''Estate of Sydney J. Carter v. Commissioner of Internal Revenue'', 453 F.2d 61 (2d Cir. 1971),
was a
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
Federal income tax case decided by Judge
Henry Friendly of the
Second Circuit Court.
Facts
Dorothy T. Carter, the widow of Sydney J. Carter, was the taxpayer and appellant in the case. Mrs. Carter had been paid by Mr. Carter's employer what he would have earned until the end of the
fiscal year
A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many ...
. Mrs. Carter did not include that amount as
income on a
joint return she filed. The joint return for 1960 filed by Mrs. Carter as
executrix
An executor is someone who is responsible for executing, or following through on, an assigned task or duty. The feminine form, executrix, may sometimes be used.
Overview
An executor is a legal term referring to a person named by the maker of a ...
and for herself did not report as income the payments of $60,130.84, although it did report as capital gain a payment of $52,337.68, less the deduction of $5,000 permitted by I.R.C. § 101(b)(2)(A) (), from the
trustees of the Salomon Bros. Profit Sharing Plan, which represented the amounts accumulated for Sydney Carter's benefit during his years of service.
The
Commissioner
A commissioner (commonly abbreviated as Comm'r) is, in principle, a member of a commission or an individual who has been given a commission (official charge or authority to do something).
In practice, the title of commissioner has evolved to in ...
assessed a
deficiency
A deficiency is generally a lack of something. It may also refer to:
*A deficient number, in mathematics, a number ''n'' for which ''σ''(''n'') < 2''n''
* for failure to include the former amount. The Commissioner's assessment was sustained by the
United States Tax Court
The United States Tax Court (in case citations, T.C.) is a federal trial court of record established by Congress under Article I of the U.S. Constitution, section 8 of which provides (in part) that the Congress has the power to "constitute Trib ...
. Mrs. Carter appealed to the
Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory comprises the states of Connecticut, New York and Vermont. The court has appellate juris ...
.
Opinion of the court
The court of appeals reversed. The court noted that, in proceedings in
United States district court
The United States district courts are the trial courts of the United States federal judiciary, U.S. federal judiciary. There is one district court for each United States federal judicial district, federal judicial district, which each cover o ...
s, payments to a survivor that had not been specifically characterized as
compensation were consistently held to be gifts, except when the corporation was dominated by the decedent's family or there was a plan for making such payments. The court held that the test that applied was that of principal motive. The court noted that in this case, the gift was made to the
widow rather than to the estate; the corporation had no obligation to make further payments to deceased; the widow had never worked for the corporation; the corporation received no economic benefit; and the deceased had been fully compensated for his services. It was error for a partner's statement that the payment was a gift to be regarded as of only slight
probative value because a declaration about intention by a person with knowledge was not excludable simply because it was made after the fact.
The court was left with the definite and firm conviction that the tax court committed a mistake in finding that the payments were compensation rather than an excludable gift.
References
External links
{{caselaw source
, case =''Estate of Carter v. Commissioner of Internal Revenue'', 453 F.2d 61 (2d Cir. 1971)
, findlaw =
, justia =http://law.justia.com/cases/federal/appellate-courts/F2/453/61/386008/
, cornell =
, precydent =
, vlex =
, other_source1 = Public.resource.Org
, other_url1 =http://bulk.resource.org/courts.gov/c/F2/453/453.F2d.61.40.71-1201.html
, openjurist =http://openjurist.org/453/f2d/61/estate-carter-v-commissioner-of-internal-revenue
United States Court of Appeals for the Second Circuit cases
United States taxation and revenue case law
1971 in United States case law