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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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Last modified: May 25, 2011