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Koshland v. Helvering
Supreme Court of the United States (1936) | 298 U.S. 441; 56 S. Ct. 767; 80 L. Ed. 1268; 1936 U.S. LEXIS 1064; 105 A.L.R. 756; 17 A.F.T.R. (P-H) 1213
TL;DR: The Supreme Court held that a stock dividend paid in common shares on preferred shares, altering the shareholder's proportionate interest, constitutes taxable income and does not reduce the cost basis of the original preferred shares for capital gains purposes.
Legal Significance: This case established that stock dividends altering a shareholder's proportionate interest are taxable income, distinguishing them from non-taxable pro-rata stock dividends that do not change such interests, as articulated in *Eisner v. Macomber*.