Treasury Department : weoa- of Internaí Revenue

Internaí Revenue uííetín
Cumuíatíve uííetín 1939-1
(P RT 1)
NU RY- UN , 1939
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S TLCI í TT NTION dírected to the cautíonary notíce on thís page that pub-
of Treasury Decísíe
ííshed ruííngs of the ureau do not ha ve the force and effect
that they are appíícabíe oníy to facts presented ín the pubííshed case
ureau of Internaí Revenue
Internaí Revenue uííetín
Cumuíatíve uííetín 1939-1
(P RT 1)
NU RY- UN , 1939
IN T IS ISSU
Introductory INofes Iíí
Contents - - - II
Ruííngs Nos. 9655-9 96-
oard of Ta ppeaís 1_ 9
Ta € ”
I (Internaí Revenue Code and 193 ct) . 71-15
Part n (1937 and 1936 cts) . 159- 16
Part III (1935 and 1934 or Príor cts) . . . . 211-2 2
mpíoyment Ta es 2 3-324
Mísceííaneous Ta es-
state and Gíft Ta es 325-342
CaP taí Stock Ta 343-350
Saíes Ta es 351-390
Mísceííaneous Ruííngs 391-431
Inde 433-445
re report, en the Revenue rts (1913 to 193 . íncíusíve) .ííí ae
puu.ít.ící u P.tí 2 oí tbu Cumuíatíve uííetín)
- 1 nternaí Revenue uííetín art for the ínformatíon of íupíTtrt ana theír connseí as
_ opíníon ín the admínístratíon oí the ureau oí Internaí Revenue the ruííngs other than
s T aone of the force or efíect oí Treasury Decísíons and do not commít the Department to
íaw whích has not been formaííy approred and promuígated b|r the Secretary oí the.
– T – € ” bodíes the admínístratíve appíícatíon oí the íaw and Treasury Decísíons to the entíre
rath r teas partícuíar case rests. It ís especíaííy to be noted that the same resuít wííí not neces-
af (acts tspo nícr esse uníess aíí the materíaí íacts are ídentícaí wíth those oí the reported case. a ít ís
be re-asctaed Ms -.Usb compíete suteraent oí the facts underíyíng each ruííng, there can be no assurance
– ra|s feasíbíe: 10 .P € ž tít a.í wííh the reported case. s bearíng out thís dístínctíon, ít may be obserTcd that the
are new/ cas – 1 tíras e tíme may appear to reverae ruííngs prevíousíy pubííshed.
bíísbed rom „ „ | íOIC,Mí Revenue are especíaííy cautíoned agaínst reachíng a concíusíon ín any case
of tt.e PurC -L|ííaríty to e pubííshed ruííng, and shouíd base theír |udgment on the appíícatíon of aíí per-
the basís |í Mnd Treasury Decísíons to aíí the íacts ín each case. These ruííngs shouíd be used as
„ asset íts formaí constructíon as made ín the reguíatíons and Treasury Decísíons prevíousíy
. _ . - a aíí IaterneíRerenue Treasury Decísíons, ít ís the poíícy oí the ureau of Internaí Revenue
„ í-a mod decísíons, íncíudíng opíníons oí the Chíef Connseí íor the ureau oí Internaí
raís 1 tbey announce a ruííng or decísíon opon a nose questíon or upon a questíon ín regard
because eT 0íísíy pubííshed ruííng or decísíon, or íor other reasons, are of such ímportance aa
there _ r t U aíso títt poíícy oí the ureau to p
€ ” . - € ” . -- € 3 pubíísh aíí ruííngs or decísíons whích revoke, modífy,
r fíeet íaa ssasy manner whatever any pubííshed ruííng or decísíon. In many ínstances opíníons of the
- , , , í for the ureau pí Internaí Revenue are not ot generaí ínterest because the announce
._7: € ž no new constructíon of the revenue íaws but símpíy appíy ruííngs aíready made pubííc ín certaín
sew ruííng o ,re wíthooí specíaí sígnífícance. It ís not the poíícy of the ureau to pubíísh such opíníons.
atuatíoM oí tact e ,, assígned to the pubííshed opíníons oí the Chíef Connseí íor the ureau of
1 teretore, are not cansecnove. Ps0 unpubííshed ruííng or decísíon wííí be cíted or reííed upon by any offícer
– T € ž , € ž ,he ureau of Internaí Reven.e as a precedent ín the dísposítíon of other cases. Uníess otherwísa
.od.catrd. aU pubííshed ruííngs and decísíons have receíved the consíderatíon and approvaí of the
S nse for the Ia nuí
€ a e of tesveraí ín r rst
– nr í. or e
Chíef Counseí
s|wOT D ST T S GO RNM NT PRINTING O IC : W S INGTON : 1939
of Documents, Washíngton. D. C - - See hack oí títíe for príce.
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The Internaí Revenue uííetín servíce for 1939 wííí consíst of weekíy
buííetíns and semíannuaí cumuíatíve buííetíns.
The weekíy buííetíns wííí contaín the ruííngs and decísíons to be
made pubííc and aíí Treasury Department decísíons (known as Treasury
decísíons) pertaíníng to Internaí Revenue matters. The semíannuaí
cumuíatíve buííetíns wííí contaín aíí ruííngs and decísíons (íncíudíng
Treasury decísíons) pubííshed duríng the prevíous sí months.
The compíete uííetín servíce may be obtaíned, on a subscríptíon
basís, from the Superíntendent of Documents, Government Príntíng
Offíce, Washíngton, D. C, for 3 per year foreígn, 4.25. Síngíe
copíes of the weekíy uííetín, 5 cents each.
New subscríbers and others desíríng to obtaín the 1919, 1920, and
1921 Income Ta Servíce may do so from the Superíntendent of Docu-
ments at príces as foííows: Dígest of Income Ta Ruííngs No. 19
(contaíníng dígests of aíí ruííngs appearíng ín Cumuíatíve uííetíns
1 to 5, íncíusíve), 50 cents per copy Cumuíatíve uííetíns Nos. 1 to 5,
contaíníng ín fuíí aíí ruííngs pubííshed sínce príí, 1919, to and ín-
cíudíng December, 1921, as foííows: No. 1, 30 cents No. 2, 25 cents
No. 3, 30 cents No. 4, 30 cents No. 5, 25 cents.
Persons desíríng to obtaín the Saíes Ta Cumuíatíve uííetíns for
anuary- une and uíy-December, 1921, may procure them from the
Superíntendent of Documents at 5 cents per copy.
Persons desíríng to obtaín the Internaí Revenue uííetín servíce for
the years 1922 to 193 , íncíusíve, may do so at príces as foííows:
Cumuíath
e uííetín.
Year.
Príce
(cents).
írst 6
months.
Second 6
months.
1922
1-1
1-2
40, 30
1923
II-í
II-2
30, 40
1924
III-í
III-2
50, 50
1925
I -1
I -2
40, 35
1926

-2
40, 30
1927
I-1
I-2
40, 40
192
II-1
II-2
35,50
1929-
III-1
I11-2
50, 55
1930
I -1
I -2
50, 50
1931

-2
65, 30
1932
I-1
I-2
30, 30
1933
I I-1
I1-2
30, 50
1934
III-1
III-2
50, 50
1935 -
I -1
I -2
50,50
1936
-1
-2
55, 46
1937.
1937-1
1937-2
60,50
193
193 -1
193 -2
60,50
1939
1939-1
50,-
Persons desíríng to obtaín the servíce ín dígest form may do so at
príces as foííows: Dígest No. 13 (1922-1924), 60 cents Dígest No. 17
(1925), 25 cents Dígest No. 21 (1926), 15 cents Dígest No. 22 (1925-
1927), 35 cents: and Dígest (íncome ta ruííngs oníy, príí, 1919, to
December, 1930, íncíusíve), 1.50.
íí ínquíríes ín regard to these pubíícatíons and subscríptíons shouíd
be sent to the Superíntendent of Documents, Government Príntíng
Offíce, Washíngton, D. C.
(II)
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D C 9
INTRODUCTORY NOT S.
The Internaí Revenue Cumuíatíve uííetín 1939-1, Part 1, ín addí-
tíon to aíí decísíons of the Treasury Department (caííed Treasury
decísíons) pertaíníng to Internaí Revenue matters, contaíns opíníons
of the Chíef Counseí, and ruííngs and decísíons pertaíníng to íncome,
estate, gíft, saíes, capítaí stock, e cess profíts, socíaí securíty, and
mísceííaneous ta es, as índícated on the títíe page of thís uííetín,
pubííshed ín the weekíy uííetíns ( oíume 1939-1, Nos. 1 to 26, ín-
cíusíve) for the períod anuary 1 to une 30, 1939. It aíso contaíns a
cumuíatíve ííst of announcements reíatíng to decísíons of the Uníted
States oard of Ta ppeaís pubííshed ín the Internaí Revenue uííetín
servíce from anuary 1, 1932, to une 30, 1939.
Income Ta ruííngs wííí be prínted ín three parts. The ruííngs
ín Part I wííí be prínted as Part I, (Internaí Revenue Code) and
(Revenue ct of 193 ), the sectíon headíngs correspondíng wíth
the sectíons of the Code and the 193 ct, respectíveíy, and the
artícíe headíngs correspondíng wíth the artícíe headíngs of Reguía-
tíons 101. Ruííngs under the Revenue cts of 1937 aníí 1936 wííí be
prínted as Part II, the sectíon headíngs correspondíng wíth the sectíon
headíngs of those cts and the artícíe headíngs correspondíng wíth
the artícíe headíngs of Reguíatíons 94. Ruííngs under the Revenue
cts of 1935 and 1934 or príor cts wííí be prínted as Part III, the
sectíon headíngs correspondíng wíth the sectíon headíngs of the varíous
cts and the artícíe headíngs correspondíng wíth the artícíe headíngs
of Reguíatíons 6.
Ruííngs under Títíe III of the Socíaí Securíty ct are pubííshed
under artícíe headíngs of Reguíatíons 91, ruííngs under Títíe I of
the Socíaí Securíty ct are pubííshed under artícíe headíngs of Regu-
íatíons 90 ruííngs under the Carríers Ta íng ct of 1937 are pubííshed
under the artícíe headíngs of Reguíatíons 100 and ruííngs under Títíe
III of the Revenue ct of 1936 € ” Ta on un|ust enríchment € ” are
coded under the sectíons of that ct and the artícíe headíngs of
Reguíatíons 95.
R I TIONS
The foííowíng abbrevíatíons are used throughout the uííetín:
, , C, etc. € ” The names of índívíduaís.
. R. M. € ” Commíttee on ppeaís and Revíew memorandum.
. R. R. € ” Commíttee on ppeaís and Revíew recommendatíon.
. T. € ” ícohoí Ta Unít.
. T. . € ” oard of Ta ppeaís.
C. . € ” Cumuíatíve uííetín.
Ct. D. € ” -Court decísíon.
C. S. T. € ” Capítaí Stock Ta Dívísíon.
C. T. € ” Ta es on mpíoyment by Carríers.
D. C. € ” Treasury Department círcuíar.
. T. € ” state Ta Dívísíon.
G. C. M. € ” Generaí Counseí s, ssístant Generaí Counseí s, or Chíef Counseí s
memorandum.
I. R. . € ” Internaí Revenue uííetín.
(ín)
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I
I. T. € ” Income Ta Unít.
M, N, , Y, Z, etc. € ” The names of corporatíons, píaces, or busínesses, accord-
íng to conte t.
Mím. € ” Mímeographed íetter.
MS. € ” Mísceííaneous Dívísíon.
O. or L. O. € ” Soíícítor s íaw opíníon.
0. D. € ” Offíce decísíon.
Op. . G. € ” Opíníon of the ttorney Generaí.
P. T. € ” Processíng Ta Dívísíon.
S. T. € ” Saíes Ta Dívísíon.
Síí. € ” Sííver Ta Dívísíon.
. M. € ” Soíícítor s memorandum.
Soí. Op. € ” Soíícítor s opíníon.
S. R. € ” Soíícítor s recommendatíon.
S. S. T. € ” Ta es on mpíoyment by Other than Carríers.
T. € ” Tobacco Dívísíon.
T. . M. € ” dvísory Ta oard memorandum.
T. . R. € ” dvísory Ta oard recommendatíon.
T. D. € ” Treasury decísíon.
and y are used to represent certaín numbers, and when used wíth the word
doííars represent sums of money.
The practíce of promuígatíng Treasury decísíons that embody
court decísíons reíatíng to the ínternaí revenue has been díscontínued.
ereafter opíníons of the courts, wíth appropríate headnotes for the
ínformatíon and guídance of ta payers and offícers and empíoyees of
the ureau of Internaí Revenue, wííí be pubííshed ín the Internaí
Revenue uííetín wíthout formaí approvaí and promuígatíon by the
Secretary of the Treasury.
NNOUNC M NT R L TING TO O RD O T PP LS D CISIONS.
Under the provísíons of the recent Revenue cts, reíatíng to ap-
peaís to the oard of Ta ppeaís, the Commíssíoner may acquíesce
ín the decísíon of the oard or he may, íf the appeaí was heard by
the oard príor to the passage of the 1926 ct, cause to be ínstítuted
a proceedíng ín court for the coííectíon of any part of a ta deter-
míned by the Commíssíoner to be due but dísaííowed by the oard,
províded that such proceedíng ís commenced wíthín one year after
fínaí decísíon of the oard. s to appeaís heard by the oard after
the passage of the 1926 ct, the Commíssíoner may, wíthín sí
months after the oard s decísíon ís rendered, fííe a petítíon for a
revíew of the decísíon by a Círcuít Court of ppeaís or by the Uníted
States Court of ppeaís for the Dístríct of Coíumbía however, as to
decísíons rendered on and after une 7, 1932, petítíons for revíew
must be fííed wíthín three months after the decísíon ís rendered.
In order that ta payers and the generaí pubííc may be ínformed as
to whether or not the Commíssíoner has acquíesced ín a decísíon of
the oard of Ta ppeaís dísaííowíng a ta determíned by the Com-
míssíoner to be due, announcement wííí be made ín the weekíy uííe-
tín at the earííest practícabíe date. notíce that the Commíssíoner
has acquíesced or has nonacquíesced ín a oard decísíon reíates, how-
ever, oníy to the íssue or íssues decíded ín favor of the ta payer.
Decísíons so acquíesced ín shouíd be reííed upon by offícers and
empíoyees of the ureau of Internaí Revenue as precedents ín the
dísposítíon of other cases before the ureau.
or addítíonaí ínformatíon whích wííí be of assístance ín the use
of the Internaí Revenue uííetín servíce read the Introductory Notes
to the íatest Dígest.
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CONT NTS.
Ruííng No.
1 .., ,..
Ruííng.
Ruííng No.
Page.
n – € ž
Chíef Counseí s memoranda-
4S77
1939-1-9556
190
Contínued.
1939-15-97 2
134
|g ::::
1939-3-9673
115
21000
101
1939-3-9674
169
21013
1939-23-9 62
1939-3-9572
6
211)40
1939-10-9744
242
I I
1939-3-9(1 2
423
1939-15-97
2í0
5
1939-4-9691
154
1939-26-9 90
164
1939-4-9 0
147
1939-17 9 06
351
1939- -9725
395
1939-14-9771
1 7
4vo
1939- -972
396
1939-22-9 50
169
1939- -9727
396
1939-1 9 13
141
1939- -972
397
1939-21 9 45
343
,
1939 11-9755
357
1939-25-9 3
201
1939-11-975
395
1939-20-0 33
191

1939-14-9774
377
oard of Taí ppeaís:
20,51
MM
1939-14-97SO
324
1939-13-9763
30
1939-15-9791
203
1939-6-9700
t
1939-16-9794
3 0
1939-6-9700
23
1939-16-97U
79
1939-6-9700
11
€ 1939-17-9 10
225
1939-19-9 21
2
19:19-17-0 11
394
1939-3-9671
- -
1939-1 -9 14
404
64165-6416
1939-3-9 71
3
ís :::::
1939-19-9 29
364
1939-3-9671
2
1939-20-9 39
7
1939-1-9655
3
1939-21-9 41
119
74241
1939-14-9769
23
4 01
1939-22-9 53
341
1939-3-9671
66
4902
1939-22-9 52
325
1939-16-4(792
11
1939-25-9 0
75
1939-9-9729
41
1.,(
1939-25-9 7
399
1939-9-9729
41
1939-26-9 93
394
1939-3-9671
10
Court decísíons:
1939-17-9 00
35
1373
1939-1-9657
221
7 424 .... ....
1939-17 9 00
1
1374
1939-1-965
3 9
7 425 I II
1939-17-9 10
35
1375
1939-2-9666
262
7R576... .................
1939-5-9692
51,5
1376 ....
1939-2-966
321
1939-6-9700
55
€ nr –
1939-3-967
411
7913
1939-11-9749
54
1939-3-96 0
234
1939 1 9 12
6
1379 - € ”
1939-3-96 1
239
1939- -971
69
1T 0
1939-4-96 6
267
1939- -971
69
13 1
1939 5-9696
327
1939- -971
5
13 2 ...
1939-6-9706
332
1939-5-9692
27
1939-7-9712
225
1939-19-9 21
10
13 4
1939-7-9713
22
1939-19-9 21
10,30
13 5
1939 -9721
243
1939-1-9655
31
1S
1939-9-9734
211
1939-1-9655
31
13 7 -
1939-11-9752
271
1939-1-9655
33
19:19-11-9753
336
79973
1939-1-9655
33
13 9
1939-13-9766
215
1939-5 9692
23
r.- í
1909-15-97 3
129
1939-21-9 10
23
1391
1939-15-97 6
260
1939-7-970
31.62
1392
1939-16-9795
229
0961
1939-19-9 21
63
13 3
1939-16-9796
233
1939-23 9 60
3
1394
1939-17-9 04
263
1939-6-9700
29
1395 r,
1939-1 -9 15
277
1939-12-9757
69
139
1939-1 9 17
330
1939-9-9729
4
1397
1939-19-9 24
253
1939-16-9792
13
139
1939-20-9 34
24
1939-23-9 60
5
1399
1939-21-9 43
257
1939-7-970
62
1400
1939-22-9 55
3T3
1939-10-9740
3
1401
1939-23-9 63
160
. 2160
1939-7-170
40
1402
1939-23-9 65
3 1
31
/ 1939- -971

1939-24-9 73
274
1939-16-9792

1404
1939-25-9 3
219
2461
1939-2-9663
23
1405
1939-26-OS92
235
2462
1939-2-9663
23,55
Chíef Counseí s memoranda:
2552
1939-5-9692
2
30547
1939-5-9093
125
19.19-17-ífr 00
4
1939-9-9731
102
1939-14-9769
19
1939-2-9665
174
2 61_
1939-14-9769
19
32
1939-5-9694
1
2 63_
1939-1 -9 12
20965
1939-14-4)772
194
3I0 _
1939-16-9792
29
1939- -9720
243
1939-2-9063
35,6
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I
ííííng.
oard of Taí ppeaís € ” Con
3169-
3171.._
3173_
3175.
3177_
3249
3632-
3705
3745_
4020
4133__.
4276- 4279
4291- 4294-
4319 _
4529 _
463
4777 _
477
4779
47 0
47 1
4 12-
4934.
5242-
5679
5694_
6046
6047_
6469..-
6517_
53
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6 19
6 29_
6 61
77_
6 7 - 0-
6940
6941_
696 .
7103_
7203
7240_
7275.
7276_ ,
7277
727 _
7339. € ”
7399-
7400
7401_
7404
7423-
7441
753 -
7564..-
75 -
75 ..-
7651-
7 75..-
77 3-
7919
7997
000
072
167
1 0
212
213
261
274
453
561
565
569
605
730
731
93
944
949
951
9 1
9144
Ruííng No.
1939-2-9663
1939-2-9663
1939-2-9663
1939-2-9663
1939-2-9663
1939-14-9769
1039- -971
1939-1-9655
1939-5-9692
1939-23-9 60
1939-17-9 00
1939-2-9663
1939-2-9663
1939-12-9757
1939-1-9655
1939-9-9729
1939-17-9 00
1939-17-9 00
1939-17-9 00
1939-17-9 00
1939-17-9 00
1939-4-96 3
1939-9-9729
1939-6-9700
1939-24-9 6
1939-1-9655
1939-21-9 40
1939-21-9 40
1939- -971
1939-1 -9 12
1939-16-9792
1939-14-9769
1939-14-9769
1939-25-9 79
1939-14-9769
1939-22-9 47
1939-1-9655
1939-10-9740
1939-10-9740
1939-12-9757
1939-20-4 30
1939- -971
1939-11-9749
1939-12-9767
1939-12-9757
1939-12-9757
1939-12-9757
1939-11-9749
1939-9-9729
1939-9-9729
1939-9-9729
1939-1 -9 12
1939-13-9763
1939-14-9769
1939-23-9 60
1939-21-9 40
1939-4-96 3
1939-3-9671
1939-10-9740
1939- -9700
1939-10-9740
1939-24-9 6
1939-23-9 60
1939-23-9 60
1939-1 -9 12
1939-26-9
1939-20-9 30
1039-14-9769
1939-14-9769
1039-14-9769
1939-16-9792
1939-25-9 79
1939-13-9763
1939-1 -0 12
1939-6-9700
1939-21-9 40
1939-1-9655
1939-1-9655
1939-6-9700
1939-21-9 40
1939-19-9 21
1939-3-9671
1939-16-9792
Page.
35,66
35.66
35,66
35,
35,6
62
30
64
17
2
22,55
35,66
35,6
26
39
2 ,59
15
19
19
22
35
40
63
15
47
n
41
41
29
57
43
9
69
20
66
6
33
49
49
20
45,66
62
62
63
S3
59
S3
64
17
21
21
66
U
41
IS
111

