- 11 -
Springs, CA Loss taken due to court proceedings - details in
taxpayers file.” Petitioner did not inform Mr. Wise that
petitioner had deducted the Frenchtown Hills loss on his 1994
return.
On his 1991 tax return, petitioner showed an NOL carryover
of $64,445, which he used to offset $50,843 in income. On his
1992 tax return, petitioner showed an NOL carryover of $182,510,
which was used to offset $142,022 in income. In 1988, petitioner
was aware he had gross income, including $9,906 in wages, $17,088
in retirement pay, $1,552 in unemployment compensation, and
$1,838 in commissions. Not including net profit in the amount of
$62,304 reported on Schedule C and shown on line 12, petitioner
had gross income in 1988 in the amount of $30,384. Petitioner
did not sign his 1988 tax return until March 7, 1990.
OPINION
1. Taxability of Settlement Proceeds
We must decide whether petitioner received any of the
settlement proceeds on account of a personal injury. To the
extent that he did, the funds are excludable from his gross
income. See sec. 104(a)(2). To the extent that he did not, the
funds are includable in his gross income. See sec. 61(a).
Because respondent determined that none of the proceeds are
excludable from petitioner's gross income under section
104(a)(2), petitioner must prove otherwise. See Rule 142(a);
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