Cliff Connors - Page 17

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               Under the terms of the policy, long-term disability benefits           
          were based on petitioner’s monthly basic earnings at the time               
          that he became totally disabled.  The benefit payments that                 
          petitioner received at the time of his disability, as well as the           
          payments made pursuant to the settlement agreement, were based on           
          the terms of the policy and the coverage it provided and not by             
          reference to the nature of petitioner’s injury.  Petitioner has             
          offered no evidence to the contrary.  Additionally, a fact deemed           
          admitted under Rule 90 is that Connecticut General’s payment of             
          $269,474 to petitioner was in satisfaction of the insurance                 
          company’s requirement to pay 66-2/3 percent of his salary as a              
          disability payment.  Therefore, the exception under section                 
          105(c) is not applicable.                                                   
               Finally, on brief, petitioner argues that “on settlement of            
          that case * * * [he] did not receive all that money, oh no, he              
          received much, much less money from that case.”  He argues that             
          Quadrino & Schwartz retained the larger portion of the lawsuit              
          settlement and denied him access to most of his funds.                      
          Additionally, petitioner argues that the $141,565.77 payment made           
          to petitioner on February 14, 2005, from the Quadrino & Schwartz            
          escrow account should not be taxable to him in 2002 because he is           
          a cash basis taxpayer.                                                      
               As a general rule, when a taxpayer’s litigation recovery               
          constitutes income, the taxpayer is taxable on the contingent fee           

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