41 T.C. 667">*667 The respondent determined a deficiency in income tax for the taxable year 1959 in the amount of $ 835.

The sole issue presented is whether an award made to petitioner Frederick W. Denniston under the Government Employees' Incentive Awards Act is taxable as income to him or is excludable from gross income under the provisions of section 74(b) of the Internal Revenue Code of 1954.

41 T.C. 667">*668 FINDINGS OF FACT

Most of the facts are stipulated and are incorporated herein by this reference.

The petitioners are husband and wife, whose residence during the taxable year 1959 was at East Winchester Road, Annapolis, Md. They filed a joint Federal income tax return for that taxable year with the district director of internal revenue at Baltimore, Md. Hereinafter Frederick W. Denniston will be referred to as the petitioner.

During the calendar year 1959, and for some1964 U.S. Tax Ct. LEXIS 144">*147 time prior thereto, the petitioner was an employee of the U.S. Government in the capacity of Assistant General Counsel, Transportation and Public Utilities, Office of General Counsel, General Services Administration (sometimes hereinafter referred to as GSA). As assistant general counsel, the petitioner supervised the legal activities of GSA in its task of representing the executive agencies of the U.S. Government in negotiations with carriers and other public utilities before Federal and State regulatory bodies.

The "Semi-Automatic Ground Environment System," known as SAGE, is a program of the U.S. Government employing a large amount of leased private telephone and other communication services. GSA had the statutory responsibility of representing agencies of the executive branch of the Government before the various regulatory bodies in connection with such program. In pursuance thereof the administrator of GSA established the "SAGE Committee," consisting of the deputy administrator of GSA (chairman of such committee), the general counsel of GSA, and the commissioner for transportation and public utilities services of GSA. At the same time the "SAGE Task Force" was established1964 U.S. Tax Ct. LEXIS 144">*148 to implement and carry out the decisions of the SAGE committee. The project group consisted of 12 full-time GSA employees.

The petitioner, in his employment by GSA, was appointed chairman and executive director of the SAGE task force, which represented the executive departments before the Federal Communications Commission in proceedings involving rates and charges for certain telephone and other communication services in connection with the SAGE project.

The efforts of the task force resulted in the issuance of an order by the Federal Communications Commission on June 25, 1958, directing a 15-percent reduction in charges then in force by the companies supplying the communication services. The suppliers, so directed, complied with the order and effectively reduced the rates on August 25, 1958, with all remaining suppliers voluntarily complying on May 18, 1959.

On May 26, 1959, the SAGE committee recommended to the administrator 41 T.C. 667">*669 of GSA, by a memorandum with a supporting digest, that the 12 employees assigned to the SAGE project, including the petitioner, be given a group monetary award of $ 10,000 under the Government Employees' Incentive Awards Act for superior accomplishment1964 U.S. Tax Ct. LEXIS 144">*149 consisting of advocacy, initiation, development, analysis, preparation, and successful prosecution of actions resulting in reductions in costs and providing savings for the Federal Government which it was estimated therein would reach $ 15,385,000 annually. The administrator of GSA forwarded this recommendation by letter dated May 26, 1959, to the U.S. Civil Service Commission for its approval.

The Civil Service Commission, by letter dated June 30, 1959, advised the administrator of GSA that it had approved the total award of $ 10,000 for superior accomplishment. Therein the executive director of the Commission conveyed his congratulations to the petitioner and the other members of the SAGE task force for their contribution to economy in government operations, stating that "The achievement of these career employees reflects great credit on the General Services Administration and the entire Federal service." ¹

1964 U.S. Tax Ct. LEXIS 144">*150 On July 15, 1959, GSA presented the cash award to the 12 members of the SAGE project. The $ 10,000 total award was divided proportionately among the employees on the basis of their individual contributions to the total achievement, the petitioner being allocated $ 3,000 thereof.

GSA in making the award to the petitioner withheld $ 540 for Federal income tax and paid $ 2,460 to him, treating such award as taxable wages. The Form W-2 withholding tax statement for 1959 supplied to the petitioner by GSA reflected total wages of $ 16,536.80, consisting of the petitioner's regular salary payments for 1959 totalling $ 13,536.80 and the $ 3,000 award. ²GSA, in response to a letter from the petitioner dated April 13, 1960, advised the petitioner by letter dated April 27, 1960, that it had treated the $ 3,000 award as taxable wages based on the definitions of "wages" contained in several 41 T.C. 667">*670 sections of the Internal Revenue Code and contained in the Employees' Tax Guide issued by the Internal Revenue Service.

