The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1921-03-29
VICTORY FOR
GOVERNMENT
IN TAX Case
Supreme Courts Interpretation
of Term Income" for AS
seSSment of Taxes.
OPINION ENDORSED
BY ENTIRE COURT
Net Income of individuals Shall
Include Gains and
Profits.
(Ry rhe AssoeIated Pre,s,

WASHINGTON, March 2S. - Three
sweeping victories were won by the gov
ernment today in the supreme court in
depreciation of the term income" for
the assessment of taxes under the in
come and excess profits act.
The court held that any gain derived
from corporate securities or corporate
assets and any increase in the value Of
capital investment, when realized is
taxable as income. In each case the
opinion was endorsed by the entire court.
Solicitor General Frierson, who was
present to hear the opinions read, in
terpreted them as upholding in every
particular the contentious of the gov
ernment. He believed elimination of
problems involved in cases decided to-
day would go far toward relieving the
treasury department of Inconvenience it
mas suffered as a result of muti-anrled
tax litigation facing it for the past year.
no estimate could be obtained tonight as
10 the amount in dollars and cents af-
fected by the courts action.
Apparently with a view OF clearing the
DOCKET soon of all important tax aues-
tlons, the court, before recessing until
April II, advanced TO the date hearing
OF arguments in the insurance dividend
case, the corporation reorganization case
and the inheritance tax case The first
involves taxation of dividends applied as
the partial payment to insurance Lrem-
iums, the second applying to stock re-
ceived from the reorganization Of a eor-
poration in this case the Du Pont Power
company and the last, whether inheri-
lance taxes can be deducted from tax
able income.
The key case selected by the court
Tor decision today was the appeal
brought by the Merchants Loan and
trust company as trustee of the estate
OF Arthur Ryerson, Of Chicago. from de-
cislohS OF illinois courts upholding as
sessments levied by internal revenue Of
icials upon profits realized through fbe
sale of certain trust assets Included IN
the trust fund were $500 shares of
stock in Joseph T. Ryerson and Son. a
corporation which We're valued at s56f.-
600 March l, 1913, but which were sold
in 1917 for S1,2S0, 900. Collection of a
tax on the difference in value between
March 1913, and the date of sale as in
come, was upheld by the court in the
decision rendered today.
The word income" was defined by Ibe
supreme court in a case under the cor
poration excise tax act of 1909 Justice
CIark said, ''as gain derived from capi-
tai. from labor or from both combined "
Ihls definition, frequently approved
oy this court" the opinion continued.
received an addition in the latest in
come tax decision, Eisner VS.. Macomber.
Nhich is especially significant in its ap-
lllcatIon to such case as we nave mere.
me definition was then TO read:
income may be defined as a gain de-
,lVed from capital, from labor. or
rom both combined, provided Il De un
lerstood to include profits gained through
ale or conversion of capital assets
II rs obvious that unless this def1nI-
ION De modified. it rules the case at
'ar, and, Notwithstanding the arguments
leard in this case. we continue entirelv
atisfied with that definition Since the
una SO taxed was the amount realized
rom the sale of stock in 1917. less me
apitai investment as of March !. 1912.
is palpable that it was a gain or
rofit produced by or derived from,
hat investment and thereby became tbe
Continued On Page Two)