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On March 16, 1995, respondent issued a notice of deficiency to
Mr. Sullivan, determining that he had additional interest income in
1990 of $151,844 from the personal injury settlement. Mr. Sullivan
filed a petition with this Court contesting that determination.
That case was resolved following a concession by respondent that
the interest was not includable in the gross income of Mr. Sullivan
for 1990.
In the notice of deficiency giving rise to this case, dated
February 20, 1998, respondent determined that Mr. Sullivan had
$303,848.70 in unreported interest income from the satisfaction of
the personal injury judgment, and $21,853 in salary income and $12
in dividend income from McDonald's Corp. (Respondent now concedes
that Mr. Sullivan did not have salary or dividend income from
McDonald's Corp. for 1989.) Respondent further determined that Mr.
Sullivan was entitled to a Schedule A miscellaneous itemized
deduction in the amount of $101,276 for attorney's fees incurred in
connection with earning the interest income.
Discussion
The dispute in this case involves the year in which petitioner
must report as income interest received on a judgment award and the
amount thereof. Petitioner argues that: (1) Because his receipt
of the judgment award was subject to substantial restrictions, he
did not have actual or constructive receipt of the interest in
1989, as respondent claims; and (2) the amount of interest he
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