This section contains the nature of the case and procedural background.

Heim (P) was an inventor of a rod end and spherical bearing. He applied for a patent in 1942 and two months later executed a formal written assignment of his invention and patent rights to the Heim Company. This was duly recorded in the patent office. The patents were issued in 1946. The assignment to the company was made pursuant to an oral agreement and was reduced to writing in 1943. P assigned to his wife an undivided 25% interest in his agreement with the Company in 1943 and similar assignments were made to his son and daughter. P paid gift taxes on the assignments. The Commissioner determined that the income received by the assignees should be taxable as income to P.

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