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in the amount of FOUR HUNDRED THOUSAND AND NO/100
DOLLARS ($400,000.00) plus legal interest from the date
of judicial demand plus costs in the amount of EIGHT
THOUSAND FIVE HUNDRED EIGHTY-EIGHT AND 05/100 DOLLARS
($8588.05), in favor of Christopher J. McCann, III and
Vickilynn M. McCann and against the Louisiana Patient’s
Compensation Fund, has been paid in full; * * *.
Petitioners also agreed that all claims and causes of action that
they might have had against LPCF were fully satisfied and
released by the $839,000 payment.
C. Respondent’s Determination
Respondent determined that $256,625 of the $839,000 was
prejudgment interest and was includable in petitioners’ income.
Respondent calculated that amount as follows:
1. $839,000 less $400,000 damages equals $439,000.
2. $439,000 multiplied by 40 percent (the percentage of
the proceeds paid as attorney’s fees) equals $175,600.
3. $175,600 plus $6,7751 of legal expenses equals
$182,375.
4. $439,000 less $182,375 equals $256,625.
At trial, respondent conceded that $642 of the $256,625
amount was not interest.
1 We note that $439,000 is 52 percent of $839,000, and that
$6,775 is 52 percent of $13,028 (the total amount of legal
expenses that petitioners incurred in the State court action).
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Last modified: May 25, 2011