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| | Eisner v. Macomber |
 | | In January, 1916, in order to readjust the capitalization, the board of directors decided to issue additional shares sufficient to constitute a stock dividend of 50 per cent of the outstanding stock, and to transfer from surplus account to capital stock account an amount equivalent to such issue. |
 | | She was called upon to pay, and did pay under protest, a tax imposed under the Revenue Act of 1916, based upon a supposed income of $19,877 because of the new shares; and an appeal to the Commissioner of Internal Revenue having been disallowed, she brought action against the Collector to recover the tax. |
 | | The Revenue Act of 1916, in so far as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of Article I, Section 2, clause 3, and Article I, Section 9, clause 4, of the Constitution, and to this extent is invalid notwithstanding the Sixteenth Amendment. |
| pegasus.cc.ucf.edu /~bandy/eisner.htm (8727 words) |
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