Commissioner v. Giannini 129 F.2d 638 (9th Cir. 1942) Giannini was president of a bank called Bancitaly. He worked for the bank for six years without any compensation. Eventually, the Board authorized a committee to pay him something. The committee eventually settled on offering to pay Giannini 5% of the bank's profits. That turned out to be a stunningly large amount of money. Giannini took about $445k in payment, but when the bank offered more he told them that he wouldn't accept it and that they should do something worthwhile with the money instead. The bank made a donation for $1.3M to the University of California in Giannini's name. Go Bears! When Giannini filed his taxes, he did not include the $1.3M donated in his name in his gross income. The IRS disagreed. The IRS argued that the $1.3M was essentially given to Giannini and then given by him to the school, so he should be liable to pay taxes on it as income (and then maybe deduct some of it as a charitable donation). In other words, Giannini realized the income when he directed the disposition of it. It didn't matter that he waived his rights to the property once it was offered, he still 'received' it for tax purposes. Giannini argued that he never accepted the $1.3M, so he shouldn't be liable to pay taxes on it. Giannini argued that, "a person has the right to refuse property proffered to him, and if he does so, absolutely and unconditionally, his refusal amounts to a renunciation of the proffered property...Property which is renounced cannot be diverted or assigned by the renouncer, and cannot be taxed upon the theory it was received." The Tax Court found for Giannini. The IRS appealed. The Appellate Court affirmed. The Appellate Court found that Giannini did not direct the money to the school, all he did was refuse to accept it. As far as Giannini was concerned, the bank could have kept the money. The Court found that since Giannini never had control over what happened to the money, he could not be said to have realized it for tax purposes. Basically, if Giannini had said, "Don't give the money to me, give it to Berkeley instead," then he would have assigned his interest and the money would be taxable to him. But he didn't do that, he did not have any control over what happened to the money. A renunciation does not equal an assignment of interest.