1964 U.S. Tax Ct. LEXIS 144">*151 In their joint income tax return for the taxable year 1959 the petitioners reported total joint gross income of $ 14,752.15 and taxable income of $ 10,353. They did not include in gross income the $ 3,000 award, but attached a statement to their return in which they described the award as "non-reportable income."

In the notice of deficiency the respondent determined that "the $ 3,000.00 awarded to you by your employer, the General Services Administration, under authority of the Government Employees' Incentive Awards Act constitutes taxable income and is not excludable from gross income under section 74(b), section 102, or any other section of the Internal Revenue Code of 1954."

The work performed by the petitioner as chairman of the SAGE task force was within the scope of his employment. The $ 3,000 award to him was in recognition of achievement in connection with, and as a part of, his employment and constituted additional compensation for services performed by him for GSA.

OPINION

The sole issue is whether the award received by the petitioner in the taxable year 1959 under the Government Employees' Incentive Awards Act constituted taxable income to him.

The petitioner contends1964 U.S. Tax Ct. LEXIS 144">*152 that the award was essentially a gift and comes within the specific exclusion from gross income provided in section 74(b) of the Internal Revenue Code of 1954. ³ It is his position that the award was made primarily in recognition of some achievement referred to in that section (apparently civic achievement), that he was selected without any action on his part to enter the contest or proceedings, and that he was not required to render substantial future services as a condition to receiving the award.

1964 U.S. Tax Ct. LEXIS 144">*153 The respondent, on the other hand, contends that such award constituted additional compensation for services, taxable as income under section 61(a)(1) of the Code, ⁴ and that it is not excludable from income 41 T.C. 667">*671 under the provisions of section 74(b) or any other section of the Code. It is his position that the award was not made primarily in recognition of any civic or any other achievement referred to in section 74(b), but that, rather, it was made by the petitioner's employer in recognition of achievement in connection with petitioner's employment. The respondent cites section 1.74-1 of the Income Tax Regulations, which provides in part as follows:

Prizes and awards -- (a) Inclusion in gross income. * * * Prizes and awards which are includible in gross income include (but are not limited to) amounts received from radio and television giveaway shows, door prizes, and awards in contests of all types, as well as any prizes and awards from an employer to an employee in recognition of some achievement in connection with his employment.

* * * *

(b) Exclusion from gross income. * * * Section 74(b) does not exclude prizes or awards from an employer to an employee in recognition1964 U.S. Tax Ct. LEXIS 144">*154 of some achievement in connection with his employment.

There are set forth in the margin pertinent provisions of section 304 of the Government Employees' Incentive Awards Act (5 U.S.C. sec. 2123). ⁵Such act authorizes the heads of various departments and agencies in the executive branch of the Federal Government to pay cash awards to civilian officers and employees of the Government who by their suggestions, superior accomplishments, or other personal efforts contribute to the efficiency, economy, or other improvement of Government operations, or who perform special acts or services in 41 T.C. 667">*672 the public interest in connection with or related to their1964 U.S. Tax Ct. LEXIS 144">*155 official employment.

1964 U.S. Tax Ct. LEXIS 144">*156 There can be no doubt, we think, that the purpose of the Government Employees' Incentive Awards Act is, as the name implies, to provide Government employees with an incentive to render outstanding or exceptional services to the Government. Nothing in the congressional committee reports in regard to the legislation indicates the contrary. See H. Rept. No. 1464, 83d Cong., 2d Sess.; S. Rept. No. 1992, 83d Cong., 2d Sess.; and Conf. Rept. No. 2665, 83d Cong., 2d Sess. The awards for achievement are limited, under the statute, to achievements accomplished while the recipients are in the employ of the Government, and it is also provided that the awards shall be in addition to the regular compensation of the recipients.

The award in question was given to the petitioner by GSA, with the approval of the Civil Service Commission, in recognition of superior accomplishment in the advocacy, initiation, development, analysis, preparation, and successful prosecution of actions resulting in large savings to the Federal Government, as pointed out in the Findings of Fact. There can be no question that the award was in recognition of achievements of the petitioner in connection with, and as a part1964 U.S. Tax Ct. LEXIS 144">*157 of, his employment as assistant general counsel of GSA and as chairman and executive director of the SAGE task force. We think the award must be considered as additional compensation for services rendered to the GSA and that, as such, it is taxable under the provisions of section 61(a)(1) of the Code.

