- 4 -
petitioner, but he returned it to Wright’s attorney, refusing to
accept it. Thereafter, Wright’s attorney filed an interpleader
action with respect to the $45,000 and deposited it with the
Clerk of the Superior Court. The interpleader action was
subsequently dismissed, and the $45,000 was tendered to
petitioner.
Subsequent to his receipt of $1,055,000, petitioner claimed
that Wright and others had breached the settlement agreement.
Petitioner commenced further litigation that continued through
the time of trial of this case in January 1996. Petitioner
refused to accept the $45,000 from the Superior Court because he
believed that it would compromise his position that a valid
settlement agreement had not been entered into.
Petitioner did not file a tax return for 1988 until
December 29, 1993, after he was contacted by the Internal Revenue
Service.
OPINION
Petitioner contends that, because his ongoing litigation
with Wright has not been resolved, it would be premature to tax
him on the proceeds that he actually received in 1988 from
Wright. Alternatively, petitioner contends that the proceeds
were not pursuant to a settlement agreement entered into in 1988
but were paid on account of a tentative decision of the Superior
Court in 1984. Neither theory, however, makes the funds actually
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