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ego of the surrogate's court and that the transfers of funds from
the custodian to the temporary administrator were in essence
transfers to the surrogate's court. Therefore, the estate argues
that there were no distributions to the estate, and it was in
neither actual nor constructive receipt of the funds. Second,
even if there were deemed distributions to the estate, under the
claim of right and constructive receipt doctrines, the estate
contends that it did not receive the funds because the funds were
subject to substantial limitations or restrictions under New York
law.4 According to the estate, under New York law, a temporary
administrator's powers are limited to acts done for the
preservation of an estate pending resolution of litigation.
Hence, substantial limitations or restrictions are imposed on the
use of funds received by the temporary administrator.
Respondent makes several arguments for including the
distributions in the estate's 1988 and 1989 gross income. First,
respondent argues that the distributions were taxable to the
estate in the years of receipt because the funds were no longer
held by a qualified trust and there were distributions to a
"distributee" within the meaning of section 402(a)(1). Second,
4 Under the "claim of right" doctrine, if a taxpayer
receives income under a claim of right and without restrictions,
the income is taxable in the year received, whether the taxpayer
sees fit to enjoy it, even though the taxpayer is not entitled to
retain the money, and even though the taxpayer may later be
adjudged liable to restore its equivalent. See North Am. Oil
Consol. v. Burnet, 286 U.S. 417, 424 (1932).
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