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repay that amount. He simply was trying to protect his
litigating position. Because he had control over those funds in
1988, the $45,000 must also be included in his income for that
year.
Petitioner asserts that the funds that were assigned to his
children were to compensate them for the loss of their father
during the years in which he was engaged in litigation with
Wright. Petitioner’s anticipatory assignment of the proceeds to
his children, however, cannot avoid tax otherwise due on amounts
paid on account of his claim against Wright. See, e.g., Lucas v.
Earl, 281 U.S. 111 (1930); Doyle v. Commissioner, 147 F.2d 769
(4th Cir. 1945).
Petitioner conceded at trial that he did not consult with
any tax adviser with respect to his obligation to report the
funds that he received in 1988 on a timely filed return for that
year. He has not established reasonable cause for his failure to
file a return. Similarly, he has not proven that his failure to
file the return and report the proceeds as income is not due to
negligence. The additions to tax determined by respondent,
therefore, must be sustained.
We have considered petitioner’s other claims and
contentions, and they do not affect our disposition of the issues
in this case.
Decision will be entered
for respondent.
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