308 F.

2d 160

William SIMMONS and Viola Simmons, his wife, Appellants,

v.
UNITED STATES of America, Appellee.
No. 8609.

United States Court of Appeals Fourth Circuit.

Argued June 11, 1962.
Decided August 28, 1962.

Sheldon H. Braiterman, Baltimore, Md. (Marvin Braiterman and Louis H.

Fried, Baltimore, Md., on the brief), for appellants.
Fred E. Youngman, Atty., Dept. of Justice (Louis F. Oberdorfer, Asst.
Atty. Gen., Lee A. Jackson and Melva M. Graney, Attys., Dept. of Justice,
Joseph D. Tydings, U. S. Atty., and Robert W. Kernan, Asst. U. S. Atty.,
on the brief), for appellee.
Before SOBELOFF, Chief Judge, and HAYNSWORTH and BOREMAN,
Circuit Judges.
SOBELOFF, Chief Judge.

Diamond Jim III, a rock fish, was one of millions of his species swimming in
the Chesapeake Bay, but he was a very special fish, and he occasions some nice
legal questions. Wearing a valuable identification tag, he was placed on June
19, 1958, in the waters of the Bay by employees of the American Brewery, Inc.,
with the cooperation of Maryland state game officials. According to the wellpublicized rules governing the brewery-sponsored Third Annual American
Beer Fishing Derby, anybody who caught Diamond Jim III and presented him
to the company, together with the identification tag and an affidavit that he had
been caught on hook and line, would be entitled to a cash prize of $25,000.00.
The company also placed other tagged fish in the Chesapeake, carrying lesser
prizes.

Fishing on the morning of August 6, 1958, William Simmons caught Diamond

Jim III. At first, he took little notice of the tag, but upon re-examining it a half

hour later, he realized that he had caught the $25,000.00 prize fish. After
Simmons and his fishing companions appropriately marked the happy event, he
hastened to comply with the conditions of the contest. Soon thereafter, in the
course of a television appearance arranged by the brewery, he received the cash
prize. The record shows that Simmons knew about the contest, but, as an
experienced fisherman, he also knew that his chances of landing that fish were
minuscule, and he did not have Diamond Jim III in mind when he set out that
morning.
3

Thereupon, an alert District Director of the Internal Revenue Service came

forward with the assertion that the cash prize was includable in Simmons' gross
income under section 61(a) 1 and section 74(a)2 of the Internal Revenue Code,
26 U.S.C.A. 61(a), 74(a) and assessed a tax deficiency of $5,230.00.
Promptly Simmons paid and filed a claim for refund. A small sum was
refunded on the basis of very generous deductions allowed by the Internal
Revenue Service. Not satisfied, however, Simmons brought an action in the
District Court on the theory that no part of the cash prize can be included in
gross income under sections 61(a) and 74(a) of the Internal Revenue Code, or,
in the alternative, that the prize falls within the exclusions of either section
74(b), pertaining to certain prizes and awards, or section 102, pertaining to gifts.
He also maintained that, if the Internal Revenue Code undertook to tax such an
award, it would offend the taxing provisions of the Constitution. On motion for
summary judgment, the District Court held for the Government,3 and Simmons
prosecutes this appeal.

I.
4

We turn first to the taxpayer's contention that the prize money is excluded from
his gross income by the terms of section 74(b). This subsection specifies the
three requirements that must be met in order to qualify for its benefits:

" 74. Prizes and awards.

