New Britain herald. [microfilm reel] (New Britain, Conn.) 1890-1976, 1921-03-28
This Reverses Decision OF Connecticut Fl
Court And Upon This Ruling Depe|
Whether Or Not Uncle Sam Would Have
Refund Millions In Taxes ..."a~
Increase in Value of
p0rate Bonds and n
From Sale of Asse
Trust Fund Are Also
able. i

Washington, March 28.-Tn3
of value of capital investm1
taxable as income under the re-
act Of 1916, the supreme court
held. .#t. u
The courts decision was giv
the appeal of David M. Goodrich
a ruling Of the internal revenu1
reau assessing him upon the incl
value of stocks purchased pri
1913. Action of the revenue 81
was affirmed by the supreme ed
the transaction showing a gaif
The court ruled that the tra
tions showing an actual loss cou3
be taxed since there was no d
derived.
Revcrses Conn. Decision.
The supreme court reversed q
cision of federal courts Of Conn{
which held against the goverd
on the question of whether an q
tax could be levied against an in
in the value OF securities pur(
and held as an investment, but
that the tax could only be impo@
the actual gain.
History of Case.
New York courts sustained
murrer by the government q
ground of "insufficiency." GoI
then obtained q writ of error col
ing that the entire act, so Tar
was construed to cover "grol
80 -
property held for Investment
unconstitutional.
Mr.. Goodrich purchased
shares of mining stock in 19I3
ing SO cents a share or $500
lot, on March 1, 1918, it was
at $695, and in 1916 when Sd
received nearly $4,000 for his
ings.
In a separate transaction, ST.
the B. F. Goodrich company, Oh
in 1912 for $291,O0O decreas
value to $148.OO0 in 1913, an
sold in 1916 for $269.000.
Mr.. Goodrich was assessed
profit" of more than $4,000
case of the mining stock and onI
900 in the case of the Goodrich
the difference being estimated
March I, 1913, under section /
the act.
When the case was argued til
solicitor general conceded ths
government could not hope to
the treasury in its ruling that
ference between the price on
1, 1918, and on the date of 50
be considered profit regan
the original cost.
Thousands of cases OF inc
sessments come within this
of the court, upon which depe
necessity of the government
ing millions Of dollars in taxe
Millions Are Involved
Taxes estimated to aggrega4
$100,O00,000 are involved in al
the supreme court in the tw
covering the question of wheth
mented value of an Investment
come"
In one case the court was al
counsel whether the revenue
1916 was constitutional insofa
is construed to tax as income
increment realized by the CON
OF capital investments into ca4
Thousands of individuals WI
invested in securities prior q
World war and who, on the 81
advance in market prices in thai
iod, had sold their holdings at
profit, were naturally Interest,"
the outcome. 1t was common X
edge that the fear of being com,
to turn over the bulk Of their
at the government in the form q
es prevented many paper mi
aires" from realizing on their
ings. Incidentally, many were
out in the slump which followe
signing of the Versailles peace t
All Are Involved.
The legal point involved. hoy
concerned not only individuals
corporations and partnerships /,
had invested surplns of cApitai in
securities and sold them onAa
market
In the case of David M. Coo
VS.. William H. Edwards, collec'
internal revenue for the Second
York district. a tax was assess
stock, which was sold at. q los
which was sold at O. price abovt
quoted for it on March 4, 1919
date set in the statute as that