Settlement of Lawsuit - How to deduct payment

[gfizer]

I have a client who was leasing a farm to an individual. The original lease was for a sum certain each year and had an initial term of 5 years with an option to renew annually each year after the initial 5 years. The initial term expired many years ago and the lease had been renewed annually for several years. In 2011 my client's grandchildren convinced her that she was not getting a good price (which she wasn't) and talked her into leasing the farm to someone else instead on a cropshare agreement. The original lessee of course got mad and sued my client. I don't have all the specifics of the lawsuit, but in a nutshell rather than the expense and time involved to litigate the matter the parties agreed to go to mediation and as a result my client agreed to pay the original lessee a lump sum cash settlement which the Settlement Agreement says is for "settlement of his claim to an extension of the lease."

Logically, in my mind at least, I would think that this payment should be deductible by my client, but where and how? Should it be amortized and if so how long? Is there anyone else out there who has had any experience in this area or who can offer a suggestion as to how the payment should be handled?

Thanks!