6* * * * *
7

"(b) Exception. Gross income does not include amounts received as prizes
and awards made primarily in recognition of religious, charitable, scientific,
educational, artistic, literary, or civic achievement, but only if

"(1) the recipient was selected without any action on his part to enter the
contest or proceeding; and

"(2) the recipient is not required to render substantial future services as a

condition to receiving the prize or award."4

10

We do not understand the taxpayer to claim immunity from the tax on the
ground that capture of the fish or the award of the prize had any religious,
charitable, scientific, educational, artistic, or literary significance whatever. His
argument is that the payment was made in recognition of a civic achievement.
He attributes a civic purpose to the American Brewery, Inc., in offering a prize
the effect of which, he says, is to popularize the recreation and resort facilities
of the state of Maryland. Yet it requires a considerable flight of fancy to
romanticize the Fishing Derby into a civic endeavor. A glance at the
advertisements announcing first the Derby and later the capture of Diamond
Jim III unmistakably reveals that the purpose of the contest and of the prize was
to stimulate the sale of American beer.

11

But even if a civic purpose could be discerned in the company's campaign, we

are of the opinion that it is not the motivations of the donor that are legally
relevant. The statute and its legislative history5 speak only of the character of
the recipient's achievement. and the crucial test is the nature of the activity
being rewarded. For example, if Simmons' achievement cannot be considered
one of those enumerated in section 74(b), the exclusion provided in that section
would not apply even if the prize were given by the state of Maryland to further
a promotional campaign for its facilities. Conversely, if the recipient's
achievement were "civic" in the sense of the statute, he would be entitled to its
benefits even though the donor had a commercial purpose in making the award.

12

The taxpayer advances the further argument that a jury could reasonably find
that the payment was for a civic achievement since it rewarded his skill as a
fisherman, and that it was therefore error to refuse to permit the jury to
determine the issue. To agree that these facts present a jury question would
distort both the basic concept of the statutory exclusion and the meaning of the
language used.

13

While dictionary definitions are not an infallible guide to the exact meaning of
statutory language, they may limit the range of possible meanings. The word
"civic" is defined as "[r]elating, pertaining, or appropriate, to a citizen."6 One
may be said to be a civic person if he merely lives in a state and quietly obeys
its laws, but a "civic achievement" involves more. It implies positive action,
exemplary, unselfish, and broadly advantageous to the community. This
interpretation of the phrase is reinforced by a consideration of the other types of
achievement singled out in section 74(b). While the class of civic achievements

is not limited to the others specifically enumerated, it must resemble them in

general character, and they all represent activities enhancing in one way or
another the public good. Although the qualifying word "civic" is the last in the
enumeration of achievements, it should not be treated as a limitless extension of
the previously enumerated classes, for that would erase all distinctions and
make the exclusion almost as broad as the taxing provision of subsection (a).
Moreover, the statute's legislative history indicates that only awards for
genuninely meritorious achievements were to be freed from taxation. Thus,
Nobel and Pulitzer prizes were there cited as examples of awards to be within
the exclusionary provisions of section 74(b), while prizes given in "radio and
television giveaway shows, or as door prizes, or in any similar type contest"
were to be taxed as income.7
14

Viewing the facts most favorably to the taxpayer, we hold that he was not
rewarded for a civic achievement, properly interpreted. There was nothing
meritorious in a civic sense in catching this rock fish. Simmons was not even
rewarded for an extraordinary display of skill, if that could be considered a
civic achievement, for catching Diamond Jim III was essentially a matter of
luck. The case might be different if, for example, Simmons had at considerable
risk to himself captured and destroyed a killer whale terrorizing the Maryland
seashore. That could have been regarded as a genuine civic achievement. But
catching this fish cannot reasonably be so denominated, for the only
community interest in the event was one of idle curiosity. Innumerable are the
rhapsodies uttered in praise of the delights and virtues of the piscatorial
pastime, but never to our knowledge has it been seriously called a civic
enterprise. The character of this fortuitous event is not raised to a civic level by
being linked to an advertising campaign aimed at selling beer. Far from
resembling a Nobel or Pulitzer prize-winner, Mr. Simmons fits naturally in the
less-favored classification the legislators reserved for beneficiaries of
"giveaway" programs.

