Sharon Purcell DiLeonardo - Page 1

          T.C. Memo. 2000-120                                                         

                               UNITED STATES TAX COURT                                

                      SHARON PURCELL DILEONARDO, Petitioner v.                        
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 5508-97.             Filed April 5, 2000.                   

                    P is a one-sixth income beneficiary of a trust.  In               
               State court, P filed objections to an accounting by the                
               trustee.  The State court (1) ruled against P, (2) required            
               P to compensate the trustee, the other beneficiaries, and a            
               guardian ad litem for their expenses in dealing with P’s               
               objections, and (3) directed the trustee to use P’s share of           
               the trust distributions to accomplish this compensation.  P            
               reported as income her share of the trust’s income and                 
               deducted the court-ordered payments.                                   
                    Held:  The origin and character of the claim resulting            
               in P’s payments was the trustee’s filing of an accounting,             
               proposing a distribution, and acknowledging that an argument           
               could be made for a different apportionment of the proposed            
               distribution; P’s payments are deductible under sec. 212(1)            
               and (2), I.R.C. 1986.                                                  

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