- 17 -17
fictional. Accordingly, rather than applying a ratio of land
value to alleged lost profits, the court concluded:
[The] more reasonable choice is to subtract the
adjusted land values [$290,000] from the total
settlement proceeds [$350,000] and treat the remainder
[$60,000] as compensation for allegedly lost income.
By this calculation, $290,000 of the settlement
proceeds would have been received in lieu of the
ownership interests asserted in the real property, and
the remainder of $60,000 would be attributable to the
claimed compensatory damages for lost income. [Id. at
50-51.]
The court then separated the $290,000 received for the
interest in land into an appreciation component and an original
1944 value component. The original value component was excluded
from income under section 102, as interpreted in Lyeth v. Hoey,
supra. The appreciation component was taxable since "this
remaining amount was received in lieu of the rather spectacular
appreciation of the properties over the 21-year period between
the date of death and the date of settlement." Parker v. United
States, supra at 51. In effect, the court found that the
plaintiffs' 1965 settlement encompassed the land's appreciation
since 1944.
In our case, Mrs. Marcus made no claim against the estate of
Fulvio Suvich for lost income. Respondent has admitted that the
$37,898 was received as a substitute for a bequest of property,
thus invoking the rule of Lyeth v. Hoey, supra, and its progeny.
However, when Mrs. Marcus entered into the agreement, she did not
settle for a sum certain to be paid upon the eventual sale of the
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