George G. Green - Page 18

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               other damages received via Jury Verdict and finally by                 
               the Release and Settlement Agreement of November 17,                   
               1995.                                                                  
          Additionally, with respect to petitioner’s interest in TS                   
          Capital, petitioner reported losses in the amount of $30,587.               
          Petitioner’s return for 1999 showed no tax due.  Petitioner also            
          claimed a $100,000 deduction for legal fees.                                
               On July 13, 2001, petitioner filed Forms 1040X, Amended U.S.           
          Individual Income Tax Return, for 1996, 1997, and 1998, stating,            
          among other things, that “$95,088 of reported income was not                
          includable in taxpayer income.  Section 104(a)(2) establishes               
          taxpayer guidance for excludability, along with RR 65-29 and                
          RR 76-133 and PL 97-473.”  This resulted in petitioner’s                    
          requesting a refund of $7,654 for 1997.                                     
          Internal Revenue Service (IRS) Determinations                               
               In connection with the damages awarded to petitioner under             
          the settlement agreement, the IRS determined that all amounts               
          received by petitioner in 1995, 1996, 1997, 1998, and 1999 were             
          taxable income.                                                             
               In connection with Green Capital and TS Capital, the IRS               
          disallowed all losses and subsequent carryforward losses claimed            
          by petitioner in 1995, 1996, 1997, 1998, and 1999.  The IRS also            
          disallowed the $100,000 itemized deduction petitioner claimed in            
          1999.                                                                       







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