Keller Street Development Company v. Commissioner of Internal Revenue

HUG, Circuit Judge:

I

OVERVIEW

Keller Street Development Company (“Keller”) appeals the Tax Court’s decision that certain monies, received by Keller as a result of a sale of assets and subsequent litigation, are to be treated as ordinary income. Keller sold a brewery to Maier Brewing Company (“Maier”) in 1958. The day after the sale, Keller’s minority shareholders brought a derivative suit. After ten years of litigation in the California courts, a final judgment was issued, detailing the terms of sale the court deemed necessary to make the transaction fair to all parties. One element of the new…