Forres v. Commissioner of Internal Revenue

25 B.T.A. 154 (1932)

From our private database of 46,000+ case briefs, written and edited by humans—never with AI.

Forres v. Commissioner of Internal Revenue

United States Board of Tax Appeals
25 B.T.A. 154 (1932)

Facts

Olympic Portland Cement Company, Ltd. (Olympic) was incorporated in the United Kingdom. Olympic owned properties in the United States. Earnings from the United States were sent to the United Kingdom and commingled with Olympic’s other funds. Olympic’s only offices were in London, where its officers conducted the firm’s business. Following meetings in England, Olympic paid dividends to United Kingdom stockholders (stockholders) (plaintiffs) by checks that were drawn on bank accounts in the United Kingdom and cashed by the stockholders in the United Kingdom. Under United States law, the stockholders were nonresident aliens. The proportion of the dividends attributable to properties in the United States was not segregated from that attributable to other sources. The United States commissioner of Internal Revenue (commissioner) (defendant) levied a tax on the dividends under the Revenue Acts of 1921 and 1924, §§ 213 and 217(a)(2)(B). These sections provided that a nonresident alien had to include dividends paid from a foreign corporation in gross income if 50 percent of the corporation’s gross income three years before the dividends’ declaration date came from United States sources. The stockholders argued that application of the law to dividends distributed entirely in the United Kingdom by a United Kingdom firm using United Kingdom property to non-United States resident aliens violated the Due Process Clause of the Fifth Amendment. The stockholders noted that when Olympic’s United States earnings were sent to the United Kingdom and mixed with Olympic’s United Kingdom funds, the accounts involved were all Olympic’s property, not the stockholders’ property. When the stockholders were paid, it was entirely out of Olympic’s property in the United Kingdom, and the source of the funds was thus in the United Kingdom. The stockholders also argued that the tax violated principles of comity and could cause jurisdictional problems.

Rule of Law

Issue

Holding and Reasoning (Goodrich, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 742,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 742,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,000 briefs, keyed to 986 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 742,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,000 briefs - keyed to 986 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership