Taxation-Federal Income Tax-Strike Benefits May Be Gifts

Authors

Christopher Cobb, University of Michigan Law School

Abstract

Taxpayer received assistance from a labor union while he was participating in a strike called by the union. The area in which he lived had become a distressed area as a consequence of the strike, and the union had established a general program of aid for strikers with no other source of income. Both before and after he joined the union payments were made to taxpayer under this program. Taxpayer sued for a refund of the income tax he payed on the value of the assistance so received, and the jury returned a verdict in his favor, finding the payments to be gifts. The trial court entered judgment for the Government despite this verdict. The Court of Appeals for the Seventh Circuit reversed on the grounds that strike assistance, regardless of whether it is a gift, is not within the statutory definition of gross income, and that in any event the jury's verdict must stand. On certiorari to the United States Supreme Court, held, affirmed, three Justices dissenting. When the payment of strike benefits is motivated by charitable considerations, the payments may be excluded from gross income as gifts. United States v. Kaiser, 363 U.S. 299 (1960).

Recommended Citation

Christopher Cobb, Taxation-Federal Income Tax-Strike Benefits May Be Gifts, 59 Mich. L. Rev. 321 (1960).
Available at: https://repository.law.umich.edu/mlr/vol59/iss2/12