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Respondent determined a deficiency in petitioners’ Federal
income tax (tax) for 1998 in the amount of $4,763.
The issue for decision is whether the $29,000 settlement
amount (settlement amount at issue) that petitioner Naylene M.
Nield (Ms. Nield) received in 1998 in settlement of a claim
against her employer is excludable from petitioners’ gross income
under section 104(a)(2). We hold that it is not.
Background
Most of the facts have been stipulated and are so found.
Petitioners resided in Cedar City, Utah, at the time they
filed the petition in this case.
On September 5, 1989, Ms. Nield began working for Goer
Manufacturing, Inc. (Goer). On or about July 9, 1992, Goer
terminated her employment.
On December 31, 1992, Ms. Nield filed a claim (State claim)
against Goer with the State of Utah Industrial Commission, Anti-
Discrimination Division (Utah Industrial Commission) consisting
of two affidavits by Ms. Nield (Ms. Nield’s affidavits) in which
she alleged employment discrimination, sexual harassment, and
retaliation.2 One of Ms. Nield’s affidavits alleged that “when
* * * [Ms. Nield’s supervisor] would walk past me he would lift
up his elbow and bump into my breast.”
2Although the record is unclear, it appears that at some
time after Ms. Nield filed the State claim, that claim was
referred to the Equal Employment Opportunity Commission (EEOC).
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