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April 27, 1998. Pursuant to that agreement, petitioner received
during 1998 a settlement payment of $30,000.2
On April 15, 1999, petitioner filed her Federal income tax
return for 1998 and, through withholding, paid the full amount of
the tax shown thereon. On the basis of the advice of her then
counsel, who represented her in the dispute with the prospective
employer, petitioner did not report the settlement payment on her
1998 return.
Subsequently, the Internal Revenue Service (IRS) took the
position that petitioner had underreported her income tax for
1998. Petitioner at that point terminated her former counsel and
employed her present attorney, Sudhir R. Patel (Mr. Patel).
Although the record contains no information on the course or
manner of resolution of any ensuing examination, on May 21, 2001,
respondent assessed additional tax and a penalty under section
6662 for 1998 in the respective amounts of $10,602 and $1,399.
Respondent also on that date assessed interest due for 1998 in
the amount of $1,705.41. Petitioner was sent notices of balance
due on May 21 and June 25, 2001.
2 Although documents and testimony contained in the record
are inconsistent as to whether the settlement payment was $30,000
or $35,000, the settlement agreement itself and other
contemporaneous material recite the $30,000 figure. In any
event, the discrepancy is immaterial to the issues we consider in
this proceeding.
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