Detroit Corporation Sued Chicago Corporation for Intentional Damage to Detroit's

Multiple Choice

Detroit Corporation sued Chicago Corporation for intentional damage to Detroit's goodwill. Detroit had created its goodwill through providing high-quality services to its customers. Thus, no basis for the goodwill appeared on Detroit's balance sheet. The suit was settled and Detroit received $1,500,000 for the damages to its goodwill.

A) The $1,500,000 is not taxable because it represents a recovery of capital.
B) The $1,500,000 is taxable because Detroit has no basis in the goodwill.
C) The $1,500,000 is not taxable because Detroit did nothing to earn the money.
D) The $1,500,000 is not taxable because Detroit settled the case.
E) None of these.