-13-
language” regarding what the payment was for, “then the most
important fact in determining how section 104(a)(2) is to be
applied is ‘the intent of the payor’ as to the purpose in making
the payment.” Metzger v. Commissioner, 88 T.C. at 847-848
(quoting Knuckles v. Commissioner, 349 F.2d 610, 613 (10th Cir.
1965), affg. T.C. Memo. 1964-33); see also Whitehead v.
Commissioner, T.C. Memo. 1980-508 (general release found to
indicate that payor “regarded the settlement payment as
compensation for all of the claims which may have been brought by
petitioner rather than as compensation for one particular type of
claim.”).
In the case before us, the intent of the payor is evidenced
in trial testimony and the agreement. The DaimlerChrysler
counsel with settlement authority for petitioner’s claims, and
who executed the settlement for DaimlerChrysler, testified at
trial. DaimlerChrysler did not allocate the payment between the
causes of action in the agreement but rather intended the
agreement to encompass “settlement of all claims.” In the
agreement, DaimlerChrysler specifically referenced the Forms 1099
that would be issued regarding the payments, as well as the
“withholding or any applicable income and employment taxes in
connection with the consideration paid”. Id. (emphasis added).
By referring to the income and employment taxes, the Forms 1099,
and their intention that the agreement include settlement of all
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