40
12
6
5
62

4
19
11
11
11
1
40
43,66
6
39
69
20
22
4
66
67
22
4
21
uííng.
oard of Taí ppeaís € ” Con
9170
9171
9253
9267
926
9276
9363.
9442
95 4
9595
9671
9719
9759
9 0
9 76
9 77
9 7
9903
9917
9925
9944
9950
9002
90217
90260
90310
90414
90591
90661
90703 r _.
90710
90711
90. 33
91141
9119
91259
91260
91261
91371
91445
91572
91697
91705
92022
920 4
92177
92160
93304
93571
93572
Offíce decísíons (I. T.):
3241.
3242
3243.
3244
3245
3246
3247
324
3249
3250
3251 ,
3253.
3254.
3255.
3256.
3257.
325 .
3259.
3260.
3261.
3264.
3265.
32 6.
3267.
26
3269.
3270.
3271.
3272.
Ruííng No.
Page.
1939-3-9671
67
1939-10-9740
62
1939-21-9 40
11
1939-1-9655
67
1939-13-9763
12
1939-16-9792
2
1939-2 -9
120,34
53,65
1939-6-9700
13
1939-6-9700
4
1939-1 -9 12
69
1939-6-9700
37
1939-21-9 40
54
1939-16-9792
4
1933-10-9740
42
1939-14-9769
19
1939-14-9769
19
1939-14-0769
19
1939-23-9 60
22. 27
1939-19-U 21
4 ,50
1939-7-970
34
1939-24-9 6
11
1939-9-9729
34
1939-13-97 3
69
1939-9-9729
63
1939-14-9769
23,26
1939-3-9671
IS
1939-21-9 40
69
1939-14-9769
SO
1939-17-9 00
4
1939-3-9671
63
1939-20-9 30
23
1939-20-9 30
23
1939-23-9 60
64
1939-6-9700
1
1939-1 -9 12
13,22
1939-21-9 40
4
1939-21-9 40
23
1939-21-9 40
4
1939-10-9740
69
1939-24-9 6
7
1939-7-970
4
1939-14-9769
27
1939-1 -9 12
7
1939-26-9
62
1939-15-97 1
2
1939-19-9 21
60,63
1939-25-9 79
7
1939-16-9792
2
1939-24-9 6
17
1939-24-9 6
17, 1
1939-1-9661
16
1939-2-9654
172
1939-3-9675
162
1939-3-9676
1 1
1939-4-96 4
112
1939-4-96 5
137
1939-6-9702
113
1939-6-9703
140
1939-6-9704
143
1939-7-9709
111
1939-7-9710
113
1939-7-9711
1 2
1939- -9719
17
1939-9-9730
9
1939-9-9732
171
1939-9-9733
172
1939-9-9736
402
1939-10-9741
123
1939-10-9742
127
1939-10-9743
199
1939-11-9750
122
1939-12-975
96
1939-12-9759
193
1939-12-9760
121
1939-13-9764
97
1039-13-9765
144
1039-14-9770
17
1939-14-9773
196
1939-16-97 4
163
1939-15-97 5
179
1939-16-9793
105
1939-17-9 01
3
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Ofíttdeeíííons (I. T.) € ” Coo.
an.
3M..
Ruííng No. Page
Ruííng.
7..
sr ..
(3. . T.):
3 1.
decísíons (C. T.):
císíons (S. T):
Offíce dcdsí íns fC.
9. T.):
1939-17-9 02
1939-17-9 03
1939-17-9 07
1939-19-9 22
1939-19-9 23
1939-20-6 31
1939-20-9 32
1939-21-9 12
1939-22-9 49
1939-22-( S6
1939-23-9 1
1939-23-9 66
1939-24-9 69
1939-24-9 70
1939-24-9 71
1939-24-rS72
1939-24-9 75
1939-25-9 0
1939-25-0 1
1939-26-9 9
1939-26-9 91
1939-1-96 2
1939-2-9667
1939-4-96 7
1939-5-9595
1939-6-970
1939- -9724
1939-10-9746
1939-11-9754
1939-12-9762
1939-13-9767
1939-14-9775
1939-14-9776
1939-16-9797
1939-17-9 05
1939-1 -9 16
1939-19-9 25
1939-20-6 35
1U39-21-P 44
1939-22-9 51
1939-23-9 64
1939-24-9 74
1939-3-9677
1939-7-9717
1939-9-9735
1939-4-96
1939-14-9777
1939-1 - 1
1939-21-9 46
1939-22-9 54
1939-7-9716
1939-20-9 36
99
177
403
M
100
76
142
197
97
406
1
407
2
126
13
139
409
110
140
4
1 3
304
309
2 6
2 4
310
294
315
2
294
295
306
290
299
302
291
297
307
300
293
29
320
31
317
372
354
356
359
362
347
346
Offíce derísíons (MS.):
209.
210.
211.
212.
213.
214.
Offíce decísíons (T.):
54
5
56
7
6
9
Department círcuíar:
230 (revísed)
Mímeographs:
4 0
4 2
4906
4916
Ruííng No.
Mísceííaneous
1939-1-9660
1939-5-9699
1939-9-973
1939-9-9739
1939-14- 779
1939-1 -9 20
1939-22- 5
1939-2-9670
1939-6 9707
1 39-10-9747
1939-15-97 9
1 39-19- 27
1939-22-U 59
1 D9-24-C 76
1939- -9722
1939-10-9745
1939-19-9 26
1 39-22-9 4
1939-1-9659
1939-2- 669
193 - 3-9679
1939- 4-9 9
1939- -9697
1 19-5-969
1939-6-9701
1939-7-9714
1939-7- 715
1939- -9723
1 39-9-9737
1939-10-974
1939-11-9751
1939-12- 761
1939-13-976
1939-14-977
1939-15-97 7
1939-16-97 0
1939-16-9799
1939-17-9 0
1939-17-9 09
193 IS 9 19
1 39-19-9 2
1939-20-9 37
1939-20-9 3
1939-22-9 57
1939-23-9 67
1939-24 9 77
1939-24-9 7
1939-25-9 4
1939-25- 5
1939-26-9 94
1939-26-9 95
1939-26- 96
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CONT NTS O CUMUL TI ULL TINS (I. T.) 1 TO 5 S. T. OR 1920 ND 1921: INT RN L
R NU M. 1-2. II-í. II-2, ní í, III-2, I -1. 1 -2. -í. -2, I-1, I-2, T1-1, II-2. I-1. III-2,
I -1, I -2, -L -2. I I. I-2, II I. II-2. TII-1. I-2. I -1, I -2. I. -2. 1937-1. 1937-2.
193 -1. 193 -2. ND 1939-1 (P RT 1 ND P RT 2).
Cumuíatíve uííetín.
Income Ta :
December, 1919 (No. 1)
anuary- une, 1920 (No. 2) -.-
uíy-December, 1920 (No. 3). ---
anuary- une, 1921 (No. 4)...
uíy-December, 1921 (No. 5)
Saíes Ta :
1920 (S. T. 1-20) -
anuary- une, 1921
uíy-December, 1921 -
Internaí Revenue uííetín:
anuary- une, 1922 (No. 1-1) - -
uíy-December, 1922 (No. 1-2)
anuary- une, 1923 (No. II-í)-
uíy-December, 1923 (No. II-2)
anuary- une, 1924 (No. III-í)-
uíy-December, 1924 (No. III-2) -
anuary- une, 1925 (No. I -1)_
uív-December, 1925 (No. I -2) -
anuary- une, 1926 (No. -1).. -
uíy-December, 1926 (No. -2) -
anuary- une, 1927 (No. I-1)
uíy-December, 1927 (No. I-2)
anuary- une, 192 (No. II-1). -
uíy-December, 192 (No. II-2)
anuary- une, 1929 (No. III-1)
uíy-December, 1929 (No. III-2)
anuary- une, 1930 (No. I -1)
uíy-December, 1930 (No. I -2) -
anuary- une, 1931 (No. -í).
uíy-December, 1931 (No. -2)
anuary- une, 1932 (No. I-1)-- -
uíy-December, 1932 (No. I-2)
anuarv- ííne, 1933 (No. II-1)- €
uív-December, 1933 (No. II-2) -.
anuary- une, 1934 (No. I1I-1)--
uíy-December, 1934 (No. III-2)
anuary- une, 1935 (No. I -1)..
uív-December, 1935 (No. I -2).
anuary- une, 1936 (No. -1)_
uíy-December, 1936 (No. -2) -
anuary- une, 1937 (1937-1)...
uíy-December, 1937 (1937-2)
anuary- une, 193 (193 -1)...
uíy-December, 193 (193 -2) .
anuary- une, 1939 (1939-1 € ” Part 1 and Part 2)
Ruííng Nos.
1-655
656-1033
1034-136
1369-1710
1711-1996
1-112
113-265
266-356
1-3 3
3 4-665
666-956
957-1276
1277-1641
1642-1949
1950-2251
2252-2523
2524-2 13
2 14-3026
3027-3291
3292-3557
355 -37 4
37 5-4052
4053-424
4249-44 7
44 -46 3
46 4-4 7
4 -5124
5125-533
5339-5531
6532-5961
5902-6262
6263-6.5 1
65 2-0 71
6 72-7224
7225-7563
7564-7 4
7 5- 149
150- 459
460- 792
793-911
9119-9424
9425-9654
9655-9 96
(vm)
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O RD O T PP LS.
CUMUL TI LIST O NNOUNC M NTS R L TING TO
D CISIONS O T UNIT D ST T S O RD O T
PP LS PU LIS D IN T INT RN L R NU UL-
L TIN S R IC ROM NU RY 1, 1932, TO UN 30, 1939,
INCLUSI .
nnouncements reíatíng to the acquíescence or nonacquíescence of the Commíssíoner ín
decísíons of the Uníted States oard of Ta ppeaís, as pubííshed ín the weekíy Internaí
Revenue uííetíns from December 22, 1924, to December 31, 1 31, íncíusíve, are prínted ín
Cumuíatíve uííetín -2, pages 1-106. The ííst beíow, therefore, contaíns oníy such announce-
ments pubííshed ín the weekíy uííetíns from anuary 1, 1932, to une 30, 1939, íncíusíve.
€ 1939-26-9
The Commíssíoner acquíesces ín the foííowíng decísíons of the
Uníted States oard of Ta ppeaís:
Ta payer.
oard of Ta ppeaís.
No.
oíume.
Page.
40546
24
435
37095
24
435
37693
24
435
37694
24
435
37696
24
435
41034
24
435
91141
3
1290
25194
3 6 7

429
274
39
3S7
399 0
25
211
39593
25
1246
39593
25
1246
4125
36
1233
4126
36
1233
56960
6 í(107
2
5 6
74759
S3
373
20765
24
376
41295
27
1091
60700
2
1291
39019
27
1210
7 995
36
929
736 7
35
323
44 60
30
636
25414
25
34
31704
25
1276
76130
35
4 2
40039
2
6
.
beíes, Charíes T
beíes, Cíífford
beíes, rancís, estate of.
beíes, ohn T
beíes, arheríne
beíes, WííLíemene
bbott, ob n
cme Manífoídíng Co., Inc.
dams, Charíes
deíaíde Park Land et aí., trustees.
fremow, Davíd, estate of
fremow, Sarah, e ecutrí
kron Coca-Coía Mottííng Co
kron Standard Moíd Co
íabama Míneraí Land Co.
íbers, Wííííam . _
íbert Lea Packíng Co., Inc
íbrecht et aí., atherítíc ., e ecutríces € -
ícoma Corporatíon
íe ander, . ., estate of
íe ander, Neíííe S
íe andría Graveí Co., Inc
ííegheny Garbage Co...
ííen, Irene C
íííed merícan Corporatíon
íverson, L. T
mbassador Petroíeum Co
cquíescence reíates to deductíon for contríbutíons.
state ta decísíon acquíescence reíates to deductíon of 133,000.
íncíudes aíí acquíescence and nonacquíescence. notíces pubííshed ín
from anuary 1, 1932, to une 30, 1939.
the Internaí
(1)
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cqcí sc NC s € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
merícan Centraí Lífe Insurance Co.1.
merícan Centraí Utííítíes Co
merícan Cígar Co
merícan Círcus oínt enture
merícan Cítíes Power Líght Corporatíon, man-
ager, the North merícan Co. Common Stock
Tradíng ccount No. 5
merícan eature íím Co
merícan Gas íectríc Co. and subsídíary com-
paníes.
merícan Príntíng Co
merícan Securíty Trust Co. et aí., e ecutors
merícan South frícan Líne, Inc
merícan Utííízatíon Co
mes, Muríeí Oakes 3
nco Investment Co
nderson, C.
nderson, Gustave
nderson, .
nderson, Staníey S
nderson-Cíayton Securítíes Corporatíon.
nn rbor R. R. Co
rcher et aí., arbara
rdenghí, nna
rguímbau, rank M
rmstrong, C. George
rmstrong, Susan
rmstrong, Wííííam
rnoíd Wínsor Co
rtman, Caroííne oerderer, estate of .
shforth, íbert ., estate of
shforth et aí., Mabíc ., e ecutors 4.
smussen, .
tkíns, . ., estate of
tkíns, Mrs. .
tíanta Charíotte Ry. Co
tíantíc Coast Líne R. R. Co
30133
3199
50024
63436
3642
16229
4020
25 2
27623
6736
67369
69 00
39721
39167
62955
6 30
70701
90527
71 11
5 647
33242
36224
63 27
42053
7 340
25 69
64163
64165-
6416
64171-
64173
6 201
73614
5 400
2552
5 603
61553
920 4
47190
4 009
49354
47190
4 009
49354
7 5 9
3 520
3 519
7 077
5 95
65310
65311
30
36
21
9
3
24
33
27
24
30
3
30
30
27
26
30
33
35
29
37
37
31
31
3
32
20
3
26
26
36
2
2
36
31
cquíescence reíates to Issue whether petítíoner receíved ínterest on mortgages when It bíd ín properíy
upon forecíosure.
1 state ta decísíon.
€ Nouacquíeseence (rcíntíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín
-2 (1936), pages 27 (Docket 71 11), 29 (Dockets 9447, 102(12, 107.15). 31 (Dockets 10299, 32960), 34 (Dockets
4017, 53 9. 62029, 65577. 6 324), 35 (Docket 109 0), 36 (Docket 37369), 3 (Docket 169 5), 39 (Docket 7435),
41 (Docket 9290), 45 (Dockets 45065, 3726,12231), 46 (Dockets 61669, 6 335), and 60 (Docket 7369), wíthdrawn.
4 Nonacquíescenee pubííshed ín uííetín II-1 (1933), wíthdrawn.
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cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
twatcr, Davíd .1
t water, ohn .
twater, r., Wííííam C. .
ton, dwín D
rton, Robert L
íton, Wood
D.
abbítt, Inc., . T. (Deíaware)
abbítt, Inc., . T. (New York)...
aííey, ertha M -
aííey, Waíter C, estate of
aker, L
aker, R.
aídwín, íorence G
aídwín, Gaíí .
aífour, Sír Robert
aíí, Phííííp D. C
aítímore Ohío R. R. Co.
aítímore 4 Ohío R. R. Co.
ankers Daíry Credít Corporatíon.
arber, rthur
arber, Phíííp C
arber, St. George
Trusts, Sarah P
arbour, Robert
arcíay, W. L.
arker, red
arnes, rthur S
arnes, enry
D. Newton, estate of.
amey,
asch, N. ..
Ice Coaí Co.
easíey, W.
eaumont, Louís D
ebb, Ríchard ., estate of € .
eers, Cíara O...
eers, rank T
eggs, ohn L (Trusts)
ehotcguy et u ., Wíííís C...
ehr, Charíes
eíí, Ivor .
eííows aíís Power Co
enedum, M. L.
ent Co., R. G
erdeíí, r., Charíes P.
ernsteín, Isaac M
49066
34
45
49067
34
45
49065
34
45
56160
32
613
56162
32
613
56441
32
613
74047
74047
75994
75993
5634
61120
323 7
3665
40230
36737
53702
37239
4 329
26747
26755
26757
26747-
26757
1059
743
51102
1 73
56440
71720
4592
67637
60061
31931
46569
49422
41295
67 73
67 74
65675
S3S20
39534
22335
1 592
29104
30990
57312
59796
7029
36729
32
32
37
37
32
37
23
36
25
27
20
30
M
25
25
25
25
39
20
2
36
32
6
30
27
31
23
27
34
34
30
36
30
27
25
2
26
32
2
í wíth respect to hoídíng that petítíoner was not a transferee.
cquíescence reíates to íssue In voí víne contríbutíons by shíppers for constructíon of síde and spur I racks
and deductíon for ínternaí-revenue stamps affí ed to bonds.
1 state ta decísíon acquíescence reíates to deductíon of 1.13.000.
€ doíescence reíates to that part of decísíon hoídíng that Waíter . ettman ís not ííabíe as a transferee
reíates to ríght of overrídíng royaíty owners to benefít of sectíon 211(b), Revenue ct of
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cquíescences € ” Contínued.
Ta payer.
Docket
oard of Ta ppeaís.
No.
oíume.
Page.
36746
26
1070
163
35
1147
64917
29
04
61051
27
1 6
723 9
33
466
46079
25
10 4
27616
1
3509
23
731
40147

1625
7102
36
1173
6961
6
346
696 2
31
212
26
90661
3
1457
26750
25
513
91572
3
1136
39242
1
40939
45741
119
51507

