54 T.C. 135">*135 Respondent determined a deficiency in petitioners' income tax for the year 1962 in the amount of $ 14,943.28.

The issue is whether $ 39,666.66, the net amount received by petitioner Joseph M. Mariani in 1962 in settlement of a suit against his father's estate, is excludable from gross income as a gift or inheritance under section 102, I.R.C. 1954. ¹

FINDINGS OF FACT

Some of the facts are stipulated and they are found accordingly.

Joseph M. Mariani, who will be called petitioner, and his wife Minnie Mariani, resided in Los Angeles County, Calif., at the time they filed their petition in this case. They filed their joint income tax return1970 U.S. Tax Ct. LEXIS 220">*222 for 1962 with the district director of internal revenue in Los Angeles.

When petitioner was discharged from the Army in 1945 he went to work for his father as foreman of his father's fruit ranch. He worked for his father and was paid a salary for such services until sometime in 1954, when he left his father's employment.

Petitioner's father died testate December 3, 1958, and his estate was probated in Santa Clara County, Calif. Decedent's will, executed April 6, 1954, contained the following clauses:

FIFTH: I hereby give, devise and bequeath, share and share alike to my three children JOSEPH M. MARIANI, NICHOLAS J. MARIANI and MARIAN PAULA MARIANA my one-half community property interest in and to my estate.

SIXTH: I hereby give, devise and bequeath to my three children, JOSEPH M. MARIANI, NICHOLAS J. MARIANI and MARIAN PAULA MARIANI, share 54 T.C. 135">*136 and share alike, all of my separate property of every kind or nature and wheresoever situate.

A codicil to this will, executed September 25, 1954, which was admitted to probate along with the will, contained the following clauses:

1. For reasons best known to myself, it is my positive intention to leave my son JOSEPH M. MARIANI nothing1970 U.S. Tax Ct. LEXIS 220">*223 and in the place and stead of paragraph "Fifth" in my said Will of April 6th, 1954 I hereby give, devise and bequeath, share and share alike to my two children NICHOLAS J. MARIANI and MARIAN PAULA MARIANI my one-half community property interest in and to my estate.

2. In the place and stead of paragraph "Sixth" in my said Will of April 6th, 1954 I hereby give, devise and bequeath, share and share alike to my two children NICHOLAS J. MARIANI and MARIAN PAULA MARIANI all of my separate property of every kind or nature and wheresoever situate.

On June 26, 1959, petitioner filed what is termed a "Creditor's Claim" in the amount of $ 275,000 in his father's estate based on three asserted claims. Petitioner's First Claim alleged he had gone to work for his father in 1945 in the management of the latter's ranch and that it was agreed between his father and him that, in addition to a portion of the income of the ranch properties, "claimant would be compensated at the death of deceased by being the legatee and devisee of one-half (1/2) of the estate of said deceased." The claim goes on to allege that later in April of 1954 he was asked by his father to reduce his interest to one-third of 1970 U.S. Tax Ct. LEXIS 220">*224 his father's estate and he agreed and his father executed the will (of April 1954), leaving him a one-third interest in his estate. The claim alleges petitioner fully performed all of the conditions of his agreement with his father but in violation of said agreement "deceased revoked the bequest and devise to claimant and left claimant nothing."

The Second Claim alleged claimant's rendition of services for deceased for which decedent agreed to pay and an unpaid balance of $ 275,000 on the sum due claimant for said services.

The Third Claim sought $ 275,000 for work and labor done for decedent which was due and owing to claimant.

The Creditors' Claim was rejected by the executor of the estate and petitioner filed suit in the Santa Clara County Superior Court against the estate with the executor and the heirs and legatees named as defendants. The complaint in this suit sets forth causes of action substantially the same as the claims described above which were contained in the Creditor's Claim filed in the estate and rejected by the executor.

The above lawsuit was settled on or about April 18, 1962, by petitioner being paid $ 70,000. The said $ 70,000 that was paid to petitioner came1970 U.S. Tax Ct. LEXIS 220">*225 in equal portions from the distributive shares of Marian and Nicholas who were petitioner's sister and brother. In the settlement proceedings petitioner executed a release of any and 54 T.C. 135">*137 all claims he might have against the estate as an heir or devisee or legatee or creditor or in any other capacity.

From the $ 70,000 received, petitioner paid legal fees of $ 23,333.34 and investigating fees of $ 7,000, leaving a net of $ 39,666.66 which petitioner received which was not included by him in his taxable income in 1962. Respondent's notice of deficiency determined the $ 39,666.66 "taxable as ordinary income."

OPINION

Respondent's position is that the $ 39,666.66, the net amount petitioner received in settlement of his suit against his father's estate, constitutes taxable "gross income" under section 63(a).

Petitioner argues that the net sum he received in settlement of his suit was excludable from his gross income under section 102. In general, that section provides that gross income "does not include the value of property acquired by gift, bequest, devise, or inheritance."

Petitioner's suit was nothing more than a claim against the estate. It was based on an alleged agreement1970 U.S. Tax Ct. LEXIS 220">*226 with decedent, petitioner's performance of the agreed services, and the breach of the agreement by the decedent. The money received in settlement of the suit was not acquired by gift, bequest, devise, or inheritance within the provisions of section 102. Ethel West Cotnam, 28 T.C. 947">28 T.C. 947, affirmed on this point 263 F.2d 119; John Davies, 23 T.C. 524">23 T.C. 524. Petitioner argues on brief that "in the last analysis, it was his position as an heir that brought about the settlement." But the suit did not contest the validity of the will or codicil. The record shows petitioner's two children received bequests under the will. Petitioner did not receive the settlement sum as an inheritance and since he was specifically excluded by the will and its codicil he could not receive anything in the nature of a bequest or devise. He does not argue that he received the settlement sum as a gift from any living donor. Respondent was right in holding the net amount received in settlement of the suit in 1962, or $ 39,666.66, was not excludable from petitioner's taxable gross income.

Petitioner concludes his argument on 1970 U.S. Tax Ct. LEXIS 220">*227 brief with a few lines to the effect that if the amount received is not held excludable he should have "the benefit of averaging his back-pay over the entire period that he worked." He cites section 107 (d), I.R.C. 1939, as amended 1943, section 1302 and he also cites section 1303 (a), I.R.C. 1954, as in effect in 1962. ² Petitioner also cites section 1.1301-1, Income Tax Regs., but he does not point out how any of these statutes or the regulation are applicable to the facts of this case. It is enough to point out that the 54 T.C. 135">*138 statutes generally limit income averaging to those situations where services were performed in prior years and payment was not made in those years because of certain intervening events. There was no intervening event here. Petitioner's position as claimant was not that he became entitled to payment during the years prior to his father's death. Under this record the $ 39,666.66 could not be allocated to prior years on any theory that it would have been received during those years except for some intervening event.

1970 U.S. Tax Ct. LEXIS 220">*228 Decision will be entered for the respondent.