Commissioner v. Duberstein

Mose Duberstein (plaintiff) ran a company and sometimes gave customer leads to Morris Berman, who ran a similar company. After seven years, Berman gave Duberstein a new Cadillac, saying that it was because Duberstein’s customer leads had been so helpful. Berman’s business deducted the car’s value as a business expense on its taxes. Duberstein considered the car a gift and not income. The commissioner of the Internal Revenue Service (commissioner) (defendant) determined that the car was income, not a gift, and that Duberstein owed additional taxes. Duberstein sued, and the tax court ruled that the car was not a gift. The Sixth Circuit reversed, finding the car was a gift. Separately, Alden Stanton (plaintiff) resigned after working for a church for over 10 years. The church gave Stanton $20,000, calling it a “gratuity” in appreciation for Stanton’s prior services. Although the church did not owe Stanton any retirement benefits, the church also said that the payment released it from any retirement-benefit obligations. Stanton considered the $20,000 a gift and not income. The commissioner determined that the payment was income, not a gift, and that Stanton owed additional taxes. Stanton sued. In a brief ruling, the district court found that the payment was a gift. The Second Circuit reversed, finding that the payment was not a gift. The United States Supreme Court consolidated the two cases and granted certiorari.