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Four minutes after petitioner filed the second amended
complaint, the parties filed a request for dismissal, which the
court entered the same day.
Federal Tax Return
Petitioners filed their Federal income tax return for 1998,
reporting taxable income of $108,004.08 and tax of $24,907.
Petitioners reported wages paid to petitioner of $141,000 from
Summus Group, Ltd., shown on a W-2, Wage and Tax Statement.
Petitioners received a Form 1099-MISC, Miscellaneous Income, from
ProGuard for $90,684.92 of nonemployee compensation. When
preparing petitioners’ return, Stevenson was told that the
lawsuit settled after the parties agreed that a claim for
personal injury could be added by petitioner and that the payment
was made based on physical injury. Stevenson did not review the
entire second amended complaint or the other two complaints prior
to preparing petitioners’ return.
Petitioners included an attachment to their return, with a
copy of the Form 1099, stating that the $90,684.92 was
“excludable from taxpayer’s taxable income pursuant to section
104(a)(2)” and was therefore not reported on their return as
income.
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Last modified: May 25, 2011