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In early 1997, the Company issued to petitioner a Form 1099-
R, Distributions From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., with respect to
the $25,000 payment to petitioner during 1996.2
On his Federal income tax return for 1996, petitioner did
not include the $25,000 as income on his return. Petitioner
attached to his return a statement acknowledging receipt of the
$25,000 but claiming that the payment was a gift and, therefore,
was excludable from gross income.
In the notice of deficiency, respondent determined that the
$25,000 payment petitioner received from his former employer
during 1996 was includable in gross income.
Section 61(a) defines income for income tax purposes as "all
income from whatever source derived" and spells out a number of
examples of such income. Section 102(a), on the other hand,
specifically states that "Gross income does not include the value
of property acquired by gift, bequest, devise, or inheritance."
In Commissioner v. Duberstein, 363 U.S. 278, 285-286 (1960), the
Supreme Court stated:
the mere absence of a legal or moral obligation to make such
a payment does not establish that it is a gift. * * * And,
2 The parties did not offer into evidence a copy of the
Form 1099-R, although petitioner acknowledged that Federal and
State income taxes were withheld from his $25,000 payment, and
such withholdings were reflected on the Form 1099-R.
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