GREEN, Judge.
The plaintiffs bring this suit as executors of the estate of Herman H. Hoffman, deceased, to recover $21,183.89 taxes alleged to have been unlawfully collected from the said Herman H. Hoffman, or his estate, for the year 1917 upon dividends received from the Democrata Cananea Sonora Copper Company.
The parties have stipulated as to the facts, and those material to the decision of the ease will be hereinafter stated.
The Democrata Cananea Sonora Copper Company was organized in 1905. On March 1,1913, it had an operating loss of $211,185.84, and the Commissioner found the value of its ore reserves at that date to be $1,059,101. The value of the ore reserves at that date is not stated in the stipulation, but the value so fixed by the Commissioner was a very large increase over the cost of the ore deposits, and the amount thereof can be computed approximately from the other facts stated in the stipulation. It is not necessary, however, that this computation be made, as it is not disputed that such increase was more than sufficient to cover any dividend distributions which are in controversy herein.
[285]*285In 1916 the eopper company made three dividends aggregating $860,991, and in 1917 a dividend of $286,997. There is no controversy over the taxation of the 1916 dividends, it being conceded that more than sufficient profits had been earned since March 1, 1913, to cover the amount thereof. These dividends, however, will have to bo considered in determining in connection with items of profit and loss the amount which could be distributed free from tax in 1917. Herman H. Hoffman, of whose estate the plaintiffs are executors as above stated, held 84 per cent, of the stock of this copper company and received dividends accordingly. He filed an income tax return for the year 1917 showing a tax liability of $27,224.78, which was paid. There were further assessments, claims in abatement, payments, and refunds until finah ly, in the year 1926, there had been paid by the estate on the taxes for 1917 and not refunded the sum of $84,509.63. Plaintiffs filed an application for a refund of part of this sum, which, having been denied, was followed by this suit. The basic facts upon which the claim is based are as follows:
On March 12, 1917, the copper company made a distribution to its stockholders of $286,997, to which reference has already been made. On the basis of 84 per cent, of thé capital stock held by Herman H. Hoffman, he received from the distribution of this dividend the sum of $239,610. The plaintiffs concede that at the time of the payment of the 1917 dividend the eopper company had 1917 earnings available for dividends in the sum of $18,025.94, and on this basis $15,141.-59 of the amount received by Hoffman was paid out of 1917 earnings available for dividends and was taxable. The balance or remainder of the dividend received by Hoffman, plaintiffs contend, was not taxable. The Commissioner, however, taxed the entire balance of $224,468.41 at the rates in effect for 1916.
The fundamental issue between the parties is whether this action of the Commissioner was in accordance with law.
Some further explanation is necessary in order that the contentions of the respective parties may be understood. Counsel for plaintiffs asserts that a distribution out of an increase in the value of the property of the corporation which accrued prior to March 1, 1913, is exempt from tax, and all through his argument refers to .the increase in value of the property of the copper company as having “accrued” prior to March 1, 1913, or as “realized appreciation” before that date, and submits a computation by which he undertakes to show that “$211,139.03 of the dividend paid on March 12, 1917, was out of realized appreciation which had accrued prior to March 1, 1913, and was, therefore, nontaxable in the hands of the stockholders.”
Counsel for defendant does not dispute the proposition that an increase in value that had accrued prior to March 1, 1913, may be distributed free of tax to the stockholders, but contends that the increase in value of the property of the copper company did not accrue and was not accrued prior to March 1, 1913, and was not actually realized until after that date. In other words, the contention on behalf of the defendant is that the increase in value of the property of the company merely occurred or came into existence prior to March 1, 1913, and did not become fixed or realized until the company after that date sold a portion of its property in the course of its operations. Until then and only then, as counsel for defendant contends, did this increase in value become “accrued.” It will be observed that the case turns on the proper moaning and construction to be given the word “accrued” as used in the statutes applicable to the case, the consideration of which will next be taken up.
