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T.C. Memo. 1997-72.
Petitioners did not act with reasonable cause and in good
faith in failing to include the DFAS settlement as gross income
on their 1997 return. Prior to filing their return, petitioners,
through their attorney, contacted DFAS about the Form 1099 issued
by DFAS requesting that it be corrected. Petitioners were
advised in two letters from the attorney for DFAS that the
payment to them was not for personal injuries and could not be
excluded from gross income under section 104(a)(2). There is no
showing that petitioners contacted any other professional
advisors on this question. They simply chose to ignore the Form
1099 and did not include the payment as income on their 1997 tax
return. Respondent, therefore, is sustained on this issue.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
under Rule 155.
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