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petitioner's 1990 Federal income tax in the amount of $4,388 and
an accuracy-related penalty under section 6662 in the amount of
$878. After concessions,2 the only issue for decision is whether
amounts received by petitioner in settlement of a lawsuit are
excludable from income under section 104(a)(2).
FINDINGS OF FACT
Some of the facts have been stipulated, and they are so
found. The stipulation of facts and the attached exhibits are
incorporated herein by this reference. At the time of filing the
petition, petitioner resided at Eaton, Ohio.
On June 9, 1989, petitioner commenced legal action against
his former employer, United Cable TV of Oakland, Inc. (United),
for damages related to the termination of his employment with
United on July 7, 1986. Petitioner's complaint asserted claims
of breach of contract, negligence, and intentional infliction of
emotional distress. Petitioner's complaint further alleged that,
as a result of United's conduct, petitioner suffered loss of
employment and employability, loss of past and future earnings,
emotional pain and suffering, mental anguish, and defamation of
character.
2 Respondent concedes that: (1) Petitioner is not liable
for the accuracy-related penalty under sec. 6662 and (2) if it is
determined that the amounts in question constitute taxable income
to petitioner, "petitioner is entitled to an itemized deduction
in the amount by which petitioner's total legal fees and costs of
$7,469.20 exceed 2 percent of petitioner's adjusted gross
income".
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