Ps are husband and wife. Johnson & Johnson, Inc. (announced a contest called the 'Annual Youth Scholarship Contest.' An entrant was required to complete in fifty additional words or less the statement 'A good education is important because * * *.' The prizes were as follows: Grand prize $ 10,000 Two second prizes 5,000 each Four third prizes 2,500 each Six fourth prizes 1,500 each Thirty-six fifth prizes 1,000 each The prizes consisted of annuity policies in the face amount of the respective prizes. Only persons under age 17 years and 1 month (as of May 14, 1957) are eligible to receive the policies for education. Anyone can enter but those over that age must designate a person below the age of 17 years and 1 month to receive the policy for education. P named his the 7-year-old daughter. One of P’s statements submitted was selected. Johnson & Johnson filed an application and paid Mutual $ 1,287.12. As the result thereof, P's daughter received from Mutual, during 1957, a fully paid-up annuity policy, having a face value of $1,500. This policy contained no limitation whatsoever on the manner in which Karen would be entitled to use the proceeds or any other benefits available under the policy. Specifically, the use of these proceeds or benefits was not limited to educational or similar purposes. Ps did not include any amount in their income tax return and this upset D greatly. D determined that the policy constituted gross income to {, and assigned a value thereto of $ 1,287.12. P filed this appeal.

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