Ted Mosby is a professor at Columbia University where heteaches architecture. Although Ted enjoys his job, theadministration at Columbia University and him do not get along. Theadministration is sick and tired of Ted’s business venture, PuzzlesBar and Grill, taking up all of his time outside of class. Sincethe administration wants Ted gone, they offer him a $300,000payment to Ted and, in return, Ted would relinquish his tenure andresign. Ted decides to take them up on their offer and accepts the$300,000 payment.
Marshall Erickson, Ted’s lawyer friend, advised him that“tenure” is a long-term capital asset and Ted should recognize along-term capital gain on the $300,000 payment for tax purposes.Marshall is an environmental lawyer at the National ResourceDefense Council and knows little about tax law though. Also, BarneyStinson, Ted’s business executive friend, is convinced the $300,000payment should be ordinary income because Ted’s employer is payinghim. Barney and Marshall get into a heated argument and theargument results in a “slap-bet” between Marshall and Barney on whois right about the character of the $300,000 payment for taxpurposes.
A. RULE OF LAW: A review of the tax authorities
Legislative Authority- The Internal Revenue Code (IRC)
Administrative Authority- Regulations, Revenue Rulings
Judicial Authority-Court Cases
B. Select at least one case from your Rule of Law section andlook it up in the Citator. Give a brief summary of what hashappened to the case since it was rendered. What was the originalcourt of jurisdiction? Was it appealed? Have other cases madereference to the case. If so, were the references favorable orunfavorable?
