- 5 -
Form W-2. State Farm negotiated and reported the $283,178 of
settlement proceeds on Form 1099-MISC as the amount it would have
paid petitioner if she had become its independent insurance
agent. State Farm negotiated and reported the $425 of settlement
proceeds on Form W-2 with payroll taxes properly withheld as the
amount it would have paid petitioner if it had initially hired
her as a trainee agent.
Petitioner timely filed her Federal income tax return, Form
1040, for the 1992 tax year with the Internal Revenue Service
Center in Fresno, California. Petitioner attached to her 1992
return a Schedule C and a Form 8275 disclosure statement
reporting her receipt of settlement proceeds of $1,383,118 from
State Farm companies in 1992 on account of personal injuries or
sickness from a “very serious auto accident and an intentional
personal discrimination claim”, which were excludable from gross
income under section 104(a)(2). Of this total amount, petitioner
received approximately $1,100,000 from State Farm Mutual Auto
Insurance Company in settlement of a claim for personal injuries
suffered in an auto accident. These personal injury settlement
proceeds are not at issue in this case.
On October 7, 1993, respondent’s District Director mailed
petitioner a letter and Information Document Request (Form 4564)
informing her that her 1992 income tax return had been selected
for examination. On April 8, 1994, petitioner’s counsel mailed
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011