Business Profits as a Measure of Earning Capacity in an Accident Case: Fundamentals Revisited

This article examines the legal bases for determining when the profits of a business can be a valid measure of an owner’s earning capacity in an injury case. It is shown that both economic theory and federal income tax law can serve as foundation for analyzing and quantifying such a loss under tort law precedents. A sample case further illustrates applications in a federal lawsuit filed by a business owneroperator.