Commissioner v. Duberstein
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| Commissioner v. Duberstein | ||||||||||
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| Argued March 23, 1960 Decided June 13, 1960 |
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| Holding | ||||||||||
| The court upheld the Tax court's ruling with regards to Duberstein but split as to Stanton. | ||||||||||
| Court membership | ||||||||||
| Chief Justice: Earl Warren Associate Justices: Hugo Black, Felix Frankfurter, William O. Douglas, Tom C. Clark, John Marshall Harlan II, William J. Brennan, Jr., Charles Evans Whittaker, Potter Stewart |
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| Case opinions | ||||||||||
| Majority by: Brennan |
Commissioner v. Duberstein, , was a case decided by the United States Supreme Court dealing with the exclusion of "the value of property acquired by gift" from the gross income of an income taxpayer. Justice William J. Brennan, Jr. delivered the opinion of the Court.
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[edit] Facts
The Court was presented with two sets of facts.
[edit] No. 376, Commissioner v. Duberstein
Berman was president of Mohawk Metal Corporation. Duberstein was president of the Duberstein Iron & Metal Company. They would often talk on the phone and give each other names of potential customers. After receiving some particularly helpful information, Berman decided to Duberstein a gift of a Cadillac. Although Duberstein said he did not need the car as he already had a Cadillac and an Oldsmobile he eventually accepted it. Mohawk Metal Corporation later deducted the value of the car as a business expense, but Duberstein did not include the value of the Cadillac in his gross income when he filed his tax return, deeming it a gift. The Commissioner asserted a deficiency for the car’s value against Duberstein. The Tax court affirmed.
[edit] No. 502, Stanton v. United States
Stanton worked for the Trinity Church in New York City as the comptroller of the Church corporation and president of the corporation. He resigned from both positions to go into business for himself. As a "gratuity" the corporation's directors awarded Stanton $20,000 in appreciation of the services rendered. While some directors testified that Stanton had been well liked by all in the Vestry and the $20,000 was a gift to show that good will, there was also some evidence given that Stanton was being forced to resign. The trial judge made a simple finding that the payments were a "gift".
[edit] The Issues
Was the car that Duberstein received a gift for taxation purposes? Was the money that Stanton received a gift for taxation purposes?
[edit] The Court's reasoning
The Court began by explicitly rejecting the idea that a "gift" for taxation purposes was the same as "gift" in common law terms. Duberstein at 285.
Furthermore, the Court rejected the premise that there is hard and fast line to what does and does not constitute a gift. Duberstein at 287. Instead, when determining whether something is a gift for taxation purposes, the critical consideration is the transferor's intention. Duberstein at 285-286 (citing Bogardus v. Commissioner, ). This is a question of fact that must be determined on a "case-by-case basis". Duberstein at 290. The body that levies the tax must conduct an objective inquiry that looks to "the mainsprings of human conduct to the totality of the fact of each case." Duberstein at 289.
Gifts are the result of the "detached and disinterested generosity." Duberstein at 285 (quoting Commissioner of Internal Revenue v. LoBue, 351 U.S. 243 (1956)). The disinterested nature of gifts is contrasted with payments given as an "involved and intensely interested" act. See Olk v. United States, 536 F.2d 876 (9th Cir. 1976). Gifts are often given out of "affection, respect, admiration, charity or like impulses. Duberstein at 285 (quoting Roberts v. United States, 343 U.S. 711, 714 (1952). To determine whether a payment was a gift, the trier of fact must consider all of the evidence in front of it and determine whether the transferor's intention was either disinterested or involved. Duberstein at 285-289.
[edit] Holding
The court upheld the Tax court's ruling with regards to Duberstein but split as to Stanton.
[edit] Holding re: Duberstein
The Court determined that Duberstein's car was not a gift because it was given to him either as compensation for the customer references he gave to Berman or to encourage Duberstein to give more references in the future. Duberstein at 291-92. This was certainly not disinterested. Id.
[edit] Holding re: Stanton
A plurality remanded Stanton's situation back to the trial court for a determination of whether the Vestry had a the intent to give a gift or whether the money was given as compensation. Id. at 292.
[edit] Justice Whitaker's concurrence
Justice Whitaker wrote separately to state his opinion that sometimes whether something is a gift is a mixed question of fact and law, and not strictly a fact question as the majority wrote. Id. at 293.
[edit] Justice Douglas's dissent
Justice Douglas dissented. Id. He believed that both were gifts. Id.
[edit] Justice Black's concurrence and dissent
Justice Black agreed with the Court's reasoning regarding Duberstein. Id. at 293-94. He disagreed with the Court's decision regarding Stanton. Id. at 294. He believed that Stanton's money truly was a gift. Id.
[edit] Justice Frankfurter's concurrence and dissent
Justice Frankfurter agreed that Duberstein's car was a gift. Id. at 295. Justice Frankfurter believed that Stanton's money was definitely not a gift because it was given to him as a result of his hard work. Id. at 297-98. He explained that when "[T]hings of value [are] given to employees by their employers upon the termination of employment" or when an employer gives "payments entangled in a business relation and occasioned by the performance of some service" that there is a " strong implication is that the payment is of a business nature" and, therefore, not a gift. Id. at 295-296.
[edit] See also
- List of United States Supreme Court cases, volume 363
- Bogardus v. Commissioner,
