Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-03-29
COURTS WORD
(continued from Page One

600. Collection of a tax on the diff
ference in value between March.
1913 and the date of sale as income,
was upheld by the court in the de-
cision rendered today.
The word Income" was defined by
the supreme court in case under
the corporation excise tax act or
1908, Justice Clark said, as "a gain
derived from capital. from labor or
from both combined"
This definition, frequently APP
proved by this court" the opinion
continued, received an addition in
the latest leone tax decnision (Eis-
ney VS.. Macomber) which is espec-
tally significant in it's application 20
such a case as we have here. The
decision was then to read: Income
may be defined as a gain derived
from capital, from labor or from
both combined provided 1t be I'M
derstood 20 include profits gained
through sale or conversion of capital
assets"
st is obvious that unless this def1-
milton be modified it rules the case at
bar and notwithstanding the argu-
ments heard in this case we continue
entirely satified with that definition.
Since the fund taxed was the amount
realized from the sale of stock In
1917. less the capital investment as or
March /, 1918, it is palpable that It
was gain or profit produced by or
derived from that investment ana
thereby became the realized gain
which has been repeatedly declared 10
be taxable income within the meaning
of the constitutional amendment and
the acts Of congress"
The opinion quickly dismissed a
contention that the word income as
used in the 18th amendment did not
include the gal realized by single
transactio but only profits realized by
oe engaged in buying and selling as
business.
PLAINLY the gain we are consider
ing" the court said, was derived
from the sale of personal property
and very certainly the comprehen-
sive last clause lin section p: gains
or profits and income from any source
whatever must also include it, If the
trustees taxable person within the
meaning Of the act"
The reasoning used in the case of
the Ryerson estate was held to cover
fully the courts decision in the APP
peal brought by David M. Goodrich.
of New York. involving taxation of
profits on investment capital, except
that in one trasactio Mr.. Goodrich
showed an actual loss from the price
he had paid for the securities. The
ruling of the tax assessors that the
value as Of March l. 1919, which was
below the cost price in 1912 and the
subsequent sale price in 1916, only
would be considered was reversed by
the Supreme court
The act under which the tax was
assessed provides that the net in
come of the individual shall include
gains" and profits" the opinion
said. Thus it is very plain that this
statute imposes the income tax on
proceeds of personal property to the
extent only that gains are derived
therefrom and since no gain was de-
rived on this transaction. no tax
could be assessed against the vendor"
In the third case settled today
Walsh, collector, versus Brewster
the same points were considered. De-
ciion of Connecticut courts that the
government could not collect tax on
an increase in the value of securities
purchased ad held for investment was
reversed, the Supreme court again
making the point that the tax could
only be collected where the proceeds
showed a profit over the purchase
price.