- 5 - grounds for relief and/or damages, including bad faith and punitive damages. In the settlement of the suit, petitioners released any rights they may have had for all claims stated and for possible future claims arising from their relationship with the insurance company on this matter. The terms of the settlement did not specify any particular grounds for which the payment was made. In pursuing the question of whether the settlement was taxable, petitioners seemed to focus on the fact that the cost of repair approximated the total recovery from all sources. When respondent questioned whether the amount received was for punitive damages, petitioners presented the Appeals officer with repair receipts in an effort to demonstrate that they had spent the funds received for repairs to the home. Petitioners have continued this approach in disputing the deficiency and emphasize this aspect in their present motion. Conversely, respondent has focused on the fact that petitioners’ claims and settlement with their insurance company may have been for punitive damages.3 The parties’ arguments have gone off on different tangents. 3 Respondent did argue about the expenditures as a secondary matter. Respondent questioned whether some of the expenditures by petitioners were improvements, rather than replacement and repairs. In the Court’s analysis, we found that there were some improvements, as respondent contended, but we found them to be de minimis. For example, petitioners added air conditioning to their replacement heating unit. This aspect adds some justification for respondent’s position.Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011