Quimbee logo
DMCA.com Protection Status
From our private database of 16,500+ case briefs...

Freda v. Commissioner

United States Court of Appeals for the Seventh Circuit
656 F.3d 570 (2011)


Facts

C & F (plaintiff), a meat-processing company, developed a new way to freeze sausages. C & F reached an agreement with Pizza Hut, under which Pizza Hut would buy sausages from C & F so long as C & F divulged the details of its freezing process to Pizza Hut. Pizza Hut allegedly divulged C & F’s freezing process to IBP, a C & F competitor. IBP implemented the process and began selling its sausages to Pizza Hut. In a separate action, C & F sued IBP and Pizza Hut for misappropriation of its trade secret. C & F won a $10.9 million verdict against IBP and settled its case with Pizza Hut for $15.3 million. C & F reported the settlement amount as capital gains on its income tax returns. The Internal Revenue Service (IRS) (defendant) disallowed this classification, finding that the settlement amount should be taxed as ordinary income. C & F appealed to federal court, arguing that its trade secret was a capital asset, and thus the settlement recovery should be treated as a capital gain for tax purposes. The United States Tax Court affirmed the IRS’s decision. C & F appealed.

Rule of Law

Issue

Holding and Reasoning (Tinder, J.)

Dissent (Manion, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.

Here's why 419,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 16,500 briefs, keyed to 223 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Questions & Answers


Have a question about this case?

Sign up for a free 7-day trial and ask it

Sign up for a FREE 7-day trial