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Commissioner, T.C. Memo. 1999-341, published the day respondent
filed his opening brief in these cases.
In Sullivan, the taxpayer received an award of $942,112.50
plus interest and costs in a personal injury lawsuit. After
judgment was entered, but before it was paid, a guardian ad litem
was appointed for the taxpayer in connection with a divorce
proceeding instituted by his wife. The attorneys and the
guardian agreed that the judgment proceeds would be deposited in
an interest-bearing escrow account pending the family court’s
directions regarding the disbursement of the funds. Mr. Sullivan
endorsed the check for deposit into the escrow account. This
Court, focusing on Mr. Sullivan’s signature on the check,
determined that the income was taxable to Mr. Sullivan when it
was deposited into the escrow account. In Sullivan, we stated:
although the placing of the check proceeds into escrow
accounts pending resolution of disputes over the amount
of attorney’s fees and the amount of Mrs. Sullivan’s
share of the marital estate was a substantial
restriction over * * * [Mr. Sullivan’s] ultimate
disposition of the judgment proceeds, these
restrictions did not limit * * * [Mr. Sullivan’s] legal
entitlement to the judgment award and interest in 1989.
Because he received and endorsed the check for the
judgment with interest in 1989, that is the year in
which * * * [Mr. Sullivan] must report the entire
amount of interest. [Id.]
13(...continued)
in Sullivan. Respondent now asserts that the Ready
Mixed settlement proceeds were constructively received
in 1992.
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