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Petitioners point out that the settlement in this case
voided the May 18, 1990, judgment and contend there is no
judgment for which the clerk can calculate prejudgment interest.
We disagree. The Court of Appeals for the First Circuit rejected
this argument in Rozpad v. Commissioner, supra at 3. We do so
here for the same reasons. It is fair to assume, absent a
contrary allocation, that interest and damages compose the same
proportions of the settlement as of the voided antecedent
judgment. Rozpad v. Commissioner, supra at 4. The proper
question for decision is "'in lieu of what were damages awarded'
or paid." Delaney v. Commissioner, 99 F.3d at 23-24; Alexander
v. IRS, 72 F.3d 938, 942 (1st Cir. 1995), affg. T.C. Memo. 1995-
51. The Court of Appeals for the First Circuit affirmed our
decision that part of the damages was paid in lieu of prejudgment
interest. Rozpad v. Commissioner, supra at 4-5.
Petitioners contend that the entire settlement should be
excluded because it was reached while the appeal of a judgment
was pending. Petitioners contend that our result is inequitable
to those who settle while the appeal of a judgment is pending
because a party who settles a case before judgment receives
better tax treatment than one who settles after judgment even if
they settle for the same amount. Petitioners do not explain how
this is so.
Petitioners' contention could be based on the fact that R.I.
Gen. Laws section 9-21-10 applies "In any civil action in which a
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