Opinion
Nos. 37911, 37912, 37913, 37914, 37915, 37916 and 37917
Decided June 19, 1963.
Taxation — Listing personal property — Income-yielding investments — Not to list as unproductive, when — Investments outstanding for less than calendar year.
Where a taxpayer properly adopts and follows the federal election method of listing his investments yielding income, he is not required to list as an unproductive investment an income-yielding investment that was not outstanding for the full calendar year next preceding tax listing day. (Sections 5701.06, 5701.10, 5711.10 and 5711.22, Revised Code, construed and applied.)
APPEALS from the Board of Tax Appeals.
The taxpayers owned Rike-Kumler shares during the year 1959. Under a reorganization plan during that year, the taxpayers received 1 1/10 shares of Federated Department Stores, Inc., for each of their shares of Rike-Kumler Company.
The taxpayers used the federal election method provided for by Section 5711.10, Revised Code, in filing their 1960 personal property tax returns and included within the aggregate amount of their income from taxable investments all dividends received during 1959 on their Rike-Kumler shares ($1.50 per share) and on their Federated Department Stores shares ($.50 per share).
So far as pertinent, Section 5711.10, Revised Code, reads:
"If a taxpayer so elects, he may, under uniform regulations prescribed by the Tax Commissioner, in lieu of listing his investments yielding income as prescribed in Sections 5711.01 to 5711.36, inclusive, * * * file with his return a verified summary of his federal income tax return for the last preceding taxable year, * * * itemized and analyzed in such manner as the commissioner may by such regulations prescribe, together with a statement as to the aggregate amount of income received by him during such taxable year derived from investments taxable under such sections, the income from which is not required to be reported for federal income tax purposes. In such case the aggregate amount of income of the taxpayer from investments of the classes taxable under such sections may be included in the taxpayer's return without specification as to the sources thereof, and shall be taken as the assessment of his investments yielding income, in lieu of the assessment thereof as otherwise prescribed * * *." (Emphasis added.)
Section 5711.22 reads so far as pertinent:
"In listing investments, the amount of the income yield of each for the calendar year next preceding the date of listing shall, except as otherwise provided in Sections 5711.01 to 5711.36, inclusive, * * * be stated * * * and the assessment thereof shall be at the amount of such income yield; but any property defined as investments in either division (A) [generally shares of stock] or division (B) [generally interest bearing obligations] of Section 5701.06 * * * which has not been outstanding for the full calendar year next preceding the date of listing or which has yielded no income during such calendar year shall be listed and assessed as unproductive investments, at their true value in money on the day that such investments are required to be listed [here, January 1, 1962] * * *." (Emphasis added.)
Prior to June 18, 1959, the words of the foregoing statute reading "which has not been outstanding for the full calendar year next preceding the date of listing or" were not in the statute but apparently in lieu thereof Section 5711.20, Revised Code (which was repealed when the present Section 5711.22 was enacted), read so far as pertinent:
"Whenever, during a calendar year, a corporation is dissolved, merged, or consolidated with another corporation, * * * and a stockholder of such corporation surrenders his shares and receives in lieu thereof other shares of stock of the same or another corporation, such stockholder, in listing the shares so received as productive investments, shall give as the income yield thereof the aggregate amount of cash dividends paid during such year on the shares so surrendered and the shares so received."
The Tax Commissioner determined that the shares of Federated Department Stores, Inc., should have been taxed again as unproductive investments at 2 mills of their value.
The Board of Tax Appeals reversed that determination.
The cause is now before this court on appeal from the decision of the Board of Tax Appeals.
Messrs. Estabrook, Finn McKee, for appellees.
Mr. William B. Saxbe, attorney general, and Mr. John J. Lokos, for appellant.
The Tax Commissioner contends that the enactment of Section 5711.22, Revised Code, at the time of the repeal of Section 5711.20, Revised Code, resulted in requiring a taxpayer to list as unproductive investments all those income-yielding investments owned on tax listing day which had not been outstanding for the full calendar year preceding that day.
Unquestionably this would be required of a taxpayer who had not, pursuant to Section 5711.10, Revised Code, adopted the federal election method of "listing his investments yielding income." However, as to a taxpayer who had adopted that federal election method, that statute still specifically provides that "the aggregate amount of income of the taxpayer from investments * * * taxable * * * [under the intangible tax law] shall be taken as the assessment of his investments yielding income, in lieu of the assessment thereof as otherwise prescribed."
Even though they were "not * * * outstanding for the full calendar year next preceding the date of listing," the Federated Department Store shares of the taxpayers in the instant case represented "investments yielding income" within the meaning of those words as set forth in Section 5711.10, Revised Code. This necessarily follows from the present definition of income yield in Section 5701.10, Revised Code, as, "in the case of shares of stock, the dividends * * * paid or distributed."
Therefore, our conclusion is that, where a taxpayer properly adopts and follows the federal election method of listing his investments yielding income, he is not required to list again as an unproductive investment an income-yielding investment that was not outstanding for the full calendar year next preceding tax listing day.
Therefore, the decision of the Board of Tax Appeals is affirmed.
Decision affirmed.
ZIMMERMAN, MATTHIAS, O'NEILL, GRIFFITH, HERBERT and GIBSON, JJ., concur.