- 57 -
the $1,623,203 settlement payment in petitioner's 1994 tax return
was the result of Mr. Gargiulo's error. On that record, we
further find that petitioner's reliance on Mr. Gargiulo was not
reasonable and that he did not act in good faith in relying on
him.
We now address petitioner's contention that the state of the
law was such when he filed his 1994 tax return in October 1995
that his position to exclude the payments at issue as income from
that tax return was reasonable. We disagree. The Supreme Court
decided both United States v. Burke, 504 U.S. 229 (1992), and
Commissioner v. Schleier, 515 U.S. 323 (1995), before petitioner
filed his 1994 tax return. In both of those cases, the Supreme
Court explained the requirements prescribed by section 104(a)(2)
that damages be received "on account of personal injuries or
sickness." We have found on the instant record that petitioner
has failed to establish (1) that the $1,623,203 settlement
payment which he received from du Pont during 1994 was received
on account of the loss of his business reputation or the loss of
his reputation as an orchid grower and (2) that such losses
constitute personal injuries within the meaning of section
104(a)(2). We have also found that du Pont issued Form 1099-MISC
for the $2,800,000 total settlement amount to Fred Henry's
Paradise of Orchids and its attorneys in the lawsuit.
Page: Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 NextLast modified: May 25, 2011