Arizona republican., 1921-03-29
Three Victories Won By Government In Supreme Courts Interpretation Of Term Income"
Opinion Is Unanimous
Decisions Will Eliminate Multi-Angled Tax Liti- gation Facing Treasury Department
IRepublIcan A. p. Leased wIre1

WASHINGTON, March 2s.-Three victories were won by the govern ment today in the supreme court in depreciation of the term "incomev for the assessments of taxes under the income and excess profits act The court held that any gain derived from corporation securities or corporate assets, and any increase in the value of a capital investment, when real ized. is taxable as income
 The opinions were endorsed by the entire court tzs
 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 resuit- ing from multi-angled tax htigafzfn facing it for the last year.
 No estimate could be obtaineos g. to the amount affected by the court action Apparently with q view Of early clearing the docket of all i'm portant tax questions, the court be- fore recessing until April II. ad- yanced to that date hearing Of areu-S2 ments in the insurance dividend case. the corporation reorganization ease and the inheritance tax case The first involves taxation of dividends< applied as partial payment to inSl:- ance premiums, the second appleSstos stock received from the reofEall5za- tion of a corporation in this case the Du Pont Powder ccmpany. and the last, whether inheritance tax cannot be deducted from taxable ffs-
 come The key caser selected fo1< decision today was the aE,,-sff brought by the Merchants Loan ana l Trust company. as trustee Of the sss' tate of Arthur Ryerson Of Cbics1&1 l from decisions of Illinois courts up- holding assessments levied by infcr- nal revenue officials on profits real l iZed through sale of certain trust as- sets. Included in the trust fund v1fe | 9500 shares of stock in Joseph T. Ryerson & Son. corporation which
 were valued at s561 600 March I, 1913. but which were sold in 1917 for xf.ly 2S0, 600. Collection of a tax on fitx difference in value between Marca. 1913, and the date Of sale, as income was upheld by tks courts decision The word income was defined Ey the supreme court in a case under flss corporation excise tax act of .tAlA
 Justice Clark said, as a gain 9te<zed from capital. from labor. or from l bosh.''
 .Tt is obvious that unless this def | milton is modified it rules the case
 at bar" the opinion said and not
 withstanding the arguments heard, 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 cap | ital investment as of March l, 1913. | it is palpable that it was a gain or
 profit produced by or derived from | that investment and thereby became
 the realized gain which has been re- peatedly declared to be taxable st~e4z l come'
 The opinion quickly dismissed a contention that the word '.income'
 as used in the sixteenth constitutional
 amendment did not include gain real
 ized by single transaction but only profits realized by one engaged iL
 buying and selling as a business.
 Tt is sufficient to say of this con tention." the court ruled, that no
 such distinction was recognized in tie ! civil war income tax act or in-ths ! income tax act of 1894 The argu{
 ment which is pressed upon us faf4s' 1 to convince us that a construction
 should be adopted which would in a l large measure defeat the purpose of
 the amendment.
 | "Plaintly the gain we are consider ing was derived from the sale of per-
 sonal property, and very certainly the comprehensive last clause Gin section
 two): gains or profits and income