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.
While State law may control as to the extent of petitioners legal rights to the compensation award, it does not control as to the characterization of the award or its components for Federal income tax purposes.View Full Point of Law