COMMISSIONER V. GLENSHAW GLASS CO.
348 U.S. 426 (1955)
NATURE OF THE CASE: This was a combined hearing of two cases presenting identical issues
of just how to treat money received as exemplary damages in lawsuits.
FACTS: Glenshaw (P) sued Hartford for fraud and treble damages for Hartford's alleged
violation of antitrust laws. In December of 1947, the parties concluded a settlement of all
pending litigation and Hartford agreed to pay P $800,000. It was ultimately determined that
of the total settlement, $324,529.94 represented payment of punitive damages for fraud and
antitrust violations. P did not report that portion of the settlement as income for the tax
year involved. The Commissioner determined a deficiency claiming as taxable the entire sum
less only deductible legal fees. The Tax Court and the Court of Appeals upheld the taxpayer.
Goldman theatres sued Loew's Inc. to violation of federal antitrust laws and sought treble
damages. It was found at trial that Goldman suffered a loss of $125,000 in profits and was
entitled to $375,000 in treble damages. Goldman reported the $125,000 and claimed the
balance of $250,000 as punitive damages. The Tax Court agreed and so did the appeals court.
It was conceded by all parties that there was no constitutional barrier to the imposition of
tax on punitive damages awards.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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