Opinion
No. 26010.
Opinion Filed December 1, 1936.
(Syllabus.)
1. Taxation — State Income Tax — Exemption of Income Received as Interest on Tax-Exempt Securities.
An income taxpayer of this state is not required to pay a tax on that portion of his income received as interest on certain specified tax-exempt governmental securities. In fixing or approving the amount of his tax, or passing upon his return, the State Tax Commission has no authority to strike a certain percentage of his claimed deduction for business operating expenses merely because it equals that percentage of his total income which is received as interest upon such tax-exempt securities.
2. Same — Amount of Deduction From Total Income for Expenses of Business to Be Determined by Tax Commission Only From Actual Facts.
The amount of deduction from total income, for ordinary and necessary expense of doing business, is to be determined from the actual facts, and the State Tax Commission is not authorized to substitute for such determination a rule which fixes a percentage of such expense to be allowed as deductible, thereby arriving at an arbitrary portion of expense to be allowed and a portion disallowed without due regard to the actual facts.
Appeal from District Court, Oklahoma County; Sam Hooker, Judge.
Action by the Tradesmens National Bank of Oklahoma City, against the Oklahoma Tax Commission et al. to recover income tax paid under protest. Demurrer to answer was sustained and judgment for plaintiff. Defendant appeals. Affirmed with modification as to costs.
C.D. Cund, C.W. King and A.L. Herr, for plaintiffs in error.
Wilson Wilson, for defendant in error.
This case was argued and submitted with cause No. 26011, Oklahoma Tax Commission v. First National Bank of Oklahoma City, this day decided, 178 Okla. 260, 62 P.2d 1220. The pleadings of the parties, the judgment rendered, and the questions here presented are substantially the same. The Tax Commission's brief in cause No. 26011, is by specific request treated as its brief in this case.
The reasoning of the opinion in cause 26011 is applicable here, and the conclusion there is controlling here. We, therefore, adopt the syllabus of that opinion and upon that authority the judgment here considered is modified to exclude any judgment for costs, and in all other respects is affirmed.
McNEILL, C. J., OSBORN, V. C. J., and PHELPS, CORN, and GIBSON, JJ., concur. RILEY, BAYLESS, and BUSBY, JJ., absent.