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Respondent determined a deficiency in petitioner's 1992
Federal income tax in the amount of $4,219.
After concessions,2 the sole issue for decision is
whether section 104(a)(2) authorizes petitioner to exclude from
gross income the amount received in settlement of a claim for
wrongful termination of employment.
Some of the facts have been stipulated and are so found.
The stipulations of fact and attached exhibits are incorporated
herein by this reference. Petitioner resided in Bethany,
Oklahoma, on the date the petition was filed in this case.
Petitioner worked as a bookkeeper for National Livestock
Commission Association (NLCA) from May 22, 1982 until March 30,
1990. On March 29, 1990, petitioner was served with a subpoena
to give a deposition in an action involving NLCA. The next day
petitioner's employment was terminated. Petitioner received a
final paycheck in the amount of $2,203.71 for her previous 2
weeks' work plus 1-month's severance pay. NLCA withheld taxes
from this amount.
As a result of the termination of her employment, petitioner
suffered the intangible harms of embarrassment, humiliation, and
other mental distress. Petitioner contends that her mental
2 The parties agree that the issue of whether part of
petitioner's Social Security benefits are taxable is a statutory
computation controlled by our decision as to the exclusion of the
settlement proceeds.
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