Joseph S. Rozpad and Kathleen M. Rozpad - Page 6

                                        - 6 -6                                        

          $1 million check to Mr. DiBiasio and his attorney.  Mr.                     
          DiBiasio's attorney cashed the check; retained $447,460.21 for              
          attorney's fees and costs; and issued a $552,539.79 check to Mr.            
          DiBiasio.  Dr. Mariorenzi's medical malpractice insurer did not             
          issue a Form 1099, regarding the $1 million settlement, to either           
          Mr. DiBiasio or the Internal Revenue Service.                               
               The DiBiasios, on their Federal income tax return for the              
          taxable year 1989, neither reported any portion of the $1 million           
          settlement on their return nor claimed any deductions relating to           
          Mr. DiBiasio's medical malpractice dispute.                                 
          1. Allocation of Settlement Proceeds                                        
               Respondent determined that in each case petitioners' gross             
          income includes the portion of their respective settlement that             
          is attributable to prejudgment interest.  Petitioners contend               
          that no part of their respective settlement is attributable to              
          prejudgment interest.  To support their contention, petitioners             
          rely on the stipulations of dismissal.  The stipulations state              
          "no interest."  Petitioners contend that the phrase "no interest"           
          means no portion of the settlement is allocable to prejudgment              
          interest.  For the following reasons, we reject petitioners'                
               First, in Delaney v. Commissioner, 99 F.3d 20 (1st Cir.                
          1996), affg. T.C. Memo. 1995-378, the U.S. Court of Appeals for             

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  Next

Last modified: May 25, 2011