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various acceptable methods of securing his fee. * * *
[Isrin v. Superior Court, 403 P.2d 728, 732, 733 (Cal.
1965).]
See Benci-Woodward v. Commissioner, supra, where the Court of
Appeals for the Ninth Circuit held that California law did not
operate to exclude a contingent fee payment from the taxpayers’
gross income.
On the basis of California law, as interpreted in Isrin v.
Superior Court, supra, and Benci-Woodward v. Commissioner, supra,
we hold that all of the settlement proceeds, less the $10,000
paid to the estate for the cause of action, must be included in
petitioner’s gross income in the year received.
2. NOL’s
Section 1398 applies to this case because petitioner is an
individual who was a debtor in a proceeding under chapter 7 of
the U.S. Bankruptcy Code. See sec. 1398(a). Section 1398
provides that a debtor’s bankruptcy estate succeeds to the
debtor’s NOL carryovers and that the debtor succeeds to the NOL
carryovers which remain when the bankruptcy estate is terminated.
See sec. 1398(g), (i).
Petitioner’s estate was created on July 29, 1986, upon his
filing of his petition with the bankruptcy court. See 11 U.S.C.
sec. 303 (1978). Because the estate did not terminate until it
closed on December 29, 1993, see 11 U.S.C. sec. 346(i)(2) (1976);
see also Firsdon v. United States, 95 F.3d 444, 446 (6th Cir.
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