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income tax for 2000 in the amount of $2,998.
The issue for decision is whether a $20,000 payment that
David Gerald Lockmiller (petitioner) received in 2000 from his
former employer is excludable from gross income under section
104(a)(2). We hold that it is not.
Background
Some of the facts have been stipulated, and they are so
found. Petitioner resided in San Francisco, California, at the
time that his petition was filed with the Court.
From July 1988 to January 2000, petitioner was employed by
UC Construction Co. of Corte Madera, California (UC Construction)
as an accountant/bookkeeper. Petitioner’s employment with UC
Construction terminated on January 28, 2000, because of a dispute
that arose between the parties concerning the terms of
petitioner’s compensation package, particularly with regard to
profit-sharing.
In April 2000, petitioner and UC Construction entered into a
Settlement Agreement. Shortly thereafter, and pursuant to the
terms of that document, petitioner received a lump-sum payment of
$20,000 from UC Construction.2 In exchange, petitioner agreed
“not to make any future claims against UC Construction for
salary, vacation pay, or any other benefits to which he claims to
2 The Settlement Agreement provided that “If at all, UC
Construction will report this payment by way of 1099-MISC form
for miscellaneous income for the year 2000.”
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