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exclude amounts received in settlement of a class action suit.
We hold she is 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, petitioner resided
in San Francisco, California.
In the fall of 1974, petitioner sought the entry-level sales
position of trainee agent with State Farm Insurance Co. (State
Farm). State Farm's agents discouraged petitioner from pursuing
such a position.
On June 1, 1979, a class action suit was filed in the U.S.
District Court for the Northern District of California,
Kraszewski v. State Farm Gen. Ins. Co.. The plaintiffs in the
class action 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.
On April 29, 1985, the District Court ruled in the liability
phase that State Farm was liable under Title VII for classwide
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