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inquiry,2 and is generally made by reference to the settlement
agreement. Robinson v. Commissioner, 102 T.C. 116, 126 (1994),
affd. in part and revd. in part 70 F.3d 34 (5th Cir. 1995). An
important factor in determining the validity of the agreement is
the “intent of the payor” in making the payment. Knuckles v.
Commissioner, 349 F.2d 610, 613 (10th Cir. 1965), affg. T.C.
Memo. 1964-33.
In examining the nature of the claim, we find that
petitioner filed a complaint under Title VII of the Civil Rights
Act of 1964, as amended, and the Civil Rights Act of 1991. In
United States v. Burke, supra at 237, the Supreme Court held that
recoveries received for the settlement of claims based on Title
VII of the Civil Rights Act of 1964, Pub. L. 88-352, 78 Stat.
253, are not excludable from gross income under section
104(a)(2). The Supreme Court concluded that because the remedies
under the Act did not create remedies for personal injuries, the
causes of action involving the Act were not based on tort or tort
type rights. Id. at 241. In 1991, Congress amended the Civil
Rights Act of 1964, effective November 21, 1991, to permit
recovery of compensatory and punitive damages for certain
violations. Civil Rights Act of 1991, Pub. L. 102-166, sec. 102,
105 Stat. 1072.
2 Sec. 7491(a), concerning burden of proof, has no bearing
on the underlying substantive issue.
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