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Paragraph 1 of the settlement agreement specifies that it
provides the settlement terms for all claims for “Workmen’s
Compensation”. Paragraph 1 provides for annual “payments of
$25,130 (to be adjusted as described in paragraph 2.e.)”. As we
have already discussed, the inclusion of the “workmen’s
compensation” language in paragraph 1 of the final agreement is
not an express allocation of settlement proceeds to a tort or
tort type personal injury. Indeed, if paragraph 1 is read
literally as a settlement for workers’ compensation claims, the
amount paid pursuant to paragraph 1 would not qualify for
exclusion under section 104(a)(2).22 However, the inclusion of
that language appears to have been a last minute change initiated
by Mr. Forste on the faulty advice of his accountant. DHS did
not suggest that language, and its inclusion is inconsistent with
the previous drafts of the settlement agreement. There is no
evidence in the record that Mr. Forste or DHS had previously
contemplated the existence of a workers’ compensation claim in
the settlement negotiations, and respondent makes no argument
that paragraph 1 was intended to settle any claims for workers’
compensation. We therefore do not construe the inclusion of the
“workmen’s compensation” language in the final agreement to
22See sec. 1.104-1(c), Income Tax Regs., which provides that
workers’ compensation does not qualify for exclusion under sec.
104(a)(2).
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