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petitioner's research and writing expenses were not incurred in
his capacity as an employee of UConn.10
We do not agree with petitioners' contention that the
remitted fellowship proceeds should offset gross wages received.
Petitioner had an employment relationship with UConn which
existed both prior to and subsequent to receipt of the
fellowships, and the amount of gross wages received during the
year in issue was determined in accordance with this agreement.
Petitioner, by agreeing to remit a portion of the fellowship
proceeds to UConn, maintained the terms of this employment
relationship, including full salary and related benefits. We
conclude, therefore, that the amounts paid to petitioner by UConn
constitute wages in the full amount reflected on the Form W-2
issued by UConn.
We now turn to the characterization of the fellowship
proceeds. The facts before us are not distinguishable from those
presented in Spiegelman v. Commissioner, supra, where we held
that fellowship proceeds are fully includable in the recipient's
gross income, unless some statutory exclusion is applicable. Id.
at 405-406. In this case, the fellowships were awarded to
petitioner. After being awarded the fellowships, petitioner
10 By claiming petitioner's fellowship expenses on Schedule
C rather than as employee business expenses on Schedule A,
petitioners minimize the effects of the alternative minimum tax.
See Kant v. Commissioner, T.C. Memo. 1997-217.
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