Campbell v. Commissioner
United States Tax Court
P included on his return as "Other income" $ 5.25 million of an $ 8.75 million "qui tam" payment P was awarded pursuant to a Federal False Claims Act action. He did not report the remaining $ 3.5 million, which was subtracted from the recovery by P's attorneys as attorney's fees. P then omitted the $ 5.25 million net proceeds of the qui tam payment from the taxable income of $ 793 he reported on his return.
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P included on his return as "Other income" $ 5.25 million of an $ 8.75 million "qui tam" payment P was awarded pursuant to a Federal False Claims Act action. He did not report the remaining $ 3.5 million, which was subtracted from the recovery by P's attorneys as attorney's fees. P then omitted the $ 5.25 million net proceeds of the qui tam payment from the taxable income of $ 793 he reported on his return. P disclosed the $ 3.5 million attorney's fee payment on Form 8275, Disclosure Statement, attached to his return. P contends that none of the $ 8.75 million qui tam payment is includable in…
1Opinion of the Court
Wells, Judge:
Respondent determined a deficiency in petitioner’s Federal income tax for taxable year 2003 of $3,044,000, an accuracy-related penalty pursuant to section 6662(a) of $608,800, and a delinquency addition to tax pursuant to section 6651(a)(1) of $151,955.50. We must decide the following issues: (1) Whether a “qui tarn” settlement payment is taxable income to petitioner; (2) whether petitioner has substantiated that he paid contingent attorney’s fees from the qui tarn settlement; (3) if so, whether the attorney’s fee payment is includable in petitioner’s gross income and deductible…
2Cases cited23 opinions
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