Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955)

Commissioner v. Glenshaw Glass Co.


No. 199


Argued February 28, 1955
Decided March 28, 1955 *
348 U.S. 426

CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Syllabus

Money received as exemplary damages for fraud or as the punitive two-thirds portion of a treble damage antitrust recovery must be reported by a taxpayer as "gross income" under § 22(a) of the Internal Revenue Code of 1939. Pp. 427-433.

(a) In determining what constitutes "gross income" as defined in § 22(a), effect must be given to the catch-all language "gains or profits and income derived from any source whatever." Pp. 429-430.

(b) Eisner v. Macomber, 252 U.S. 189, distinguished. Pp. 430-431.

(c) The mere fact that such payments are extracted from the wrongdoers as punishment for unlawful conduct cannot detract from their character as taxable income to the recipients. P. 431.

(d) A different result is not required by the fact that § 22 (a) was reenacted without change after the Board of Tax Appeals had held punitive damages nontaxable in Highland Farms Corp., 42 B.T.A. 1314. Pp. 431-432.

(e) The legislative history of the Internal Revenue Code of 1954 does not require a different result. The definition of gross income was simplified, but no effect upon its present broad scope was intended. P. 432.

(f) Punitive damages cannot be classified as gifts, nor do they come under any other exemption in the Code. P. 432.

211 F.2d 928 reversed.