- 10 - Petitioner’s Federal income tax returns, beginning in 1985 or 1986, were prepared by Von A. Gammon (Gammon), who at the time he prepared petitioner’s 1994 return had been practicing accounting for 10 years. Gammon was not aware that HGTG had filed a 1994 return. Gammon also knew that petitioner had an unused loss carryover of $200,000 in connection with HGTG because petitioner did not have sufficient basis to claim the loss. Because of Gammon’s knowledge of HGTG’s creditors and outstanding debt, he believed that any 1994 return for HGTG would show losses, which petitioner could not claim because he did not have sufficient basis. Accordingly, no income or loss from HGTG was reflected on petitioner’s 1994 return. Based on his above understanding, Gammon did not inquire about the status of HGTG’s 1994 taxable year or whether a return was to be or had been filed. Petitioner’s stock in HGTG was worthless as of December 31, 1994. OPINION The issues for our consideration in this case require an analysis of whether any portion of the settlement proceeds received by petitioner or on his behalf may be excluded from petitioner’s gross income. First, we consider whether any portion is excludable under section 104(a)(2). If some portion is includable, we shall then consider whether petitioner wasPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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