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$67,321, $85,604, and $81,096 from the respective years' income
because the deducted amounts were reported as income on the
returns of an estate in bankruptcy (the estate).
On October 28, 1983, Mr. Evans had filed for protection
under Chapter 11 of the Bankruptcy Code. On September 29, 1988,
his case was converted to Chapter 7 of the Bankruptcy Code, and
his Chapter 7 proceeding continued throughout the subject years.
Throughout the proceedings in the bankruptcy court, Mr. Evans was
represented by experienced counsel, and Mr. Evans' position was
that the royalty income (as well as all of his assets) belonged
to him and not to the estate. Randolph N. Osherow (Mr. Osherow),
an experienced bankruptcy attorney, was appointed trustee of the
estate in or before 1989, and he remained as trustee throughout
the subject years. Mr. Osherow disagreed with Mr. Evans'
position on the ownership of the royalties, as well as the
ownership of Mr. Evans' other assets. Sometime in 1989,
Mr. Evans and Mr. Osherow settled their disagreement with the
former retaining most of his assets. Following the settlement,
Mr. Osherow never attempted to recover any of the royalties that
had been paid to Mr. Evans; Mr. Osherow understood the settlement
agreement to provide that the royalties belonged to Mr. Evans.
The estate never received any of the royalties, and Mr. Osherow
never reported the royalties as income on the Federal income tax
returns that he filed for the estate.
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Last modified: May 25, 2011