- 3 -
misinformed, and discouraged in their efforts to obtain the entry
level sales position." The court found State Farm liable with
respect to "all female applicants and deterred applicants who, at
any time since July 5, 1974, have been, are, or will be denied
recruitment, selection and/or hire as trainee agents by defendant
companies within the State of California."
Mary Gillette was a member of the class action suit and
prevailed in her claim. As a result, in 1992 State Farm issued
petitioner and her attorney a $155,888 check. Petitioner's
attorney retained legal fees of $31,226, and the balance was paid
to petitioner. None of the $155,888 amount was reported or
disclosed on petitioners' return. Respondent determined that the
entire $155,888 should have been included in petitioners' gross
income.
Discussion
This case requires the Court to revisit the taxability of
the proceeds received by a claimant who was a member of the class
of plaintiffs in Kraszewski v. State Farm Gen. Ins. Co. In each
of our prior cases, we held that none of the proceeds were
excludable from the taxpayer's gross income. See Hayes v.
Commissioner, T.C. Memo. 1997-213; Hardin v. Commissioner, T.C.
Memo. 1997-202; Raney v. Commissioner, T.C. Memo. 1997-200; Clark
v. Commissioner, T.C. Memo. 1997-156; Berst v. Commissioner, T.C.
Memo. 1997-137; Martinez v. Commissioner, T.C. Memo. 1997-126;
Fredrickson v. Commissioner, T.C. Memo. 1997-125. Petitioner has
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