- 9 -
realized no gain or profit when it collected the funds.
Respondent argues that the FEECA receipts are includable in
People's gross income. Respondent contends that People's
collected the receipts without a trust relationship. Respondent
contends that the FEECA expenditures benefited People's
significantly.
We agree with respondent that the FEECA receipts are
includable in People's gross income. We begin our analysis with
the statutory text, which provides that "gross income means all
income from whatever source derived". Sec. 61(a). Congress
prescribed this text intending to "use the full measure of its
taxing power". Helvering v. Clifford, 309 U.S. 331, 334 (1940).
This text is construed broadly to reach any accession to wealth
realized by a taxpayer, and over which the taxpayer has complete
control. See United States v. Burke, 504 U.S. 229 (1992);
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955).
Funds received by a taxpayer are excludable from gross
income when: (1) The funds are received in trust subject to a
restriction that they be expended for a specific purpose and
(2) the taxpayer does not profit, gain, or benefit in spending
the funds for the stated purpose. See Ford Dealers Adver. Fund,
Inc. v. Commissioner, 55 T.C. 761, 771-772 (1971) (discussing
Seven-Up Co. v. Commissioner, supra, and its progeny), affd. per
curiam 456 F.2d 255 (5th Cir. 1972). People's does not meet this
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011