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Respondent determined a deficiency of $1,073 in petitioners’
1998 Federal income tax. The issue for decision is whether
petitioners must include in income certain amounts paid to
Hilario M. Aguirre in 1998 as a result of a back injury sustained
in the previous year.
Background
Some of the facts have been stipulated and are so found.
Petitioners are husband and wife. They filed a timely 1998 joint
Federal income tax return. At the time the petition was filed,
they resided in Richmond, Texas. References to petitioner are to
Hilario M. Aguirre.
At all relevant times, petitioner was employed by Anheuser
Busch, Inc. (Anheuser). In 1997, petitioner injured his back and
filed a claim for worker’s compensation benefits. At first his
claim was disputed, but ultimately, in 1998, petitioner was
awarded worker’s compensation benefits totaling $15,852.29 of
which, for reasons explained below, only approximately $9,000 was
paid directly to him.
During the period in which petitioner’s worker’s
compensation claim was under consideration, he entered into an
agreement with Anheuser (the agreement) whereby he was entitled
to receive certain benefits upon the condition that any amount he
received pursuant to the agreement would be repaid from any
worker’s compensation award that he might subsequently receive.
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