The Puerto Rico Court of Appeals ruled on May 12, 2026, that a $5,102,387 payment received by Mildred A. Segarra Boerman is subject to income tax. This decision affects her estate and clarifies how similar inheritance-related payments may be taxed in the future.

The case originated when Segarra Boerman, through her estate, challenged a tax assessment made by the Puerto Rico Department of Treasury. The court's ruling confirms that the payment, received from the Titín Foundation Inc. as part of a settlement agreement, constitutes taxable income rather than an inheritance.

Background

Mildred A. Segarra Boerman was involved in a legal dispute regarding her late brother's estate, which included a significant payment from the Titín Foundation Inc. This payment stemmed from an extrajudicial agreement related to a federal lawsuit concerning the inheritance of her brother, Luis Felipe Segarra Boerman, also known as Titín.

In her 2023 income tax return, Segarra Boerman reported the $5,102,387 as an inheritance, seeking to exclude it from taxable income. However, the Puerto Rico Department of Treasury issued a tax adjustment, stating that the amount should be considered taxable income. Following her disagreement with this determination, Segarra Boerman filed a complaint with the Office of Administrative Appeals of the Department of Treasury.

The Ruling

The court ruled against Segarra Boerman, confirming the Department of Treasury's assessment that the payment was taxable. The judges on the panel included Judge Hernández Sánchez, Judge Rivera Torres, and Judge Marrero Guerrero. In their opinion, they stated, "The sum received by the petitioner as part of a settlement does not qualify as an inheritance for tax purposes."

The court emphasized that the payment was a result of a legal settlement rather than a direct inheritance. They noted that the nature of the lawsuit did not challenge the validity of the will, which is a key factor in determining whether a payment is considered an inheritance. The court concluded that the payment was a taxable income derived from a settlement agreement.

Impact

This ruling has significant implications for how similar cases will be handled in the future. It clarifies that payments received as part of legal settlements, even if they are related to inheritance disputes, may be treated as taxable income. This decision may affect other taxpayers who have received similar payments and are unsure of their tax obligations.

Furthermore, the ruling reinforces the presumption of legality and correctness in administrative decisions, meaning that taxpayers must provide substantial evidence to overturn tax assessments. This case may serve as a precedent for future disputes involving the taxation of inheritance-related payments.

What's Next

Details were not available in the court filing regarding whether Segarra Boerman's estate plans to appeal the decision. However, the ruling does indicate that the estate may face ongoing tax obligations related to the assessed income.