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Mr. Simon’s and petitioner’s meeting with Mr. Brown, there were
no discussions regarding petitioner’s alleged causes of action.
On the basis of the entire record, we conclude that the FDIC
did not provide the settlement proceeds to petitioner on account
of a harm to business reputation claim.11 The record, instead,
favors respondent’s argument that the FDIC settled petitioner’s
lawsuit on account of his allegations that First City Bank’s
actions led to the loss of his Modern World stock. Because we
decide against petitioners with regard to whether the settlement
proceeds were received on account of harm to business reputation,
we conclude that the settlement proceeds were not received on
account of personal injuries or sickness. Accordingly, we need
not address whether the underlying causes of action were based
upon tort or tort type rights. Therefore, we sustain
respondent’s determination.
III. Section 6662(a) Accuracy-Related Penalty
Pursuant to section 6662(a), for the year in issue,
respondent determined an accuracy-related penalty of 20 percent
on the amount of the underpayment attributable to a substantial
understatement of tax. In the alternative, respondent determined
the accuracy-related penalty on the amount of the underpayment
11 Petitioners argue that FCLT was the real payor of the
settlement proceeds. While we disagree, we note that Mr. Simon
and petitioner did not discuss petitioner’s claims with Mr. Brown
and that petitioners have failed to provide any credible evidence
that Mr. Brown was aware of a harm to business reputation claim.
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