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Petitioner and Signorile met again on April 29, 1992, and
petitioner brought a copy of the sublease agreement to the
meeting. Petitioner did not bring a copy of the surrender
agreement to the meeting. Petitioner again stated that, in
exchange for vacating rooms 103 and 141, he received the new
apartment rent free for 3 years and nothing else. At Signorile's
request, petitioner signed a written statement to that effect.
Signorile drafted the written statement, and Spyropoulos read the
statement to petitioner before petitioner signed it.
OPINION
The dispute in this case is whether petitioner is liable for
tax on the amounts paid by and/or value received from Seawall
pursuant to the surrender agreement and sublease agreement.
Seawall paid $297,500 to petitioner's family members, $2,500 to
petitioner, and $22,500 to Spyropoulos for legal fees and
expenses. Seawall also provided petitioner with the new
apartment rent free for 3 years. We address each in turn.
Petitioner seems to argue that he should not be taxed on the
$297,500 disbursed to his family because he never received those
moneys. Respondent argues that the $297,500 is taxable to
petitioner. We agree with respondent.
Gross income includes gains derived from dealings in
property. Sec. 61(a)(3). Income is taxed to the person that
"earned" the item of income. Commissioner v. Culbertson, 337
U.S. 733, 739-740 (1949); Helvering v. Horst, 311 U.S. 112, 115-
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