SOME INDICIA OF CAPITAL TRANSFERS UNDER THE FEDERAL INCOME TAX LAWS

The fundamental difference between capital and income is recognized throughout the entire structure of the income tax law, and many decisions have distinguished between the two for the purpose of determining whether a given transaction comes within the meaning of the term "income" as used in the Sixteenth Amendment. But while recognizing the fundamental differences between capital and income, apparently the courts have been somewhat doubtful about advancing any broad, general statements by which specific transactions might be classified. While they have sometimes hesitated to call a specific item a capital transfer, they have, nevertheless, held numerous transactions involving the transfer of money or property and the apparent enrichment of the recipient not to be "income." The following discussion is an attempt to correlate some of the decisions on this question and to formulate, if possible, some generalizations regarding the nature of capital transfers.