## Facts

- Helen D. Miller, widow of band leader Glenn Miller (who died in 1944), engaged in commercial ventures exploiting his continuing popularity.
- In 1952, she entered a contract with Universal Pictures Company, Inc. concerning production and exploitation of the motion picture “The Glenn Miller Story.”
- The contract purported to grant Universal exclusive worldwide rights to produce, distribute, and exhibit one or more photoplays based on Glenn Miller’s life and activities; Miller warranted she was the sole owner of the rights conveyed.
- Universal agreed to pay Miller a share of income derived from the picture.
- In 1954, Miller received $409,336.34 under the contract.
- On her 1954 return, Miller reported the payment as long-term capital gain, asserting it was gain from the sale or exchange of a capital asset held more than six months.
- The Commissioner recharacterized the payment as ordinary income; the Tax Court sustained the deficiency.

## Issues

1. Whether payments received under a contract granting exclusive motion-picture rights based on a deceased celebrity’s life and persona are proceeds from the sale or exchange of a “capital asset” under I.R.C. § 1221.
2. Whether Miller possessed a transferable “property” interest in Glenn Miller’s life story, name, and personality that could qualify as a capital asset for federal tax purposes.

## Decision

- The Second Circuit affirmed the Tax Court.
- The court held the $409,336.34 payment was ordinary income, not long-term capital gain.
- The court concluded the transaction did not involve the sale or exchange of a § 1221 capital asset because the asserted interests were not “property” in the relevant federal tax sense.

## Legal Principles

- “Capital asset” under I.R.C. § 1221 (“property held by the taxpayer”) is construed narrowly in light of the limited purpose of capital-gain preference.
- Not every economically valuable interest or contractual right constitutes “property” qualifying as a capital asset for federal income tax characterization.
- Payments for granting exclusive rights to exploit a person’s name, likeness, personality, or life story—especially where the claimed interest is uncertain or attenuated—may be treated as ordinary income analogous to royalties rather than capital gain from disposition of a capital investment.
- The existence or scope of state-law privacy, publicity, or unfair-competition concepts does not itself establish a transferable “property” interest that must be treated as a capital asset for federal tax purposes.

## Conclusion

The court treated the film-related payments as ordinary income because the widow’s purported transfer of exclusive rights to exploit Glenn Miller’s life and persona did not constitute the sale of a capital asset within § 1221, so capital-gain treatment was unavailable.


Miller v. Commissioner, 299 F.2d 706 (2d Cir. 1962)