Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1921-03-29
Income
Contests
.AreDecided
Four Nictories Won by Govern
ment in Rulings By United
States Supreme Court
On Appeals.
Relate To Stock Sales
BY ARTHUR SEARS HENNING.
thicngo Tribune Omaha Bee Leased Wire.

thicngo Tribune Omahn Bee Leased Wire.
Washington, March 2S.--Four inn
portant victories were won by the
government today i'll decisions by
the United States supreme court in
tax cases.
The case involved similar cases
| relative to the taxation as income
OF profits derived from the sale of
! corporate stocks, bonds and capital
assets. The court held that profits
! Of this kind are properly taxable as
income under tile 10th amendment to
the constitution.
The principal case was that of the
Merchants Loan and Trust COM
pany of Chicago as trustee OF the
estate Of Arthur Ryerson against
julius Smietanka, formerly collector
of internal revenue for the First
district Of Illinois. This case involved
profits from the sale OF corporate
stocks held in f.-ust fund. 49,.
Corporate Stock Case.
The second case. that OF the Ell
dorado Coal and Mining company
al Indiana corporation, against Har-
ry W. Mager, collector OF. internal
revenue OF the First district of H.
linois, involved profits made i'll the
sale OF the corporate stocks of the
company.
The third case was that OF David
Il, Goodrich against William il. Ed
wards, collector OF internal revenue
Of the Second district of New YORK.
This involved profits from the sale
OF corporation stock Two separate
transactions were involved, in one OF
which decision was given based
on the decision in the Ryerson case,
, favorable to the governr cnt III the
other of which it was held no tax
could be levied where there had been
no actual profit on the investment,
even though there had been all ap-
probation in value from March /,
1918, the effective date of the first
income tax law. In respect to this
second transaction, the court mere
! " held in accordance with the adj
mission made recently by Solicitor
General Frierson that all error had
been n1ade in attempting to impose
tax where an actual loss on the
investment had taken place.
Favorable to Government,
In the Ryerson. Eldorado and
Goodrich cases, the decisions OF the
lower courts were favorable. Is ttg
contention OF the government
The fourth case was one III which
the lower court had decided In favor
OF the taxpayer. The case was that
Of James J. Walsh, collector OF III
ternal revenue in Connecticut against
Fred X. Brewster, It involved three
different transactions. The decision
| followed the principals laid down by
the court in the Ryerson and Good
rich cases and in the Eisner stock
dividend discussion OF March, 1920.
Solicitor General Frierson in COM
menting upon the decisions said that
the governments position had been
completely upheld He regarded the
cases of an important nature mas
much as adverse rulings would have
meant refunds OF millions OF dollars
OF taxes.
The Ryerson cast involved 1000
shares OF capital stock Of all Illinois
corporation which was held by the
Merchants Loan and Trust company
OF Chicago as trustee of the estate
OF Arthur Ryerson. The stock was
valued on March /, 1913, at S5o1 900.
1t was sold on February 2, 1917, for
81 l,2S0, 900, and the collector OF inyer-
nal revenue imposed a tax upon the
proht amounting to about 100000.
Will Keep Tax.
In seeking to recover the tax paid
upon this amount the Merchants
Loan and Trust company contended
that the gain in four years of over
100000 in an investment OF about
$50O,O00 was not income within the
intent OF the 10th amendment to the
constitution.
A second contentioH made by the
plaintiff in the Ryerson case was
that the word income as used in the
10th amendment and in the income
tax act does not include gain from
capital realized by a single isolated
sale of property, but that only the
profits realized from sales by one
engagement of buying and holding
as buslness--a merchant, a real es-
tate agent, or a broker-constitat
income which may be taxed.
In the case OF the Eldorado Coal
and Mining company, the company
IN 1917 sold its interests and orac-
tioally wound no its affairs. On the
basis Of the fair market value as of
March |, 1918, the sale of the canitAl
assets resulted in profit of about
So 100 The ,rcnr,n a.. ...a. -. -