Court Opinion

ID: 9643145
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:20:44.303703+00
Date Added: 2024-06-11T18:10:57.784665
License: Public Domain

CHASE, Circuit Judge
(dissenting).
I cannot help but think that my brothers have failed to give recognition and effect to the substance of the difference between Koshland v. Helvering, 298 U.S. 441, 56 S.Ct. 767, 80 L.Ed. 1268, 105 A.L.R. 756, and Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570.
If, after the receipt of a dividend paid in stock, a stockholder has not only additional stock but also stock of a different character his proportionate interest in the net assets of the corporation may have been changed where there are several, or more, stockholders. Whenever it has been and the change is by way of increase in his proportionate interest in the net value of the corporation there is a receipt of income which Congress has taxed. Koshland v. Helvering, supra, 298 U.S. 441, 56 S.Ct. 767, 80 L.Ed. 1268, 105 A.L.R. 756. But surely the case just mentioned must rest upon firmer ground than a change in the kind of shares of stock a stockholder has as the result of a dividend of stock on stock. There must also be a change in his proportionate interest in the corporation’s net assets in order to have what is known as a “realization” of income. When, as in this instance, there has been no such change for the simple reason that the stock dividend did not bring that about in the holdings of one who, both before and after it, owned exactly the same interest in the net value of the corporation, because he always owned it all, the real basis of decision in the Koshland case is lacking and that of Eisner v. Macomber, supra, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570, does, I think, apply. See Sprouse v. Commissioner, 9 Cir., 122 F.2d 973.
I would reverse.