LYNCH V. TURRISH, 247 U. S. 221 (1918)

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U.S. Supreme Court

Lynch v. Turrish, 247 U.S. 221 (1918)

Lynch v. Turrish

No. 421

Argued March 4, 5, 6, 1918

Decided June 3, 1918

247 U.S. 221


Due to gradual increase in the market value of timber lands owned by a corporation, the market value of it shares had increased to twice par value by March 1, 1913, when the Income Tax Act of that year took effect. Afterwards, the company sold all its property and made

Page 247 U. S. 222

final distribution of the proceed to the shareholders on surrender of their certificates of stock, the amount received by each being twice the par value of his shares but representing no increase since the effective date of the act. Held that the value thus received in excess of par was not "income, gains, or profits" of a shareholder, subject to the tax, (a) because it represented merely a conversion of his existing investment, (b) because it did not "arise" or "accrue" after the act became effective.

236 F.6d 3 affirmed.

The case is stated in the opinion.

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