Opinion ID: 256733
Heading Depth: 1
Heading Rank: 2

Heading: T. 4027, 1950-2 Cum.Bull. 9

Text: 2 '61. Gross income defined '(a) General definition.-- Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: '(1) Compensation for services, including fees, commissions, and similar items;   .' 3 '102. Gifts and inheritances '(a) General Rule.-- Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.' 4 35 T.C. 65 (1960). For general discussions of the issues involved in this case, and summaries of the course of Treasury rulings and judicial decisions concerning corporate payments to widows under section 102 and its predecessors, see Crown, Payments to Corporate Executives' Widowns, N.Y.U. 19th Inst. on Fed.Tax 815 (1961); Pelisek, Tax Treatment of Payments to the Widows of Corporate Officers and Employees, 44 Marq.L.Rev. 16 (1960) 5 This restricted scope of review was applied in Kaiser v. United States, 363 U.S. 299, 80 S.Ct. 1204, 4 L.Ed.2d 1233 (1960), and by the courts of appeals in United States v. Stanton, 287 F.2d 876 (2d Cir. 1961), and United States v. Kasynski, 284 F.2d 143 (10th Cir. 1960). In defining the proper scope of appellate review, the Supreme Court in Deberstein specifically adopted the view of the dissenters in Bogardus v. Commissioner, 302 U.S. 34, 39, 44, 58 S.Ct. 61, 64, 82 L.Ed. 32 (1937). The majority had there held that drawing factual inferences from the basic facts as to the reasons for the payments was 'a conclusion of law or at least a determination of a mixed question of law and fact,' a question to which the clearly erroneous standard of review did not apply so that an appellate court could more independently exercise its own judgment. The courts of appeals, however, did not consistently use this approach. Compare Simpson v. United States, 261 F.2d 497, 500 (7th Cir. 1958) (broad review), with United States v. Allinger, 275 F.2d 421, 423 (6th Cir. 1960) (narrow review). In Bounds v. United States, 262 F.2d 876, 880 (4th Cir. 1958), relying on the majority's opinion in Bogardus, we felt at liberty to apply the broad scope of review in reversing the findings of the District Court as to motive. Consequently, we would be guilty of no inconsistency were we to reach a different result here, having proceeded in Bounds according to now unacceptable standard for review 6 363 U.S. at 285, 80 S.Ct. 1190, 4 L.Ed.2d 1218 7 '101. Certain death benefits '(b) Employees' death benefits.-- '(1) General rule.-- Gross income does not include amounts received (whether in a single sum or otherwise) by the beneficiaries or the estate of an employee, if such amounts are paid by or on half of an employer and are paid by reason of the death of the employee. '(2) Special rules for paragraph (1).-- '(A) $5,000 limitation.-- The aggregate amounts excludable under paragraph (1) with respect to the death of any employee shall not exceed $5,000. '    ' li Before us the Government expressly declined to advance the argument that section 101(b) now requires all payments from an employer, made by reason of the death of an employee, to be included in the recipient's gross income, subject only to the $5,000 exclusion. This position finds support in our dictum in Bounds v. United States, 262 F.2d 876, 878 n. 2 (4th Cir. 1958), and in the dictum of Judge Dimock in Rodner v. United States, 149 F.Supp. 233, 236-38 (S.D.N.Y.1957). It has been specifically rejected in Reed v. United States, 177 F.Supp. 205, 209 (W.D.Ky.1959), aff'd per curiam, 277 F.2d 456 (6th Cir. 1960); Cowan v. United States, 191 F.Supp. 703, 705 (N.D.Ga. 1960); Frankel v. United States, 192 F.Supp. 776 (D.Minn.1961); and by Judge weinfeld in Wilner v. United States, 195 F.Supp. 786, 787-90 (S.D.N.Y.1961). In view of the Government's position, we are not called upon to reconsider this issue. 8 E.g., Florence S. Luntz, 29 T.C. 647 (1958); Estate of John A. Maycann, 29 T.C. 81 (1957); Estate of Arthur W. Hellstrom, 24 T.C. 916 (1955); Louise K. Aprill, 13 T.C. 707 (1949); see Pelisek, supra note 4, at 20 n. 20 9 See Bounds v. United States, 262 F.2d 876, 881-82 (4th Cir. 1958). The language of the corporate resolution here is no doubt modeled after the sample resolution in I.T. 3329, 1939-2 Cum.Bull. 153. See Pelisek, supra note 4, at 22-23. I.T. 3329 was in this respect revoked in 1950 by I.T. 4027, 1950-2 Cum.Bull. 9, but without any appreciable effect on the course of decision in the Tax Court. See Estate of Arthur W. Hellstrom, 24 T.C. 916, 919 (1955) 10 Estate of Rose A. Russek, 20 CCH Tax Ct.Rep. 123 (January 31, 1961); see Ivan Y. Nickerson, 19 CCH Tax Ct. Mem. 1508 (1960) (payment, to children of deceased employee) 11 Estate of Julius B. Cronheim, 20 CCH Tax Ct.Rep. 1144 (August 17, 1961); Ray I. Martin, 36 T.C. No. 56 (June 21, 1961); Mildred W. Smith, 20 CCH Tax Ct.Rep. 775 (May 29, 1961); Estate of Rose A. Russek, 20 CCH Tax Ct.Rep. 123 (January 31, 1961)