Mahlon Pitney

“ There is no express provision that even allows a merchant to deduct the cost of the goods that he sells.
Yet it is plain, we think, that by the true intent and meaning of the act the entire proceeds of a mere conversion of capital assets were not to be treated as income. Whatever difficulty there may be about a precise and scientific definition of 'income,' it imports, as used here, something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities. ”

“ In the case of a corporation organized under the laws of a foreign country, the net income was to be ascertained by taking into account the gross income received within the year 'from business transacted and capital invested within the United States and any of its territories, Alaska, and the District of Columbia,' with deductions for expenses of maintenance and operation, business losses, interest, and taxes, all referable to that portion of its business transacted and capital invested within the United States, etc. ”

“ Plaintiff is a lumber manufacturing corporation which operates its own mills, manufactures into lumber therein its own stumpage, sells the lumber in the market, and from these sales and sales of various by-products makes its profits, declares its dividends, and creates its surplus. It sells its stumpage lands, so-called, after the timber is cut and removed. Its sole business is as described; it is not a real estate trading corporation. Plaintiff acquired certain timber lands at its organization in 1903 and paid for them at a valuation approximately equivalent to $20 per acre. ”