358 F2d 138 Aluminum and Metal Service Inc v. Commissioner of Internal Revenue

358 F.2d 138

66-1 USTC P 9323


No. 15331.

United States Court of Appeals Seventh Circuit.

March 24, 1966.

Howard R. Slater, Phillip S. Makin, Chicago, Ill., for petitioner.

Richard M. Roberts, Acting Asst. Atty. Gen., Tax Division, Robert I. Waxman, Atty., U.S. Dept. of Justice, Washington, D.C., Lee A. Jackson, Harold C. Wilkenfeld, Attys., Dept. of Justice, Washington, D.C., on the brief for respondent.

Before HASTINGS, Chief Judge, and CASTLE and SWYGERT, Circuit Judges.


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We have before us the petition of Aluminum and Metal Service, Inc. (taxpayer) for a review of a decision of the Tax Court of the United States. This decision was filed May 13, 1965 in the case of Aluminum and Metal Service, Inc. v. Commissioner of Internal Revenue, Docket No. 1956-63. T.C. Memo. 1965-129. The memorandum findings of fact and opinion were entered by Judge Graydon G. Withey for the Tax Court and can be found in CCH Tax Ct. Mem. Dec. 27, 384(M).


The issue in controversy presented to the Tax Court was whether respondent erred in ruling that the sum of $90,000 of a total of $148,624.20, recovered by taxpayer in its fiscal year ended April 30, 1958, in settlement of a suit for damages resulting from a tortious injury to taxpayer (slander, libel and destruction of credit by Aluminum Transatlantic, Inc.) constituted taxable income in the year of recovery. Also, whether as a result of such ruling, respondent erred in the treatment of such sum as ordinary income in the computation of petitioner's operating loss deduction on a carry forward basis for the fiscal year ended April 30, 1960.


The Tax Court upheld the determination by respondent that the $90,000 excluded from its gross income by petitioner for its fiscal year ended April 30, 1958, was properly to have been included therein as ordinary income. The Tax Court so decided on the ground that taxpayer failed to sustain its burden to establish the non-compensatory and capital nature of the settlement amount.


We hold that there is sufficient evidence in the record to support the findings and conclusions of the Tax Court and that its decision should be affirmed. Sager Glove Corporation v. C.I.R., 7 Cir., 311 F.2d 210 (1962).


Reference is made to the findings of fact and opinion of the Tax Court as reported in T.C. Memo. 1965-129, supra. We adopt the opinion of the Tax Court and affirm the decision under review on the authority of such opinion.