Helvering v. Horst

311 U.S. 112 (1940)

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Nature of the Case

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Facts

In 1934 and 1935, D, the owner of negotiable bonds, detached them from the negotiable coupons and delivered them to his son shortly before the due date. D claimed that the delivery was a gift. The son then collected the coupons at maturity. Under section 22 the IRS ruled that the interest payments were taxable in the years when paid. The Circuit Court of Appeals reversed the order of the Board of Tax Appeals sustaining the tax. The appeals court determined that as the consideration for the coupons had passed to the obligor, the donor had, by the gift parted with all control over them and their payment and for that reason this case was distinguishable from Lucas v. Earl and Burnet wherein the assignment of compensation for services had preceded the rendition of the services and where the income was held taxable to the donor. The Supreme Court granted certiorari.