Jesse and Tawara Goode - Page 1

                                 T.C. Memo. 2006-48                                   

                               UNITED STATES TAX COURT                                

                       JESSE AND TAWARA GOODE, Petitioners v.                         
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

          Docket No.  9914-04.               Filed March 21, 2006.                    

                    Ps did not include in their 2001 Federal income                   
               tax return payments totaling $135,000, remitted                        
               pursuant to a settlement agreement entered into between                
               petitioner-husband (P-H) and the District of Columbia.                 
               Under the terms of the settlement agreement, the                       
               proceeds at issue were designated as attorney’s fees                   
               and “claims and out-of-pocket expenses”, and were to be                
               considered as non-taxable amounts pursuant to sec.                     
               104(a)(2), I.R.C.  Ps were not furnished with a timely,                
               properly issued Form 1099-Misc., Miscellaneous Income.                 
                    Held:  Ps are not entitled to exclude the $135,000                
               settlement payment from their gross income under sec.                  
               104(a)(2), I.R.C.  The record does not establish that                  

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