Commissioner v. Glenshaw Glass Co.
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''Commissioner v. Glenshaw Glass Co.'', 348 U.S. 426 (1955), was an important income tax case before the
United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on question ...
. The Court held as follows: *
Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...
, in enacting income taxation statutes that comprehend "gains or profits and income derived from any source whatever," intended to tax all gain except that which was specifically exempted. *Income is not limited to "the gain derived from capital, from labor, or from both combined." :*Although the Court used this characterization in '' Eisner v. Macomber'', it "was not meant to provide a touchstone to all future gross income questions." *Instead, income is realized whenever there are "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." :*Under this definition, punitive damages qualify as "income" -- even though they are not derived from capital or from labor.


Facts

Two factually distinct cases were consolidated because they presented the same issue. *In one case, the
defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one juris ...
Glenshaw Glass Company had won an award of
punitive damages Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. ...
in an
antitrust Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
lawsuit A lawsuit is a proceeding by one or more parties (the plaintiff or claimant) against one or more parties (the defendant) in a civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today ...
. The defendant did not declare this award as income or pay taxes on it, claiming that it was not subject to taxation. The
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...
brought suit to collect the
tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...
. *In another case, William Goldman Theatres, Inc. neglected to report punitive damages as income. Again, the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...
sued to collect the
tax A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...
.


Opinion of the Court

The Supreme Court, in an opinion by Chief Justice Earl Warren, held that the award of treble damages was taxable income. In the opinion, Warren pointed out that the language of section 22(a) (the predecessor of current section 61(a)) was employed by Congress in order utilize "the full measure of its taxing power," as provided for under the Sixteenth Amendment. Essentially, Congress, in enacting section 22(a), intended to tax all gains except those specifically exempted. The Court then held that the amounts received by the taxpayers in this case were "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." This three-part "test" for determining income is broader than the earlier test employed by the Court in '' Eisner v. Macomber'', and is to this day the preferred test for identifying gross income.


See also

* List of United States Supreme Court cases, volume 348 *'' Clark v. Commissioner'' *'' Commissioner v. Indianapolis Power & Light Co.'' *'' Haverly v. United States'' *'' Raytheon Production Corp. v. Commissioner''


References


Further reading

* *


External links

* {{US16thAmendment 1955 in United States case law United States Sixteenth Amendment case law United States Supreme Court cases United States Supreme Court cases of the Warren Court United States Supreme Court cases in 1955