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of the settlement that respondent attributes to decedent's
previously reported royalties. However, the parties have
stipulated that decedent reported all the royalties that she
received for the years 1975 through 1980. Under these
circumstances, the Rule 155 computation cannot be based on the
assumption that decedent received more royalty income during the
years 1975 through 1980 than she reported on her returns.8
Based upon the available information, we find that 24
percent of the $681,840 settlement, or $163,641, should be
attributed to excess royalties received and reported by decedent
during the years 1975 through 1980.9 This $163,641 should then
be allocated to each of the years 1975 through 1980 in proportion
to the amount of gross royalties that decedent reported during
each of these years. For purposes of making the computations
required by section 1341(a)(5), these respective amounts should
be reduced by the proportionate amount of depletion allowance
that decedent took on her 1975 through 1980 returns. The
resulting amounts should then be excluded from reported income
8Respondent made no argument that this aspect of the
computation was an attempt to determine which portion of Exxon's
claims against decedent was attributable to Jessamine's
royalties. Indeed, respondent's counsel acknowledged that
Jessamine's royalties could not be identified and that
respondent's computations give petitioner the benefit of any
doubt on this point.
9This allocation does not attribute any portion of the
$681,840 settlement to interest that Exxon claimed in addition to
its base claim for excess royalties. Respondent's proposed
computation made no allocation of the $681,840 settlement to
interest and presented no arguments regarding how such an
allocation should or could be made.
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