Brief Fact Summary. Petitioner was an attorney and rendered legal services to a client. The parties agreed that he would provide the services free of charge until the client’s death and she would leave him a set amount of stock and/or cash. The will did indeed provide for the payment to Petitioner as agreed.
Synopsis of Rule of Law. Gross income does not include property acquired by gift, bequest, devise, or inheritance.
Issue. Is the bequest income to Petitioner?
Held. Judge Oaks issued the opinion for the United States Second Circuit Court of Appeals in holding that the bequest was income because it was payment for services rendered.
Discussion. The Court of Appeals found that parties entered into a contract for services. Payment for such would normally be income and such a result should not be any different here. The parties delayed payment and payment was accomplished through a devise in a will. This was not a true gift or devise excludable from gross income.