Doyle v. Mitchell Bros.
Co., 247 U.S. 179 (1918)
This was an action to recover from the Collector additional taxes
assessed against the respondent under the
Corporation Excise Tax Act of August 5, 1909.
...
The act became effective January 1, 1909, and provided for the annual
payment by every domestic corporation 'organized for profit
and having
a capital stock represented by shares' of an excise tax 'equivalent
to
one per centum upon the entire net income over and above five thousand
dollars received by it from all sources during such year,' with
exceptions not now material.
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If you have read the
previous
pages in this chapter, the above italicized words should be getting a
little boring by now.
The suggestion that the
entire proceeds of the conversion should be still treated as the same
capital, changed only in form and containing no element of income
although including an increment of value, we reject at once as
inconsistent with the general purpose of the act. Selling for profit is too familiar a
business transaction to permit us to suppose that it was intended to be
omitted from consideration in an
act for taxing the doing of business in corporate form upon the
basis of the income received 'from all sources.'
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Parse:
Selling for profit is too
familiar a [corporate] business
transaction to permit us to suppose that it was intended to be
omitted from consideration in an
act for taxing the doing of business
in corporate form upon the
basis of the [corporate net] income
received 'from all sources.'
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Yet it is plain, we think,
that by the true intent and meaning of the act the entire proceeds of a
mere conversion of capital assets were not to be treated as income. Whatever difficulty there may be about a
precise and scientific definition of 'income,' it imports, as used
here, something entirely distinct from principal or capital either as a
subject of taxation or as a measure of the tax; conveying rather the
idea of gain or increase arising
from corporate activities. As was said in Stratton's
Independence v. Howbert: 'Income may
be defined as the gain derived from capital, from labor, or from both
combined.'
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Parse of Doyle:
Whatever difficulty there
may be about a precise and scientific definition of [corporate net] 'income,' it imports, ... the idea of
gain or increase arising
from corporate activities.
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Parse of Stratton citation
from last page:
| [Corporate net] 'income' may be defined
as
the [corporate] gain
derived
from capital, from labor, or from both
combined, and here we have combined operations of capital and labor.
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