Commissioner v. Glenshaw Glass Co, 348 U.S. 426 (1955)
Nov 11, 2014 by Vahid Dejwakh

Facts and Procedural History

Glenshaw Glass wins $800K from Hartford-Empire Company in settlement of an antitrust violation case, about $325K of which represented punitive damages. Glenshaw does not report this $325K in its income tax declaration.

Glenshaw wins in both Tax Court and Court of Appeals.


Is the income derived from punitive damages of a lawsuit taxable?

Holding and Dissent(s)

C.J. Warren: reversed in favor of IRS
1) Sec. 22(a) of 1939 code defines “gross income” as including “gains or profits and income derived from any source whatever”
2) “Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to their nature”
3) No reason why we should exclude windfall income from punitive damages from taxable income category

Analysis and Discussion

Do we need to incentivize antitrust lawsuits by NOT taxing the income from punitive damages? Or is the incentive sufficiently present even if we tax this income?

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