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Form 1099-MISC showing the payment as income. Respondent
contends that this payment was not a gift and petitioner should
have included it in income. Petitioner claims this payment was a
gift from PCI’s owner, Mr. Hoiland, whom petitioner identified as
a “close acquaintance”. Petitioner alleges that Mr. Hoiland’s
generosity stemmed from a romantic interest in her rather than
her performance for PCI.
Gross income is income from whatever source derived unless
otherwise excluded. Sec. 61(a). Gross income includes
compensation from services. Sec. 61(a)(1). Gross income does
not include the value of property acquired by gift. Sec. 102(a).
Generally, amounts transferred by or for an employer to, or for
the benefit of, an employee are includable in gross income. Sec.
102(c)(1). The legislative history underlying section 102(c)
indicates that a payment from an employer to an employee solely
for personal reasons can still be a gift if the payment is
completely unrelated to the employment relationship and reflects
no expectation of a business benefit. Williams v. Commissioner,
T.C. Memo. 2003-97 (citing S. Rept. 99-313, at 49 (1986), 1986-3
C.B. (Vol. 3) 1, 49), affd. 120 Fed. Appx. 289 (10th Cir. 2005);
H. Rept. 99-426, at 106 n.5 (1985), 1986-3 C.B. (Vol. 2) 1, 106.
A gift must proceed from a detached and disinterested
generosity, motivated by affection, respect, admiration, charity,
or the like for income tax purposes. Duberstein v. Commissioner,
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Last modified: March 27, 2008