## Facts

- Alden D. Stanton served for nearly ten years as Manager of the Estate and Comptroller of the Corporation of Trinity Church and as President of Trinity Operating Company, Inc., a wholly owned subsidiary.
- Stanton resigned from all offices; the resignations were accepted effective November 30, 1942.
- On November 19, 1942, Trinity Operating’s board adopted a resolution awarding Stanton a $20,000 “gratuity,” payable in monthly installments beginning December 1942.
- The resolution stated the payment was “in appreciation of the services rendered” and conditioned payment on Trinity Church being released from claims to unaccrued pension and retirement benefits.
- Stanton reported the payment dispute in a refund suit, asserting the $20,000 was a non-taxable gift rather than taxable compensation.
- After appellate proceedings and a Supreme Court remand directing reconsideration consistent with Commissioner v. Duberstein, the district court revisited the record to determine the character of the payment.
- Evidence on intent centered on testimony from vestry/board insiders describing the motivation for the payment and its meaning within the organization.

## Issues

1. Whether the $20,000 paid to Stanton upon resignation was a “gift” excludable from gross income or taxable compensation for services.
2. Whether the resolution’s pension-release condition showed a quid pro quo inconsistent with donative intent under the governing standard.

## Decision

- The court found, as a matter of fact, that the dominant motive for the payment was gratitude and appreciation rather than compensation.
- The court held the $20,000 qualified as a gift for federal income tax purposes and was excluded from Stanton’s gross income.
- The court treated the pension-release clause as a collateral condition that did not, on this record, convert the payment into bargained-for compensation.
- Judgment remained for the taxpayers in the refund action.

## Legal Principles

- Whether a transfer is a “gift” for federal income tax purposes turns primarily on the transferor’s intent, assessed from the totality of circumstances.
- A payment is a gift only if it proceeds from “detached and disinterested generosity,” not from moral or legal duty, or from an anticipated economic benefit to the payor.
- Labels in corporate resolutions (e.g., “gratuity”) are relevant but not controlling; the factfinder evaluates all surrounding facts, including any conditions attached to payment.

## Conclusion

Applying the fact-intensive intent test required by controlling Supreme Court precedent, the court concluded the employer-affiliated board’s $20,000 payment to Stanton upon resignation was motivated by goodwill and appreciation, not compensatory obligation, and therefore was an excludable gift rather than taxable income.


Stanton v. United States, 186 F. Supp. 393 (E.D.N.Y. 1960)