Estate of Algerine Allen Smith, Deceased, James Allen Smith, Executor - Page 5

                                        - 5 -                                         

          Year                Amount                                                  
          1975                $58,512                                                 
          1976                 62,302                                                 
          1977                 45,061                                                 
          1978                 36,734                                                 
          1979                 36,846                                                 
          1980                 44,725                                                 
          Total            $284,180                                                   

          On her returns for those years, decedent deducted an allowance              
          for depletion in an amount which was 22 percent of the gross                
          royalties reported.                                                         
               Petitioner filed a Federal income tax return for the taxable           
          year 1992 on which it reported and paid a tax of $8,338.  This              
          1992 tax was computed without taking a deduction for any portion            
          of the amount paid to Exxon in 1992.                                        
               Section 1341 provides relief to taxpayers who are forced to            
          repay an item previously reported as income under a claim of                
          right.  Both parties agree that for purposes of section 1341,               
          petitioner and decedent should be treated as one and that                   
          petitioner is entitled to section 1341 relief.  Both parties also           
          agree that relief should be in the form of a credit computed                
          pursuant to section 1341(a)(5) and (b).                                     
               The pertinent provisions of section 1341 provide as follows:           

               SEC. 1341.  COMPUTATION OF TAX WHERE TAXPAYER RESTORES                 
               SUBSTANTIAL AMOUNT HELD UNDER CLAIM OF                                 
               RIGHT.                                                                 
                    (a)  General Rule.--If--                                          







Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  Next

Last modified: May 25, 2011