Opinion
No. 30343.
February 3, 1942. Rehearing Denied March 10, 1942.
(Syllabus.)
1. TAXATION — Money or other property distributed to stockholders out of earnings or profits in liquidation of corporation constituted "dividends" under 1935 Income Tax Law allowable as credit against net income.
Section 6, art. 6, ch. 66, S. L. 1935, levied a tax upon the entire net income of every person. Section 7 of that act defined "net income," except as to insurance companies, as meaning "gross income less the deductions allowed." Section 11 of the act provided for the allowance of a credit against the net income of the amount received as dividends from any corporation subject to taxation under the act, except dividends from a building and loan association, deducted as interest paid from the gross income of such association. Subdivision (k) of section 4 of the act defined the term "dividend" as meaning "any distribution to its shareholders or members which is made by a corporation, out of its earnings or profits, whether such distribution is in cash or other property or in stock of the corporation." Held: Money or other property distributed by a corporation to its stockholders out of its earnings or profits, in liquidation and dissolution of the corporation, constitutes dividends as defined by said act, and are allowable as a credit against the net income.
2. SAME — Subsection of act held inapplicable.
Subsection (c) 3 of section 12, art. 6, ch. 66, S. L. 1935, applies only in determining whether there has been a gain or loss in the purchase and sale of stock in corporations and has no application to the questions of allowance of deductions against the net income.
Appeal from Oklahoma Tax Commission.
From adverse order of Tax Commission relating to income tax. Velma Roring appeals. Reversed.
Bohanon Adams, of Oklahoma City, and Geo. N. Otey, of Ardmore, for protestant.
F.M. Dudley, A.L. Herr, C.D. Stinchecum, and A.D. Howell, all of Oklahoma City, for respondents.
The facts and applicable provisions of law in this case are in all respects the same as in the case In the Matter of the Protest of Harold C. Price, Bartlesville, Okla., against the Assessment of Additional Income Tax for the Calendar Year 1938, No. 30243, 190 Okla. 261, 122 P.2d 994, except as to the income tax year.
The rule there announced governs this case, which requires a reversal of the order of the Oklahoma Tax Commission. The syllabus in case No. 30243, supra, is adopted as the syllabus in this case.
The order of the Oklahoma Tax Commission appealed from herein is reversed.
WELCH, C. J., and OSBORN, BAYLESS, GIBSON, HURST, and ARNOLD, JJ., concur. CORN, V. C. J., and DAVISON, J., absent.