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Petitioners have not differentiated between the settlement
award and the incentive payment. They contend that the entire
amount is excludable. In Berst v. Commissioner, T.C. Memo. 1997-
137, we held that an incentive payment made to another claimant
in the same class action suit (Kraszewski v. State Farm Gen. Ins.
Co.) was received contingent upon the signing of the Release,
making the incentive amount bargained-for consideration. There
is nothing that distinguishes the present case. Thus, the
incentive payment is also includable in gross income.
In the notice of deficiency, the Commissioner allowed
petitioners to deduct their legal fees as a miscellaneous
itemized deduction. Petitioners have not contested this
treatment except to the extent that they have argued that the
entire award should be excluded from gross income pursuant to
section 104(a)(2). Based on our holding above, we conclude that
petitioners must be treated as having conceded this issue.
Due to a concession by respondent,
Decision will be entered
under Rule 155.
(...continued)
apply retroactively. Id. at 286. Thus, petitioner's Title VII
claim, and its potential exclusion under sec. 104(a)(2), must be
considered in light of the Act under which she sued. Clark v.
Commissioner, T.C. Memo. 1997-156. Since Burke also involved the
application of sec. 104(a)(2) to a settlement award under Title
VII of the 1964 Act, its result is squarely on point for this
case.
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