Megargel v. Commissioner
United States Tax Court
The petitioner transferred stock but later instituted action to annul the transaction and for recovery of the stock. In the taxable year the action was compromised and settled, the petitioner receiving cash upon agreement to dismiss the action and to execute general releases, including the claim in suit. Petitioner had no other claim against the defendants. Held, that the amount was received upon sale of capital assets. Amount of basis determined.
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The petitioner transferred stock but later instituted action to annul the transaction and for recovery of the stock. In the taxable year the action was compromised and settled, the petitioner receiving cash upon agreement to dismiss the action and to execute general releases, including the claim in suit. Petitioner had no other claim against the defendants. Held, that the amount was received upon sale of capital assets. Amount of basis determined. Held, further, that certain expenses growing out of the litigation are deductible, under section 121 of the Revenue Act of 1942.
1Opinion of the Court
OPINION.
Disney, Judge:
With reference to the $120,000 received by the petitioner, only one question is propounded to us by the respective positions taken by the parties: Does the amount represent ordinary income, or gain from a sale of capital assets? The petitioner contends in substance that she'sold capital assets and wishes to report income on that basis and deduct the base of such capital assets; while the respondent contends that the income was ordinary, there having been a mere buying of peace by Loft, Inc., and Pepsi-Cola Corporation, having no such relation to the original transaction…
2Cases cited9 opinions
- Dobson v. CommissionerSupreme Court of the United States · 1944
- Lyeth v. HoeySupreme Court of the United States · 1938
- Griffiths v. CommissionerSupreme Court of the United States · 1939
- Helvering v. HammelSupreme Court of the United States · 1941
- United States v. Safety Car Heating & Lighting Co.Supreme Court of the United States · 1936
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3Cited by53 opinions
- Raytheon Production Corp. v. Commissioner of Int. Rev.Court of Appeals for the First Circuit · 1944
- Hope v. CommissionerUnited States Tax Court · 1971
- Coke v. CommissionerUnited States Tax Court · 1951
- Schultz v. CommissionerUnited States Tax Court · 1968
- Longhorn Portland Cement Co. v. CommissionerUnited States Tax Court · 1944
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