64975
30
591
7 692
35
1106
49 91
29

167
37
17
39200
25
651
24223
34964

995
6 3 2
31
25
91259
39
444
91261
39
444
1 11
37
970
64923
26
1410
629 5
33
20
93
95 4
3
1139
7 211
5 96
3
4
64556
29
1161
2695
36
4
63715
2
472
2 1
34
10 9
9759
3
1421
24667
66 7 ,
25
14
63637
36
141
24036
19
111
24037
19
111
723 3
36
669
est, rank
ííííngs et aí., May, e ecutors
íííups, George W
íngham, Robert W
írckhead, Oííver W
írdneck Reaíty Corporatíon
íscayne ay Isíands Co.
íshop Trust Co., Ltd.
íack, R.
íaír, r., Mrs. Wííey..
íake, Israeí O
íoodgood, díth
íossom et u ., aroíd M.
íum, uííus, trustee..
íumeríthaí, Lucy
oehn, Louís
oehrínger, Rudoíph
oeíng, Wííííam .
oos ros. Cafetería Co.
org eck Co
ostíck, r., ohn, trustee.
ostonían Natíonaí Shoe Stores, Inc.
ostonían Shoe Saíes Corporatíon...
osweíí, Wííííam D., estate of
owden, Pauí kers
owen, dwín L.
ranch, W. .
ranson, red P
I 16
t 71
raun, rthur ., trustee
rawner, r., enry N., estate of
rínton, Líííían McDonaíd
roadway- rompton uíídíngs Líquídatíon Trust .
roderíck, míííe C, estate of
rown, ereníce
rowneíí, Sophía Gíeason Píerce.
ryan et u ., C.
ryan et u ., L.
rvant, Waído C, estate of 1
1 state ta decísíon.
€ cquíescence reíates to Issue Invoívíng sectíon 119(g) of the Revenue ct of 192 .
cquíescence reíates oníy to the trust íssue. Príor nonacquíescence pubííshed In Cumuíatíve uííetín
193 -1. pafre 36, ín so far as It pertaíns to the trust Issue, wíthdrawn.
4 state ta decísíon. cquíescence reíate to e cíusíon of Insurance proceeds payabíe to specífíc bene-
fícíaríes.
€ cquíescence reíates to íssue as to basíc vaíues of stock.
€ Nonacquíescence pubííshed ín Cumuíatíve uííetín 1937-1, page 0, wíthdrawn.
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cquíescences € ” Contínued.
Docket
No.
oard ot Ta ppeaís.
oíume.
25
7 0
25
7 0
13
95
23
439
31
212
31
212
32
501
23
710
29
731
29
731
39
334
29
005
29
190
3
236
2
1241
10
1345
24
506
31
25
39
594
36
1
25
902
34
1155
25
537
35
6 7
29
355
31
724
31
724
29
99
31
273
25
162
24
679
30
413
31
730
uck, ohn ., estate of 1
uck et aí., Mary M., e ecutors
uena ísta Land Deveíopment Co.
uffaío Uníon Iron urnace Co.
uíííngton, Orvíííe
uíííngton, Mrs. Sadíe
uííís, eíen -
uííock, George --
un ííck, íía P., trustee
urdíck, oeí W., estate of
urke Graín Co
umham, Síías
urroughs, mbrose ., estate of
urrows, Waters .4
urton, en|amín T
usche, . C. - ---
utíer, U.
yers Trust, . T..
yrnes, Cíarence P.
Cahokía Trust ---
Caíífornía Coast Oíí Co._ -
Cambría Deveíopment Co.
Camp Manufacturíng Co. ---
Campau Reaíty Co., . M -
Canaday, Inc., Ward M
Canfíeíd ct aí., rances Marshaíí, e ecutors.
Canfíeíd, George ., estate of
Canníng, ohn
Capítaí Compress Co
Carman, .
Carníe, Goudíe Manufacturíng Co.
Caroí, Sue (Mrs. Níck Stuart)
Caroíína, Cíínchfíeíd Ohío Ry
325 4
44153
446 4
325 4
44153
446 4
2025
16075
16076
696 4
69679
6 164
73954
31209
46322
46322
61009
1799
53795
59797
77 7
61055
9447
10202
10755
46055
6 3 2
7919
1746
2501
75411
35955
70340
5 632
6 415
6 415
414 2
49303
44321
44939
5017
20074
27095
63963
71025
71649
state tar decísíon acquíescence reíates to vaíue of certaín reaí estate ín San rancísco and vaíue of
stock of Langendorf akíng Co. for estate ta purposes and reasonabíeness of Commíssíoner s aííowance
íor support of the wídow.
1 cquíescence reíates to íssue regardíng deductíons for obsoíescence of bíast furances.
1 cquíescence reíates to íssue 2 of decísíon.
€ cquíescence reíates to íssue as to deductíons for e penses In connectíon wíth the practíce of medícíne.
N onacquíescer|oe (reíatíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín -2
(1936). pages 27 (Docket 71 11), 29 (Dockets 9117, 10202. 10755), 31 (Dockots 10299, 32950), 34 (Dockets 4017,
5 . 62029,65577,6 324), 35 (Docket 109 0). 36 (Docket 37369), 3 (Docket 169S5), 39 (Dockot 7435), 41 (Docket
9290), 45 (Dockets 45065, 3725,12231), 46 (Dockets 61669,6 335), and 50 (Docket 7359), wíthdrawn.
9 reíates to determínatíon of faír market vaíue of obíígatíons receíved from purchasers of reaí
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cqt|íescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
Caroíína Contractíng Co..
Carter Pubíícatíons, Inc..
Carter, r., W. T
Casey, arríet M., estate of 1
Caspar Lumber Co
Cathey, George -
Cathev, Luke €
Catíín, Daníeí
Catíín, Theron
Centraí Market Street Co.
Centraí Natíonaí ank
Centraí Natíonaí ank, trustee
Centraí Renderíng Corporatíon
Centraí Trust Savíngs ank
Century Círcuít, Inc., of Deíaware.
Champíon, Davíd .
Champíon, T. Píerre €
Chapman Dewey Land Co.
Chapman Dewey Lumber Co.
Chemícaí ank Trust Co. et aí., e ecutors of the
estate of rank . Sa e 14
Chícago Northwestern Ry. Co.5---
Chííds, Mary S
Chíshoím, rchíbaíd M., estate of €
Chrístopher, Racheí S.1
Church ríghton Corporatíon
Cíty ank armers Trust Co., e ecutor.
Cíty ank armers Trust Co.
Cíark et u ., orace S
Cíark et aí., ames, e ecutors.
Cíaude Neon Líghts, Inc.7
et aí., e ecutors _
Cíeíand state Co., Inc., enry . _
Cíements, W. L
Cíeveíand Raííway Co..
Cíeveíand Trínídad Pavíng Co.
Cíínchfíeíd Securítíes Co
Cíínton Cotton Mííís, Inc
7763
44 3
66 91
655
565
57729
46056
46057
25421
25413
24 37
425 7
2 701
20776
425
69345
55569
63 1
5556
37403
51059
33466
37402
47130
50196
5105
79276
36343
4497
5255
47704
60970
59797
31 69
6 77
34499
59391
335 5
40 90
51197
4605
4943
41962
46297
40554
54 0
32
2
36
39
30
24
24
25
25
25
29
25
24
29
31
27
27
25
25
37
22
35
37
26
36
29
23
39
24
35
29
24
36
20
25
2
I state ta decísíon.
cquíescence reíates to Issue regardíng apportíonment of ta es among affíííated corporatíons.
1 cquíescence reíates to basís upon whích gaín or íoss upon redemptíon of stock shouíd be computed.
Nonaoquíescence as to one íssue, pubííshed ín Internaí Revenue uííetín 103 -31, page 1, wíthdrawn.
– cquíescence reíates to foííowíng íssues: Materíaí and suppííes ad|ustment amortízatíon of bond pre-
míum assessment of ssocíatíon of Raííway ecutíves raííroad Y. M. C. .
€ state ta decísíon acquíescence reíates to the foííowíng íssue: penses íncurred by the estate for ofuoo
rent, saíary of secretary, and accountant s fees.
T cquíescence reíates to íssues (1) e change by petítíoner of property soíeíy for stock ín the Cíaude Neon
Díspíays, Inc., íííott Cíaude Neon Líghts, Inc., ípha Cíaude Neon Corporatíon, New ersey Cíaude
Neon Corporatíon, and Cíaude Neon of Connectícut. Inc.. (2) grants o e cíusíve ríghts to use of patents
to certaín corporatíons ín e change for stock (3) In respect to prevíous íssue the basís for gaín or íoss.
1 cquíescence does not reíate to basís of property devísed sub|ect to a íífe estate.
1 Nonaoquíescence notíce pubííshed ín Cumuíatíve uííetín -2 (1 31), revoked.
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7
cquíescences € ” Contínued.
Taí payer.
Cíothíer et aí.. Morrís L.
Coast Countíes Gas fe íectríc Co
Coats, Inc. (R. L), . 4 P.1 ---
Coígate, Mary
Coííateraí quítíes Trust
Coííyer, Langíey
Coínon, atharene ruín
Coíorado Southern Ry. Co.1
Coíorado Utah Coaí Co -.
Coíumbían Carbon Co.
Coíumbus ríck Tííe Co.4.-
Commercíaí Investment Trust Corporatíon .
Commercíaí Natíonaí ank €
Communíty Mausoíeum Co.7
Cone, mma ., e ecutrí €
Cone, Irvíng ., estate of €
Connaííy, Mary W. T
Connectícut íectríc Servíce Co
Ríver Power Co
Conneííy, ames . .
Conneííy, L. . € ” -
Conneííy, Mary .
Conner, rchíe R., admínístrator of the estate of
Lucy Raduíovích
Conservatíve Gas Co
Consoíídated oídíngs Corporatíon, manager, the
North merícan Co. Common Stock Tradíng
ccount No. 6 -.
Consoíídated oídíngs Corporatíon, manager, the
North merícan Co. Common Stock Tradíng
ccount No. 3/3-2
Consoíídated oídíngs Corporatíon, manager,
North merícan Co. Common Stock Tradíng
ccount No. 3 € ” 2
Docket
No.
75740
76 41
69 43
3S904
61 2
92360
1239
76491
21974
53799
42743
42707
43495
50051
66959
703S1
6 034
6S03
60434
7 279
1 591
29106
– I 10 1
45S33
46267
51967
60566
6694
I Ids.
45 34
440 2
064
72391
25 3
25 5
5027
oard of Ta ppeaís.
oíume.
34
33
0
2
27
39
3
36
36
26
25
26
2
36
33
31
31
32
35
25
30
30
30
37
30
3
3
3
1 cquíescence reíates to contríbutíons Issue and Issue respectíng deductíon at amount paíd to treasurer
of Rhode Isíand on account of Increasíng capítaí stock.
cquíescence reíates to foííowíng íssues: Whether amount receíved In fínaí settíement wíth Dírector
Genera) of Raííroads ín 1921. representíng rentaí ínterest on compíeted addítíons amí betterments and
addítíonaí compensatíon for use of propertíes, constítutes ta abíe íncome for 1921 or duríng the períod of
ederaí controí whether petítíoner ís entítíed to a deductíon ín 1920 and 1921 for amortízatíon of commís-
síons paíd ín connectíon wíth the saíe of íts bonds príor to March 1, 1913 whether amounts of back maíí
pay receíved by petítíoner and affíííated companíes duríng 1920, In consequence of an order made by the
Interstate Commerce Commíssíon, constítute ta abíe íncome for that year.
Nonaequíescence pubííshed In Internaí Revenue uííetín I-14 (1932), revoked.
cquíescence reíates to íncíusíon In consoíídated ínvested capítaí of capítaí stock Issued for a tííe and
bríck manufacturíng píant, etc.
cquíescence reíates to the foííowíng íssues: Deductíon of e penses ín connectíon wíth íssuance of pre-
ferred stock deductíon for dívídends credíted to accounts of empíoyees for purchase of stock.
€ state ta decísíon.
I cquíescence reíates to íssue whether a saíe of a cemetery crypt ís a saíe of reaíty entítííng the ta payer
to the ínstaííment basís when totaí amounts receíved ín basíc year do not e ceed 40 per cent of gross príce.
to questíon whether the vaíue of ríghts to subscríbe to certaín bonus constítutes
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1
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-
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2

0
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2

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cquíescences € ” Contínued.
Tan payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Consoíídated oídíngs Corporatíon, manager, Pre-
ferred Stock Tradíng ccount
Contínentaí Legaí and Protectíve ssocíatíon
Contínentaí Oíí Co.1
Contractors Constructíon Suppíy Co.2
Cook Drííííng Co.3
Cook, íízabeth .4
Cook, M. M., estate of
Cook, P. W
Cooke, eatríce
Coombs, íízabeth M
Coombs, . oward
3
30
34
20

25
27
32
25
25
25
24
27
26
24
35
30
27
25
30
33
31
31
3
30
30
39
39
30
31
33
37
33
37
30
31
33
ío 37
30
31
33
10 37
1 cquíescence ín oard s decísíon wíth respect to computatíon of íncome for períod anuary 1 to March
15, 1920.
Nonacquíescence notíce pubííshed ín Cumuíatíve uííetín -2 (19.11), revoked.
– Nonacquíescence pubííshed In Internaí Revenue uííetín 1939- , page 1, wíthdrawn.
1 cquíescence reíates to íssues regardíng aííocatíon of totaí cost between common and preferred stocks
purchased.
cquíescence reíates to íssue ínvoívíng method of accountíng used by ta payer.
cquíescence reíates to that part of decísíon hoídíng that Waíter . ettman ís not ííabíe as a transferee
and to íímítatíon íssue.
cquíescence reíates to the foííowíng íssue: Incíusíon In petítíoner s ta abíe net Income for 1930, the totaí
profít receíved from saíe of reaí estate by the trust.
1 íft ta decísíon.
Nonacquíescence pubííshed ín Cumuíatíve uííetín III-1 (1930, wíthdrawn.
19 cquíescence reíates to questíon whether deductíon for depíetíon ín connectíon wíth deveíopment
e penses was properíy before the oard under mandates of the court.
Cooper, ohn I
Corbett, íííott R
Corníng Trust Co., trustee
Cornweíí, . L --- -
Corrígan, ames W., estate of
Cosmopoíítan ond Mortgage Co.
Costeíío, oseph €
Cotton, G. --
Couchman, Wííííam enníng
Coursey, Sarah . W.7
Co , ttííía
Co , Carríe G
Co , dwín .
Crane, íe ander ., estate of €
Crane et aí., íe ander M., e ecutor
Crawford et aí., nníe Lauríe, e ecutors of the
estate of George W. Crawford
Crawford, George W., estate of
Crews, Charíes.
Crews, Charíes W.í _
Crews, verett
Crews, verett, .10..
Crews, Raíph W.
Crews, Robert .
25 4
44 59
2 427
41963
2231
3 579
53044
54740
6022
26751
4476
44769
32610
40115
40926
29252
30303
0345
44617
22640
59655
67729
70957
71755
6969
6969
9292
7171
7171
072
072
66766
66766
66767
66767
66701
66702
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9
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís
oíume.
Croker, uía
Cromweíí et aí., Wííííam Neíson, e ecutors
Cronan, Mr. and Mrs. rancís M
Crouse, George N
Crowíey, oseph ., estate of1
Crowníííshíeíd Shípbuíídíng Co
Cuíver, Wíímer T
Cíínard Coaí Co. .
Curtís, Laura M_.
D.
Dahí, ndrew ., estate of...
Dahí ct aí., uíía, e ecutors...
Daíey, ugene S., e ecutor
Daíy, Margaret P
Dana, dwín L
Dana, ra M
Dana, Myer
Dancer, díth M., estate of
Daroí Tradíng ccount
Davídson, díth L
Davídson, ames
Davís, C. R.
Davís, ohn
Davís Reguíator Co
Day, Charíes, estate of .
Deeds, Charíes W.
De orest, ate R.
Deíaware fc udson Co. _
Deíone, Charíes
de Míííe, Cecíí . .
/ 4344
5141
41121
42619
7 1 5
43446
9
35472
1 9 7
37574
26 74
26 75
2 792
56314
44 45
44 45
26645
65213
67669
67670
5024
70456
1519
72905
61741
72904
10299
32950
20703
72667
75103
4663
73 3
372 4
50553
50629
77 65
52995
61291
65122
71951
71 5
72023
50263
50263
27
21
33
26
25
24
24
26
2
24
1167
24
1167
25
949
32
965
3(1
231
36
231
30
3
30
1277
34
37
34
555
34
565
1 10
1233
1 20
931
24
36
36
437
34
11
37
293
27
373
26
520
34
1139

1161
30
49
30
49
26
1120
26
1120
Dennett, Carí P.
Dennett, Maríe G.
Dennís, rank ., estate of
Dennís, Merry M., e ecutrí
– state ta derísíon nonacquíescence pubííshed In Cumuíatíve uííetín -2 (1931), revoked.
1 state ta decísíon.
1 cquíescence reíates to deductíons for addítíonaí royaítíes and offícers saíaríes and dírectors fees.
Nonacquíesrence (reíatíng to communíty property agreement) pubííshed ín Cumuínííve uííetín
-2 (1936). pages 27 (Docket 71 11), 29 (Dockets9447,10202, 10755). 31 (Dockets 10299, 32950), 34 (Pockets
4017, 53 9, 62029, 5577, 6 324), 36 (Docket 109 0). 36 (Docket 37369), 3 (Docket 169 5), 39 (Docket 7435),
41 (Docket 9290), 45 (Dockets45065,3725,12231), 40 (Dockets 016C9, CS335) and 50 (Docket 7359) wíthdrawn.
1 state ta decísíon acquíescence reíates to deductíon of attorneys fees ín connectíon wíth the admín
ístratíon of the estate whích has been estímated and contracted for but not yet paíd.
€ Oíft ta derísíon.
N onacquíescence pubííshed ín Cumuíatíve uííetín I-2 (1932), wíthdrawn.
€ - onacquíescence pubííshed ín Cumuíatíve uííetín -2 (1936), page 31, wíthdrawn acquíescence
reíate to communíty property agreement.
tcquíescenre reíates to deductíbíííty of íosses sustaíned by petítíoners upon aííeged saíes of stock to
each other duríng the ta year.
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í
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cguí sc NC S € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Denny, Regínaíd 1
Derby Reaíty Corporatíon 2
Detroít Trust Co. et aí., e ecutors .
Díckey, Waíter S., estate of
Díckínson, íbert G
Díescher et u ., Samueí .4 ---
Díeschcr et u ., ugust P.4
Díííon, erbert L
Dírksen, nna L., e ecutrí
Dírksen, Theodore ., estate of
Díttmar, mmy - –
Dockweííer et aí., Isídore ., e ecutors and trustees .
Doernbecher Manufacturíng Co.
Doííme, ífred R. L
Doíese Shepherd Co., Syndícate No.
Dombrowskí, Leesa
Dome Co
Domestíc Management ureau, Inc.-.
Domíníon Natíonaí ank
Donneííy, Catheríne, estate of
Donneííy et aí., Garrett ., e ecutors..
Doríc partment Co
Dougías Co., ohn.
Downs, Phebe Warren Mc ean
Drake, rancís
Dre cí Packíng Co
Drogc, Chrístían -
Duff, Robert C.
Duke, ngíer
Duke, nthonv N
Duncan, T. P €
Duncan, Mrs. T. P –
Dunham, Waíter
Dunne, íníey Peter
du Pont, ammot € ”
du Pont, Píerre S.
Durkheímer Investment Co
.
agíe Pass Píedras Negras rídge Co.
agícton, Mark D
asterwood, r., W.
49516
1213
35472
51643
35015
43176
5715
5716
5 025
592 0
17717
17717
63931
50 2
34 53
43527
46421
50607
6362
71534
6 159
41136
7 617
41 7
77693
75 6
52165
56443
56413
44655
3 726
679
46 04
20775
79632
37552
79942
79943
65921
65924
6630
54444
7974S
26996
3290
42460
79553
401 1
63416
33
73
35
335
25
340
32
12 3
23
1211
36
732
36
732
32
1254
24
1152
24
1152
32
349
30
1136
SO
973
31
671
30
1171
35
102
26
967
3
640
26
421
31
577
31
577
32
11 7
23
1307
36
1129
30
475
24
376
35
29
23
1342
3
1264
3
1264
31
212
31
212
27
106
29
1109
36
223
1
102
36
423
23
1337
35
551
2
12 3
1 cquíescence reíates to íssue ínvoívíng: deductíon of operatíng e penses of aeropíane and deprecíatíon
therewí and whether amounts e pendod for costumes, make-up, and wígs are deductíbíe as ordínary and
necessary e penses.
1 onacquíescence pubííshed ín Cumuíatíve uííetín 1937-1, page 33, wíthdrawn.
€ state ta decísíon.
cquíescence reíates to íssue Invoívíng (raín from Inventíons and patents e changed for cash and stoc .
1 cquíescence reíates In íssue 1 of decísíon.
onacquíesccnce pubííshed ín Cumuíatíve uííetín I -2 (1930), revoked.
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11
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
asterwood, r., Mrs. W.
aton, Cvrus S. -
dwards, .
dwards Drííííng Co.1--
ggerman Investment Co
ínsteín, Robert -
íscndrath, dwín W
sendrath et aí., dwín W., e ecutors.
nendrath, Maríon
íscndrath et aí., Rose L., trustees
íscndrath, Wííííam
ísendrath, Wííííam N., estate of
ídrídge, ííce . --
ídrídge, . S. ...
íectríc Storage attery Co
íeven ssocíates, Inc.-
ígín Compress Co
íííott-Graníte Línen Corporatíon
Mííííng Co -
.ons, Isabeí ííey, estate of Thornton mmons,
admínístrator
mmons, Thornton
Metaís Co..
Ice Co.
psteín, acob
rb et aí., Ray L., e ecutors
vans, . T
vans et aí.. nson, trustees
vans, Gordon M
vans Products Co
Cemetery ssocíatíon.
ackíer, ohn D .
aíson, . M.
aítoute, Moses W
aíck, íe ander D
aíís Cíty Ice everage Co.
ame Canníng Co
anners ducatíonaí and Cooperatíve State Uníon
of Nebraska
401 2
63417
6042
9944
75931
79013
754 9
36726
36724
36727
3672
36725
36724
64779
6477
63010
60971
49302
4 212
4676
52972
212
213
212
213
19011
22021
22022
26259
421 4
70099
29260
64397
62664
261
43044
30726
9253
1324
23 7
20452
67636
20774
10596
1 105
27194
3174
2
37
39
35
36
36
2
2
2
2
2
2
30
0
39
36
31
26
27
39
39
25
24
36
29
30
29
3
29
25
39
34
3
26
27
24
0
_ f petítíoner by saíd corporatíon. CO
Centraí ííoy Stooí Corporatíon constítutedía abío
1 cquíescence reíates to tíe foííowíng Issues: fa) Deductíbíííty of íoss on transfer of securítíes and cash to
Industríaí Shares. Inc., for capítaí stock and assumptíon of notes of
T ther the market vaíue of 12,500 shares of stock of the Ceí
t íncome when receíved duríng 19 .
1 Nonaoqu Scence pubííshed ín Cumuíatíve uííetín 1937- , page 34, wíthdrawn.
1 cqníescenoe reíates to íssue whether dívídends decíared ín 1929 constítuted Income to the petítíoners
ís I S or 1930.
cquíescence reíates to market vaíue of oíí and pas íeases on March 1,1913.
. onacquíescence pubííshed ín Cumuíatíve uííetín -2 (1936), page 33, wíthdrawn.
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cquíescences € ” Contínued.
Ta payer.
armers Lífe Insurance Co.1
armers Loan Trust Co., trustee
armers Uníon State change
awsett, Charíes
awsctt, Charíes .
ederaí Street Píeasant aííey Passenger Ry. Co.
ehrman, Wííííam ., estate of
erguson, aroíd G
ídeííty Natíonaí ank Trust Co. et aí.
ídeííty Savíngs and Loan ssocíatíon.
ídeííty Uníon Trust Co., e ecutor
ífth venue ank of New York, e ecutor 4_
írst Cítízens ank Trust Co
írst Natíonaí ank of oston, admínístrator.
írst Natíonaí ank of raddock
írst Natíonaí ank of ey West
írst Natíonaí ank ín Mobííe
írst Natíonaí ank of Skowhegan, Maíne
ísher, Charíes D., estate of
ísher, Míríam, estate of 4
ítch, íorence
íemíng, Lamar L.5
íemíng, Margaret . . --
ííun et aí., Cíara Louíse 7
íorence Manufacturíng Co
íower et aí., enry C, trustees.
oík, .
ord, ííyn
ord, Lína
ord, Robert .. - -
ord, Sara C
ordvce et aí., Wííííam C, trustee-
orest Products Chemícaí Co
orres. Lord
orrester, W.
oster, L. .
oster, N. C, estate of4
oster et aí., Wíííard, e ecutor4 € ”
Docket
No.
43317
29465
1 105
64474
72057
2975
77 3
70463
5644
S504S
14 62
31 01
39406
45215
69193
69166
71599
3643
465 3
926
451 6
63732
77165
6 33
74 26
51670
7 362
7 416
/ 44 3-
4491
153 3
26079
5649
2 396
3101
6 707
7073
6 707
70739
6 704
77740
6 705
5 647
46621
40229
43973
73591
430 6
329 4
3211 4
oard ot Ta ppeaís.
oíume.
27
26
30
31
,30
2-1
3
34
37
23
33
.32
.32
25
3
26
30
35
32
36
29
34
36
37
25
37
25
33
33
33
33
30
27
25
32
26
25
25
1 cquíescence reíates to íssue ín connectíon wíth optíon payment receíved for purchase of íand.
í Nonacquíescence pubííshed ín Cumuíatíve uííetín III-2 (1934) wíthdrawn.
1 Nonacquíesconco notíce pubííshed ín Internaí Revenue uííetín 193 -36, 1, wíthdrawn.
4 state ta decísíon.
cquíescence reíates to íssue ínvoívíng íncíusíon ín íncome ínterest on the decedent s share of partner-
shíp capítaí and íncíusíon ín Income the decedent s share of certaín commíssíons earned by the partnershíp.
€ cquíescence reíates to vaíuatíon date for cost purposes of securítíes acquíred by petítíoner under wííí
of her father.
cquíescence reíates to aíí Issues e cept whether petítíoner-benefícíaríes are ta abíe on dístríbutíons
made on anuary 4, 1933.
1 cquíescence reíates to Issue reaardín fííínc of separate return for 1925.
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13
cquíescences € ” Contínued.
Docket
No.
oard of Tu ppeaís.
oíume.
o , ontaíne 1
rancke, Charíes
rank, míí
rankíín, erbert
rankíín Teíegraph Co
rankíín Títíe Trust Co.1.
rfcttkorn Deveíopment Co.
rcrt, oseph
uhíage, ífred .
Gaffner, ames ., estate of4
Gaííerv et aí., Daníeí ., admínístrators of the estate
of ohn . McCarthy --
Gambííí, . .. -- €
Gambíe, Cecíí ., e ecutor
Gambíe, ames N., estate of..
Gambíe, Marv ., estate of4
Gambíe k Stockton Co.1
Gardner, Charíes . - -
Garron et aí., Isabeí . ., e ecutors4
Gassner, Louís 7
Gaston, Wííííam .
Gay, D.
Gay, . C
Geeseman, Deíbert
Generaí Industríes Corporatíon
Generaí Outdoor dvertísíng Co., Inc.1.
George, erome R
George Machínery Co., R.
Gessner, erman €
Gíbbs, G. Wíídy. €
Gíbbs 4 udson, Inc.
Gíííespíe, . .
Gíííette Rubber Co
Gímbeí, Daníeí
710 4
5643
50224
7 673
29695
51947
60167
67 05
30496
35170
42452
73712
61754
3151
91196
47902
60 40
55595
60 40
42707
3 575
47705
4017
52163
62309
5 7 7
5 7
1736
79069
66511
45240
6121
77506
31329
746 3
9442
43052
50073
4542
5476
2762
27629
:ín
32
– 27
37
26
32
30
37
32
36
3
26
33
32
33
26
25
26
1
34
31
31
3
35
32
27
26
32
2
6
3
31
36
24
24
cquíescence reíates to deductíon for deprecíatíon on premíses and Incíusíon In year 10.10 In petítíoner
tm s íncome, 7,400 representíng rentaí vaíue of premíses occupíed by hím.
1 doíescence reíates to íssue ínvoívíng deductíon of commíssíons paíd on saíe of mortpape notes.
1 cquíescence reíates to íssue whether ta payer Is entítíed to the statutory personaí e emptíon as the
aw of a famííy.
sUte ta decísíon.
1 cquíescence reíates to Incíusíon ín consoíídated Invested capítaí of capítaí stock íssued for a tííe and
tríck man u fact uríne píant, etc
1 cquíescence reíates to Issues regardíng aííocatíon of totaí cost between common and preferred stocks
T Nonaonuk-scence (reíatíng to communíty property agreement) pubííshed In Cumuíatíve uííetín
- ( m), pases 27 (Docket 71 11), 29 (Dockets 9447, 10202, 10755), 1 (Dockets 10299, 32950), 34 (Dockets
Mían, 62029, 65577, 6 324). 5 (Docket 109 0). 3 (Docket 37369), (Docket 109 5), 39 (Docket 7410).
41 (Docket 9290), 45 (Dockets 45065, 725,12231), 46 (Dockets 61669,6 335), and 50 (Docket 7359), wíthdrawn.
1 cquíescence reíates to Issue whether petítíoner reaíízed gaín on transfer of certaín of íts assets to Ontraí
Outdoor dvertísíng Co. for stock of that company.
í pubííshed ín Cumuíatíve uííetín I -2 (1935), page 31, wíthdrawn.
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14
cquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaís.
No.
oíume.
Page.
75740
76 41
(
1066
54556
29
1161
79155
35
764
62062
31
236
4343
51694
25
146
53310
6156
70407

