Lynch v. Hornby

Citations

• 247 U.S. 339
• 38 S. Ct. 543
• 62 L. Ed. 1149
• 1918 U.S. LEXIS 1915
• 3 A.F.T.R. (P-H) 2992
• 1 U.S. Tax Cas. (CCH) 20

Syllabus

<p>The Income Tax Act of October 3, 1913, c. 16, 38 Stat. 166, drew a distinction between a shareholder’s undivided interest in the gains and profits of a corporation prior to declaration of a dividend, a,nd his participation in the dividends declared and paid; treating the latter, in ordinary circumstances, as part of his income for the purpose of the “surtax,” and not regarding the former as taxable to him unless fraudulently accumulated to evade the tax.</p> <p>nder the Sixteenth Amendment, Congress may tax without apportionment dividends received in the ordinary course by a shareholder from a corporation, even though extraordinary in amount and derived from a surplus of corporate assets existing before the Amendment.</p> <p>nder the Income Tax Act of 1913, dividends declared and paid in the ordinary course by a corporation to its shareholders after March 1, 1913, whether from current earnings or from a surplus accumulated before that date, were taxable tó the individual shareholders as income, under the “surtax” provision. Lynch v. Turrish, ante, 221, and Southern Pacific Co. v. Lowe, ante, 330, distinguished.</p>