Charles Johnson v. United States

Appellant Johnson seeks refund of federal income taxes for the year 1978 in the sum of $52,606, and appeals from the district court’s grant of summary judgment for the government.

I.

Appellant is a professional basketball player. In 1974 he signed a contract with a Panamanian Corporation, Presentaciones Musicales S.A. (“PMSA”), conveying to it the exclusive rights to his services as a professional athlete for a term of at least six years. In return, PMSA agreed to make monthly payments of $1,500.00 (later increased to $2,000.00) to appellant for his life. PMSA later assigned the contract to EST International Limited, a British Virgin Islands corporation which later changed its name to Interlit.

Appellant played for two National Basketball Association teams during 1978: the Golden State Warriors and the Washington Bullets. He played for the Warriors under a contract negotiated and executed by him on August 29, 1977. Neither PMSA nor Interlit engaged in negotiations. Neither was a party to the contract. Appellant’s attorney attempted to persuade the Warriors to contract with Interlit but on advice of its counsel, the Warriors refused, taking the position that it would contract…