CHASE, Circuit Judge.
In 1916, the plaintiff owned thirty shares of the capital stock of a New Jersey corporation. He had paid $1,875 for them. While section 2 (a) of the Revenue Act of 1916 (39 [840]*840Stat. 756, 757) was in effect, the corporation declared a stock dividend of 2,00 per cent, and transferred in cash to capital account from surplus earned since February 28, 1913, the par value of the dividend shares. The plaintiff received sixty shares as a dividend on his stock. He reported such dividend as taxable income in the amount of 16,00o for that year in accordance with the statute above mentioned and regulations thereunder and paid the tax.
In 1918, the plaintiff sold his ninety shares of stock for $5,625. He reported in his return for that year a loss on the sale computed by adding the original cost of the thirty shares, $1,875, to the par value of the dividend shares, $6,000, and subtracting the sale price, $5,625, from the total. In so doing he complied with sections 201 (a) and (e) of the Revenue Act of 1918 and T. D. 45-, Art. 1546.
On March 8,1920, the decision in the case of Eisner v. Macomber, 252 U. S. 189, 40 S. Ct. 189, 64 L. Ed. 521, 9 A. L. R. 1570, was handed down. It was then known that stock dividends were not taxable income, but it was not until the passage of the Revenue Act of 1921 (42 Stat. 227), that the provisions of the 1918 act taxing them as such were repealed. In the meantime, after the decision in Eisner v. Maeomber, supra, the regulations of the Treasury Department relative to the taxation of such dividends as income were revoked, and article 1547 of Reg. 45 was amended to read as follows:
.“Art. 1547. Sale of sioch received as dividend. — Stock received as a dividend does not constitute taxable income to the stockholder, but any profit derived by the stockholder from the sale of such stock is taxable income to him. For the purpose of ascertaining the gain or loss derived from the sale of such stock, or from the sale of the stock with respect to which it is issued, the cost * * * of both the old and new shares is tó be determined in accordance with the following rules:
“(1) Where the stock issued as a dividend is all of substantially the same character or preference as the stock upon which the stock dividend is paid, the cost of each share of both the old and new stock will be the quotient of the cost, * * * of the old shares of stock divided by the total number of the old and new shares.”
The appellant never filed any claim for refund of the tax paid by him on the dividend shares he received in 1916. In 1923, however, the tax due on his return for 1918 was redetermined in accordance with the regulations above quoted; the loss on the sale of the stock shown by the appellant in his return was disallowed and a deficiency assessed on the basis of a profit of $3,750, which increased the appellant’s taxable income by that amount. The appellant,'after unsuccessful attempts to have the deficiency redetermined in his favor, paid the additional tax of $2,151.17 under protest and brought this suit to recover it.
The basis of his claim is that, since Congress intended to tax stock dividends as income when the Revenue Act of 1918 was passed and should not be presumed, in the absence of a clear expression to that effect, to have intended double taxation, United States v. Supplec-Biddle Hardware Co., 265 U. S. 189, 44 S. Ct. 546, 68 L. Ed. 970, it did not intend to tax the entire sale price of dividend stock when sold as a gain derived from the sale; and, further that the intent of Congress must be determined in the light of existing conditions when the statute was passed and before the decision in Eisner v. Macomber, supra.
The pertinent portions of the Revenue Act of 1918 are (Revenue Act of 1918 [40 Stat. 1057, 1059, 1060,1065]):
“Sec. 213. That for the purposes of tins title (except as otherwise provided in section 233) the term ‘gross income’—
“(a) Includes gains, profits, and income derived from salaries, wages, or compensation for personal service (including in the ease of the President of the-United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia, the compensation received as such), of whatever kind and in whatever form paid, or-from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. * * *
“See. 201. (a) That the term ‘dividend’ when used in this title (except in paragraph [10] of subdivision [a] of section 234) means (1) any distribution made by a corporation, other than a personal service corporation, to its shareholders or members, whether in cash or in other property or in stock of the corporation, out of its earnings or profits accumulated since February 28,1913. * * *
[841]*841“(e) A dividend paid in stoek of the corporation shall be considered income to the amount of the earnings or profits distributed. Amounts distributed in the liquidation of a corporation shall he treated as payments in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distributee as other gains or profits. * * *
“See. 202. (a) That for the purpose of ascertaining the gain derived or loss sustained from the sale ox other disposition of property, real, personal, or mixed, the basis shall be—
“(1) In the ease of property acquired before March 1, 1913; * *' *
“(2) In the case of property acquired on or after that date, the cost thereof; or the inventory value, if the inventory is made in accordance with section 203.”
