Show A 1 T II t O II Stock tock Dividend Dividen Rul Rulings I Made in Washington The bureau of Internal revenue has prepared for guidance of I which be affected by stock dividend dividend divi divi- tax decision of supreme court In Macomber case a series of rulings which Indicate what stock dividends may be subject to taxation It says aya The following rulings embodied In treasury decision cover the questions which will most frequently arise and are of the tho widest interest to corporations and taxpayers generally Where a corporation being authorized 50 So to do by laws of the state in which it Is Incorporated transfers a portion of 01 ofUs lt Us surplus to capital account Issues new stock representing amount of the surplus sur surplus plus so transferred and distributes the th stock BO so issued to Its stockholders such stock la Is not Income to the tho stockholders and the stockholders incur no liability for Income tax by reason of Its receipt Where hero a corporation being thereunto I lawfully authorized Increases Its r stock and simultaneously declares a o at dividend equal In amount to the tsiu Jd in its capital stock and gives to Its holders a real option to keep tt the ra for or their own or to reinvest in th II shares such dividend Is s a cash 9 and Is Income to the stockholders tV er or they reinvest it in the new not noi Where a corporation which Is it nol nil w milled under the tho laws of the State which It Is Incorporated lo to Issue a slot g dividend Increases its capital tod i s1 at the the- same time declares a cash It under an agreement with s reinvest tbs tb's money so received In tit the v. v tee issue issue- of capital stock such i 1 1 subject to tax as income to the naIl tod hot holders ers Where a a. going ins ing a surplus accumulated In port part to March 1 1913 and I lawfully authorized transfers to Its 07 o ital account a portion of Its b ii- ii sues new stock the acau so transferred to the capital account is then declares a dividend payable la Ia fi sit I itt ittin in cash and part in shares of li lbs eti ins Issue of stock that portion of tie its i paid In cash will be deemed to been paid out of the Iho surplus it since March 1 1913 and Is subject j it tax but the portion of the in In stock will not bo be subject to tu Las u 31 Income I IA A dividend paid In stock of corporation held as a part of the u jj of the tho corporation paying the the- divided d b Income to the tho stockholders at the tha tta the same Is made available for eli bullon lo to the tho full amount of tb the tie Ito t market value of such stock ThI J is based upon the decision of th the cOurt of the tho United States In 4 vs Eisner U. U S. S which WIS Ft modified by the case cae of Eisner Einner vs Cl Mt If It such stock be subsequently sold saM br by tt Ill stockholder the difference difference- tet il l' l market value at date of re receipt ml nJ LII price for which It Is sold Is ad income or loss loes to him as the case ca ray The Tho profit derived by a r upon the salo of stock received u 25 5 1 is Income to the dU taxable as such even though the lbs 0 j 3 time tee tI the Itself was nas not Income at Vf 1 It- It For lor receipt by the a s the tho amount o Of pose poso of determining or loss derived from the sal of ital 13 of the received as a dividend or rrt W 5 respect to which such both paid the cost of stock P with ft the Iho dividend stock and the Ibe sped to which It is Issued have ft r and preferences is t the theof 11 its Ia r of the cost of the stock or K ket value as of March I. I 13 1913 if t r by IH divided 3 lor to that date pi 51 ol old na number of or of the stock il |