The Commissioner assessed the tax in controversy under the 1916 and 1917 Revenue Acts. Both of these acts (39 Stat. 757, § 2(a); 40 Stat. 337, § 31(a) made exempt from the individual income tax dividends out of any earnings or profits which “accrued” prior to March 1, 1913, and, as before stated, it is conceded on behalf of the defendant that, if the increase in value “accrued” prior to that date, dividends made therefrom would be exempt. As a general rule, the word “accrued,” when used in statutes imposing an income tax, means “fixed” or “realized.” Under the circumstances of this case it is evident that no profits could be “realized” until the ore had been mined and sold. In fact, until the sale occurred, it was uncertain whether there would ever be any profit on the ore. A great depreciation might occur, such as has taken place with reference to copper within a very recent period, which would make the value of the ore reserves less instead of greater than cost, and, when sold, instead of realizing a profit, there would be a loss. In this ease the profit did not become fixed until after March 1, 1913, for no profit was realized until after that date.
In Allen v. Armstrong, 58 App. Div. 427, 68 N. Y. S. 1079,1081, it was said-: “Profits have accrued when they are paid or, when the [286]*286right to enforce payment presently exists. Profits may not be said to have accrued until they have become fixed and payable,” and therefore a .contract requiring the payment of a certain sum when profits have “accrued” means when they have become fixed or payable.
But the profits on the ore in the mine did not become fixed until the ore was sold, and, no profit 'being realized until that time, the profit did not accrue until after the sale, if we give the word its ordinary significance and meaning.
That a mere increase in value is not a gain or profit taxable as income under our revenue laws has been clearly established by the decisions of the Supreme Court. In Eisner v. Macomber, 252 U. S. 189, 40 S. Ct. 189, 193,.64 L. Ed. 521, 9 A. L. R. 1570, the court explained what was meant by income and what gains and profits are subject to tax as income under the Sixteenth Amendment. In the opinion on this case the court said: “Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital; however invested or employed. * * * ”
Stating the matter conversely, “a growth or increment of value in the investment” is not income, neither is it a gain “accruing” to capital. A gain- or profit, as distinguished from an increase in value, is “something of exchangeable value proceeding from the property, severed from the capital”; that is, it must be separate from the capital. If an “increment of value” in the investment is not income, then an increase in value is not income, for increment and increase mean the same thing as applied to the subject now under consideration.
Lynch v. Turrish, 247 U. S. 221, 38 S. Ct. 537, 62 L. Ed. 1087, and Lynch v. Hornby, 247 U. S. 339, 38 S. Ct. 543, 544, 62 L. Ed. 1149, are cited as authorities for plaintiffs’ position. But we think what was said by the Supreme Court in the case of Lynch v. Turrish, supra, has no application to the one at bar. In that case it appeared that a corporation having property which it had acquired prior to March 1, 1913, and which had increased in value up to that date, sold it and distributed the proceeds among its stockholders. It was held that this transaction was a distribution of capital and the gain was not taxable. In the instant case the property originally acquired was not sold until after it had been converted by mining operations which resulted in a profit over and above the March 1,1913, valuation. From the proceeds in the transaction, including the operating profit, ordinary dividends were declared.
In Lynch v. Hornby, supra, a dividend distribution made out of an increase prior to March 1, 1913, in the value of the property of a corporation was held to be taxable, and the court distinguished the Turrish Case, saying that that ease was one “where the distribution in question was a single and final dividend received by Turrish from the Payette Company in liquidation of the entire assets and business of the company and a return to him of the value of his stock upon the surrender of his entire interest in the company.” Ho such case is before us for consideration, and we therefore hold that the Turrish Case is not controlling.
In Lynch v. Hornby, supra, the Supreme Court was considering the taxation of corporate dividends made under the 1913 act and held that under its provisions net taxable income includes “ * * * all dividends declared and paid in the ordinary course of business by a corporation to its stockholders, after the taking effect of'the act (March 1, 1913), whether from current earnings, or from the accumulated surplus made up of past earnings or increase in value of corporate assets, notwithstanding it accrued to the corporation in whole or in part prior to March 1, 1913.”
Counsel for plaintiffs quote from the same decision: “In the more recent Income Tax Acts, provisions have been inserted for the purpose of excluding from the effect of the tax any dividends declared out of earnings or profits that accrued prior to March 1, 1913. This originated with the act of September 8,1916, and has been continued in the act of October 3, 1917.”
As the dividends in controversy in' that case appear to have been paid in part at least from an increase in the value of the property of the corporation occurring prior to March 1, 1913, it is contended on the part of plaintiffs that the statement last quoted above from the opinion shows that the court held, in effect, that under the 1916 and 1917 acts a distribution out of any increase in value of property occurring prior to that date which resulted in a gain or a profit realized after that date was not taxable under those acts.
