Heim v. Fitzpatrick

Lewis Heim (plaintiff) assigned his invention, future improvements, and any resulting patents to The Heim Company, retaining royalty rights, reversionary cancellation rights, and decision-making rights over future patents. He then assigned those retained rights to family members (who were not under his control) and paid gift tax on the transfers. The Commissioner (defendant) found a deficiency, contending the royalty income should have been included in Heim's gross income.

Whether income received by an assignee of income-producing property is taxable as gross income to the assignor.