Barrett v. Commissioner
United States Tax Court
In 1981, P bought and sold options to buy stock, realizing a large profit which was reported for 1981 as short-term capital gain. The Securities and Exchange Commission (SEC) charged that P had used insider information in buying the options, and instituted proceedings to cancel his license as a broker. Certain other brokers filed lawsuits against P and others seeking $ 10 million. In 1984 the lawsuits were settled, with P paying $ 54,400 to the plaintiffs.
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In 1981, P bought and sold options to buy stock, realizing a large profit which was reported for 1981 as short-term capital gain. The Securities and Exchange Commission (SEC) charged that P had used insider information in buying the options, and instituted proceedings to cancel his license as a broker. Certain other brokers filed lawsuits against P and others seeking $ 10 million. In 1984 the lawsuits were settled, with P paying $ 54,400 to the plaintiffs. P also paid $ 17,721.79 in legal fees. The SEC dismissed its charges. Held, petitioners are entitled to a credit under sec. 1341(a)(5),…
1Opinion of the Court
OPINION
FEATHERSTON, Judge:
Respondent determined a deficiency in the amount of $22,001 in petitioners’ Federal income tax for 1984. The issues to be decided are as follows:
1. Whether, under section 1341,1 petitioners are entitled to a credit against their income tax for 1984 in an amount equal to the decrease in their income tax for 1981 attributable to the removal from 1981 gross income of $54,400, which was paid in 1984 to settle a claim asserted against petitioner Joseph A. Barrett for allegedly using insider information in buying and selling certain options to buy stock.
2. Whether…
2Cases cited23 opinions
- North American Oil Consolidated v. BurnetSupreme Court of the United States · 1932
- Higgins v. CommissionerSupreme Court of the United States · 1941
- Lyeth v. HoeySupreme Court of the United States · 1938
- Woodward v. CommissionerSupreme Court of the United States · 1970
- Healy v. CommissionerSupreme Court of the United States · 1953
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