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Petitioners contend that the $25,000 payment was a gift
because Dr. Hestir said during the medical board hearing that it
was a gift. We disagree. At that hearing, Dr. Hestir testified:
(1) Petitioner took the money; and (2) petitioner said it was a
gift and not blackmail, to which Dr. Hestir responded by saying:
“Yes”. We take this testimony only to mean that petitioner
wanted it to be a gift.
Petitioners contend that Dr. Hestir paid the $25,000 out of
a feeling of guilt or moral obligation. Petitioners point out
that a newspaper article states that Dr. Hestir said he paid
petitioner, ended the affair, and reported himself to the medical
board because of his guilty conscience. A payment made because
of the constraining force of moral or legal duty is not a gift.
Id.
Dr. Hestir’s accountant filed the Form 1099-MISC a few days
after the medical board hearing. Petitioners contend that Dr.
Hestir did that to punish petitioner for reporting the matter to
the medical board and to incorrectly make it appear that the
$25,000 payment was not a gift. We disagree; the payment was not
actually a gift.
Petitioners contend that the $25,000 is not income because
they did not receive the Form 1099-MISC. We disagree.
Nonreceipt of a Form 1099 does not make a taxable item
nontaxable. See Bond v. Commissioner, T.C. Memo. 2005-251;
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