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appealable, approved the Tax Court's allocation of part of a
settlement under Rhode Island law to prejudgment interest where
the parties had not allocated any amount to prejudgment interest.
The allocation of prejudgment interest in Rozpad was calculated
by applying a ratio based on the judgment of the State court to
apportion the total settlement between prejudgment interest
(added to the State court's tort damage award under R.I. Gen.
Laws section 9-21-10) and compensatory damages. Rozpad is
indistinguishable from this case.
The clerk of the Rhode Island court calculated that the
prejudgment interest component of the jury award was $62,437.50
under R.I. Gen. Laws section 9-21-10, which was 45.43 percent of
the total award. Applying the allocation formula in Rozpad, we
conclude that $64,510.60 (i.e., 45.43 percent of $142,000) of the
$142,000 settlement was prejudgment interest and is not
excludable from income under section 104.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011