§1234A — Gains or losses from certain terminations
3 cases·2 distinguished·1 cited
Statute Text — 26 U.S.C. §1234A
Gain or loss attributable to the cancellation, lapse, expiration, or other termination of—
a right or obligation (other than a securities futures contract, as defined in section 1234B) with respect to property which is (or on acquisition would be) a capital asset in the hands of the taxpayer, or
a section 1256 contract (as defined in section 1256) not described in paragraph (1) which is a capital asset in the hands of the taxpayer,
shall be treated as gain or loss from the sale of a capital asset. The preceding sentence shall not apply to the retirement of any debt instrument (whether or not through a trust or other participation arrangement).
3 Citing Cases
768 n.1 (2000). Eight categories of property are excluded from this definition. See sec. 1221(a)(l)-(8). The parties agree that those exclusions do not apply. Petitioners also argue that the qui tam award is entitled to capital gains treatment under sec. 1234A. The gain or loss attributable to the cancellation, lapse, expiration or other termination of a right or obligation for property that is a capital asset of the taxpayer will be treated as the sale of capital asset. See. 1234A. As stated, p
ngress has enacted numerous statutes that require capital gain and/or loss in certain situations where the dispositions are technically not sales or exchanges, including, inter alia, section 165(g), applicable to losses for worthless securities, and section 1234A, applicable to certain terminations of rights or obligations with respect to property that is (or on acquisition would be) a capital asset.