f 1908, and the amount distributed in 1919, when the
insured received the amount of his policy plus cash dividends
apportioned thereto since 1908, constituted a gain, that portion of the
latter which accrued between 1908 and 1913 was deemed to be an accretion
of capital and hence not taxable.[39]

DEDUCTIONS; EXEMPTIONS, ETC.

Notwithstanding the authorization contained in the Sixteenth Amendment
to tax income "from whatever source derived," Congress has been held not
to be precluded thereby from granting exemptions.[40] Thus, the fact
that "under the Revenue Acts of 1913, 1916, 1917, and 1918, stock fire
insurance companies were taxed * * * upon gains realized from the sale
* * * of property accruing subsequent to March 1, 1913," but were not so
taxed by the Revenue Acts of 1921, 1924, and 1926, did not prevent
Congress, under the terms of the Revenue Act of 1928, from taxing all
the gain attributable to increase in value after March 1, 1913 which
such a company realized from a sale of property in 1928. The
constitutional power of Congress to tax a gain being well established,
Congress, was declared competent to choose "the moment of its
realization and the amount realized"; and "its failure to impose a tax
upon the increase in value in the earlier years * * * [could not]
preclude it from taxing the gain in the year when realized * * *"[41]
Congress is equally well equipped with the "power to condition, limit,
or deny deductions from gross incomes in order to arrive at the net that
it chooses to tax."[42] Accordingly, even though the rental value of a
building used by its owner does not constitute income within the meaning
of the amendment,[43] Congress was competent to provide that an
insurance company shall not be entitled to deductions for depreciation,
maintenance, and property taxes on real estate owned and occupied by it
unless it includes in its computation of gross income the rental value
of the space thus used.[44]

ILLEGAL GAINS AS INCOME

In United States _v._ Sullivan[45] the Court held, in 1927, that gains
derived from illicit traffic in liquor were taxable income under the Act
of 1921.[46] Said Justice Holmes for the unanimous Court: "We see no
reason * * * why the fact that a business is unlawful should exempt it
from paying the taxes that if lawful it would have to pay."[47] But in
Commissioner _v._ Wilcox,[48] decided in 1946, Justice Murphy, speaking
for a majority of the Court, held that embe