Therefore, a brief history tracing the development of the Supreme Court's jurisprudence is essential to an understanding of the meaning of the term "contribution to capital" and thus, the tax character of the instant payments. In Edwards v. Cuba Railroad Co., the Supreme Court held that money from the Cuban government paid to a railroad to "subsid[ize] up to $6,000 per kilometer" of track laid, "and [which was] used for capital expenditures," was a capital contribution, not income. 268 U.S. 628, 629, 630-31, 45 S.Ct. 614, 69 L.Ed. 1124 (1925); see also Springfield St. Ry. Co. v. United States, 217 Ct.Cl. 89, 577 F.2d 700, 702 (1978). The Supreme Court explained,

In Edwards v. Cuba Railroad Co., the Supreme Court held that money from the Cuban government paid to a railroad to "subsid[ize] up to $6,000 per kilometer" of track laid, "and [which was] used for capital expenditures," was a capital contribution, not income. 268 U.S. 628, 629, 630-31 (1925); see also Springfield St. Ry. Co. v. United States, 577 F.2d 700, 702 (Ct. Cl. 1978). The Supreme Court explained,

Other courts have adopted similar interpretations. See, e.g., AT&T, Inc. v. United States, 629 F.3d 505, 517 (5th Cir. 2011) (describing the CB&Q factors as "mandatory characteristics" and requiring that the property transferred become part of the permanent working capital); Springfield St. Ry. Co. v. United States, 577 F.2d 700, 702-03 (Ct. Cl. 1978).

The CB & Q case merely suggests it is necessary to examine several characteristics of a transfer, and not intent alone, to determine its status as a capital contribution. In Springfield Street Railway Co v United States 217 Ct. Cl. 89, 577 F.2d 700,703 (1978), the Court of Claims pointed out that, in CB & Q the Supreme Court “clearly affirmed the viability of the ‘intent of the transferor’ test. At the same time, however, the Court recognized that more than evidence of a non-shareholder's intent to make a capital contribution is required.”

The CB Q case merely suggests it is necessary to examine several characteristics of a transfer, and not intent alone, to determine its status as a capital contribution. In Springfield Street Railway Co. v. United States, 217 Ct. Cl. 89, 577 F.2d 700, 703 (1978), the Court of Claims pointed out that, in CB Q, the Supreme Court "clearly affirmed the viability of the 'intent of the transferor' test. At the same time, however, the Court recognized that more than evidence of a nonshareholder's intent to make a capital contribution is required."