William R. Hamberg and Edwina Hamberg v. Commissioner of Internal Revenue

This petition for review of a decision of the Tax Court involves petitioners’ federal income taxes for the taxable year 1959. Following the Commissioner’s issuance of a statutory notice of deficiency, petitioners sought a redetermination in the Tax Court. That court upheld the Commissioner’s decision, and petitioners now seek relief here. Our jurisdiction is conferred by section 7482 of the Internal Revenue Code of 1954.

The factual circumstances are clearly detailed in the unreported memorandum decision of the Tax Court, written by Judge Fay. Much of our statement of the case, which follows, is taken directly from Judge Fay’s opinion.

Petitioners, William R. Hamberg and Edwina Hamberg (hereafter referred to as William and Edwina), husband and wife, are residents of Priest River, Idaho. William is a retired civil service employee. For many years a warm personal friendship had existed between petitioners and John and Florence Murray (hereafter referred to as John and Florence). William and John had been acquainted since approximately 1900. Following the petitioners’ marriage in 1940, the couples often socialized on a regular basis. In 1947 Florence acted as godmother at the…