(dissenting). I think the decision in State ex rel. Bundy v. Nygaard, 163 Wis. 307, 158 N. W. 87, supports that of the circuit court and requires an affirmance of the judgment. ■
When the Nygaard Case was decided, I understood the intention was to hold that “income,” as used in sec. 1, art. VIII, of the constitution, means gains or profits derived from labor or capital or both, reduced to money or the equivalent; that such meaning was carried into the statute as to income taxes; that such statute, as of the date of its enactment, fixed the status of property then in existence and that it could not thereafter be turned into income, in a constitutional sense. It seems the logic thereof is that all property of a corporation at the date of the Income Tax Law, as regards thereto, is capital assets and cannot be made income to the stockholders by a distribution in the form called dividends, in case of such corporation being a mere holding body, as in this case.
The Prospect Hill Land Company was not a business, concern. It merely held the title to a tract of land to realize thereon and divide the proceeds among its stockholders. It had the property which was distributed, at the time of the passage of the Income Tax Law. It was more valuable then than when distributed. The distribution did not involve any profit to the corporation nor to the stockholders, in a just and proper sense, which accrued after such passage. Why does not the logic of State ex rel. Bundy v. Nygaard then rule the situation ? How can capital assets, fixed as such at the time of passage of the Income Tax Law, and in effect impressed *53as such by such law, he made income of the equitable owners, in a constitutional sense, by a distribution to them ? By such distribution each obtained his aliquot part of the capital assets, lessened somewhat in value, as they existed at the time of the passage of the Income Tax Law. If the corporation had made a return to the assessor of incomes before the distribution, it would not have, rightfully, included any part of the distributioned shares.
Many illustrations might he suggested, demonstrating, as it seems, the inconsistency of the decision now with State ex rel. Bundy v. Nygaard and the injustice of it as well. I will rest by giving one showing where such decision will lead.
If a person should adopt the common method of dividing his property between the members of his family without, presently, disorganizing it, of forming a corporation as a holding company and trustee, the shares of stock being made only large enough to admit of the desired division, and very small in proportion to the value of the property, and then distributing it, and the property is subsequently converted into money, without any addition thereto of value, and divided,, the shares would be reckoned as assessable income .in the hands of the distributee, notwithstanding sec. 1087m- — 4, making “inheritances, devises, bequests and gifts received during the year,” not assessable as incomes. The entire property without any gain by the mere transition from the corporation would be converted into assessable income. State ex rel. Bundy v. Nygaard, adhered to, in its unanswerable logic, in my judgment, would render such an unreasonable administration impossible.
I do not care to say more about the decision in Van Dyke v. Milwaukee, 159 Wis. 460, 150 N. W. 509, than that the court there dealt with the ordinary dividends of a corporation made out of profits from business operations which were not readily traceable to the origin as to time. It did not involve, as here, a mere distribution of the property of a holding cor*54poration. So far as it was there said that every distribution to stockholders in excess of capital stock, creates income in the hands of each, regardless of whether the subject of distribution existed before the passage of the Income Tax Law, I think it is wrong. The situation is no different in this case, as I see it, than if the corporation had, without formal action denominating the distribution share, dividends, or converting the property into money, deeded to each stockholder his equitable part of the land, just as an individual trustee might do. No one would claim, I apprehend, if the value of the interest was no greater when received than at the time of the passage of the Income Tax Law, that it would include assessable income.
Rosekberry, J., concurs in the foregoing dissenting opinion.