South Bend news-times. (South Bend, Ind.) 1913-1938, 1921-03-29
U. S. WINS TAX
CASES BEFORE
HIGH TRIBUNAL
Supreme Court Holds Gains
Derived From Investments
Liable 10 Tax.

CONTINUED FRO1t PAGE oNE)
81 in the trust fund were $500
shares az stock in Joseph r. Ryerson
and Son. e corporation which were
valued az 2561.GOo on March T..
1918. but which were sold in 1917
for sI.2s0.Oo0. collection Of a tax
81 on the difference in value between
March 1918. and the date Of sale
as income. was upheld BY the court
s. in the decision rendered Monday.
Income" Defined.
The word Income" was defined
by the supreme court in case
4 uuoer the corporation excise tax act
. az 1909. Justice Clark said. cas- a
gain derived from capital from
Il labor or both combined"
This definition. frequently APP
i proved by this court" the opinion
i continued received an addition 20
the latest income tax decision
1 CEisner VS. AfacOmber) which Is es-
DcciaUy significant Units application
to such "a case as We have here.
4 the definition was then 20 read. In
come may be defined as a gain de-
= rived from capital from labor. or
Il from both combined provided IS be
Understood 90 include profits gained
through sale or conversion Of cap
ital assets
"It is obvious that unless this
definition Doe modified Il rules the
case az bar and notwithstanding
ne arguments heard in this case
We continue entirely satisfied with
hat definition. Since the fund so
axed was the amount realized
rom the sale OF stock IN 1907 less
he capital Investment also March l..
f913. 30 is palpoble that 81 was a
"a gain or profit produced by or
derived from that investment and
hereby became the realized gain
which has repeatedly declared 90 be
axable income within the meaning
0f the constitutional amendment
nd the acts of congress"
Dismisscs Contention
The opinion quickly dismissed a
outeutiOn that the word income"
g used in the sixteenth amendment
I'D not include the gain realized by
single transaction but only profits
ealized by one engaged in buying
md selling as business.
1T IS sufficient 20 say Of this
q outenton." the court ruled. that
o such distinction was recognized
I'd the Civil war income tax acts
On the income tax act OF 1894.
The Interesting and ingenious argu-
nent which is pressed upon us. fails
o convince us that a construction
should be adopted which would in
large measure defeat the purpose
T the amendment
PLAINLY the gain we arc consider
lg. was derived from the sale OF
personal property and very certain
y the comprehensive last clause Gin
lection two:) Gains or profits and
income from any source whatever"
must also inclued IL. If the trustee
> a taxable person within the mean
ng or the act
The reasoning used in the case Of
he Ryersou estate was held 20 cover
ully the courts decision in the APP
zeal brought by David NJ Good
ich OF New York involving taxa
on OF profits on investment capital.
Goodrich showed an actual loss
rom the price he had paid for the
ecurities The ruling Of the tax
SCISSORS that the value as OF March
1918. which was below the cost
rice I'm 1912 and the subsequent
ale Price in 1916, only would be
Considered WIS reversed by the
upreme court
To Include Gains"
The act under which the tax
as assessed provides that the net
ncome OF the individual shall IN
Jude gains and profits" the
opinion said THUS 90 is very
+ lain that this statute imposes the
boone tax on proceeds OF personal
ropcrty TO the extent only that
aims are derived therefrom and
nee no gain was derived on this
transaction mo- tax could be assess
against the vendor"
= In the third case settled Monday
Walsh. collectors. versus Brewster
the same points were considered.
decision of Connecticut courts that
he government could not collect "a
. x on am increase Am the value of
ecuuucs purchased and held for
Investment was reversed the gu
i RENE court again making the
oint that the ,ax could only be
buected where the proceeds show
profit over the purchase Price.
Elimination Of the March 4. 1913.
lpset line through Mondays
p.nions was in conformation with
b. voluntary action taken by the
4 governments advocates during the
rgument Of the cases. Solicitor
eaeral Peterson at that time Con
Ssed error far as tax apparent
ents had been made on apparent
rodts figured from March 7. 1913.
hen comparison with the pur-
base price showed the investor 20
awe suffered am actual loss. For
proposes os computing the proper
on of profts To- zee assessed. how
e- that date as set forth In the
prs statute SIN stands under the
ourts ruling.