- 39 -
court's charge to the jury and the jury's answers to the
interrogatories submitted to them. This document lists the
amounts the jury awarded on each of the charges on which
petitioner brought suit; it does not, however, indicate that
prejudgment or postjudgment interest is to be provided on the
amounts.
Elms testified that at the time he prepared petitioners'
return, it was his understanding that punitive damages awarded on
a personal injury case were not taxable. Elms was concerned
whether the award included some interest income; however, he
concluded that no part of the amount received would be considered
interest income.
Petitioner signed the partial settlement agreement;
therefore, he knew that Harte-Hanks agreed to make a settlement
payment in part for all of the postjudgment interest on the first
$22 million of liability. Petitioner knew the actual damages
totaled $11,500,000, he knew that Columbia and Hudson were not
liable to pay anything unless the total award exceeded $12
million, and he knew that Columbia and Hudson paid $3 million to
settle their potential liability. Therefore, petitioner knew
that the settlement agreement contained pertinent information
that was not included in the document he provided Elms.
Petitioner, in possession of pertinent information, may not
claim good faith and reasonable cause when he stands mute while
his tax adviser in ignorance of such information comes to an
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011