The Birmingham age-herald., 1921-03-19
Supreme Court SustainS Ruling Federal Treasury Must Return Over $500,- 100000 and Lose $103,- 100000 Annually
By HUGH W. ROBERTS Washington Bureau The Age Herald
 ROO Davidson RuildinE

0OO Davidson Bu1ld1nB
 Washington, March 17.-(Special.) In restoring to the trustees of the estate of the late John H. Woodward of Birmingham $165, ,075.7S, the court of claims rendered an opinion today which, if sustained by the supreme court, will constitute a solar plexus blow against the treasury of the United States.
 The suit brought by the trustees, A. Oscar w. Underwood. all of Birming ham, was based on their contention that the amount of the tax paid as in heritance taxation should be deducted from the amount of income subject to income taxation This contention was disregarded by the commissioner of in ternal revenue. and full payment under protest was made by the trustees. The court today in it's unanimous dcision in which Chief Justice Campbell, formerly of Birmingham, concurred held that the trustees were within their right in declining to pay until compelled to do so, and that the government must re-
 
 in excess of what was actually and legally due.
 GETS EARLY ATTENTION | The court of claims gave this case the earliest possible consideration because of the effect the decision would be certain to have in every precinct of the United States. Like wise, the supreme court will no doubt accede to petitions that 1t pro ceed with its consideration as quickly as it can conveniently do so. It is un- derstood that arguments will be sub mitted about April IS.
 The decision, If sustained, means that the United States will forever lose an average annual revenue
 computed by treasury officials to-
 day to be approximately $103,065.-
 GOO, and will be forced to restore
 $51S,325,OOO, the estimated sum coi-
 Iected ms inheritance taxation since
 the enactment of the law in 1916.
 POINTS AT ISSUE
 The cnse of the trustees was started
 in part as fOllOwss
 Tn conformity with the require ments of the revenue act, the execu- tors in 1919 filed with the collector oi internal revenue at Birmingham all in come received by the estate in 1918 The executors claimed deductions un. der the law, including deduction oi s4S9,S34.07, the amount of estate tax l (inheritance tax) previously paid t the collector.
 'The commissioner of internal rev enue refused to allow the deduction and made an assessment of income ta, against the estate of s165,075.7S ant through the collector of internal rev .- enue at Birminghafn made demand oi |, the executors for the payment of tn N tax so assessed. Tn order to avoi penalties, the executors made paymen of the tax"
 The trustees of the estate were rep resented by E.. J. Smyer of Birming , ham, an attorney prominently knowi , throughout Alabama
 KNOWS CONSEQUENCE l Specifically the court of claims hel' } today that every estate. the ne amount of which exceeds $50,oo0, ant l which has been or is hereafter com } pelled to pay the federal estates tax l lis entitled to deduct the amount s : paid from it's income tax return The decision in the case was base on the construction of Section 2l4 o : the revenue act of 1918, which provide 3 that fin computing the net incom l there shall be allowed as deduction } taxes paid or accrued within the taxa 
 9 the United States, except income. wa profits and excess profits taxes" tn construction of the commissioner o internal revenue being that provide ? under the internal tax law was not l tax which could be deducted, but toll taken from the property trans
 ferred" Judge Downey, in discussin the position taken by the commission I CT of internal revepNe, said: ''We are. in effect, asked to constru Il the statute so as to nullify one of it $ plain provisions. We do not feel tha ' we are Justified in adding another eS ? ception to those provided for ;n tn . statute. If Congress intended that tn ' estate tax should not be deducted, l determining the net income it woul ' have said so. We are not unmindf, :. os the importance of this holding, an :. oe it's possible effect on revenues an J the public treasury but we came s conclude that such matters should | " in any wise controlling"