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petitioners' Federal income tax for 1997 and a penalty under
section 6662(a) in the amount of $3,164.
The issues for decision are: (1) Whether $55,000 of a
$60,000 payment received by Rose M. Dorroh (petitioner) from her
former employer during 1997 is excludable from gross income under
section 104(a)(2), and (2) whether petitioners are liable for the
penalty under section 6662(a).2
Some of the facts were stipulated. Those facts, with the
annexed exhibits, are so found and are incorporated herein by
reference. At the time the petition was filed, petitioners were
legal residents of San Antonio, Texas.3
Petitioner was an employee of the Defense Finance and
Accounting Service (DFAS), an agency in the U.S. Department of
Defense. At the time her employment with that agency was
mutually terminated during 1997, petitioner had completed
2 At trial, respondent conceded that $5,000, representing
attorney's fees paid by petitioner in recovering the $60,000, is
excludable from gross income pursuant to decisions of the Court
of Appeals for the Fifth Circuit to which this case would be
appealable were it not a small tax case. Srivastava v.
Commissioner, 220 F.3d 353, 365 (5th Cir. 2000), affg. in part,
vacating and remanding in part T.C. Memo. 1998-362; Cotnam v.
Commissioner, 263 F.2d 119 (5th Cir. 1959), affg. in part and
revg. in part 28 T.C. 947 (1957); Golsen v. Commissioner, 54 T.C.
742, 757 (1970), affd. 445 F.2d 985 (10th Cir. 1971).
Additionally, petitioners conceded unreported interest income of
$344.
3 Petitioners are husband and wife and filed a joint
Federal income tax return for 1997. The principal issue, the
$55,000, involves only Mrs. Dorroh.
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