That the appellant is right in saying that Congress intended to tax stock dividends as income when the above statute was passed is obvious. We agree with him also that what Congress intended to tax when the 1918' act was passed was not changed by the subsequent decision of the Supreme Court. That decision merely went to the power of Congress to tax stoek dividends as income. In carrying out its general purpose to include all income in gross income for the purpose of determining taxable income, Heiner v. Colonial Trust Co., 275 U. S. 232, 48 S. Ct. 65, 72 L. Ed. 256, „it enacted section 201 (a), (c) of the 1918 act. It exceeded its power, not in taxing income, but in including, as a part of the basis for the computation of the income tax, stoek dividends which the Supreme Court later held were not income and so not taxable as such.
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CHASE, Circuit Judge.
In 1916, the plaintiff owned thirty shares of the capital stock of a New Jersey corporation. He had paid $1,875 for them. While section 2 (a) of the Revenue Act of 1916 (39 [840]*840Stat. 756, 757) was in effect, the corporation declared a stock dividend of 2,00 per cent, and transferred in cash to capital account from surplus earned since February 28, 1913, the par value of the dividend shares. The plaintiff received sixty shares as a dividend on his stock. He reported such dividend as taxable income in the amount of 16,00o for that year in accordance with the statute above mentioned and regulations thereunder and paid the tax.
In 1918, the plaintiff sold his ninety shares of stock for $5,625. He reported in his return for that year a loss on the sale computed by adding the original cost of the thirty shares, $1,875, to the par value of the dividend shares, $6,000, and subtracting the sale price, $5,625, from the total. In so doing he complied with sections 201 (a) and (e) of the Revenue Act of 1918 and T. D. 45-, Art. 1546.
On March 8,1920, the decision in the case of Eisner v. Macomber, 252 U. S. 189, 40 S. Ct. 189, 64 L. Ed. 521, 9 A. L. R. 1570, was handed down. It was then known that stock dividends were not taxable income, but it was not until the passage of the Revenue Act of 1921 (42 Stat. 227), that the provisions of the 1918 act taxing them as such were repealed. In the meantime, after the decision in Eisner v. Maeomber, supra, the regulations of the Treasury Department relative to the taxation of such dividends as income were revoked, and article 1547 of Reg. 45 was amended to read as follows:
.“Art. 1547. Sale of sioch received as dividend. — Stock received as a dividend does not constitute taxable income to the stockholder, but any profit derived by the stockholder from the sale of such stock is taxable income to him. For the purpose of ascertaining the gain or loss derived from the sale of such stock, or from the sale of the stock with respect to which it is issued, the cost * * * of both the old and new shares is tó be determined in accordance with the following rules:
“(1) Where the stock issued as a dividend is all of substantially the same character or preference as the stock upon which the stock dividend is paid, the cost of each share of both the old and new stock will be the quotient of the cost, * * * of the old shares of stock divided by the total number of the old and new shares.”
The appellant never filed any claim for refund of the tax paid by him on the dividend shares he received in 1916. In 1923, however, the tax due on his return for 1918 was redetermined in accordance with the regulations above quoted; the loss on the sale of the stock shown by the appellant in his return was disallowed and a deficiency assessed on the basis of a profit of $3,750, which increased the appellant’s taxable income by that amount. The appellant,'after unsuccessful attempts to have the deficiency redetermined in his favor, paid the additional tax of $2,151.17 under protest and brought this suit to recover it.
The basis of his claim is that, since Congress intended to tax stock dividends as income when the Revenue Act of 1918 was passed and should not be presumed, in the absence of a clear expression to that effect, to have intended double taxation, United States v. Supplec-Biddle Hardware Co., 265 U. S. 189, 44 S. Ct. 546, 68 L. Ed. 970, it did not intend to tax the entire sale price of dividend stock when sold as a gain derived from the sale; and, further that the intent of Congress must be determined in the light of existing conditions when the statute was passed and before the decision in Eisner v. Macomber, supra.
The pertinent portions of the Revenue Act of 1918 are (Revenue Act of 1918 [40 Stat. 1057, 1059, 1060,1065]):
“Sec. 213. That for the purposes of tins title (except as otherwise provided in section 233) the term ‘gross income’—
“(a) Includes gains, profits, and income derived from salaries, wages, or compensation for personal service (including in the ease of the President of the-United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia, the compensation received as such), of whatever kind and in whatever form paid, or-from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. * * *
“See. 201. (a) That the term ‘dividend’ when used in this title (except in paragraph [10] of subdivision [a] of section 234) means (1) any distribution made by a corporation, other than a personal service corporation, to its shareholders or members, whether in cash or in other property or in stock of the corporation, out of its earnings or profits accumulated since February 28,1913. * * *
[841]*841“(e) A dividend paid in stoek of the corporation shall be considered income to the amount of the earnings or profits distributed. Amounts distributed in the liquidation of a corporation shall he treated as payments in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distributee as other gains or profits. * * *
“See. 202. (a) That for the purpose of ascertaining the gain derived or loss sustained from the sale ox other disposition of property, real, personal, or mixed, the basis shall be—
“(1) In the ease of property acquired before March 1, 1913; * *' *
“(2) In the case of property acquired on or after that date, the cost thereof; or the inventory value, if the inventory is made in accordance with section 203.”
