Court Opinion

ID: 9608970
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:20:19.404067+00
Date Added: 2024-06-11T13:30:30.389606
License: Public Domain

On Motion for Rehearing.
Counsel for the State strenuously insists that the court, in its *773opinion, has reasoned circuitously by refuting the Commissioner’s contention because it would necessarily repeal by implication Code § 92-3120 (d), which construction is not favored by the law, and, thereafter, under the rule of harmonious construction, the court proceeded to repeal a portion of the same Code section by its opinion. To this contention it might be said that all judicial constructions balancing two statutes which limit, or, in any way, restrict one statute are, in some sense, a repeal by implication, but the court has the task of reconciling the statutes to a working formula if at all possible under recognized rules of construction. It is our feeling that to adopt counsel’s contention, that Code § 92-3002 (o) should be given its full literal meaning, would be to repeal Code § 92-3120 (d) in toto with reference to any accumulated earnings. With the court’s interpretation, Code § 92-3002 (o) does not repeal by implication Code § 92-3120 (d), but only modifies it when it is shown that a liquidation is a subterfuge to pay a dividend. State Revenue Commission v. Glenn, 61 Ga. App. 567 (6 S. E. 2d 384). Counsel for the Commissioner insists that his contention is only a modification and does not work as a repeal by implication. However, the distinction is a question of degree. It is also largely a question of semantics. As to the difference between modification and repeal, this court deems it necessary to say that it feels the court’s interpretation is a modification and does not operate to repeal Code § 92-3120 (d).
Intermingled with this problem, though not dealt with specifically in either the majority opinion or the special concurrence, is “when does profits or money earned take on peculiar characteristics of assets whereby a different taxing formula is used upon the happening of a tax event?” For example, one might say a corporation is the sum total of its undistributed earnings, its physical assets plus the accrued gain (or loss) of value in its physical assets, together with the value of its good name and other incidentals. Yet, in a sales situation the undistributed earnings take the characteristic of an asset of the corporation and are taxed accordingly, i.e., capital- gains. It is still the same money which the corporation earned and which, if paid as a dividend, would be considered normal income. However, the *774legislature has seen fit to say this is a particular classification that will be taxed differently from ordinary income. Likewise, in a liquidation situation the legislature has prescribed a different method of taxing the accumulated earnings by treating the event the same as a sale. Code § 92-3120 (d). These are the same earnings, but taxed differently. It is our opinion that the basic philosophy for this treatment is much the same as that of capital gains. It would be unfair to tax an individual in one year at a high percentage of taxation on accumulated earning on which, if spread out over the several years they were earned, the taxpayer would be taxed at a lower percentage. In the last analysis the liquidation is a very final act much the same as a sale. In the event the taxpayer is attempting to obtain earnings by a sham liquidation, Code § 92-3002 (o) would allow the Commissioner to tax the earnings as normal income.

Judgment'adhered to on rehearing.