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363 U.S. 278, 285 (1960); Williams v. Commissioner, supra. The
transferor’s intention is the most critical consideration for
this inquiry. Duberstein v. Commissioner, supra at 285. The
transferor’s own characterization of the payment, however, is not
determinative. Id. at 285-286. There must be an objective
inquiry as to whether the payment is really a gift. Id.
Payments from an employer to an employee may still be income to
the employee even when the two share a close friendship.
Williams v. Commissioner, supra. Also, payments between an
employer and an employee may be income when the employer provides
neither a Form W-2 nor a Form 1099-MISC and fails to withhold tax
on those payments. Leschke v. Commissioner, T.C. Memo. 2001-18.
Nevertheless, a payment between an employer and an employee may
be a gift when the relationship between the employer and the
employee is personal and unrelated to work. Caglia v.
Commissioner, T.C. Memo. 1989-143; Harrington v. Commissioner,
T.C. Memo. 1958-194. The personal relationship may be indicated
by after-work social interactions or activities such as gambling
trips. See Caglia v. Commissioner, supra; Harrington v.
Commissioner, supra.
Mr. Hoiland rewarded petitioner’s performance as an officer
and employee of PCI with promotions and raises. Mr. Hoiland
arranged to give petitioner the $160,000 payment after she turned
down a $20,000 raise and an offer of a home and an automobile.
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