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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
injury.
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
applicable.
Alan E. Rothfeder, Jo Karen Parr, and Carla R. Cole, for
petitioners.
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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