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labeled “Payment for: Satisfaction of Judgment” and, by
numerical coding reflected on the check, the $195,477 was
allocated by the State's Insurance $70,000 to medical expenses
and $125,477 to interest.
The total amount petitioner received from both the Doctor's
Insurance and the State's Insurance was $320,880 ($125,403 plus
$195,477 equals $320,880).
On February 21, 1993, petitioner signed an agreement (the
Agreement) which, in exchange for payment of the $125,403 from
the Doctor's Insurance, released petitioner's doctor and the
Doctor's Insurance from any further liability with respect to the
medical treatment petitioner received relating to bacterial
endocarditis.
In approximately February of 1993, a document entitled
“Satisfaction of Judgment” (the Satisfaction of Judgment
document) was signed by petitioner's lawyers in which it was
represented that by payment of the $125,403 petitioner's doctor
and the Doctor's Insurance satisfied their portion of the above
court judgment and that by payment of the $195,477 the State's
Insurance satisfied its portion of the court judgment, except for
petitioner's future medical costs.
For 1993, petitioners timely filed a joint Federal income
tax return on which petitioners excluded from reported gross
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Last modified: May 25, 2011