Rufus Wheeler Peckham

“ Consequently, when a stock dividend is declared, the fact that the directors might have chosen to declare a larger one if it had not been for the payment of the taxes the company had made on its own property, is entirely immaterial. So is the fact, if it be a fact, that the total stock dividend was reduced by the amount which the company had theretofore paid as a tax upon its undistributed surplus. ”

“ It is a dividend which is to include for distribution any part of the surplus or contingent fund of a railroad or other company. How can a stock dividend distribute a fund? As already remarked, a stock dividend distributes nothing but stock. Hence there is no sense in applying the statute to a case where no distribution of a fund is made and where the fact of a double payment of the fund cannot arise. ”

“ Under such circumstances that portion of the dividend which has thus once paid its duty of 5 per cent. is not to be taxed again when distributed to the shareholders. But, so long as there is no distribution, the tax paid on the surplus as surplus, and which belonged to the corporation when the tax was paid, is not to be credited on or deducted from a subsequent tax upon a stock dividend which does not distribute the surplus nor in any manner change its ownership. ”