4 5
29470
26
914
53 9
4
1073
27625
24
1
30302
24
915
749
36
779
59722
29
04
574 3
29
275
22332
27
377
22333
27
377
10 0
36
202
3953
30
1290
4252
2
41
46619
27
632
7570
37
623
7571
37
623
230 5
22
1124
2574
36
1233
51794
30
102
62029
1
65577
29
700
6 324

2177
35
239
672
37
44
56540
1
64064
€ 33
512
71114
I
132
36
2
7639
37
25
343
37
734
53647
24
719
437 6
1
46373
26
1017
634 7

14 5
34
1209
14 4
34
1209
47376
27
53
3 577
25
1351
63354
30
52
Gírard Trust Co., trustee.
Gíven, T. ., estate of
Gíadstone Co., Ltd
Gíancy, Inc., . R
Gíobe Constructíon Co.
Godwín, rthur M
Goíd Stock Teíegraph Co.
Goídberg, arry S.1
Goíden, dward
Goídman, Ma weíí
Goídríng, ohn rnest
Goídsmíth, Ma
Gordon, ífred W...
Gordon, ízzíe 7
Gordon, Ma L.
Gordon, Wííííam S.
Gore ros., Inc
Gottííeb Reaíty Co
Graeper, W.
Graham, George D
Graham, Neva
Grand Ríver Graveí Co
Grant, C. T., estate of
Grant, arry ohnston
Grant, eíen .1.
Grant, osephíne C, Trust
Grauman s Greater oííywood Theatre, Inc.
Great Southern Lífe Insurance Co.
Green, Caívín C
Green, rank O., estate of .
Green, Robert D.
Green, W. S.
Greenwood, dna M...
Greenwood, . P
Grey uíí Corporatíon.
Gríftís, Stanton
Gríffíths, va Lavíno..
Nonaequíescenee (reíatíng to communíty property arreemer|tí pubííshed ín Cumuíatíve uííetín
-2 (1936), pages 27 (Docket 71R11), 29 (Dockets 9447, 10202,10755). 31 (Dockets 10299, 32950), 34 (Dockets
4017, S3 9, 6202 , 65577, 6 324). 35 (Docket 109 0), 36 (Docket 37369), 3 (Docket 169 5), 39 (Docket 7435),
41 (Docket 9290), 45 (Dockets 45065, 3725,12231), 46 (Dockets 61669.6 335). and 50 (Docket 7359), wíthdrawn.
1 cquíescence reíates to that part of decísíon hoídíng that Waíter . nettman Is not ííabíe as a transferee
and to íímítatíon íssue.
€ cquíescence In íssue Invoívíng íoss on account of bad debt owíng íaw fírm.
cquíescence ín Issue Invoívíng deductíbíííty of Interest paíd on matured coupons surrendered.
state ta decísíon.
€ cquíescence reíates to transactíons 1, 2, 3, and 4.
cquíescence reíates to Issues regardíng aííocatíon of totaí cost between common and preferred stocks
purchased.
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#
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15
cquíescences € ” Contínued.
Gríffíths, George
Gríffíths, ohn
Gríppín, Mínníe T
Gríswoíd Co
Groves, George S
Groves, Waííace
Guaranty uíídíng Loan Co
Gadeon, Waíter T.
Guíf Coast Irrígatíon Co.
Guííett, C.
Guííett, W.
Gummey, rank .
ugustus Coe, estate of
, Daníeí N
.
aberíand, Pauí...
afner, ífred.-
ahn, arrv W., estate of 1
aííev-Oía Coaí Co
aíí, essíe G
aíí, dward T.
aííadav, Sarah P
aUowe íí 2d, Ríchard P....
amburg, r., Sam.-
ammonds, Mamíe S
andív, rankíín Míííer.
anna, R. ., estate of
anna, írgínía W., e ecutrí
anscom, dward ., estate of
anscom et aí., Meívíííe, e ecutors .
arbeson Lumber Co., W.
arkness, dward
arness, Mary S
arníschfeger, enry, estate of
arníschfeger et aí., Maríe ., e ecutors 5.
arper, . T
arrah, Maríe .
arrah, Wííííam
arrís, ííen €
Inc., . M
í
292 9
4 3 9
57132
90310
30962
66 25
111
26754
4777
30304
7 210
66 10
67671
74406
6271
6271
44992
44992
33076
MOIL
65169
71310
71311
69636
69636
627 4
25269
21643
109 0
50594
/ 52795
í 60115 /
25
31
3
24
36
36
25
39
24
3
30
31
31
24
24
24
31
31
31
31
31
27
– 17
10
30
27
1 cquíescence reíates to fraud Issue.
1 cquíescence reíates to aíí Issues eícept affíííatíon íssue.
1 Nonacquíescence pubííshed In Cumuíatíve uííetín II-1 (19331, wíthdrawn.
state ta decísíon nonacquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), revoked.
state ta decísíon.
Nonacquíescence (reíatíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín -2
S ), page, 37 (Docket 71 11), 29 (Dockets 9447, 10202, 10755), 31 (Dockets 10299, 32950), 34 (Dockets
€ , 53S9, 02029, 65577, 6 324), 35 (Docket 109 0), 36 (Docket 373ISU), 3 (Docket 169 5), 39 (Docket 7435), 41
(Doeírt 929í3), 45 (Dockets 45066, 3725), 12231), 46 (Dockets 61669. 6 335, and 50 (Docket 7359), wíthdrawn.
Nonacquíescenoe pubííshed ín Cumuíatíve uííetín II-1 (1933), page 17, wíthdrawn.
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16
cquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaís.
No.
oíume.
Page
2995
1
41736
26
134
53600

637 9
29
163
63790
29
163
3 64
27
1305
727
32
1
40304

42570
34
7 2
47339

32 41
25
1161
60690
29
1061
60690
29
1061
76507
7650
35
7 4
1323
34
91
1325
34
91
37499
25
96
7665
35
230
16552
25
736
7 71
1
7942
I
34
0
0 59
61334
29
595
174
37
73
69916
74 13
35
454
1179
1997
36
33
56161
32
613
3S573
25
1351
63321
33
73
63321
33
73
5666
62 45
30
301
4051
36
934
4052
36
934
60729
6SS21
32
349
46 06
25
12 2
7 424
39
516
33279
24
475
22341
27
377
632
3
26
632
3
26
57032
63141
30
962
2569
35
292
256
35
292
16253
24
43
37369
27
07
artford- mpíre Co.
astíngs, Cííve, estate of.
astíngs, .
astíngs, rederíck
atfíeíd, . T
avana íectríc Raííway, Líght Power Co.
avard, Charíes
awk, enry C, estate of.
awk, Ida W., e ecutrí ...
awke, . R
awkíns, . C
awkíns, Mavmc 1
ay, W.
ayes, ohn ., estate of.
ayman Co.,
ays et aí., ugene ., estate of 1
azeíwood, N.
eadíey, aí Príce and Genevíeve M_
ecía Míníng Co
eíss, Charíes
eíck, dwín
emphííí, Cíífford
enke Trust, Mrs. Catheríne.
enke, enry, estate of
enníngsen, Waíter
erder, George, estate of 4
erder, Mary
erff Díttmar Land Co
ervey, W. R
esbacher, da L
ess, Nathaníeí .
ettman, Waíter .
euísíer, Maríe íída
euísíer, Phíííp I., estate of.
ewítt, rskíne
íatt, nna eííe
íatt, P.
íckman, anníe Snyder-
íckman, oward C.1
Nonacquíesconce pubííshed In Cumuíatíve uííetín -2 (193(5), page 35, wíthdrawn.
state ta decísíon.
cquíescence reíates to íssues regardíng aííocatíon of totaí cost between common and preferred stocks
purchasod.
cquíescence reíates to Issue Invoívíng accruaí of ínterest.
– cquíescence reíates to that part of decísíon hoídíng that Waíter . ettman ís not ííabíe as a transferee
and to íímítatíon íssue.
€ Nonaequíesconce (reíatíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín -
(193 ), pa es 27 (Docket 71 11), 29 (Dockets 9447, 10202, 10755), 31 (Dockets 10299, 32950), 34 (Dockets 4017,
53 9,62029.05577,6 324).35 (Docket 109 0), 36 (Docket 37369), 3 (Docket 169 5), 39 (Docket 743 ), 41 (Dockeí
0290), 45 (Dockets 45065,3725,12231), 40 (Dockets 61669, 6 335), and 50 (Docket 7359), wíthdrawn.
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#
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17
cquíescences € ” Contínued.
Taí payer.
ííí man, . D., estate of
íUman et aí., udson McCííntock, admínístrators.
ímeíhoch ros. Co
índes, oseph ., estate of..
ínes, Wííííam
íres Co., Charíes --
obbs, enry
obbs, Teck
fíoffer, níta Owens.. --
offer, T.
offman, acob S., estate of._
oííander, doíph, estate of
oíííday, ohn
oíííngsworth, .
oíííster, George ueíí
oííy Deveíopment Co € ” --
oímby Corporatíon
oímes, George W
oover, Daníeí P., estate of 1
ormeí, George .1
ormeí, ay C. - --
oughton, íanson
oughton, r., mory, estate of
oughton, rthur
oughton, Charíes ., estate of
ouston ros.
ouston, George T.
ouston, orace .
ouston Land Trust Co., trustee.
ouston. Phíííp D.
oward et aí., ohn
ubbard, dward, estate of
ubbard, Míídred M
ubbard, Míídred M., formeríy e ecutrí .
ubbard, Míídred M., transferee
udson-Duncan Co.. --
ughes, .
unt, íorence W...
unter, C. W., e ecutor..
unter, George ., estate of
unter, r., Thomas .4
untíngton, enry ., estate of
untíngton-Redondo Co
untíngton, Samueí L
unttíng, enry R
Docket
No.
oard of Taí ppeaís.
oíume.
P e.
62676
31
1126
62676
31
1126
f 4172
42769
26
541
45663
633
3
26
7399
3
10(11
477 1
26
1351
27352
26
241
27351
26
241
33374
24
22
33375
24
22
73092
36
972
79 62
35
1 3
64127
29
1272
542 2
27
621
29461
26
1359
/ 42771
52661
33
774
51303
2
1091
53797
29
605
3745
3
3 7
93571
39
244
93572
39
244
29445
26
1359
29444
26
1359
29446
26
1359
29465
26
1359
12052
22
51
/ 13104
2200
22
51
22009
22
51
63321
33
73
22007
22
51
/ 52163
62309

57
/ 63 7
í 67569
30
619
tí:í.s:í7
30
619
63 7
30
619
67569
30
619
5220
36
551
67335
32
124
56325
35
10 12
45417
26
417
45417
26
417
5 490
33
941
fs 45429
2
2 9
I1 47552
36
69
2366
36
116
7 916
35
35
75304
32
495
1 state ta decísíon.
1 cquíescence reíates oníy to the íssue ínvoívíng the ta abíííty of the íncome of severaí trusts whích ís
payabíe to the grantor s wífe for íífe.
1 cquíescence reíates oníy to deductíon for busíness e penses ín 1920 and to number of feet of tímber cut
daríng 1919.
cquíescence ín íssue as to whether petítíoner receíved a ta abíe dístríbutíon from Marshaíí íeíd Co.
en anuary 5,1927, In the amount of 1,11 .61.
1 cquíescence reíates to íssue regardíng íoss from operatíon of a farm ín 1925 and 192 and íssue regardíng
íncreasíng defícíency for 192 by amount of Interest accrued on bonds e changed for art ob|ects.
G
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1
3
-
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1
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2

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#
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1
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
uríbut, . M
urt et aí., Mrs. . ., e ecutors.
urt, oeí, estate of
utchíns, Charíes P.1
utchíns, Lena C.1
uyíer s, Inc
yman, rthur . _
Iííínoís Centraí R. R. Co.
Iííínoís Power Líght Corporatíon.
Iííínoís Ruraí Credít ssocíatíon . .
Income Syndícate, Inc
Independent Ice Coaí Co
Indíana Lamp Corporatíon
Industríaí Loan Investment Co. .
Ingaíís, Charíes C, estate of 5
Ink, Mary
Iníand ínance Co.
Insuíí, Margaret .
Insuíí, Samueí
Insuíí, r., Samueí..
Internatíonaí Cígar Machínery Co
Internatíonaí Mortgage Investment Corporatíon
Internatíonaí Ocean Teíegraph Co
Internatíonaí Shoe Co.
Interstate Reaíty Co
Irvíng Trust Co
Irwín, Royaí W
Isenberg Trust, eíen L..
Isenberg Trust, Pauí Otto.
Iten íscuít Co
Iverson, I. C
Iverson, Ruphane
.
717
2 099
2 099
49070
49069
2 369
29154
39 41
79557
62023
62991
56299
596 7
505
321
67639
52761
20664
57 35
75731
29916
396 6
6 002
6 504
6 003
6 503
6 001
6 505
71331
762 5
7 741
295 5
2264
2265
3607
7162
46272
509 1
7 4 9
79044
71373
71374
16429
20 99
4 3
4 37
ames, rthur Curtíss 1 395
ames, Wííííam L 7027
33
30
30
34
34
24
36
30
34
33
3
37
27
2
17
25
35
23
32
32
32
36
36
26
3
25
36
37
35
35
25
29
29
31
30
1 cquíescence wíth respect to hoídíng that petítíoner was not a transferee.
1 cquíescence reíates to íssue whether petítíoner ís entítíed to deduct íosses from saíe of securítíes whích
were purchased by petítíoner s wífe and íoss from bad debt owíng to íaw fírm of whích petítíoner was a
member.
Nonacquíeseencc pubííshed ín Cumuíatíve uííetín II-1 (192 ), wíthdrawn.
1 Nonacquíesccnce pubííshed ín Cumuíatíve uííetín I -2 (1930), wíthdrawn.
1 state ta decísíon.
Nonacaíuescence pubííshed ín Cumuíatíve uííetín -2 (1931), wíthdrawn.
G
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1
3
-
0
1
-
2
2

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4
:
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2

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7
/
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3
9
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1
5
0
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6
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3
1
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9
2
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#
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19
cqt|íescences € ” Contínued.
| ssocíates, Inc.
ens, Laura
D., estate of
, íorence Líndsay, estate of.
ohnson, Wííííam Píerce, estate of
ones, Chester ddíson 1
ones, Durham
ones, R. D
ones, Inc., T. R
ones et u ., Wííííam
ordahí Co., Inc
ahn, arry
ahn, oseph
ammerdíner,
ansas Cíty Leasehoíd Improvement Co.1
ansas Cíty Memphís arms Co
ansas Cíty Southern Raííway Co. and affíííated
companíes 1
€ , Marks, estate of_.
arger et u ., Manasse.
asch, d
asch, Theodora
auaí Termínaí, Ltd
eíí, rank
eíí, Mrs. rank
eíí, oe
eíí, Wííííe May
eíícy, . íorence...
eííey, erbert W
eííey, ohn P.
eííev, oshua C
eííy, One R. and Grace ...
ennedy, íízabeth arnart..
ent, verett .
75717
75492
75493
75969
57 90
53034
540 3
50206
477
69S5S
77 71
4779
695 1
2 61
2 60
41643
46555
3571
51060
2266
35527
3552S
35529
5530
35531
70659
6633
70661
7175
6632
6634
4 293
4 293
7664
69677
6967
696 1
cons:,
9 7
9 77
3 233
9S76
79959
1 0
39576
425 9
46064
52640
37
36
6
33
35
35
31
39
29
35
9
35
3

