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Respondent determined a deficiency in petitioner’s 2000
Federal income tax of $8,887. After a concession by petitioner,1
the issue for decision is whether petitioner’s gross income
includes $50,000 of settlement proceeds she received from her
former employer.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts with attached exhibits, and an
additional exhibit admitted at trial, are incorporated herein by
this reference. At the time the petition was filed, petitioner
resided in Redding, California.
Petitioner began working as a special education teacher for
the Shasta County Office of Education (SCOE) in 1986. By the
late 1990s, petitioner’s relationship with SCOE had deteriorated
significantly. In 1999, SCOE had petitioner evaluated by a panel
of mental health experts and filed a complaint against her in
State court. The complaint alleges that petitioner is mentally
unfit to teach and seeks to place her on mandatory sick leave.
SCOE filed the complaint as part of its efforts to terminate
petitioner’s employment.
1 Petitioner concedes that a $491 income tax refund she
received from the State of California is taxable. The remaining
adjustment in respondent’s notice of deficiency is computational;
therefore, we do not address it.
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