Hornung v. Commissioner

Brief Fact Summary. Petitioner is a well-known professional football player for the Green Bay Packers. He received a Corvette as an award for his performance in the championship game.

Synopsis of Rule of Law. All items which constitute gross income are to be included for the taxable year in which actually or constructively received.

Facts. Petitioner is a well-known football player for the Green Bay Packers and resides in Louisville, Kentucky. Each year Sports Magazine awards a new Corvette car to the player selected by its editors as the outstanding players in the National Football League championship game. The car is usually purchased several months before the award is given. The game was played on December 31, 1961 and Petitioner was awarded the car for his performance. He accepted the award but did not take possession. The car was not available for pickup that day because it was located at a dealership in New York that was closed on Sunday. He received the car on January 3, 1962. Petitioner sold the car and reported the income from the sale as gain on his 1962 tax return. He did not include the fair market value of the car on his gross income in any tax year.

Issue. Whether the value of the car should in his gross income for the tax year 1962?

Held. Judge Hoyt issued the opinion for the Tax Court in holding that the value should have been included.

Discussion. The Tax Court found that constructive receipt means “unfettered control” and Petitioner failed to show that he met this standard. He could not have obtained the car the day of the award. The editor of Sports Magazine did not have the keys or title to transfer to him that day and the dealership, which was several states away, was closed.