Jacob Flax v. Treasurer of Puerto Rico

The question for decision is whether certain payments made to Herman Jacob Flax by virtue of a scholarship granted to him by the State Insurance Fund constituted taxable income under § 15 (a) of the Income Tax Act, which defines the term “gross income” as including, among others, “compensation for personal services . . . and income . . . from any source whatever”, or if such payments constitute “gifts” under § 15 (b) (3) of the same Act, which provides that said term does not include, among others, “the value of property acquired by gift.”

During 1947 Dr. Herman Jacob Flax was working in the…