There is nothing in the opinion of the court that supports such a conclusion. The question to be decided by the court was whether Congress might lawfully tax divi[287]*287dends received in the ordinary course by a shareholder from a corporation, even though they had been derived from the surplus of corporate assets existing before the income tax amendment, and it held that dividends made after March 1, 1913, wore taxable, “whether from current'earnings, or from the accumulated surplus made up of past earnings or increase in value of corporate assets, notwithstanding it [they] accrued to the corporation in whole or in part prior to March 1, 1913.” In order that this sweeping statement might not be understood to apply to every case under the acts of 1916 and 1917, it is further stated in the opinion that these acts exclude “from the effect of the tax any dividends declared out of earnings or profits that aeerued prior to March 1, 1913” (italics ours); but there is no intimation that the 1916 or 1917 act made any change with reference to a mere increase in value. The earnings and profits excluded from the operation of the 19.16 and 1917 acts wore those which had “aeerued prior to March 1,1913.” Even if we concede that an increase in value is a profit, the earnings and profits which we are considering in this ease had not been received or realized until after that date. Moreover, the 1916 and 1917 acts do not mention “increase in value of property.” This fact and the further fact that the Supreme Court did not refer to “increase in value” as being affected by the 1916 and 1917 acts show that Lynch v. Hornby, supra, instead of being an authority in favor of plaintiffs’ position, is against it, and, following the reasoning above set forth, we conclude that under the 1913, 1916, and 1917 acts all of the dividend received by Hoffman was taxable. This conclusion, however, does not dispose of the ease.
Counsel for plaintiffs calls attention to article 623 of Regulations 74 as follows: “Any distribution by a corporation out of earnings or profits accumulated prior to March 1, 1913, or out of increase in value of property accrued prior to March 1, 1913 (whether or-not realized by sale or other disposition, and, if realized, whether prior to or on or after March 1,1913), is not a dividend within the meaning of Title I [of the 1921 act]” — and also to other regulations made by the Commissioner containing a similar rule and making it applicable to all of the Revenue Acts from 1916 to 1926, inclusive.
Under these regulations any part of the dividend in controversy which was paid “out of increase in value of property aeerued pri- or to March 1, 1913,” would not be taxable, even though the increase in value had not resulted in a realized profit until after that date.
We have been furnished with no argument in support of this regulation, which seems to have been followed by the Bureau for a long period. Counsel for plaintiffs apparently considers that the regulation by reason of long-continued application has come to have the force of law, and counsel for defendant, in order to support its ease, is obliged to make an argument along lines utterly inconsistent with the regulation.
If this regulation finds any support in the law, it is contained in section 201 (b) of the Revenue Act of 1921 (42 Stat. 228), which is set out below.1 In the absence of argument, we infer that the Bureau of Internal Revenue considered that the regulation carried out the purpose and intent of the provision of the 1921 statute with reference to “increase in value of property” and was retroactive in its effect. The regulation therefore gives rise to two questions: First, whether the provisions of the 1921 statute under consideration are susceptible of the construction given in the regulation; and, if so, second, whether its provisions are retroactive.
To determine these questions it becomes necessary to analyze this provision and find the intent and purpose of Congress in enacting it.
Section 201 of the Revenue Act of 1921 relates. to dividends, and subdivision (b) thereof (now under consideration) states what dividends shall be exempt. The provision is administrative in its nature, and declares that “any earnings or profits accumulated or increase in value of property accrued prior to March 1, 1913, may be distributed exempt from the tax. * * * ” Here again the word “accrued” is used, which, as we have heretofore shown, usually means “realized” or “fixed,” and it might be so construed here if the context did not in[288]*288dicate otherwise. But it will be observed that “earnings or profits accumulated” are included in the same clause and the same rule applied thereto when such accumulation took place prior to March 1,1913; also that there is a further proviso to the effect that a distribution of such profits or increase in value can only be made “after * * * profits accumulated since February 28, 1913,” have been distributed. But an increase in value that had been realized would become a part of accumulated profits unless absorbed by a deficit. If we construe “accrued” as meaning “fixed” or “realized” in this provision, there would be no necessity to insert the words “increase in value of property accrued,” for such increase would be included in the words “profits accumulated.” We need therefore to look for some other meaning which will be consistent with the remainder of the provision. The word “accrue” sometimes means “to arise,” and “accrued”, sometimes means “has arisen” or “come into existence.” If given this meaning, the language used in the statute is not confused, but harmonious; otherwise it is .conflicting and inappropriate.
