Court Opinion

ID: 6899306
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:53:18.938231+00
Date Added: 2024-06-11T16:06:06.939781
License: Public Domain

STEPHENS, Associate Justice
(concurring).
Except for the fact that under the agreement between Warner Bros. Pictures, Inc., and the Distributing Corporation the legal title to the films remains in Warner Bros., I think the separate corporate entity of the Distributing Corporation would insulate Warner Bros, from the tax — there being no contention, or basis therefor (since the Distributing Corporation was formed before the tax statute was enacted), that the Distributing Corporation was formed for the purpose of tax avoidance. It is true, as urged by Warner Bros., that the Distributing Corporation under the agreement has in practical effect an owner’s power over the use of the films and that eventually they are junked and the junk value paid to the Distributing Corporation; it is true also that the Distributing Corporation treats the films as its own in personal property tax returns in the District of Columbia. Nevertheless, during the period of their use in the District of Columbia ownership of the films is in Warner Bros. Legal title is expressly retained. That is a fact which cannot be ignored. The statute taxes the “income from District of Columbia sources of every corporation, whether domestic or foreign . . . ” D. C. Code (1940) § 47-1502(b), and defines gross income to include “gains, profits, and income derived from . . . dealings in property, whether real or personal, growing out of the ownership, or use of, or interest in, such property . . D. C. Code (1940) § 47-l504(a). Thus the income in question in the case is derived from the use of Warner Bros.’ property, and this use is in the District of Columbia and the income is therefore from a District of Columbia source.