Chapter 3 – Gifts

Chapter 3 – Gifts - Chapter 3 – Gifts •...

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Chapter 3 – Gifts • General rule – gifts are NOT includible in gross income.
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Gifts Two ways of reducing gross income: Excluding (generally done by a specific statute) Deductions (sometimes by statute, sometimes by general rule of “ordinary and necessary”) Gifts are specifically, by statute, excluded from gross income under section 102.
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Commissioner v. Duberstein 363 U.S. 80 S.Ct. 1190 (1960) Consolidated the cases of Duberstein and Stanton – opposite conclusions from two different Appeals courts. Duberstein – taxpayer referred business to a business colleague, never expecting anything in return. As a “thank-you” the colleague presented Duberstein with a new Cadillac even though taxpayer insisted he did not want it and never expected it (he ultimately accepted it).
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Commissioner v. Duberstein 363 U.S. 80 S.Ct. 1190 (1960) Duberstein never reported the car as gross income, but considered it a gift. Colleague deducted the expense of the car as a business expense. IRS disagreed (no surprise
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This note was uploaded on 09/27/2008 for the course BUS 1000 taught by Professor Professor during the Spring '08 term at Cal Poly.

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Chapter 3 – Gifts - Chapter 3 – Gifts •...

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