Olk Vs. United States

Case Reviewed: OLK v. United States, Cite as 38 ATFR 2d 76-5219, Code Sec(s) 61, (CA9), 1976

Facts:

The Ninth Circuit Court of Appeal is asked to determine whether tokes received by taxpayer in a relevant trade by patron is taxable income. The plaintiff in this case was employed as a craps dealer in Las Vegas in 1971. As a dealer, they are forbidden to socialize with the patron of the casino. The monies or tokes given to the dealer are combined in a common pool and split equally between the dealers. The plaintiff received an average of $10 and $20 per in day in tokes from his places of employment. The Government assert that this money is characteristic of tips and should be taxable to the taxpayer.

Verdict was in favor of the plaintiff in trial court on the basis that the tokes is not a form of compensation for services and that they are “detached and disinterest” generosity. However, the government appeal and won.

Issue:

Whether monies, called “tokes” given to the craps dealer is constitute as taxable income or gift under §102.

Decision:

The court determined that the tokes are like tips and is therefore taxable to the plaintiff and the request for a refund was denied.

Reason(s):

1. The appeal court determines that there is a social obligation for gambler to give a “toke(s)”. This constitute the toke(s) as tip and should be included in gross income.

1. The district court determines that the “finding of fact” in regards to tokes only applies to the giving of tokes are a result of impulsive generosity or superstition on the part of the patron and conclude that tokes “are a result of detached and disinterested generosity” is a conclusion of law, not of “finding of facts”.

1. The regularity of the flow, the equal division of receipts and the daily amount received also determine the court decision as to tokes to be consider as compensation.