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Petitioner alleged further that USI fraudulently promised to
employ him to operate and manage petitioner's former companies
when it did not intend to continue him in this position.
The jury returned a verdict awarding petitioner $8,128,515
compensatory damages on his fraud claim. Petitioners excluded
this damage award from taxable income on their 1990 Federal
income tax return.
The Claim for Interference with a Business Relationship
In his complaint in the third jury trial, petitioner alleged
that USI maliciously interfered with petitioner’s business and
contractual relationship with Leesburg Bank by withholding
payments of dividends on the USI stock that petitioner had
pledged as security for loans from the bank, that consequently
the bank was required to sell petitioner’s stock at a depressed
price to satisfy his loans, and that petitioner was deprived of
the use and benefit of the dividends and “otherwise damaged”.
The jury returned a verdict awarding petitioner compensatory
damages in the amount of $43,050 and punitive damages in the
amount of $18,500,000, which the trial judge remitted to $2
million. On their 1990 joint Federal income tax return,
petitioners included in income $34,748 of the compensatory
damages, but excluded from income the remaining amounts received
with respect to this claim.
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