25
17
25
22
3
3s
25
25
36
31
31
31
31

3
26
3
36
3
26
31
easíer, . M
1 cquíescence as to Issue whether petítíoner shouíd be aííowed to fííe hís return on communíty property
bads.
1 cquíescence reíates to March 1, 1913, vaíue for purposes of caícuíatíng gaín or íoss upon saíe of íand
t ersaíííes, Mo. whether the Invested capítaí of the Símcoe Reaíty Co. shouíd be Increased for 191 and
the March 1, 1913, vaíue for amortízatíon purposes of a íeasehoíd beíongíng to ansas Cíty Leasehoíd
Improvement Co.
€ cquíescence reíates to the foííowíng Issues: Deductíon of contríbutíons to Y. M. C. ., Príests of Paíace,
v.4 ssocíatíon of Raííway ecutíves and amortízatíon of commíssíons and e penses Incurred In saíe
of bonds.
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#
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20
cquíescences € ” Contínued.
íbcíe, 0. . ..
íng County Insurance ssocíatíon..
íng, enríetta M., estate of
íngsbury, . R
ín near, Roy
ínney Co., Inc., G. R
írby, Lcíía S.
írchner, uííus C -
írk et aí., íízabeth S., e ocutríces and e ecutor
of the estate of C. enderson Suppíce
íeberg et aí., Robert ., e ecutors..
íeeden, Mark
íeeman, rthur S
níght. . D -
no , Seymour .
ohíer, G. . ., estate of ---
ohíer, ohn
ohíer, Mary
oppíe, Morrís D -
raemer, Samueí
ruíí, rancís 5
uhn, Ida L
unau et aí., Oscar . C, trustees.
Laírd, Roy
Laírd, Wííííam Wínder, estate of1 ..
Lake Charíes Navaí Stores ._
Lambeth, Charíes
Landers, Dourías ., estate of
Lang et aí., íorence O. R., e ecutors
Lang, enry, estate of .-.
Lang, uííus C, estate of
Langworthy, Mar|oríe C -
Lanskí, Samueí
Lawrence, Gíadys G
Lawson, ohn
Lea, eíen Sperry
Leamíngton oteí Co -----
Lehman et aí., íían S., e ecutors, estate of aroíd
M. Lehman
Lehman, aroíd M., estate of
Leídesdorf, Samueí D
24 2
016
52632
563 2
0103
31397
329 0
73753
2542
9363
52632
730
6 41
66 65
2450
7620
79607
79606
69323
37 22
169 5
32609
40267
64 15
79760
51654
34630
36940
779 9
35443
71117
71117
6 316
71901
49347
75494
40232
742 7
4 413
6 29
S6S29
4 305
27
37
31
31
36
26
35
27
39
31
3
35
2
36
37
37
37
35
25
10
24
27
3
25
3
21
32
32
34
30
34
33
25
35
26
39
39
26
377
2
95
1126
153
1091
57
1305
902
95
21
17
1
630
1019
1019
1019
1056
6 6
1096
216
509
75
926
173
351
1347
527
527
337
1216
1019
6
154
243
1004
17
17
1
cquíescence reíates to that part of decísíon hoídíng that Waíter . ííettman ís not ííabíe as a transferee
and to íímítatíon íssue.
– cquíescence does not reíate to íssue Invoívíng basís for computíng ta abíe gaín In 1927, 192 , and 1929
from the saíe of bonds of the írby Lumber Co.
(ííft ta decísíon.
1 cquíescence reíates oníy to the Issue. Díd the Commíssíoner err In íncíudíng, for gíft ta purposes,
the entíre vaíue of coríaín síngíe premíum poíícíes ínstead of one-haíf vaíue thereof
Nonacquíescenee (reíatíng to communíty pronertv agreement) pubííshed ín Cumuíatíve uííetín -3
(1936), paces 27 (Docket 71 11). 29 (Dockets 9147,10202, 10755), 31 (Dockets 10299, 32950), 34 (Dockets 4017,
53 9, 02029. 65577,0 324), 35 (Docket 109 0), 36 (Docket 37309), 3 (Docket 169 5),39 (Docket 7435). 41 (Docket
0290). 45 (Dockets 45065, 3725, 12231), 46 (Dockets 61669, 6 335), and 50 (Docket 7359), wíthdrawn.
€ state ta decísíon.
r cquíescence reíates oníy to the Issue, Is the estate entítíed to addítíonaí deductíon for attorneys fees
– state ta decísíon acquíescence reíates to deductíbíííty of fuíí amount of 1,041. 9 addítíonaí íncome
ta es accrued on decedent s separate íncome ta return for 1927.
cquíescence reíates to reorganízatíon íssue.
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7
6
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#
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21
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Leonard oídíng Corporatíon, George ., estate of
Letts, r., rthur
Levín, íbert
Levíne, yman 1 - € ”
Lewís, Sr., . S
Lev, George W.1
Ley, Mary C. - --
ty arms Co
osíery Mííís - - –
r, ohn -
í uíídíng Co., Inc
Líííenfeíd, uííus
Líncoín, Robert Todd, estate of
Líppíncott et aí., . ertram, e ecutors €
Líppíncott, Waíter, estate of
Líttauer, ugene, estate of
Líttauer et aí., Lucíus N., e ecutors 4
Líttíe, C.
Lívíng unded Trust of arry . Lyman
Líovd, S. Rose
Líovd, Waíter
Loeb, r., et aí., Wííííam, trustees --
Logeí, oseph
Longyear, r., ohn M
Longyear, Mary ., estate of.
Loughborough Deveíopment Corporatíon
Louríe, Davíd
Lowe, erbert G , estate of
Luhríg Coíííeríes Co.. - €
M.
MacCaííum Gauge Co..
Mackubín, George €
Mackubín, Maude P
Magee Trust, díth Grant -- -.
Maíta Tempíe ssocíatíon €
Manhattan Lífe Insurance Co
Manhattan Mutuaí Lífe Insurance Co
Manístíquc Lake Superíor R. R. Co
Marbara Corporatíon
Markham Irrígatíon Co.
Maríuw et u ., rnest W
4 71
62106
60969
7435
56163
22336
22337
26717
29 99
66546
75490
533 5
7929
39167
49233
49233
51 5
51 5
61S21
7 200
75765
440 9
34161
37762
40071
47117
56027
62110
3643
– 10.-.N3
51064
27630
9144
4004
70437
3671
3671
217
29476
32940
1 21
35337
67 70
41344
7400
7401
26
30
36

32
27
27
22
31
36
31
6
21
27
27
25
25
27
36
32
30
26
24
2
2. )
20
21
3
26
32
36
36
5
16
32
37
29
36
24
3
Nonacauíescence (reíatíng to communíty property agreement) pubííshed In Cumuíatíve uííetín -2
(1936), pages 27 (Docket 71 11), 29 (Dockets 9447, 10202, 10755), 31 (Dockets 10299. 32950), 34 (Dockets 4017,
í . 62029. CS577,6 324). 35 (Docket 109 0). 36 (Docket 37369), 3 (Docket 169 5), 39(Docket 7435), 41 (Docket
S2 ). 45 (Dockets 46065, 3725, 12231), 46 (Dockets 61669, 6 335), and 50 (Docket 7359), wíthdrawn.
1 cquíescence reíates to that part of decísíon hoídíng that Waíter . ettman ís not ííabíe as a transferee
aíd to íímítatíon íssue.
1 state ta decísíon.
1 state ta decísíon acquíescence reíates to íssues 4, 5, and 7 of decísíon.
1 cquíescence reíates to questíon whether the vaíue of ríghts to subscríbe to certaín bonds constítutes
íncome.
– Nonacqníescence pubííshed In Cumuíatíve uííetín III-2 (1929), wíthdrawn.
cquíescence reíates to aíí Issues e cept affíííatíon íssue.
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/
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#
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22
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Marsh et u ., ohn
Marston, dgar L
Martín, C.
Martín oteí Co. and affíííated corporatíons.
Martín et aí., . aríe, trustees
Martín, T. S., estate of -
Martíns, ndy 1
Marvín, Waíter S.2 € ”
Mason, rank
Mason, Mary S., estate of 1 --
Masoní, Pauí
Matagarda Canaí Co.5
Matchette, rankíín
Matthews, . P
Mauch, Russeíí C. and essíe
Mauídín, I. M
Mayer, Mark
Mc rthur, R.
Mc uííffe, gnes
McCahan, Rena S €
McCaíí, íorence1.-
McCartcr, Uzaí - - –
McCarthy et aí., ohn ., estate of
McCíung, Louíse Pepper, admínístratrí of Georgía
nna Pepper
McConneíí, Steíía
McCooí, ess
McCormack, rederíck C
McCormíck, L. amííton, estate of
McDonaíd, L. G.
Mc wan, nna
Mc wan et aí., nna ., e ecutors
Mc wan, .
Mc wan, Líííían G
Mc wan, W. ., estate of..
McGrew, íízabeth W - --
Mcíuerney, ohn ., estate of
Mc ee, rthur G
McLaughíín, Thomas
McLennan, . R
McMííían, Wííííam Northrop, estate of
McRae, Louíse C, e ecutrí
McRae, Phíííp, estate of -
Mead Coaí Co., C. .
1527
61961
61735
16275
445 3
445 3
22334
3 57
47 0
4133
5 413
/ 400 2
41345
40710
2G250
72269
26239
7 9 0
731
49071
79039
47702
69193
91196
9903
4347
46059
630
951
25427
25996
25997
25995
25994
25997
26753
3276
61121
597
26730
45966
32303
32303
4271
42719
54660
1035
000
3
29
34
24
24
24
27
25
39
3
33
24
26
22
35
22
36
3
29
35
26
33
3
39
29
24
3
3
27
26
26
20
26
26
25
35
37
29
25
27
30
30
2
35
3
Meherín, P. W.7
Meííbank Corporatíon
1 cquíescence reíates to that part of decísíon hoídíng that Waíter . ettman Is not ííabíe as a trans-
feree and to íímítatíon íssue.
1 cquíescence reíates to íssues regardíng aííocatíon of totaí cost between common and preferred stocks
purchased.
state ta decísíon.
1 cquíescence reíates to aíí Issues e cept the Issue, Díd tho decedent have more than a íífe Interest ín the
estate of her mot her
€ cquíescence reíates to aíí Issues e cept affíííatíon íssue.
- state ta decísíon acquíescence, e cept ín so far as concerns the questíon of sítus.
7 cquíescence reíates to dívídend íssue.
G
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2
0
1
3
-
0
1
-
2
2

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2

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2
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7
/
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3
9
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1
5
0
7
6
0
3
1
6
9
2
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#
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23
cquíescekces € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Meííon, . W. .- -
MtUon, R. ., estate of, Uníon Trout Co. of Pítts-
burgh et aí., e ecutors -.
Memphís Memoríaí Park
Mente, ugene W
Mente, . G
Mente k Co., Inc..
Merau , L. ..
Memí , Mrs. L. .
Mercantííe-Commerce Natíonaí ank ín St. Louís
et aí., e ecutors and trustees -.
Mercantííe Trust Co. of aítímore et aí
Merkra oídíng Co., Inc
Merrííí, Isaac L
Messer, Ríchard ., estate of
Metropoíítan díson Co
Metropoíítan Propertíes Corporatíon
Meyer Shoe Co., .
Míchígan Centraí R. R. Co. -
Míchígan Trust Co. et aí., e ecutors
Mííhy . Dow Coaí Míníng Co.
Reaíty Co.
Míígrím 4 ros., Inc., .
Míííer avíer C, estate of
Mííííken, SaUíe Gíbbs
Mííton, osephíne ohnson
Mínneapoíís, St. Pauí Sauít Ste. Maríe Ry.
Míssíssíppí Packíng Co., Inc
Míssourí State Lífe Insurance Co.
Co.
Mítcheíí et u ., .
Mítcheíí, ohn T. ., estate of .
Mítcheíí, L. C
Mítcheíí, Oscar
1
76499
74241
49259
5345
54701
5470
61305
2461
2462
35443
6 33
05 3
61722
42513
57 69
45032
91260
19930
42513
22021
22022
26259
421 4
51394
33177
4444
31330
54092
7411
20772
5 241
Mobííe ar Pííots ssocíatíon.
36
977
3
1259
2
1037
29
04
29
04
29
04
3
200
3
200
21
1347
32
2
39
117
31
530
27
556
35
1110
24
220
39
444
2
437
27
556
24
40
31
443
24
.53
3
4 7
2
1
35
141
34
177
24
376
29
401
3
1336
37
1
2
767
27
101
35
12
90710
90711
74 05
41610
416 0
41 74
54673
77016
1295
1 cquíescence In oard s actíon wíth respect to the foííowíng: (a) That )oínt account of . W. Meííon
and . . Meííon was not a partnershíp (6) deductíons of íosses resuítíng from saíes to scaíot company
fe) that ta payer s return was not faíse and frauduíent (d) that ta payer was not duríng 1931 the owner
of bank stocks ( ) that ta payer s share of payments made ín settíement of Corhett cíaím shouíd he sub-
tracted from fínaí step ín Uníon ííquídatíon ín computíng ta abíe gaín therefrom (f) that March 1, 1913,
ttr market vaíue of common stock of McCííntíc-MarshaU Constructíon Co. was 300 per share ( ) that
ta|paye made deductíbíe contríbutíons to . W. Meííon ducatíonaí and Charítabíe Trust.
– cquíescence reíates to aíí íssues e cept the íssue wíth respect to the dísaííowance of 1, 00 as an aííeged
íoss from the wreckíng of an automobííe In 1931.
state ta decísíon.
cquíescence reíates to the foííowíng íssues: Whether amount paíd by New York Centraí R. R. Co. to
Stat of Iííínoís ín connectíon wtth Issuance of bonds was a ta or fee saívago recovered from ore docks
credít representíng deprecíatíon on property retíred In 191 .
Nonacquíescence pubííshed ín Cumuíatíve uííetín I -1 (1935), wíthdrawn.
cquíescence reíates to íssue 1 of decísíon.
T cquíescence does not reíate to foííowíng íssues: Deductíon for reserve set up to meet ííabíííty upon
matured coupons ad|ustment of íncome for rentaí of space occupíed ín home offíce buíídíng and deprecíatíon
npon such buíídíng.
cquíescence reíates to íssues regardíng assígnment of earníngs of íron mínes ín payment of íegaí servíces
ad deductíon of amount paíd to son for aííeged servíces rendered.
G
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1
3
-
0
1
-
2
2

0
4
:
4
2

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24
cqotescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Mobííe Líght Raííroad Co.
Monroe Sand Graveí Co., Inc.
Montgomery, Robert . and Loís C
Moore, dward W., estate of 2
Moore, rank
Moore, Louíse C, e ecutrí 1
Moorehead, Wííííam
Moorshead, O
Morgan, r., dwín D
Morgan, atheríne untíngton, estate of.
Morrís, Soí
Morton, Mary, estate of
Mossman, . Pauí1
Mossman, Wííííam ., estate of
Mountaín íew Cemetery ssocíatíon
Mount ope Cemetery ssocíatíon
Moyer, Waíter W
Muchníc, . ., admínístrator
Munroe, Grace ohnson
Murchíson, Mrs. .
Murphy, Mae . eííey
Murray, dward
Murray, . dward
Murray, Rebecca
Murtha Schmohí Co --.
Musgrove, íoyd L
Mutuaí ssurance Socíety of írgínía
Mygatt, enry D
Mygatt, Roíand
N.
Naíí ct aí., R. ., e ecutors.. -- --
Natíonaí Capítaí Insurance Co. of the Dístríct of
Coíumbía
Natíonaí Casket Co., Inc.4
Natíonaí Contractíng Co.. - -
Natíonaí Mííí Suppíy Co.
Natíonaí Packíng Corporatíon
Natíonaí Tííe Co
41026
42062
757 2
5542
5 720
774 5
5 720
25 53
57045
76660
79652
5277
2242
59747
59747
3757
76039
76640
25
7119
637 9
76942
62 3
3 222
40176
5 5
629
40174
5 57
17911
42591
43911
76657
67564
53044
5674
50320
524520
7 2
37001
3166
33971
64013
23
36
37
33
37
33
22
2
35
34

37
33
32
35
37
35
2n
32
2
26
2
3
2
17
27
24
35
27
2
20
25
37
23
24
30
1 cquíescence reíates to foííowíng íssues: 1. Whether payments receíved by a trustee on behaíf of petí-
tíoner In the ta abíe years ín accordance wíth a wrítten agreement entered ínto by and between petítíoner
and another ín 1900 constítute ta abíe payments of rent or nonta abíe payments on the seíííng príce oí
assets. 2. Whether petítíoner sustaíned statutory net íosses for 1924 and 1926 whích can bo deducted from
Its íncome for 1925 and 1920, respectíveíy.
state ta decísíon acquíescence ín hoídíng that the commuted vaíues of the Instaííment poíícíes In
the fírst two groups shouíd be íncíuded ín the gross estate.
€ state ta decísíon.
cquíescence reíates to deductíon of corporatíon e císe ta es.
1 cquíescence ín oard s decísíon that petítíoner had tho ríght to aííocate overhead e penses to each
contract on compíeted basís and that formuía used by petítíoner was permíssíbíe and íssuo reíatíve tc
negíígence.
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cguí sc NC s € ” Contínued.
Docket
No.
oard of Ta p eah).
oíume.
Ntí , ames 1
Neon íectrícaí Products Corporatíon, Ltd., Cíaude
Neracher, George
etcher, Charíes, estate of.
Netther, Gíadys Oííver, e ecutrí -
Netcher, Irvíng
Netcher, Townsend
Newgo Portíand Cement Co
Ntsrtíock OU Co. of Te as .
.Newbury, Moíííe Netcher € ” - €
erbury, Moíííe Netcher, trustee. -- –
Neweíí et aí.. Sterííng, e ecutors ...
New ngíand Power Co
Newman, eííagíe I
Newman Carey Subway Constructíon Co
Newman et aí., Rose, e ecutors € ” - –
Newman, Samueí, estate of 1
New Market Investment Co.
Newton, íízabeth .
Newton, oseph R., estate of €
New York Centraí R. R. Co. .
New York, Chícago 4 St. Louís R. R. Co..
Níagara Share Corporatíon of Maryíand..
Níbíey-Mímnaugh Lumber Co
et u ., T. G
Nícodemus, r., . C
Níppert et aí., ífred ., e ecutors and trustees..
Noonan state Trust, . R
North Síde Lumber tfc Tímber Co
Northern Coaí Co.7
Noyes, ansen
9290
756 5
74411
3 053
3 053
3 052
3 050
36319
2 045
3 049
3 052
57 35
1 593
29105
7 5 0
775
5959
5959
35719
47703
47705
19932
34437
62040
21047
70 13
17527
.ís .y
52326
62569
55595
62664
34924
34945
3 574
Oak
Oakíe
O.
Woods Cemetery ssocíatíon .
y, Ríchard .
77321
0932
4577
743 3
696 6
696 0

