''Estate of Sydney J. Carter v. Commissioner of Internal Revenue'', 453 F.2d 61 (2d Cir. 1971), was a

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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'' * 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

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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