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He fought IRS, and he won

Arnold Levine hates losing.

One of the area's most prominent _ and expensive _ criminal defense and divorce lawyers, Levine once fought his own speeding ticket. He finally won after proving the cop's radar gun was set up in a no-parking zone.

Levine was preparing for another personal battle Monday, this time against the Internal Revenue Service. The federal trial would culminate a five-year dispute over the value of modern art he and his wife, Gail, donated to the University of South Florida in 1986.

But before a jury was picked, the IRS agreed to refund the Levines more than $10,000.

An IRS spokesman said the agency would not comment on the case, but Levine called Monday's settlement a victory.

"I'm satisfied they made a meaningful acknowledgment that I was right and they were wrong," he said.

Levine conceded his pursuit of the case probably cost more than the refund, but he said it was a matter of principle.

"The government had taken the hard line, as did I," Levine said. "People shouldn't kowtow to IRS. Just do it right."

People who donate art to charity or public museums should get the benefit of the doubt, not a headache from the IRS, he said. Otherwise, people may just decide not to bother.

Margaret Miller, director of USF's Contemporary Art Museum, said there was never any question the art was worth what the Levines claimed.

"We haven't had any challenges to any other contributions," Miller said. "We don't want people to think that if you give to USF your gift will be challenged. It is, in fact, very rare."

The matter began after the Levines donated 19 pieces of art to USF's Contemporary Art Museum in 1986. Some of the art was from the early days of Graphicstudio, the non-profit workshop for invited artists at the university.

The collection included 17 lithographs by artists Tommy Bell, Robert Rauschenberg and Richard Anuszkiewicz and two castings of tire tracks by Rauschenberg entitled The Patch and Realm.

Rauschenberg, who lives on Florida's Captiva island, is one of the most highly acclaimed artists in the world. One of his works sold for $7.3-million at an auction three years ago.

Levine and his wife, who sits on the boards of the Tampa Museum and the USF Gallery, took a $54,700 charitable deduction on their 1986 income tax return, based on the appraised market value of the art.

The IRS disputed the deduction, calling the art's valuation "grossly exaggerated."

According to the government, the prints were only worth $10,200, and the castings just $100 each _ the cost of their materials.

The castings ruling stemmed from a tax rule prohibiting artists from taking deductions of the fair market value for donations of their own work.

The IRS argued that because Rauschenberg created the tire track castings at a Tampa studio operated by Pyramid Partners Ltd. of which Levine was a member, Levine was in fact a producer of the art and was therefore limited to its cost when figuring a deduction for a donation.

The Levines appealed the IRS interpretation, but in June 1991 wound up paying $15,859 in back tax, interest and penalties. They then sued the IRS for a refund.

The case was set for a jury trial before visiting U.S. District Judge Robert Merhige, who suggested the parties try to settle.