CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is Towne v Eisner?

Towne v. Eisner

This was a landmark court case in the US in 1918 over the issue of investor taxes. The Supreme Court ruled that a stock dividend based on accumulated profits was not ‘income' within the true intent of the United States Constitution.

Where have you heard about Towne v Eisner?

Businessman Henry R Towne brought the case against Mark Eisner, who was the man responsible for revenue collection. He took action to try to recover money collected by the government, arguing that a stock dividend where the shareholder received no actual cash should not be classed as income.

What you need to know about Towne v Eisner.

In the aftermath of the case, Congress passed a new law that specifically stated that stock dividends were to be counted as income.

However, another tax case was brought before the Supreme Court in 1920. In Eisner v Macomber, the court ruled that dividends of a corporation declared by issuing its own stock were not income within the meaning of the Sixteenth Amendment to the constitution.

It turned out that the success of investors in avoiding tax was somewhat short lived.

Find out more about Towne v Eisner.

Read our definition of Eisner v Macomber for another key financial case.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading