Re: [tips_and_tricks] Court statements about taxes collected [1 Attachment]
- Do NOT - I repeat, DO NOT cite or quote ANY case until you have read it. The attached .pdf is like 100's of other papers I've seen which take snippets out of context, ignore the subject-matter & often cite the case wrong, or ignore what happened to it later. Just the 1st 2 cases listed on the .pdf make the point:The case cited as Havlering v. Gregory, 69 F2d 809 (& missing the year, which should always appear in parentheses & also missing the Circuit it was decided in) went on to the supreme court as Gregory v. Helvering, Comm. of Internal Revenue, 293 U.S. 465 (1935) & it deals with the "reorganization" of a corporation under section 112(g) of the Revenue Act of 1928. The following 2 statements from the case make the point (emphasis added):
"The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted. United States v. Isham, 17 Wall. 496, 506; Superior Oil Co. v. Mississippi, 280 U.S. 390, 395 , 396 S., 50 S.Ct. 169; Jones v. Helvering, 63 App.D.C. 204, 71 F.(2d) 214, 217. But the question for determination is whether what was done, apart from the tax motive, was the thing which the statute intended."
"In these circumstances, the facts speak for themselves and are susceptible of but one interpretation. The whole undertaking, though conducted according to the terms of subdivision (B), was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else. The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation, because the transaction upon its face lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose."
Now then, does that case say what the .pdf indicates that it says?
The next case is cited as Brushaber v. Union Pacific R/R 240 U.S. 1, 17;36 S.Ct. 236, 241 (year missing again) & that's pretty close - it's Brushaber v. Union Pacific R.R. Co. - in Book No. 240 of the U.S. Supreme Court Reporter, it starts on page 1 (240 U.S. 1) & the case was decided in 1916. However, the citation indicates that on page 17 of the decision (240 U.S. 1, 17) this statement is found:
"Income has been taken to mean the same thing as used in the Corporation Excise Tax of 1909 (36 Stat. 112). The worker does not recieve a profit or gain from his/her labors - merely an equal exchange of funds for his services."
But that statement IS NOT THERE - not on page 17, nor ANYWHERE in that decision.
This is what the case was about (240 U.S. 1, 9):
"As a stockholder of the Union Pacific Railroad Company, the appellant filed his bill to enjoin the corporation from complying with the income tax provisions of the tariff act of October 3, 1913 (II., chap. 16, 38 Stat. at L. 166). Because of constitutional questions duly arising the case is here on direct appeal from a decree sustaining a motion to dismiss because no ground for relief was stated."
And here's the entire text of page 17:
"of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such unless and until it was concluded that to enforce it would amount to accomplishing the result which the requirement as to apportionment of direct taxation was adopted to prevent, in which case the duty would arise to disregard form and consider substance alone, and hence subject the tax to the regulation as to apportionment which otherwise as an excise would not apply to it. Nothing could serve to make this clearer than to recall that in the Pollock Case, in so far as the law taxed incomes from other classes of property than real estate and invested personal property, that is, income from 'professions, trades, employments, or vocations' (158 U.S. 637), its validity was recognized; indeed, it was expressly declared that no dispute was made upon that subject, and attention was called to the fact that taxes on such income had been sustained as excise taxes in the past. Id. p. 635. The whole law was, however, declared unconstitutional on the ground that to permit it to thus operate would relieve real estate and invested personal property from taxation and 'would leave the burden of the tax to be borne by professions, trades, employments, or vacations; and in that way what was intended as a tax on capital would remain, in substance, a tax on occupations and labor' (id. p. 637),-a result which, it was held, could not have been contemplated by Congress.
This is the text of the Amendment:
'The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.'
It is clear on the face of this text that it does not purport to confer power to levy income taxes in a generic sense,-an authority already possessed and never questioned,"
I can't count the number of times people have been shot down in flames citing cases they haven't read - but their adversary has. Don't fall into the trap of believing what somebody tells you a case says - go get it yourself & read it - or don't cite it @ all.~ ~ ~
From: dave <dwissel@...>
Sent: Mon, October 19, 2009 10:00:05 PM
Subject: [tips_and_tricks] Court statements about taxes collected [1 Attachment]