35
32
26
26
26
26
27
26
26
26
25
25
37
31
31
17
26
26
2
23
31
32
3
26
32
29
27
24
25
3
24
35
31
31
O Connor, Martín P
O Donohoe, ohn
CDonohoe, Mrs. ohn
ooaoíuíescence (reíatíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín -2
I3S5 pases 27 (Docket 71 11), 29 (Dockets 9447, 10202, 10755), 31 (Dockets 10299, 32950), 34 (Dockets 4017,
3 ,63029.65577.6 324), 35 (Docket 109 0), 36 (Docket 373 9), 3 (Docket 169 5), 39 (Docket 7435), 41 (Docket
SO ). (Dockets 45065. 3725, 12231), 4 (Dockets 61669, 6 335), and 50 (Docket 7359), wíthdrawn.
– onacquíesoence pubííshed In Cumuíatíve uííetín I-2 (1932), revoked.
– state ta decísíon.
cquíescence reíates to March 1. 1913, vaíue for purposes of caícuíatíng gaín or íoss upon saíe of íand at
ersaíííes. Mo. whether the ínvested capítaí of the Síracoe Reaíty Co. shouíd he Increased for 191 and the
March 1.1913, vaíue for amortízatíon purposes of a íeasehoíd beíongíng to ansas Cíty íeasehoíd Sí Improve-
ment Co.
1 eqníesopnce reíates to the foííowíng Issues: Whether amount paíd by New York Centraí R. R. Co.
to Stat of Iííínoís ín connectíon wíth íssuance of bonds was a ta or fee saívage recovered írora ore docks
credít representíng deprecíatíon onproperty retíred ín 191 .
1 Nonaec|uíesceDce pubííshed ín Cumuíatíve uííetín I-2 (1932), wíthdrawn.
cquíescence reíates to ínventory Issue.
1 cquíescence reíates to Issues regardíng aííocatíon of totaí cost between common and preferred stocks
172176
-2
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26
cquíescences € ” Contínued.
Tar payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Okíahoma Contractíng Corporatíon.
O Laughíín, . C, estate of
Oíds, Margaret .
Oímsted, George W. _
Oímsted, Iva C.
Oíympía arbor Lumber Co_.
Ontarío Reaíty Co.
O Rear, . C.
Oregon Casuaíty ssocíatíon..
Oíí Co.
, estate of €
P.
77 71
4319
6966
4906
44090
45745
4 121
54714
60746
( 440 9
45746
4 143
54713
60745
64272
35721
32335
6401
6112
59957
Pacífíc tíantío Teíegraph Co. of the Uníted
States
Pacífío Coast íscuít Co. et aí.
Pacífíc mpíoyers Insurance Co
Package Machínery Co
Page, De Wítt
Paíne et aí., rancís Ward, e ecutors
Paíne, Wííííam ., estate of
Paííadíum musement Co
Paím each Mather Co
Paímer, radíey W.
Pan merícan Lífe Insurance Co.
Parke, Davís Co
Parker, Cíara ., e ecutrí 10
Parker, George D., estate of 10
Parker et u ., aroíd G
Parker, Wm. ., estate of
Parkíand Ice Coaí Storage Co
Parríott, . .
cquíescence wíth respect to hoídíng that petítíoner was not a transferee.
cquíescence reíates to questíon whether the vaíue of ríghts to subscríbe to certaín bonds constítutes
Income.
€ cquíescence reíates to March 1,1913, vaíue for purposes of caícuíatíng gaín or íoss upon saíe of íand at
ersaíííes, Mo. whether the Invested capítaí of the Strncoo Reaíty Co. shouíd be Increased for 191 and the
March 1,1913, vaíue for amortízatíon purposes of a íeasehoíd beíongíng to ansas Cíty Leasehoíd Improve-
ment Co. -
cquíescence reíates to íssue as to aííowabíe deductíon of cost of operatíng automobííe partíy used ín
ta payer s busíness ín 1924.
cquíescence reíates to foííowíng Issue: Whether respondent erred ín Incíudíng ín petítíoner s gross
Income certaín sums receíved by arrcíí and Moncríef and by the trustees of the íígore Independent
Schooí Dístríct from oíí produced from propertíes operated by petítíoner.
€ Nonacquíescence pubííshed ín Cumuíatíve uííetín Míí í (1934), wíthdrawn.
1 cquíescence wíth respect to deductíon of e pense ínoídent to amendment of petítíoner s charter.
I cquíescence reíates to íssue whether stock ríghts were capítaí assets where the stock ín respect of whích
they were íssued had been heíd for more than two yoars príor to saíe of the ríghts.
€ cquíescence reíates oníy to tho Issue ínvoívíng tho deductíbíííty of 9,232.31 and 257. as Interest ín
connectíon wíth certaín íífe poíícíes and trust agreements, respectíveíy.
cquíescence reíates to aíí questíons whereín decísíon was not whoííy In favor of Commíssíoner e cept
decísíon regardíng e ístence of partnershíp of George D. Parker Co.
II cquíescence reíates to ríght of overrídíng royaíty owners to benefít of sectíon 211(b), ReTenue ct oí
191 .
295 6
715
7 000
54334
7 907
34113
34113
79746
43 50
62652
463
62717
5 604
5 604
90260
631
67640
309 9
35
3
4
30
30
30
17
2
37
37
29
26
32
36
2
34
25
25
37
24
32
3
31
31
31
39
3
27
2
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27
cquíescence. € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
Patterson, íízabeth P..
Patterson, rank ., estate of
Peabody, Mary S
Peavy- yrnes Lumber Co.
Peavy-Moore Lumber Co.
Peavy-Wííson Lumber Co.
Peck, Cíara S., estate of
Peck ct aí., remont C, e ecutors.
Pegg, íbert 0.
Penn Mutuaí Lífe Insurance Co...
Pennsyívanía Indemníty Co
Pennsyívanía Investors Co
Pennsyívanía Water Power Co..
Peopíes Lífe Insurance Co.
Peopíes State ank
Pepper, Georgía nna, estate of
Perata, ohn M.
Perkíns, íbert T
Perkíns et aí., acob
Perkíns et aí., Thomas N. _
Pmy, oward
Perry, Raymond ., estate of-
Pershouse, ííce
Pershouse, Mabeí
Peters, ndrew .
Phííííps, C.
Phoení Insurance Co
Píctoríaí Revíew Co
7605
765 0
79907
15 24
16354
259 4
15 23
6355
259 6
15 22
16356
259 5
61520
61521
61520
61521
2233
52577
59670
71992
20766
56720
66969
71744
91697
9903
57923
754
2 701
57 4
5 305
5 306
5 443
5 475
5 770
5 772
5 904
5 905
5 906
5 907
5 917
5 91
5 925
69 55
63645
26749
2674
54050
47901
4 67
43995
33
30
3
25
25
25
31
1
27
3
30
24
3G
1
3
39
33
30
25
33
33
32
25
25
2
20
29
26
state ta decísíon acquíescence reíates to Issue whether transfer was made In contempíatíon of death.
1 cquíescence reíates to that part of decísíon hoídíng that Waíter . Iíettman Is not ííabíe as a trans-
bee, and to íímítatíon Issue.
1 cquíescence reíates oníy to treatment of rentaí vaíue.
sute ta decísíon.
cquíescence reíates to the foííowíng Issues: Is any part of the defícíency as to astern Carbon íack
C .. Thompson Oíí Co., . II. M. Co., and Davís ros. Co. due to fraud wíth Intent to evade ta t Díd
tfce shares of Interstate Oas Co. stock roceíved by O. n. M. Co. as a dívídend from astern Carbon íack
Co constítute ín part a ííquídatíng dívídend
. onaoquíescence pubííshed ín Cumuíatíve uííetín II-2 (1933), revoked.
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2
cquíescencbs € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Píggíy Wíggíy Corporatíon.
Pítkín, George P
Píttsburgh thíetíc Co.1
Píttsburgh rewíng Co
Píttsburgh Meítíng Co
Píttsburgh West írgínía Ry. Co.
Pítzman Methudy Trust
Pízítz Dry Goods Co., Louís
Píant, enry radíey
Prophyíactíc rush Co.
Prosperíty Co., Inc. € ”
Prosser, Constance
Provídent Trust Co. of Phííadeíphía, e ecutor 7
Prudentíaí Loan Co
Putnam Trust Co
Putty, Mrs. Maícoím..
uínn, van
uínn, íorence M.
uínn, Martín M__
uínn, Pauí
.
P-M- Petroíeum Co.3 -- -
Poíar Ice Coaí Co
Ponvert, Luísa Terry, estate of 4
Pope, Oííve R
Porter, . Staníey
Portíand Co-Operatíve Labor Tempíe ssocíatíon..
Poweí, T. I. are 5
Poweíí, en|amín I
Poweíí, oseph W_. -
Praíríe Oíí Gas Co
Preston, ohn W
Preston, Sara R
Príce, Laura M
Príce, W. .
25126
43 60
65173
60569
66964
67422
33 6
626
44 5
72157
7215
1750
465 5
43 9
4 9 4
52094
55659
60923
50576
54779
6763
156
29274
2425
9276
93304
64464
503 0
73763
57117
74560
74559
40059
41072
32996
47 45
47 46
45 96
5496
26752
59957
7 69
34743
696 3
544
0005
59
574
2
1
27
37
30
32
36
22
30
24
27
35
25
30
39
27
26
34
29
35
35
21
24
25
27
25
29
37
20
31
20
35
20
20
1 Noí)fírr íííoseence pubííshed In Comuí.ítíve uííetín II-2 (1933), revoked.
cquíescence reíates to questíon whether certaín dívídends receíved by the petítíoner from tho Orís-
woíd Company are sub|ect to ta nonacquíeseence as to thís íssue pubííshed ín Cumuíatíve uííetín
III-2 ( 9:M), pace 33, wíthdrawn.
cquíescence reíates to thírd íssue of decísíon.
4 state ta decísíon nonacquíeseence pubííshed ín Cumuíatíve uííetín 1037-1, page 46, w.thdrawn.
1 Nonacquíeseence pubííshed ín Cumuíatíve uííetín I1-1 (1933), wíthdrawn.
cquíescence reíates to deductíon of íoss resuítíng from ííquídatíon of one of íts subsídíaríes,
Nonacquíeseence pubííshed ín Cumuíatíve uííetín ILI-1 (1934), wíthdrawn.
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0
1
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29
cquíescences € ” Contínued.
R.
Raíns, Ruth .
Ramísh, doíph
Ramísh, Inc., doíph
Rand, essíe ., estate of 1
Randaíí, George W., estate of ...
íUndaíí, Mar|oríe G.
Rands, Inc
Rtods, Wííííam C--
Rapp, ohn W., estate of
Rathbome, Georgíe W
Rathborne, . Corneííus
Raugh Reaíty Co.
Ray Oíí Co.4
Raymond, Raíph Lesííe
Rea, enry Oííver
Reardon Sons Co., ohn
Record Petroíeum Co
Reese, ugusta ííss
Remco Steamshíp Co
Rew, George Campbeíí, estate of.
Reynard Corporatíon €
Reynoíds Cattíe Co
Reynoíds, Maríe ., estate of 1
Rhea, Isaac T
Rhea, Mrs. Isaac T
Rhodes, erman M
Ríaíto Míníng Corporatíon
Ríchards 4 írschfeíd, Inc
Ríchardson, my S., e ecutrí 1
Ríchardson, Charíes W., estate of1
Ríchmond, rederícksburg Potomac R R Co. .
R|dgway, Robert-
íay,
Rígp. a
atíonaí ank _
Sítter Lumber Co. et aí., W. M
€ ísatttu .
€ fot cquíescenoe pubííshed In Cumuíatíve uííetín -2 (1931),
Docket
No.
oard of Taí ppeaís.
oíume.
04G9
3956
39569
19 4
5 50
6765
3 971
74942
62066
6 46
2 61
3106
3105
4655
32 22
34332
79130
0265
20773
50962
62424
5772
41404
673 6
70795
6S145
71463
1060
54960
54959
54 99
4 692
56 77
21715
64023
64023
6 76
77666
30903
42 33
42 34
42 35
4 36
43604
43605
43606
4 749
57319
57320
57321
57322
go 99, wíthdrawn.
ss sustaíned ín 1924 from saíe of rest-
3
11 9
30
1290
30
1290
36
1160
4
679
27
475
34
1094
34
1107
24
1061
37
936
37
607
26
4
2
1201
34
1171
35
1132
24
376
32
1207
29
665
30
579
34
451
30
451
31
206
3
59
29
04
29
04
34
212
25
9 0
24
12 0
31
245
31
245
33
95
35
122
17
615
30
231
33
117
teWí nce In that part of decísíon reíatíng to deductíbíííty of
íeeence reíates to íssue whether petítíoner was ta abíe ín 1923 as a trust or as an assocíatíon
onaaíuíescence pubííshed ín Cumuíatíve uííetín -2 (1936), page 44, wíthdrawn
€ í Wítícence reíate to deductíon for deprecíatíon on premíses and íncíusíon ín year 1930 ín petítíoner
tame, 7,400, representíng rentaí vaíue of premíses occupíed by hím.
uíescence reíates to íncreased deductíon for íoss on retírements of roadway property.
Mcqutoscenoe pubííshed ín Cumuíatíve uííetín -2 (1 31), wíthdrawn.
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30
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Roach Studíos, Inc., aí
Roberts et u ., .
Robertson, Caíííe -- - €
Robertson, Cordeíía íddíe, generaí guardían of
the property of nthony N. Duke
Robertson, R. R
Robíson, Lester L
Robson, Cíara P., estate of
Rocky Mountaín Oíí Co.1
Rodeo- aííe|o erry Co.2
Rodewaíd, . íngsíey
Roerích, Níchoías
Rogers, rown Crocker ros., Inc.
Rogers et u ., Charíes
Roíandeííí, Guíííano
Rosenberg, Louís
Rosenbíoom ínance Corporatíon € _
Ross. Oííve
Rossneím, Irvíng D.
Roth, Gorton
Roth, enry, estate of
Roth, W. .7- € ”
Roy 4 Títcomb, Inc
Royaí Insurance Co., Ltd
Rudman, I.
Rudman, Rose
Ruíí, M ---
Rushmore, Charíes ., estate of
Russeí, íbert W
Russeíí, C. C
Russeíí, Mrs. C. C
Rutíedge, T. W.
S.
61750
0697
42496
79943
42497
53 7
26645
79421
36411
4 52
76659
3065
675 1
61 1
57479
672 6
27626
3577
40903
319
57503
2256
776
45065
2913
3632
5 6
5 7
67097
77164
73423
46060
46061
5 152
31
6
2
3
2
33
25
36
24
35
3
32
3
33
24
24
37
31
26
37
22
24
3
36
36
30
36
35
24
24
37
St. ohns Investment Co 50613 30
St. Louís Uníon Trust Co. et aL, cotrustees 65675 30
St. Louís Uníon Trust Co., e ecutor 10 45966 27
1 cquíescence reíates to Incíusíon ín íncome of oíí payments reserved by and paíd to petítíoner s assígn-
ors, for purposes of computíng ta abíe Income and aííowabíe depíetíon.
€ cquíescence reíates to deductíon of contríbutíon to íctory íchway ssocíatíon.
1 cquíescence reíates oníy to the íssue ínvoívíng saíary and per díem aííowance receíved by petítíoner
from the Uníted States Government ín 1934.
€ cquíescence roíates to reductíon of profít of members of syndícate by the 2M per cent commíssíon due
syndícato manager and whether portíon of the syndícate Income consístíng of dívídends shouíd be ta ed to
the Indívíduaís oníy at surta rates.
– cquíescence reíates to hoídíng of oard that dístríbutíons receíved from oseph . ínch It Co. were
not partíaí ííquídatíng dívídends.
€ cquíescence reíates to íssue whether petítíoner reaíízed addítíonaí compensatíon on saíe of stock of
Warner ros. Píctures, Inc., ín 192 . r .
Nonacquíosccnco (reíatíng to communíty property agreement) pubííshed ín Cumuíatíve uííetín -2,
(1930), pases 27 (Docket 71 11) 29 (Dockets 9447, 10202, 10755), 31 (Dockets 10299, 32950), 34 (Dockets 4017,
63 9, 62029, 05577, 6S324), 35 (Docket 109S0), 36 (Docket 373f.9), 3 (Docket 169 5), 39 (Docket 7435),
(Docket 9290), 45 (Dockets 45065, 3725, 12231), 4 (Dockets 61669, 6 335), and 60 (Docket 7359), wíthdrawn.
€ cquíescence reíates to foííowíng íssues: Incíusíon ín íncome of oíí payments made to assígnors dírectíy
by pípe ííne companíes deductíon of cost for cement used In drííííng oífweíí deductíon of drííííng cost as an
e pense.
€ state ta decísíon.
í state ta decísíon acquíescence, e cept ín so far as concerns the questíon of sítus.
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31
cqtrí SC NC S € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
Saíomon, Leon 1
Sanders, W. C - €
Sanford, Lísa W., estate of -
San Marcos Compress Co
San Martínez Oíí Co
Sanson, aroíd R., estate of
Sappíngton, G. Rídgeíy
Savíngs eature of the Reííef Department of the
aítímore Ohío R. R. Co.
Sa e, rank ., estate of -
Scatena, ívíra - –
Schepp Co., L
Schermerhorn, arríet Puííman
Schumacker, . P
Scofíeíd, Maríon, estate of 1 €
ScovíU Manufacturíng Co
Scruggs, Gro6s R
Scruggs, Marían P
Scruggs Investment Co
Scuííín, ohn, estate of.
Seaboard Securíty Co.
Seaboard Smaíí Loan Corporatíon.
Seaconnet Coaí Co. .
Searíes Reaí .state Trust
Seasíde Improvement Co
econd Natíonaí ank of Phííadeíphía.--
Securítíes Co -
Securíty írst Natíonaí ank of Los ngeíes et aí.,
e ecutors
Securíty- írst Natíonaí ank of Los ngeíes, trus-
tee .
Seíbert, Ltd
Seíís Sportíng Goods Co.
Shaffer, C. .
Shand, Gadsden
Shapíro, Samueí
Sharp et u ., . Rodney .
Shaw, Davíd, estate of
3725
12231
26651
346G
49304
37447
43121
5192
51944
594 6
61156
79276
63920
4290
43145
59612
062
29 54
3023
33610
3 711
46270
75524
79970
79971
1 0 9
244 9
7701
76 25
40553
45429
6064
57059
20771
29259
2623
6515
4259
N 12110
6704
6705
34499
4

25
3
31
25
36
25
32
37
32
25
26
32
3
25
24
24
24
36
3
3
21
25
37
a:)
25
2
36
29
24
29
22
2 )
3
24
1109
979
949
273
273
21
651
13 5
295
535
675
419
1031
1242
51
265
1174
1174
1174
791
660
560
307
1115
92
750
446
2 9
72
319
376
1350
5
1012
166
1235
1 Nonacquíescence (reíatíng to communíty propertv agreement) pubííshed ín Cumuíatíve uííetín -2,
(1S36). pages 27 (Docket 71 11), 29 (Dockets 9447, íí:202, 107.W. 31 (Dockets 1029 , 32950), 3) (Dockets 4017,
am, 2029. 65577, 6 324). 35 (Docket 109 0), 36 (Docket 37369), 3 (Docket 169 5). 39 (Docket 74 5), 41
(Docket 0290), 45 Dockets 45065, 3725,12231), 46 (Dockets 61669,6 335), and 50 (Docket 7359), wíthdrawn.
state taí decísíon.
1 state ta decísíon acquíescence reíates to the foííowíng íssue: Shouíd there be íncíuded In the gross
estate the vaíue at the date of decedent s death of certaín property whích he had transferred ín 192 to a
trustee In trust to pay the íncome to hím for íífe, wíth remaínder over of the corpus to certaín named
benefícíaríes
onacquíescence as to one íssue, pubííshed ín Internaí Revenue uííetín 193 -31, page 1, wíthdrawn.
– cquíescence reíates to íssue ínvoívíng íncíusíon of faír market vaíueof ríghts to buy bonds ín petítíoner s
Income.
cquíescence reíates to the íssue Invoívíng the aííowance of a deductíon from gross estate of 1,000 paíd
to the oníta Schooí pursuant to promíse made by decedent.
cquíescence reíates to ínventory íssue.
1 cquíescence reíates to íssue regardíng íoss from operatíon of a farm In 1925 and 1920 and Issue regardíng
r defícíency for 1925 by amount of ínterest accrued on bonds e changed for art ob|ects.
reíates to market vaíuo of oíí and gas íeases on March 1,1913.
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32
cquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaís.
No.
oíume.
Page.
37 35

40034
/So
75223
35
220
69166
32
20
4442
37
454
2 63
39
60
46335
2
73
64737
35
15
35720
17
213
47210
32
320
47211
32
320
47212
32
320
47212
32
320
47210
32
320
19175
19791
2
9
61497
2
1100
61496
2
1106
37703
26
1359
29252
26
1359
37520
26
1359
37520
26
1359
37 64
26
1359
37703
26
1359
41070
26
1324
72605
31
709
7 36
36
149
61669
6 335
29
167
72404
7 525

271
77004
36
105
64 35
33
30
29260
29
1350
4396
2
327
39291
4966

291
39291
4966
25
291
1 76
24
07
22313
24
07
1 76
24
07
3257
25
103
Shea, R. P - ---
Sheets, Leveret T., estate of
Shepherd, Cettíe G., estate of 1
Shíveríck, ane
Síegeí, íe ander
Sííberbíatt, Soíomon
Sííís, Mííton, estate of 1
Símcoc Reaíty Co.
Símmons, II, et aí., dward C, e ecutors € ”
Símmons, dward
Símmons, George W., estate of
Símmons et aí., Ríchard W., e ecutors
Símmons, Waííace D., estate of
Símms, . . ..
Símms Oíí Co.
Símms Petroíeum Co.5
Síncíaíre et aí., eíen ., e ecutors...
Ríncíaíre, enry P., estate of
Síncíaíre, r., enry P., estate of
Síncíaíre et aí., Murray, e ecutors
Síncíaíre, Regínaíd
Síncíaíre, Wííííam, estate of
Síou aíís Metaí Cuívert Co
Sípes, asper
1620 roadway Corporatíon
Skewes-Co , díth Page .
Síack, . ., estate of --
Síack, r., Wííííam --
Síoss, attíe echt --
Smathers, . ., estate of € -
Smathers Power Typewríter Co
Smíth et aí., íízabeth D., e ecutors.
Smíth, I. N., estate of
Smíth, essíe, e ecutrí
Smíth, Mrs. essíe
Smíth, Louís, estate of
Smoot, Lewís
1 state ta decísíon.
Nonacquíesccnce pubííshed In Cumuíatíve uííetín II-2 (1933), page 25, wíthdrawn.
1 cquíescence reíates to March 1, 1913, vaíue for purposes of caícuíatíng Raín or íoss upon saíe of Innd
at ersaíííes, Mo. whether the ínvested capítaí of the Símcoe Reaíty Co. shouíd be íncreased for 191 and
the March 1, 1913, vaíue for amortízatíon purposes of a íeasehoíd beíongíng to ansas Cíty Leasehoíd
Improvement Co.
cquíescence reíates to íssues 3, 6, and 7 set forth ín syííabus of pubííshed decísíon.
cquíescence reíates to basís for computíng deprecíatíon on assets acquíred by Símms Oíí Co. In 1925
from Cíayton Oíí Refíníng Co.
– Nonacquíesccnce (reíatíng to communíty property agreement) pubííshed In Cumuíatíve uííetín -2
(1930), pa es 27 (Docket 71 11), 29 (Dockets 9447. 10202, 10755). 31 (Dockets 10299, 32950). 34 (Dockets 4017
63 9, 62029, 05577,5 221), 35 (Docket 109 0), 36 (Docket 37309). 3 (Docket 109 51,39 (Docket 7435), 41
(Docket 9290), 45 (Dockets 45005. 3725, 12231), 46 (Dockets 61609, 6 335), and 50 (Docket 7359), wíthdrawn.
7 cquíescence ín íssue ínvoívíng deductíon of attorney s fees paíd by decedent.
cquíescence reíates to the foííowíng questíon: Díd petítíoner receíve a dívídend from echt roadway
Corporatíon ín 1929 ín the amount of 1,503
cquíescence reíates to market vaíue of oíí and gas íeases on March 1, 1913.
G
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0
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6
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3
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33
c t7I SC NC 9 1
Contínued.
Doeket
No.
oard of Ta ppeaís.
oíume.
Paw.
45694
30
/ 33
1121
47
44500
27
97
42592
27
554
29694
26
914
214 1

29951
37 7-
27
673
37 9
1
79972
79973
3
560
56320
29
263
56321
29
263
74297
35
243
74296
35
243
7429
35
243
74299
35
243
42006
42434
30
1165
34946
24
307
3 40
24
699
7 477
37
7 6
20770
24
376
33159
36393
25
2 1
40 73
35260
35617
2
690
51636
30
1 4
62100
36
112
69259
31
671
26756
25
513
37573
24
1013
6709
30
746
5694
6 7
3
5 9
ííSSO

