Taxation – Federal Income Tax – Exemplary Damages as Taxable Income to Recipient

Petitioner, a motion picture exhibitor, sued certain motion picture distributors under the private remedy provisions of the federal antitrust acts. Judgment was had against the distributors for treble damages. Upon failure of petitioner to report as income the amount recovered above its actual loss of profits, the Commissioner determined deficiencies in petitioner’s income tax. Held, the amount recovered above actual loss of profits was exemplary damages and not taxable income. William Goldman Theatres, Inc., 19 T.C. 637 (1953).