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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).
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