## Facts

- Paul V. Hornung, a cash-basis taxpayer and professional football player for the Green Bay Packers, challenged an income tax deficiency for the 1962 tax year.
- Sport Magazine annually awarded a new Corvette to the player its editors selected as the outstanding player in the NFL championship game, as part of a promotional awards program.
- The 1961 NFL Championship Game occurred on December 31, 1961; Hornung was told after the game that he had been selected and would receive a 1962 Corvette.
- On December 31, 1961, the Corvette was at a dealership in New York City; the dealership was closed, and Sport’s representative in Green Bay did not have the keys or title.
- Hornung did not take possession on December 31, 1961; he received the Corvette at a New York awards luncheon on January 3, 1962. The Corvette’s fair market value was $3,331.04.
- In 1962, Hornung arranged to have a car available in Green Bay; a local Ford dealership provided him the free use of a 1962 Thunderbird (later replaced with another), while title remained with Ford and Hornung paid insurance and operating costs.
- The dealership provided the Thunderbirds to obtain publicity from associating with Hornung; Hornung made no formal service commitment beyond a minimal requested appearance at a Ford-sponsored youth event.
- In 1961, Hornung’s employer gave Hornung’s mother a fur stole; the Commissioner sought to include its value in Hornung’s 1962 income.

## Issues

1. Whether the fair market value of the 1962 Corvette awarded for Hornung’s championship-game performance was includible in gross income for 1962, and whether it was excludable as a gift or instead constructively received in 1961.
2. Whether the value of Hornung’s free use of Ford Thunderbird automobiles in 1962 was includible in gross income or excludable as a gift or loan.
3. Whether Hornung’s 1962 gross income included the value of a fur stole given in 1961 to his mother by his employer.

## Decision

- The Tax Court held the Corvette was a taxable prize under I.R.C. § 74 and was includible in Hornung’s 1962 gross income when actually received, not in 1961.
- The Tax Court rejected Hornung’s constructive-receipt argument because he lacked practical and legal control over the Corvette on December 31, 1961.
- The Tax Court held the value of the free use of the Thunderbirds was not a tax-exempt gift and constituted taxable gross income as an economic benefit conferred for business/publicity reasons; Hornung did not carry his burden to show the Commissioner’s determination was wrong.
- The Tax Court held Hornung’s 1962 gross income did not include the value of the fur stole because it was given to his mother and related to 1961.

## Legal Principles

- Amounts received as prizes and awards are included in gross income under I.R.C. § 74 unless a statutory exception applies.
- A transfer is not a gift excludable under I.R.C. § 102 when the dominant motive is commercial promotion rather than detached generosity.
- For a cash-basis taxpayer, constructive receipt requires that income (or property) be made available without substantial limitations so the taxpayer has unfettered control and could take possession if desired.
- Mere notice that a prize has been awarded does not create constructive receipt when the taxpayer cannot obtain immediate dominion and control due to practical or legal barriers (e.g., location of the property, closed dealer, no keys/title available).
- The free use of valuable property can be taxable gross income when it confers a measurable economic benefit connected to services, publicity, or other consideration, even absent a formal contract.
- An item is not includible in a taxpayer’s income when it is transferred to a different recipient and not to the taxpayer for the year at issue.

## Conclusion

The Tax Court treated the Corvette as a taxable promotional prize includible in 1962 because Hornung lacked control to claim constructive receipt in 1961, included the value of his free use of Thunderbirds as taxable economic benefit rather than a gift, and excluded from Hornung’s 1962 income a fur stole given in 1961 to his mother.


Hornung v. Commissioner, 47 T.C. 428 (1967)