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physical injuries or physical sickness. Id. To decide the
purpose or purposes for which a payment was made, courts have
considered, inter alia, the following: (1) The underlying
complaint and the nature of the claims; (2) the settlement
negotiations and settlement agreement; and (3) the intent of the
payor. See United States v. Burke, 504 U.S. 229, 237-239 (1992);
Thompson v. Commissioner, 866 F.2d 709, 711 (4th Cir. 1989),
affg. 89 T.C. 632 (1987); Knuckles v. Commissioner, 349 F.2d 610,
612-613 (10th Cir. 1965), affg. T.C. Memo. 1964-33; Agar v.
Commissioner, 290 F.2d 283, 284 (2d Cir. 1961), affg. per curiam
T.C. Memo. 1960-21; Bagley v. Commissioner, 105 T.C. 396, 406
(1995), affd. 121 F.3d 393 (8th Cir. 1997).
B. Whether the $25,000 Is Excluded From Income Under Section
104(a)(2)
1. Petitioner’s Carpal Tunnel and Back Injuries
Petitioner’s carpal tunnel syndrome was diagnosed in 2002,
and she suffered back injuries in 2002 while working for Ivy
Tech. Petitioner made worker’s compensation claims for those
injuries. The settlement agreement specifically excludes all
claims that petitioner had pending under the Indiana Worker’s
Compensation Act for injuries which occurred before the date of
the agreement. Thus, we conclude that the $25,000 settlement
payment was not intended to compensate petitioner for her carpal
tunnel and back injuries.
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