Lance R. and Elaine C. LeFleur - Page 2

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                  I.R.C.  As R's primary position in the notice of                                    
                  deficiency, R determined that Ps' gross income includes                             
                  the total amount of settlement proceeds.  R determined                              
                  that $380,000 was attributable to salary and wages, and                             
                  an additional $420,000 was characterized as business                                
                  gross receipts.  Consistent with that allocation, R                                 
                  determined that $107,596 of the legal fees and costs                                
                  could be deducted as a Schedule C expense, and the                                  
                  remaining $65,946 was a miscellaneous itemized                                      
                  deduction pursuant to sec. 67, I.R.C.  R also set forth                             
                  an adjustment position which allocated $1 million to                                
                  salary and wages and nothing to business gross                                      
                  receipts.  In accordance therewith, R determined that                               
                  all legal fees and costs must be taken as miscellaneous                             
                  itemized deductions pursuant to sec. 67, I.R.C.                                     
                        1.  Held:  None of the proceeds are excludable                                
                  from Ps' gross income under sec. 104(a)(2), I.R.C.,                                 
                  because they were not received on account of a personal                             
                        2.  Held, further, Ps attorney's fees and costs                               
                  are deductible as a miscellaneous itemized deduction to                             
                  which the provisions of secs. 67 and 68, I.R.C., are                                

                  Alan E. Rothfeder, Jo Karen Parr, and Carla R. Cole, for                            
                  John F. Driscoll and Shuford A. Tucker, Jr., for respondent.                        

                           MEMORANDUM FINDINGS OF FACT AND OPINION                                    
                  K�RNER, Judge:  Respondent determined a deficiency in                               
            the Federal income tax of petitioners (Lance R. and Elaine C.                             
            LeFleur) for the tax year ended December 31, 1991, in the amount                          
            of $283,078.  (Petitioner Elaine C. LeFleur is a party to this                            
            proceeding solely because she filed a joint return with her                               

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