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In the circumstances of this case, we conclude that judicial
estoppel should not be applied. First, Indeck has not shown a
clear inconsistency between the positions taken by Mr. Polsky in
the Lake County Lawsuit and in the instant proceedings. In the
motion to enforce settlement in the Lake County Lawsuit, Mr.
Polsky’s counsel took the position that, under State law, Indeck
had a contractual obligation arising out of the settlement to pay
“interest” of $4,856,922. Whether that amount constituted
interest for Federal income tax purposes, deductible under
section 163(a), was not a necessary implication of Mr. Polsky’s
position in the motion to enforce settlement in the Lake County
Lawsuit. The item’s treatment for Federal income tax purposes
was simply not at issue in the State court proceedings to accept
or to enforce the settlement. Cf. Folio v. City of Clarksburg,
134 F.3d 1211 (4th Cir. 1998) (for purposes of judicial estoppel,
party’s position in State court proceedings that assessment was a
fee under State law not inconsistent with claim that it was a tax
under Federal law in later proceedings); UNUM Corp. v. United
States, 886 F. Supp. 150 (D. Me. 1995) (for purposes of judicial
estoppel, party’s position with State regulators that
distribution of stock was exchange not inconsistent with position
for Federal income tax purposes that distribution was dividend).
Second, Indeck has not shown that the court in the Lake
County Lawsuit accepted a position of Mr. Polsky’s that is
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