Brief Fact Summary. The Supreme Court consolidated two cases with a similar issue. In both cases, the taxpayers did not report money received as punitive damages as income.
Synopsis of Rule of Law. Gross income includes gains or profits and income derived from any source whatsoever.
Section 61(a) includes in gross income all income from whatever source derived.View Full Point of Law
Issue. Whether money received as exemplary damages for fraud or as punitive damages of an antitrust recovery must be considered gross income?
Held. Chief Justice Warren issued the opinion for the Supreme Court of the United States in holding that the amounts should be considered gross income.
Dissent. Justice Douglass dissented but did not issue a separate opinion.
Discussion. The Supreme Court found no exception applicable to punitive damages. Further, the Court could not ignore the plain language of the statute that gross includes any income from any source.