Maurie Starrels and Doris W. Starrels v. Commissioner of Internal Revenue

The Tax Court decision before us for review was founded upon a stipulation disclosing the following facts: Doris W. Starrels is the daughter of the late Commander Frank W. Wead. Loew’s, Inc. wished to produce a motion picture about naval aviation. Loew's agreed to pay Mrs. Starrels certain sums of money in return for her consent to the portrayal of her father, herself, and other members of the family in the proposed movie. Loew’s subsequently produced a movie "in which was depicted events taken from the life of Commander Wead,” and in due course made the disputed payment.

The question presented to the Tax Court, and to us, is whether the payments which Mrs. Starrels received from Loew’s fell within the terms of 26 U.S. C.A. § 104(a) (2), which excludes from a taxpayer’s gross income “the amount of any damages received (whether by suit or agreement) on account of personal injuries * * The Tax Court held that they did not, and we agree.

Mrs. Starrels contended before the Tax Court that damages for invasion of a taxpayer's right of privacy are exempt from taxation under Section 104(a) (2), and that payments made pursuant to a prior consent to a future invasion of such rights should…