- 4 -
release State Farm from "any claim * * * of any and every kind
based on any federal, state, or local law
* * * as well as any and all claims * * * arising out of or
relating to any alleged discriminatory, improper, or unlawful act
or omission of State Farm." The $135,000 settlement represented
51 percent of the full value of petitioner's $264,935 claim. The
full value of the claim was calculated based on "back pay as a
State Farm agent accrued from the year of the challenged
appointment to February 1, 1992, plus six months of front pay
from that date forward."
During the taxable year 1992, State Farm paid $135,000 in
settlement of Mrs. Easter's claim in the class action suit and an
incentive payment in the amount of $16,200, both in accordance
with the Master Settlement Agreement and the Settlement Agreement
and General Release. Of the $151,200 total amount, $37,841.25
was retained by class counsel as legal fees, and the remainder
was received by Mrs. Easter. On April 24, 1992, the Saperstein
firm sent Mrs. Easter its check for $112,778.29 that represented
her share of the settlement proceeds from her State Farm claim,
less $580.46 taxes withheld.
Section 104(a)(2) allows a taxpayer to exclude from gross
income "the amount of any damages received (whether by suit or
agreement and whether as lump sum or periodic payments) on
account of personal injuries or sickness". In United States v.
Burke, 504 U.S. 229 (1992), the taxpayers brought a sex
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011