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moving expenses and pay for their temporary stay at an Embassy
Suites hotel. Authentic Fitness arranged for petitioner’s move
and paid the expenses directly to the service providers.
Petitioner stayed at an Embassy Suites hotel and worked in
Irwindale for 3 months. Then the company filed for bankruptcy.
Petitioner’s employment terminated, and she received severance
pay. Petitioner then moved back to Reno, Nevada, at her own
expense. As a result of the bankruptcy, Warnaco became the
surviving owner of the Authentic Fitness assets and business.
In connection with petitioner’s move and in accordance with
the policies of her employer, the following amounts were paid on
petitioner’s behalf directly to the service providers. The
amounts paid by Authentic Fitness were:
For moving personal belongings $ 3,759.87
For lodging 8,241.24
For meals 1,705.54
For maintenance of former residence 339.99
Total amount paid to third parties $14,046.64
Authentic Fitness attributed the entire amount it paid to third
parties as income to petitioner. In addition, Authentic Fitness
paid directly to petitioner $7,464.34 for what was identified as
“Total Tax Liability Gross-Up”, intended to compensate or
reimburse petitioner for any Federal and State income taxes that
might be due on this additional income. Thus, the $14,046.64
paid to third-party providers and the $7,464.34 paid directly to
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Last modified: May 25, 2011