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Income Tax Keyed to Bankman
Commissioner v. Glenshaw Glass Co.
Citation:
348 U.S. 426 (1955)Facts
(Glenshaw): Petitioner was a glass bottle manufacturer did not report as gross income a portion of the damages it received from a $800,000 settlement with one of its suppliers, Hartford-Empire Company. Petitioner’s lawsuit arose from claims for exemplary damage for fraud and treble damages for antitrust violations. Through a method of allocation approved by the U.S. Tax Court, it was determined that $324,529.94 of the settlement constituted punitive damages which Petitioner did not include as income for the taxable year. The Commissioner of Internal Revenue asserted a deficiency, finding that the entire settlement payment was taxable as gross income, less only deductible legal fees.
(Goldman): Petitioner was a motion picture house operator did not report as gross income a portion of the damages it was awarded from a lawsuit against its business partner, Loew’s, Inc. The lawsuit arose from Petitioner’s claims against Loew’s for a violation of antitrust law and for resulting treble damages. It was determined that Petitioner suffered a loss of profits of $125,000 and was entitled to treble damages for $375,000. Petitioner only reported $125,000, and argued the rest was not taxable as it constituted punitive damages. The Commissioner of Internal Revenue asserted a deficiency, finding that the entire judgment award was taxable as gross income, less only deductible legal fees.
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