Diedrich v. Commissioner
United States Supreme Court
457 U.S. 191 (1982)
Relevant factsFree
The Diedrichs (plaintiffs) gave stock to their children on the condition the children pay the resulting gift taxes, which totaled $62,992 against the Diedrichs' $51,073 adjusted basis in the stock; the Commissioner (defendant) determined the children's tax payment discharged the Diedrichs' own indebtedness and was therefore taxable income to them, and after the Tax Court ruled for the Diedrichs and the Eighth Circuit reversed, the Supreme Court granted certiorari to resolve a circuit split.
IssueFree
Whether, for purposes of federal tax law, a donee's payment of a tax for the benefit of a donor-taxpayer constitutes income to the taxpayer.