Christopher J. and Vickilynn M. McCann - Page 10

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          McShane v. Commissioner, T.C. Memo. 1987-151.  The taxpayers in             
          McShane settled a personal injury lawsuit.  The settlement                  
          agreement in McShane stated that amounts to be paid did not                 
          include costs or interest.  In McShane, we found that the                   
          payments were entirely for the taxpayers’ personal injuries.                
               McShane is distinguishable because the RRC agreement does              
          not state that the settlement payment did not include interest.4            
               4.   Conclusion                                                        
               Neither the settlement negotiations nor the RRC agreement              
          shows that the entire $839,000 payment was damages for personal             
          injuries.  The RRC agreement does not allocate the $839,000                 
          payment between damages and interest or state whether any of the            
          payment is for interest.5  Cf. id. (settlement agreement stated             
          that payment included no interest).  We conclude that LPCF did              
          not pay petitioners more than $400,000 for personal injuries.               
          Thus, petitioners have not shown that respondent’s determination,           
          as adjusted, is incorrect.                                                  

               4  Because McShane v. Commissioner, T.C. Memo. 1987-151, is            
          distinguishable, we need not decide petitioners’ contention that            
          neither Rozpad v. Commissioner, 154 F.3d 1 (1st Cir. 1998), affg.           
          T.C. Memo. 1997-528, nor Delaney v. Commissioner, 99 F.3d 20 (1st           
          Cir. 1996), affg. T.C. Memo. 1995-378, overruled McShane.                   
               5  Petitioners contend that, under Robinson v. Commissioner,           
          70 F.3d 34, 37 (5th Cir. 1995), affg. in part and revg. in part             
          102 T.C. 116 (1994), the character of the settlement payment is             
          determined solely by the language of the settlement agreement.              
          In light of our conclusion regarding the RRC agreement, we need             
          not further consider petitioners’ reliance on Robinson.                     

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