- 40 -
was contrived. See Robinson v. Commissioner, 102 T.C. 116
(1994), affd. on this issue and revd. in part. 70 F.3d 34 (5th
Cir. 1995); Burditt II v. Commissioner, T.C. Memo. 1999-117.
C. Intent of the Payor
In the absence of any express language in the agreement, the
intent of the payor is the most important factor in determining
the purpose of the payment. Pipitone v. United States, 180 F.3d
at 864; Kurowski v. Commissioner, 917 F.2d 1033, 1036 (7th Cir.
1990), affg. T.C. Memo. 1989-149; Knuckles v. Commissioner, 349
F.2d 610, 613 (10th Cir. 1965); Agar v. Commissioner, 290 F.2d
283, 284 (2d Cir. 1961), affg. T.C. Memo. 1960-21; Metzger v.
Commissioner, 88 T.C. 834, 847-848 (1987), affd. without
published opinion 845 F.2d 1013 (3d Cir. 1988); Kroposki v.
Commissioner, T.C. Memo. 1997-563.
Petitioner and Ormet negotiated the terms of the Settlement
Term Sheet for several months before agreeing to a final version.
Paragraph 10 of the Settlement Term Sheet finalized their mutual
assent stating: “This Term Sheet is intended to constitute a
binding agreement among the parties thereto, subject only to the
negotiation and execution of satisfactory documentation.”
Although the binding nature of the settlement terms was
explicitly stated in the Settlement Term Sheet, whether the
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