Bagley v. Commissioner
United States Tax Court
In 1987, P received $ 150,000 in compensatory damages and $ 500,000 in punitive damages pursuant to judgment on a claim for tortious interference with future employment, with statutory interest thereon, and $ 1.5 million in settlement of claims for tortious interference with future employment, libel, and invasion of privacy. P excluded all of these amounts from income under sec. 104(a)(2), I.R.C.
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In 1987, P received $ 150,000 in compensatory damages and $ 500,000 in punitive damages pursuant to judgment on a claim for tortious interference with future employment, with statutory interest thereon, and $ 1.5 million in settlement of claims for tortious interference with future employment, libel, and invasion of privacy. P excluded all of these amounts from income under sec. 104(a)(2), I.R.C. R determined that the punitive damages and interest received from the judgment and $ 1.305 million of the settlement amount attributable to punitive damages were not excludable under sec. 104(a)(2),…
1Opinion of the Court
SCOTT, Judge:
Respondent determined a deficiency in petitioners’ income tax for the calendar year 1987 in the amount of $488,976.31. The issues for decision are: (1) What portion, if any, of the amount of $1.5 million paid to Hughes Bagley (petitioner) in settlement of a suit against Iowa Beef Processors, Inc. (IBP), is allocable to punitive damages; (2) whether the $500,000 in punitive damages paid to petitioner pursuant to a judgment against IBP, and the portion, if any, of the $1.5 million paid to petitioner in settlement of his suit against IBP which is allocable to punitive damages, are…
2Cases cited30 opinions
- City of Newport v. Fact Concerts, Inc.Supreme Court of the United States · 1981
- Trans World Airlines, Inc. v. ThurstonSupreme Court of the United States · 1985
- Commissioner v. CulbertsonSupreme Court of the United States · 1949
- Overnight Motor Transportation Co. v. MisselSupreme Court of the United States · 1942
- United States v. BurkeSupreme Court of the United States · 1992
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3Cited by72 opinions
- Hughes A. Bagley and Marilyn B. Bagley v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1997
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- Kenseth v. CommissionerUnited States Tax Court · 2000
- Chamberlain Ex Rel. Chamberlain v. United StatesCourt of Appeals for the Fifth Circuit · 2005
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