- 2 - 1. Whether petitioners, pursuant to section 104(a)(2), are entitled to exclude amounts received in settlement of a class action suit. We hold they are not. 2. Whether petitioners, pursuant to section 162, are entitled to an above-the-line deduction for legal fees. We hold they are not. Unless otherwise indicated, all section references are to the Internal Revenue Code as in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Background The facts have been fully stipulated under Rule 122 and are so found. At the time the petition was filed, petitioners resided in Eureka, California. On June 1, 1979, a class action suit against State Farm General Insurance Co., State Farm Mutual Automobile Insurance Co., State Farm Life Insurance Co., and State Farm Fire and Casualty Co. (State Farm) was filed in the U.S. District Court for the Northern District of California, Kraszewski, et al. v. State Farm Gen. Ins. Co.. The plaintiffs alleged that State Farm, in violation of title VII of the Civil Rights Act of 1964 (Title VII), had discriminated against women in the hiring of its insurance agents. On November 6, 1981, the District Court bifurcated the litigation into a liability and a remedy phase.Page: Previous 1 2 3 4 5 6 7 8 Next
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