William O. Douglas

“ The tax falls upon the owner by virtue of the mere fact of ownership, regardless of use or disposition of the security. The tax upon profits made upon purchases and sales is an excise upon the result of the combination of several factors, including capital investment and, quite generally, some measure of sagacity; the gain may be regarded as 'the creation of capital, industry and skill.' Tax Commissioner v. ”

“ No mere collation of other statutes can be decisive in determining what the instant statute means. The meaning of each phrase must be closely related to the time and circumstance of its use. The phrase 'income derived therefrom' as used in § 26 clearly has taken on coloration from the express exemption for nearly a quarter century of only interest on these bonds. ”

“ It is our view that under § 26 respondent is entitled to an exemption only for interest on the bonds.
To be sure, 'income' is a generic term amply broad to include capital gains for purposes of the income tax. ”

“ Respondent also stresses the fact that circulars, prepared and distributed by the Farm Loan Board 'advising investors of the merits and advantages of farm loan bonds', [21] stated that these bonds and their income were 'free from all forms of taxation' including the income tax, that 'this exemption is complete', etc. As we have said, it was found that respondent relied upon such statements reasonably believing that capital gains would not be taxable. ”

“ The Revenue Act of 1916, 39 Stat. 756, was enacted shortly after the Farm Loan Act by the same Congress and at the same session. [3] Sec. 2 of that Act, like § 22 (a) of the 1928 Act, included in taxable income 'gains, profits, and income derived from * * * sales, or dealings in property.' And § 4 of that Act, like § 22 (b) (4) of the 1928 Act, exempted from taxation 'interest upon * * * securities issued under the provisions of the Federal Farm Loan Act.' It is clear that 'all acts in pari materia are to be taken together, as if they were one law.' United States v. ”

“ Bank of Commerce v. Tennessee, 161 U.S. 134, 146, 16 S.Ct. 456, 460, 40 L.Ed. 645; Id., 163 U.S. 416, 423, 16 S.Ct. 1113, 1116, 41 L.Ed. 211. Exemptions from taxation cannot rest upon mere implications. ”