Glenn Hightower - Page 11

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                                      OPINION                                         
          A.   Whether the Payments at Issue Are Taxable to Petitioner in             
               the Years Received                                                     
               1.   Contentions of the Parties                                        
               The parties dispute whether the payment to petitioner for              
          the stock buyout and related interest are taxable to petitioner             
          in 2000 and 2001.  Petitioner contends that those amounts are not           
          taxable in those years because of the claim of right doctrine.              
          Respondent disagrees.5  We agree with respondent.                           
               Income includes all economic gains not specifically exempted           
          from taxation.  See sec. 61; Commissioner v. Glenshaw Glass Co.,            
          348 U.S. 426, 429 (1955).  Income is generally taxable in the               
          year in which the taxpayer receives it unless, under the method             
          of accounting used by the taxpayer, the amount is properly                  
          taxable in another year.  Sec. 451(a).  For taxpayers using the             
          cash method of accounting, income is taxable in the year actually           
          or constructively received.  Sec. 1.451-1(a), Income Tax Regs.              
               Under the claim of right doctrine, a payment is includable             
          in income in the year in which a taxpayer receives it under a               
          claim of right (even if that claim is disputed by another party)            


               5  Income generally includes proceeds of a stock sale (less            
          a taxpayer’s basis) and interest on money received.  Secs.                  
          61(a)(3), (4), 1001.  Respondent contends that petitioner                   
          received income in the amount of the gross proceeds less his                
          basis in the stock, plus all of the interest credited to the                
          account in which he had deposited that payment.                             





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