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January 9, 1974


The opinion of the court was delivered by: Will, District Judge.


This action has been brought by plaintiff taxpayers for the recovery of certain income taxes paid to the United States Government. The jurisdiction of the court is asserted under 28 U.S.C. § 1346(a). The parties have entered into a stipulation of uncontested facts and have submitted their arguments on the legal question involved on briefs. For the reasons set forth below, judgment will be entered in favor of the plaintiff.*fn1

During the years 1967 and 1968, plaintiff Charles N. Haverly was the principal of a public elementary school in the City of Chicago. During each of those two years, textbook publishers sent plaintiff unsolicited sample copies of their publications. For each of those years, all the textbooks received had an aggregate fair market value at the time of receipt of $200.

The purpose of sending the samples was to provide plaintiff with an opportunity to study the books to determine whether or not they might fit the purposes of the instructional units in his curriculum. No controls whatsoever were put on the use to which plaintiff might put the texts. He was free to keep them or dispose of them as he saw fit. The parties have agreed that they were not intended to provide plaintiff with compensation for anything he had done in the past or would do in the future for the publishers. The books were in effect free samples of a product which the senders hoped plaintiff would recommend or purchase.

The parties have also agreed that the books were not gifts within the meaning of § 102 of the Internal Revenue Code of 1954,*fn2 as the clear motive of the publishers in sending the samples was their hope that the texts would receive favorable consideration, and that plaintiff might then order them for use at his school.

In 1968, plaintiff made a contribution of these books to the library of the school where he was principal. The transfer was without restriction and the defendant concedes that plaintiff was entitled to a charitable contribution deduction under § 170 of the Internal Revenue Code in the amount of $400, the value of the books at the time they were contributed.

In reporting his taxable income for the year 1968, plaintiff did not include the value of the textbooks received and donated during that year in his gross income, but did deduct the value of the books as a charitable contribution. Following an audit of his 1968 return, the Internal Revenue Service increased plaintiff's taxable income by the value of the textbooks, and assessed a deficiency in the amount of the tax resulting therefrom. Plaintiff paid the amount of the deficiency, filed a claim for a refund, and subsequently commenced this action to recover that amount.

The question raised is whether an individual has income when he receives and accepts unsolicited samples such as these textbooks. The position of defendant is that once a person "manifests an intent on his part to accept such property" it is properly classified as taxable income. (Defendant's brief, p. 5). Here, defendant argues, the claiming of the charitable contribution deduction on the income tax return evidences the requisite intent to accept the property, and therefore the value of the texts is includable in plaintiff's gross income. Plaintiff, on the other hand, contends that unsolicited samples cannot be considered income at any point. They are not, he urges, income when they are received, and they cannot be transformed into income by a particular subsequent use or disposition.

We find that the samples in question do not constitute income. Even if we had any doubt about the matter, we would have to follow the well-settled rule that, when doubt arises as to the taxability of an item, it must be resolved in favor of the taxpayer. Gould v. Gould, 245 U.S. 151, 38 S.Ct. 53, 62 L.Ed. 211 (1917); Dunbar v. Commissioner of Internal Revenue, 119 F.2d 367 (7th Cir. 1941); Commissioner of Internal Revenue v. Swift & Co. E.B.A., 151 F.2d 625 (7th Cir. 1945).

First, it is clear that unsolicited samples do not fall within any of the specifically enumerated categories of the income sections of the Internal Revenue Code ("Code"). Section 61(a) of the Code provides:

  Except as otherwise provided in this subtitle, gross
  income means all income from whatever source derived,
  including (but not limited to) the following items:
   (1) Compensation for services, including fees,
       commissions, and similar items;

(2) Gross income derived from business;

(3) Gains derived from dealings in ...

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