Miller v. Commissioner

Andrew Miller (plaintiff) was a partner in White & Case. As a partner, Miller was entitled to a share of White & Case’s profits. In 1960 White & Case opened an office in Paris, France, and made Miller the managing partner. Miller was paid $20,000 a year for his work as managing partner in addition to his partnership share. The $20,000 salary was meant to be a guaranteed payment that, under § 707(c) of the Internal Revenue Code, Miller could treat as payment to a nonpartner. According to § 911(a) of the Internal Revenue Code, United States citizens living abroad may exclude income received from sources outside the United States from their gross income. On his income-tax returns for the years 1960, 1961, and 1962, Miller did not include his $20,000 salary or his partnership share in his gross income for the time he was working outside the United States. The Commissioner of Internal Revenue (the Commissioner) (defendant) assessed a deficiency against Miller, arguing that Miller could only exclude payments from White & Case to the extent that the payments came from White & Case’s income from sources outside the United States. In making his determination, the Commissioner did not distinguish between Miller’s $20,000 salary and his partnership share. Miller petitioned the United States Tax Court for a redetermination.