Commissioner v. Glenshaw Glass Co. case
brief
ANALYSIS:
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348 U.S. 426, 75 S. Ct. 473, 99 L. Ed.
483, 1955 U.S.
CASE SYNOPSIS: Petitioner Commissioner
of Internal Revenue sought review of a judgment of United States
Court of Appeals for the Third Circuit, which affirmed a tax court
judgment holding that respondent taxpayers were not required to
report their awards of punitive damages as income under 26 U.S.C.S. §
22(a).
FACTS: The taxpayers received punitive damages from judgments in their favor, but they did not report the damages as gross income. The tax court and the appellate court concluded that they did not have to report the damages as income under § 22(a).
FACTS: The taxpayers received punitive damages from judgments in their favor, but they did not report the damages as gross income. The tax court and the appellate court concluded that they did not have to report the damages as income under § 22(a).
HOLDING:
On certiorari, the Court held that
recovery of punitive damages was taxable income under § 22, which
determined what was taxable gross income and which was given a broad
and liberal construction.
ANALYSIS:
The intention of Congress was to tax
all gains of income except those specifically exempted. In reversing
the judgment, the Court held that it was anomalous to conclude that
recovery of actual damages was taxable, but not the additional amount
extracted as punishment for the same conduct that caused the injury.
Punitive damages were not gifts, could not be considered a
restoration of capital for taxation purposes, and did not fit under
any exemption provision of the Internal Revenue Code.
CONCLUSION: The Court reversed the appellate court's judgment.
CONCLUSION: The Court reversed the appellate court's judgment.
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