Dean v. Commissioner - 187 F.2d 1019 (3d Cir. 1951)

Rule:

It was the taxpayer's legal obligation to provide a family home and if he did it by the occupancy of a property which was held in the name of a corporation of which he was president, the fair value of that occupancy was income to him.

Facts:

Appellant taxpayer and his wife were the sole shareholders in a corporation. The wife owned real estate prior to the marriage, and after marriage, transferred title to their corporation. Appellant and his wife continued to occupy the real estate as their home following the transfer. Appellant was in military service during the late war, but received from the corporation the difference between his military pay and the salary he had previously received. Appellant also shared in the occupancy of the home as he was free to do so. Appellee Commissioner of Internal Revenue ordered that the fair rental value of the residence property was to be included in the taxpayer's gross income under the general provisions of 26 U.S.C.S. § 22. Appellant challenged the ruling, and the trial court found in appellee's favor. Appellant sought further review. 

Issue:

Was it proper to include the fair rental value of the residence property in the appellant taxpayer’s gross income? 

Answer:

Yes.

Conclusion:

The court stated that it was appellant's legal obligation to provide a family home, and if he did it by the occupancy of a property which was held in the name of a corporation of which he was president, the fair value of that occupancy was income to him. The court affirmed the lower court's ruling, and ordered that appellant pay the income tax.