## Facts

- Reverend Lloyd L. Goodwin served as pastor of Gospel Assembly Church in Des Moines, Iowa, and received a modest church salary and use of a parsonage.
- Beginning in 1966, congregants made “special occasion” transfers to the Goodwins, evolving from in-kind items to cash.
- During 1987–1989, the church used a regularized method to collect and deliver these payments:
  - Church leaders solicited contributions while the Goodwins were absent.
  - Members contributed anonymous cash in envelopes; only cash was accepted.
  - A church leader aggregated the cash and delivered a lump sum to the Goodwins.
  - The church kept no donor records, and donors did not claim charitable deductions.
- The district court found the annual amounts to be approximately $12,750 (1987), $14,500 (1988), and $15,000 (1989).
- The Goodwins did not report these payments as income, treating them as excludable gifts.
- The IRS determined the payments were taxable income, assessed deficiencies, and the Goodwins paid and filed a federal refund suit.
- The parties stipulated that donors voluntarily contributed and personally regarded their contributions as gifts, not compensation to retain Rev. Goodwin.

## Issues

1. Whether recurring, church-organized “special occasion” cash payments from congregants to a pastor qualify as excludable gifts under I.R.C. § 102 or constitute taxable income.
2. Whether, on the stipulated record, a reasonable factfinder could treat the payments as gifts rather than compensation-like income.

## Decision

- The Eighth Circuit affirmed judgment for the United States, upholding denial of the Goodwins’ refund claim.
- The court held the payments were taxable income, not excludable gifts.
- The court rejected the government’s proposed broad categorical standard, but concluded that the objective features of the payments compelled income treatment as a matter of law.
- Because the case was resolved on summary judgment, the court concluded no reasonable jury could find the payments were gifts under the governing test.

## Legal Principles

- Whether a transfer is a “gift” for federal income tax purposes turns on the transferor’s intent, determined from objective facts rather than the parties’ labels.
- Regularity, organization, and the relationship between payments and services are relevant indicators in distinguishing gifts from compensation.
- Substantial, recurring payments arranged through an institutional process and functioning to augment compensation are generally taxable income, even when individual contributors subjectively describe them as gifts.
- In a refund suit decided on summary judgment, taxpayers must show that the record permits a reasonable factfinder to classify the transfers as excludable gifts under I.R.C. § 102.

## Conclusion

The court treated the congregation’s structured, substantial, and recurring “special occasion” cash payments as compensation-like receipts tied to pastoral services, making them taxable income rather than excludable gifts under I.R.C. § 102.


Goodwin v. United States, 67 F.3d 149 (8th Cir. 1995)