- 14 - 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.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