- 13 - L. “Tax Consistency” Letter A letter dated June 8, 1994, addressed to Peter Hobler and signed by David Fleisher, the chief financial officer of Maritz Inc., states that “It is understood” by Maritz Inc. that the settlement payments to Katherine and Damian “are, and for income tax purposes shall be treated as, payments in settlement of claims for personal damages” and therefore “do not require reporting on Form 1099 or any other applicable information reporting form.” M. Settlement Payments, Tax Reporting, and Examination On July 7, 1994, Katherine and Damian received checks from Maritz Inc. in amounts of $500,000 and $250,000, respectively. Maritz Inc. issued no Form 1099 to Katherine or Damian. Petitioners did not report the settlement payments on their respective 1994 joint Federal income tax returns. On June 5, 1998, respondent commenced examination of petitioners’ 1994 Federal income tax returns. On October 6, 2000, by separate notices of deficiency, respondent determined that the settlement payments were includable in petitioners’ respective taxable incomes for 1994.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011