66 Ct. Cl. 713 | Ct. Cl. | 1929
delivered the opinion of the court:
The facts in this case are stipulated by the parties, and may briefly be stated as follows:
Plaintiff was incorporated in March, 1925, with an authorized capital stock of $2,000,000. It had no assets, and was not engaged in business prior to June 1, 1925. On that date plaintiff acquired certain salmon-canning plants of the value of $2,000,000, in payment of the total authorized issue of 20,000 shares of the stock in plaintiff company. On July 24, 1925, plaintiff filed its capital-stock tax return for the taxable period July 1,1925, to June 30; 1926, showing, among other facts, the fair value of the capital stock of plaintiff
The tax in question, known as the capital-stock tax, is imposed by section 700 (a) of the revenue act of 1924, 43 St-at. 325, which reads as follows:
“ On and after July 1, 1924, in lieu of the tax imposed by section 1000 of the revenue act of 1921—
“(1) Every domestic corporation shall pay annually a special excise tax with respect to carrying on or doing business, equivalent to $1 for each $1,000 of so much of the fair average value of its capital stock for the preceding year ending June 30 as is in excess of $5,000. In estimating the value of capital stock the surplus and undivided profits shall be included;
«(2) * * *
“(b) The taxes imposed by this section shall not apply in any year to any corporation which was not engaged in business * * * during the preceding year ending June 30, * *°
The capital-stock tax is an excise tax imposed on a corporation for the privilege of doing business. It is assessed and collected a/n/nually for the privilege of doing business in the following year, and the tax is measured by values relating to the preceding year. Regulations 64 (1924 edition), article 14 as amended by Treasury Decision 3771, contains the clear and pertinent statement: “The tax is measured by the fair average value of the capital stock of the corporation for the year ending June 30 preceding the taxable period. A corporation in existence less than a year on July 1 of the taxable period will be permitted to consider values only during that portion of the year it was m existence.” (Our italics.) In the present case the corporation was in existence only for the month of June in the year preceding the taxable period. There was no change whatever in the value of the stock from June 1 to June 30, 1925. Where there is no change in value,