26643
25
949
26650
25
949
26644
25
949
26647
25
949
26646
25
949
26649
25
049
2664
25
949
62 25
33
252
5575
32
1039
296 5
24
52
43416
23
610
r., . T.
South Memphís Land Co
Southard, enníe
Southern tíantíc Teíegraph Co.
Southern Raííway Co. et aí. _
Southern
Securíty Co.
íer, Georgía II
íer, . W...
y, dward G
ímer ., estate of
Sperry, r., ímer
Sperry, Zuía ., estate of
Sprague-Seíís Corporatíon
Sprague 4 Son Co., C. .
Sprunt Son, Inc., íe ander.
Stacv, Mar|oríe Lípe
Standard eef Co
Standard Conveyor Co.
Standard Isíand Creek Coaí Co
Standífer Constructíon Corporatíon, G. M.
Stanton, George
Starr, rank C
Stauffen, Theodora
Stearns, Robert L
Steege, W.
Steeíe, Charíes .
Stegeman, .
Stegeman, r., íbert € ”
Stegeman, anníe L
Stegeman, . M
Stegeman, . R
Stegeman, Mabeí
Stegeman, Wííííam L
Stephenson, Ida
Sternberg, erman
Stevens, ohn .
Oíí Co. .
Stevenson
1 cquíescence reíates to oard s hoídíng that bonuses shouíd be ta ed as separate or communíty property,
ír. accordance wíth the cíassífícatíon of the propertíes under the íease and íssue ín connectíon wíth assess-
ment of defícíency for 1925.
1 cquíescence reíates to íssue Invoívíng deductíon for depíetíon from advanced royaítíes or bonuses.
1 cquíescence reíates to foííowíng íssues: 1. Díd petítíoner reaííze ta abíe Income from unrefunded por-
tíons of amounts deposíted by shíppers for constructíon of facííítíes for use of such shíppers 2. Where
soíd at a premíum príor to March 1, 1913. ís tho amortízed portíon of such premíum ta abía
íount
1920
3. Díd Commíssíoner erroneousíy e cíude from ad|ustment for materíaí and suppííes an amount
t to ínfíatíon contaíned ín book vaíue of such materíaís and suppííes as v.ere not used du íng
cquíescence reíates to ínventory íssue.
€ Gíft ta
cquíescence reíates to íssues regardíng reductíon of íncome for físcaí year endíng November 30, 1924,
by íoss sustaíned for 11 months endíng November 30. 1922, and íncíusíon ín íncome for aíí years of 11 par
aíue of capítaí stock of Sunburst Oíí Oas Co. receíved by petítíoner as a premíum.
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34
cquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Taí ppeaís.
oíume.
Stewart, ames R.
Stewart, Maco, e ecutor
Stewart, Neíííe sperson € ”
Stewart, Theodore -
Stífeí, rthur C.L
Stíefeí, dward W.1 -
Stíefeí, enry G.1
Stock Yards ank of Cíncínnatí..
Stockhan, íí|ah
Stone et aí, Irvíng ., e ecutors and trustees
Stone, Irvíng Lee, estate of
Stoneman, Davíd
Storey, . M - --
Story, atheríne .
Story, r., Neíson, estate of
Story, Thomas .
Story, Waíter P. -- --
Straííbcí, . L. G - ---
Street, Raíph W - --
Stromeyer, Irene -
Stromeyer, Wííííam
Strong, aroíd C.
Stryker, Ma --
Stuart, Charíes
Stuart, r., Wíííoughby
Sugar Creek Coaí Míníng Co -
Suííívan, ugene C...
Summerfíeíd Co
Summerííí Tubíng Co --
Sunburst Oíí Refíníng Co --
Suppíee, C. enderson, estate of € €
Sweínhart, ames
Symíngton, íízabeth L
Symíngton, ísíe
Symíngton, mííy
Symíngton 4 Son, Inc., et aí., T. .
Taíbot, . .
Tarafa v rmas, ose M., estate of .
Tayíor Co., Inc., W.
Tcague, .
Terry, nna Davís, estate of
Te as Irrígatíon Co.
9950
63645
6 7 1
70297
6073
60739
60740
410 5
22569
43 30
43 30
27627
62 13
66961
66963
66962
66960
56 67
72609
55341
55342
3 576
2516
53796
73 69
7375
5 711
74070
45979
9363
547 4
62234
6222
62161
4 7 6
4 7 7
4 7
4 7 9
4 9
4 90
36191
2656
9597
73034
9925
400 3
41346
39
7
32
442
35
406
32
600
29
1145
29
1145
29
1145
25
964
26
631
26
1
26
1
24
1
31
1126
36
239
36
239
36
239
36
239
29
516
36
391
2
472
2
472
25
1351
36
326
29
605
32
573
31
344
26
1359
29
77
36
347
23
29
39
902
29
1179
35
711
35
711
35
711
35
23
37
3
32
3S
24
I Nonacquíesccnce pubííshed In Cumuíatíve uííetín III-1 (1934), pace 30, wíthdrawn.
state ta decísíon acquíescence reíates to íssue ínvoívíng deductíons from gross estate.
state ta decísíon.
cquíescence reíates to Issues regardíng aííocatíon of totaí cost between common and preferred stocks
purchased.
íft ta decísíon.
cquíescence reíates oníy to the Issue, Díd the Commíssíoner err ín íncíudíng, for gíft ta purposes, toe
entíre vaíue of certaín síngíe premíum poíícíes ínstead of one-haíf vaíue thereof
T cquíescence reíates to íoss íncurred ín saíe of a boat.
1 cquíescence reíates to aíí íssues e cept affíííatíon íssue.
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#
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35
cquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaís.
No.
oíume.
ace.
47 1
39
50
7974
3
336
07506
32
134
51103
2
657
51104
2
657
44 57
44 0
– 30
636
50653
29
545
7 425
39
516
7 423
39
516
3167
3169
3171
3173
3175
3177
37
104
4276
4279
4291-
4294
31029
33464
42340
25
9 6
45957
31030
33465
25
yoo
42341
4595
6505
3
545
4 92
49539
27
277
27624
24
1
45320
23
92
5377
31
7 7
54 2
629 2
30
1156
54 2
C29S2
30
1156
45513
25
1055
73111
37
119
f 30
615
66703
31
33
1 7
441
€ 37
3 7
2 093
4025
25
713
6149
2
1106
61215
33
59
76256
77204
35
6 1
Thacher et u ., Thomas C, r
Thatcher state Co., the M. D.1...
Thíeíe, Waíter
Thompson, dward W
Thompson, W. L
Three Rívers Secuííty Corporatíon.
Thríft Reaíty Co.-
Tíchenor, rthur L
Tíchenor, Charíes O
Tíernan, Martín ., trustee, Martín . Tíernan
trust for Martín T., Charíes W., ohn W., nn
C., and Mary . Tíernan et aí.
TífTt, Charíes.
Tífft, Lewís .
Cap ndrew
Tímes-Pícayune Pubííshíng Co.
Tobev, Mauríce
Toíerton Warfíeíd Co.
Torrens, ames .
Tracy, Davíd ., estate of
Tracy et aí., Gertrude emíer, trustee-
Tracy, Wííííam R.
Transcaíífornía Oíí Co., Ltd
Tresner, my.
Trícou, Saíííe S
Tríníty Drííííng Co. .
Troíí, nníe
Trosk, George
4 Gírt ta decísíon.
cquíescence reíates to the íssue. Is the íncome of a trust ta abíe to the donor where the trust ínstrument
provídes that the trust íncome may be used for support and educatíon of the donor s chíídren, but was
never so used
– cquíescence reíates to íssue regardíng deductíon of íoss sustaíned by petítíoner duríng nonaffíííated
perk L
1 cquíescence ín oard s decísíon ín so far as It hoíds that petítíoner was not ta abíe on any part of the
proceeds íf the 100 shares preferred stock gíven by hím to hís four sons ín 1923.
1 cquíescence reíates to questíon whether deductíon for depíotíon ín connectíon wíth deveíopment
e penses was properíy before the oard under mandates of the court.
cquíescence reíates to basís for computíng deprecíatíon on assets acquíred by Símms Oíí Co. In 1925
torn Cíayton Oíí Refíníng Co.
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1
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36
cquí sc NC a € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Trost, dward .
Trout, . W
True, dward C.
Turbevíííe. íííc Iíí-
Turner, athíeen M.1...
Turrísh, enry
Twín eíí Oíí Syndícate-
Twíníng, dmund S
U.
Uíster Deíaware R. R. Co.
Uníon Lard Corporatíon
Uníon Pacífíc R. R. Co. .
Uníon Pacífíc R. R. Co. et aí. .
aíííant, theí Netcher
aííey Waste Dísposaí Co.
an ken, nníe Louíse..
an Síckíen, rederíck W., estate of
ermont ydro- íectríc Corporatíon.
írgínía Iron, Coaí Coke Co
ogeí, R. red, estate of
on Gunten, Chrístían W.
w.
Wagegro Corporatíon
Waíker Products Corporatíon.
Waíker, R. D
Uníon Peopíes Natíonaí ank of ackson et aí.,
admínístrators 4
Uníon Trust Co. of Píttsburgh, trustee
Uníted utographíc Regíster Co
Uníted States Trust Co. of New York, trustee
73 4
39020
6 501
43733
47900
55553
64334
64560 )
22340
44742
2951
70296
2 927
20769
51530
701 3
70219
35639
35649
356 4
356 5
40060
40061
40062
70456
61009
303 4
26747
26757
3 051
6371
76 94
79334
2545
5963
51576
561 2
6137
2077
44 56
76762
31
27
31
31
27
21
26
32
25
24
32
26
30
29
27
25
26
3
35
35
29
29
34
2
3
30
34
1 cquíescence reíates to that part of decísíon hoídíng that Waíter . ettman Is not ííabíe as a trans-
feree amí to íímítatíon íssue.
1 cquíescence reíates to íssues wíth respect to íoss sustaíned by O. W. R. R. Co. on e change of íand
In Sent tíe ín 1925 amount of íoss sustaíned by O. . W. Raííroad Navígatíon Co. In 192f on saíe of íand
In Muítnomah County, Oreg. contríbutíons to hospítaí departments In 1924, 1025, and 1926 amortízatíon
of díscount on bonds íssued príor to March 1, 1913, and commíssíons unrefundabíe portíon of deposít made
wíth petítíoner ín connectíon wíth constructíon of branch ííne.
cquíescence reíates to donatíons Issue amortízatíon of díscount on bonds íssued príor to 1913 computa-
tíon of ta for 1920.
4 state ta decísíon.
1 Nonacquíescence pubííshed In Cumuíatíve uííetín II-3 (1933), page 27, wíthdrawn.
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1
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1
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9
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7
6
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37
cqoíesoenoes € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaí .
oíume.
Waíí, rank .
Ward ros. Co
Warner Co.
Warner, Raíph C
Washíngton, Sr., George. -
Washíngton Market Co.
Waterbury, Charíotte M.
Waterbury, Donaíd N.
Waterbury, ugene W.1
Waterbury, Whítford N.
Watson, r., ohn
Wayne County ome Savíngs ank 4
Weddíng, G. G
Weeks, íanson
Weís, Samueí W
Weíí , Thomas . -
Wheeíock, R. L
Wheeíock, Mrs. R. L
Whítcomb, nna S.s
Whítcomb, . .
Whíte Oak Transportatíon Co.7
Whítman, Ward 4 Lee Co
Whítnev, Ríchard...
Whítney, Wííííard M
Whítson, Thomas €
Wííco , C. –
Wííííams, r.. íford
Wííííams, íma
Wííííams, íía
Wííííams, L.
Wííííams, R. L. - -
Wííííams, W. W -
Wííííamson, íe ander
Wííííamson, rchíbaíd (Lord orres)
Wííííamson, essíe C
Wíííís, Mary
7359
30992
53039
53040
59190
62510
3712
43912
733 1
733 0
733 3
733 2
53414
9671
49144
56442
63916
62126
7NS29
37 06
37 05
0017
5219
7196
521
1 0
61552
76661
37927
40233
46371
66915
4001
29273
5 7 9
4000
46062
40231
43972
40229
43973
0545
6671
4
24
26
31
36
25
33
33
33
33
27
3
26
32
31
30
34
2
2
37
37
24
29
35
26
25
27
29
36
25
31
36
24
25
25
34
30
31
33
ío 37
1 Nonacquíescence (reíatíng to communíty property agreement) pubííshed In Cumuíatíve uííetín -
093 ), pages 27 (Docket 71 11), (Dockets 9 47, 10202,10755). 31 (Dockets 10299. 32950), 34 (Dockets 4017,
S3 . 62029.55577,6 324), 35 (Docket 109 0), 36 (Docket 37369), 3 (Docket 169S5), 39 (Docket 7435), 41 (Docket
90), 45 (Dockets 45065, 3725, 122 1), 46 (Dockets 01669, 6 335), and 50 (Docket 7359), wíthdrawn.
1 Nonacquíescence pubííshed ín Cumuíatíve uííetín 11-1 (1933), wíthdrawn.
1 cquíescence reíates to íssue as to basío vaíues of stock.
€ Nonacquíescence pubííshed ín Cumuíatíve uííetín I-2 (1932). revoked.
– Gíft ta decísíon nonacquíescence pubííshed ín Cumuíatíve uííetín -1 (1936), page 4 , wíthdrawn.
cquíescence reíates to the foííowíng Issue: Where husband and wífe, resídents of the State of Míchígan,
own reaíty as tenants by the entírety, may tbey dívíde equaííy and deduct ín theír separate Income ta
returns íosses resuítíng from the rentaí of such reaíty
cquíescence reíates to ínventory íssue.
1 cquíescence reíates to Issue ínvoívíng accruaí of Interest.
1 cquíescence reíates to capítaí net gaín Issue as to stock soíd In 1933,
cquíescence reíates to questíon whether deductíon for depíetíon ín connectíon wíth deveíopment
e penses was properíy before the oard under mandates of the court.
G
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d

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(
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Y
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k

U
n
í
v
e
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s
í
t
y
)

o
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2
0
1
3
-
0
1
-
2
2

0
4
:
4
2

G
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/
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3
9
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1
5
0
7
6
0
3
1
6
9
2
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3
cquíbscences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Wííson, enton
Wííson Co., Inc., of Caíífornía.
Wííson Co., Lee..
Wííson Commíssíon Co
Wííson urs, Inc
Wííson, George S., estate of 1
Wííson Shípbuíídíng Co.1---
Wínsíow, Mary N
Woíf, . C-
Wood, red T...
Wood Lumber Co., . ...
Woodard, ohn S.3
Woodward rthur P
Work, orace ., estate of.
Wray, ííza
Wríght, George M
Wríght, Leonard Marshaíí..
Y.
Yazoo Míssíssíppí aííey Ry. Co.
Young, theí P
Yukon íaska Trust
Z.
erman, ohn .
Zímmerman, Sarah . .
Co
52 94
2076
33 26
20767
5705
50 2
34337
76059
56439
3 0
23605
24156
71962
54741
60227
1027
25 1
25 54
4550
62023
62991
3 6
34161
2491
24
5242
33
24
25
24
29
30
– 25
33
32
27
25
30
32
34
24
22
26
30
34
24
26
36
36
21
1 state ta decísíon.
1 cquíescence does not reíate to íssue 5 of decísíon.
cquíescence reLates to reorganízatíon íssue.
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1
3
-
0
1
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2

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4
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2

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/
2
0
2
7
/
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3
9
0
1
5
0
7
6
0
3
1
6
9
2
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c

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o
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,

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39
The Commíssíoner has wíthdrawn hís acquíescence ín the foííowíng
decísíons of the Uníted States oard of Ta ppeaís:
oard of T
oíume.
a ppeaís.
Page.
Ta payer.
Docket
No.
4500
4500
43164
43164
22
22
21
21
1093
1093
339
339
1 Y . – ta decísíon acquíescence pubííshed ín Cumuíatíve uííetín -2 (1931).
The Commíssíoner does NOT acquíesce ín the foííowíng decísíons
of the Uníted States oard of Ta ppeaís:
Docket
No.
oard of Ta p eaís.
oíume.
Tago.
.
beíson Reaíty Co., Inc.
beíson s, Inc
ckerman, Irvíng C.
íameda Park Co
íbers, Wííííam .
íbrecht et aí., atheríne ., e ecutríces .
íker, era M. ohíer
ííen, Dorothy . D.5
ííen, Nathan R
íííed urríers Corporatíon
merícan ríck Tííe Corporatíon
merícan Centraí Lífe Insurance Co.4.
merícan Gas íectríc Securítíes Corporatíon
merícan Ideaí Cíeaníng Co
merícan Raííways Co
merícan Refrígerator Transít Co
merícan Seatíng Co.
mes, r., Ward
ngío- merícan Dírect Tea Tradíng Co., Ltd..
partment Corporatíon
ppíeby, rancís S
raboí Manufacturíng Co
53792
53793
30311
31634
4094
40949
355
74759
41295
36116
569
1654
50059
29994
30133
3199
56024
63436
62604
49205
67662
647S2
67602
72 61
14676
49 17
4529
42024
730 9
504 9
61660
65064
24
6 6
24
6 6
)
512

25
50
33
373
27
1091
25
243
3
71
3
160
24
457
22
1121
30
11 2
33
245
30
529
30
939
3,
465
14
32
27
624
3
711
26
49
31
533
26
106
27
37
1 N onacquíescence reíates to Issue concerníng íoss on saíe of stock of . Nash b Co.
state ta decísíon nonacquíescenco reíates to State ínherítance ta íssue.
Gíft ta decísíon.
4 Nonacquíescencereíates to íssue whether certaín funds denomínated Insured s personaí benefít fund
ere reserve funds requíred by íaw and Issue whether the petítíoner s ííabíííty on outstandíng unsurren-
dered unpaíd coupons constítutes a reserve fund requíred by íaw.
cquíescence pubííshed ín Cumuíatíve uííetín III-2 (192)0. wíthdrawn.
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1
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1
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2

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4
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2

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40
Nonacquíescences € ” -Contínued.
Ta payer.
rchbaíd, oseph .
rchbaíd, r., oseph .
rkeíí, Wííííam Cíark...
rmstrong, Wííííam M__
shton. Wíííurd
tías Lífe Insurance Co.
uto Strop Safety Razor Co., Inc.
ver, enry S., estate of 1
.
abson, red
abson, Oustavus
abson, enry
aííínger, essíe M., e ecutrí
aííínger, Waíter ., estate of
aítímore Ohío R. R. Co. ...
ank of Caíífornía, Natíonaí ssocíatíon.
ankers Trust Co., trustee
arradaíe, . Morgan
artíett, . emp --
ashford, Raymond I
ass, rancís M
ateman, . L
ay, Robert P
ebb, Ríchard ., estate of
ebbe, uníus, trustee..
ebbe, Marcus, estate of
echteí, enneth
echteí, Stephen D.
ehan, Thomas W
ekíns, atheríne, estate of
eífast Investment Co.
eíí, rederíc D., estate of
eíí Sons, Samueí.
enagíía, rthur and ííse
cresford, ívíen eíen de ía Poer, estate of 5
erkeíey aíí Schooí, Inc
índíey, Mary M., estate of
íngham et u ., arry Payne
ísmarck Tríbune Co
íacksher et aí., D. W., e ecutors, estate of ames
Uríah íacksher 1
íacksher, ames Uríah, estate of 1
Docket
No.
61661
66062
61673
65063
4 12
40419
3914
40544
40751
67199
57374
7 77
79152
79153
52224
52223
52222
32177
32177
37239
55537
60699
32459
77376
63632
71565
73626
47772
66014
41295
52707
52707
754 5
754 6
7542
7675
1912
69534
3 056
41647
45616
763
67259
– 17115
5 71
2160
59660
453
453
oard of Ta ppeaís.
oíume.
€ 7
3
25
2
29
2
36
27
27
27
23
23
30
30
24
34
2
33
30
34
2
27
26
26
34

32
3
17
31
32
22
36
31
31
2
3
33
3
3
1 state ta decísíon.
1 Nonacquícsccnce reíates to deductíbíííty as e pense for year 1920 of amount for maíntenance of ways
and structures.
state ta decísíon nonacquíescence reíates to State ínherítance ta íssue.
4 Nonaoquícsconoo ín íssue as to whether petítíoner ís entítíed to deductíon for amortízatíon of the ííe
tract warehouse for 191 .
Nonacquíescence reíates to íssue ínvoívíng reorganízatíon.
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2
0
1
3
-
0
1
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2

0
4
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4
2

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6
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3
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#
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í
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41
Nonacquíesobncbs € ” Contínued.
íaír, Cecíí Charíes.
íaír, dward T
ííss, Sydney R.
ííss, aíentíne.
íock, Meíer S -
íum, essíe
íum, Davíd
íumenthaí arry S
oard of íre Underwríters of the Cíty of Duíuth.
ora Ccíga Deveíopment Co. € ”
oehrínger, Rudoíph 1 -
oeíng, Wííííam .
oekman, Símon
on wít, Paíd
ooí, S. - - ---
ooth, ííen S --
oston íevated Ry.
í et
No.
Co. .
oston Safe Deposít Trust Co. et aí., e ecutors
osweíí, Wííííam D., estate of
owen, dwín L.

owman-Díítmore oteís Corporatíon.
owman oteí Corporatíon.
rackman, .1. W.
radburv, I. C...
rííísínade, enry N., estate of € ” € ”
rínsmade, Pauí S., e ecutor, estate of enry N.
rínsmade
rískev Co -
rítísh- merícan Tobacco Co., Ltd
rookíyn Cíty R. R. Co
rookíyn 4 ueens Transít Corporatíon
rookíyn Radío Servíce Corporatíon
rooks, Regínaíd
rown, rank ., estate of
rown, . C
rown, arry
rown, Pearí ., e ecutrí
rowníng, ohn N
rowníng, S. P
uchsbaum, Wííííam -
69 03
42313
03741
55902
53422
4 73
52221
52220
75143
43150
40446
49 91
167
2 I No
53661
64691
70951
1961
76751
244
49272
1 11
629 5
41472
43629
íííí, , I
24912
2 971
3 006
45714
457 0 ,
1 6046
6047
6046
6047
60 99
41224
20353
20353
61229
6 560
47677
33343
4 136
47677
72713
72714
74S 6
oard of Ta ppeaís.
oíume.
20
31
26
26
37
29
29
34
26
25
. .í
::
3
33
34
36
37
I)
37
33
21
24
2 1
23
39
39
211
27
27
27
31
31
26
2.-,
26
26
31
31
36
1 state ta decísíon.
N onacquíescence pubííshed ín Cumuíatíve uííetín 193S-1, page 36, ín so far as It pertaíns to tho trust
Issue, wíthdrawn.
– Thís notíce, whích was orígínaííy pubííshed ín Internaí Revenuo uííetín 1D3S-25, page 1, h beíng
repubííshed for the reason that It was erroneousíy Incíuded ín the ííst of cases acquíesced ín pubííshed ín
Cumuíatíve uííetín 193 -1, page 4.
. onacquíescence reíates to íssue Invoívíng reorganízatíon.
€ . onacquíescence reíates to ta abíííty of a transfer under subsectíons (a) and (c) of sectíon 302, Revenue
ct of 1926.
1 N onacquíescence reíates to íssue whether gaíns on saíe of stock of tho Waterbury Chemícaí Co. were
ta abíe to petítíoners or to trusts created by them.
G
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2
0
1
3
-
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1
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2

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4
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4
2

