Carney v. United States
United States District Court for the District of Connecticut
67-2 U.S.T.C. P9605 (1967)
- Written by Rich Walter, JD
Facts
Susan L. Carney’s (plaintiff’s) husband, a company president, died in an airplane crash. After consulting their accountant, the company’s board of directors voted to pay the widow $36,000, the salary her husband would have earned through the balance of the year. Board minutes characterized the payment both as a token of respect and as further consideration for the husband’s past services. The accountant deducted the payment as a business expense, as he routinely did for ordinary payroll expenses. The Internal Revenue Service of the United States (defendant) taxed the amount as income. Mrs. Carney sued to recover the amount, claiming it was a nontaxable gift. At trial, the testimony of two disgruntled ex-directors paralleled the board minutes’ mixed characterization of the payment as reflecting both a sense of obligation and a sense of respect. Following the evidentiary phase, Judge Blumenfeld gave the foregoing factual recitation and then proceeded to instruct the jury on the relevant evidence and applicable law, as summarized below.
Rule of Law
Issue
Holding and Reasoning (Blumenfeld, J.)
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