Phyllis sued Martins estate and won a $65,000 settlement. She showed the probate court that she carried out her end of a compensatory arrangement with her companion, under which she provided traditional wifely services without benefit of matrimony during Martins life in exchange for all of his estate. Martin left his entire estate to his faithful dog Sparky via a testamentary trust. How much gross income is recognized by Phyllis?

Answer must include:

1. CODE SECTION & REGULATION
2. ADMINISTRATIVE RULING (rev rul, rev proc)
3. ADMINISTRATIVE RULING (rev rul, rev proc)
4. COURT CASE 1
5. COURT CASE 2