Nancy J. Vincent - Page 14

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          Whittier’s only interest in the settlement was resolving the                
          matter and avoiding any future tax consequences from doing so.              
          Once these concerns were met, Whittier ceased to be an active               
          participant in the negotiations and, in effect, gave petitioner a           
          green light to classify the settlement proceeds in whatever                 
          manner she desired.                                                         
               That petitioner did so is evident from the disparity between           
          her damages as argued at trial and the ultimate settlement.  She            
          documented actual lost wages of $161,817 and argued that she was            
          entitled to up to $397,729 for total past and future lost wages             
          and benefits, as well as emotional distress, on account of                  
          Whittier’s removal of her accommodation.  The jury awarded her              
          $400,000.  In the settlement, she allocated only $60,000 for past           
          and future lost wages.  This large reduction in the amount                  
          allocable to her lost wages (over $100,000 less than her                    
          documented loss of past wages and $335,000 less than the total of           
          her lost past and future wages) was further tax advantaged to her           
          by splitting the receipt of it between 2 years.  Such tax                   
          planning, from which Whittier was insulated by the                          
          indemnification clause, is not the product of arm’s-length                  
          negotiations between adversarial parties.  See, e.g., Robinson v.           
          Commissioner, supra at 127.                                                 
               We are not persuaded by such agreements and look beyond the            
          stated form of the settlement to its economic realities.  Id.               






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