Taxation Case Brief: Cesarini v United States

Lesson 2 Case Brief Cesarini v. United States Case Information Name:Cesarini v. United States296 F.Supp.3 (1969) Court:United States District Court Citation:Cesarini v. the United States, 296 F. Supp. 3, 69-1 U.S. Tax Cas. (C.C.H.) P9270, 23 A.F.T.R.2d (R.I.A.) 997, 18 Ohio Misc. 1, 47 Ohio Op. 2d 27 (N.D. Ohio February 17, 1969) Date:1969 Parties:Ermenegildo CESARINI et al./ PLAINTIFFS/ TaxpayersU.S. DEFENDANT/IRS Keys Facts This case aims to determine if the money found in an individual's income should be included in their gross income. In 1957, the plaintiffs bought a used piano for $15.50. While cleaning the Piano in 1964, the plaintiffs came across a total of $4,467. The money was included in the plaintiffs' income on their joint tax return for 1964. On October 18, 1965, they filed an amended return to exclude the amount from their gross income. They then requested a refund of $836.51, which was the amount they overpaid in taxes due to the inclusion of the money in their income. The commissioner denied the plaintiffs' request for a refund, and the plaintiffs filed an action lawsuit. This case highlights Congress's broad powers when taxing individuals' income. Under the 16th Amendment of the U.S. Constitution, Congress has the power to impose taxes on all income. Issue(s) Should the money found in the Piano be included in income? Are plaintiffs entitled to a refund and statutory interest or capital gain treatment? Whether the taxes on the monies were due in the year Piano was purchased or in the year monies were found? Rule(s) of Law Section 61 of the United States Code provides that "all income from whatever source is considered gross income." It means that items excluded from this definition are not included in the gross income calculation. Section 1.61-1 of the Treasury Regulation also provides that "Gross income" means all income from any source unless excluded by law. In 1953, the I.R.S. issued a ruling stating that the income from selling property, services, or money is considered gross income. It means that the person who found the treasure trove is required to pay taxes on the income they have received. According to the ruling, "the finder of a treasure trove" is considered to receive taxable income, and this is due in the year the money was found. In Ohio, no specific statute provides ownership rights for people who find treasure-trove. The treasure trove is not "deprived to the true owner" until it is discovered. The finder owns the title to the treasure trove against all other properties in the world.