Commissioner v. Ferrer
United States Court of Appeals for the Second Circuit
304 F.2d 125 (2d Cir. 1962)
Jose Ferrer (plaintiff), an actor, entered into a contract with Pierre LaMure, the author of the novel Moulin Rouge, to acquire the right to produce Moulin Rouge for a live stage performance. Under the contract, Ferrer obtained (1) a renewable lease of the right to produce Moulin Rouge as a play, (2) the power to prevent others from producing the Moulin Rouge story during the term of the lease, and (3) a 40 percent share of the proceeds from any Moulin Rouge movie that was produced. Under the contract, LaMure expressly retained title to the copyright for the Moulin Rouge story. Soon after entering into the contract with LaMure, Ferrer was contacted by movie producer John Huston, who invited Ferrer to play the lead role in a planned movie production of Moulin Rouge. Ferrer accepted the movie role and agreed to sell his Moulin Rouge production rights to Huston. Huston paid Ferrer a salary in exchange for Ferrer’s personal services as an actor, plus a participation interest in the movie proceeds, in exchange for the rights that Ferrer held under his contract with LaMure. On Ferrer’s federal tax return, he reported his salary from Huston as ordinary income and his participation-interest payments from Huston as capital gain. The federal tax commissioner (commissioner) (defendant) issued a deficiency notice against Ferrer, determining that the participation-interest payments constituted ordinary income. Ferrer petitioned the United States Tax Court for a redetermination. The tax court entered judgment in favor of Ferrer, and the commissioner appealed to the United States Court of Appeals for the Second Circuit.
Rule of Law
Holding and Reasoning (Friendly, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 706,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 706,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,400 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.