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Based on the foregoing, we find that the proceeds of
petitioner's settlement with ABMI are not excludable under
section 104(a)(2). Accordingly, respondent is sustained on this
issue.
Self-Employment Tax
Respondent determined in the notice of deficiency that, due
to adjustment to petitioner's Schedule C income, petitioner was
liable for self-employment tax under section 1401 in the amount
of $2,902. In opposition, petitioner argues that the settlement
was excludable under section 104(a)(2), and, therefore,
improperly reported by ABMI as nonemployee income on IRS Form
1099. We find, however, that petitioner's arguments on this
point are moot, as we have already held for respondent on the
question of whether the settlement was excludable from
petitioner's income. Accordingly, respondent is sustained on
this issue as well.5
Section 6662(a) Penalty
Respondent determined an accuracy-related penalty under
section 6662(a) with respect to petitioner's 1989 Federal income
tax return for negligence or disregard of rules or regulations.
In pertinent part, section 6662 imposes an accuracy-related
penalty equal to 20 percent of the portion of an underpayment of
tax that is attributable to negligence or disregard of rules or
5In computing petitioner's self-employment income in the
Rule 155 computation, allowance will be made for respondent's
concession that petitioner is entitled to Schedule C deductions
for 1989 in the amount of $2,902.
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