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effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Respondent determined a deficiency in petitioner’s Federal
income tax of $12,229, and an accuracy-related penalty of $2,446,
for the taxable year 1999.
The issues for decision are: (1) Whether a $50,000 payment
petitioner received in 1999 is excludable from gross income under
section 104(a)(2), and, if not, whether the portion of the
payment retained by petitioner’s attorney is includable in
petitioner’s income; and (2) whether petitioner is liable for the
accuracy-related penalty under section 6662(a) for a substantial
understatement of tax.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Riverside, California, on the date the petition was filed in this
case.
In June 1996, petitioner began working as a loss prevention
agent for the May Department Stores Company, d.b.a. Robinsons-May
(“the May Company”). On March 23, 1997, petitioner was injured
while working at one of the May Company department stores. In
attempting to apprehend a disabled shoplifter, petitioner’s hand
became stuck in a wheelchair, causing injury to her right thumb
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