Republic Automotive Parts, Inc. v. Commissioner
United States Tax Court
Petitioner licensed a Brazilian corporation to use petitioner's trade name, trademark, and technical knowhow in exchange for 5-percent royalty payments. The agreement provided for a 15-year term. Petitioner retained the right to terminate the agreement if the licensee did not maintain the quality of the products sold under petitioner's trade name and trademark, and licensee could not assign its interest without petitioner's written consent.
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Petitioner licensed a Brazilian corporation to use petitioner's trade name, trademark, and technical knowhow in exchange for 5-percent royalty payments. The agreement provided for a 15-year term. Petitioner retained the right to terminate the agreement if the licensee did not maintain the quality of the products sold under petitioner's trade name and trademark, and licensee could not assign its interest without petitioner's written consent. An American corporation subsequently induced the licensee to breach the agreement. Petitioner sued the American corporation in tort and recovered $…
1Opinion of the Court
OPINION
Tietjens, Judge:
The respondent determined a deficiency in Federal income tax against the petitioner for taxable year 1969 in the amount of $77,239. The issue is whether amounts received by petitioner from Borg-Warner Corp. as tort damages for wrongfully inducing the breach of a contract between the petitioner and a third party were capital gains or ordinary income.
The petitioner, Republic Automotive Parts, Inc. (Republic), is a Delaware corporation with offices at 20200 East Nine Mile Road, St. Clair Shores, Mich. 48083. Petitioner filed its corporate income tax return for taxable year…
2Cases cited16 opinions
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- Hort v. CommissionerSupreme Court of the United States · 1941
- Commissioner v. Gillette Motor Transport, Inc.Supreme Court of the United States · 1960
- Raytheon Production Corp. v. Commissioner of Int. Rev.Court of Appeals for the First Circuit · 1944
- Durkee v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1947
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3Cited by3 opinions
- Tomerlin Trust v. CommissionerUnited States Tax Court · 1986
- Republic Automotive Parts, Inc. v. CommissionerUnited States Tax Court · 1977
- Tomerlin Trust v. CommissionerUnited States Tax Court · 1986