Commissioner v. Glenshaw Glass, 358 U.S. 426 (1955)

By ftsig-admin | June 7, 2025

Case Link: https://scholar.google.com/scholar_case?case=11404527107386030954

Wikipedia Article: https://en.wikipedia.org/wiki/Commissioner_v._Glenshaw_Glass_Co.

IMPORTANCE:

This case is famous because it redefined “gross income” for the purposes of I.R.C. 61 to mean “all accessions of wealth over which the taxpayer has complete dominion”. Prior to this case, Stratton’s Independence v. Howbert, 231 U.S. 399, 415, 34 S.Sup.Ct. 136, 140 58 L.Ed. 285, Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185, 38 S.Sup.Ct. 467, 469, 62 L.Ed. 1054, and Eisner v. Macomber, 252 U.S. 189, 207, 40 S.Ct. 189, 9 A.L.R. 1570 (1920) all limited “income” to PROFIT or GAIN and not GROSS receipts.

This case appears to have redefined “gross income” ONLY for those having exactly the same standing as the parties to this case. In this case, that standing was domestic corporation that filed an 1120 domestic return to include gross receipts rather than mere profit. This principle of limiting the applicability of caselaw to cases with parties having the same standing and status is called the Stare Decisis Doctrine and sometimes the Law- of-the-Case Doctrine, which requires party-specific case application only to parties similarly situated and in the same general class.

This case redefined “income” in CONTRADICTION to Eisner earlier and didn’t explain why:

“In order, therefore, that the [apportionment] clauses cited from article I [§2, cl. 3 and §9, cl. 4] of the Constitution may have proper force and effect …[I]t becomes essential to distinguish between what is an what is not ‘income,’…according to truth and substance, without regard to form.  Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone, it derives its power to legislate, and within those limitations  alone that power can be lawfully exercised… [pg. 207]…After examining dictionaries in common use we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909, Stratton’s Independence v. Howbert, 231 U.S. 399, 415, 34 S.Sup.Ct. 136, 140 [58 L.Ed. 285] and Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185, 38 S.Sup.Ct. 467, 469, 62 L.Ed. 1054…”

[Eisner v. Macomber, 252 U.S. 189, 207, 40 S.Ct. 189, 9 A.L.R. 1570 (1920);
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

“…Whatever difficulty there may be about a precise scientific definition of ‘income,’ it imports, as used here, something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities.”

[Doyle v. Mitchell Brothers Co. , 247 U.S. 179, 185, 38 S.Ct. 467 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

“This court had decided in the Pollock Case that the income tax law of 1894 amounted in effect to a direct tax upon property, and was invalid because not apportioned according to populations, as prescribed by the Constitution.  The act of 1909 avoided this difficulty by imposing not an income tax, but an excise tax upon the conduct of business in a corporate capacity, measuring, however, the amount of tax by the income of the corporation…Flint v. Stone Tracy Co., 220 U.S. 107, 55 L.Ed. 389, 31 Sup.Ct.Rep. 342, Ann. Cas.”

[Stratton’s Independence v. Howbert, 231 U.S. 399, 414, 58 L.Ed. 285, 34 Sup.Ct. 136 (1913);
SOURCE: https://scholar.google.com/scholar_case?case=11971357151204259952]

The parties to this suit were corporations and filed the 1120 form as DOMESTIC corporations rather than FOREIGN corporations using the 1120-F. The parties to this suit were NOT human beings or nonresident aliens. Thus, it did NOT apply to anyone other than those with the status of the parties in this suit.

We remind the reader that corporations such as those that were party to this case are fictions of law that do not HAVE constitutional rights, so the constitution does not limit the definition of “income” in their case. Human beings or nonresident aliens standing on land protected by the constitution, however, are limited to taxes only on profit and not gross receipts. As a result of this case:

  1. “Income” means gross receipts for domestic corporations and other artificial entities.
  2. “income” STILL means profit for human beings filing as nonresident aliens.
  3. Since “U.S. persons” are privileged fictions by consent or election and receiving privileges, they too must include gross receipts in their “gross income”.
  4. However, if the taxpayer is a human being, a nonresident alien, and is standing on land protected by the constitution, then the constitutional definition of “income” as profit only applies RATHER than gross receipts.
  5. This case in referring to the “Taxpayer” having “full dominion” over the amount in question is a sophist method of saying that the entire amount is a privilege earned by a domestic entity that is public property, and thus is not private property protected by the constitution.

The above are confirmed by the text of 26 U.S.C. 871(a) which is income from “sources within the United States” that is not connected to the “trade or business” excise taxable franchise and privilege:

26 U.S. Code § 871 – Tax on nonresident alien individuals

(a)Income not connected with United States business—30 percent tax

(1)Income other than capital gains

Except as provided in subsection (h), there is hereby imposed for each taxable year a tax of 30 percent of the amount received from sources within the United States by a nonresident alien individual as—

(A)interest (other than original issue discount as defined in section 1273), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income,

(B)gains described in subsection (b) or (c) of section 631,

The “income” mentioned above is NEVER defined in the entire I.R.C. In fact, it doesn’t NEED to be defined because as we pointed out above, the CONSTITUTION defines it as PROFIT in the case of a nonresident alien who is a national and not a privileged alien and who is standing on land protected by the constitution. This is similar to the definition of “gross income” in I.R.C. 61, which also uses the word “income”.

This case is also important because the U.S. Supreme Court is not a legislative body that can define ANYTHING. Only Congress can do that. And in fact, in the Eisner case the U.S. Supreme Court admitted that not even Congress can define “income” for CONSTITUTIONAL purposes. So this case did NOT indeed define “gross income” to mean GROSS RECEIPTS rather than profit in the case of those who have constitutional rights, which means nonresident aliens standing on land protected by the constitution ONLY.

This case also contradicts the holdings in the following, which are that “income” does not mean gross receipts but PROFIT:

  1. Wright v. United States, 302 U.S. 583 (1938)
    SOURCE: https://scholar.google.com/scholar_case?case=1412045407043087473
  2. Southern Pacific v. Lowe, 247 U.S. 330
    SOURCE: https://scholar.google.com/scholar_case?case=9702563774965412467&
  3. Bowers v. Kerbaugh Empire Co, 271 U.S. 170 (1926)
    SOURCE: https://scholar.google.com/scholar_case?case=9246029933485828434

This case never reconciled why these previous cases were not violated or superseded. It didn’t because if they did explain why, they would have to admit that all the corporations have no constitutional rights because they are franchises, and therefore that their “gross income” is everything that comes in as a result. None of the cases discussed here reference human being standing on land protected by the constitution who are foreign and not domestic, because for these people, the constitutional definition of “income” would be limited to profit in THEIR case. Thus, it is obvious why the government would prefer to cite this case for its definition of “gross income” as gross receipts as identified in Wikipedia: They unjustly get more revenue!

This three-part “test” for determining income is broader than the earlier test employed by the Court in Eisner v. Macomber,[3] and is to this day the preferred test for identifying gross income.

[Wikipedia: Commissioner v. Glenshaw Glass Co.; SOURCE: https://en.wikipedia.org/wiki/Commissioner_v._Glenshaw_Glass_Co.]

If you would like to study the historical evolution of “income” and “gross income”, see:

Authorities on “income”, Family Guardian Fellowship
https://famguardian.org/TaxFreedom/CitesByTopic/income.htm

Posted in Major SCOTUS cases