The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-05-21
Government Wins
Income Tax Suits
Tribunal Decides Two
Important Controversies In
volving Interpretation of
Income Provisions of Rev
enue Acts, Increased
Value of Invested
Capital and inner
itance Tax

Washington. May i6.-Th:ou2h de-
cisions OF the supreme court today.
the government Won two important
Victories in controversies involving
Interpretation OF income provisions o.
the revenue acts Of 1916 and 1911.
Increased valuc Of u capital asset
Duld not bc added to Invested cap
ital" the court ruled in the appeal
OF the Ia Belle Iron Works an Ohio
concern. from a ruling By treasury
officials "ut on the contrary must be
considered in computing the profits
of tho corporation on which the
taxes We're to hc assessed. In the 9TH
or decision the court ruled that in
heritancc taxes paid to a state could
not be deducted from the met es-
tate" taxes under the revenue act.
The ia Bel" Iron Works suit was
characterized bE hiGh government
oiilcia! as the most Important lcGa:
s,iit affecting tcdera! finances % arise
in sercll! decades" TIE specific point
a; iss&. was whether ore LANDS in the
AlrSa5i range ot Minnesota, purchased
for $!9D. .1oG prior to 1904. could be
returned By The iron company at a
jicu. valuation OF SO 100000 in 1917.
The increase being covered by Il stock
issue ANA carried under invested cap
ital
We think the meaning Of the ac;
as to invested capital is perfectly
erinS the court decision il
defined this term TO mean .Cl) actual
cash paid in. % the actual cash
value at the time Of payment ot as
sets Other tnan cash paid in, and CD
paid in or earned surplus and undl
vided profits used or employed II
the business but not include money
or Other property borrowed.
''N hen speaking Of the capital OF
business corporation CT partnership
! such as the act deals with to invest
| imports a laying oct of money ol
moneys worth with view TO OBJ
| tanning income or profit from the con-
duct Of q business.
In order to adhere to this restrict
ed meaning and avoid exaggerated
valuation. the craftsman OF the &ci
|
/ ing but money, or moneys worth
actually contributed or converted ;.
exchange for shares OF capital STOCK
or actually acquired through the bus
mess activities Of the corporation o.
! partnership and coming in as eNtra
BY way Of increase over the oIlSlna
capital stock. How consistently tn:
was carried out bocames evident il
the section (section 2o1) is examined
| in detail -.
The sanle controlling thought i:
carried into the proviso. Every lint
shows evidence Of a legislative pur'
pose to confine the account to sucf
! items as We're pad ior in stock o.
shares specifically issued for it, ans
to their values at time of such pay
men;.
Hundreds Of millions of doll1rS II
taxes hung upon the decision, tnei:
porations which did not have on IN III
books an item showing materia! "um:
resulting from appreciated v&'": o
capital assets.
The inheritance tax case Na'
brought 10 the supreme court oy tN'
ccutors OF the estate OF the a;e }
Harsen PurdT Of New York. NO ies:
than FIVE states had collected t2X"-
on the turnover of parts OF the eS: l,
within their jurisdiction and he e%'
ecutors claimed That all these sum:
should be deducted before fedora
taxes on the met estate. cou.d be
/ legally computed. Refusal of tax cot
lectors TO agree 70 this contention
was upheld in turn By the Treasury
department and the federal co":;s
and today. by the supreme coHHt.
Th net estate" contemplated II
the act the opinion said was the en-
| tire residue remaining TO be dlStl!3-
uted alter the immediate charges
such rs funeral expenses and debts
had been met. imposition OF the ted
eral tax did not Interfere With the
right Of The state 10 control the prop
erty within lis borders of u ,ieccdel.t