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U.S. Supreme Court

Bogardus v. Commissioner, 302 U.S. 34 (1937)

Bogardus v. Commissioner of Internal Revenue

No. 15

Argued October 18, 1937

Decided November 8, 1937

302 U.S. 34


1. A conclusion by the Board of Tax Appeals which is but a conclusion of law or a determination of a mixed question of law and fact based upon other facts found is subject to review. P. 302 U. S. 38.

2. A payment cannot be both "compensation for personal service" within the meaning of § 22(a) of the Revenue Act of 1928 and a "gift" under (b)(3) of the same section. Old Colony Trust Co. v. Commissioner, 279 U. S. 716, distinguished. P. 302 U. S. 39.

3. Payments made to present and former employees of a corporation by its former stockholders, acting through a new corporation which had taken over part of the property of the other, held not "compensation for personal services," taxable to the recipients as income under § 22(a) of the Revenue Act of 1928, but "gifts," exempted from taxation by subdivision (b)(3) of that section. P. 302 U. S. 40.

No connection subsisted between the old corporation or the recipients of the gifts, on the one hand, and the makers of the gifts and their new corporation, on the other. The gifts were made, without any legal or moral obligation, not for any services rendered or to be rendered or for any consideration given or to be given by any of the recipients to the donors or the new corporation, but were acts of spontaneous generosity in appreciation of the past loyalty of the recipients which had redounded to the profit of the donors when stockholders of the older company.

4. When all the facts and circumstances clearly prove an intent to make a gift, the erroneous use of the terms "honorarium" and "bonus" cannot convert the gift into a payment for services. P. 302 U. S. 42.

5. A gift is none the less a gift because inspired by gratitude for the past faithful service of the recipient. P. 302 U. S. 44.

88 F.2d 646 reversed.

Review by certiorari, 301 U.S. 674, of a judgment which affirmed an order of the Board of Tax Appeals sustaining a deficiency assessment of income tax. chanrobles.com-red

Page 302 U. S. 35


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