II.
15

The taxpayer's next point is that he was at least entitled to have a jury decide
whether the $25,000.00 payment to him was a gift, excluded from gross income
by section 102.8 The Supreme Court's exposition of this branch of the law in
Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190
(1960), is of course controlling, and this court expressed its understanding of
that decision in Poyner v. Commissioner, 301 F.2d 287 (4th Cir. 1962). Here it
suffices to repeat that it is the function of the trier of fact to determine the basic
facts and from these to infer the motivations of the donor. This does not mean,
however, that in an appropriate case a district judge may not make a decision

on summary judgment. Where, from the facts stipulated and submitted on

affidavit, when viewed in the light most favorable to the taxpayer, it plainly
appears that a jury could not reasonably infer that the payments were motivated
"out of affection, respect, admiration, charity or like impulses,"9 or from a
"detached or disinterested generosity,"10 or from similar sentiments, summary
judgment for the Government is the correct disposition. Such is the present
case.
16

The established fact is that there was no personal relationship between

Simmons and the brewery to prompt it to render him financial assistance. Nor
was it impelled by charitable impulses toward the community at large, for the
prize was to be paid to whoever caught Diamond Jim III, regardless of need or
affluence. Rather, the taxpayer has apparently rendered the company a valuable
service, for, by catching the fish and receiving the award amid fanfare, he
brought to the company the publicity the Fishing Derby was designed to
generate.

17

Moreover, under accepted principles of contract law on which we may rely in

the absence of pertinent Maryland cases, the company was legally obligated to
award the prize once Simmons had caught the fish and complied with the
remaining conditions precedent. The offer of a prize or reward for doing a
specified act, like catching a criminal, is an offer for a unilateral contract.11 For
the offer to be accepted and the contract to become binding, the desired act
must be performed with knowledge of the offer.12 The evidence is clear that
Simmons knew about the Fishing Derby the morning he caught Diamond Jim
III. It is not fatal to his claim for refund that he did not go fishing for the
express purpose of catching one of the prize fish. So long as the outstanding
offer was known to him, a person may accept an offer for a unilateral contract
by rendering performance, even if he does so primarily for reasons unrelated to
the offer.13 Consequently, since Simmons could require the company to pay
him the prize, the case is governed by Robertson v. United States, 343 U.S.
711, 713-714, 72 S.Ct. 994, 96 L.Ed. 1237 (1952). There, the Supreme Court
held that, since the sponsor of a contest for the best symphonies submitted was
legally obligated to award prizes in accordance with his offer, the payment
made was not a gift to the recipient.14

III.
18

Having shown that the payment does not fall within any statutory exclusion, it
remains to consider whether it is income within sections 61(a) and 74(a) and
whether the Constitution confers upon Congress the power to tax this money. It
is necessary first to examine the source of the Congressional taxing power, its

scope and its limitations, to demonstrate that the appellant's position is

untenable.
19

The power to tax is conferred on Congress by article I, section 8, clause 1 of the

Constitution,15 but other sections of the Constitution impose certain restrictions
upon the manner in which the taxing power of the Federal Government may be
exercised. In addition to the general limitations placed upon that power by the
due process clause of the Fifth Amendment, Congress is specifically prohibited
from laying any tax on the export of goods;16 whatever indirect taxes it may
enact shall be "uniform throughout the United States";17 and it may impose a
capitation or direct tax only if apportioned among the states according to
population.18 This last restriction, the only one pertinent to the present case, has
been limited in scope by the Sixteenth Amendment which permits taxes "on
incomes, from whatever source derived" without regard to the apportionment
requirement.19

20

Proceeding to the case before us, it is apparent that the basic grant of taxing
power under article I, section 8, clause 1, is broad enough to embrace the power
to tax the sum received by Simmons, for we are taught that the clause is allinclusive, embracing "every form of tax appropriate to sovereignty."20 It is
equally plain that Congress has not apportioned among the states the tax
imposed by sections 61 and 74. Therefore, the taxpayer can establish his
contention that the tax imposed is invalid under the Constitution only by
showing, first, that the tax is direct and therefore requires apportionment, and
second, that the tax does not fall within the scope of the Sixteenth Amendment
which lifts the apportionment requirement from such categories of taxes on
income as are deemed to be direct taxes. We find that neither showing has been
made.21

