426 Opinion of the Court. his capital investment. Id., at 210. It was held that the taxpayer had "received nothing out of the company's assets for his separate use and benefit." Id., at 211. The distribution, therefore, was held not a taxable event. In that context distinguishing gain from capital-the definition served a useful purpose. But it was not meant to provide a touchstone to all future gross income questions. Helvering v. Bruun, supra, at 468 469; United States v. Kirby Lumber Co., supra, at 3. Here we have instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion. The mere fact that the payments were extracted from the wrongdoers as punishment for unlawful conduct cannot detract from their character as taxable income to the recipients. Respondents concede, as they must, that the recoveries are taxable to the extent that they compensate for damages actually incurred. It would be an anomaly that could not be justified in the absence of clear congressional intent to say that a recovery for actual damages is taxable but not the additional amount extracted as punishment for the same conduct which caused the injury. And we find no such evidence of intent to exempt the payments. It is urged that re-enactment of § 22 (4) without change since the Board of Tax Appeals held nitive damages nontaxable in Highland Farms Corp., 42 B. T. A. 1314, indicates congressional satisfaction with that holding. Re-enactment-particularly without the slightest affirmative indication that Congress ever had the Highland Farms decision before it is an unreliable indicium at best. Helvering v. Wilshire Oil Co., 308 U. S. 90, 100-101; Koshland v. Helvering, 298 U. S. 441, 447. Moreover, the Commissioner promptly published his nonacquiescence in this portion of the Highland Farms holding and has, 71941-1 Cum. Bull. 16. 7 Opinion of the Court. 348 U.S. before and since, consistently maintained the position that these receipts are taxable. It therefore cannot be said with certitude that Congress intended to carve an exception out of § 22 (a)'s pervasive coverage. Nor does the 1954 Code's' legislative history, with its reiteration of the proposition that statutory gross income is "allinclusive," 10 give support to respondents' position. The definition of gross income has been simplified, but no effect upon its present broad scope was intended." Certainly punitive damages cannot reasonably be classified as gifts, cf. Commissioner v. Jacobson, 336 U. S. 28, 47–52, nor do they come under any other exemption provision in the Code. We would do violence to the plain meaning of the statute and restrict a clear legislative attempt to 8 The long history of departmental rulings holding personal injury recoveries nontaxable on the theory that they roughly correspond to a return of capital cannot support exemption of punitive damages following injury to property. See 2 Cum. Bull. 71; 1-1 Cum. Bull. 92, 93; VII-2 Cum. Bull. 123; 1954-1 Cum. Bull. 179, 180. Damages for personal injury are by definition compensatory only. Punitive damages, on the other hand, cannot be considered a restoration of capital for taxation purposes. 968A Stat. 3 et seq. Section 61 (a) of the Internal Revenue Code of 1954, 68A Stat. 17, is the successor to § 22 (a) of the 1939 Code 10 H. R. Rep. No. 1337, 83d Cong., 2d Sess. A18; S. Rep. No. 1622, 83d Cong., 2d Sess. 168. 11 In discussing § 61 (a) of the 1954 Code, the House Report states: "This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22 (a). "Section 61 (a) provides that gross income includes 'all income from whatever source derived.' This definition is based upon the 16th Amendment and the word 'income' is used in its constitutional sense." H. R. Rep. No. 1337, supra, note 10, at A18. A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168. 426 Opinion of the Court. bring the taxing power to bear upon all receipts constitutionally taxable were we to say that the payments in question here are not gross income. See Helvering v. Midland Mutual Life Ins. Co., supra, at 223. MR. JUSTICE DOUGLAS dissents. Reversed. MR. JUSTICE HARLAN took no part in the consideration or decision of this case. 348 U.S. Opinion of the Court. GENERAL AMERICAN INVESTORS CO., INC. v. COMMISSIONER OF INTERNAL REVENUE. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT. No. 114. Argued February 28, 1955.-Decided March 28, 1955. Payments received by a corporation pursuant to the "insider profits" provisions of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 are taxable as "gross income" to the corporation under § 22 (a) of the Internal Revenue Code of 1939. Commissioner v. Glenshaw Glass Co., ante, p. 426. Pp. 434-436. 211 F. 2d 522, affirmed. Norris Darrell argued the cause for petitioner. With him on the brief was John F. Dooling, Jr. Solicitor General Sobeloff argued the cause for respondent. With him on the brief were Assistant Attorney General Holland, Charles F. Barber, Ellis N. Slack and Melva M. Graney. MR. CHIEF JUSTICE WARREN delivered the opinion of the Court. The sole question presented by this case is whether a payment is taxable as gross income when received by a corporation pursuant to the "insider profits" provisions of the Securities Exchange Act of 19341 and the Investment Company Act of 1940. Subject to exceptions not presently relevant, § 16 (b) of the Securities Exchange Act provides that the profit realized from certain defined securities transactions undertaken by a director or major stockholder of the issuing corporation "shall inure to and be recoverable by the issuer." This provision is made 1 48 Stat. 881, 15 U. S. C. § 78a. 3 434 Opinion of the Court. applicable to investment companies by § 30 (f) of the Investment Company Act of 1940. Under these provisions, petitioner, a registered closed-end investment company, received payments totalling $170,038.04. This sum represented the profits accruing to one of petitioner's directors and a stockholder through dealings covered by § 16 (b); the money was paid over to petitioner on demand and without litigation. The payments were not reported as income on petitioner's tax returns. The Commissioner of Internal Revenue allowed a $13,000 deduction for legal expenses incurred in recovering the amounts due but asserted a deficiency for the balance on the ground that the receipts constituted taxable gains under § 22 (a) of the Internal Revenue Code of 1939.5 The Tax Court, 19 T. C. 581, and the Court of Appeals for the Second Circuit, 211 F. 2d 522, sustained the Commissioner's determination. We granted certiorari, 348 U. S. 812, because of an apparent similarity of issues here to those involved in Commissioner v. Glenshaw Glass Co., 211 F. 2d 928 (C. A. 3d Cir.), and the possible conflict between that case and this. 4 54 Stat. 837, 15 U. S. C. § 80a-29. 5 "SEC. 22. GROSS INCOME. "(a) GENERAL DEFINITION.-'Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service. . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. . . ." (Emphasis added.) 53 Stat. 9, 53 Stat. 574, 26 U.S. C. § 22 (a). • There was, however, no disagreement among lower courts which faced the question of the taxability of a § 16 (b) recovery of "insider profits." See Park & Tilford Distillers Corp. v. United States, 123 Ct. Cl. 509, 107 F. Supp. 941; Noma Electric Corp., 12 T. C. M. 1 (CCH Tax Ct. Mem., Dec. 1953). |