Supreme Court of the United States, 1930

Cooper v. United States

Supreme Court of the United States · Decided February 24, 1930 · McReynolds

280 U.S. 409; 50 S. Ct. 164; 74 L. Ed. 516; 1930 U.S. LEXIS 761; 1 C.B. 272; 8 A.F.T.R. (P-H) 10270; 2 U.S. Tax Cas. (CCH) 486 (United States Reports)

Counsel

Mr. Wayne Johnson for petitioner., Solicitor General Hughes, with whom Assistant Attorneys General Youngquist and Galloway, Messrs. Sewall Key, J. Louis Monarch, and John Vaughan Gronér, Special Assistants to the Attorney General, Lisle A. Smith and Henry A. Cox were on the briefs, for the United States.

Cases that cite this one

85 later published cases cite this decision. The 25 that cite it most often are listed here.

Temple University--Of the Commonwealth System of Higher Education v. United States (3d Cir. 1985)
City National Bank of Clinton v. IOWA STATE TAX COM'N (Iowa 1960)
Edward Sec. Corp. v. Commissioner (United States Board of Tax Appeals 1935)
Shanahan v. United States (United States District Court for the District of Colorado 1970)
Miller v. Johnson Controls, Inc. (Ky. 2009)
Fidelity Bank, N.A. v. Commonwealth (Pa. Commw. Ct. 1994)
Jerry W. Carlton, of the Will of Willametta K. Day v. United States (9th Cir. 1992)
Klebanow v. Glaser (N.J. 1979)
Simpson v. United States (District Court, S.D. Iowa 1976)
Wilgard Realty Co. v. Commissioner of Internal Rev. (2d Cir. 1942)
State v. Industrial Tool & Die Works, Inc. (Minn. 1945)
Welch v. Henry (Supreme Court of the United States 1938)
Sutherland v. Commissioner (United States Tax Court 2001)
John M. Quarty, Personal Representative of the Estate of Angele C. Quarty Elizabeth B. Cherne v. United States (9th Cir. 1999)
Rocanova v. United States (District Court, S.D. New York 1996)
Jackson v. Price (2d Cir. 1985)
Peick v. Pension Benefit Guaranty Corp. (District Court, N.D. Illinois 1982)
United States v. Darusmont (Supreme Court of the United States 1981)
Hellman v. Director, Division of Taxation (New Jersey Tax Court 1981)
DuBois v. Director, Division of Taxation (New Jersey Tax Court 1981)
Appendrodt v. United States (District Court, W.D. Pennsylvania 1980)
Klebanow v. Glaser (N.J. Super. Ct. App. Div. 1978)
Timothy L. Shanahan and Mary E. Shanahan v. The United States of America (10th Cir. 1971)
Katzenberg v. Comptroller of the Treasury (Md. 1971)
First National Bank in Dallas, of the Estate of George Pattullo, Deceased v. The United States. Lucile W. Pattullo v. The United States (1st Cir. 1970)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

Mr. Justice McReynolds

delivered the opinion of the Court.

Petitioner paid income taxes assessed according to her return for the calendar year 1921; thereafter, by suit in the Court of Claims she sought to recover a portion of the same ($8,474.90) with interest, which she alleged had been improperly exacted.

Her return showed $36,670.00 as gain derived from-the sale of 380 shares of bank stock sold November 7, 1921, at $210.00 per share. She acquired this stock November 1, 1921, by gift from her husband. On that day its fair market value was $210.00 per share; in 1918 it cost her husband $113.50 per share.

The challenged assessment was made under Section 202 (a) (2), Revenue Act, November 23, 1921, effective (Sec. 263) January 1, 1921. Chap. 136, 42 Stat. 227, 229.

“Sec. 202 (a). That the basis for ascertaining the gain derived or loss sustained from a sale or other disposition of property, real, personal, or mixed, acquired after February 28, 1913, shall be the cost of such property; except that— ....

“(2) In the case of such property, acquired by gift after December 31, 1920, the basis shall be the same as that which it would have in the hands of the donor or the last preceding owner by whom it was not acquired by gift. . . . -In the-case of such property acquired by gift on or before December 31, 1920, the basis for ascertaining gain or loss from a sale or other disposition thereof shall be the fair market price or value of such property at the time of süch acquisition. . . .”

The Court of Claims decided against the petitioner; and the cause is here upon certiorari. She maintains—

*411 First, that Sec. 202 (a) (2) should not be construed as applicable to transactions fully completed before enactment of the statute. Second, that if construed to apply where both gift and sale were consummated before such enactment the section is arbitrary and capricious and, therefore, invalid under the due process clause of the Fifth Amendment.

To support the first point Shwab v. Doyle, 258 U. S. 529, is cited; for the second Nichols v. Coolidge, 274 U. S. 531; Blodgett v. Holden, 275 U. S. 142; Untermyer v. Anderson, 276 U. S. 440, are relied upon.

We think the purpose of Congress to apply the provisions of Sec. 202 (a) (2) to the transaction here involved is clear. Shwab v. Doyle grew out of the Revenue Act of Sept. 8,1916. There, after considering the relevant circumstances, we declared there was no intention to give retroactive effect to the enactment. Here, the contrary design is not doubtful.

The power of Congress to tax as part of a donee’s income the difference'between what the gift cost the donor and the price received therefor when sold by the donee was affirmed in Taft v. Bowers, 278 U. S. 470, and Is not now denied.

That the questioned provision can not be declared in conflict with the Federal Constitution merely because it requires gains from prior but recent transactions to be treated as part of the taxpayer’s gross income has not been open to serious doubt since Brushaber v. Union Pacific R. Co., 240 U. S. 1, and Lynch v. Hornby, 247 U. S. 339.

Nichols v. Coolidge, 274 U. S. 531, held arbitrary and capricious a statute which required executors to pay an excise ostensibly laid upon the transfer of property by death, but reckoned upon its value plus the value of other property conveyed by the decedent before the enactment in entire good faith and without contemplation of death, and said that to enforce it would amount to confiscation. *412 Blodgett v. Holden, 275 U. S. 142, and Untermyer v. Anderson, 276 U. S. 440, considered the validity of an enactment which laid a tax upon donors because of gifts fully consummated prior to its passage. We held this was beyond the power of Congress. None of these cases is in point; they gave no consideration to the power of Congress to jequire that taxable income should include profits from transactions consummated within the year.

We can find nothing unusual, arbitrary or capricious in the provision of the taxing Act here involved, and the judgment of the court below must be affirmed.

Affirmed.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.