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transactions, does not protect petitioner from taxation on the
$100,000, citing James v. United States, 366 U.S. 213 (1961).
Respondent also contends that petitioner’s 1996 fraudulent
purpose contradicts petitioner’s alternative contention that the
$100,000 is excludable as a gift.
We agree with respondent.
A. Claim of Right Doctrine
In Nordberg v. Commissioner, 79 T.C. 655, 664-665 (1982),
affd. without published opinion 720 F.2d 658 (1st Cir. 1983), we
described the claim of right doctrine as follows:
This case presents merely another variation of the
familiar “claim of right” doctrine pursuant to which the
receipt of money under a claim of right which would
otherwise represent taxable income must be treated as
taxable income even though the recipient may be under a
contingent obligation to return it at a later time. In
North American Oil Consolidated v. Burnet, 285 U.S. 417
(1932), often regarded as the seminal case in this area, the
Supreme Court stated (at 424):
If a taxpayer receives earnings under a claim of right
and without restriction as to its disposition, he has
received income which he is required to return, even
though it may still be claimed that he is not entitled
to retain the money, and even though he may still be
adjudged liable to restore its equivalent. [Citations
omitted.]
Although this doctrine has been applied “in a variety of
contexts,” the situations have shared “a common factual
element: the receipt of money or other property by a
taxpayer with an imperfect right to retain it.” Wootton,
“The Claim of Right Doctrine and Section 1341,” 34 Tax Law.
297 (1981). * * *
Proceeding from the indisputable premise that “One of
the basic aspects of the federal income tax is that there be
an annual accounting of income” (Healy v. Commissioner, 345
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