Saturday, May 4, 2013

Hornung v. Commissioner case brief

Hornung v. Commissioner case brief
47 T.C. 428, 1967 U.S. Tax Ct.

CASE SYNOPSIS: Petitioner taxpayer challenged the finding of respondent Internal Revenue Service of a deficiency in his income tax payment for the taxable year 1962.

FACTS: Taxpayer contended that the value of a Corvette he won for his performance in a professional football game, the value of the use of other automobiles furnished to him by an automobile company, and the value of a fur stole received by his mother from his employer should not be included in his gross income for the taxable year 1962. Taxpayer argued that he constructively received the Corvette in 1961.

The tax court found that taxpayer did not demonstrate that he possessed control over the Corvette before 1962 and that it was not the result of disinterested generosity but an award for the taxpayer's performance in a football game.

The Corvette was also not an exempted award under I.R.C. § 74 and should have been included in the taxpayer's gross income for 1962. The court further held that the taxpayer's free use of the other automobiles constituted income within the meaning of I.R.C. § 61, as he received a valuable benefit that was fully realized by him in a business context as a result of his implied endorsement of the vehicles. Lastly, the court held that because the taxpayer's mother actually received the mink stole in 1961, it did not constitute income to taxpayer in 1962.

CONCLUSION: The tax court affirmed the determination of the Internal Revenue Service in part and was precluded from addressing it in part.

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