Hugo Black

“ Subsection (a) of section 115 of the Revenue Act of 1928 [3] defines 'dividend,' for income tax purposes, as 'any distribution made by a corporation to its shareholders, * * * out of its earnings or profits accumulated after February 28, 1913.'
Subsection (b) of this income tax law exempts corporate earnings and profits accumulated before March 1, 1913. ”

“ We are urged so to expand and broaden an exemption granted by Congress as a 'concession to the equity of stockholders' [5] that such concession would in reality serve to nullify and defeat the tax on corporate profits earned after 1913. Courts should construe laws in harmony with the legislative intent and seek to carry out legislative purpose. With respect to the tax provisions under consideration, there is no uncertainty as to the legislative purpose to tax post-1913 corporate earnings. We must not give effect to any contrivance which would defeat a tax Congress plainly intended to impose. ”

“ The use of bookkeeping terms and accounting forms and devices cannot be permitted to devitalize valid tax laws.
The transaction under which this company paid $1,025,000 cash for its own stock of $50,000 par value does not fall within subsections (a) and (b) of section 115. Its character and effect are determined by subsections (c) and (h) which relate to distributions in complete or partial corporate liquidation. ”