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Respondent determined a deficiency of $2,800 in petitioner’s
1999 Federal income tax. This Court must decide whether
petitioner must include proceeds from a legal settlement in gross
income.
This case was submitted fully stipulated pursuant to Rule
122. All of the facts stipulated are so found. Petitioner
resided in Concord, California, at the time she filed her
petition.
On her 1999 Federal income tax return, petitioner did not
report $10,000 from settlement proceeds. Respondent determined
that petitioner was required to report this $10,000 as income.
During 1999, petitioner received $10,000 in settlement (the
settlement proceeds) of a dispute between petitioner and a Salt
Lake City, Utah, television station (the television station).
The dispute arose out of a 1998 television news report (the news
report) concerning petitioner’s role as a court-appointed monitor
of a consent decree following a civil rights class action
involving the State of Utah’s child welfare system. The news
report contained statements that petitioner believed were false
and defamatory. Petitioner and her three children also believed
they were subject to harassment and embarrassment as a result of
the news report.
Petitioner engaged in several discussions with the
television station’s counsel regarding the potential legal claims
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