Milton D. and Linda M. Peebles - Page 5

                                        - 4 -                                         
               Petitioner and one of petitioners’ daughters contacted the             
          Arkansas State Medical Board (medical board) in November 1999 to            
          report the affair between Dr. Hestir and Mrs. Peebles.  In an               
          undated letter, Dr. Hestir self-reported his misconduct to the              
          medical board and expressed deep regret for his actions.                    
               The medical board held a hearing on February 3, 2000.                  
          Petitioners testified at the hearing.  When questioned why Dr.              
          Hestir gave him $25,000, petitioner said:  “I think it was to try           
          to clear his conscience.”                                                   
               On February 8, 2000, Dr. Hestir’s accountant prepared a Form           
          1099-MISC, Miscellaneous Income, reporting that he had paid                 
          $25,000 to petitioner.  Petitioners did not report the $25,000 on           
          their timely filed Federal income tax return for 1999.                      
                                     Discussion                                       
          A.   The Parties’ Contentions and Legal Background                          
               Petitioners contend that Dr. Hestir intended the $25,000               
          payment to be a gift.2  We disagree.                                        
               Gross income includes all income from whatever source                  
          derived.  Sec. 61.  However, gross income does not include gifts.           
          Sec. 102(a).  In Commissioner v. Duberstein, 363 U.S. 278, 285-             
          286 (1960), the Supreme Court said:                                         


               2  We need not decide which party bears the burden of proof            
          because we decide this case on the basis of the preponderance of            
          evidence without regard to the burden of proof.                             





Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011