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compensation for a wrongful termination, or a lesser amount that
is net of the legal fees and other costs that she incurred to
recover this award. We hold it is the greater amount. Unless
otherwise stated, section references are to the Internal Revenue
Code in effect for the year in issue. Rule references are to the
Tax Court Rules of Practice and Procedure. Dollar amounts are
rounded to the nearest dollar.
Background
All facts have been stipulated.1 The stipulated facts and
the exhibits submitted therewith are incorporated herein by this
reference. When petitioners petitioned the Court, they resided
in Lake Havasu City, Arizona. They are husband and wife, and
they filed a 1994 Form 1040, U.S. Individual Income Tax Return,
using the filing status of "Married filing joint return".
On May 5, 1990, Ms. Coady was discharged from her employment
with Alaska Housing Finance Corporation (AHFC). Thereafter,
while she resided in Alaska, she retained an attorney in the
Alaska office of the law firm of Hellen, Partnow & Condon (HPC)
to represent her in a wrongful termination suit against AHFC.
According to the terms of that representation:
[Ms. Coady is] responsible for all costs incurred,
e.g. filing fees, long distance telephone calls,
1 Petitioners ask the Court to find a fact from a letter
that they attached to their posttrial brief. We decline to do
so. This letter is not evidence. Rule 143(b); see also Boyd
Gaming Corp. v. Commissioner, T.C. Memo. 1997-445.
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