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of the backpay award was based on the decision in Bennett v.
United States, supra. They also attached copies of the Bennett
decision and other documents supporting the exclusion to the
return.
Prior to the expiration of the applicable period of
limitations on assessment, respondent conducted an examination of
petitioners’ 1993 Federal income tax return. On December 31,
1996, respondent issued an examination report that determined the
entire settlement award received from Northwest Airlines was
fully taxable to petitioners, citing the United States Supreme
Court’s decision in Commissioner v. Schleier, 515 U.S. 323
(1995).2 The examination report was respondent’s first written
contact with petitioners.
From the time petitioners received the examination report
until approximately February 25, 1997, petitioners considered the
report and consulted with their return preparer concerning it.
On February 25, 1997, petitioners signed Form 4549-CG consenting
to the assessment of the additional tax proposed in the
examination report and submitted it to respondent with a check in
the amount of $10,332. On February 28, 1997, respondent received
2The examination report also pointed out that the Bennett
case on which petitioners had relied was reversed in an
unpublished per curiam decision based on the Supreme Court’s
decision in Commissioner v. Schleier, 515 U.S. 323 (1995). See
Bennett v. United States, 30 Fed. Cl. 396 (1994), revd. without
published opinion 60 F.3d 843 (Fed. Cir. 1995).
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