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United States v. Gotcher

United States Court of Appeals for the Fifth Circuit
401 F.2d 118 (1968)



John Gotcher (plaintiff) was the prospective co-owner of a Volkswagen (VW) car dealership. The German-made VW cars sold poorly in the United States. VW’s strategy for improving its sales involved increasing dealer confidence in VW and the German economy. VW paid for Gotcher and his wife to visit VW’s German facilities and tour Germany. The trip’s formal activities took up only two of the trip’s 12 days, but Gotcher also heard daily presentations from VW officials, toured VW dealerships, and generally observed Germany’s economic strengths. After the trip, Gotcher became a part owner in the dealership, and VW’s U.S. sales increased. The commissioner of internal revenue (commissioner) (defendant) determined that Gotcher owed taxes on the value of the trip. Gotcher paid the deficiency due under the determination. Gotcher then filed suit against the commissioner in federal district court for a refund. The district court held that the cost of the trip was not income. The commissioner appealed.

Rule of Law


Holding and Reasoning (Thornberry, J.)

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