-5-
PayLess.
On March 17, 1995, pursuant to the above settlement,
petitioner received a payment of $27,184.16 ($8,869.00 back
wages, $18,315 designated as liquidated damages) from which
attorney’s fees of $9,387 were deducted, for a net payment of
$17,797.16.3
Petitioner did not report any portion of the $27,184.16 on
her 1995 income tax return. Respondent determined that
petitioner must include the $27,184.16 in her 1995 gross income.
Respondent also allowed petitioner $8,663 as a miscellaneous
itemized deduction for attorney’s fees incurred to collect back
wages.
Petitioner contends that the $27,184.16 settlement is not
includable in her gross income. She argues that at least 50
percent of her award is attributable to a recovery for the
intentional and/or negligent infliction of emotional distress and
is excludable under section 104(a)(2).
Respondent counters that the $27,184.16 in damages was not
paid on account of personal injuries. Instead, respondent
contends that the settlement proceeds resulted from the claim set
forth in the complaint--the FLSA claim which does not provide for
personal injury compensation. Respondent also contends that any
3 On brief, respondent argues that attorney’s fees should
not be excluded from petitioner’s gross income. However, the
question of whether attorney’s fees are excludable was not raised
by petitioners as an issue in this case. Accordingly, there is
no need to address respondent’s argument.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011