278 Mass. 557 | Mass. | 1932
These are proceedings pursuant to G. L. c. 58A, inserted in General Laws by St. 1930, c. 416, § 1, as amended by St. 1931, c. 218, § 1, whereby each of the several taxpayers seeks an abatement of an income tax. The controversy arises on these facts, which are identical in each case except as to amounts: The taxpayers were stockholders in a Maine corporation known as the Bingham Mines Company. That corporation, called in the contract the seller, in 1929 entered into a contract in writing with the United States Smelting, Refining & Mining Company, therein called the purchaser, whereby the seller
The question to be decided is whether the income thus received was a dividend on shares in a corporation taxable at the rate of six per cent, or a gain from a purchase and sale of intangible personal property taxable at the rate of three per cent. The governing statutes are these sections of G. L. c. 62, whereby taxes are imposed upon income “received by any inhabitant of the commonwealth during the preceding calendar year”: § 1, as most recently amended by St. 1926, c. 160: “Income of the classes described in subsections (a), (b), (c) and (e) . . . shall be taxed at the rate of six per cent per annum. ...(b) Dividends, other than stock dividends paid in new stock of the company issuing the same, on shares in all corporations . . . organized under the laws of any state or nation other than this commonwealth . . .” (with exceptions not here material). § 5, as amended by St. 1928, c. 217, § 1 (see now St. 1931, c. 435): “Income of the following classes . . . shall be taxed as follows: ...(c) The excess of the gains over the losses received by the taxpayer from purchases or sales of intangible personal property . . . shall be taxed at the rate of three per cent per annum . . . .”
The nature of this transaction as a whole with reference to the taxpayers as stockholders in the Bingham company determines their liability to taxation on income. The nature of this transaction must be ascertained from the substance of the things done, and not alone, or chiefly, from the legal formalities in which that substance is cloaked. If the transaction had been directly between the stockholders of the Bingham company as sellers, on the one side, who pursuant to the offer had transferred their shares of stock directly to the Smelting company as purchaser, on the other side, in return for shares in the latter corpora
The result, in our opinion, is that the taxpayers have received dividends taxable at the rate of six per cent under G. L. c. 62, § 1 (b). There is no contention that the tax was not correctly computed by the commissioner of corporations and taxation on this footing. It follows that the taxpayers are not entitled to abatements and their several petitions to that end are to be dismissed.
So ordered.