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payment directly to Olimpia, Whelan, & Lively. The settlement
agreement does not refer to the attorney’s fee as being incurred
“in connection with” Mr. Biehl’s duties as an employee, or as
having been incurred “for” NCMI or “on behalf of” NCMI or
incurred by Mr. Biehl “as an agent” of NCMI, nor does it make any
reference to a reimbursement arrangement.
It is clear that the terms of the settlement (and events
subsequent thereto) providing for NCMI’s direct payment to Mr.
Biehl’s attorney of his attorney’s fee in prosecuting his
termination claim served Mr. Biehl’s tax purposes, not any
designated business purpose of NCMI. As Mr. Biehl admitted in
his motion and supporting affidavit in the California Superior
Court to enforce the settlement agreement, the form and method of
making the settlement payment or payments was a matter to which
NCMI was completely indifferent.
The exhibits made part of the stipulation of facts on which
this case has been submitted for decision include not only the
settlement agreement pursuant to which NCMI paid $799,000 to Mr.
Biehl and $401,000 to the account of his attorney, Olimpia,
Whelan, & Lively, but also petitioners’ motion papers
subsequently filed with the California Superior Court in the
termination lawsuit to enforce the terms of the settlement. The
gravamen of petitioners’ motion was that NCMI had violated the
terms of the settlement by issuing a single Form 1099 to Mr.
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