Facts
In 1996, spouses [A.X.] and [B.X.] made a capital contribution of CHF 100,000 to the sole proprietorship [Y.] Management, which was operating an investment fraud based on a Ponzi scheme. Between January and December 1997, they received a total of CHF 42,770 as "profit shares" paid out. The Cantonal Tax Office of Zurich assessed these payments as taxable income. The [X.] spouses unsuccessfully filed an objection and appeal. The Administrative Court of the Canton of Zurich partially upheld their appeal and decided that the "profit shares" paid out after June 17, 1997, in the amount of CHF 26,700, should not be considered realized asset income, but rather as uncertain claims that could not be classified as income-generating. The [X.] spouses filed a constitutional appeal against this decision with the Federal Supreme Court.Considerations
The Federal Supreme Court dismissed the constitutional appeal, to the extent that it was admissible. It stated that for the question of whether income has been realized, the decisive factor is generally the time when the respective service becomes due. At the time of the payment of the "profit shares" between January and June 1997, there were no doubts that they were asset income from the asset management contract. The fact that [Y.] Management was later exposed as a fraudulent Ponzi scheme does not change this. The fact that the bankruptcy administration later…