- 45 -
supra; Stocks v. Commissioner, 98 T.C. 1, 11 (1992); Seay v.
Commissioner, supra.
Respondent does not argue that defamation is not a tort
under the law of California. See Roemer v. Commissioner, supra
(holding that defamation is a cause of action based upon tort or
tort type rights). Respondent contends that petitioner “did not
have a viable defamation claim against UTA.” Viability of the
claim is not a factor that controls the determination of
exclusion pursuant to section 104.22 See Robinson v.
Commissioner, supra; Seay v. Commissioner, supra. We conclude
that petitioner made tort or tortlike claims against UTA.23
C. Whether To Respect the Settlement’s Allocation (Whether
the Payments Were on Account of the Defamation)
Respondent next argues that the allocation of the payments
made in the employment termination agreement and the defamation
agreement should not be respected because the allocation occurred
in an uncontested, nonadversarial, tax-motivated context.
Generally, an express allocation in the settlement agreement
of a portion of the proceeds to tort or tort like claims is
binding for tax purposes if the agreement was entered into by the
22 Viable is defined as “capable of success or ongoing
effectiveness”. Valid is defined as “legally sound”. Webster’s
II New Riverside University Dictionary 1274, 1285 (1994).
Accordingly, a cause of action could be valid (legally sound) but
not viable (winnable).
23 We note that respondent does not refer to the other
claims in addition to defamation, including intentional
infliction of emotional distress and invasion of privacy,
contained in the complaint.
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