Washington
How Eisner v. Macomber applies in Washington: state-specific rules, key cases, and bar exam notes for Tax Law.
Washington follows the principles established in Eisner v. Macomber regarding the taxation of income and the definition of income. The state courts uphold the distinction between realized gains and unrealized appreciation, ensuring that only income truly reached or received by taxpayer is subject to taxation.
In Washington, income is only taxable when it has been realized and is not merely on paper gains. This aligns with the federal principle that emphasizes the need for a taxable event.
The Washington Supreme Court affirmed that taxation of unrealized gains is unconstitutional, echoing the principles of Eisner v. Macomber.
The court ruled that income must be measured based on actual transactions and not mere appreciation in value.
The case reinforces the distinction between corporate profit and individual income for taxation purposes, consistent with Eisner.
Washington's approach to the principles from Eisner v. Macomber closely mirrors the federal standard concerning income taxation, particularly in terms of the realization requirement. However, Washington has further emphasized restrictions against taxing unrealized gains, providing additional protections under state law.
Eisner v. Macomber's principles about income taxation and realization events are relevant for Washington bar exam questions focusing on tax law and constitutional issues surrounding taxation.