Cesarini v. United States

Brief Fact Summary. Plaintiffs purchased a used piano and found $4,467 in cash inside. Plaintiffs originally reported this as income but filed an amended return and sought a refund of the taxes paid on that income.

Synopsis of Rule of Law. Gross income means all income from whatever source derived.

Facts. Plaintiffs, husband and wife, bought a used piano for $15.00. Inside they found $4,467 and reported this as income. They filed an amended return and sought $836.51, which was the tax they believed owed to them because the found money should not have been reported as income. The Commissioner of Internal Revenue rejected their claim and they filed suit.

Issue. Should the found money be included as income?

Held. Judge Young issued the opinion for the United States District Court in holding that the found money should be included as gross income of Plaintiffs.

Discussion. The rule requiring all income to be included as gross income is intentionally broad to allow Congress to use its taxing power broadly under the Sixteenth Amendment. Plaintiffs could not show a specific exception for found money.