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received her elective share on November 3, 1989; $377,753 of
income from 2 individual retirement accounts (IRA's), including
post mortem interest and other income paid to the estate in 1989;
and capital gains of $176,432 that, pursuant to advice from the
attorney who drafted decedent’s will, Mr. Deutsch treated as
estate income in their entirety. The capital gains consisted
entirely of post mortem asset appreciation that the estate
realized when Mr. Deutsch liquidated estate assets in
anticipation of paying the elective share to petitioner.
On September 13, 1990, petitioner filed her 1989 income tax
return, pursuant to extensions. Petitioner's return did not
include the DNI shown by the estate’s fiduciary income tax return
as having been distributed to her. Petitioner's return included
a Form 8275 (Disclosure Statement under Section 6661) with a
rider that disclosed receipt of the elective share and its
noninclusion in her gross income and also disagreed with
inclusion of the capital gains in estate DNI.
Following dismissal, in March 1990, of her appeal of the
Probate Court Order, petitioner sued Mr. Deutsch in the Civil
Division of the Circuit Court for the 15th Judicial Circuit for
Palm Beach County, Florida. Petitioner alleged that Mr. Deutsch
had violated his fiduciary duty to her by “intentionally
plac[ing] 100% of the income tax burden on [petitioner] and
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