- 6 - On his 1995 Federal income tax return, petitioner did not include in gross income any of the amounts received by him in settlement of the class action. Petitioner claimed the standard deduction under section 63(c). In the notice of deficiency, respondent determined that the entire amount of $52,975 allocated to petitioner in the settlement constituted gross income and that petitioner was entitled to an itemized deduction of $18,292 for the attorney's fees and costs allocable to petitioner. Because petitioner had claimed the standard deduction, respondent disallowed the standard deduction and substituted that with an allowed itemized deduction of $18,292. At trial, respondent conceded that petitioner was entitled to an additional itemized deduction of $2,222 for charitable contributions. Petitioner conceded that $6,000 of his award as compensation for participation in the class action constituted gross income. Petitioner, however, challenged the back pay of $14,116.97 and the liquidated damages of $32,858.21.2 Petitioner contends that the amount he received in the 2 Petitioner has not challenged respondent's inclusion of the $18,292 for attorney's fees in gross income and allowance of that amount as an itemized deduction. The $18,292 in attorney's fees is subject to the 2-percent limitation under sec. 67(a). See Miller v. Commissioner, T.C. Memo. 2001-55; Benci-Woodward v. Commissioner, 219 F.3d 941 (9th Cir. 2000).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011