physical assets were leased to and used by the latter
was declared to be a nontaxable bookkeeping transaction between
virtually identical corporations.

[17] 247 U.S. 347 (1918).

[18] 252 U.S. 189, 206-208 (1920).

[19] Eisner _v._ Macomber, 252 U.S. 189, 207, 211-212 (1920). This
decision has been severely criticized, chiefly on the ground that gains
accruing to capital over a period of years are not income and are not
transformed into income by being dissevered from capital through sale or
conversion. Critics have also experienced difficulty in understanding
how a tax on income which has been severed from capital can continue to
be labeled a "direct" tax on the capital from which the severance has
thus been made. Finally, the contention has been made that in stressing
the separate identities of a corporation and its stockholders, the Court
overlooked the fact that when a surplus has been accumulated, the
stockholders are thereby enriched, and that a stock dividend may
therefore be appropriately viewed simply as a device whereby the
corporation reinvests money earned in their behalf. _See also_
Merchants' Loan & T. Co. _v._ Smietanka, 255 U.S. 509 (1921).

[20] Reconsideration was refused in Helvering _v._ Griffiths, 318 U.S.
371 (1943).

[21] United States _v._ Phellis, 257 U.S. 156 (1921); Rockefeller _v._
United States, 257 U.S. 176 (1921). _See also_ Cullinan _v._ Walker, 262
U.S. 134 (1923).

In Marr _v._ United States, 268 U.S. 536, 540-541 (1925) it was held
that the increased market value of stock issued by a new corporation in
exchange for stock of an older corporation, the assets of which it was
organized to absorb, was subject to taxation as income to the holder,
notwithstanding that the income represented profits of the older
corporation and that the capital remained invested in the same general
enterprise. Weiss _v._ Stearn, 265 U.S. 242 (1924), in which the
additional value in new securities was held not taxable, was likened to
Eisner _v._ Macomber, and distinguished from the aforementioned cases on
the ground of preservation of corporate identity. Although the "new
corporation had * * * been organized to take over the assets and
business of the old * * *, the corporate identity was deemed to have
been substantially maintained because the new corporation was organized
under the laws of the same State with presumably the same powers as the
old. There was also no change in the character of the secu