Pueblo chieftain., 1921-03-29


Solicitor General Frierson inter-
preted the opinion as upholding all
the contentious of the government.
He believed elimination of problems
involved in cases decided would go
far toward relieving the treasury de-
partment of inconveniences resulting
from the multi-angled tax litigation
facing it for the last year. No esu-
mate could be obtained as to the
amount affected by the courts ac-
ton. Apparently with n view of early
clearing the docket of all important
tax questions, tho court before re-
cessing until April /. advanced to
that datc hearing of arguments in the
insurance dividend case. the corpora
ton reorganization case and tho in
heritancc tax cases. The first in
wolves taxation of dividends applied
as partial payment to insurance
premiums. the second applies to stock
received from the stock reorganiza-
ton of n corporation.-in this case
tho Dupont Powder company-and
the last, whether inheritance tax can
not be deducted from taxable income.
The key case" selected for deci-
sion today was the appeal brought
by the Merchants Loan and Trust
company, rs trustee of tho estate of
Arthur Ryerson, of Chicago. from de-
cisions of Illinois courts upholdinE
assessm ents levied by internal revenue
officials on profits realized thru sale
of certain trust assets. Included In
the trust fund were $500 shares OF
stock in Joseph T. Ryerson and Son.
a corporation, which were valued at
1861. 900 March /. 1913. but which
wcro sold in 1917. for s1,2so,ooo.
Collection OF a tax on the differ
ence in value between March. 1913.
snd the date of sale. as income, was
upheld by the courts decision.
defined hy
the supreme court in a case under
the corporation excise tax act OF
1909. Justice Clark said. as "a gam
derived from capital from labor or
from both"
"it is obvious that. unless this de-
finition be modified. 1t rules tho case
at bar" the opinion said. and not
withstapding the arguments heard.
we continue entirely satisfied with
that definition. Since tho fund so
taxed was the amount realized from
tho sale of the stock In 1917. less the
capital investment act of March l..
1918. II is palpable that II was gain
or profit produced by or derived
from that investment and thereby
became tho realized gain which has
been repeatedly declared TO be tax
able income
contention that the word income as
used in the sixteenth constitutional
amendment did not include gain
realized by n single transaction but
only profits realized by one engaged
in buying and selling as n business
1T is sufficient TO say OF this con-
tcntion." tho court ruled. that not
such distinction was recognized IN tho
civil war income tax act or IN the
income tax act OF 1s9t
The argument which is pressed up
on t,s fails to convince us that n con-
H. ~ Cd
would in "a large measure defeat tho
purpose of tho amendment
Plainly. the gain We arc considering
was derived from tho sale OF personal
property. and very certainly the COM
prch.nsiyc last clause din section G:-
gains or profits and income from any
source whatever must also include IL
II tho trustee is y taxable person with
In tho meaning Of the act"
The reasoning in the caSc OF the
Ryorson estate was held TO cover the
courts decision in the appeal brought
by payid NJ. Goodrich. ot New York.
involving taxation of profits on in
vcstmcnt capital, except that in one
transaction Mr.. Goodrich showed a loss
from the price he had paid for the Sc
curiucs.. Tho ruling OF tho tax asses
sorz that tho value of March I. 1919,
which was below the cost price in 1919.
and tho subsequent price in 1915. only
would be considered. was reversed BY
tho supreme court.
''Th, act under which tho tax was
issued provides that the net income Of
tho individual shall include 'Eains' and
profits " tho opinion said.
Thus IL Is plain that this statute
imposes the income tax on proceeds of
personal property to tho extent only
that gains arc derived thercfrom since
no gain was derived on this trans
action. no tax could be assessed
against the vendor"
In tho third case walsh, Nollcctors.
versus Browhcr the same points wor-
considered. Decision Of Connecticut
courts that tho government could not
collect a tax In tho decrease in tho
value OF securities purchased and held
for investment was reversed, tho SUI
prcmc court again making the point
that the tax could only be collected