Nickelsburg v. Commissioner of Internal Revenue
Decision Date | 14 March 1946 |
Docket Number | No. 35.,35. |
Citation | 154 F.2d 70 |
Parties | NICKELSBURG v. COMMISSIONER OF INTERNAL REVENUE. |
Court | U.S. Court of Appeals — Second Circuit |
Before L. HAND, CHASE, and FRANK, Circuit Judges.
Julian G. Culver, of New York City (John Schulman, of New York City, of counsel), for appellant.
Sewall Key, Acting Asst. Atty. Gen., and A. F. Prescott and S. Dee Hanson, Sp. Assts. to Atty. Gen., for respondent.
This amount was paid to the petitioner and the corporation charged it to surplus account. It claimed no deduction for it as an expense. The petitioner reported the receipt of the $7,500 in his return of income for 1940 but only as a non-taxable gift. The Commissioner included it in his gross income on the ground that it was additional compensation for services rendered the Fur Merchants Warehouse Corporation and consequently taxable income. The Tax Court so held and this petition is to review that decision.
The money the petitioner accepted from the corporation which had benefited from his services may have been compensation for such services, and not necessarily a gift, even though it was made voluntarily. Old Colony Trust Co. v. Com'r, 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918; cf. Com'r v. Wemyss, 324 U.S. 303, 65 S.Ct. 652. If there was a consideration for it, there was no gift. Noel v. Parrott, 4 Cir., 15 F.2d 669; Botchford v. Com'r, 9 Cir., 81 F.2d 914. What are in fact bonus payments by way of additional compensation paid in recognition of some obligation not legally enforceable are taxable as income. Fisher v. Com'r, 2 Cir., 59 F.2d 192.
In each instance where an employer adds something voluntarily to the compensation which is paid to an employee in full discharge of the employer's legal obligation as such the test as to the taxability of the additional amount received is whether under the particular...
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...enforce its payment. The last of our decisions in Carragan v. Commissioner, 2 Cir., 197 F.2d 246, 248, so declares and in Nickelsburg v. Commissioner, 154 F. 2d 70, we said (at page 71) that the test was whether "what was added was by way of more compensation for a deserving employee or mer......
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