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and made her check payable to the Washington State Department of
Revenue.
PCI did not deduct the $160,000 payment on its Federal
income tax return for 2001. PCI issued petitioner a Form 1099-
MISC for the $160,000 payment rather than a Form W-2, Wage and
Tax Statement. PCI did not withhold tax on the $160,000 payment.
Respondent mailed a deficiency notice to petitioner treating
the $160,000 payment as a bonus not a gift, as petitioner
asserts. Petitioner filed a timely petition.
OPINION
Petitioner did not report the $160,000 payment and contends
that it was a gift. Respondent determined that the $160,000
payment was includable in petitioner’s 2001 income and that
petitioner is liable for an accuracy-related penalty. Petitioner
contends that she is not liable for the accuracy-related penalty
because she acted with reasonable cause and in good faith in
reliance upon the advice of her lawyer and tax preparer. We
address each issue in turn.
Inclusion of the $160,000 Payment in Petitioner’s Income5
We first consider whether petitioner should have included
the $160,000 payment in income. Petitioner failed to include
this amount in income on her return even though PCI issued her a
5Petitioner conceded that she bears the burden of proof on
this issue. See Rule 142(a).
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