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$19,253. The parties have resolved some of the adjustments that
were in controversy, and the following issues remain for our
consideration: (1) Whether any portion of a $4,997,896 lawsuit
settlement is excludable under section 104(a)(2); (2) whether the
portion of the settlement paid to petitioner’s attorneys under a
contingency fee arrangement should be included in petitioner’s
gross income; and (3) whether petitioner is liable for an
accuracy-related penalty under section 6662(a).
FINDINGS OF FACT2
Petitioner resided in Mobile, Alabama, at the time his
petition was filed in this case. Petitioner purchased an
automobile dealership in Mobile, Alabama, in 1982, and James R.
Jordan (Jordan) was his sales manager. Around 1985, petitioner
was advised of the availability for sale of a Toyota automobile
dealership in Enterprise, Alabama. Representations were made by
the sellers to petitioner concerning the amount of vehicles sold
each month and the profits that could be expected. Petitioner
and Jordan became interested in purchasing the Toyota dealership
and provided personal information to the sellers, Toyota-GMC of
Enterprise, Inc., an Alabama corporation. Petitioner and Jordan
1(...continued)
consideration, and Rule references are to this Court’s Rules of
Practice and Procedure.
2 The parties’ stipulations of fact and exhibits are
incorporated by this reference.
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