[Download] "Holcombe Et Al. v. Ginn Et Al." by Supreme Judicial Court of Massachusetts ~ eBook PDF Kindle ePub Free

📘 Read Now     📥 Download

eBook details

• Title: Holcombe Et Al. v. Ginn Et Al.
• Author : Supreme Judicial Court of Massachusetts
• Release Date : January 26, 1937
• Genre: Law,Books,Professional & Technical,
• Pages : * pages
• Size : 65 KB

Description

QUA, Justice. The questions here presented relate to the allocation as between capital and income of 'deficiency' income taxes
assessed by the commissioner of internal revenue upon 'income' received during the years 1931, 1932, and 1934 by the trustees
under the will of Edwin Ginn and of similar taxes to be hereafter assessed. An outline of the provisions of this will is set
forth in the opinion of this court in Parkhurst v. Ginn, 228 Mass. 159, 117 N.E. 202, Ann.Cas.1918E, 982, wherein directions
were given on various matters to former trustees of this same trust. So much of the taxes paid as are attributable to 'capital gains' should be charged against principal. Although the Federal
statutes which were in force during the years here involved treat and tax capital gains as a form of income, Revenue Act of
1928, §§ 22, 101, 45 U.S.Sts. at Large, 797, 811 and Revenue Act of 1932, §§ 22, 101,
47 U.S.Sts. at Large, 178, 191 (26 U.S.C.A. §§ 22 and note, 101 note); Revenue Act of 1934, §§
22, 117, 48 U.S.Sts. at Large, 686, 714 (26 U.S.C.A. §§ 22, 101); Merchants' Loan & Trust Co. v.
Smietanka, 255 U.S. 509, 41 S.Ct. 386, 65 L.Ed. 751, 15 A.L.R. 1305, yet for purposes of accounting by fiduciaries such gains
are additions to principal. Tax Commissioner v. Putnam, 227 Mass. 522, 529, 116 N.E. 904, L.R.A.1917F, 806; Williams v. Milton,
215 Mass. 1, 11, 102 N.E. 355. A tax upon such gains is a tax upon capital transactions the substantial benefit of which goes
to capital. It is an expense incident to dealings in capital and not an expense incident to the collection of income. It differs
from the ordinary annual taxes assessed locally upon real estate, and formerly also upon securities, which in Parkhurst v.
Ginn, 228 Mass. 159, 170, 117 N.E. 202, Ann.Cas.1918E, 982, were held chargeable to income, in that instead of being imposed
at stated intervals merely as a condition of continuing ownership and in the nature of a current expense, it is imposed with
respect to particular transactions resulting in profit and only if such transactions take place. See Cogswell v. Weston, 228
Mass. 219, 222, 117 N.E. 37; Plympton v. Boston Dispensary, 106 Mass. 544. The true character of this tax in so far as it
affects the relation between fiduciaries and beneficiaries is not obliterated by the fact that capital gains are income within
the broad sweep of the Sixteenth Amendment to the Constitution of the United States or by the requirements of annual return
and assessment. The American Law Institute in its Restatement of Trusts, § 233, comment f, lays down the rule as
follows: 'Any tax levied by any authority, federal, State or foreign, upon profit or gain which is allocable to principal
is payable out of principal, although such tax may be denominated a tax upon income by the taxing authorities.' To the same
effect is Wilcox v. Wilcox, 26 Hawaii, 219, 233. Any other rule might well result in seriously reducing the income available
for life tenants in the years in which the transactions of the trust are most profitable.

Ebook Download "Holcombe Et Al. v. Ginn Et Al." PDF ePub Kindle