Claim for refund of income tax paid on proceeds of a settlement agreement; “origin of the claim” doctrine; inapplicability of exclusion from taxation under I.R.C. § 104(a)(2); proceeds taxable as ordinary income and not capital gains OPINION AND ORDER LETTOW, Judge. In this tax refund case, plaintiffs James P. and Beatriz N. Duffy (collectively, “the Duff-ys”) seek a refund of $13,049 in income taxes allegedly overpaid for tax year 2007. Am. Compl. ¶ 1, ECF No. 3. In their complaint, the Duffys maintain that the proceeds of an agreement entered by Mr. Duffy to settle a claim he had made were not taxable pursuant to 26 U.S.C. (“I.R.C”) § 104(a)(2) because payment was on account of Mr. Duffy’s “physical injury or physical sickness.” Am. Compl. ¶ 135. In the alternative, the Duffys aver that the proceeds were not taxable as ordinary income, but rather were taxable as capital gains meant to restore impaired goodwill. Am. Compl. ¶¶ 119, 125. Pending before the court is the government’s motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) of the Rules of the Court of Federal Claims (“RCFC”). Mot. to Dismiss of United States (“Def.’s Mot.”), ECF No. 7; see Hr’g Tr. at 8:19-22 (Jan. 27, 2015). 1 For the reasons stated, the court converts the government’s motion to dismiss under RCFC 12(b)(6) into a motion for summary judgment under RCFC 56 and concludes that the government is entitled to judgment as a matter of law on the Duffys’ tax refund claim. BACKGROUND In 2004, Mr. Duffy maintained a private consulting business. Am. Compl. ¶ 6. He worked with the United Commercial Bank (“UCB” or “the Bank”) in San Francisco, California, and then became Tax Director and First Vice President of the Bank. Id. While working at UCB, Mr. Duffy was responsible for ensuring that all accounting policies and procedures within his department complied with the Public Company Accounting Reform and Investor Protection Act of 2002 (“Sarbanes-Oxley Act”), Pub. L, 107-204, 116 Stat. 745, Am. Compl. ¶ 17, Ex. B. 2 To that end, he “had the opportunity to observe UCB’s compliance with various legal, accounting, and financial procedures and *58 ... participated in many significant decisions affecting UCB’s financial statements.” Am. Compl. ¶ 17. In 2006, Mr. Duffy witnessed an action at UCB that was allegedly fraudulent and not in compliance with the Sarbanes-Oxley Act. Am. Compl. ¶ 18. He subsequently reported the incident to management at UCB, including the Chief Financial Officer, the Controller, and the Sar-banes-Oxley Director. Am. Compl ¶¶ 18-19, 22. 3 Mr. Duffy was placed on administrative leave shortly thereafter. Am. Compl. at Ex. D. On November 9, 2006, UCB terminated his employment contract, Am. Compl. ¶¶ VO-71, Ex. H. As a result, Mr. Duffy filed a claim against the Bank on February 2, 2007 with the Department of Labor alleging employment discrimination in violation of 18 U.S.C § 1514(a). 4 Am. Compl. at Ex. D. Mr. Duffy …
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