- 10 - taxpayer. Central Foundry Co. addressed whether a corporation could deduct the reimbursement of shareholders’ expenses from a successful proxy fight as ordinary and necessary business expenses. The Court stated that no matter which remedy the shareholder selected, a derivative action or a proxy contest, it was the proximate relationship to the corporation and the benefit to the corporation that determined whether the expenses were deductible. Central Foundry Co., however, has not been relied upon by this Court, or any other court, for guidance in determining whether recoveries by taxpayers are excludable from gross income under section 104(a)(2). Thus, we do not view Central Foundry Co. as persuasive support for petitioner’s position that the focus should be on the legislative policy underlying title VII rather than the possible remedies available to claimants. More important, however, is the fact that the Supreme Court did not follow the dissent’s view in Burke and held that a claim under title VII is not based on a “tort or tort type” right, taking account of the kinds of remedies that may be awarded for that claim. United States v. Burke, supra at 234-237. Because pre-1991 title VII remedies were limited to backpay and injunctive relief, the Court held that a sex discrimination claim did not assert a “tort or tort type” right. Regardless of whether petitioner’s claims may have had an analogue at commonPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011