tressed by the following observation:
"It is true that the surtax is imposed upon the annual income only if it
is not distributed, but this does not serve to make it anything other
than a true tax on income within the meaning of the Sixteenth Amendment.
Nor is it true, * * *, that because there might be an impairment of the
capital stock, the tax on the current annual profit would be the
equivalent of a tax upon capital. Whether there was an impairment of the
capital stock or not, the tax * * * was imposed on profits earned during
* * *--a tax year--and therefore on profits constituting income within
the meaning of the Sixteenth Amendment."[27] Likening a cooperative to a
corporation, federal courts have also declared to be taxable income the
net earnings of a farmers' cooperative, a portion of which was used to
pay dividends on capital stock without reference to patronage. The
argument that such earnings were in reality accumulated savings of its
patrons which the cooperative held as their bailee was rejected as
unsound for the reason that "while those who might be entitled to
patronage dividends have, * * *, an interest in such earnings, such
interest never ripens into an individual ownership * * * until and if a
patronage dividend be declared." Had such net earnings been apportioned
to all of the patrons during the year, "there might be * * * a more
serious question as to whether such earnings constituted 'income' [of
the cooperative] within the Amendment."[28] Similarly, the power of
Congress to tax the income of an unincorporated joint stock association
has been held to be unaffected by the fact that under State law the
association is not a legal entity and cannot hold title to property, or
by the fact that the shareholders are liable for its debts as
partners.[29]

Whether subsidies paid to corporations in money or in the form of grants
of land or other physical property constitute taxable income has also
concerned the Court. In Edwards _v._ Cuba Railroad Co.[30] it ruled that
subsidies of lands, equipment, and money paid by Cuba for the
construction of a railroad were not taxable income but were to be viewed
as having been received by the railroad as a reimbursement for capital
expenditures in completing such project. On the other hand, sums paid
out by the Federal Government to fulfil its guarantee of minimum
operating revenue to railroads during the six months following
relinquishment of their control by that g