-5- PayLess. On March 17, 1995, pursuant to the above settlement, petitioner received a payment of $27,184.16 ($8,869.00 back wages, $18,315 designated as liquidated damages) from which attorney’s fees of $9,387 were deducted, for a net payment of $17,797.16.3 Petitioner did not report any portion of the $27,184.16 on her 1995 income tax return. Respondent determined that petitioner must include the $27,184.16 in her 1995 gross income. Respondent also allowed petitioner $8,663 as a miscellaneous itemized deduction for attorney’s fees incurred to collect back wages. Petitioner contends that the $27,184.16 settlement is not includable in her gross income. She argues that at least 50 percent of her award is attributable to a recovery for the intentional and/or negligent infliction of emotional distress and is excludable under section 104(a)(2). Respondent counters that the $27,184.16 in damages was not paid on account of personal injuries. Instead, respondent contends that the settlement proceeds resulted from the claim set forth in the complaint--the FLSA claim which does not provide for personal injury compensation. Respondent also contends that any 3 On brief, respondent argues that attorney’s fees should not be excluded from petitioner’s gross income. However, the question of whether attorney’s fees are excludable was not raised by petitioners as an issue in this case. Accordingly, there is no need to address respondent’s argument.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
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