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McCoy v. Commissioner

United States Tax Court
38 T.C. 841 (1962)


Facts

Lawrence McCoy (plaintiff) won a sales contest. McCoy’s employer awarded him a new car that the employer had bought less than a month earlier. After receiving the car, McCoy drove it on a long trip and then had it appraised for less than the $4,452.24 that the employer had paid for the car. McCoy sold the award car for $1,000 and bought another car for $2,600. McCoy included $3,600 in his gross income, reasoning that this was the fair market value of the award at the time he included the award in his gross income. McCoy also reasoned that even when he received the award car less than a month after the employer bought it, the award car was worth less than $4,452.24 to the employer because a new car’s resale value would always be lower than its original price, even before the car received any use. The commissioner of internal revenue (commissioner) (defendant) determined that McCoy’s gross income should have included the full price that McCoy’s employer paid for the award car, rather than the car’s value at the time of the award or after McCoy’s use of the car. McCoy filed a petition challenging the commissioner’s determination.

Rule of Law

Issue

Holding and Reasoning (Atkins, J.)

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