D.C. Code ยง 47-1551c(m) (1967 ed.). Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). See also Oppenheimer II, supra, note 9, 124 U.S.App. D.C. at 223, 363 F.2d at 710; Doyle v. District of Columbia, 124 U.S.App.D.C. 207, 363 F.2d 694 (1966); Snow v. District of Columbia, 124 U.S.App.D.C. 69, 71-72, 361 F.2d 523, 525-526 (1966); Estate of Uline v. District of Columbia, 124 U.S.App.D.C. 5, 360 F.2d 820 (1966); Bord v. District of Columbia, 120 U.S.App.D.C. 175, 177, 344 F.2d 560, 562 (1965).
There we said: Verkouteren v. District of Columbia, supra note 2, 139 U.S.App.D.C. at 308, 433 F.2d at 466; Oppenheimer II, supra note 35, 124 U.S.App.D.C. at 224, 363 F.2d at 711; Doyle v. District of Columbia, 124 U.S.App.D.C. 207, 363 F.2d 694 (1966); Estate of Uline v. District of Columbia, 124 U.S.App.D.C. 5, 7, 360 F.2d 820, 822 (1966); Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 353-356, 258 F.2d 651, 653-656, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958).Supra note 35.
We noted that an unrealized appreciation in a corporation's assets could not be regarded as a part of its earned surplus; and we reminded that we have held the dividend distributions taxable under ยง 1551c(m) to be limited to those attributable to earned surplus. See Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). Thus it was that petitioner was held to have received in 1953 taxable income by reason of the liquidation only in the amount of the earned surplus of $135,248.75.
The Tax Court agreed. The District relied upon Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). The petitioners in 1960 income tax return reported as ordinary dividend income to the Estate subject to tax only $32,764.
The District urges here, as it did before the Tax Court, the view to which its assessor had subscribed, while respondent supports the Tax Court's position. After mature consideration of the opposing contentions in the light shed by the record, we affirm the Tax Court. Compare Estate of Uline v. District of Columbia, 124 U.S.App.D.C. 5, 360 F.2d 820 (1966); Bord v. District of Columbia, 120 U.S.App.D.C. 175, 344 F.2d 560 (1965); Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). D.C. Code ยง 47-1551c( l) (1967 ed.).
There is no issue raised in this case with respect to whether the distribution in liquidation is properly to be regarded as a "dividend" for purposes of income taxation. See Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). II
Obviously, had the Corporation been liquidated entirely, the distribution from its earnings would have constituted a dividend. Uline v. District of Columbia, 124 U.S. App.D.C. 5, 360 F.2d 820 (1966); Snow v. District of Columbia, 124 U.S.App.D.C. โ, 361 F.2d 523. (1965), rehearing en banc denied (1966); District of Columbia v. Oppenheimer, 112 U.S.App.D.C. 239, 301 F.2d 563 (1962); Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). The Tax Court made findings of fact and reached ultimate conclusions which we deem controlling here. It appears that for many years prior to 1950, the taxpayer was the sole proprietor of a printing and offset business.
s (other than paid-in surplus), whenever earned by the corporation and whether made in cash or any other property (other than paid-in surplus), whenever earned by the corporation and whether made in cash or any other property (other than stock of the same class in the corporation if the recipient of such stock dividend has neither received nor exercised an option to receive such dividend in cash or in property other than stock instead of stock) and whether distributed prior to, during, upon, or after liquidation or dissolution of the corporation: Provided, however, That in the case of any dividend which is distributed other than in cash or stock in the same class in the corporation and not exempted from tax under this subchapter, the basis of tax to the recipient thereof shall be the market value of such property at the time of such distribution: And provided, however, That the word `dividend' shall not include any dividend paid by a mutual life insurance company to its shareholders." 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). The remainder of the transaction was a dissolution, a liquidation.
Thus, the $390,000, minus the book cost of $20,480, is to be regarded as part of the earned surplus of Capitol upon dissolution, and, thus, includible in appellants' incomes as dividends. Since deficiencies assessed on this basis would be the same as those on the capital gains approach advanced by the District, the petitions were denied. Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 78 S.Ct. 1384, 2 L.Ed.2d 1551 (1958); and see District of Columbia v. Oppenheimer, 112 U.S.App. D.C. 239, 301 F.2d 563 (1962). This disposition, in our view, cannot stand.
"The word `dividend' means any distribution made by a corporation * * * to its stockholders or members, out of its earnings, profits, or surplus (other than paid-in surplus), whenever earned by the corporation and whether made in cash or any other property * * * and whether distributed prior to, during, upon, or after liquidation or dissolution of the corporation: * * *". In support of the decision of the Tax Court, respondent relies on Berliner v. District of Columbia, 103 U.S.App.D.C. 351, 258 F.2d 651, cert. denied, 357 U.S. 937, 79 S.Ct. 1384, 2 L.Ed.2d 1551 (1958). We there held that when gain which has been realized by the corporation from the sale of appreciated assets is distributed to the stockholders, it is taxable to the stockholder as a dividend under 47 D.C. CODE ยง 1551c(m).