Flintkote Company v. United States

The Flintkote Company (“Flintkote”) appeals from the district court’s judgment in favor of the government following cross-motions for summary judgment in this action for refund of federal income taxes plus interest paid by Flintkote for the years 1970-73. Flintkote contests the Internal Revenue Service’s (“IRS”) partial disallowance of Flint-kote’s deduction of $3.5 million paid to settle a large number of civil antitrust treble damage actions. The parties to this action dispute whether, within the meaning of 26 U.S.C. § 162 (g), the civil suits involved the same violation as was charged in a subsequent criminal indictment against Flintkote.

The district court had jurisdiction under 28 U.S.C. § 1346 (a)(1), and this court has jurisdiction of this timely appeal under 28 U.S.C. § 1291 . We affirm.

I.

In 1973, Flintkote agreed to settle a large number of civil antitrust treble damage actions brought in the late 1960s against it and other manufacturers of gypsum wallboard. Flintkote paid $3.5 million as its share of the settlement payment, and then deducted that amount from its federal income taxes as a business expense. Relying on 26 U.S.C. § 162 (g), the IRS disallowed $…