Doris B. Harte and Stanley J. Harte v. United States

WATERMAN, Circuit Judge.

The question for decision is whether payments received by the taxpayer under an agreement settling a will contest are taxable as income, or whether they are exempt as property acquired by inheritance. During the years 1946 through 1951 the payments in question were duly reported in the income tax returns of the taxpayers but were not included in the computation of taxable income. 1 The Commissioner determined that the payments were subject to tax. He assessed a deficiency which was paid under protest. An action was thereupon commenced in the District Court to recover…