In determining the meaning to .be given these words as# intended by Congress, we are assisted by the statement of the managers on the part of the House explaining the conference report on the 1921 bill.
As originally passed by the House, section 201 (b) merely made exempt from taxation a distribution out of “any earnings or profits- accumulated prior to March 1,1913.” The Senate, by amendment No. 18, inserted, after the words “any earnings or profits accumulated,” the words “or increase in value of property accrued.” The managers on the part of the House reported back to thát body a statement with reference to this amendment which is set out in a note below.2 It will be observed from this statement that this amendment was intended to remove a “doubt in the existing law as to the right of a corporation to distribute tax free the increase in value of property accrued prior to March 1, 1913,” but, if it is held that the word “accrued” as used in the amendment means “fixed” or “realized,” no doubt would be removed, but a confusion would be added. Moreover, the statement calls attention to the provision in the amendment that “such increase may be distributed to the stockholders free from tax after the earnings and profits accumulated since February 28, 1913, have been distributed.” As stated above, if we hold that the word “accrued” is used in the 1921 act as meaning “fixed” or “realized,” the whole of the amendment becomes meaningless, for increase in value that was realized after February 28,1913, would be a part of “profits accumulated.” It would seem that both House and Senate intended to distinguish an “increase in value of property accrued prior to March 1,1913,” from “profits accumulated,” and in the 1921 act used the word “accrued” as meaning “occurred” or “has arisen” or “has come into existence.”
There is grave doubt, to say the least, as to whether the 1921 act standing by itself and alone should be construed as being retroactive, and, were it not for the regulations of the Bureau, which have been in force so long, we would have grave doubts as to whether it should be so construed. As bearing upon this question it will be noted that the provision under consideration is administrative and that the House managers stated that the amendment inserting the words “or increase in value of property accrued” was inserted to remove “a doubt in the existing law.” We think this might possibly be construed to indicate a purpose and intent that in administering the provision it should be applied to all cases, regardless of whether they arose before or after the enactment of the 1921 statute. At all events, it was so applied by the -Bureau in accordance with one of the regulations which we have hereinabove set out.
This construction of the 1921 act, as before stated, has been followed by the Bureau of Internal Revenue almost uniformly for a long period and applied to the preceding taxing statutes. In Brewster v. Gage, 280 U. S. 327, 50 S. Ct. 115, 117, 74 L. Ed. 457, it is said; “It is the settled rule that the practical interpretation of an ambiguous or doubtful statute that has been acted upon by officials charged with its administration will not be disturbed except for weighty reasons. Logan v. Davis, 233 U. S. 613, 627, 34 S. Ct. 685, 58 L. Ed. 1121.”
And also: “The substantial re-enactment in later acts of the provision theretofore eonstrued by the Department is persuasive evidence of legislative approval of the regulation. National Lead Co. v. United States, 252 U. S. 140, 146, 40 S. Ct. 237, 64 L. Ed. 496. * * * The subsequent legislation confirmed and carried forward the policy evidenced by the earlier enactments as inter[289]*289preted in the regulations promulgated under them.”
The provision under consideration has been re-enacted by Congress and continued down to the present time without substantial change.
Taking all of the matters stated above into consideration, we conclude that the Bureau regulation which we have hereinbefore set out should now he treated as expressing the intent of Congress and the proper interpretation of the law as applied to the instant ease.
Having determined that an increase in value which came into existence prior to March 1, 1913, can be distributed free of tax, it next becomes necessary to determine whether in the instant case there was any distribution out of an increase in the value of tho corporation’s properly, which occurred prior to that date, and, if so, the amoimt thereof.
