-23--23-
Due to the contingent nature of the Raiders’ obligation, an
unconditional and enforceable debt did not exist for tax purposes
at the times that the $4 million advance and the rent credits
were received by the Raiders from the LAMCC. Thus, we sustain
respondent’s determination that the Raiders had income in 1982,
1983, 1984, 1985, and 1986 equal to the amount of the rent
credits, and that, in 1984, the Raiders had an additional
$4 million in income from the advance made in 1984.
City of Qakland Lawsuit Settlement
Petitioners bear the burden of proving that the damages
received from Oakland in settlement of the Raiders’ claims were
not includable in taxable income. Rule 142(a); H. Liebes & Co.
v. Commissioner, 90 F.2d 932 (9th Cir. 1937), affg. 34 B.T.A. 677
(1936). Petitioners argue that the damages received were to
compensate the Raiders for damage to goodwill, and, thus, as a
return of capital, they would not be included in the Raiders’
gross income. Respondent contends that the damages were to
compensate the Raiders for lost profits, and, therefore, the
Raiders would be required to include the settlement amounts
received in 1988 and 1989 in gross income.
The parties generally agree on the legal principles that
govern the determination of this issue. “‘[W]hether a claim is
resolved through litigation or settlement, the nature of the
underlying action determines the tax consequences of the
resolution of the claim.’” Getty v. Commissioner, 913 F.2d 1486,
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