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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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