Haverly v. United States
United States Court of Appeals for the Seventh Circuit
513 F.2d 224 (1975)
Elementary school principal Charles Haverly (plaintiff) received unsolicited free textbook samples from publishers, who gave them to him for whatever personal purpose he chose. Haverly donated the books to his school's library and claimed a $400 charitable deduction for their value, but never reported that same value as income; the IRS assessed a deficiency, Haverly paid it and sued for a refund, and the parties agreed the publishers' gift did not constitute a taxable gift itself but disputed whether the deduction implied taxable income. The district court ruled the books' receipt was not taxable income and ordered a refund.
Whether a taxpayer who demonstrates an intent to exercise complete dominion over unsolicited free product samples must report the samples' value as gross income.