- 16 -16
The suit was settled in 1965; the plaintiffs each received
$175,000. In Parker v. United States, supra at 43-44, the Court
of Claims stated:
The Internal Revenue Service determined that the
settlement transaction resulted in the sale or exchange
of a capital asset, namely, the taxpayers' "claim"
against Bertha's estate, that a substantial amount of
capital gain, attributable to the appreciation of the
claim over the some twenty years it remained unasserted
was thereby realized, and that this gain amounted to 75
percent of the settlement proceeds.
The plaintiffs paid the income tax deficiencies asserted by the
IRS, filed claims for refund which were disallowed, and then
filed a petition in the Court of Claims seeking a refund under
the doctrine of Lyeth v. Hoey, supra.
The Court of Claims, citing Lyeth, framed the issue as "In
lieu of what did Marilyn and Robert [the plaintiffs] receive
$350,000 in settlement of their cross-complaint against the other
members of the Segerstrom family." Parker v. United States,
supra at 47. The court eliminated the claim for $10 million of
punitive damages from consideration since the plaintiffs conceded
the issue at settlement. Aided by appraisals of the land in 1944
and 1965, the court calculated the 1965 value of the plaintiffs'
claim to a 1944 inheritance of real property by applying an
appreciation factor of 500 percent. The court found the 1965
adjusted land value to be $290,000. The court found the
plaintiffs' demands for lost profits to be inflated and
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