21

1. A direct tax is a tax on real or personal property, imposed solely by reason of

its being owned by the taxpayer. A tax on the income from such property, such
as a tax on rents or the interest on bonds, is also considered a direct tax, being
basically a tax upon the ownership of property.22 Yet, from the early days of
the Republic, a tax upon the exercise of only some of the rights adhering to
ownership, such as upon the use of property23 or upon its transfer,24 has been
considered an indirect tax, not subject to the requirement of apportionment. The
present tax falls into this latter category, being a tax upon the receipt of money
and not upon its ownership.

22

This tax is similar to others held to be indirect. In the case which on its facts
most nearly resembles the present one, Scholey v. Rew, 90 U.S. (23 Wall.) 331,
346-348, 23 L.Ed. 99 (1875), the Supreme Court upheld a federal death tax,

placed upon persons receiving real property from a deceased under a will or by
intestate succession, against the claim that the tax was an unapportioned direct
tax on property. In that case, as in the present, the tax was borne directly by the
recipient, but was held to be merely upon the transfer of property. The Scholey
case was by name reaffirmed in Knowlton v. Moore, 178 U.S. 41, 78-83, 20
S.Ct. 742, 44 L.Ed. 969 (1900), and by implication in New York Trust Co. v.
Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921), both cases
upholding federal estate taxes imposed, not upon the beneficiary but upon the
decedent's estate. A tax upon the donor of an inter vivos gift was held to be an
indirect tax in Bromley v. McCaughn, 280 U.S. 124, 135-138, 50 S.Ct. 46, 74
L.Ed. 226 (1929). If a tax on giving property is indirect, so would be a tax on
receiving it, regardless of its source. That no distinction may be drawn between
giving and receiving was pointed out in Fernandez v. Wiener, 326 U.S. 340,
352-355, 361-362, 66 S.Ct. 178, 90 L.Ed. 116 (1945), where the Supreme
Court upheld as an indirect tax the federal estate tax on community property at
the death of one spouse: "If the gift of property may be taxed, we cannot say
that there is any want of constitutional power to tax the receipt of it, whether as
a result of inheritance [citation omitted] or otherwise, whatever name may be
given to the tax * * *. Receipt in possession and enjoyment is as much a
taxable occasion within the reach of the federal taxing power as the enjoyment
of any other incident of property."25
23

While the distinctions drawn in these cases may seem artificial, the necessity
for making them stems from the structure of the Constitution itself, which
distinguishes between direct and indirect taxes. The Supreme Court has
restricted the definition of direct taxes to the above-enumerated well-defined
categories, and we have no warrant to expand them to others.

24

2. Even if we were to assume that the tax upon Simmons is direct, it comes
within the Sixteenth Amendment, which relieved direct taxes upon income
from the apportionment requirement. We need look no further than the two
most recent Supreme Court cases in this area. In Commissioner of Internal
Revenue v. Glenshaw Glass Co., 348 U.S. 426, 75 S.Ct. 473, 99 L.Ed. 483
(1955), the Court upheld the inclusion in gross income of money received by
the taxpayers as punitive damages, stating that "[h]ere we have instances of
undeniable accessions to wealth, clearly realized, and over which the taxpayers
have complete dominion." 348 U.S. at 431, 75 S.Ct. at 477. This test was
specifically reaffirmed in James v. United States, 366 U.S. 213, 81 S.Ct. 1052,
6 L.Ed.2d 246 (1961), where the Court considered the taxability of embezzled
money. The plunder was held to be income solely because it came into the
taxpayer's possession and control and despite the fact that he had no right to it
and indeed was under a legal obligation to return it to its rightful owner. This

obligation to repay was deemed irrelevant, for a gain "constitutes taxable

income when its recipient has such control over it that, as a practical matter, he
derives readily realizable economic value from it."26 As is apparent from the
quoted statements, and as illustrated by the diverse factual situations in these
cases, it is the status in the recipient's hands of the money being taxed which is
the crucial factor, while the source of the money is not relevant.
25