In order to find whether any part of the dividend in question had boon distributed from the increase in value of the corporAto property, it becomes necessary to determine the-pro fits and losses of the company for each year after March 1, 1913. The stipulation does not state what these profits and losses were, but it is merely a mathematical proposition to compute them from the figures given in the stipulation. The method, where the operating profits exceed the amount of all depletion, is as follows:
The operating profit for 1913, after depletion on cost, is stipulated, and also the amount of depletion on cost.' If these two items are added, it gives the operating profit before depletion on cost. Then as the depletion based on the March 1,1913, value is stipulated, we have only to deduct the amount of this depletion to ascertain the net profit on the basis of the March 1, 1913, value.
In case there is an operating loss or deficit, or the depletion exceeds the amount of operating profit, the principle is the same, hut the calculation necessarily different. In a note below3 we present the computation of the net profits and losses of the copper company for each year on the basis of the March 1, 1913, valuation. This does not determine whether any part of the dividend was paid out of. tho increase in tho value of the property of the corporation; but, so far as it goes, we think its accuracy will not be disputed.
Taking this computation as a basis, we shall undertake to apply the law thereto in order to determine the ultimate question in the case.
The parties agree that $18,025.94 of the 1917 dividend, which is in controversy, was taxable. This was the net operating profit of January 1,1917, to March 12 of the same year, after deducting the depletion on the March 1,1913, valuation, as shown by the computation, and is taxable because it was earned during the year that the dividend was made. In the year 1916, the net operating profit, after deducting depletion on March 1, [290]*2901913, value, exceeded the dividends made that year by $197,334.79. Under the 1917 act, the dividend made in that year (1917) was “deemed to have been made from the most recently accumulated undivided profits or surplus.” Revenue Act 1916, § 31(b), as added by Revenue Act 1917, § 1211 (40 Stat. 336). In the ease of Edwards v. Douglas, 269 U. S. 204, 46 S. Ct. 85, 89, 70 L. Ed. 235, undivided profits are distinguished from surplus, and it is held in effect that the meaning of the term “undivided profits,” as used by Congress, is “current undistributed earnings,” and it is also said in the same ease that the purpose of the act was to “treat as a unit the profits of the whole tax year.” This $197,334.79, which remained over out of the net profits for the year 1916 after the dividends of that year had been distributed, was therefore undivided profits within the meaning of the law and most recently accumulated. It may be claimed that there were deficits prior to 1916 which must be taken into consideration. But this point was disposed of by the ease of Blair v. United States, 63 Ct. Cl. 193 (certiorari denied), wherein it was held in effect that if a corporation earned sufficient to pay the dividend in the year in whieh it was made the fact that it had prior losses would not affect the taxability of the dividend. It is true that in the instant ease the dividend was actually paid in a subsequent year, but under the law the sum of $197,334.79' must be deemed to have been distributed out of the 1916 profits.
The question still remains as to whether the remainder of the dividend above the sums of $18,025.94 and $197,334.79 was taxable. These two sums exhausted the profits made in 1917 and also 1916 whieh had not already been distributed in dividends. If there were any other profits out of which the dividend in controversy might have been distributed, they must be found in the years between March 1, 1913, and January 1, 1916. It becomes necessary, therefore, to ascertain what disposition was made of any profits earned during thht period.
The table which is found in note 3 shows that after March 1, 1913, to December 31, 1913, there was a net profit of $49,312.94. For the period from January 1, 1914, to December 31, 1914, there was an operating deficit upon the basis of cost depletion of $27,781.70, and a deficit on the basis of March 1, 1913, value of $74,181.41. The year 1915 showed an operating profit after cost depletion, but an operating loss on 1913 value. We have already shown that, while these losses exceeded the operating profit in 1913, that did not prevent, under the statute, the taxability of the-operating profits of' 1916 and 1917. But the losses whieh occurred in 1914 and 1915 exceeded the profits . made in 1913, and the question arises whether the remainder or any part of the dividend can be taken out of the profits made in 1913, notwithstanding the losses sustained in 1914 and 1915 exceeded the amount of these profits. We think not. It appears to us that the profits of- 1913 cannot be said to have been “recently accumulated” when losses occurred for the two succeeding years whieh more than exceeded these profits. If the profit of 1913 had been distributed in that year, we think it would have been taxable, notwithstanding there was an operating deficit prior to March 1 of that year. But it was not distributed. Nothing was done with reference to it, and subsequent losses more than absorbed it, with the result that it could not be said that it was distributed as part of a dividend made'in some subsequent year. Moreover, we see no reason why the profits or losses for 1915 should be computed on the basis of cost and those of 1916 and 1917 computed on the basis of March 1, 1913, valuation. But a more conclusive reason, as we think, for not giving this construction to the statute, is that it would have the effect of making profits of any year after March 1, 1913, applicable to dividends later on, reg'ardless of the fact that losses greater in amount had subsequently occurred. Under such a construction, a dividend distributed after March 1, 1913, would be taxable in so far as there were earnings and profits in the year distributed and any of the prior years sufficient to pay it. If Congress had intended this result, we think it would have been so Stated in language more brief than that used in the statute and more clearly showing such a meaning.
