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not intend to pay the settlement amount at issue in order to
compensate petitioner for his physical injuries.
On the instant record, we reject respondent’s position.
With respect to respondent’s contentions that petitioner has
failed to introduce evidence regarding, and that Mr. Rodman was
skeptical about, the extent of petitioner’s physical injuries as
a result of the incident, those contentions appear to ignore the
well-established principle under section 104(a)(2) that it is the
nature and character of the claim settled, and not its validity,
that determines whether the settlement payment is excludable from
gross income under section 104(a)(2). See Bent v. Commissioner,
supra; Glynn v. Commissioner, supra; Seay v. Commissioner, supra.
In any event, we find below that the record establishes that Mr.
Rodman’s dominant reason in paying the settlement amount at issue
was petitioner’s claimed physical injuries as a result of the
incident.
With respect to respondent’s contention that Mr. Rodman did
not intend to pay the settlement amount at issue in order to
compensate petitioner for his physical injuries because the
amount of liquidated damages (i.e., $200,000) payable by peti-
tioner to Mr. Rodman under the settlement agreement was equal to
the settlement amount (i.e., $200,000) paid to petitioner under
that agreement, we do not find the amount of liquidated damages
payable under the settlement agreement to be determinative of the
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