- 8 -
(1920).2 We disagree. Gross income includes all income from
whatever source derived unless excluded by law. Sec. 61;
Commissioner v. Kowalski, 434 U.S. 77, 82-83 (1977); Commissioner
v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955). The Internal
Revenue Code provides no exclusion from gross income for proceeds
received by a relator in a qui tam proceeding. In Eisner v.
Macomber, supra, the Supreme Court decided that a shareholder-
taxpayer did not realize gain on the receipt of a stock dividend.
The Supreme Court said that income is “‘gain derived from
capital, from labor, or from both combined,’” id. at 207 (quoting
Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 (1918)), but it
does not include “enrichment through increase in value of capital
investment”, id. at 214-215.
Neither qui tam payments nor punitive damages are intended
to compensate the recipient for actual damages. Punitive damages
are includable in gross income. O'Gilvie v. United States, 519
U.S. 79, 90 (1996); Commissioner v. Glenshaw Glass Co., supra.
In Commissioner v. Glenshaw Glass Co., supra at 430-431, the
Supreme Court said that gross income includes all accessions to
wealth and that the definition of income in Eisner v. Macomber,
supra, “was not meant to provide a touchstone to all future gross
2 At trial petitioner suggested that a qui tam payment is a
nontaxable share in the recovery of a reimbursement. However, we
do not consider this theory because petitioner did not explain or
argue it on brief.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011