' In accordance with the views above expressed, we find that out of the 1917 dividend the amount subject to tax is the sum of the two items of $18,025.94 and $197,-334.79, a total of $215,360.73, and we think that this is all that is subject to tax because we consider the remainder ($71,636.27) was paid out of the “increase in value” of the property of the corporation prior to March 1,1913. Such being the ease, under the statute and the Treasury regulations construing it, this last-named sum was exempt from taxation. The term “realized appreciation” has often been referred to in the argument upon the ease. The respective counsel differ very much as to its application and precise meaning, but we have no occasion to define this [291]*291expression or determine its application, for the statute does not use -these words. It might he said, however, that, if it means in this ease the same as the increase in value of the property which occurred before March 1,1913, then under the rules laid down above it would be exempt, and it will bo noticed that the portion of the dividend which we have held subject to taxation is a part of the profits which was over and above the March 1, 1913, valuation. Our attention has been called to- the fact that the operating deficit for 1914 on the basis of cost was $27,781.70. See table, note 3. This sum subtracted from the net profit of 1913 after depletion on Mareh 1, 1913, value, which is $49^312.94, leaves $21,531.24. In other words, the operating profit from Mareh 1, 1913, to the end of the year on the basis of the March 1, 1913, value, is $21,531.24 greater than the operating loss in 1914, computed on the basis of cost. If this last-named sum be also held subject to taxation, then the amount exempt should bo reduced accordingly. But the operating deficit computed on a cost basis was not the real operating loss or deficit. On the basis of March 1, 1913, value the net deficit for 1914 was $74,181.41, which, instead of being $21,531.24 less than the net profit of 1913, greatly exceeded and absorbed it. Moreover, if the operating profit is computed on the basis of cost in order to find profits which are called “realized appreciation,” and considered taxable, we think this necessarily includes a part of tho increase in value before March 1, 1913, in the amount that may bo taxed.
In Edwards v. Douglas, supra, it was said that “to accomplish the purpose of Congress it was necessary that the dividend he deemed to have been paid out of the available profits or earnings of the most recent year or years.” But we do not think that earnings were “available” when wiped out by subsequent deficits. We conclude therefore that to the extent of the two sums mentioned as undivided profits in 1916 and 1917 the dividend was subject to taxation. The remainder of $71,636.27 was exempt.
In a reply argument the plaintiffs insist that the Blair Case, supra, has no application, because the corporation which had a surplus on March 1, 1913, also had a surplus on December 31, 1918, sufficient to cover the amount of dividend, but the computation from which this surplus is derived starts with a surplus on March 1, 1913, of $106,460.51. Tho table included in the reply argument of counsel shows that in the Blair Case the losses after March 1, 1913, exceeded the gains for the same period by over $20,000. In the instant case, when we include the increase in value, tho company had a surplus on Mareh 1, 1913, of over half a million dollars, and, using the method for which counsel contends, there would have been in 1917 a surplus very much larger than the amount of the dividend. But in neither case does this fact have any bearing on the point in issue. The source of the dividend is fixed by the statute, and in this connection it will be noted that the distributed profits which we hold to be taxable were over and above the Mareh 1, 1913, valuation, so that, although an increase of value was realized, no part of the increase in value is included and taxed.
Judgment will he withheld with leave to respective parties to submit a computation of the proper tax and amount to- be refunded in accordance with the conclusions stated above. If the parties agree with reference to the result of the computation, judgment will be entered for the amount so- fixed; otherwise the court will have the computation ma'de and the judgment entered.
BOOTH, Chief Justice, and WHALEY and WILLIAMS, Judges, concur.