Commissioner v. Glenshaw Glass Co.

348 U.S. 426 (1955)

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Nature of the Case

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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.