One of the functions of the claim of right doctrine is to create an adjustment for income that has been included in gross income in one year when events have transpired that require the return of that income in a later year.
With the recent IRS publication of Revenue Procedure 2009-20 and Revenue Ruling 2009-9, the use of the claim of right doctrine by taxpayers who invested money with Madoff has become more limited.
One condition for electing the safe harbor, however, is that the taxpayer must waive the right to utilize the claim of right doctrine with respect to the theft loss claim.
It is important to note how the court applied the claim of right
The article concludes that, although Thomas II may be correct that a debt claim of right was unavailable under the facts of that case, Thomas II is wrong to the extent it concluded that claims of right are no longer available in any robbery case.
In the only other reported decision on point--Thomas II--the defendant asserted a debt claim of right and the property taken was money.
So, too, in the nationalism of today, we hear not simply the Claim of Right
to ancient sovereign powers, but also the voice of regional and ethnic self-determination responding to the forces ot globalization that have so rapidly eroded the singular powers of the nation-state.
If a taxpayer does have to surrender amounts recognized in a prior tax year under a claim of right, the year of recognition is not retroactively modified.
For example, if a taxpayer surrenders income recognized in a prior period under a claim of right and is subject to a lower tax rate in the year of surrender than in the year of initial recognition, the resulting deduction does not make the taxpayer whole.
Programs for a defined population can be confined--and perhaps also can more readily be grounded in a claim of rights
or of equal protection.