Required: Ignoring capital gains tax, discuss whether receipt of the $300,000 by each of the employees constitutes ordinary income (citing authority where appropriate).

Bryan owned a company, INV Pty Ltd, that ran a business that managed investments for some wealthy clients. This company employed 10 persons, who had all worked for Bryan for at least 5 years. Bryan had developed a friendship with these 10 employees of INV, and all 10 of these employees had attended his recent 80th birthday celebration (there were 18 guests in total).

Given Bryan's age, he decided to sell the shares in INV Pty Ltd, and ended up doing so for $30 million. The employees continued to be employed by INV, even though it had a new owner.

Bryan then surprised all 10 of the employees by gifting them $300,000 each. He sent the same message to each employee (through email): "thank you all for all the emotional support you've given me over the years and helping me to become so rich."