The $25,000.00 received by Simmons squarely meets these tests laid down by
the Supreme Court. The receipt of this sum constitutes an economic gain over
which he has complete control and, better than the situation in James, complete
legal right. Whether the money came to Simmons as a gift, or as a return for
services, or for some other reason, it still is income to him.27

26

It might be contended that reliance cannot properly be placed upon the

Glenshaw and James decisions because they purport to interpret the meaning of
"income" only as used in section 61 of the Internal Revenue Code and not as
used in the Sixteenth Amendment. However, the opinions in both cases show
that the Supreme Court was aware of the constitutional issues. In Glenshaw,
these were dismissed in a single sentence. 348 U.S. at 429, 75 S.Ct. at 475. In
James, the constitutional issues were unmistakably brought to the Court's notice
by the dissent of Mr. Justice Whittaker. 366 U.S. at 248, 81 S.Ct. at 1070. His
sole objection was that the taxpayer had no legal right to the money, and
therefore, in his opinion, there was no economic gain that could be
constitutionally taxed. This feature of the controversy in James is not present in
our case because Simmons enjoys a permanent economic benefit, not subject to
any claim of restitution. None of the several opinions of the Justices in James
intimates a doubt of the constitutional validity of a tax upon a true gain.

27

Moreover, the constitutional and the statutory provisions are closely related.
The language of section 61, a paraphrase of the Sixteenth Amendment, "was
used by Congress to exert in this field the full measure of its taxing power."28
This means that Congress intended to avail itself to the utmost of the exemption
granted it by the Sixteenth Amendment from the requirement of article I,
section 8, clause 1, that direct taxes shall be apportioned. Thus, the Court, in
upholding taxes on income imposed by section 61 which might also be direct
taxes, necessarily decides that such taxes are authorized by the Sixteenth
Amendment. And conversely, from our conclusion here that Simmons received
income within the meaning of that amendment, it necessarily follows that it is
taxed by sections 61(a) and 74(a).

28

Affirmed.

Notes:
1

" 61. Gross income defined

"(a) General definition. Except as otherwise provided in this subtitle, gross
income means all income from whatever source derived * * *."

" 74. Prizes and awards

"(a) General rule. Except as provided in subsection (b) and in section 117
(relating to scholarships and fellowship grants), gross income includes amounts
received as prizes and awards."

197 F.Supp. 673 (D.Md.1962)

See Max Isenbergh, 31 T.C. 1046, 1052 (1959); Treas.Reg. 1.74-1(b)

H.R.Rep. No. 1337, 83d Cong., 2d Sess. (1954), reprinted in 3 U.S.Code,

Cong. & Ad.Law News, pp. 4017, 4036, 4163 (1954); S.Rep. No. 1622, 83d
Cong., 2d Sess. (1954), reprinted in 3 U.S.Code, Cong. & Ad.Law News, pp.
4621, 4642, 4813 (1954)

Webster, New International Dictionary 492 (2d Ed. 1954)

S.Rep. No. 1622, 83d Cong., 2d Sess. (1954), reprinted in 3 U.S.Code, Cong. &
Ad.Law News, pp. 4621, 4813 (1954). This legislative history reveals that
section 74 was passed to obviate the results of Pauline C. Washburn, 5 T.C.
1333 (1945) (prize given by Pot O'Gold radio show held a gift and nontaxable),
and McDermott v. Commissioner, 80 U.S.App. D.C. 176, 150 F.2d 585 (1945)
(Ross Essay prize awarded by American Bar Association held a gift and
nontaxable), and to modify and clarify the law in this area. See Commissioner
of Internal Revenue v. Duberstein, 363 U.S. 278, 290 n. 12, 80 S.Ct. 1190, 4
L.Ed.2d 1218 (1960)

" 102. Gifts and inheritances

"(a) General rule. Gross income does not include the value of property
acquired by gift, bequests, devise, or inheritance."

