Appeal, No. 5, May T., 1954, from judgment of Court of Common Pleas of Dauphin County, 1951, Commonwealth Docket No. 71, in case of Commonwealth of Pennsylvania v. First National Bank of Scranton. Judgment affirmed. Appeal by taxpayer from decision of Board of Finance and Revenue refusing to review settlement for tax on value of shares of stock. Before SOHN, J. Adjudication filed finding for Commonwealth; exceptions to decree dismissed and judgment entered for Commonwealth. Taxpayer appealed.
Charles H. Welles, 3rd, with him Welles & Mackie, for appellant.
George W. Keitel, Deputy Attorney General, with him Frank F. Truscott, Attorney General, for Commonwealth, appellee.
George F. Shinehouse, Jr., with him Albert Barnes Zink, for First National Bank of Sunbury, et al., amicus curiae.
Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.
OPINION BY MR. JUSTICE BELL
This is an appeal from a judgment upholding a tax settlement made by the Board of Finance and Revenue fixing for purposes of taxation the value of the shares of stock of The First National Bank of Scranton. The Act imposes a tax on shares of capital stock of corporations doing a banking business: Act of July 15, 1897, P.L. 292, § 1, as amended, 72 PS § 1932; upon the actual value of such shares.
Section 1 of the Act provides: "... the actual value of each share of stock to be ascertained and fixed by adding together the amount of capital stock paid in, the surplus and undivided profits, and dividing this amount by the number of shares."
This Court held that the tax was imposed upon the actual value of the shares and not their book value: Commonwealth v. Butler County National Bank, 376 Pa. 66, 70, 101 A.2d 699.
The shares were valued by the Commonwealth at their actual value, based upon a determination that the loans and discounts, mortgages and judgments had an actual value equal to their face value.
Where, as here, no attempt is made by a bank to appraise the value of each individual loan and discount, the Board allows a bank to set up a reserve for losses upon loans and discounts based upon a 5 year business cycle. This reserve may be used to reduce the face value of such loans and discounts. Expressed in another way, the amount of such reserves may be subtracted from the assets in computing the bank's surplus and ...