Mccann v. United States

81-2 U.S. Tax Cas. (CCH) P9689 (1981)

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Nature of the Case

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Facts

Ps made a round trip between Shreveport and Las Vegas, Nevada, in 1973 for the purpose of attending a seminar that was conducted in Las Vegas by P's employer, Security Industrial Insurance Company (Security). All the traveling and other expenses with attendance at the Las Vegas seminar were paid by Security. In filing their joint income tax return for 1973, Ps did not include in their gross income any amount reflecting the cost to Security of paying the trip. The IRS (D) decided that the fair market value of the Las Vegas trip should have been included in gross income. Ps filed a claim for refund; and eventually instituted the present litigation. Security is engaged in the sale of life, burial, and accident insurance. Ever since 1950, Security has sponsored what is commonly referred to as an annual sales seminar at some place outside the State of Louisiana. An agent qualifies to attend a seminar if he or she achieved a specified net increase in sales during the preceding calendar year. Security emphasizes the pleasure aspects of seminars. The company schedules sightseeing tours; furnishes participants with lists of tennis courts and golf courses at, and descriptive travel brochures concerning seminar sites; and chooses locations which (in the opinion of the company) will have 'excitement' and 'charisma' for qualifying employees. Referring to the official program for the trip created by Security, the vast amount of time was spent in leisure pursuits. D decided that the fair market value of the trip was equivalent to the cost of the trip to Security.