Section 1.61-1(a) of the Treasury Regulations, the corresponding section to Section 61(a) in the 1954 Code, reiterates this broad construction of gross income, providing in part: "Gross income means all income from whatever source derived, unless excluded by law.
IRC 61 CODE
This absence of express mention in any of the code sections necessitates a return to the "all income from whatever source" language of Section 61(a) of the code, and the express statement there that gross income is "not limited to" the following fifteen examples. While neither of these listings expressly includes the type of income which is at issue in the case at bar, Part III of Subchapter B (Sections 101 et seq.) deals with items specifically excluded from gross income, and found money is not listed in those sections either. Subsections (1) through (15) of Section 61(a) then go on to list fifteen items specifically included in the computation *5 of the taxpayer's gross income, and Part II of Subchapter B of the 1954 Code (Sections 71 et seq.) deals with other items expressly included in gross income. The starting point in determining whether an item is to be included in gross income is, of course, Section 61(a) of Title 26 U.S.C., and that section provides in part: "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: * * *" (Emphasis added.)
§§ 1201 et seq.Īfter a consideration of the pertinent provisions of the Internal Revenue Code, Treasury Regulations, Revenue Rulings, and decisional law in the area, this Court has concluded that the taxpayers are not entitled to a refund of the amount requested, nor are they entitled to capital gains treatment on the income item at issue.
IRC 61 TRIAL
The Government, by its answer and its trial brief, asserts that the amount found in the piano is includable in gross income under Section 61(a) of Title 26, U.S.C., that the money is taxable in the year it was actually found, 1964, and that the sum is properly taxable at ordinary income rates, not being entitled to capital gains treatment under 26 U.S.C. And thirdly, that if the treasure trove money is gross income for the year 1964, it was entitled to capial gains treatment under Section 1221 of Title 26. § 61) Secondly, even if the retention of the cash constitutes a realization of ordinary income under Section 61, it was due and owing in the year the piano was purchased, 1957, and by 1964, the statute of limitations provided by 26 U.S.C. First, that the $4,467.00 found in the piano is not includable in gross income under Section 61 of the Internal Revenue Code. Plaintiffs make three alternative contentions in support of their claim that the sum of $836.51 should be refunded to them. On January 18, 1966, the Commissioner of Internal Revenue rejected taxpayers' refund claim in its entirety, and plaintiffs filed the instant action in March of 1967. On October 18, 1965, plaintiffs filed an amended return with the District Director of Internal Revenue in Cleveland, Ohio, this second return eliminating the sum of $4,467.00 from the gross income computation, and requesting a refund in the amount of $836.51, the amount allegedly overpaid as a result of the former inclusion of $4,467.00 in the original return for the calendar year of 1964. Being unable to ascertain who put the money there, plaintiffs exchanged the old currency for new at a bank, and reported the sum of $4,467.00 on their 1964 joint income tax return as ordinary income from other sources. In 1964, while cleaning the piano, plaintiffs discovered the sum of $4,467.00 in old currency, and since have retained the piano instead of discarding it as previously planned. In 1957, the plaintiffs purchased a used piano at an auction sale for approximately $15.00, and the piano was used by their daughter for piano lessons. Plaintiffs are husband and wife, and live within the jurisdiction of the United States District Court for the Northern District of Ohio. The facts necessary for a resolution of the issues raised should perhaps be briefly stated before the Court proceeds to a determination of the matter. Plaintiffs and the United States have stipulated to the material facts in the case, and the matter is before the Court for final decision. Plaintiffs contend that the amount of $836.51 was erroneously overpaid by them in 1964, and that they are entitled to a refund in that amount, together with the statutory interest from October 13, 1965, the date which they made their claim upon the Internal Revenue Service for the refund. This is an action by the plaintiffs as taxpayers for the recovery of income tax payments made in the calendar year 1964. Murray & Murray, Sandusky, Ohio, for plaintiffs.
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