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Petitioners’ main argument is that the payments to Mr.
Broedel were intended by the parties to be “tax free”. Mr.
Broedel and Mr. Lesniak both testified that it was their
understanding that the amount received under paragraph 2 of the
settlement agreement was “tax free”. Petitioners also presented
substantial evidence in the form of letters written by Mr.
Broedel and Mr. Lesniak to several State and Federal officials in
which they maintain that the settlement agreement required Mr.
Broedel to receive “tax free” payments.
The consent award does not provide that the payments were
intended to be “tax free”. Additionally, the testimony of Mr.
Panebianco and the Supplemental Opinion and Award No. 2 rendered
by Mr. Babiskin both indicate that the condition that the
payments be “tax free” was not part of the settlement agreement.
Petitioners also argue that the Form 1099-MISC in the amount of
$29,186.25 was issued as the result of improper coding and that
if the payments had been intended to be taxable, then petitioners
would have received a second Form 1099-MISC reflecting the other
payment. However, it is just as possible that a second Form
1099-MISC was not sent by the State of New York because error
caused only one payment to be coded as taxable when both payments
were intended to be coded as taxable.
We note that even if the parties intended the payments to be
“tax free”, this does not necessarily mean that they are excluded
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