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salary from the corporation. Under these circumstances, the
court held section 1341 inapplicable because it was the
corporation, rather than the taxpayer, who had previously
reported the item being repaid. Kraft v. United States, supra at
299.6
It is undisputed that petitioner, as decedent's estate,
stands in the same position as decedent for purposes of applying
section 1341. Thus, in these cases, section 1341 relief is
restricted to that part of the $681,840 that represents the
royalties that decedent had personally received and reported for
the years 1975 through 1980. Decedent did not receive royalties
paid to Jessamine and Frankie during the years 1975 through 1980,
nor did she report or pay tax on those amounts. We hold that
only that portion of the $681,840 that represents repayment of
royalties previously received and reported by decedent can be
used to provide benefits to petitioner under section 1341.
6As succinctly stated in Judge Nelson's concurring opinion:
For a taxpayer to take advantage of � 1341, he
must show, among other things, (1) that 'an item' was
included in a prior year's gross income because of an
apparent unrestricted right to the item, and (2) that
it was subsequently established that the taxpayer did
not have an unrestricted right to 'such item' or
portion thereof. 26 U.S.C. �� 1341(a)(1) and (a)(2).
Both sections clearly speak of the same 'item.'
The 'item' included in the Krafts' gross income
for the prior year at issue here was not a fee received
from Blue Cross; it was, rather, a salary item received
by Dr. Kraft from his corporation. * * * [Kraft v.
United States, 991 F.2d 292, 300 (6th Cir. 1993).]
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