Manuel J. Serpa, Jr. and Patricia A. Serpa - Page 6

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               In Rozpad v. Commissioner, supra, the U.S. Court of Appeals            
          for the First Circuit, the circuit in which this case is                    
          appealable, approved the Tax Court's allocation of the                      
          prejudgment interest component of a settlement under Rhode Island           
          law where the parties did not allocate any amount to prejudgment            
          interest.  The allocation of prejudgment interest in Rozpad was             
          calculated by using a ratio based on the judgment of the State              
          court to apportion the total settlement as between prejudgment              
          interest (added to the 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 a prejudgment           
          interest component of $62,437.50 of the judgment under R.I. Gen.            
          Laws section 9-21-10, which was 28.61 percent of the total                  
          judgment.  Applying the allocation formula in Rozpad, we conclude           
          that $42,9104 of the $150,000 was prejudgment interest.                     
          B.   Petitioners' Other Contentions                                         
               Petitioners contend that we should not consider the Form               
          1099 that Allstate issued that stated Allstate was paying                   
          petitioners $50,000 as prejudgment interest because Allstate                
          issued it unilaterally.  We do not consider that form.5                     



               4 Respondent concedes that this amount is correct.                     
               5 Petitioners make no argument based on the amended Form               
          1099 that Allstate issued.                                                  




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