Source: https://www.legalcrystal.com/case/95014/hellmich-vs-hellman
Timestamp: 2017-11-21 10:20:24
Document Index: 5169774

Matched Legal Cases: ['§ 201', '§ 201', '§ 201', '§ 201', 'Art. 1548', '§ 201', '§ 201', '§ 201', '§ 201', '§ 201', '§ 201']

Hellmich Vs Hellman - Citation 95014 - Court Judgment | LegalCrystal
Hellmich Vs. Hellman - Court Judgment
LegalCrystal Citation legalcrystal.com/95014
Case Number 276 U.S. 233
.....of 1918, amounts distributed to the stockholders of a liquidating corporation out of earnings and profits accumulated by the corporation since february 28, 1913, are not to be treated as "dividends," which, under § 201(a), are exempt from normal tax, but as payments made by the corporation in exchange for its stock, which are taxable "as other gains or profits." § 201(c). p. 276 u. s. 236 . page 276 u. s. 234 2. the objection that this result in double taxation cannot prevail over the clearly expressed intention of the statute. p. 276 u. s. 237 . 18 f.2d 239, 244 reversed. certiorari, 275 u.s. 513, to review two judgments of the circuit court of appeals sustaining recoveries of money paid under protest as income taxes. mr. justice sanford.....
Hellmich v. Hellman - 276 U.S. 233 (1928)
U.S. Supreme Court Hellmich v. Hellman, 276 U.S. 233 (1928)
1. Under the Revenue Act of 1918, amounts distributed to the stockholders of a liquidating corporation out of earnings and profits accumulated by the corporation since February 28, 1913, are not to be treated as "dividends," which, under § 201(a), are exempt from normal tax, but as payments made by the corporation in exchange for its stock, which are taxable "as other gains or profits." § 201(c). P. 276 U. S. 236 .
2. The objection that this result in double taxation cannot prevail over the clearly expressed intention of the statute. P. 276 U. S. 237 .
The two Hellmans brought these suits against the Collector to recover additional income taxes assessed against them for the year 1919 under Title II of the Revenue Act of 1918, [ Footnote 1 ] and paid under protest. They recovered judgments in the district court, which were affirmed by the circuit court of appeals. 18 F.2d 239 and 244.
"So-called liquidation or dissolution dividends are not dividends within the meaning of the statute, and amounts so distributed, whether or not including any surplus earned since February 28, 1913, are to be regarded as payments for the stock of the dissolved corporation. Any excess so received over the cost of his stock to the stockholder, or over its fair market value as of March 1, 1913, if acquired prior thereto, is a taxable profit. A distribution in liquidation of the assets and business of a corporation, which is a return to the stockholder of the value of his stock upon a surrender of his interest in the corporation, is distinguishable from a dividend paid by a going corporation out of current earnings or accumulated surplus when declared by the directors in their discretion, which is in the nature of a recurrent return upon the stock. [ Footnote 2 ]"
These Regulations, with a change made in 1921 as to the second sentence of Art. 1548, [ Footnote 3 ] are still in effect so far as distributions in liquidation under the Act are concerned.
corporation -- although this term, as generally understood and used, refers to the recurrent return upon stock paid to stockholders by a going corporation in the ordinary course of business, which does not reduce their stock holdings and leaves them in a position to enjoy future returns upon the same stock. See Lynch v. Hornby, 247 U. S. 339 , 247 U. S. 344 -346, and Langstaff v. Lucas, 9 F.2d 691, 694.
However, when § 201(a) and § 201(c) are read together, under the long established rule that the intention of the lawmaker is to be deduced from a view of every material part of the statute, Kohlsaat v. Murphy, 96 U. S. 153 , 96 U. S. 159 , we think it clear that the general definition of a dividend in § 201(a) was not intended to apply to distributions made to stockholders in the liquidation of a corporation, but that it was intended that such distributions should be governed by § 201(c), which, dealing specifically with such liquidation, provided that the amounts distributed should "be treated as payments in exchange for stock," and that any gain realized thereby should be taxed to the stockholders "as other gains or profits." This brings the two sections into entire harmony, and gives to each its natural meaning and due effect. The Treasury Regulations correctly interpreted the Act as making § 201(a) applicable to a distribution made by a going corporation to its stockholders in the ordinary course of business, and § 201(c) applicable to a distribution made to stockholders in liquidation of the corporation. And this is in accord with the rulings of the Board of Tax Appeals. Appeal of Greenwood, 1 B.T.A. 291, 295; Appeal of Chandler, 3 B.T.A. 146, 149.
available in the one case than it would have been in the other. See Merchants' L. & T. Co. v. Smietanki, 255 U. S. 509 ; Goodrich v. Edwards, 255 U. S. 527 . When, as here, Congress has clearly expressed its intention, the statute must be sustained even though double taxation results. See Patton v. Brady, 184 U. S. 608 ; Cream of Wheat Co. v. Grand Forks, 253 U. S. 325 , 253 U. S. 330 .