Michael Thomas Prasil and Lori Lynn Prasil - Page 2

                                        - 2 -                                         
          (hereinafter referred to individually as Mr. and Mrs. Prasil)               
          Federal income tax for the taxable year 1999 in the amount of               
          $2,183.                                                                     
               After concessions by the parties,2 the issue for decision is           
          whether a $7,650 payment that Mrs. Prasil received in 1999 in               
          settlement of a claim against her former employer is excludable             
          from petitioners’ gross income under section 104(a)(2).  We hold            
          that it is not.                                                             
                                  FINDINGS OF FACT                                    
               Some of the facts were stipulated, and they are so found.              
          Petitioners resided in Iowa Park, Texas, at the time that the               
          petition was filed with the Court.                                          
               For a few months ending in early 1995, Mrs. Prasil worked              
          for Heartland Realty Investors, Inc. (Heartland) in Rochester,              
          Minnesota.  Mrs. Prasil’s boss was an individual by the name of             
          Gary Lakner (Mr. Lakner).  Mrs. Prasil alleged that during her              
          brief tenure at Heartland, Heartland and Mr. Lakner subjected her           
          to sex discrimination and harassment.  The record does not                  
          disclose the nature of the alleged sex discrimination that she              
          experienced.                                                                


               2  Petitioners concede that they failed to report: (1)                 
          Interest income, (2) pension and annuity income, and (3)                    
          additional tax under sec. 72(t) on a premature distribution from            
          a qualified retirement plan.  Respondent concedes that                      
          petitioners are not liable for self-employment tax under sec.               
          1401, and hence they are not entitled to a self-employment tax              
          deduction under sec. 164(f).                                                




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