T.C. Memo. 1998-75
UNITED STATES TAX COURT
EDWARD W. AND VIRGINIA K. REIHER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16449-96. Filed February 23, 1998.
Virginia K. Reiher, pro se.
Mark A. Weiner, and Steven M. Roth, for respondent.
MEMORANDUM OPINION
LARO, Judge: This case is before the Court fully
stipulated. See Rule 122. Edward W. and Virginia K. Reiher
petitioned the Court on July 30, 1996, to redetermine
respondent's determination of a $37,556 deficiency in their 1992
Federal income tax. Following concessions by petitioners, the
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only remaining issue is whether section 104(a)(2) allows them to
exclude from their gross income $149,990 of settlement proceeds
received from State Farm Insurance Co. (State Farm). We hold it
does not. Section references are to the Internal Revenue Code in
effect for the year in issue. Rule references are to the Tax
Court Rules of Practice and Procedure.
Background
All the facts have been stipulated and are so found. The
stipulated facts and the exhibits submitted therewith are
incorporated herein by this reference. Petitioners resided in
Ventura, California, when they petitioned the Court. They filed
a 1992 Form 1040, U.S. Individual Income Tax Return, using the
filing status of "Married filing joint return".
Mrs. Reiher was a claimant in the class action lawsuit (the
Lawsuit) entitled Kraszewski, et al. v. State Farm Gen. Ins. Co.
The Lawsuit was filed against State Farm in the U.S. District
Court for the Northern District of California on June 1, 1979, on
behalf of a class of women who alleged that State Farm had
engaged in sex discrimination during the recruitment, hiring, and
training of women for insurance sales agent positions within
California, in violation of Title VII of the Civil Rights Act of
1964, Pub. L. 88-352, 78 Stat. 241.
On April 29, 1985, the District Court ruled that State Farm
was liable for gender discrimination. See Kraszewski v. State
Farm Gen. Ins. Co., 38 Fair Empl. Prac. Cas. (BNA) 197 (N.D. Cal.
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1985), affd. 912 F.2d 1182 (9th Cir. 1990). The District Court
found that women who attempted to become State Farm trainee
agents were "lied to, misinformed, and discouraged in their
efforts to attain the entry level sales position."
In 1992, State Farm issued Mrs. Reiher and her attorney a
check for $149,990 to release her claims against State Farm.
Mrs. Reiher's attorney received $37,841 of this amount, and she
received the rest. Mrs. Reiher did not report any of the
$149,990 amount on petitioners' 1992 tax return.
On May 2, 1996, respondent issued petitioners a notice of
deficiency for 1992. The notice stated that the $149,990 amount
was taxable income to them. The notice also stated that
petitioners could deduct the $37,841 payment as a miscellaneous
itemized deduction subject to the 2-percent floor of section 67.
Discussion
The instant case requires the Court to revisit the
taxability of the proceeds received by a claimant who was a
member of the class of plaintiffs in Kraszewski v. State Farm
Gen. Ins. Co. In each of our prior cases, we held that none of
the proceeds were excludable from the petitioning taxpayer's
gross income. See Easter v. Commissioner, T.C. Memo. 1998-8;
Brewer v. Commissioner, T.C. Memo. 1997-542; Gillette v.
Commissioner, T.C. Memo. 1997-301; Hayes v. Commissioner,
T.C. Memo. 1997-213; Hardin v. Commissioner, T.C. Memo. 1997-202;
Raney v. Commissioner, T.C. Memo. 1997-200; Clark v.
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Commissioner, T.C. Memo. 1997-156; Berst v. Commissioner, T.C.
Memo. 1997-137; Martinez v. Commissioner, T.C. Memo. 1997-126;
Fredrickson v. Commissioner, T.C. Memo. 1997-125. We hold
similarly today. Petitioner has presented no new arguments which
would change our view on the instant issue, and we continue to
adhere to our view as espoused in those memorandum opinions for
the reasons stated therein.
To reflect the foregoing,
Decision will be entered
for respondent.