William J. Broedel and Joan C. Broedel - Page 14




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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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