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facts of this case and in accordance with the previously cited
cases, we hold that the factual issue upon which petitioners must
present credible evidence for purposes of section 7491(a) is what
portion, if any, of the $45,615 payment from DHS was received in
settlement of Mr. Forste’s tort or tort type personal injury
claims.
III. Whether Petitioners Presented Credible Evidence
Where there is an express allocation contained in a
settlement agreement between the parties, it will generally be
followed in determining the amount which is received in
settlement of tort or tort type claims for personal injuries,
provided the agreement is entered into by the parties in an
adversarial context at arm’s length and in good faith. Bagley v.
Commissioner, 105 T.C. at 406; Robinson v. Commissioner, 102 T.C.
116 (1994).
Petitioners contend that the agreement between Mr. Forste
and DHS contains an express allocation in paragraph 1. They rely
19(...continued)
T.C. 160, 175-176 (1988), affd. on this issue and revd.
on other issues 913 F.2d 1486 (9th Cir. 1990).
Also, in Keel v. Commissioner, T.C. Memo. 1997-278, we held:
Petitioners have the burden of proving the
specific amounts of the payments allocable to claims of
tort or tort-type damages for personal injuries.
Failure to meet this burden results in the entire
amount’s being presumed not to be excludable. * * *
[Citations omitted.]
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