Taxable Payments

Payments a woman got for agreeing to be faithful to her boyfriend are taxable. After dating for about a year, a couple pledged their fidelity to each other in writing. The agreement required him to pay her $400,000. Later, he accused her of cheating. They broke up and he sued her. He also filed a 1099 Misc, reporting the payment. A state court found that she defauded him and required her to repay the $400,000.  Still, the Tax Court says she owes tax on the amount.

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