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debt when she participated in the strike and that the penalty
withheld from her wages extinguished such debt.
We think that petitioner's circumstances are different from
those of the taxpayer in Tucker v. Commissioner, supra. In the
latter case, the taxpayer did not dispute the fact that she had
violated State law and incurred a debt as a result of such
violation. Nor did the taxpayer dispute the fact that the
withholding of the penalty from her wages satisfied such debt.
In the present case, however, petitioner vigorously disputed the
auditor's determination that he was liable to the school district
for excess advances, and the parties' dispute was not resolved by
the New York courts by the end of 1990.
Similarly, respondent's reliance on Kuntz v. Commissioner,
supra, and Kasey v. Commissioner, supra, is also misplaced. In
those cases, we held that the taxpayers constructively received
income to which they were entitled but which was garnished and
remitted to judgment creditors. In neither case is there any
indication that the taxpayers disputed their liability. Thus,
these cases are also distinguishable from the present one.
In view of the foregoing, we hold that petitioner is not
taxable, in 1990, on the net wages withheld by the school
district during that year. Because 1990 is the only year before
us, we need not, and do not, decide whether the net wages are
taxable in some other year.
Issue (2): Section 72(t)
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