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U.S. Supreme Court

Commissioner v. Duberstein, 363 U.S. 278 (1960)

Commissioner v. Duberstein

No. 376

Argued March 23, 1960

Decided June 13, 1960*

363 U.S. 278


1. This Court rejects the Government's suggestion that it promulgate a new "test" to serve as a standard to be applied by the 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, since the governing principles are necessarily general, and have already been spelled out in the opinions of this Court. Pp. 363 U. S. 284-286.

2. The conclusion whether a transfer amounts to a "gift" is one that must be reached on consideration of all the factors. While the principles urged by the Government may, in nonabsolute form as crystallizations of experience, prove persuasive to the trier of facts in a particular case, they cannot be laid down as a matter of law. Pp. 363 U. S. 287-289.

3. Determination in each individual case as to whether the transaction in question was a "gift" must be based ultimately on the application of the factfinding tribunal's experience with the mainsprings of human conduct to the totality of the facts in the case, and appellate review of the conclusion reached by the fact-finding tribunal must be quite restricted. Pp. 363 U. S. 289-291.

4. In No. 376, Duberstein, an individual taxpayer, gave to a business corporation, upon request, the names of potential customers. The information proved valuable, and the corporation reciprocated by giving Duberstein a Cadillac automobile, charging the cost thereof as a business expense on its own corporate income tax return. The Tax Court concluded that the car was not a "gift" excludable from income under § 22(b)(3) of the Internal Revenue Code of 1939.

Held: on the record in this case, it cannot be said

Page 363 U. S. 279

that the Tax Court's conclusion was "clearly erroneous," and the Court of Appeals erred in reversing its judgment. Pp. 363 U. S. 279-281, 363 U. S. 291-292.

5. In No. 546, Stanton, upon resigning as comptroller of a church corporation and as president of its wholly owned subsidiary created to manage its extensive real estate holdings, was given "a gratuity" of $20,000 "in appreciation of" his past services. The Commissioner assessed an income tax deficiency against him for failure to include this amount in his gross income. Stanton paid the deficiency and sued in a Federal District Court for a refund. The trial judge, sitting without a jury, made the simple finding that the payment was a "gift," and entered judgment for Stanton. The Court of Appeals reversed.

Held: the finding of the District Court was inadequate; the judgment of the Court of Appeals is vacated, and the case is remanded to the District Court for further proceedings. Pp. 363 U. S. 281-283, 363 U. S. 292-293.

265 F.2d 28 reversed.

268 F.2d 727, judgment vacated and cause remanded.

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