Robertson v. United States, 343 U.S. 711, 714, 72 S.Ct. 994, 996, 96 L.Ed.
1237 (1952), quoted in Commissioner of Internal Revenue v. Duberstein, 363
U.S. 278, 285, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960)

10

Commissioner of Internal Revenue v. LoBue, 351 U.S. 243, 246, 76 S.Ct. 800,
100 L.Ed. 1142 (1956), quoted in Commissioner of Internal Revenue v.
Duberstein, 363 U.S. 278, 285, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960)

11

See 6A Corbin, Contracts 1489 (1962); Restatement, Contracts 521 (1932)

12

1 Corbin, Contracts 59 (1950); Restatement, Contracts 53 (1932)

13

1 Corbin, Contracts 58 (1950); Restatement, Contracts 55 (1932)

14

Accord, United States v. Amirikian, 197 F.2d 442 (4th Cir. 1952). It might be
argued that Robertson is distinguishable from the present case, for here the
contract might be legally unenforceable as a wagering contract since it depends
upon the happening of the fortuitous event of catching Diamond Jim III. See
note 11, supra. Under Maryland law, it is far from clear whether the contract
would be unenforceable, see Wroth v. Johnson, 4 Har. & McH. 284 (1799);
Bennett v. Mutual Fire Ins. Co., 100 Md. 337, 340, 60 A. 99, 101 (1905);
Farmers' Milling & Grain Co. v. Urner, 151 Md. 43, 134 A. 29 (1926); Kahn v.
Schleisner, 165 Md. 106, 166 A. 435 (1933); LaFontaine v. Wilson to Use of
Ugast, 185 Md. 673 45 A.2d 729, 162 A.L.R. 1218 (1946); but, even if it were,
the tax treatment of the payment actually made to Simmons would not be
affected. In view of the extensive campaign advertising the Fishing Derby and
the cash prizes, the company was under a strong moral duty to make good on its
promises: and any attempt to treat the payment as a gift must fail "if the
payment proceeds primarily from `the constraining force of any moral or legal
duty.'" Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 285, 80
S.Ct. 1190, 4 L.Ed.2d 1218 (1960), quoting from Bogardus v. Commissioner,
302 U.S. 34, 41, 58 S.Ct. 61, 82 L.Ed. 32 (1937). Moreover, the fact that gains
originated from unenforceable wagering contracts has never prevented their
inclusion in the recipient's gross income. See Tavares v. Commissioner, 275
F.2d 369 (1st Cir. 1960); Winkler v. United States, 230 F.2d 766 (1st Cir.
1956); Campodonico v. United States, 222 F.2d 310, 314 (9th Cir. 1955); 1
Mertens, Federal Income Taxation 4.11 (1956)

15

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and
Excises, to pay the Debts and provide for the common Defense and general
Welfare of the United States; * * *."

16

United States Constitution, art. I, 9, cl. 5

17

United States Constitution, art. I, 8, cl. 1

18

"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the
Census or Enumeration herein before directed to be taken." United States

Constitution, art. I, 9, cl. 4

19

"The Congress shall have power to lay and collect taxes on incomes, from
whatever source derived, without apportionment among the several States, and
without regard to any census or enumeration." United States Constitution,
amendment XVI

20

Steward Machine Co. v. Davis, 301 U.S. 548, 581, 57 S.Ct. 883, 888, 81 L.Ed.
1279 (1937); see Brushaber v. Union Pac. R. R., 240 U.S. 1, 12, 36 S.Ct. 236,
60 L.Ed. 493 (1916)

