Robert Henry Lehmuth - Page 6

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               Mr. Davis and petitioner never entered into a written                  
          agreement permitting Mr. Davis to retain the $2,500 at issue.               
          Petitioner made several requests to Mr. Davis for his $2,500                
          between the date of the settlement agreement and the date of                
          trial, but Mr. Davis never sent the money to petitioner.                    
               Petitioner failed to report any of the settlement proceeds             
          on his 1998 Federal income tax return.  On September 6, 2000,               
          respondent mailed to petitioner a notice of deficiency in which             
          respondent determined a deficiency of $4,056 in petitioner’s                
          Federal income tax for 1998.  Respondent determined that                    
          petitioner failed to include as income the entire $15,000 of the            
          settlement proceeds.                                                        
               Respondent contends that the settlement proceeds are taxable           
          to petitioner.  Respondent’s position is that the full amount of            
          the $15,000 proceeds to which petitioner is entitled is                     
          includable in petitioner’s gross income for 1998 because                    
          petitioner actually received $12,500 and constructively received            
          $2,500 during that year.3                                                   

               3We note that respondent might have raised an argument that            
          petitioner should include in income his pro rata share (1/2) of             
          the attorney’s fees paid to Mr. Davis.  See Benci-Woodward v.               
          Commissioner, 219 F.3d 941 (9th Cir. 2000), affg. T.C. Memo.                
          1998-395; Kenseth v. Commissioner, 114 T.C. 399, affd. 259 F.3d             
          881 (7th Cir. 2001).  However, respondent did not raise this                
          issue, and we do not consider it.  This Court repeatedly has held           
          that we do not consider issues that have not been pleaded.  See             
          Foil v. Commissioner, 92 T.C. 376, 418 (1989), affd. per curiam             
          920 F.2d 1196 (5th Cir. 1990); Markwardt v. Commissioner, 64 T.C.           
          989, 997-998 (1975) (and cases cited therein).                              

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