- 23 -
represented the plaintiffs in the lawsuit) were the recipients of
that amount.
Petitioner's Tax Treatment of the Amounts at Issue
Petitioner's Tax Treatment of
the $150,000 Assistance Payment
Mr. Henry discussed the tax treatment of the $150,000
assistance payment that he received from du Pont in 1992 with
Edward William Gargiulo (Mr. Gargiulo), an enrolled agent who had
been his return preparer since around 1983. At the time Mr.
Gargiulo was considering the issue of the tax treatment of the
$150,000 assistance payment, he had never encountered an as-
sistance payment in the preparation of a tax return. Mr.
Gargiulo did not know what the character of the $150,000 as-
sistance payment was, and he made no effort to determine the
character of that payment. Neither Mr. Gargiulo nor Mr. Henry
consulted a tax attorney, the Internal Revenue Service (Service),
or a certified public accountant regarding the tax treatment of
the $150,000 assistance payment.
Although Mr. Gargiulo did not know what the character of the
$150,000 assistance payment was, he nonetheless concluded that no
portion of that payment constituted ordinary income of Mr. Henry
for 1992. Mr. Gargiulo advised Mr. Henry that he was not re-
quired to, and Mr. Henry did not, file a tax return for 1992
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011