Robert Henry Lehmuth - Page 3

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          effect for the year in issue, and all Rule references are to the            
          Tax Court Rules of Practice and Procedure.                                  
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the accompanying exhibits are                  
          incorporated herein by this reference.  Petitioner resided in               
          Orange, California, at the time the petition was filed.                     
               Respondent determined a deficiency of $4,056 in petitioner’s           
          1998 Federal income tax.  After a concession,1 the issues for               
          decision are:  (1) Whether the amounts petitioner actually or               
          constructively received in settlement of a suit for unpaid                  
          overtime wages constitute gross income to petitioner, and (2) if            
          so, whether petitioner constructively received a portion of the             
          settlement proceeds that his attorney did not remit to him.                 
               Prior to the year in issue, petitioner was employed as a               
          laboratory manager (lab manager) by Kits Camera, Inc. (Kits).2              
          In June 1997, petitioner, along with five other individuals,                
          filed a class action lawsuit in the Superior Court for the State            
          of California for the County of Orange against Kits for damages             
          for failure to pay overtime compensation and for failure to pay             

               1Petitioner concedes that he is liable for the 10-percent              
          additional tax under sec. 72(t) of $41 for an early distribution            
          of $414 from a retirement account.                                          
               2At some point during or prior to 1998, Kits Camera, Inc.,             
          changed its name to Kits Sunset, Inc.                                       

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