- 7 - lose her job if she owed substantial tax for failing to report the qui tam payment. The IRS began the examination of petitioner’s 1997 income tax return in 1999. OPINION A. Whether the $1,568,087 Qui Tam Payment Is Includable in Income We first decide whether the $1,568,087 payment made by the United States to petitioner in the qui tam action is includable in petitioner’s gross income. The qui tam payment to petitioner was the equivalent of a reward for petitioner’s efforts to obtain repayment to the United States of overcharges by NYUMC. Rewards are generally includable in gross income. Sec. 1.61-2(a), Income Tax Regs. Petitioner contends that, if qui tam payments are includable in gross income, taxpayers will be discouraged from bringing actions under the FCA. We disagree that this possibility justifies holding for petitioner. Petitioner’s point could also be made with respect to taxing any reward, but rewards are clearly includable in gross income under section 1.61-2(a)(1), Income Tax Regs. Petitioner contends that the $1,568,087 qui tam payment is not includable in gross income because it is not gain derived from capital or labor. See Eisner v. Macomber, 252 U.S. 189, 207Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
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