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    SUMMARY

    Uploaded by

    Tricia Jane Hernandez
    The document discusses the distinction between corporate ownership and stockholder interests, emphasizing that stockholders only have rights to profits when declared as dividends, not to the corporate property itself. It references legal cases to clarify that stock dividends represent increased asset value rather than actual income. Consequently, it concludes that stock dividends cannot be taxed as income under Act No. 2833.

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    SUMMARY

    Uploaded by

    Tricia Jane Hernandez
    2 views1 page
    The document discusses the distinction between corporate ownership and stockholder interests, emphasizing that stockholders only have rights to profits when declared as dividends, not to the corporate property itself. It references legal cases to clarify that stock dividends represent increased asset value rather than actual income. Consequently, it concludes that stock dividends cannot be taxed as income under Act No. 2833.

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    The document discusses the distinction between corporate ownership and stockholder interests, emphasizing that stockholders only have rights to profits when declared as dividends, not to the corporate property itself. It references legal cases to clarify that stock dividends represent increased asset value rather than actual income. Consequently, it concludes that stock dividends cannot be taxed as income under Act No. 2833.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2 views1 page

    SUMMARY

    Uploaded by

    Tricia Jane Hernandez
    The document discusses the distinction between corporate ownership and stockholder interests, emphasizing that stockholders only have rights to profits when declared as dividends, not to the corporate property itself. It references legal cases to clarify that stock dividends represent increased asset value rather than actual income. Consequently, it concludes that stock dividends cannot be taxed as income under Act No. 2833.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    SUMMARY (985-989)

    There is a clear distinction between two parties which the latter do not receive actual payments,
    but certificates are distributed. This shows their interest in the total capital, including additions to the
    initial capital through the investment of the collected profits.

    In the example cases of Gibbons vs. Mahon and DeKoven vs. Alsop, there are statements from
    Mr. Justice Gray, “The distinction between the title of a corporation, and the interest of its members or
    stockholders in the property of the corporation, is familiar and well settled. The ownership of that
    property is in the corporation, and not in the holders of shares of its stock. The interest of each
    stockholder consists in the right to a proportionate part of the profits whenever dividends are
    declared by the corporation, during its existence, under its charter, and to a like proportion of the
    property remaining, upon the termination or dissolution of the corporation, after payment of its
    debts.”. And Mr. Justice Wilkin, “A dividend is defined as 'a corporate profit set aside, declared, and
    ordered by the directors to be paid to the stockholders on demand or at a fixed time. Until the
    dividend is declared, these corporate profits belong to the corporation, not to the stockholders, and
    are liable for corporate indebtedness.”.

    The appellee argues that there is nothing in section 25 of Act No. 2833 which contravenes the
    provisions of the Jones Law. That may be admitted. He further argues that the Act of Congress (U. S.
    Revenue Act of 1918) expressly authorized the Philippine Legislature to provide for an income tax. That
    fact may also be admitted. But a careful reading of that Act will show that, while it permitted a tax upon
    income, the same provided that income shall include gains, profits, and income derived from salaries,
    wages, or compensation for personal services, as well as from interest, rent, dividends, securities, etc.
    The appellee emphasizes the "income from dividends." Of course, income received as dividends is
    taxable as an income, but an income from "dividends" is a very different thing from a receipt of a "stock
    dividend." One is an actual receipt of profits; the other is a receipt of a representation of the increased
    value of the assets of a corporation.

    Having reached the conclusion, supported by the great weight of authority, that "stock
    dividends" are not "income," the same cannot be taxed under that provision of Act No. 2833 which
    provides for a tax upon income. Under the guise of an income tax, property which is not an income
    cannot be taxed.

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