My client asked me to find out whether the value of the doughnut coupons should be included in income and ask me to give him some research. If I concluded that their value should be included in income, I was to search that if he could reduce his gross income by including in the income only the value of the coupons that he used. I understand that he has the unused coupons as documentation that neither he nor anyone else has used them.
The courts define a gift as “a voluntary transfer of property by one to another without adequate [valuable] consideration or compensation therefrom.” In my research I found that in the Income Act of 1913 states that Congress has allowed the recipient of a gift to exclude the value of a property from gross income. The only exclusion applies to gifts made during the life of the donor and transfers that take effect upon the death of the donor. Though, the recipient of a gift of income-producing property is subject to tax on the income earned from the property. For example, when receiving a home that is being rented it out. The income from the rent is taxed not the property itself. Now if the payment was not for services rendered, otherwise it is not considered a gift, the payment has to be made without a legal or moral obligation and you as the payor received no economic benefit from the transfer. For it to be a gift, the payment must be made more of an impulse or charity. From what I have seen from most cases dealing with gift tax, is most where ruled on the bases of the donor’s intent. We can rule out that it was a payment from an employer due to winning it at a Houston Astro’s baseball game. If it was from an employer to an employee is could not be excluded as a gift. (Freeman, L. (2012). The down Side of Prize Winning.)

To answer the first question of whether not the coupon are considered income, it is considered income. The