Employment Agreement

[ron44447]

I have a client who, my mutual agreement, terminated his employment where there was an employment contract involved.
He was paid a signing bonus and when he left he agreed to reimburse a portion of the signing bonus. He has already paid taxes on the complete bonus.

I thought this was a "claim of right" but I can't find anything anywhere.

Does anyone know how to handle this?
Thanks

[BP.]

I can't find anything anywhere.

Hi! TTB 3-21 might help.

[ron44447]

Thanks
But I cannot find TTB 3-21 what is that ?

[BP.]

Thanks
But I cannot find TTB 3-21 what is that ?

Sorry! The Tax Book, Tab 3, page 21.

[ron44447]

Thanks got it, recoveries. Now I just have figure out how to do that

[BP.]

Thanks got it, recoveries.

Check just a little further down the page and onto the next one, under "Repayments."
Now you got it!

[ron44447]

Thanks again

[Gary2]

Do some research on Section 1341 claims and court cases. The IRS frequently takes the position that it only applies when the original payment was in error, and not when new circumstances in a subsequent year require a repayment. They've lost some cases, won others, depending on jurisdiction.

[ChEAr$]

Do some research on Section 1341 claims and court cases. The IRS frequently takes the position that it only applies when the original payment was in error, and not when new circumstances in a subsequent year require a repayment. They've lost some cases, won others, depending on jurisdiction.

Right on, Gary2. Now if the contract had specified repayment in case of termination the section 1341 would hold. That doesn't seem to be the case here.