Wis. Dep't of Taxation v. Miller

• Citation: 239 Wis. 507,300 N.W. 903
• Parties: WISCONSIN DEPARTMENT OF TAXATION v. MILLER.
• Decision Date: 02 December 1941
• Court: United States State Supreme Court of Wisconsin

239 Wis. 507

300 N.W. 903

WISCONSIN DEPARTMENT OF TAXATION

v.MILLER.

Supreme Court of Wisconsin.

Dec. 2, 1941

Appeal from an order of the Circuit Court for Milwaukee County; Charles L. Aarons, Judge.

Affirmed.

Action by the Wisconsin Department of Taxation against Clara A. Miller, to review a decision of the Wisconsin Board of Tax Appeals. From an order of the circuit court for Milwaukee county reversing an order of the Board of Appeals, the defendant taxpayer appeals. The material facts are stated in the opinion.

Wood, Warner & Tyrrell, of Milwaukee (John K. Wood, and Kenneth F. Webster, both of Milwaukee, of counsel), for appellant.

John E. Martin, Atty. Gen., and Harold H. Persons, Asst. Atty. Gen., for respondent.

FOWLER, Justice.

The Assessor of Incomes of Milwaukee county imposed in 1932 an Emergency Relief Surtax against Clara A. Miller on her 1931 income. She paid this tax. Thereafter in proceedings duly had an additional tax of $1,763.09 was imposed by the Assessor. This tax was also paid. The taxpayer filed with the Assessor a petition for a refund of these payments. The Assessor denied the refund. The taxpayer appealed to the Wisconsin Board of Tax Appeals. The Board reversed the order of the Assessor and ordered a refund. The Wisconsin Department of Taxation brought action under sec. 73.015(2), Stats., in the circuit court for Milwaukee county to review the order of the Board. The circuit court reversed the order of the Board and sustained both taxes imposed by the Assessor of Incomes. The case is an appeal from the circuit court order.

The facts are stipulated. They are in part summarized as follows: During the year 1931 the taxpayer owned securities worth somewhere between one and three million dollars. During that year she made many changes in her invested securities selling some and purchasing others. The total volume of such manipulations involved purchases and sales aggregating respectively $765,306.89 and $340,536.55. Her purpose in so manipulating her securities was to better her holdings and thus to increase her income. In this sense it was, as she claims, to make money. On the basis of differences between purchase and sales prices of securities sold during the year, her losses exceeded her gains in the aggregate of $81,141.87. She claims she is entitled to deduct this sum from the tax base upon which her Emergency Relief Surtax was computed. She was allowed such deduction from her regular income tax base. Whether she is entitled to such deduction, in computing the tax involved, depends on the meaning of the statute imposing that tax.

The validity of the statute imposing the tax involved is not in question. The only question involved is whether under par. (b) of sec. 4(2) of Ch. 29, Laws of Special Session 1931-1932, the provisions of the general income tax law relating to “gains or losses on the sale or disposition of stocks, bonds and other securities” is applicable. Par. (b) declares that the provision relating to such “gains or losses” shall not be applicable “unless the property is held by the taxpayer in the course of his regular trade or business.”

[1][2] It seems to us that whether the judgment of the circuit court should be affirmed may be based on an item of the stipulated facts. Attached to and made a part of the stipulation is a final summary in two columns, headed and concluded as follows:

“A corrected assessment if Mrs. Miller is held to have been a dealer in securities ___ Refund due $3,916.85.”

A corrected assessment if Mrs. Miller is held not to have been a dealer in securities ___ Additional tax due $1,763.”

This item shows that it was stipulated that the case hinged on whether Mrs. Miller was a dealer in securities. The stipulation is to the effect that the clause in the statute involved: “or unless the property is held by the taxpayer in the course of his regular trade or business” means unless the taxpayer holds the securities as a dealer in securities. Holding securities in course of the taxpayer's regular course of trade or business in fact does make and was in effect stipulated to make the holder a dealer in securities. Being a dealer implies buying to hold for sale. It means selling to customers who apply to purchase and whom the dealer solicits to buy. A dealer in securities holds securities for sale, and one who applies may purchase whatever the dealer holds. Mrs. Miller did not buy securities...