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State Farm agent accrued from the year of the
challenged appointment to February 1, 1992, plus six
months of front pay from that date forward.
b. Settlement Cash at 87.5% Acceptance Rate:
State Farm offers [petitioner] Settlement Cash of
$135,000.00, which is approximately 78% of the
estimated full Consent Decree value of her claim, to
release her claims against State Farm.
* * * * * * *
c. Incentive Cash for Acceptance Rate Above
90%: The Incentive Cash will be $1,800.00 per claimant
for each full percentage point by which the Acceptance
Rate * * * exceeds 90%.
* * * * * * *
e. Attorney's Fees: The payments State Farm
is offering to [petitioner] include her attorneys' fees
and costs * * *. That is, [petitioner] will have to
pay her attorneys' fees * * * out of the payment State
Farm makes to her. * * *
Petitioner accepted the terms of the settlement agreement.
As a result, in 1992 State Farm issued petitioner and her
attorney a $151,200 check ($135,000 plus a $16,200 Acceptance
Rate bonus amount). Petitioner's attorney retained legal fees of
$37,841 and the $113,359 balance was paid to petitioner.
Petitioners reported on their 1992 joint Federal income tax
return $5,270 of the $151,200 amount. Respondent determined that
the entire $151,200 should have been included in petitioners'
gross income. The petition in this case was filed on November
24, 1995.
Discussion
I. Excludability of Settlement Proceeds Under Section 104(a)(2)
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