Taxpayer Required to Pay Tax Twice on the Same Income – Tax Court Unsympathetic

A taxpayer in the medical supply business received payments from Cigna before 2005. He reported those items in income and paid federal income tax on them.

A dispute later arose and the taxpayer returned payments to Cigna. He did not deduct the repayments in the year of repayment, even though Code Section 1341 might have allowed it.

In 2010, Cigna paid the funds back to the taxpayer in resolution of the dispute. The taxpayer did NOT report those payments, reasoning that he had already paid income tax on them the first time he received them…