Chesebrough v. City and County of San Francisco

Taxation op Shakes op Stock in Domestic Corporation.;—Under the provisions of the state constitution, declaring that all property in the state, not exempt under the laws of the United States, shall he taxed in proportion to its value, to he ascertained as provided by law, and that the word “property” includes shares of stock, and sections 3617 and 3627 of the Political Code, it is the duty of the assessor to assess shares of stock in corporations organized under the laws of California at their full value, unless there is something in the provisions of such code which exempts them from such-,, taxation.

Id.—Value op Shares op Stock, How Determined—Double Taxation.—Under seetion 3608 of the Political Code, for purposes of taxation, the shares of stock in a corporation represent the value of the aggregate of the assets of the corporation, and have no value independent of the corporate property, and when all such property is assessed to the corporation it would be double taxation to assess the shares as well as the corporate property. Such result could only follow where all the property of the corporation was assessed to it, and would not result where none, or only a portion of the property of the corporation going to make up the value of the stock, was taxed to it.

Id.—Property Outside of State—No Deduction on Account op.— While the value of the corporate shares is determined by the aggregate value of the corporate property, such property may or may not be within the jurisdiction of the state for purposes of taxation. If it is within the state, and assessed to the corporation, then the shares of stock cannot also be assessed to the stockholders, as that would constitute double taxation. But section 3608 of the Political Code does not exempt such shares from taxation when all the assets of the corporation are not taxed in this state by reason of the fact that some of .them are beyond its jurisdiction. Neither is it material that the tangible property of the corporation is situated in some other state and has there been taxed. The fact that some of the property of the corporation is assessed in another state or country is no prohibition of the taxation of the shares of stock hell here. The inhibition of double taxation only applies to such taxation in the same state or government.

Id.—Construction op Section 3608 op Political Code — Value op Stock, How Determined. — Section 3608 of the Political Code, properly construed, only means that when the aggregate property of a California corporation is assessed in this state, shares of stock of the corporation shall not be assessed, but that if all such property is not here assessed the actual value of such stock, less the value of the corporate property which is assessed here, shall be taxed. Property of the corporation located outside of the state, and over which the state cannot exercise its sovereign power of taxation, is not to be considered in diminishing the actual value of the stock held here for purposes of taxation. A contrary construction of that section would render it unconstitutional.