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conceded that petitioners had a $29,214 basis in the stock and
therefore are entitled to a $2,0092 loss in 1989 on the sale of
the stock fund.
OPINION
I. Allocation of Condemnation Award Between Gain From the Sale of
Property and Interest Income
In their Rule 155 computations for 1989, neither respondent
nor petitioner made a correct allocation of the condemnation
award between gain from the sale of property and ordinary
interest income. To comply with our holding in Wilson I, for
1989 petitioners' $62,937 condemnation award must be decreased,
not only by the $1,333 attributable to postjudgment interest, but
also by the $34,618, representing prejudgment interest.
Simultaneously, petitioners' interest income must be increased by
that amount. Accordingly, we find that in 1989, petitioners
received a condemnation award of $26,986, which is characterized
as capital gain, and interest income of $35,951, representing
$34,618 in prejudgment interest and $1,333 in postjudgment
interest, which is characterized as ordinary income.
II. Itemized Deduction for Attorney Fees
Respondent's Rule 155 computation fails to take into account
the fact that petitioners incurred $26,341 in attorney's fees for
1989 in connection with the condemnation proceedings on their
2 On brief, respondent concedes a $2,008.81 actual loss on the
sale of the stock, which we rounded up to $2,009.
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