
    LA BELLE IRON WORKS v. THE UNITED STATES.
    [55 C. Cls., 462 ; 256 U. S., 377.]
    Judgment was rendered in favor of the United States in the court below. On appeal the judgment was affirmed, and the Supreme Court decided:
    The act of October 3, 1917, c. 63, Tit. II, 40 Stat., 300, 302, in providing for a deduction of a percentage of “ invested capital ” before computation of the “ excess profits ” tax upon the income of a domestic corporation, does not mean to include in its definition of invested capital (sec. 207) any marking up of the valuation of assets upon the corporate books to correspond With increase of market value or any paper transaction by which new shares are issued in exchange for old ones in the same corporation but which is no.t in substance and effect a new acquisition of capital property by.it.
    A corporation, having acquired ore lands for $190,000.00 proved, by extensive explorations and developments, that their actual cash value was over $10,105,500; thereupon, in 1912, it increased their book valuation by adding $10,000,000, as surplus, and based thereon, declared a stock dividend for $9,915,400, which was carried out by surrender and cancellation of all the common stock, of like aggregate par value, and the issuance of one share each of preferred and new common stock for each share of the stock surrendered. The increased value of the ore lands persisted when an excess profits tax was laid under the act of 1917, supra. Held: That such increase of value was not included in- “ invested capital ” under sec. 207 (a) (3), as “paid in or earned surplus and undivided profits” (though an amount equal to the cost of the exploration and development might be), nor under id. (2) as “ the actual cash value of tangible property paid in other than cash, for the stock or shares ” of the corporation.
    The fifth ámendment having no “ equal protection ” clause, the only rule of uniformity prescribed by the Constitution respecting duties, imposts, and excises is the territorial uniformity required by Art. I, sec. 8.
    There were reasons, both theoretical and practical, including that of convenience in administration, for basing “ invested capital ” upon actual costs to the exclusion of higher estimated values; and resulting inequalities to corporations differently situated do not make out an arbitrary discrimination, amounting to confiscation and violating tbe due process clause of the Fifth Amendment.
   Mr. Justice PitNet

delivered the opinion of the Supreme Court May 16, 1921.  