ELDORADO COAL & MINING COMPANY
v.
MAGER, COLLECTOR OF INTERNAL REVENUE FOR THE FIRST DISTRICT OF ILLINOIS

U.S. | 1921-03-28
No. 609
Mr. Justice Holmes and Mr. ' Justice Brandéis, because of prior decisions of the court, concur only in the judgment.
255 U.S. 522 Supreme Court of the United States (1921) Negative Treatment
Also reported at: 65 L. Ed. 757 · 41 S. Ct. 390 · 1921 U.S. LEXIS 1722 · SCDB 1920-143
Cited by 72 cases

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Synopsis

Eldorado Coal & Mining Company challenged an income tax assessment on gains from the 1917 sale of its coal mining operation, arguing that the appreciation in the property's value was not "income" within the meaning of the Sixteenth Amendment and therefore could not be taxed. The Supreme Court affirmed the lower court's judgment upholding the tax assessment, holding that the gain from the sale of capital assets constituted taxable income under the Income Tax Act.

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Opinion of the Court
Mr. Justice Clarke

Mr. Justice Clarke delivered the opinion of the court.

This case comes into this court on a writ of error to review a judgment of the District Court of the United States for the Northern District of Illinois, sustaining a demurrer to a declaration in assumpsit to recover an assessment of income and excess profits taxes for the year 1917, under warrant of the Income Tax Act of Congress, approved September 8, 1916, c. 463, 39 Stat. 756, as amended by the Act approved October 3, 1917, c. 63, 40 Stat. 300. Payment was made under protest and the claim to recover is based upon the same contention dealt with in No. 608, this day decided, ante, 509, that the fund taxed was not “income” within ohe scope of the Sixteenth Amendment to the Constitution of the United States, and that the effect given by the lower court to the act renders it unconstitutional and void.

The Eldorado Coal and Mining Company is an In diana corporation, which operated a bituminous coal mine and mining plant, which it sold in May, 1917, for cash. The company-retained its accounts receivable and prior to September 30, 1917, it distributed among its stockholders, proportionately tq their ownership of stocks, the cash received from, the "sale and the accounts receivable in kind. The corporation, however, was not dissolved nor its charter surrendered, because there were unsettled liabilities against it for federal income taxes and excess profit taxes. Otherwise its affairs were wound up.

It is averred in the declaration that, taking the fair market value as of March 1, 1913, of. the capital assets of the company invested and employed in its business, and adding thereto the cost of additions and betterments, and subtracting depreciation and depletion to the date of sale, it appears’ that there was án appreciation in value of the property after March 1, 1913, of $5,986.02, and it was on this profit realized by the sale that the assessment of $3,073.16 was made which the company paid and in this suit seeks to recover. It is obvious from this statement of the case that it presents in so nearly the same form precisely the same questions as were considered in No. 608, Merchants’ Loan & Trust Co. v. Smietanka, this day decided, ante, 509, that further discussion of them is unnecessary, and, on the authority of that case, the judgment of the District Court is

Affirmed.

Mr. Justice Holmes and Mr. ' Justice Brandéis, because of prior decisions of the court, concur only in the judgment.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By (33 total)

  • Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (U.S. 1926)
  • Fribourg Navigation Co., Inc. v. Commissioner of Internal Revenue, 383 U.S. 272 (U.S. 1966)
    …the majority opinion, only one, G. C. M. 1597, VI-1 Cum. Bull. 71 (1927), involved a tax year after 1921. Both Supreme Court cases cited in n. 4 of the majority opinion, United States v. Ludey, 274 U. S. 295, and Eldorado Coal & Mining Co. v. Mager, 255 U. S. 522, were concerned with tax years prior to 1922. Similarly, Louis Kalb, 15 B. T. A. 865, and Even Realty Co., 1 B. T. A. 355, involved tax years prior to 1922. 42 Stat. 232, §206 (a). G. C. M. 1597, VI-1 Cum. Bull. 71 (1927). See also Treas. Reg. § 1…
    1 / 2
  • MacLaughlin v. Alliance Ins. Co., 286 U.S. 244 (U.S. 1932)
    …istently been regarded as income within the meaning of the Sixteenth Amendment and taxable as such in the period when realized. See Lynch v. Hornby, 247 U. S. 339; Merchants’ Loan & Trust Co. v. Smietanka, supra; Eldorado Coal & Mining Co. v. Mager, 255 U. S. 522; Goodrich v. Edwards, 255 U. S. 527; Walsh v. Brewster, 255 U. S. 536; Taft v. Bowers, 278 U. S. 470; Lucas v. Alexander, 279 U. S. 573; Willcuts v. Bunn, 282 U. S. 216. [*250] Here there is no question of a tax on enhancement of value occurring bef…

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