Glenn Hightower - Page 17

                                       - 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  Next

Last modified: May 25, 2011