Elmer J. Faul and Sybell E. Faul v. Commissioner of Internal Revenue

Before us in this case is a petition to review decision of the Tax Court of the United States. The sole question on this review is whether the finding of the Tax Court that petitioner Elmer J. Faul did not perform services as an informer covering a period of 36 calendar months or more (from the beginning to the completion of such services) is clear error, and hence that petitioner is not entitled to income allocation benefits under Section 107(a) of the Internal Revenue Code of 1939.

It is to be noted that one seeking the benefits of Section 107(a) must meet three requirements: First — at least 80 per cent of the total compensation must be received or accrued in one taxable year. Petitioner met this requirement. He received an informer’s award from the United States Government in the amount of $68,837.96 in April of 1952. Second — the compensation received or accrued must be for personal services. The Tax Court did not reach or pass on this requirement because of its views that its finding adverse to the petitioner on the third requirement was dispositive of the case. Third — the services must cover a period of 36 months or more from the beginning to completion of such services.…