- 7 -7 respondent, was simply an accommodation to relieve Mrs. Marcus of the details of handling the property until it was sold. Consequently, the parties dispute whether the arrangement is more properly characterized as a settlement document by which Mrs. Marcus resolved her claims against her stepfather's estate or as a vehicle that simply facilitated the handling of the property. The parties do not disagree as to the law on this point; however, they have a fundamental disagreement as to the facts. Respondent further argues that even if the rationale of Lyeth controls, it does not automatically make the cash received in compromise of a claim as an heir a tax-free inheritance. Although the settlement of a claim for a portion of the corpus of an estate is excludable from an individual's gross income, the settlement of a claim for lost income results in gross income to the individual. Lyeth v. Hoey, supra; Parker v. United States, 215 Ct. Cl. 773, 573 F.2d 42, 49 (1978); Delmar v. Commissioner, 25 T.C. 1015, 1021 (1956). Respondent fails to fully develop this alternative argument; she apparently believes that petitioners have not shown that any claims compromised were solely for a share of the property. Respondent's final argument is that the arrangement, by using an amount contingent on the future sale price of the property, necessarily contains the potential for an appreciation component that would not be a tax-free inheritance. ThisPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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