236 F. 653 | 8th Cir. | 1916
(after stating the facts as above).
It is admitted by the demurrer that in this case the value of the property of the corporation increased solely by reason of the advance in the value of its timber lands from $1,500,000 in 1903 to $3,000,000 on March 1, 1913, that the value of the stock of the plaintiff from the same cause proportionately increased from $79,975 in 1903 to $159,950-on March 1, 1913, and that no further increase of value, gain, income,
“That there shall be levied, assessed, collected a,nd paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year * * * a tax of 1 per cent, per annum.” Paragraph A, subd. 1.
“In addition to the income tax provided under this section [herein referred to as the normal income tax] there shall be levied, assessed, and collected upon the net income of every Individual an additional income tax [herein referred to as the additional tax] of 1 per centum per annum. * * * All the provisions of this section relating to individuals who are to be chargeable with the normal income tax, so far as they are applicable and are not inconsistent with this subdivision of paragraph A, shall apply to the levy, assessment, an(J collection of the additional tax imposed under this section.” Paragraph A, subd. 2.
“That, subject only to such exemptions and deductions as are hereinafter allowed, the net income of a taxable person shall Include gains, profits, and income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, businesses, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in, real or personal property, also from interest, rent, dividends, securities, or the transaction of any lawful business carried on for gain or profit, or gains or profits and income derived from any source whatever, Including the income from but not the value of property acquired by gift, bequest, devise, or descent.” Para-gz-aph B.
After specifying the exemptions and deductions allowed in the computation of the net income for the purpose of levying the normal tax the law declares that:
“The said tax shall be computed upon the remainder of said net income of each person subject thereto, accruing during each preceding calendar year ending December thirty-first: Provided, however, that for the year ending December thirty-first, nineteen hundred and thirteen, said tax shall be computed on the net income accruing from March first to December thirty-first, nineteen hundred and thirteen, both dates inclusive.” Section II, D.
The third argument of counsel for the collector is that, because paragraph B provides that “the net income of a taxable person shall include gains, profits and income derived * * * from interest, rent, dividends, securities, or the transaction of any lawful business carried on for gain or profit, or gains or profits and income derived from any source whatever,” all surplus or undivided profits included in any dividend received after March 1, 1913, although they accrued and arose years prior to that date, are by these terms of the law subjected to the additional tax; and he cites, in support of this conclusion, Van Dyke v. City of Milwaukee, 159 Wis. 460, 146 N. W. 812, 150 N. W. 509. Conceding that this decision sustains this proposition of counsel for the government, it is not controlling and has not proved persuasive. In Van' Dyke’s Case Judge Barnes filed an able dissenting opinion;-'which has proved more convincing, and which is in accord with the decision
Because no income, gains, or profits accrued to the plaintiff during the year 1914, or after March 1, 1913, but during that time his property remained of the same value, and because the sale of the property of the Payette Company in 1914 and the distribution of its proceeds by a dividend to its stockholders was but a change of the form, with