Estate of Algerine Allen Smith, Deceased, James Allen Smith, Executor - Page 9

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               There is nothing in the record to indicate how much of                 
          Exxon's claim related to excess royalties paid to Jessamine or              
          her estate, and respondent does not factor this into respondent's           
          computation.  Since it appears likely that some part of the claim           
          against decedent was attributable to royalties paid to Jessamine            
          or her estate, respondent's decision not to allocate any portion            
          of the settlement to Jessamine works in petitioner's favor.7                
          Respondent's computation uses Exxon's allocation of its claims as           
          between decedent and Frankie, which, as previously stated,                  
          attributes to decedent 24 percent of the excess royalty claims              
          against decedent and Frankie.  Under these circumstances, we find           
          that 24 percent is the most appropriate percentage for purposes             
          of determining the portion of the settlement that is available              
          for purposes of computing petitioner's section 1341 relief.                 
               While we reject petitioner's argument that the entire                  
          $681,840 is available to adjust decedent's previously reported              
          income, we also reject part of the computational method proposed            
          by respondent.  Respondent's Rule 155 computation seems to assume           
          that decedent received royalties in excess of what she reported             
          for the years 1975 through 1980.  This assumption is based on               
          unexplained allegations made by Exxon in its lawsuit.  Relying on           
          Exxon's apparent claim that it paid more royalties to decedent              
          than she reported, respondent's computation reduces the portion             


          7Respondent's counsel explained that there was no                           
          information upon which to allocate any of Exxon's claims to                 
          royalties paid to Jessamine or her estate.                                  




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