Case ID: us-ct-cl_61/html/1030-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice BRANDeis", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

RAY CONSOLIDATED COPPER COMPANY v. THE UNITED STATES
    May 25, 1925.
    [59 C. Cls. 686; 268 U. S. 373]
    Judgment, was rendered in favor of the United States in the court below. On appeal the judgment was affirmed, the Supreme Court deciding:
    1. The term “ capital stock ” has no fixed meaning in taxing statutes, and must be interpreted in each case by reference to the context, the nature, purpose and history of the statute, and by other aids to construction.
    2. The revenue act of 1918 provides: “ Every domestic corporation shall pay annually a special excise tax with respect to carrying on or doing business equivalent to $1.00 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 the capital stock, the surplus and undivided profits shall be included.” Held:
    
    (a) That “capital stock” here means the entire potentiality of the corporation to profit by the exercise of its corporate franchise; and the method for ascertaining the value, not being prescribed, is left to the sound discretion of the Commissioner of Internal Revenue, subject only to the obligation to consider every relevant fact.
    (b) The net fair value of the corporate assets is clearly relevant; and adoption of this, rather than the value of the outstanding shares of stock as evinced by the average prices at which the shares were sold on the stock exchange, was not arbitrary nor an abuse of discretion.
   Mr. Justice BRANDeis

delivered the opinion of the Supreme Court