Source: https://openjurist.org/212/f2d/516/hubert-v-commissioner-of-internal-revenue
Timestamp: 2019-04-26 06:09:56+00:00

Document:
Robert W. Weinstein and Albert Mintz, Rittenberg, Weinstein & Bronfin, New Orleans, La., for petitioners.
Alonzo W. Watson, Jr., Ellis N. Slack, George F. Lynch, Special Asst. to Atty. Gen., Dept. of Jus., H. Brian Holland, Asst. Atty. Gen., Charles E. Lowery, Special Atty. Bur. Int. Rev., Kenneth W. Gemmill, Act. Chief Counsel. Washington, D.C., for respondent.
This appeal from a decision of the Tax Court sustaining the commissioner's determination of a deficiency in income taxes for the taxable year 1948, presents a single question. This is whether the sum of $1000 received by Leon D. Hubert, Jr., from the Louisiana State Law Institute during the taxable year in question was taxable income within the meaning of Sec. 22(a), I.R.C., or whether it was a gift within the meaning of Sec. 22(b)(3) of the Code, 26 U.S.C.A. § 22(a)(b)(3).
The Tax Court, Arundell, Judge, stating the undisputed facts and, in a clear and brief opinion,1 setting down the reasons for its conclusion that the quarterly installments of the honorarium were paid to, and received by, Hubert as compensation for personal services rendered, and, therefore, constituted taxable income, rejected petitioner's contention, that they were gifts and specifically excludable under Section 22(b)(3) of the Code.
The taxpayers are here insisting that in determining whether the honorarium was a gift or payment for services, the Tax Court erred: in refusing to consider and accord adequate weight to controlling features2 of the undisputed evidence; and 'in placing great weight on the possibility that Hubert could anticipate the receipt of an honorarium during 1948, merely because he had received honoraria in prior years'.
In support of their view that the payments made were not earnings but gifts, taxpayers rely heavily on statements,3 of the condition under which the honorarium was paid, made by the director of the Institute, and on the decisions of this court in Schall v. Commissioner, 5 Cir., 174 F.2d 893, 895, and of the Supreme Court in the Bogardus case, (Bogardus v. Commissioner), 302 U.S. 34, 58 S.Ct. 61, 82 L.Ed. 32.
As has been so often declared, in these cases where the question of gift or compensation has been involved, whether a particular payment is the one or the other may not be determined by any fixed rule but must depend upon the intention of the parties, particularly that of the payor as disclosed by the attending facts and circumstances.4 We are pointed to no satisfactory reason, we see none, for rejecting the determination of commissioner and Tax Court in favor of the contention of the taxpayer. On the contrary, we are of the clear opinion that the decision appealed from was right and that it should be affirmed.
2 '(a) That the giving by the Louisiana State Law Institute to Mr. Hubert was not a discharge of a legal obligation.
'(b) That there was no contractual obligation on the part of the one giving the money (The Louisiana State Law Institute).
'(c) That the taxpayers did not have the right to enforce the giving of said honorarium and could not collect it by legal process.
'(d) That the intent of the Louisiana State Law Institute was to show good will, esteem, and kindliness toward Mr. Hubert without thought to make requital for his service.
'(e) That the purpose of the honorarium was to give and incite rather than to employ or buy.
'(f) That the assistance by Mr. Hubert was pro bono publico.
'(g) Those people working under Mr. Hubert's authority and supervision were paid far in excess of the amount given to Mr. Hubert.
'(h) That the payor (the Louisiana State Law Institute) did not withhold federal income tax from the honorarium given to Mr. Hubert while it did withhold federal income tax from payments for the employment of research and clerical assistants and the director of the Institute.
'(i) There was no fixed number of hours that the taxpayer, Mr. Hubert, was supposed to or had to work.
4 Bogardus v. Commissioner, 302 U.S. 34, 58 S.Ct. 61, 82 L.Ed. 32; Schall v. Commissioner, 5 Cir., 174 F.2d 893; Thomas v. Commissioner, 5 Cir., 135 F.2d 378; Bass v. Hawley, 5 Cir., 62 F.2d 721; Levey v. Helvering, 62 App.D.C. 354, 68 F.2d 401; Fisher v. Commissioner, 2 Cir., 59 F.2d 192.

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