The New York herald., 1921-03-29
GOVERNMENT wins
THREE APPEALS IN
INCOME TAX SUITS
supreme court Decides IN
come Includes Profits in
capital Assets sales.
OPINION Is UNANIMOUS
Generally Term Means Gain
From Capital. Labor. or
Both in Combination.
10 TAX WITHOUT PROFITS
Inheritance, Insurance and
Corporation Cases Advanced
for Hearin. on April IL.

WAsHlNGro& March 4S Three
sweeping victories were woA by he
Government: to-dsv Ii the Supreme
Court interpretation D; The term IN
come for the assessment or taxes
under lie income ana excess profits
act
The court held that any gain derived
from corporate securities, or corporate
assets. and amy increase in the value
of capital Investment. when realized,
Is JaXabie as income. In each case the
op.aion was Endorsed by the entire
court.
Solicitor Frierson who was
present 10 hear the opinions read. in
terpreted them as upholding in every
particular the contentious Of the Gov
erlment. lie believed elimination OF
problems involved in cases decided to-
day would go far toward relieving the
Treasury Department Of inconven-
iences i has suffered as a result OF
multiangled tax litigation facing it
for the last year
No estimate could be obtained to-
night as to the amount in dollars and
cents affected by the courts action.
Apparently with view of an early
clearing Of the docket OF all important
tax questions. the court before recessing
until April II advanced to that date
hearings Of arguments il the insurance
dividend case. the corporation reorgan-
ization case and the Inheritance tax
case. The first involves taxation Of
dividends applied part payment 10
Insurance premiums. the second applies
10 stock received from the reorganiza-
tion OF a corporation--in this case the
Du Pont Powder Company--and the
last whether Inheritance taxes can be
deducted from taxable incomes.
The key case selected by the court
for decision was the appeal OF the
Merchants Loan and Trust Company. as
trustee OF the estate Of Arthur Ryerson
Of Chicago. from decisions of Illinois
courts upholding assessments levied by
Internal Revenue officials upon profits
realized through the sale OF certain trust
assets. Included in the trust fund were
$500 shares OF stock In Joseph T. Ryer-
son & Son, corporation. which were
valued at s56i.o00 on March /. 1915,
but which were sold in 1917 for sl.2s0.-
600. Collection OF a tax on the differ
cnce in value between March, 1918. and
the date OF sale. as income. was uJrheld
BY the court in the decision rendered
to-day.
The word income" was defined BY
the Supreme Court in a case under the
corporation excise saS act of 1909,
Justice Clark said. as "a gain derived
from capital, from labor OF from both
combined.
This definition. frequently approved
By this court the opinion continued
received an addition in the latest in
come tax decision. Eisncr VS.. Macombt,
which Is especially significant in its ap-
plcation 10 such a case as we have here
The definition was tacn TO read In
come may be defined as q gain derived
from capital. from labor or from both
combined. provided Il be understood to
include profits gained through sale or
conversion OF capital assets
1T Is obvious that unless this defini-
tion be modified Il rules the case at
bar. and Notwithstanding tne arguments
heard in this case we continue entirely
satisfied With that definition. Since the
FUND SO taxed was the amount realized
from the sale OF stock in 1917. less the
capital investment as Of March 1. 1913
il i palpahIe that il was gain Or