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Federal Income Tax

The Claim-of-Right Doctrine

The Claim-of-Right Doctrine

Learn about the deductions taxpayers sometimes get if they receive income, include it in gross income, and later have to return it.


Introduction, General Rules

In this lesson, we'll study the claim-of-right doctrine. Under this doctrine, if a taxpayer receives money or other property without any significant restrictions on its disposition or any consensual, fixed, noncontingent repayment obligation and treats the property as the taxpayer’s own, then the property's value is gross income to the taxpayer in the year of receipt. This rule applies even if there's a significant possibility that, in a later year, the taxpayer...