The award here involved falls directly within the provision of the regulations which states that the exclusion provided by section 74(b) does not encompass prizes or awards from an employer to an employee in recognition of some achievement in connection with his employment. The petitioner, however, contends, in effect, that in this respect the regulation is not a valid interpretation of section 74(b). He points out that section 74(b) provides a basic and two subsidiary tests for determining whether certain prizes and awards are excludable from income, and that none of these suggests a legislative intent to apply a broad general principle that under no circumstances can a payment by an employer to an employee come within the exclusion.

We do not read the regulations in question as setting forth the broad principle that under no circumstances can a payment by an employer to an employee1964 U.S. Tax Ct. LEXIS 144">*158 come within the exclusion. Rather, such regulations provide that there can be no exclusion under section 74(b) where a prize or an award is given by an employer to an employee in recognition of some achievement in connection with his employment. Actually, the congressional committee reports in connection with the enactment of section 74 of the 1954 Code (H. Rept. No. 1337, 41 T.C. 667">*673 83d Cong., 2d Sess., p. A27, and S. Rept. No. 1622, 83d Cong., 2d Sess., p. 179) specifically state that section 74(b) was not intended to exclude from income prizes or awards from an employer to an employee in recognition of some achievement in connection with his employment. ⁶ The petitioner contends that the quoted language is not contained in the committee reports, but in a technical analysis appended to the reports. The petitioner is in error. The technical analyses are integral parts of the reports. The petitioner takes the position that, in any event, the language of section 74 is clear and unambiguous and contends, in effect, that resort cannot be had to the committee reports in interpreting it. It has been held, however, that there is no rule of law forbidding resort to explanatory1964 U.S. Tax Ct. LEXIS 144">*159 legislative history no matter how "clear the words may appear on 'superficial examination.'" Harrison v. Northern Trust Co., 317 U.S. 476">317 U.S. 476. See also Max Carasso, 34 T.C. 1139">34 T.C. 1139, affd. (C.A. 2) 292 F.2d 367, certiorari denied 369 U.S. 874">369 U.S. 874, and other cases cited therein. The regulations are in accord with the intent of Congress as evidenced by the committee reports. Since they are not unreasonable or inconsistent with the intent of the statute, they must be sustained. Commissioner v. South Texas Lumber Co., 333 U.S. 496">333 U.S. 496.

1964 U.S. Tax Ct. LEXIS 144">*160 It is our conclusion that the award here in question does not come within the exception provided in section 74(b). ⁷1964 U.S. Tax Ct. LEXIS 144">*161 Whether, as the 41 T.C. 667">*674 regulations appear to contemplate, it is taxable by virtue of the provisions of section 74(a) which state the general rule that gross income includes amounts received as prizes and awards, we need not here decide ⁸ since, as indicated above, we think that the award constitutes compensation and hence is taxable income under the provisions of section 61(a)(1) of the Code.

The petitioner, while apparently not specifically relying upon the provisions of section 102(a), ⁹ does state on brief that the award in question is in the nature of a gift. He states that the courts, including the Supreme Court in Commissioner v. Duberstein, 363 U.S. 278">363 U.S. 278, have refused to adopt a position that under no circumstances can there be a gift from an employer to an employee and that in all instances the amount received is taxable as compensation. However, in the Duberstein case it was stated that a gift in the statutory sense proceeds from a detached and disinterested generosity and out of affection, respect, admiration, charity, or like impulses, and that the most critical consideration is the transferor's intention. 1964 U.S. Tax Ct. LEXIS 144">*162 We think it clear that awards made under the Government Employees' Incentive Awards Act are not generated by the impulses alluded to by the Supreme Court, but are intended as compensation for exceptional services rendered to the Federal Government. Accordingly, the award is not excludable from income as a gift under section 102(a) of the Code. Nor is there any other provision of the Code under which it would be excludable. It may be added that the Government Employees' Incentive Awards Act itself contains no provision exempting the awards from tax.

In the recent case of Griggs v. United States, (Ct. Cl.) 314 F.2d 515, the same conclusion was reached with respect to an award given under the Government Employees' Incentive Awards Act to the taxpayer, who was a transportation and freight specialist employed by 1964 U.S. Tax Ct. LEXIS 144">*163 the Department of Defense. The Court of Claims concluded, among other things, that the award was in reality compensation for special services rendered.

The respondent did not err in including the award in question in the petitioner's taxable income.

Decision will be entered for the respondent.