- 3 -
On the basis of third-party information reported to the IRS,
respondent determined that petitioner failed to report relatively
small amounts of capital gain/dividend income, interest income,
and pension/annuity income (investment income), as well as $17,818
of nonemployee consulting compensation and $58,000 of the $85,000
he received from MVEDC in connection with settlement of a lawsuit.
See infra. Petitioner concedes error in his failure to report the
various amounts of investment income, as well as the $17,818 of
nonemployee consulting compensation, but he disputes the
taxability of $58,000 of the $85,000 in settlement proceeds he
received from MVEDC, claiming that portion was nontaxable
compensation for personal injuries. Moreover, petitioner claims
entitlement to deductions for certain expenses in connection with
his lawsuit against MVEDC and in rendering his consulting
services.
From 1980 until he was dismissed on July 27, 2000, petitioner
was a loan officer for MVEDC. For several months before his
dismissal, petitioner had been cooperating with the FBI and the
U.S. Department of Justice in providing files, correspondence, and
other documents pertaining to certain of MVEDC’s activities. In
2003, petitioner brought suit against MVEDC2 for terminating his
2Petitioner’s lawsuit, in addition to naming MVEDC, included
MVEDC’s executive director and treasurer and Mahoning Valley
Industrial Loan Fund as defendants.
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