Brush v. Commissioner

The question brought here for determination is whether the salary of petitioner as Chief Engineer of the Bureau of Water Supply of the City of New York is a part of his taxable income for the purposes of the federal income-*360tax law. The answer depends upon whether the water system of the city was created and is conducted in the exercise of the city’s governmental functions. If so, its operations are immune from federal taxation and, as a necessary corollary, “fixed salaries and compensation paid to its officers and employees in their capacity as such are likewise immune.” New York ex rel.…