Wallace R. Noel and Robinette Noel - Page 7

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          Of this amount, petitioner paid $300,000 to the attorneys                   
          handling the lawsuit against PepsiCo.                                       
               In preparing his 1990 Federal income tax return, petitioner            
          allocated the $3,250,071 payment between two amounts.  Petitioner           
          treated $1,969,7404 as the amount received for his shares of PMI            
          and $1,280,331 as the amount received in exchange for the release           
          of his claims against PepsiCo and Pizza Hut.                                
               Petitioner's C.P.A., Wayne Hoover, advised petitioner in               
          connection with the preparation of petitioner's 1990 Federal                
          income tax return that the $1,280,331 was excludable from income            
          under section 104(a)(2) as damages received on account of per-              
          sonal injuries.  Petitioner did not report this amount as income            
          on his 1990 Federal income tax return.  Petitioner claimed on his           
          return a basis of $1,469,309 in his PMI stock, consisting of the            
               Original basis                     $200,000                            
               Miscellaneous expenses             100,000                             
               Received from children                1 61,875                         
               Travel expenses                    5,797                               
               Misc. legal fees                   1,637                               
               Legal fees paid                    300,000                             
               Contingent legal fees               2 800,000                          
               Total                         1,469,309                                
                    1 Petitioner, in his 1990 Federal income tax                      
               return, reduced his gain by $61,875, which represents                  
               the amount received which is attributable to his wife's                
               and children's stock.  Respondent concedes that this                   
               amount is not taxable to petitioner.                                   

          4Petitioner's allocation comports to the $5 per share book                  
          value reflected in the 1990 financial statements of PMI.                    

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