Die Schweiz

Compte rendu des travaux de la Chambre Syndicale pendant lʹannée 1926

Bibliographic data

Monograph

Identifikator:: 1008917265

URN:: urn:nbn:de:zbw-retromon-19129

Document type:: Monograph

Author:: Flückiger, Otto http://d-nb.info/gnd/117736708

Title:: Die Schweiz

Edition:: Zweite Auflage

Place of publication:: Zürich

Publisher:: Druck und Verlag von Schultheß & Co.

Year of publication:: 1914

Scope:: 1 Online-Ressource (VI, 243 Seiten)

Digitisation:: 2017

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Einzelbeschreibung

Collection:: Economics Books

14 STOOK DIVIDENDS or property of a person at a given instant of time; “income” represents the advantage, service, or use actually rendered by capital to its owner during a period of time. Under the act, income need not be money, but may be any advan- tage or service capable of easy, accurate, monetary appraisement. State courts have held that the term “income” includes the passing of shares of stock. (Union &e. Trust Co. v. Taintor, 85 Conn, 452; Gray ». Hemenway, 212 Mass. 239; Leland v. Hayden, 102 Mass. 542, 551.) There is a strong presumption that the distribution of this stock dividend was an advantage to the stockholders from the fact that they desired it and passed the resolutions directing it. These advantages were: (1) A transfer of the sur- plus and undivided profits from the plenary control of the corporation to a control largely in the stockholder. (2) An assurance that a declaration of dividends would in the future specifically take account of this surplus and be declared upon it. (3) A muniment of title which enables the stockholder to deal easily with his interest in the surplus by a mere spiel of his new stock. The latter is a real advantage and of great value. (In re Evans (1913), 1 Ch. Div. 23, 30, 31.) These advantages constitute “income” to the stock- holder because they flow to him from his property rights (i. e., “capital’”) in the corporation, and are capable of easy, accurate, monetary appraisement. They acerued to him because of his ownership of a portion of the original capital stock; that they were capable of easy, monetary appraisement is demonstrated by the fact that there was a regular market quotation upon them. True, the surplus always belonged to the stockholder, but not in the strict sense and to the full extent of control obtaining in the case of original capital. The transfer gave him new rights. It can not be said that the corporation lost nothing or that the stockholder gained nothing. The former lost its plenary control over the surplus; instead of being indebted to “surplus,” with a con- sequent free use of such funds, it Became indebted to “ capital,” with a limited use of the funds. The latter gained a direct: right against the corporation instead of an indirect interest in the “surplus.” Counsel contend that the surplus was put in a position where it could not be distributed as dividends or income. But it gained this position by distribution ; by conversion into capital. It passed to the stockholder as income en bloc, and of course could not produce income again in that form until another complete change took place. 3 The rule as between life tenant and remainderman, involved in Gibbons ». Mahon (136 U. S. 549), depends on equitable considerations, but a statute levying a tax must be rigorously applied according to its correct construction, no matter what hardships may be caused thereby. In Bailey v. Railroad Co. (22 Wall. 604, 106 U. S. 109), it was undoubtedly held in the first error pro- ceedings that a stock dividend was, and could lawfully be, taxed under the in- come act tax of 1864. Gibbons ». Mahon seems to recognize this (p. 560). Reviewing the decisions of this court in the first Bailey case, in Gibbons . Mahon, and in Logan County ». United States (169' U. 8. 255), comparing them, and considering carefully the due weight to be given to each as an authority in the case at bar, it is submitted that the question whether a stock dividend is “income’’ within the meaning of an act taxing “net income arising or accruing from all sources’ is not foreclosed by authority. Mr. Gordon M. Buck, by leave of court, filed a brief as amicus curiae, Mr. Justice Holmes delivered the opinion of the court. This is a suit to recover the amount of a tax paid under duress in respect of a stock dividend alleged by the Government to he income. A demurrer to the declaration was sustained by the district court and judgment was entered for the defendant. (242 Fed. Rep. 702.) The facts alleged are that the corpora- tion voted on December 17, 1913, to transfer $1,500,000 surplus, being profits earned before January 1, 1913, to its capital account, and to issue 15,000 shares of stock representing the same to its stockholders of record on December 26; that the distribution took place on January 2, 1914, and that the ‘plaintiff received as his due proportion 4,17414 shares. ~The defendant compelled the plaintiff’ to pay an income tax upon this stock as equivalent to $417,450 income in cash. The district court held that the stock was income within the meaning of the income tax of October 3, 1913 (ec. 16, sec. II; A, subdivisions 1 and 2; and B : 38 Stat. 114, 166, 167). It also held that the act so construed was constitu tional, whereas the declaration set up that so far as the act purported to confer power to make this levy it was unconstitutional and void. The Government in the first place moves to dismiss the case for want of juris- diction on the ground that the only question here is the construction of the

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