Codrington v. Commissioner

Board of Tax Appeals

Codrington v. Commissioner

6 B.T.A. 415, 1927 BTA LEXIS 3515

CourtUnited States Board of Tax Appeals

DecidedMarch 5, 1927

DocketDocket No. 4685.

StatusPublished

Cited by2 cases

This text of 6 B.T.A. 415 (Codrington v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Codrington v. Commissioner, 6 B.T.A. 415, 1927 BTA LEXIS 3515 (bta 1927).

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Opinion

[416]*416OPINION.

Smith :

Section 213 of the Revenue Act of 1918, in defining gross income, provides in paragraph (c) the following:

In tlie case of nonresident alien individuals, gross income includes only the gross income from sources within the United States, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, dividends from resident corporations, and including all amounts received (although paid under a contract for the sale of goods or otherwise) representing profits on the manufacture and disposition of goods within the United States.

The Revenue Act of 1918 does not define a resident corporation. It does, however, define a domestic corporation and a foreign corporation. The Commissioner has held that the Canadian Pacific Railway Co. is a resident foreign corporation within the meaning of the Act. He does not, however, contend that the company is “ in its strict sense, a resident corporation of the United States, that is, the Commissioner admits that the legal residence of the Canadian Pacific is Canada, although it has lines and offices situated in the United States.”

If the Commissioner’s contention in this case is correct then every nonresident alien receiving dividends upon the shares of stock of the Canadian Pacific Railway Co. is liable to income tax to the United States in respect of the dividends received, and it is immaterial whether the dividends were received through a fiduciary located within the United States or received directly from the office of the company in Canada. In either case the source of the income would be the interest of the stockholders in the Canadian Pacific Railway Co. The source is not changed by reason of the fact that the income was received through a conduit located in the United States. Appeal of Estate of L. E. McKinnon, 6 B. T. A. 412.

We think that it Avas never the intention of Congress to impose an income tax upon nonresident aliens in respect of income received [417]*417from dividends of a foreign corporation practically all of whose property is located in a foreign country. Upon the evidence of record we are of the opinion that the Canadian Pacific Railway Co. is not a resident corporation of the United States.

Judgment will be entered for the 'petitioner.

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[416]*416OPINION.

Smith :

Section 213 of the Revenue Act of 1918, in defining gross income, provides in paragraph (c) the following:

In tlie case of nonresident alien individuals, gross income includes only the gross income from sources within the United States, including interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, dividends from resident corporations, and including all amounts received (although paid under a contract for the sale of goods or otherwise) representing profits on the manufacture and disposition of goods within the United States.

The Revenue Act of 1918 does not define a resident corporation. It does, however, define a domestic corporation and a foreign corporation. The Commissioner has held that the Canadian Pacific Railway Co. is a resident foreign corporation within the meaning of the Act. He does not, however, contend that the company is “ in its strict sense, a resident corporation of the United States, that is, the Commissioner admits that the legal residence of the Canadian Pacific is Canada, although it has lines and offices situated in the United States.”

If the Commissioner’s contention in this case is correct then every nonresident alien receiving dividends upon the shares of stock of the Canadian Pacific Railway Co. is liable to income tax to the United States in respect of the dividends received, and it is immaterial whether the dividends were received through a fiduciary located within the United States or received directly from the office of the company in Canada. In either case the source of the income would be the interest of the stockholders in the Canadian Pacific Railway Co. The source is not changed by reason of the fact that the income was received through a conduit located in the United States. Appeal of Estate of L. E. McKinnon, 6 B. T. A. 412.

We think that it Avas never the intention of Congress to impose an income tax upon nonresident aliens in respect of income received [417]*417from dividends of a foreign corporation practically all of whose property is located in a foreign country. Upon the evidence of record we are of the opinion that the Canadian Pacific Railway Co. is not a resident corporation of the United States.

Judgment will be entered for the 'petitioner.

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6 B.T.A. 415, 1927 BTA LEXIS 3515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/codrington-v-commissioner-bta-1927.

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