Commissioner v. Duberstein

Facts

Duberstein, Taxpayer, was president of the Duberstein Iron & Metal Company. He did business with Mohawk Metal Corporation. Berman was the president of Mohawk and the two knew each other for seven years. Taxpayer often provided Berman with information on potential customers. Berman gave Taxpayer a Cadillac in exchange for the information. Taxpayer did not want to accept the car because he had no expectation for giving the information to Berman., but upon Berman’s insistence he accepted the car. Taxpayer testified that he did not think Berman would have sent him the Cadillac except for the customer information. Mohawk deducted the Cadillac as a business expense on its corporate income tax return. Taxpayer did not include the value of the Cadillac in his gross income for 1951. The Commissioner of Internal Revenue asserted a deficiency and the Tax Court affirmed. The text also discusses the case of Stanton v. United States. Stanton, Taxpayer, was employed by Trinity Church for 10 years. He resigned to go into business for himself and received a “gratuity” of $20,000. Taxpayer failed to include this amount as gross income and a deficiency was asserted. Testimony showed that the amount could have been a gift for the years of service. However, other evidence suggested the amount may have been part of a severance package in return for his resignation.