Henshaw v. Commissioner
United States Tax Court
Petitioners sued the owner and operator of a recycling plant for damages to oil in place underneath two oil leases of which petitioners were part owners. They secured a judgment against the defendant. Defendant appealed from the judgment and it was later settled by agreement. After deduction of expenses petitioners had a gain from the settlement, the amount of which is not in dispute.
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Petitioners sued the owner and operator of a recycling plant for damages to oil in place underneath two oil leases of which petitioners were part owners. They secured a judgment against the defendant. Defendant appealed from the judgment and it was later settled by agreement. After deduction of expenses petitioners had a gain from the settlement, the amount of which is not in dispute. This gain petitioners returned as capital gain and the Commissioner has determined it to be ordinary income under section 22 (a). Held, the amount petitioners received was compensatory damages for the compulsory…
1Opinion of the Court
OPINION.
Black, Judge:
The parties are in agreement that $59,211.11 of the $74,738.30 which petitioners received in • compromise of their judgment against Skinner & Eddy represented income to petitioners. Petitioners had no unrecovered basis of cost of their oil and gas leases on which they were operating. Therefore, after the deduction of the expenses of their lawsuit, the remainder of the amount which they received represented gain to them.
Petitioners contend that the $59,211.11 represents gain from involuntary conversion of property owned by petitioners and used in their trade or business…
2Cases cited5 opinions
- Anderson v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1936
- Commissioner of Internal Revenue v. Glenshaw Glass Co. Commissioner of Internal Revenue v. William Goldman Theatres, IncCourt of Appeals for the Third Circuit · 1954
- Waggoner v. CommissionerUnited States Tax Court · 1950
- Chesson v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1932
- State v. JohnsonSupreme Court of South Carolina · 1941
3Cited by1 opinion
- Henshaw v. CommissionerUnited States Tax Court · 1954