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action suit brought under Title VII of the Civil Rights Act of
1964, 42 U.S.C. sec. 2000e et seq., are excludable from
petitioners' gross income pursuant to section 104(a)(2)1, and (2)
whether petitioners are entitled to deduct $37,841 in legal fees,
relating to the State Farm settlement, as a trade or business
expense or as a miscellaneous itemized deduction.
At the time of the filing of their petition, petitioners,
Walter R. and Marilyn K. Easter, resided in Pleasanton,
California. Walter Easter is involved as a petitioner herein
solely because he filed a 1992 joint income tax return with his
wife Marilyn K. Easter. References to petitioner in the singular
will be to Marilyn K. Easter.
Petitioner, whose maiden name was Marilyn Brent, was
employed by State Farm Insurance Company from December 1, 1983,
through February 27, 1986. She was a claimant in a class action
suit filed in the District Court for the Northern District of
California entitled Kraszewski v. State Farm Gen. Ins. Co., 38
Fair Empl. Prac. (BNA) Cas. 197 (N.D. Cal. 1985)(hereinafter "the
class action suit"). On May 11, 1988, petitioner filled out a
document entitled "INITIAL CLAIM FORM" that was used by the law
firm of Farnsworth, Saperstein & Seligman (hereinafter referred
to as the Saperstein firm) to evaluate her claim. During April
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the year in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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