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items specifically excluded from gross income,
see part III (sec. 101 and following).
A. Different Categories of Income
Nothing in the text of the constitutional provisions
requires all income categories to be treated identically, or
requires all income categories to be added together or offset, in
the case of losses in one or more categories.
United States v. Hudson, 299 U.S. 498 (1937), was a suit for
refund of a 50-percent tax imposed on profits from transfers of
interests in silver bullion. In the course of the Supreme
Court’s analysis, the Court held that this was an income tax and
further held as follows (299 U.S. at 500):
It is not material that such profit is
taxed, along with other gains, under the
general income tax law, for Congress has
power to impose an increased or additional
tax if satisfied there is need therefor.
Patton v. Brady, 184 U.S. 608, 620-622.
Wilson Milling Co. v. Commissioner, 138 F.2d 249 (8th Cir.
1943), affg. 1 T.C. 389 (1943), involved an “unjust enrichment
tax” imposed by the Revenue Act of 1934, ch. 277, 48 Stat. 680.
The Circuit Court of Appeals dealt with the taxpayer’s
constitutional challenge as follows (138 F.2d at 251):
But the petitioner asserts that Congress
was without power to impose an unjust
enrichment tax upon a person in a year when
his operations as a whole resulted in a loss,
which is to say, in effect, that Congress, in
such a situation, may not segregate a
particular type of income and impose a
special tax upon it. The Supreme Court,
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