That the appellant is right in saying that Congress intended to tax stock dividends as income when the above statute was passed is obvious. We agree with him also that what Congress intended to tax when the 1918' act was passed was not changed by the subsequent decision of the Supreme Court. That decision merely went to the power of Congress to tax stoek dividends as income. In carrying out its general purpose to include all income in gross income for the purpose of determining taxable income, Heiner v. Colonial Trust Co., 275 U. S. 232, 48 S. Ct. 65, 72 L. Ed. 256, „it enacted section 201 (a), (c) of the 1918 act. It exceeded its power, not in taxing income, but in including, as a part of the basis for the computation of the income tax, stoek dividends which the Supreme Court later held were not income and so not taxable as such. However, the fact that Congress plainly intended to include all income in the base and to put stoek dividends into it as income must be considered in connection with the intent of Congress, expressed with equal clarity, to include in the same base “ * * * gains, profits * * * from * * * sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in sueh property; * * * or gains or profits and income derived from any source whatever. * * *” Section 213 (a).
It does not necessarily follow that, in giving effect to the intent of Congress to tax dividend stoek as income and to tax gains and profits derived from the sale of all property which, of course, included all shares of stock, whether dividend stoek or not, there would be any double taxation and so be necessary to impute to Congress any intent to impose double taxation upon any one. These two taxes would not be based even in part upon the same economic change in the taxpayer’s situation unless that which was taxed as income was also included in that which was taxed as the gain or profit derived from the sale. Whether or not it was included in the latter depended merely upon what factors were given effect in computing the gain or profit. Without double taxation, there might have been an additional taxable gain derived from the sale of dividend stoek, if the sale price was high enough, even when dividend stock was taxed as income and its valuation for that tax deducted as its cost in computing the gain on sale.
So long as stock dividends were considered income, it was reasonable and just to provide, as the Treasury regulations then did, that, when dividend stoek was sold the gain or loss on the sale should bo determined by taking as its cost “the valuation at which it was returnable as income” for taxation purposes. T. D. 45, art. 1546 (3). This method gave effect to the part of the 1918 act which taxed gains on sales without including in the gain so taxed that part of the value which had been otherwise included in gross income for purposes of taxation. The tax on gains from sales was unaffected as a lawful tax by the decision in Eisner v. Macomber. The 1938 act taxed actual gains from sales Horn °the time it became effective and while it remained in fox'ce whether stock dividends were taxable as income or not. The decision as to the latter did no more, so far as any issue here is affected, than to require a change in the concept of cost to the owner in computing the gain or loss on the sale of dividend stoek in order to determine whether or not there had been any gain. The statute did not undertake to do that, but imposed the tax upon whatever gain was derived from the sale. Before the decision in Eisner v. Macomber, supra, it was considered that the recipient of dividend stock received income when he got the stoek. He realized a profit at that time and paid a tax upon it. While this theory prevailed, it could not be said that when he sold the stoek he derived any gain from the sale except when he received something in excess of the income he had already received. He could not make the same profit twiee. So, while sale gains were taxed under the statute, only this excess was taxed as a gain under the regulations. But, when it became neeessary to take the view that the recipient received no income when he got dividend stoek, it became apparent that, if and when ho sold that stock, all that he received over and above what the stock had actually cost him was not only his profit, just [842]*842as it always had been, but that sneh profit was derived wholly from the sale and realized only then. Where before it was possible to obtain what was treated as a profit for purposes of taxation both when the dividend stock was received and when it was sold, if the sale price exceeded the valuation at which the stock had' been returned for taxation as of the time it was received, after Eisner v. Macomber, supra, there was but one taxable change in the taxpayer’s situation as a result of the receipt and sale of dividend stock. Other than to this extent the decision in Eisner v. Macomber, supra, left the tax on gains from the sale of shares of stock untouched. The intent of Congress to tax such gains was clear from the passage of the statute. What are in fact such gains was made clear by what follows from the decision in Eisner v. Macomber, supra.
That the plaintiff has been taxed on a gain derived from the sale of his stock gives him no just cause for complaint if the computation of the gain was correct, and we do not understand that he questions the computation itself. He had ample time to claim a refund after he knew the tax he had paid on his dividend stock was unlawfully collected, and yet did not see fit to do that.
Judgment affirmed.