TAXATION - INCOME FROM SALE OF GOODS WITHIN THE UNITED STATES

Authors

Michigan Law Review, University of Michigan Law School

Abstract

The commissioner of internal revenue assessed income and profits taxes against a Mexican corporation for its sales of oil to domestic buyers under the provisions of section 2 33 (b) of the Revenue Acts of 1918 and 1921. The statutes taxed income from the "sale" of personal property "within the United States." The commissioner contended that the essential character of the transaction-the contract of sale-is the decisive factor in determining the place of sale for this purpose. Since the contracts were made here and called for payment at the offices of the seller's agents in this country, the sales occurred within the United States. He also argued that title passed to the buyer within this country because the contracts provided for inspection and gauging by representatives of both parties at the place of delivery. Some of the contracts called for delivery to the buyer's tank ships at the seller's wharf in Mexico. The other contracts called for delivery c.i.f. buyer's wharf in Texas. The latter shipments were made by ocean common carriers. All of the oil was produced in Mexico, part by the seller and the balance of it was purchased. The Board of Tax Appeals rejected the contention of the commissioner, and the Circuit Court of Appeals in affirming the Board held the "sale" occurred and the income was earned where title passed, upon delivery to the ocean carriers in Mexico, consequently the income was not taxable. Commissioner of Internal Revenue v. East Coast Oil Co., S. A. (C. C. A. 5th, 1936) 85 F. (2d) 322.

Recommended Citation

Michigan Law Review, TAXATION - INCOME FROM SALE OF GOODS WITHIN THE UNITED STATES, 35 Mich. L. Rev. 1195 (1937).
Available at: https://repository.law.umich.edu/mlr/vol35/iss7/24