INTRODUCTION TO TAX SCHOOL
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Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
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1
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for two important
propositions:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
2
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for two important
propositions:
The Definition of
Gross Income
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
3
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for two important
propositions:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
4
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
5
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
6
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
This permitted the first Constitutional
Income Tax in the United States.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
7
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
th
Congress implemented the 16th
Amendment by statute in the
“codes” of 1913, 1923, 1939, 1954,
and
and 1986.
1986.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
8
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
th
Congress implemented the 16th
Amendment by statute in the
“codes” of 1913, 1923, 1939, 1954,
and 1986.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
9
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
th
Congress implemented the 16th
Amendment by statute in the
“codes” of 1913, 1923, 1939, 1954,
and 1986.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
10
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
th
Congress implemented the 16th
Amendment by statute in the
“codes” of 1913, 1923, 1939, 1954,
and 1986.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
11
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
The Need
Need for
for aa
Realization Event.
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
th
Congress implemented the 16th
Amendment by statute in the
“codes” of 1913, 1923, 1939, 1954,
and 1986.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
12
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
13
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
14
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Notice how the
Constitution’s wording is
essentially the same the
statute’s.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
15
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Notice how the
Constitution’s wording is
essentially the same the
statute’s.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
16
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Notice how the
Constitution’s wording is
essentially the same the
statute’s.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
17
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
The “Court has frequently stated that
this language was used by Congress
to exert in this field ‘the full measure
of its taxing power.’’’
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
18
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
The “Court has frequently stated that
this language was used by Congress
to exert in this field ‘the full measure
of its taxing power.’’’
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
The Glenshaw Glass
case repeats this
language.
19
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
20
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
21
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
Notice how once again, the
statute implements the full
taxing power of the
Constitution.
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
22
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
Notice how once again, the
statute implements
implements the full
taxing power of the
the
Constitution.
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
23
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
Notice how once again, the
statute implements the full
taxing power of the
Constitution.
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
24
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
But the question for the
Glenshaw Glass Court was:
What do these words mean?
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
25
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
But the question for the
Glenshaw Glass Court was:
What do these words mean?
The Need
Need for
for aa
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
26
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“income” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
27
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“income” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
28
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“income” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
29
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“income” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
30
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
AND
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
31
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“derived” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
32
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“derived” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
33
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“derived” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
34
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass is famous for one important
proposition:
The Definition of
Gross Income
th
Recall
Recall the
the language
language of
of the
the 16
16th
Amendment:
Amendment:
The
The Congress
Congress shall
shall have
have the
the
power
power to
to lay
lay and
and collect
collect taxes
taxes on
on
incomes,
incomes, from
from whatever
whatever source
source
derived
derived .. .. .. ..
What does
“derived” mean?
The Need for a
Realization Event.
Under
Under the
the 1939
1939 Code,
Code, section
section 22
22
provided:
provided:
'Gross
'Gross income'
income' includes
includes .. .. ..
income
income derived
derived from
from any
any source
source
whatever
whatever .. .. .. ..
Today,
Today, Section
Section 61
61 defines
defines “gross
“gross
income”:
income”:
[G]ross
[G]ross income
income means
means all
all
income
income from
from whatever
whatever source
source
derived
derived .. .. .. ..
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
35
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
36
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
37
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
38
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
39
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
This case is also on the
top 100 list.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
40
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
But, in Glenshaw Glass, the
taxpayer wanted to limit
“income” to items derived from
capital and labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
41
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
But, in Glenshaw Glass, the
taxpayer wanted to limit
“income” to items derived from
capital and labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
42
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• An early decision, Eisner v. Macomber, 252 U.S. 189
(1920), answered the question of “what does income
mean?” by referring to:
"the gain derived from
capital, from labor, or
from both combined."
But, in Glenshaw Glass, the
taxpayer wanted to limit
“income” to items derived from
capital and labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
43
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
44
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
45
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
We will parse it in a moment . . .
but first, let’s cover the facts.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
46
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
We will parse it in a moment . . .
but first, let’s cover the facts.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
47
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
48
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
49
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
50
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
These
theand
key constitution
sources of income
– Income under
the were
statute
is not limited
old Eisner v. Macomber
to that derivedunder
from the
capital
or labor.
decision.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
51
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
52
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
53
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• FACTS:
–
–
One Taxpayer received “exemplary” damages for fraud.
Another Taxpayer received punitive “treble” damages in
an anti-trust case.
• ISSUE:
– Even though neither case involved income from capital
or labor, were they income in a tax sense?
• HOLDING:
– Yes: both were income.
– Income under the statute and constitution is not limited
to that derived from capital or labor.
The Court thus limited the Eisner v.
Macomber decision.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
54
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
55
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
56
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
57
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
It must be very
clear .
