Hornung v. Commissioner
47 T.C. 428 (Tax Ct. 1967)
Hornung played a football game
in Wisconsin on December 31st, 1961. After the game he was told that
because he was so awesome he had won a car.
The car was in New York at
Hornung went to New York in
January 1962 for an awards ceremony and to pick up the car. Later he sold
if for $3300.
When he filed his 1961 taxes,
Hornung included the $3300 in his gross income. The IRS disagreed.
Hornung argued that he got
the car when the award was announced on December 31st. Therefore should
be included in his 1961 gross income.
Under the doctrine of
constructive receipt, Hornung got
the car as soon as he could have taken possession of it. It didn't matter when he actually took possession of it.
The IRS argued that Hornung
didn't actually get the car until he picked it up at the awards ceremony
in January, so he shouldn't report it as income until he filed his 1962 taxes.
The Tax Court found for The
The Tax Court agreed that
the doctrine of constructive receipt
was good law, and that a taxpayer is considered to have received property
as soon as they could take
possession of it.
The doctrine of
constructive receipt stops people
from delaying their tax burden by simply not picking up property until
the next year.
However, the Court found
that since Hornung was in Wisconsin and the car was in New York, and the
car dealership was closed on the day the award was announced, there was
no way Hornung could have possibly picked up the car that day. Therefore
even under the doctrine of constructive receipt Hornung didn't get the car until January 1962.
Btw, normally, a taxpayer like
Hornung would want to defer their
income until the next year, but for some reason Hornung didn't.
He probably expected his
1962 income to be significantly greater than his 1961 income, so he
wanted the car to count in 1961 when his tax rate was lower.
Alternately, the Statute of Limitations for 1961 tax problems may have
run, so it would be too late for the IRS to get the money.