1924 BTA LEXIS 237 | B.T.A. | 1924
Lead Opinion
The statement of the facts has probably already disclosed our opinion. The taxpayer in 1920 sold for $346,617.53 certificates which had cost her $222,272, and thereby in that year realized a profit of $124,345.53 which should be included in her gross income. This of course means that we do not regard the facts as to the accumulation of the dividends by the trustee as affecting the liability of the present taxpayer, notwithstanding their undoubted effect upon the market price generally of the certificates and the sale price of the certificates here in question.
The taxpayer was a beneficiary of the trust which collected the dividends. As such she had an inchoate right and interest in the stock and dividend fund held by the trustee. Her right and interest were much like those of a stockholder in the accretions and surplus earnings of his corporation. Eisner v. Macomber, 252 U. S. 189. She had absolutely no right or control over the amounts received by the trustee, and could only have acquired such right or control by the performance of a condition precedent — disposing of her Union Pacific stock — and this she did not do. Counsel argues that the dividends should be regarded as received by her when received by the
The learned counsel for the taxpayer contends that the dividends were taxable to the trustee when received. This may or may not be so under the statute in effect when each of the dividends was received. The statutes varied, and the terms of each and their application to the facts would require careful consideration. In our view of the case it is not necessary or proper to determine that question in this appeal.
It appears that the Commissioner has treated the $107,058.96 as dividends received by the taxpayer in 1920, and thus the amount is not subjected to normal tax. If this is true it appears to be erroneous because the amount is not a dividend but a profit from sale, and hence subject to both normal and surtaxes. We shall not now determine this as part of our formal decision, but confine our decision to approving the deficiency asserted by the Commissioner. If the additional deficiency of normal tax is asserted by the Commissioner and the taxpayer has ground for appeal upon that issue, we will then consider it upon the issue as then presented.