Bogardus v. Commissioner, was a case before the U.S. Supreme Court discussing, under United States tax law, how to distinguish compensation from tax-exempt gifts under §102(a). It is notable (and thus appears frequently in law school casebook

Casebook

A casebook is a type of textbook used primarily by students in law schools. Rather than simply laying out the legal doctrine in a particular area of study, a casebook contains excerpts from legal cases in which the law of that area was applied. It is then up to the student to analyze the language...

s) for the following holdings:

• A payment cannot be both "compensation for personal service" within the meaning of § 22(a) of the Revenue Act of 1928 and a "gift" under (b)(3) of the same section. Old Colony Trust Co. v. Commissioner
  Old Colony Trust Co. v. Commissioner
  Old Colony Trust Co. v. Commissioner, , was an income tax case before the Supreme Court of the United States.HELD:*When a third party purports to pay a person's income tax on his behalf, it must include the amount of the tax payment in the gross income on which it calculates his tax liability,...
  
  , 279 U. S. 716, distinguished.

• Payments made to present and former employees of a corporation by its former stockholders, acting through a new corporation which had taken over part of the property of the other, HELD: not "compensation for personal services," taxable to the recipients as income under § 22(a) of the Revenue Act of 1928, but "gifts," exempted from taxation by subdivision (b)(3) of that section.

Nothing connected the donees (or the old corporation) to the donors (and their new corporation). The gifts were made, without any legal or moral obligation, not for any consideration or for services rendered, but as acts of spontaneous generosity in appreciation of past loyalty of the donees which had benefited the donors when stockholders of the older company.

• When the facts and circumstances prove an intent to make a gift, the erroneous use of the terms "honorarium" and "bonus" cannot convert the gift into a payment for services.

• A gift is no less a gift because inspired by gratitude for the past faithful service of the recipient.

Issue

Is a sum of money paid to former stockholders and employees compensation which is subject to Federal Income Tax or a gift that is exempt from taxes?

Decision and Holding

The term "gift" in §102(a) is largely to be defined by reference to the motives of the payor. If the payment, though voluntary, is "in return for services rendered," or proceeds from "the constraining force of any moral or legal duty," or anticipates a "benefit" to the payor, then it is taxable to the payee even if characterized as a "gift" by the payor.

On the other hand, if the payment proceeds from a "detached and disinterested generosity," if it is made "out of affection, respect ... or like impulses," then it is an excludable gift even though the relationship between payor and payee has previously been in a business context.