The main points of the
1909 Tax Act:
- Every corporation;
- Every joint stock
- Every association;
- Every insurance company
- Organized by law (incorporated);
- Organized (incorporated) for profit;
- Having capital stock represented by shares;
- Doing business within the boundaries of the United
- Shall pay a special excise tax;
- Based on its net income;
- Excluding income already taxed by this law;
- Net income is corporate
gross income less
|'Sec. 38. That every corporation, joint stock
company, or association organized
for profit and having a
represented by shares, and every insurance company now or hereafter organized under the laws
of the United States or of any state or territory of the United States,
or under the acts of Congress applicable to Alaska or the District of
Columbia, or now or hereafter
organized under the laws of any foreign country, and engaged in business in any state
or territory of the United States or in Alaska or in the District of
Columbia, shall be subject to pay annually a special excise tax with
respect to the carrying on or doing
business by such corporation, joint
stock company or association, or insurance company equivalent to one
per centum upon the entire net income over and above five thousand
dollars, received by it from all sources during such year, exclusive of
amounts received by it as dividends upon stock of other corporations,
joint stock companies or associations, or insurance companies subject
to the tax hereby imposed; ...
Such net income shall be
deducting from the gross amount of
the income of such corporation, joint Stock company or
association, or insurance company, received within the year from all
sources, a bunch of deductions, blah blah.
- A natural person is NOT included in the 1909 Tax Act.
- The 1909 Tax Act definition of income applies only to
- The "income" being taxed by this Act is the "net"
income of the listed corporate persons.
- The "net" income is the (corporate) "profit" of the listed
- A natural person does NOT have such (corporate) "profit"
- Such a natural person owned shares of stock and was paid
dividends on such stock
A dividend is a payout
corporate profit to the corporation's stock holders. Such a dividend
would have already been taxed under the 1909 Act prior to distribution.
|1954 IRC as amended:
Internal Revenue Code
Sec. 316. Dividend defined
(a) General rule
For purposes of this subtitle, the term "dividend" means any distribution of
property made by a corporation to its shareholders -
(1) out of its earnings and profits
accumulated after February 28,
(2) out of its earnings and profits
of the taxable year ...