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SF 50 is part and parcel of the mediation agreement and,
therefore, establishes that the $60,000 represented payment for
personal physical injuries.5 The Court rejects that argument.
The mediation agreement carefully recites the various bases upon
which settlement was reached. Petitioner's on-the-job injury is
not listed in the mediation agreement. Indeed, if petitioner's
contention is correct, and the work-related injury is deemed to
have been part of the mediation agreement, such a conclusion
could seriously impair petitioner's entitlement to worker's
compensation benefits because the agreement was intended to
settle all differences between the parties. Petitioner, however,
at the time of trial, continued pursuing her worker's
compensation case. On this record, the Court is satisfied that
the $60,000 payment to petitioner by DFAS did not include any
amount for physical injuries or physical suffering. Respondent,
therefore, is sustained on this issue.
The final issue is whether petitioners are liable for the
accuracy-related penalty under section 6662(a) for a substantial
understatement in tax or for negligence or disregard of rules and
regulations. Section 6662(a) provides that, if it is applicable
to any portion of an underpayment in taxes, there shall be added
5 As noted earlier, SF 50, in the Remarks portion, stated
that petitioner was resigning her employment because of "medical,
mental, and physical trauma".
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