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specify what the $850,000 payment was meant to compensate.
Petitioner paid legal fees of $198,367 in connection with the
lawsuit.
Petitioner reported on its 1989 Form 1120 that only $83,608
of the $850,000 was taxable, and it deducted $19,494 of the legal
fees. Respondent determined that petitioner’s gross income
included the net proceeds of $651,633; i.e., $850,000 total
proceeds minus $198,367 of legal fees.
Discussion
Summary adjudication is intended to expedite litigation and
avoid unnecessary and expensive trials of phantom factual issues.
A decision on the merits of a taxpayer's claim can be made by way
of summary adjudication "if the pleadings, answers to
interrogatories, depositions, admissions, and any other
acceptable materials, together with the affidavits, if any, show
there is no genuine issue as to any material fact and that a
decision may be rendered as a matter of law." Rule 121(b).
Because summary adjudication decides against a party before
trial, we grant such a remedy cautiously and sparingly, and only
after carefully ascertaining that the moving party has met all
the requirements for summary adjudication. Associated Press v.
United States, 326 U.S. 1, 6 (1945); Boyd Gaming Corp. v.
Commissioner, 106 T.C. (1996).
This case is ripe for summary adjudication. The parties
agree on all material facts. The parties’ sole disagreement is
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