Violet A. Reynolds - Page 2

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               Paul Eugene Groff, for petitioner.                                     
               J. Scott Hargis and Joyce Marr, for respondent.                        

                                 MEMORANDUM OPINION                                   

               LARO, Judge:   This case is before the Court fully                     
          stipulated.  See Rule 122.  Violet A. Reynolds petitioned the               
          Court to redetermine respondent's determination of a $5,805                 
          deficiency in her 1994 Federal income tax and an $1,161                     
          accuracy-related penalty under section 6662(a).  The principal              
          issue we decide is whether payments received by petitioner under            
          a settlement agreement are includable in her gross income.  We              
          hold they are not.1  Unless otherwise stated, section references            
          are to the Internal Revenue Code in effect for the subject year.            
          Rule references are to the Tax Court Rules of Practice and                  
               Petitioner and Gregg P. Kent (Mr. Kent) were involved in a             
          close personal relationship from 1967 until 1991, and they                  
          cohabited as an unmarried couple during the last 24 years of the            
          relationship.  Mr. Kent told petitioner early in the relationship           

               1 The only other issue in dispute is the applicability of              
          the accuracy-related penalty.  Our holding on the principal issue           
          renders this other issue moot.                                              
               2 The parties have stipulated all facts.  The stipulation of           
          facts and the exhibits submitted therewith are incorporated                 
          herein by this reference.  When the petition was filed,                     
          petitioner resided in Seal Beach, California.                               
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