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argue, as the taxpayer argued in Brenner v. Commissioner, T.C.
Memo. 2001-127, regarding the indemnification provision in the
former corporate employer’s bylaws, that the NCMI shareholders
agreement, with its provision for payment of attorney’s fees and
costs to the prevailing party in any suit to enforce the
agreement, was a reimbursement arrangement that was implemented
by the settlement agreement. This argument is misplaced.
The shareholders agreement made no provision for recovery of
attorney’s fees and costs for a claim for wrongful termination of
employment, even any such claim by a shareholder. The
shareholders agreement expressly negates any implication or
inference that it created any right to employment or continued
employment of any shareholder. The shareholders agreement
thereby forecloses any argument that it could somehow be
construed as an arrangement to reimburse a shareholder’s
attorney’s fees incurred in prosecuting a claim for wrongful
termination of employment against NCMI.
Nor can the settlement agreement standing alone create a
reimbursement arrangement that satisfies the business connection
requirement (or any requirement, for that matter) of the
accountable plan regulations. The settlement agreement was
entered into long after Mr. Biehl had performed any services as
an employee of NCMI. The attorney’s fee is referred to in the
settlement agreement only insofar as it directs NCMI to make
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