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International, Inc., showing wages of $2,650 and no Federal
income tax withheld for that year. On their 1992 joint Federal
income tax return, petitioners reported $61,040.31 as wage income
(line 7). Petitioners attached to their return a Form 8275
Disclosure Statement asserting that the ITO payment in the amount
of $71,809.69 was excludable from their gross income pursuant to
section 104(a)(2) "as a payment received in exchange for the
release and settlement of tort-type rights, as part of IBM
Corp.'s ITO II Program".
Respondent determined that petitioners did not establish
that any amount was excludable from their gross income pursuant
to section 104(a)(2). Consequently, respondent increased
petitioners' gross income by $74,131.29 to conform to the amounts
reported on petitioner's Forms W-2. Additionally, respondent
disallowed itemized deductions in the amount of $966.08 as an
automatic adjustment resulting from the increase in petitioners'
gross income.
Discussion
The instant case is another among many in this Court where
we have been presented with the issue of whether proceeds
received pursuant to IBM's ITO II program are excludable from the
recipient's gross income pursuant to section 104(a)(2). See,
e.g., Gajda v. Commissioner, T.C. Memo. 1997-345; Lubart v.
Commissioner, T.C. Memo. 1997-343; Thorpe v. Commissioner, T.C.
Memo. 1997-342; Phillips v. Commissioner, T.C. Memo. 1997-336;
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