McCANN V. UNITED STATES
81-2 U.S. Tax Cas. (CCH) P9689 (1981)
NATURE OF THE CASE: McCann (Ps), in two consolidated cases, sought refunds of income
taxes and interest, which Ps were required to pay pursuant to deficiency notices.
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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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