                          T.C. Memo. 1997-213



                        UNITED STATES TAX COURT



                 TOMMY JEAN HAYES, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No.   4534-96.                        Filed May 7, 1997.



     Tommy Jean Hayes, pro se.

     Eric D. Stenson, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     LARO, Judge:     Tommy Jean Hayes petitioned the Court to

redetermine respondent's determination of a $50,200 deficiency in

her 1992 Federal income tax and a $2,448 addition thereto under

section 6651(a)(1).    Following concessions, the only remaining

issue is whether section 104(a)(2) allows petitioner to exclude
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from her gross income $220,723 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.   Dollar amounts are rounded to the

nearest dollar.

                          FINDINGS OF FACT

     Most of the facts have been stipulated and are so found.

The stipulated facts and the exhibits submitted therewith are

incorporated herein by this reference.   Petitioner resided in

San Diego, California, when she petitioned the Court.

     Petitioner was a claimant in the class action lawsuit (the

Lawsuit) entitled Kraszewski 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, 253.

     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 Emp. Prac. (BNA) Cas. 197 (N.D. Cal.

1985).   The District Court found that women who attempted to

become State Farm trainee agents were "lied to, misinformed, and
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discouraged in their efforts to obtain the entry level sales

position."   One year later, the District Court ordered hearings

to determine individual liability and damages.

     The District Court referred the Lawsuit to Judge Eugene

Lynch as mediator.   After September 24, 1991, under Judge Lynch,

State Farm and class action counsel started negotiations to

attempt to settle the claims of individual litigants.   As a

result of the negotiations, a Master Settlement Agreement was

reached on January 17, 1992.   The agreement provided a formula

for the computation of damages that State Farm would offer to

each claimant, who was free to accept or reject the offer.

     On or around January 17, 1992, the District Court provided

petitioner with a document entitled "Communication of State

Farm's Settlement Offer", accompanied by a "Summary of Terms of

State Farm's Settlement Offer", which had been reviewed and

approved by Judge Lynch.    State Farm offered petitioner $204,523

to release her claims against State Farm.   The offer was

conditioned upon acceptance of State Farm's offers by at least

87.5 percent of the 821 final claimants represented by class

action counsel to whom offers of that type had been extended.

The $204,523 represented 37 percent of the full Consent Decree

value of petitioner's claim.

     The offer also provided that petitioner would share in any

"incentive cash" payable.   This was an additional amount computed

under a formula based upon the number of percentage points by
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which the acceptance of State Farm's offers exceeded 90 percent.

The maximum incentive payment was $18,000.

     Petitioner accepted State Farm's offer, and State Farm

issued a $220,723 check during 1992, payable to petitioner and

class action counsel.   The check represented the $204,523

settlement of her claim and a $16,200 incentive payment.     Of the

total payment of $220,723, $44,133 was retained by class action

counsel as legal fees, $59 was applied to costs relating to the

settlement distribution, and $5,000 was withheld as a

contribution by petitioner to an appreciation fund.   Petitioner

received the balance.

     Petitioner did not report any of the $204,523 settlement

amount or any of the $16,200 incentive payment on her 1992

Federal income tax return.   On January 2, 1996, respondent issued

petitioner a notice of deficiency for 1992.   The notice stated

that the settlement amount and incentive payment aggregating

$220,723 were includable in petitioner's gross income for 1992,

and that petitioner was allowed to deduct 20 percent of this

amount ($44,145) for related legal fees.

                              OPINION

     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
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gross income.   See Hardin v. Commissioner, T.C. Memo. 1997-202;

Raney v. Commissioner, T.C. Memo. 1997-200; Clark v.

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.

     Petitioner's primary argument is that she received her

proceeds under a cause of action arising from the Civil Rights

Act of 1991 (the CRA of 1991), Pub. L. 102-166, sec. 102, 105

Stat. 1071, 1072-1073, and that the CRA of 1991 provides tort

type damages that compensate for personal injury.        Petitioner

argues that the CRA of 1991 governs her case because Judge Lynch

signed State Farm's offer to the class after the CRA of 1991 was

signed into law.   We considered petitioner's primary argument in

Clark v. Commissioner, supra, and we rejected it there.        We do

likewise today.

     We hold for respondent.   In so doing, we have considered all

arguments made by petitioner for a contrary holding, and, to the

extent not discussed above, find them to be irrelevant or without

merit.   To reflect concessions by respondent,

                                            Decision will be entered

                                       under Rule 155.