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
58
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
59
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
60
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
61
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
62
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
63
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
64
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
65
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
66
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
67
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
Money borrowed or
received as a deposit is
not an accession to
wealth because the
taxpayer has an
obligation to repay it.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
68
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
Money borrowed or
received as a deposit is
not an accession to
wealth
wealth because
because the
the
taxpayer
taxpayer has an
obligation
obligation to
to repay
repay it.
it.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
69
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
For example:
A punitive damage
award does not result
from capital or labor;
however, it is an
accession to wealth
and thus income.
Money borrowed or
received as a deposit is
not an accession to
wealth
wealth because
because the
the
taxpayer
taxpayer has an
obligation
obligation to
to repay
repay it.
it.
It must involve a
wealth increase
. . . not just a
cash-flow
increase.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
And, any accession
to wealth can
qualify: not just
those from capital
or labor.
70
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
71
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
An
An event
event must
must have
have
occurred
occurred such
such that
that
realization
realization is
is clear.
clear.
Later
Later cases
cases suggest
suggest
mere
mere appreciation
appreciation is
is
insufficient.
insufficient.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
72
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
An
An event
event must
must have
have
occurred
occurred such
such that
that
realization
realization is
is clear.
clear.
Later
Later cases
cases suggest
suggest
mere
mere appreciation
appreciation is
is
insufficient.
insufficient.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
73
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
74
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
The taxpayer
must control the
item.
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
75
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
These
These factors
factors suggest
suggest aa
meaning
meaning to
to “derived.”
“derived.” An
An
event
event must
must have
have occurred
occurred
such
such that
that the
the taxpayer
taxpayer now
now
has
has control
control over
over something
something
.. .. .ostensibly,
.ostensibly, something
something
over
over which
which he
he lacked
lacked
control
control immediately
immediately prior
prior
thereto.
thereto.
76
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
These
These factors
factors suggest
suggest aa
meaning
meaning to
to “derived.”
“derived.” An
An
event
event must
must have
have occurred
occurred
such
such that
that the
the taxpayer
taxpayer now
now
has
has control
control over
over something
something
.. .. .. ostensibly,
ostensibly, something
something
over
over which
which he
he lacked
lacked
control
control immediately
immediately prior
prior
thereto.
thereto.
77
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• Glenshaw Glass resolved the issue with the following
famous language:
Gross
GrossIncome
Incomeresults
resultsfrom
from
“undeniable
“undeniableaccessions
accessionsto
towealth,
wealth,
clearly
clearlyrealized,
realized,and
andover
overwhich
whichthe
the
taxpayers
taxpayershave
havecomplete
completedominion.”
dominion.”
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
These
These factors
factors suggest
suggest aa
meaning
meaning to
to “derived.”
“derived.” An
An
event
event must
must have
have occurred
occurred
such
such that
that the
the taxpayer
taxpayer now
now
has
has control
control over
over something
something
.. .. .. ostensibly,
ostensibly, something
something
over
over which
which he
he lacked
lacked
control
control immediately
immediately prior
prior
thereto.
thereto.
78
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
Mere appreciation in
property . . . Such as
stocks and bonds . . .
Is not clearly realized
and the taxpayer lacks
complete dominion
over it.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
79
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
Mere appreciation in
property . . . such as
stocks and bonds . . .
Is not clearly realized
and the taxpayer lacks
complete dominion
over it.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
80
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
Mere appreciation in
property . . . such as
stocks and bonds . . . .
is not clearly realized
and the taxpayer lacks
complete dominion
over it.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
81
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
Mere appreciation in
property . . . such as
stocks and bonds . . . .
is not clearly realized
and the taxpayer lacks
complete dominion
over it.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
82
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
For example:
Mere appreciation in
property . . . such as
stocks and bonds . . .
is not clearly realized
and the taxpayer lacks
complete dominion
over it.
Such a situation lacks a
realization event.
1. Undeniable
2. Accession to wealth
3. Clearly realized
4. Complete dominion
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
83
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• To summarize:
– When you hear of “Glenshaw Glass ,” you should think of:
• The Claim of Right Doctrine
– You should also associate the case with transactional accounting
and the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
84
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• To summarize:
– When you hear of “Glenshaw Glass,” you should think of:
• The Claim of Right Doctrine
– You should also associate the case with transactional accounting
and the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
85
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• To summarize:
– When you hear of “Glenshaw Glass,” you should think of:
• The Claim of Right Doctrine
– You should also associate the case with transactional accounting
and the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
86
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• To summarize:
– When you hear of “Glenshaw Glass,” you should think of:
• The Claim
of Right
The Definition
ofDoctrine
Gross Income
– You should also associate the case with transactional accounting
and the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
87
Glenshaw Glass Co. v. U.S., 348 U.S. 426 (1955)
• To summarize:
– When you hear of “Glenshaw Glass,” you should think of:
• The Claim
of Right
The Definition
ofDoctrine
The Need
Need for
for aa
Gross Income
Realization Event.
– You should also associate the case with transactional accounting
and the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
88