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before death, and (4) which were received by the taxpayer as the
decedent’s successor in interest.” Kitch v. Commissioner, supra
at 10; see sec. 691(a); sec. 1.691(a)-1(b), Income Tax Regs. IRD
must be included in the gross income of a person “who acquires
from the decedent the right to receive the amount by bequest,
devise, or inheritance, if the amount is received after a
distribution by the decedent’s estate of such right.” Sec.
691(a)(1)(C); see sec. 1.691(a)-2(a)(3), Income Tax Regs.
We conclude that the payments received by petitioner in
accordance with the agreement constitute IRD under section
691(a). First, payments received in accordance with an agreement
not to compete are includable in gross income. See Kinney v.
Commissioner, 58 T.C. 1038, 1041-1042 (1972); Rev. Rul. 69-643,
1969-2 C.B. 10. Second, the agreement vested decedent with a
legally enforceable right to receive monthly payments over a 10-
year period. Third, the value of the unexpired portion of the
agreement was not included in decedent’s gross income before his
death. Lastly, decedent’s estate distributed, and petitioner
became a successor in interest to, one-third of the unexpired
portion of the agreement. Accordingly, we hold that the payments
received by petitioner constitute IRD and are includable in
petitioner’s gross income for his 1999 tax year.
The character of an item of IRD to the successor is the same
character as the item would have had in the decedent’s hands “if
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