United States Supreme Court Cases & Opinions

U.S. Supreme Court

Crane-Johnson Co. v. Helvering, 311 U.S. 54 (1940)

Crane-Johnson Company v. Helvering

No. 8

Argued October 23, 1940

Decided November 12, 1940

311 U.S. 54

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

Decided on the authority of Helvering v. Northwest Steel Rolling Mills, ante p. 311 U. S. 46.

105 F.2d 740 affirmed.

Certiorari, 309 U.S. 692, to review the affirmance of a decision of the Board of Tax Appeals, 38 B.T.A. 1355, which sustained the Commissioner's determination of a tax deficiency.

MR. JUSTICE BLACK delivered the opinion of the Court.

Because of a previously existing deficit, petitioner corporation was prohibited by state law [Footnote 1] from distributing as dividends its profits earned in 1936. Notwithstanding this state prohibition, the Commissioner held respondent liable under the 1936 Revenue Act [Footnote 2] for surtax on undistributed profits. The Board of Tax Appeals sustained

Page 311 U. S. 55

the Commissioner, [Footnote 3] and the Circuit Court of Appeals affirmed. [Footnote 4] On a similar state of facts, the Court of Appeals for the Ninth Circuit held undistributed profits exempt from surtax. [Footnote 5] We granted certiorari in both cases to resolve this conflict. [Footnote 6] The legal questions here presented are in all respects the same as those presented in Helvering v. Northwest Steel Rolling Mills, ante, p. 311 U. S. 46, and, on the authority of that case, the decision below is

Affirmed.

[Footnote 1]

"The directors of corporations must not make dividends except from the surplus profits arising from the business thereof. . . ." N.D.Comp.Laws (Supp. 1925) section 4543.

[Footnote 2]

49 Stat. 1648, 1655.

[Footnote 3]

38 B.T.A. 1355.

[Footnote 4]

105 F.2d 740.

[Footnote 5]

Northwest Steel Rolling Mills v. Commissioner, 110 F.2d 286.

[Footnote 6]

309 U.S. 692; 311 U.S. 629.