Research and Writing - Based upon Dorocak, The Clintons? Legal Defense Fund: Income from Payment of Legal Expenses by Another and Deductibility of Such Expenses

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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...