-5-
excludes from gross income "the value of property acquired by
gift". Property is considered a gift if given in a spirit of
"'detached and disinterested generosity'". Commissioner v.
Duberstein, 363 U.S. 278, 285 (1960) (quoting Commissioner v. Lo
Bue, 351 U.S. 243, 246 (1956)). The intent of the transferor
controls the characterization of the property. Id. at 285-286.
Petitioners argue that the incentive payment was a gift.
They rely on the language contained in the Communication of State
Farm's Settlement Offer that states that "you will automatically
share in any Incentive Cash". Petitioners contend that Mrs.
Berst had no control over what the other claimants would do, and
that she was given the incentive payment with no obligation on
her part. As stated in petitioners' brief:
There were no services performed, no conditions placed
upon it [the incentive payment], and it was not
bargained for. * * * State Farm would not have
decided to pay each claimant an extra $16,200 on its
own.
State Farm's motive for making the incentive payment was far
from "detached and disinterested generosity". Its relationship
with petitioner was, at best, adversarial. State Farm was
attempting to settle its case with petitioner as quickly as
possible. Contrary to petitioners' contention, State Farm paid
the extra amount because, by inducing settlement of the claims,
it paid only a percentage of the "value" of the claims. In
petitioner's case alone, the full "value" of her claim was
$374,078. Her settlement represented 37 percent of that amount,
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