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the sale of Northwest’s ticket stock that were owed to Northwest.
We find that in 1988 the accounts in effect served to secure
Northwest’s rights against petitioner and his corporations, and
in 1991 a substantial portion of the accounts was in fact paid in
settlement of Northwest’s claims asserted against petitioner and
his corporations. Consequently, by yearend 1988 the funds in the
ANB accounts and the Sam Han account were being held under court
supervision to satisfy liabilities that were as much petitioner’s
corporations’ as petitioner’s.
In these circumstances, we conclude that the funds in the
ANB accounts and the Sam Han account by yearend 1988 had been
repaid or returned to petitioner’s corporations in that year and
accordingly are not taxable to petitioner under Leaf and like
cases applying the exception to the claim of right doctrine. We
base our conclusion that these funds had been returned to the
corporations for purposes of this exception on several factors.
First, petitioner no longer had dominion and control over the
funds once they were subject to the TRO. Although respondent
argues that petitioner’s attorney’s role as custodian of the ANB
accounts demonstrates petitioner’s maintenance of dominion and
control, the facts do not support this characterization. The
disbursements for petitioner’s personal expenses were made only
with Northwest’s approval. Further, Northwest’s attorney
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