Law School Case Brief
Goodwin v. United States - 67 F.3d 149 (8th Cir. 1995)
Congress defines "gross income" broadly in the Internal Revenue Code (Code): Except as otherwise provided in this subtitle, gross income means all income from whatever source derived. 26 U.S.C.S. § 61(a). Therefore, unless the taxpayers can prove that special occasion gifts fall within the statutory exclusion for gifts, these payments are taxable income. The Code provides that gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. 26 U.S.C.S. § 102(a).
Reverend Goodwin headed a church congregation. Over the years, the congregation's anonymous cash gifts to the reverend increased substantially. The Commissioner assessed deficiencies on the reverend and his wife for three tax years based upon the estimated unreported special occasion gifts. The reverend and his wife paid the deficiencies and filed for a refund action in the district court. The parties filed cross-motions for summary judgment, and the district court granted summary judgment in favor of the Commissioner, concluding that the special occasion gifts were taxable income.
Were the special occasion gifts taxable income to the Goodwins?
The Court of Appeals for the Eighth Circuit affirmed the decision and held that the facts demonstrated that the congregation, as a whole, rather than individual members, made special gifts on account of the reverend's on-going services as pastor of the church. The cash payments were gathered by congregation leaders in a structured program. The court found that no reasonable jury could conclude that the payments were excludable from the reverend's taxable income. Therefore, summary judgment for the Commissioner was appropriate.
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