- 10 - where it appears that one party may not have had a strong motivation to negotiate at arm’s length as to the characterization and/or division of the settlement amounts. Hemelt v. United States, 122 F.3d 204, 208 (4th Cir. 1997); Dotson v. United States, 87 F.3d 682, 687 (5th Cir. 1996); Robinson v. Commissioner, supra at 127; Threlkeld v. Commissioner, 87 T.C. 1294, 1306-1307 (1986), affd. 848 F.2d 81 (6th Cir. 1988); Fono v. Commissioner, 79 T.C. 680, 694 (1982), affd. without published opinion 749 F.2d 37 (9th Cir. 1984); see also Mitchell v. Commissioner, T.C. Memo. 1990-617, affd. without published opinion 992 F.2d 1219 (9th Cir. 1993). Our ultimate inquiry as to the character of a payment rests on the payor’s intent or dominant reason for making the payment. Knuckles v. Commissioner, 349 F.2d 610, 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; Metzger v. Commissioner, 88 T.C. 834, 847 (1987), affd. without published opinion 845 F.2d 1013 (3d Cir. 1988). For a payment to be excluded from gross income under section 104(a)(2), the payor must have intended to recompense the payee for a claim arising out of “personal physical injuries” or “physical sickness”; we may rely on the jury’s verdict as the best evidence in determining a payor’s intent for purposes of section 104(a)(2). See United States v. Burke, 504 U.S. 229, 234 (1992); Miller v.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011