Seventh Circuit -- Joseph A. Freda v. CIR

No clear error in funds received as a result of a settlement of a claim for misappropriation of capital assets being taxed as ordinary income as opposed to capital gains.

The settlement was not in lieu of a replacement of appropriated capital.

Nothing in agreement suggested that the payor viewed the deal as compensation for the use of capital assets.  Complaint was for lost profits.

Dissent: Nature and basis of claim is compensation for use of trade secret.


Joseph A. Freda v. CIR