Steel

MEMORANDUM **

Mark and Connie Steel and Odd-Bjorn and Lisa Huse appeal from the Tax Court’s affirmation of Commissioner’s deficiency determination. We have jurisdiction pursuant to 26 U.S.C. § 7482 (a), and we affirm.

The Tax Court’s finding that the lawsuit proceeds were not part of the purchase price of BFI’s stock is not clearly erroneous. See Boehm v. Comm’r, 326 U.S. 287, 293 , 66 S.Ct. 120 , 90 L.Ed. 78 (1945); In re Steen, 509 F.2d 1398, 1402 (9th Cir.1975). As the requirement for capital gains treatment was not met, the proceeds are correctly taxed as ordinary income. See West v. Comm’r, 37 T.C. 684, 687-88 , 1962 WL 1184 (1962).

The Tax Court did not err when it found that the Stock Purchase Agreement and Assignment Agreement, while related, did not provide for the lawsuit as additional consideration. The lawsuit was not tied to the purchase price in the Stock Purchase Agreement, nor was the assignment necessary to finance the deal. Instead, Appellants essentially assigned the lawsuit to themselves. Even if the two agreements are mutually interdependent, the Tax Court’s finding that the lawsuit was an unwanted asset, and not part of the purchase price, is not clearly…