21

The taxpayer actually bases his constitutional argument upon the assertion that
"[o]ne of the restrictions on the taxing powers of Congress, which has not been
removed by the Sixteenth Amendment is the simple inability of Congress to tax
as income that which is not income." But if Congress has the power to impose
the tax in question, it is not material that it calls the tax one on income, for it
has been clearly established that the labels used do not determine the extent of
the taxing power. See Eisner v. Macomber, 252 U.S. 189, 206, 40 S.Ct. 189, 64
L. Ed. 521 (1920); Penn Mut. Indem. Co. v. Commissioner, 277 F.2d 16, 20
(3d Cir. 1960). The taxpayer is also mistaken in assuming that all taxes on
income are valid only by reason of the Sixteenth Amendment. Pollock v.
Farmers' Loan & Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759 on
rehearing, 158 U.S. 601, 637, 15 S.Ct. 912, 39 L.Ed. 1108 (1895), itself
recognized that taxes on income derived from "business, privileges,
employments, and vocations" were indirect taxes and therefore would be valid
without apportionment and without any constitutional amendment

22

Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed.
759, on rehearing, 158 U.S. 601, 627-628, 15 S.Ct. 912, 39 L.Ed. 1108 (1895)

23

Hylton v. United States, 3 U.S. (3 Dall.) 171, 1 L.Ed. 556 (1796) (tax on
carriages for the conveyance of persons)

24

Fernandez v. Wiener, 326 U.S. 340, 352-355, 361-362, 66 S.Ct. 178, 90 L.Ed.
116 (1945) (estate tax on community property at death of one spouse)

25

326 U.S. at 353, 66 S.Ct. at 185. Analogous too are cases holding that a tax on
the gross receipts of a business is an indirect tax, but, being a tax on business,
this is more like the traditional excise tax, expressly treated by the Constitution
as not direct. Spreckels Sugar Ref. Co. v. McClain, 192 U.S. 397, 410-413, 24
S.Ct. 376, 48 L.Ed. 496 (1904); Stanton v. Baltic Mining Co., 240 U.S. 103,
114, 36 S.Ct. 278, 60 L.Ed. 546 (1916) (alternative holding); Penn Mut. Indem.
Co. v. Commissioner, 277 F.2d 16, 18-20 (3d Cir. 1960), affirming 32 T.C. 653
(1959)

26

Rutkin v. United States, 343 U.S. 130, 137, 72 S.Ct. 571, 96 L.Ed. 833 (1952),
quoted in James v. United States, 366 U.S. 213, 219, 81 S.Ct. 1052, 6 L.Ed.2d
246 (1961)

27

Eisner v. Macomber, 252 U.S. 189, 40 S. Ct. 189, 64 L.Ed. 521 (1920), upon
which the taxpayer relies, held only that a tax on a 50% stock dividend was a
direct tax on property and was not income within the scope of the Sixteenth
Amendment, defined as "the gain derived from capital, from labor, or from both
combined." 252 U.S. at 207, 40 S.Ct. at 193. In the Glenshaw case, Mr. Chief
Justice Warren qualified the Eisner v. Macomber definition of income: "In that
context distinguishing gain from capital the definition served a useful
purpose. But it was not meant to provide a touchstone to all future gross income
questions." 348 U.S. at 431, 75 S.Ct. at 476, 477

28

Commissioner of Internal Revenue v. Glenshaw Glass Co., 348 U.S. 426, 429,
75 S.Ct. 473, 476, 99 L.Ed. 483 (1955); H.R.Rep. No. 1337, 83d Cong., 2d
Sess. (1954), reprinted in 3 U.S.Code, Cong. & Ad.Law News pp. 4017, 4155
(1954); S.Rep. No. 1622, 83d Cong., 2d Sess. (1954), reprinted in 3 U.S.Code,
Cong. & Ad.Law News, pp. 4621, 4802 (1954)