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v. Commissioner, supra (involving a civil lawsuit for malicious
prosecution); Roemer v. Commissioner, 716 F.2d 693 (9th Cir.
1983), revg. 79 T.C. 398 (1982) (involving a civil suit for
injury to a person's reputation caused by defamatory statements
constituting libel). The law was unsettled with respect to the
excludability of claims based on age discrimination. See Downey
v. Commissioner, 97 T.C. 150 (1991), supplemented by 100 T.C. 634
(1993), revd. and remd. 33 F.3d 836 (7th Cir. 1994).
It is problematic whether petitioners adequately disclosed
the item regarding the settlement payments in their 1988 return.
While it was not a full and detailed disclosure, we are inclined
to view it as adequate because respondent was alerted to the fact
that petitioner had received settlement payments from the credit
union, some taxable and some nontaxable. The disclosure in the
attachment to the return led to respondent's audit of the item
which in turn resulted in the principal adjustment contained in
the notice of deficiency.
Accordingly, we hold that petitioners are not liable for the
addition to tax under section 6661(a) for 1988.
Issue 4. Section 6662(a) Accuracy-Related Penalties
Respondent determined that petitioners are liable for
accuracy-related penalties for negligence under section
6662(a)(1) for 1989, and for a substantial understatement of
income tax under section 6662(a)(2) and negligence under section
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