Norfolk & Western Ry. Co. v. North Carolina ex rel. Maxwell,
297 U.S. 682 (1936)

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U.S. Supreme Court

Norfolk & Western Ry. Co. v. North Carolina ex rel. Maxwell, 297 U.S. 682 (1936)

Norfolk & Western Railway Co. v. North Carolina ex rel. Maxwell

No. 610

Argued March 6, 1936

Decided March 30, 1936

297 U.S. 682


1. For ascertaining the net income of an interstate railway taxable within a particular State, a formula allocating operating revenues and operating expenses to the lines within that State by applying the average mileage prorate of the entire railway system is generally speaking valid, though it may produce unconstitutional results in particular instances. P. 297 U. S. 684.

2. A raiiway claiming that the use of such a formula operated arbitrarily to attribute net income to its lines within the State out of proportion to the income earned by them, and thus in effect to tax income derived from its business outside of the State, was under the burden of proving this clearly, and the burden was not satisfied by proof that the lines in question were exceptionally expensive to operate unaccompanied by evidence to combat the possibility that they produced revenue correspondingly above the system average. P. 297 U. S. 686.

208 N.C. 397, 181 S.E. 248, affirmed.

Page 297 U. S. 683

Appeal from a judgment in favor of the State in a suit by the Railway Company to recover money exacted as income taxes.

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