Commissioner v. Duberstein
In the Case number 376, Commissioner V. Duberstein, an individual taxpayer gave to a business corporation, upon request, the names of potential customers. The individual’s information was valuable to the corporation and in return the, corporation gave him a Cadillac automobile, the corporation then charged the cost of the car as an expense on its corporate income tax returns, The corporation was sued over this, and the Tax Court ruled that the car was not a “gift” excludable from income under section 22 (b) (3) of the internal revenue code of 1939. (Lexis/Nexis.com 1) The case was taken to Court of Appeal, which rejected the Government’s suggestion that it promulgate a new “test” to serve as a standard to be applied by lower courts and by the Tax court in dealing with numerous cases involving the question what is a “gift” excludable from income under the internal revenue code,
In conclusion the court ruled that for a transfer to be referred to as a ‘gift’ the decision must be reached on consideration of all factors. Therefore the principles urged by the government does not prove to be persuasive in absolute terms to the Trier of facts in a particular case, these principles can not be laid down as a matter of law. The determination whether the transaction in question was a gift must therefore be based on the application of the fact finding tribunal’s experience with the effects of human conduct to the totality of the facts in the case, and the appellate review of the conclusion reached by the fact-finding tribunal must be quite restricted. Therefore the court of appeal ruled that on record it cannot be said that the Tax Court’s conclusion was ‘clearly erroneous’ thus the court erred in reversing its judgment
The item is mentioned on paragraph 1 of part 2 of the article which reads ‘Income from payment of expenses by another’ and was located from Lexis/nexis.com Academic section, General search – Attorney General Linked documents.
Below is the item located from Lexis/Nexis.com as it is on the website
COMMISSIONER OF INTERNAL REVENUE v. DUBERSTEIN ET UX.
SUPREME COURT OF THE UNITED STATES
363 U.S. 278; 80 S. Ct. 1190; 4 L. Ed. 2d 1218; 1960 U.S. LEXIS 2030; 60-2 U.S. Tax Cas. (CCH) P9515; 5 A.F.T.R.2d (RIA) 1626
March 23, 1960, Argued June 13, 1960, Decided *
* Together with No. 546, Stanton et ux. v. United States, on certiorari to the United States Court of Appeals for the Second Circuit, argued March 24, 1960.
PRIOR HISTORY: CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT. DISPOSITION: 265 F.2d 28, reversed. 268 F.2d 727, judgment vacated and cause remanded.
PROCEDURAL POSTURE: Petitioner government appealed judgments from the United States Court of Appeals for the Second Circuit and the United States Court of Appeals for the Sixth Circuit that reversed determinations of whether transfers of property and money to respondent taxpayers constituted gifts excludable from gross income under I.R.C. § 22(b)(3).
OVERVIEW: Respondent taxpayer one received an automobile from a businessman. Respondent taxpayer two received a sum of money from an employer. Respondents did not include the transferred property in their gross incomes, deeming them gifts. A district court held that the automobile was remuneration for services rendered to the businessman. Another district court held that the sum of money was a gift. The appellate courts reversed the judgments. The court reversed the judgment in respondent one's case and vacated the judgment in respondent two's case. The court refused to create a standard test because the conclusion of what constituted a "gift" under I.R.C. § 22(b)(3) required consideration of the factual circumstances surrounding the transfer, in particular the transferor's intent. The district court's determination that the transfer of the automobile was recompense for respondent one's services was not clearly erroneous, based upon the evidence. The judgment in respondent two's case was vacated because the district court's conclusory and general findings were insufficient for the appellate court to reverse its determination that the transfer of money was a gift.
OUTCOME: The court reversed and vacated the judgments overturning the district courts' determinations as to whether the transfers to respondents constituted gifts.
CORE TERMS: gift, church, tribunal's, trier of facts, gross income, gratuity, resignation, business expense, fact-finding, tax laws, services rendered, transferor, spelled, governing principles, mainsprings, personally, doubtless, totality, customers, refund, reversing, conclusion of law, tax return, retirement benefits, dissenting opinion, clarification, determinative, appreciation, comptroller, fact-finder (Lexis/Nexis 2010)
Below is the Item Located from CCH as it is on the website
[60-2 USTC ¶9515], Commissioner of Internal Revenue, Petitioner v. Mose Duberstein et al., Gift v. Compensation: Automobile received from business friend: Payment to resigning officer: Test for gift(June 13, 1960), U.S. Supreme Court, (Jun. 13, 1960) [60-2 USTC ¶9515]Commissioner of Internal Revenue, Petitioner v. Mose Duberstein et al. Alden D. Stanton et al., Petitioners v. United States of America
Supreme Court of the United States, Nos. 376, 546, 363 US 278, 80 SCt 1190, 6/13/60, Reversing the decision of the Court of Appeals for the Sixth Circuit, and vacating and remanding the decision of the Court of Appeals for the Second Circuit, 59-1 ustc ¶9385, 265 F. 2d 28, 59-2 ustc ¶9562, 268 F. 2d 727
On Writ of Certiorari to the United States Court of Appeals for the Sixth Circuit. On Writ of Certiorari to the United States Court of Appeals for the Second Circuit.
[1939 Code Sec. 23(b)(3)--similar to 1954 Code Sec. 102(a)]
Gift v. Compensation: Automobile received from business friend: Payment to resigning officer: Test for gift.--In determining whether a transfer was a nontaxable gift or taxable compensation, the proper criterion is one that inquires what the basic reason for the transferor’s conduct was in fact--the dominant reason that explains his action in making the transfer. This is not to be measured by a specific test, for determining when a transfer is a gift, as urged by the Government, but is to be “based ultimately on the application of the fact-finding tribunal’s experience with the mainsprings of human conduct to the totality of the facts of each case”. Thus, in Duberstein the Tax Court was warranted in concluding that the transfer of a Cadillac automobile to the taxpayer from a business friend for furnishing names of potential customers was a recompense for past services or an inducement to be of further service in the future rather than a gift. The Supreme Court could not say with the Court of Appeals for the Sixth Circuit that such a conclusion on the Tax Court’s part was “mere suspicion”. In Stanton, since the District Court made only the simple and unelaborated finding that a payment to a corporation’s resigning president was a gift, further proceedings are required looking toward new and adequate findings of fact. For this reason the judgment of the Court of Appeals for the Second Circuit was vacated and the case remanded to the District Court. BACK REFERENCES: 60FED ¶644.2901, 60FED ¶644.2931. (CCH 2010)
CCH (2010). Commissioner of Internal Revenue, Petitioner v. Mose Duberstein et al., Compensation: Automobile received from business friend: Payment to resigning officer: Test for gift (June 13, 1960), U.S. Supreme Court, (Jun. 13, 1960) 24th July < http://intelliconnect.cch.com.libproxy.lib.csusb.edu/scion/secure/index.jsp#page>
Lexis/Nexis.com (2010). Commissioner of Internal Revenue v. Duberstein ET UX, 363 U.S. 278 (1960). 24th July 2010 <http://www.lexisnexis.com.libproxy.lib.csusb.edu/us/lnacademic/mungo/lexseestat.do?bct=A&risb=21_T9804897107&homeCsi=144928&A=0.5597041918927634&urlEnc=ISO-8859-1&&citeString=363%20U.S.%20278&countryCode=USA>