Madeline A. Coblenz and William J. Mason - Page 21

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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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