Court Opinion

ID: 4495688
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:27.866478+00
Date Added: 2024-06-11T08:48:35.509696
License: Public Domain

Aeundell,
dissenting: I think this case comes within the principle of Avery v. Commissioner, 292 U. S. 210, and the stock was taxable as a dividend when received in 1929. In that case the corporation *681declared dividends in November 1924 and November 1929, payable on or before December 31 of the respective years. The dividend cheeks were prepared in 1924 and 1929 bat held in the treasurer’s office in each case until the first business day of the following year, and then distributed through the office mail. The Court said in part:
If we give the words of the statutes their ordinary meaning, clearly the dividends under consideration were not actually received by the taxpayer during 1924 and 1929. Certainly they were not received when declared. They did not come into the taxpayer’s hands on December 81st simply because payable on that day. And, unless Congress has definitely indicated an intention that the words should be construed otherwise, we must apply them according to their usual acceptation.
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* * * Nothing indicates that it [the corporation] recognized an unrestricted right of stockholders to demand payment except through checks sen l out in the usual way. The cheeks did not constitute payments prior to their actual receipt. The mere promise to pay on a given date was not enough to subject to petitioner’s unqualified demand “cash or other property”; and none of the parties understood that it was. [Italics supplied.]
Applying the reasoning of the above opinion to this case I do not see how it can be said that the stock was “ received ” by the taxpayer in 1928. Putting the stock in her name in 1928 did not constitute a receipt by her any more than did the writing of checks in the Avery case. There, as here, the corporation became a debtor to the stockholders and they became creditors in the earlier year; no doubt that there, as here, the corporation made appropriate book entries in the earlier year. But the creation of a debt in favor of the taxpayer on a cash basis does not result in income to him save in unusual cases as in those where the doctrine of constructive receipt may be applicable. Here there is no showing of availability to the taxpayer in 192b or that she understood the dividend to be available before 1929. The letter of the president of the corporations, dated September 27, 1928, notified the stockholders that the dividend shares would be mailed “ as soon as it is practicable to do so, which should be on or before January 2, 1929.” There is nothing in that notice to lead the stockholders to expect actual distribution in 1928, and, in fact, this taxpayer did not receive her dividend shares until 1929. On the fact of actual receipt in 1929, and in the absence of any showing either that the corporation intended to distribute in 1928 or that the stockholders had any reason to expect receipt in that year, I think we should adhere to the fundamental rule of taxing income in the year of receipt, which in this case is the year 1929.
Black agrees with this dissent.