Missouri-Kansas-Texas Railroad v. State Tax Commission

The opinion of the court was delivered by

Dawson, C. J.:

This appeal presents the question whether a railway company may deduct from its net annual income so much thereof as it earned carrying the United States mails in computing its annual income tax.

For the years 1935 and 1936 the railway deducted from its Kansas allocable income so much of its net earnings as it received from the federal government for hauling the mails and paid an income tax only on the remainder. The state tax commission rejected that basis of computation and assessed additional income taxes against the company in the sums…