## Facts

- Randall Meisner, a former member of the Eagles, exchanged certain music-related intellectual property for a contract entitling him to recording-sale royalties.
- Randall and Jennifer Meisner divorced in 1981 and executed a property settlement agreement (PSA).
- The PSA granted Jennifer an undivided 40% interest in the royalty contract, described as her separate property.
- The PSA specified that Jennifer’s 40% interest included royalty rights, was not subject to reversion or contingency, and would survive the death of either ex-spouse.
- The PSA provided that Jennifer’s share would be paid directly to her by the Eagles.
- After the divorce, Randall lacked power to alter or affect Jennifer’s rights to the royalty payments, and she received royalties consistent with the PSA.
- Jennifer later filed a federal income tax refund suit for multiple tax years, asserting the royalties should have been taxed to Randall rather than to her.
- After a jury trial, the jury returned a verdict for the United States; the district court denied Jennifer’s motion for judgment as a matter of law.

## Issues

1. Whether the district court erred in denying judgment as a matter of law on the ground that insufficient evidence supported the jury’s finding that the royalties were taxable to Jennifer.
2. Whether the district court’s jury instructions and special verdict form misstated or misframed the assignment-of-income versus transfer-of-property distinction and prejudiced Jennifer.

## Decision

- The Court of Appeals affirmed the judgment for the United States.
- The court held the evidence permitted a reasonable jury to find that the PSA transferred to Jennifer a property interest in the royalty contract, not merely an assignment of future income.
- The court held the jury instructions, read as a whole, fairly submitted the governing legal distinction to the jury and did not mislead or prejudice Jennifer.
- The court held the verdict form was consistent with the theories tried and did not distort the issues or prejudice Jennifer.

## Legal Principles

- Judgment as a matter of law is proper only when the evidence points one way and supports no reasonable inference for the nonmoving party; appellate review views the evidence and inferences in favor of the verdict.
- Federal income is generally taxed to the owner of the income-producing property.
- A bare assignment of future income does not shift tax liability, but a transfer of an ownership interest in income-producing property may shift tax liability to the transferee.
- Contractual and settlement terms bearing on ownership include whether the transferee receives an undivided ownership interest, direct payment rights, survivable and noncontingent rights, and whether the transferor retains power to revoke or alter the transferee’s entitlement.

## Conclusion

The Eighth Circuit upheld the jury’s determination that the divorce settlement gave Jennifer Meisner a present, noncontingent ownership interest in the royalty contract, so the resulting royalties were taxable to her and she was not entitled to refunds.


Meisner v. United States, 133 F.3d 654 (8th Cir. 1998)