Plant v. Walsh
| Decision Date | 12 April 1922 |
| Docket Number | 2053. |
| Citation | 280 F. 722 |
| Court | U.S. District Court — District of Connecticut |
| Parties | PLANT v. WALSH, Collector of Internal Revenue |
George L. Shearer, of New York City, and Edward M. Day, of Hartford Conn., for plaintiff.
Edward L. Smith, U.S. Atty., and George H. Cohen, Asst. U.S. Atty both of Hartford, Conn., for defendant.
This action was brought by Morton F. Plant to recover income taxes assessed in 1916 for the years 1913 and 1914 and paid under protest to avoid penalties. Before the case was ready for trial Mr. Plant died and the executors of his estate have been substituted as plaintiffs.
One of the questions presented is whether the taxpayer was rightly assessed on the sum of $60,455.61 representing corporate dividends declared prior to March 1, 1913, and payable subsequent to March 1, 1913, to stockholders of record at dates prior to that time.
The Act of October 3, 1913 (38 Stat. 166), provides (section 2A subdivision 1):
'That there shall be levied, assessed, collected and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States * * * a tax of one per centum per annum upon such income.'
It becomes unnecessary to discuss the arguments submitted in the able briefs submitted by counsel, because the question now under consideration has been answered by a very recent decision of the Circuit Court of Appeals for the Second Circuit in United States v. Guinzburg, decided December 14, 1921, and reported in 278 F. 363. It was held there that corporate dividends declared February 17, 1913, payable July 1, 1913, to stockholders of record on January 30, 1913, were income when declared and not when paid. Judge Manton said:
It follows, therefore, that the ruling in the Guinzburg Case must be followed in the instant case.
Another question is whether the taxpayer was rightly assessed on the sum of $95,820, representing interest due March 1, 1913, on certain corporate bonds. This question was argued by both sides on the assumption that the interest was payable for the 6 months' period ending February 28, 1913. I think that as to this question United States v. Guinzburg, supra, is conclusive. The basis of that decision was that money owing to the taxpayer is income accrued from the time when the liability to pay becomes absolute, though it is not yet due. If the interest was payable for the 6 months ending February 28, 1913, the liability to pay became absolute before the commencement of the taxable period, though payment was not due until the first day of that period. I see no ground on which money owing by a corporation for interest on its bonds can be distinguished from money owing it for a dividend which has been declared on its stock, and therefore hold that on this item also the taxpayer was improperly assessed.
The next question arises in the following manner: The taxpayer took as a deduction on his return for the year 1913, the sum of $43,749.16, alleged to be five-sixths of the amount at which certain corporate bonds, ascertained to be worthless during the year 1913 and charged off on December 31st of that year, stood on the taxpayer's books on March 1, 1913. The plaintiff contends that this deduction was justified under section 2B, subdivision 5, of the Act of October 3, 1913, which provided that in computing net income for the purpose of the normal tax, there should be allowed as a deduction:
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Kraft Foods Company v. Commissioner of Internal Rev.
...exchanges are dealt with in § 112(b) (3) and (g) of the 1934 Act and §§ 354(a) and 368(a) (1) (E) of the 1934 Code. 13 See Plant v. Walsh, D.C.D.Conn.1922, 280 F. 722; Bulger Block Coal Co. v. United States, 1931, 48 F.2d 675, 71 Ct. Cl. 636; Helvering v. McGlue's Estate, 4 Cir., 1941, 119 ......
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Helvering v. Highland
...Commissioner, 3 Cir., 73 F.2d 589; Commissioner v. Field, 2 Cir., 67 F.2d 876; Doggett v. Burnet, 62 App.D.C. 103, 65 F.2d 191; Plant v. Walsh, D.C., 280 F. 722; cf. Chaloner v. Helvering, 63 App.D.C. 85, 69 F.2d 571; Union Trust Co. v. Commissioner, 6 Cir., 54 F.2d 199; Deering v. Blair, 5......
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...federal income statute as well as this state's gross income tax. Farming may be classified as a business for tax purposes. Plant v. Walsh (1922), 2 Cir., 280 F. 722; Wilson v. Eisner (1922), 2 Cir., 282 F. It is further pointed out that the provisions for exemptions and classifications are ......
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