Raytheon Production Corporation v. Commissioner

Citation. Raytheon Production Corp. v. Commissioner, 144 F.2d 110, 1944 U.S. App. LEXIS 2759, 44-2 U.S. Tax Cas. (CCH) P9424, 32 A.F.T.R. (P-H) 1155 (1st Cir. July 28, 1944)

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CitationRaytheon Production Corp. v. Commissioner, 144 F.2d 110, 1944 U.S. App. LEXIS 2759, 44-2 U.S. Tax Cas. (CCH) P9424, 32 A.F.T.R. (P-H) 1155 (1st Cir. July 28, 1944)

Brief Fact Summary. Raytheon, Taxpayer, alleged that the illegal conduct of R.C.A. in violation of anti-trust acts destroyed the profitable interstate and foreign commerce of Raytheon and cause in excess of $3 million in damage.

Synopsis of Rule of Law. Damages recovered for violations of anti-trust acts are treated as income when they represent compensation for loss of profits.

Points of Law - Legal Principles in this Case for Law Students.

The key question is: in lieu of what were the damages awarded?.

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Issue. Is the settlement required to be included in Taxpayer’s gross income?

Held. Circuit Judge Mahoney issued the opinion for the United States First Circuit Court of Appeals in holding that the compensation for Taxpayer’s loss of good will in excess of its cost is gross income.

Discussion. The Court of Appeals notes that the question to be asked is what was the nature of the recovery? There was nothing to indicate that the recovery by Taxpayer was for lost profits. Rather, the evidence showed that the recovery was for the value of the goodwill and the busine