Court Opinion

ID: 9469411
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:40:01.678968+00
Date Added: 2024-06-11T17:41:22.671102
License: Public Domain

FRIENDLY, Circuit Judge,
concurring in the result:
It would, of course, be unfortunate if Gambling were to escape taxation on the $70,777.52 of deferred compensation paid him in 1973 because of an ill-advised stipulation by an assistant district counsel of the Internal Revenue Service.1 Still I cannot agree that when counsel for the IRS stipulated with counsel for Gambling that “As of March 1, 1965, Gambling’s employment by RKO was discontinued”, the very words used in subparagraph 6(b) of the agreement of January 1, 1963, they meant anything other than what they plainly said.
However, although the assistant district counsel thus gave away a large part of the IRS’ case, he did not succeed in giving away all. Income is constructively received only if two conditions are met: that the taxpayer was legally entitled to it, which the stipulation settles in Gambling’s favor, and that his control of its receipt was not “subject to substantial limitations or restrictions.” Treas.Reg. § 1.451-2(a). While the stipulation of February 8, 1980, settled that RKO could not have lawfully refused Gambling’s demand in 1973, it did not settle whether RKO might reasonably have believed in earlier years that it could. The reasons persuasively set forth in Judge Meskill’s opinion amply establish that RKO might reasonably have entertained such a belief and quite possibly did. Further substantiation is afforded by the fact that when making the first payment in 1973, RKO insisted on Gambling’s signing a letter which “amended” the 1963 agreement as amended by the 1965 amendment.
I would affirm on this ground.

. I do not accept such escape as a necessary conclusion. Although the matter is not before us, the Commissioner might well be able to invoke IRC §§ 1311 and 1312.
It should be made entirely clear that the IRS attorney who signed the stipulation was not the attorney from the Department of Justice who argued this appeal.