Arizona republican., 1921-05-17
SUPREME COURT. RULES IN FAVOR OF GOVERNMENT
 IN TWO ACTIONS
tsepuelsean A. p. Leased Wirel


 WASHINGTON, May 16.-Through decisions of the supreme court today she go~ernment won two important victories in controversies involving Interpretation of income provisions of the revenue acts of 1916 and 1917.
 Increased value of a capital asset could not be added to invested cap stal~ the court ruled in the appeal of the Labelle Iron Works. an Ohio con- cern. from a ruling by treasury off csass. but on the contrary must be considered in computing profits of the corporation 9n which the taxes were 10 be assessed
 In the other decision, the court ruled that inheritance or succession taxes. paid to a state. could not be deducted from the net estate taxed under the revenue act"
 This suit was characterized by a hsxh government official as "the most important legal suit affecting federal finances to arise in several decades" - The specific point at issue was whether ore lands in the Mesabe range of Minnesota, purchased for S1SA.e0e rrior to 1904 could be re- turned by the iron company at new valuation of s10.000.000 in 1917, the increase being covered by stock is sae and carried under invested cap stal
 We think the meaning of the act as to invested capital is clear" said Justice Pitney in delivering the de- rsSson Tt defined this term 10 mean. (ll. actual cash paid in. CD. actual cash value at the time of pay --sens Of assets other than cash paid -znd t3D. paid in or earned surplus land undivided profits used or em- rtored in the business but not to in- cinde money or other property bor- rowed-
 When speaking of the capital of business corporation or partnership, Vo invest imports a laying out of money or moneys worth with a view 10 obtaining income or profit from the conduct Of a business
 To adhere to this restricted mean ing and avoid exaggerated valuation, rhe draftsman of the act resorted to the test of including nothing but money or moneys worth, actually contributed or converted in exchange for shares of capital stock, or actual iN acquired through the business ac- ssxisies of the corporation or partner shin, and coming in ab extra by way of increase over the original capital stock. How consistently this was carried out becomes evident as the section tsection 2oD is exam
 The same controlling thought is carried into the proviso. Every line showed evidence of a legislative pur- pose to confine the account to suct items as were paid for in stock or foi shares issued for it. and to theil values at time of such payment.
 Hundreds of millions of dollars 1T taxes hung on the decision, there be- ing but few partnerships or corpora tons which did not have on theii looks an item showing material sums resulting from appreciated value o1 capital assets
 The inheritance tax case was brought to the supreme court by ex- scutors of the estate of the late J Harsen Purdy of New York
 No less than five states had col fecfed tax on the tyrn over of DOT rsors of the estate within their juris dsction and the executors claimed al these sums should be deducted befor' federal taxes on the met estate could be legally computed. Refusal o tax collectors to this contention wa upheld by the treasury departmen and the federal courts, and today b, the supreme court.