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parties stipulated that “Petitioner was paid $170,000 from [sic]
the State of Maryland on account of her successful prosecution of
a claim for wrongful discharge and back wages.”
Gross income means all income from whatever source derived.
Sec. 61(a). On the record before us, we find that petitioner has
failed to carry her burden of establishing that the entire amount
of the $170,000 settlement should be excluded from her gross
income. On that record, we further find that petitioner has
failed to carry her burden of establishing that the $84,500
contingency fee that she paid to Mr. Ober out of the $170,000
settlement should be excluded from her gross income. Commis-
sioner v. Banks, 543 U.S. 426, 430 (2005) (holding that, as a
general rule, where a litigant’s recovery constitutes income, the
litigant’s income includes the portion of the recovery paid to
6(...continued)
Based upon the above information you have stated
that your client intends to claim a higher number of
exemptions than she in fact has in order to substan-
tially reduce the projected withholding of $60,136. In
your estimation, the number of exemptions will be well
above the 2 exemptions that she claimed prior to her
termination. It is your opinion, based upon advice
from a tax expert, that the number will be legally
defensible because it reflects a good faith projection
of Mrs. Messina’s tax liability. Further, you have
stated that Mrs. Messina fully understands that her
claim may subject her to an inquiry by the I.R.S. and
that there may be negative tax consequences and/or
penalties because of her decision to claim higher
exemptions. [Reproduced literally.]
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