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both the litigation settlement and the release of the employment
agreement, and therefore reject that argument as well.
Pursuant to the definitive agreement, petitioner and R.
Eihusen purchased all of V. Eihusen’s stock in petitioner for
$37,223,114. Contemporaneously with that purchase, but
independent therefrom, petitioner also transferred to V. Eihusen
a value of $3,082,710 in settlement of existing and potential
disputes between the two of them and in relinquishment of V.
Eihusen’s rights under the employment agreement. More
specifically, petitioner paid part of the $3,082,710 to V.
Eihusen to settle all of the claims which he advanced against
petitioner in the ESOP litigation and the Intermodal litigation,
and to settle all other claims which he may have had against
petitioner, First National, the ESOP committee, and petitioner’s
directors, officers, employees, and agents. Petitioner paid the
rest of the $3,082,710 to V. Eihusen for his resignation as a
director, officer, and employee of petitioner and for his release
of petitioner from its obligations under the employment
agreement.
As to the portion of the payment pertaining to the
settlement of litigation, payments made to settle litigation are
deductible as ordinary and necessary business expenses when they
have business origin and otherwise satisfy the mandates of
section 162(a). Anchor Coupling Co. v. United States, 427 F.2d
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