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Ray Consolidated Copper Co. v. United States, 268 U.S. 373 (1925)

Ray Consolidated Copper Company v. United States

No. 443

Argued January 13, 1925

Decided May 25, 1925

268 U.S. 373


1. The term "capital stock" has no fixed meaning in taxing statutes, and must be interpreted in each case by reference to the context, the nature, purpose, and history of the statute, and by other aids to construction. P. 268 U. S. 376.

2. The Revenue Act of 1918 provides:

"Every domestic corporation shall pay annually a special excise tax with respect to carrying on or doing business, equivalent to $1 for each $1000 of so much of the fair average value of its capital stock for the preceding year ending June 30 as is in excess of $5000. In estimating the value

Page 268 U. S. 374

of the capital stock, the surplus and undivided profits shall be included."


(a) That "capital stock" here means the entire potentiality of the corporation to profit by the exercise of its corporate franchise, and the method for ascertaining the value, not being prescribed, is left to the sound discretion of the Commissioner of Internal Revenue subject only to the obligation to consider every relevant fact. P. 268 U. S. 377.

(b) The net fair value of the corporate assets is clearly relevant, and adoption of this, rather than the value of the outstanding shares of stock as evidenced by the average prices at which the shares were sold on the stock exchange was not arbitrary nor an abuse of discretion. Id.

59 Ct.Cls. 686 affirmed.

Appeal from a judgment of the Court of Claims; denying a claim for recovery of the amount of an additional special corporation excise tax, paid under protest.

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