- 17 -
Petitioner relies on United States v. Merrill, 211 F.2d 297,
302-303 (9th Cir. 1954).9 In that case, the Court of Appeals for
the Ninth Circuit held that a payment mistakenly made to a
taxpayer who had no right to receive it is not taxable in the
year of receipt if, in that year, the taxpayer renounces any
claim to the funds, recognizes an obligation to repay, and makes
provision for repayment in the form of a journal entry on the
taxpayer’s books. Id. at 303-304. Petitioner’s situation
differs from that of the taxpayer in Merrill because the payment
of funds to petitioner was not a mistake, petitioner had the
right to receive the funds, and there was no existing agreement
with O’Dowd to return the payment. In Bates Motor Transp. Lines,
Lashells’ Estate, and Merrill, each recipient of funds had an
agreement with another party during the year of receipt to return
the funds.
Petitioner contends that he involuntarily received the
funds, that he unconditionally renounced his right to them, and
that he thought that not cashing the checks may have caused him
to lose the $41,585,388 or be subject to the cost of financing an
additional purchase. We disagree. He voluntarily cashed the
checks he received. Creating a separate account to hold the
9 We relied on the holding in United States v. Merrill,
211 F.2d 297, 302-303 (9th Cir. 1954), in Bishop v. Commissioner,
25 T.C. 969, 974 (1956). See also Gaddy v. Commissioner, 38 T.C.
943, 947-948 (1962), affd. in part and remanded in part on
another issue 344 F.2d 460 (5th Cir. 1965).
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011