- 25 - The breach of contract and the misrepresentation claims do not sound in tort, and to the extent that the agreement with DHS was made to satisfy those claims, any settlement proceeds would not be excludable under section 104(a)(2). See Metzger v. Commissioner, 88 T.C. 834, 848-850, 858 (1987), affd. without published opinion 845 F.2d 1013 (3d Cir. 1988); Reisman v. Commissioner, T.C. Memo. 2000-173, affd. without published opinion 248 F.3d 1151 (6th Cir. 2001). The record in this case shows numerous potential reasons for DHS to enter into the settlement agreement, including the settlement of tort or tort type personal injury claims. It appears that Mr. Forste’s assertion of his tort or tort type personal injury claims influenced and expedited DHS’s decision to negotiate the settlement with Mr. Forste. Thus, we cannot agree with respondent’s suggestion that the only reasons that DHS entered into the agreement with Mr. Forste were to provide a severance, to terminate a targeted employee, and to settle the breach of contract claim. The evidence in the record demonstrates that Mr. Forste asserted several tort or tort type claims, those claims involve personal injuries for purposes of section 104(a)(2), and at least a portion of the settlement in this case was made to settle those claims. However, our inquiry does not end there.Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Next
Last modified: May 25, 2011