Show STOCK ISTOCK I I i HELD I Supreme Court Renders Vastly r Important Decision Wn Washington March S. S Corporation dividends distributed as stock do not constitute Income onic and are arc not subject subject sub sub- to federal d r l income taxes the tho supreme su supreme su- su I preme court decided t today rny in a a. to five four decision lon Provisions ro of ot tho the 1316 1916 fc federal eral In income In- In como come tax t. law levying taxes on stock dividends were declared l. l The decision decision also nullified similar provisions pro of the present law lawand lawand and will Involve great loss in revenues revenue to the Uta government nn and refunds of such Buch tax already collected Large I financial interests likewise will be affected and numerous stoat dividends dividend of ot generous proportions proportion ar expected to be bo declared soon In the tho majority decision by Justice Pitney Chief Chic Justice White and Ids Jils- tices Uces McKenna Van Devanter and antl Mc- Mc tc I Reynolds concurred Of the four dissenting dissenting dis dis- members Justice Holmes read reada r a brief briet opinion In n which he was Joined by justice Day and Justices Justice Brandeis delivered a 0 lengthy opinion In which Justice Clarko Clarke concurred round Ground of ot Decision In holding stock distributions are not dividends on account of no separation o ate assets being Inoh Involved tl Justice Jus Jus- tice tico Pitney for the majority declared stock shares intro arc nothing except paper certificates in n undistributed assets are aro not realized profits and antl therefore are arc not taxable The Tho attempt of or Congress to taX tas stock distributions tho the majority decided ed to be unconstitutional and ond not permitted permitted permitted per per- by tho the sixteenth or income tax constitutional amendment Stock dividends dividends divi divi- d the majority held may be taxed I only onto after aLer stockholders on them Continued on Pas Page 2 I STOCK DIVIDENDS HElD Continued from Page 1 by sale in which case the government go ma may lev levy income taxes on such profits S 4 Narrow and Bizarre All An four tour dissenting Justices contended contend contend- ed eel Congress Cons ha had power to tax stock dividends holding holding- such dividends are Income the same as IS if IC in cash The sixteenth amendment the minority declared de do- Is broad enough to Justify the tax Justices Brandeis and Clarke characterized characterized characterized charac charac- the majority view as narrow and bizarre antI and sal said It would permit permit permit per per- mit man many corpor corporations ions to escape taxation taxation taxation taxa taxa- tion on much of or what Is actually their income Declaration of oC dividends in cash or in some other medium the t two o justices ad added ed is la wholly a matter of at financial management and therefore if IC a dividend l paid in securities represents represents a distribution of or profits Congress 1 n UL ax 1 S 1 S alS The other dissenting opinion ex expressed expressed ex- ex pressed the belief belle that the wor word l Income income income in come In the sixteenth amendment should bo be read in a sense most obvious to the common understanding at its adoption Most people other than lawyers lawers lawyers law law- ers It was waR added supposed when thc they voted for Cor it the they put at rest the Jhc he question question question ques ques- tion of direct taxes including Including- levies on stock dividends dl Destroys Congress Power Is Claim Washington March farch S. S S. S. Representative live tive lye Hull Democrat Tennessee author lut or of the income tax law declared tonight I that today's decision of ot tho the supreme court not only destroys destros the tho last vestige ves yes tige of congre congressional to tax h. h 1 power In l. l w. w u u Qu preset present law for tor taxation of or personal corporations those corporations those in which individual service is the factor The effect he said is that any group of or individuals ma may form torm artificial cial entities entitles and screen themselves es an and avoid a large amount of oC their Just and fair taxation I Near Panic on ChangeOver ChangeOver Change I Over False Report I New ew York March S. S Wall S. Wall street was thrown wn into a B state ate of at de demoralization o I I loua anu man many 01 ot thousands of or dollars were lost and won within a 3 afew afew few minutes when news agencies which serve the district misstated the decision of or the United States supreme court Inthe In Inthe Inthe the stock tax case an and l declared stock dividends s were wore taxable Tho The service of oC the Associated Press was accurate in er e every particular After its report reached the tho street stocks which had hall broken 2 i to 10 points under an avalanche of selling orders steadied and began nn to lo climb For tho the balance of oC tho the session prices continued to strengthen final quotations for leading lead lead- ing lag stocks making making- substantial gains During the declines frightened traders traders trad trod I ers era sold almost regardless of ot value The Tho hundreds of ot thousands of or dollars they forfeited wore captured on the tho rebound by others who had refused to soil sell on tho the strength th of oC the first and false reports or who were in Ignorance of what was happening General Motors the star tar performer gained s 1 15 points before noon reacted 11 points on ou receipt of ol the tho erroneous report and tn then rose to a net gain of ot points Crucible Steel another spectacular feature gained 30 O points after having shown an actual loss of oC 10 points Many fany other industrial shares closed 5 to 10 points up Rails flails were slow to move but rose TOSO spiritedly l in fn the last hour when wor word l came caine that the railroads had won their valuation suit in the supreme court I over tho the interstate commerce com commis commis- ion sion I |