Patrick v. Comm'r
United States Tax Court
P-H received two monetary awards for bringing qui tam complaints filed under the False Claims Act (FCA), 31 U.S.C. sec. 3730 (2006). Ps reported the awards as capital gains. R issued a deficiency notice that disallowed capital gains treatment and characterized the awards as other income.
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P-H received two monetary awards for bringing qui tam complaints filed under the False Claims Act (FCA), 31 U.S.C. sec. 3730 (2006). Ps reported the awards as capital gains. R issued a deficiency notice that disallowed capital gains treatment and characterized the awards as other income. R contends that a qui tam award does not result from the sale or exchange of a capital asset, citing I.R.C. sec. 1222(1), (3). Ps contend that under the FCA the relator sells information to the Government in exchange for a share of any recovery. Ps further argue that the right to receive a share of the…
1Opinion of the Court
OPINION
KROUPA, Judge:
Respondent determined deficiencies of $716,8831 and $94,714 in petitioners’ Federal income tax for 2008 and 2009, respectively (years at issue). We must decide whether a qui tam award qualifies for capital gains treatment under section 1222.2 We hold that a qui tam award does not satisfy the capital gains requirements.
Background
The parties submitted this case fully stipulated pursuant to Rule 122, and the facts are so found. The stipulation of facts and its accompanying exhibits are incorporated by this reference. Petitioners resided in Wisconsin when they filed the…
2Cases cited18 opinions
- Vermont Agency of Natural Resources v. United States Ex Rel. StevensSupreme Court of the United States · 2000
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- Commissioner v. BrownSupreme Court of the United States · 1965
- National Railroad Passenger Corp. v. Atchison, Topeka & Santa Fe Railway Co.Supreme Court of the United States · 1985
- Helvering v. William Flaccus Oak Leather Co.Supreme Court of the United States · 1941
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3Cited by2 opinions
- Craig Patrick & Michele Patrick v. CommissionerUnited States Tax Court · 2014
- Patrick v. Comm'rUnited States Tax Court · 2014