Haverly v. United States, 513 F.2d 224 (7th Cir. 1975)
Haverly v. United States is a foundational federal income tax case that clarifies how unsolicited sample property is treated under the Internal Revenue Code when the recipient later donates that property and claims a charitable deduction.
Must a taxpayer who receives unsolicited sample property and later donates it to a charity, claiming a charitable deduction, include the fair market value of the samples in gross income under IRC § 61?
Gross income under IRC § 61 includes all accessions to wealth, clearly realized, over which the taxpayer has complete dominion (Commissioner v. Glenshaw Glass Co.). Items transferred to a taxpayer are not excludable as "gifts" under IRC § 102 if the transfer proceeds from the donor's business motives rather than detached and disinterested generosity (Commissioner v. Duberstein). Although the IRS may, for administrative convenience, decline to tax certain unsolicited samples upon mere receipt, a taxpayer who exercises dominion over such property and seeks a charitable deduction under IRC § 170 for its donation must include the property's fair market value in gross income to avoid a double benefit and to ensure parity with the Code's treatment of contributions of appreciated or income-type property.
Yes. When a taxpayer donates unsolicited samples and claims a charitable deduction, the fair market value of those samples must be included in gross income; the samples are not excludable as gifts and the deduction cannot be taken without corresponding income recognition.
Haverly matters because it concretely demonstrates how § 61's broad income concept interacts with § 170's charitable deduction regime to prevent unintended windfalls. It teaches that administrative nonenforcement of small, unsolicited benefits does not entitle taxpayers to combine noninclusion with a deduction. For law students, the case is a clean vehicle to apply Glenshaw Glass and Duberstein, to analyze dominion and control, and to appreciate the policy of symmetry in the tax system—deductions typically follow income recognition or actual cost. It also foreshadows modern limitations on deductions for contributions of "ordinary income property" and the broader anti-abuse orientation of charitable contribution rules.