Jack J. Grynberg - Page 7




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          bankruptcy court granted the Grynbergs leave to proceed with                   
          their appeal of the superior court’s judgment.  That appeal,                   
          however, was ultimately unsuccessful:  the California Court of                 
          Appeal affirmed the judgment, and the U.S. Supreme Court denied                
          certiorari.                                                                    
               In his bankruptcy filings, petitioner listed his intrafamily              
          transfers of mineral interests made in the preceding year and                  
          named the United States as a disputed creditor for gift taxes.                 
          Petitioner never filed Federal gift tax returns on these trans-                
          fers, contending that they were not taxable gifts.3                            
               Throughout the bankruptcy proceedings, the court observed                 
          many times that, although Mrs. Grynberg “claims an interest in                 
          the Lease, * * * [petitioner] also asserts a contingent                        
          beneficial interest in the Lease.”  In April 1982, the court                   
          approved a joint plan of reorganization and treated the couple’s               
          property as common assets from which all liabilities would be                  
          paid.  The Danzig claimants eventually received the full amount                
          of their judgment against the Grynbergs, plus accrued interest.                
               As required by law, the Grynbergs filed separate Federal                  
          income tax returns for calendar years 1981 and 1982, the years in              
          which they were in bankruptcy.  On their separate Schedules C                  
          attached thereto, they divided the income and expenses of JGA                  


               3Petitioner now concedes that his assignments of overriding               
          royalties to his children’s trusts were completed gifts subject                
          to tax.                                                                        




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