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Taft v. Bowers

United States Supreme Court
278 U.S. 470 (1929)



Elizabeth C. Taft (plaintiff) received 100 shares of stock from her father as a gift in 1921 and 1922. Taft’s father had purchased the shares in 1916 for $1,000. At the time of transfer, the shares of stock had appreciated to $2,000. In 1923, Taft sold the shares for $5,000. The United States calculated a $4,000 increase in income based on the $1,000 appreciation during the father’s ownership and the $3,000 appreciation during Taft’s ownership, and taxed Taft accordingly. Taft paid the tax but subsequently sued for a refund, arguing that only the $3,000 increase during her ownership was income, and that the Sixteenth Amendment prevented Congress from taxing her for any increase during her father’s ownership. The District Court held in Taft’s favor. The Court of Appeals reversed. The United States Supreme Court granted certiorari.

Rule of Law


Holding and Reasoning (McReynolds, J.)

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