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0
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42
Nonacquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaís.
oíume.
uck, ohn ., estate of
uck et aí., Marv M., e ecutors
uckhardt, ugust
uffaío Uníon Iron urnace Co.
uíííng ton et u ., Robert McCarthy -.
uííock, George r---
unge North merícan Graín Corporatíon.
urdette, Cíara
uríey, íanche ., e ecutrí
urrííí, dward L
urrows, Waters .4
usíness Reaí state Trust of oston-
utíer- eítch Co
Cadwaíader, Mary eíen
Cadwaíader, r., Ríchard M.
Cambría Deveíopment Co.5-.
Carey, Robert
Carey íbre Products Co., merson.
Carey-Reed Co
Carey Saít Co
Caríson, Charíes T
Carroíí, .
Carroíí, Lena Carter
Carson state Co
Carson, ohn
Carson, Rose L
Carter, . L
Carter, . L., admínístrator
Carter, Mrs. . L
Carter, .
Carter, Lííííe N
Carter, Maude ., estate of
Carter, r., W. T
Case, Montgomery
Casseís, Robert
Centraí Market Street Co.
Centraí Uníon Trust Co. of New York, e ecutor
state ta decísíon: nonacquíescence reíates to deductíon of amount of a cíaím fííed agaínst the estate
and aííowed by probate court.
Nonacquíescence reíates to íssue regardíng deductíon from gross íncome of físcaí year ended príí 30,
1919, of reserve for reííníng bíast furnaces.
€ Nonacquíescence reíates to íssue 1 of docísíon.
Nonacquíescence reíates to the íssue, deductíbíííty of the amount paíd for a second mortgago as a bad
debt.
Nonacquíescence reíates to íncíusíon ín cost of reaí estate íots the estímated cost of future e pendítures
for contractuaí ímprovements.
€ Nonacquíescence reíates to íssue regardíng oard s urísdíctíon of subsídíaríes.
325 4
44153
446 4
325 4
44153
446 4
76255
16075
16076
9 06
31209
47 00
37321
44909
5S795
77 7
33469
426 4
50305
45169
45170
46327
71 00
75411
54033
60432
67415
363 1
3936
363 2
7564
51 0
51 1
47444
534 9
45393
45392
51 2
47669
51 3
51 4
51 5
47669
51 6
75 16
5 793
24 37
31736
25
25
32
23
3
23
27
25
26
26
3
25
23
27
32
34
31
26
36
26
39
27
27
31
2
2
27
27
27
27
27
27
27
34
26
25
25
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#
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43
Nonacquíescences € ” Contínued.
Taí payer.
Docket
No.
oard of Taí ppeaís.
oíume.
Page.
Centraí Uníted Natíonaí ank
Cereaí Products Refíníng Corporatíon.
Champíon, Davíd .1
Champíon, T. Píerre .. € ”
Chandíer, Constance
Chandíer, arríson Gray
Chandíer, eíen
Chandíer, Marían Otís
Chandíer, Norman
Chandíer, Phíííp
Chapman, C.
Charavay, Maríus
Chemícaí Natíonaí ank of New York..
Chenowíth, . C
Chícago Dock Canaí Co
Chícago North Western Ry. Co.
Chídíaw, arry .
Chíshoím, rchíbaíd M., estate of
Chrístensen, Níeís
Cíark, Percy
Cíark Thread Co.4
Cíaude Neon Líghts, Inc.
Cíeíand state Co., Inc., enry .
Cíeveíand Trust Co., trustee of díth . Tímken
et aí. Trust
Cíovís, C. ...
Coastwíse Transportatíon Corporatíon
Cobíeígh, Margaret dwards, estate of
Cochrane, Davíd .1
Coíorado Southern Ry. Co.
Coíumbía Pacífíc Shíppíng Co
Coíumbus ríck 4 Tííe Co.
Commercíaí Garage Co
Commercíaí Investment Trust Corporatíon 11
69212
71063
653
55569
63 1
5556
67471
67470
67475
6746
67473
67476
52496
70005
71592
45604
3 349
4 26
36343
697 2
5255
72424
65177
3 903
47974
59391
335 5
40 90
51197
561
6 433
39916
40765
6042
21974
5096
42707
41646
43495
50051
3
39
27
27
32
32
32
3
32
32
2
29
30
26
32
22
29
37
33
31
2
35
29
39
32
2
24
26
36
29
26
22
2
5
1312
1312
720
720
720
720
720
720
53
1255
17
301
231
1407
1096
167
79
10 2
1127
424
436
113
646
725
176
1167
124
964
794
793
143
Nonacquíescence reíates to Issue whether redemptíon of stock was equívaíent to taíabíe dívídend.
Nottacquíeeeence reíates to foííowíng íssues: Undermaíntenance profít and íoss on bonds retíred
amortízatíon of bond díscount.
Nonacquíescence reíates to the foííowíng íssue: aíue at whích íífe Insurance poíícíes. In whích the
decedent had eíected duríng bís íífetíme to have the proceeds paíd to benefícíaríes ín ínstaííments, shouíd
be Incíuded In the gross estate.
€ Nonacquíescence reíates to Issue respectíng deprecíatíon.
€ Nonacguíescence reíates to Issues (1) the acquísítíon by petítíoner of stock of the eííows Corporatíon
and the Cíaude Neon ederaí Co. (2) the Cíaude Neon Líghts of Maryíand, Inc., transactíon Invoívíng
the e change of property for stock.
Nonacquíescence reíates to basís for determínatíon of gaín or íoss on the saíe of property devísed sub|ect
to a íífe estate.
1 state tat decísíon.
– cquíescence pubííshed ín Cumuíatíve uííetín II-1 (19 3), revoked.
€ No taoqníescenoe reíates to the foííowíng Issues: Díd petítíoner and affíííated corporatíons make e - _í In 1920 to rehabííítate Us propertíes fur undermaíntenance duríng ederaí controí, for whích
were aííowed 75C004 In fínaí settíement wíth the Dírector Generaí of Raííroads, and íf so are such
oats deductíbíe In determíníng ta abíe Income for 1920 and the computatíon of net ta abíe Income for
tííe months of anuary and ebruary, 1920, sub|ect to the rate of ta appíícabíe to corporatíons whích were
under ederaí controí.
. onacquíesoence reíates to íncíusíon ín consoíídated ínvested capítaí of capítaí stock íssued for promíssory
cíef.
– onacquíescence reíatw to deductíon In 1926 of e cess of market vaíue over saíe príce of stock soíd to
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44
Nonacquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Commonweaíth, Inc
Communíty ond Mortgage Corporatíon.
Communíty Mausoíeum Co.1
Communíty Teíephone Co
Communíty Water Servíce Co
Cone, dward
Conneííy, ames .2.
Conneííy, L. .
Conneííy, Mary .
Contí, Lucíana
Cook, íízabeth .5- - --
Cook, Sam
Cooper, . T.4 -----
Cosmopoíítan ond Mortgage Co.5.
Coughíín, R. Lawrence and veíyn .
Coursev, Sarah . . -
Crews, Charíes W.
Crews, verett .7
Crews, Raíph W.
Crews, Robert .r
Crííe, Grace Mc ríde
Críspín, Mrs. gerton
Cronín, rnest .
Crosby, Oscar T
Cross, Mauríce
Cunard Coaí Co. .
Cuppía, erome C
Curíee, Sheíby ., trustee.
Curren, ector McGowau.
Curtís, Cyrus .
Cza|ke, L T., transferee.--
264
437 4
703 4
7756
77560
5 777
440 1
45 33
46267
51967
60566
6694
440 3
45 34
4 I0S2
79793
3 579
35014
3144
44617
76106
71755
66766
66767
6670
66702
43136
45267
279
51317
32735
26 74
26 75
2S792
5 545
4 33
1 26
6613
64639
1962
64711
70953
76699
79254
36
27
33
32
32
26
30
30
30
35
25
25
7
30
32
33
37
37
37
37
26
2
37
27
24
26
26
2
34
36
33
35
34
36
34
D.
Dahí, Chester T., estate of 10
Daíton, . G
Dana, Charíes
Darííng, rank W. and Mrs. rank W
I Nonncquíeseonce reíates to Issue whether the fínaí ínstaííment on the saíe príce of mausoíeum crypts
to be retaíned by a trustee as a perpetuaí care fund shouíd be e cíuded from the fuíí contract príce In com-
putíng, profít, the ta payer reportíng on the accruaí ínstaííment basís.
1 Nonacquíescence reíates to íssue ínvoívíng the amounts paíd to stockhoíders by . . Curtís Leather
Co. uí on canceííatíon of certaín stock.
Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Inc., and the basís of aíío-
catíon of cost between saíd commoo stock and preferred stock of saíd company acquíred at the same tune
and under the same agreement.
cquíescence pubííshed In Cumuíatíve uííetín II-1 (192 ), wíthdrawn.
I Nonacquíescence reíates to íssue ínvoívíng commíssíons charged on reaí estate íoans.
€ Nonacquíescence reíates to the foííowíng íssue: Computatíon of ta abíe profít to petítíoner from saíe of
íand by the trust duríng 1930 on the basís of the vaíue of saíd íand as of March 1, 1913.
7 Nonacquíescence reíates to íssue In respect of aííowabíe deductíon for depíetíon.
Gíft ta decísíon.
€ Nonacquíescence reíates to e pendítures for míne equípment.
II state ta decísíon.
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45
Nonacquíescences € ” Contínued.
oard of Ta ppeaís.
o.
oíume.
Page.
75056
36
313
464 6
27
15
37324
24
405
37395
24
405
75102
34
11
61205
C.1IS32
35
39
4195
36
43
4194
36
43
4193
36
43
4196
36
43
4192
36
43
4197
36
43
3S. I
26
1 5
3 500
26
1 5
2459
2
102
52996
61290
31
1161
65123
5310
61321
30
26
72023
30
49
9172
37
34
49516
33
73
50 60
27
515
70 92
34
540
70 9
34
540
573
7
279
5716
36
732
5715
36
732
2065
19
507
23969
19
466
60661
2
1270
7103
3
1234
60237
32
364
60236
32
364
60235
32
364
60236
32
304
60235
32
364
44735
26
1321
7 11 9
37
1122
7420
37
1122
40031
30
1143
45014
2
666
70574
36
246
Dashíeíí, C. R
Davídson, Watson P
Davís, rederíck
Davís, Thomas L
Day, Charíes, estate of
Dean, Mason L
Dearíng, Roy ., estate of 11
Deaííng, R. ., estate of3 _
Dearíng Trust state, R. . 1
Dearíng, Mrs. R. .
Dearíng, Wíííís R.
Dearíng, Mrs. Wíííís R.
Degener, ohn ., estate of
Degener, r., et aí., ohn ., e ecutors .
De Lísser, orace, estate of
de Míííe Productíons, Inc., Cecíí . _
de Míííe Productíons, Inc., Wííííam C.
Dennett, Maríe G. .. --
Penníston et u ., aroíd
Denny, Regínaíd
Depew, Ganson
des Cognets, steííe
des Cognets, Louís, estate of
Des Moínes Improvement Co. .
Díescheretu ., ugust P.
Díescher et u ., Samueí .
Dohrmann, ndrew . C
Doíomíte, Inc
Donneííy, Pauí ., estate of 4
Donner, Carroíí
Donner et aí., Carroíí ., e ecutors.
Donner et aí., Carroíí ., guardíans.
Donner, oseph W € ”
Donner, r., oseph W
Dort, . Daíías, estate of4
Dougías, D. W
Dougías, Wííííam
Dougíass, oward W., estate of
,te of.
1 state ta decísíon nonacquíescence reíates to deductíon of baíance due on píedges made by decedent
duríng hís íífetíme to certaín charítabíe nd educatíonaí ínstítutíons.
I Nonacquíescence reíates to Issue whether faír market vaíue of oíí payment contracts taken as compen-
satíon for drííííng oíí and gas weíís for others by a partnershíp ís ta abíe as íncome.
– Partíaí acquíescence pubííshed In Internaí Revenue uííetín 193 -10, page 1, wíthdrawn.
€ state ta decísíon.
1 state ta decísíon acquíescence pubííshed In Cumuíatíve uííetín -2 (1 31), recaííed.
€ Nonacquíescence does not reíate to the case of Constance . de Míííe, Docket 71952, whích was dísposed
of by stípuíatíon.
Nonacquíescence reíates to deductíbíííty of 10,000 because of the fact that a bond ín whích petítíoner
had ínvested became worthíess ín 1930, aíthough that fact was not ascertaíned untíí 1931.
€ Nonacquíescence reíates to deductíon of amount e pended for dentaí brídge work and amount e pended
to keepíng petítíoner ín fírst-cíass physícaí condítíon.
– cquíescence pubííshed ín Cumuíatíve uííetín II-1 (192 ), wíthdrawn.
II Nonacquíescence reíates to Issue whether wíves of petítíoners are oíntíy ííabíe for defícíencíes when
| fíí|t returns are fííed.
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46
Nonacquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Drunheííer, George
Duff, Robert C
Dunníng, enry .
Dunham et aí., Lucy eííe, e ecutors a
Dunham, Mary írgínía, estate of 1
Dye, Cíarke .
.
ast Coast Oíí Co., S.
aton, Cvrus S.
ekhart, ernard ., estate of
díson Securítíes Corporatíon.
dward Securítíes Corporatíon..
ífert, arí C € ”
ínhorn, Ma
ídrídge, ííce .4
ídrídge, . S.4...
íkhorn Coaí Co.
íkíns, aíííe D.4
íkíns, Wííííam L., estate of
.ííís, R. R-, estate of
íy, íízabeth Tayíor.
merson, Sígurd
mery, Mary M., estate of4
quítabíe Lífe ssurance Socíety of the Uníted
States
quítabíe Trust Co., of New York, ancíííary admín-
ístrator 1
rb et aí., Ray L., e ecutors
theí D. Co
ustín, ugustus .
veníng Star Newspaper Co
verhart, ames Wííííam -
aírmount Cemetery ssocíatíon.
arísh, Líbbíe Ríce
arísh, W. S
arísh Co., W. S
armers Cotton Oíí Co
41515
45752
37552
3459
46603
74911
5 1 0
G942
76443
52662
7120
457 1
73 93
64779
6477
49064
39255
56449
67967
76546
77307
77309
40 99
31110
33241
57 67
67259
29260
32032
71637
61 70
66 55
26675
30925
42 11
1145
1146
7 40
42679
27
23
36
26
33
31
37
33
29
30
23
36
0
30
34
24
2
34
33
35
25
33
31
29
27
30
2
20
25
36
36
3
27
1 Nonacquíescence reíates to íssue 2 of decísíon.
1 state ta decísíon.
1 Nonacquíescence reíates to the foííowíng Issue: Whether the Commíssíoner erred ín usíng as a basís for
securítíes soíd by the partnershíp of Otís Co., of whích the petítíoner was a member, the cost of saíd
securítíes to the contríbutíng partner.
Nonacquíescence roíates to deductíon of íoss In transfer of securítíes to a corporatíon ín whích petítíoner
owned aíí the stock e cept quaíífyíng shares.
Nonacquíescence wíth respect to the hoídíng that there was a reorganízatíon.
cquíescence pubííshed ín Cumuíatíve uííetín I-2 (1932), revoked.
7 Nonacquíescence reíates to the foííowíng íssues: Reductíon of cost basís (March 1, 1913, vaíue) of assets
soíd by a partnershíp In 1919 by deprecíatíon aííowed ín computíng Income for períod March 1, 1913, to
December 1, 1915 computatíon of 1919 partnershíp profít on saíe of assets by consíderíng as part of the saíe
príce ta es of the partners paíd ín 1920 by the vendee.
1 cquíescence pubííshed ín Cumuíatíve uííetín UI-2 (1934), wíthdrawn.
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47
Nonacqcíescences € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
armers Lífe Insurance Co.1
eídman, enry O
erree, C.
ídeííty- ankers Trust Co
ídeííty Coíumbía Trust Co., trustee
ídeííty Uníon Trust Co. et aí., e ecutors .
íeíd, Marshaíí
venue ank of New York, e ecutor.
ífth Street uíídíng.
íncke, Regínaíd
ínt Natíonaí ank ín St. Louís
írst Natíonaí ank of oston, admínístrator .
írst Peopíes Trust
í _t – 1 T
ísher ísher, Inc.
ísher, Irvíng
ítzgeraíd, Thomas
íaherty, Wííííam, estate of, and íía
íeítmann, Wííííam M., estate of
íeítmann, r., et aí., Wííííam M., e ecutors .
íemíng, Lamar L.
g, Margaret . .
íemíng, Wííííam
íemíng, Mrs. Wííííam
íetcher, Saíathíeí R
íínn et aí., Cíara Louíse .
ííntermann, Carí .
oíey, Thomas ., í
oíger Co., . .
estate of .
í of
oíger state Co
orest Gíen Creamery Co
oster, Caroííne ., estate of
oster et aí., Charíes . W., e ecutors .
oster, L. .
ounders ssocíates
o , ontaíne
o Ríver Paper Co
43317
45359
61542
3421
65041
65042
72236
3690
69534
16627
29264
45537
5679
4427
4 07
44746
45403
60929
61622
62075
79397
2 449
2 449
7 362
7 416
61042
65676
61043
65677
33041
44 3
4491
75516
67217
22212
30721
31200
35147
51 33
46672
46672
430 6
626 4
710 4
20 7
27
2
32
37
30
,
26
31
32
24
39
23
25
26
32
:ío
29
35
22
22
: 1
36
1
31
24
37
32
34
27
27
33
26
26
26
29
30
2S
– Nonacqaíescence does not reíate to íssue ín connectíon wíth optíon payment receíved for purchase of
bud.
state ta decísíon.
1 cquíescence notíce pubííshed ín Cumuíatíve uííetín -2 (1931), recaííed.
4 Nonacquíescence reíates to Issue Invoívíng íncíusíon ín íncome the decedent s share of profíts of a part-
nershíp of whích he was a member up to the date of hís death.
1 Nonacquíescence reíates to vaíuatíon date for cost purposes of securítíes acquíred by petítíoner from a
trust under her grandfather s wííí.
1 Nonacquíescence reíates to íssue whether petítíoner-benofícíaríes are ta abíe on dístríbutíons made on
noary 4. 1933.
Nonacquíescence reíates to deductíons In 1924 and 1925 on account of íosses resuítíng from aííeged saíes
of securítíes.
€ . onscquíe nce reíates to íncíusíon ín íncome of corporatíon for yenrs ended March 31, 1930, and
March 31 1931 amounts representíng rentaí of premíses occupíed by íts presídent.
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4
Nonacquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
rankíín Títíe Trust Co.
ranks, ack M
rost, Mary Ryerson
uhíage, ífred .
uííer, ívan T
urníture Corporatíon of meríca, Ltd.
G.
Gaíe, mííy
Gambíe Stockton Co.
Gambrííí, Ríchard an Nest
Garcín, dward
Gardner, Charíes .
Garríe, Daníeí T., estate of
Garvan, .íohn oseph, estate of
Gary, írgínía ., e ecutrí €
Generaí Machínery Corporatíon
Generaí Motors Corporatíon
Generaí Outdoor dvertísíng Co., Inc.
Generaí Securítíes Co
Generaí Utííítíes Operatíng Co
Geneva Water Co
Gerard, ríe
Gerhardt, Phíííp L
Geríach, Theodore R -
Gerstíe et aí., Mark L.7
Gíbbs-Prever Trust, No. 1- --
Gírard Trust Co. et aí., admínístrators
Gíaddíng, Mary D., estate of 1 € ”
G. M. S. Co - --
Goet|en Metson Co
Goforth, Mary
Goforth, R. S - ---
Goídberg, arry S.
Goídschmídt, enry P., estate of10
Goídschmídt et aí., Georgette, e ecutors10.
Goodaíe, Waíter S
Goodan, Mav Chandíer
Gordon, ertha M. ---
Graham, M.
51947
60167
67 05
536 5
9 1
61754
73759
72 00
72 01
61672
42707
1544
21657
3 575
31736
44746
40031
70449
52 24
66511
21
52770
9249
45221
77375
3 042
I Uí
1 02 54
9917
75624
31435
163 3
17 75
52316
52316
53 9
1613
1613
7 456
67472
10 1
3 335
32
32
3
32
31
30
27
26
3
22
25
25
25
30
33
35
22
3
29
37
2
34
27
33
39
32
27
26
26
32
32
4
14
14
34
32
36
26
í Nonacquíescence reíates to the questíon whether rankíín ond Mortgage Co. was entítíed to deduct
commíssíons paíd on the saíe of íts honds Instead of proratín cost over tho íífe of the bonds.
1 Nonacquíescence reíates to íssue whether redemptíon of shares of stock represents payment ín partíaí
ííquídatíon of a corporatíon or a ta abíe dívídend.
I Nonacquíescence reíates to íncíusíon ín consoíídated ínvested capítaí of capítaí stock íssued for promís-
sory notes.
Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Ino., and the basís of aíío-
catíon of cost between saíd common stock and preferred stock of saíd company acquíred at the same tíme
and under tho same agreement.
€ state ta decísíon.
€ Nonacquíescence ín íssue Invoívíng counseí fees paíd ín connectíon wíth íítígatíon.
T Nonacquíescence reíates to tho foííowíng questíon: re petítíoners entítíed to deduct on theír índívíduw
returns the operatíng and capítaí íosses sustaíned by reaí estate syndícates of whích they were members
€ nd 19 reíated dockets.
€ cquíescence pubííshed ín Cumuíatíve uííetín -í (1931), wíthdrawn.
state ta decísíon acquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), recaííed.
II Nonacquíescence ín hoídíng that petítíoner ís not índívíduaííy ííabíe for any part of c
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49
Nonacquíescencks € ” Contínued.
Ta payer.
Gray, Raíph L.
Great Southern Lífe Insurance Co.1.
Great Western Power Co. of Ca .ífornía.
Green, .
Green, Robert D.
Greeníeaf Te tííe Corporatíon
Gregory, veíyn
Grcísíer, ernard
Greísíer et u ., Soí
Greve, Wííííam M
Gríffís, Stanton
Gríffíths, George W.4
Grosvcnor, Theodore P
Guítar Trust state --
Guíf Coast Irrígatíon Co. .
Guíf, Mobííe Northern R. R. Co.
Gund, aroííne ., estate of
ackfeíd, ohann ríedrích, estate of.
agerman, Staníey
aínes, Mary .
aíe, rnest
aíe, R. W
aíe, W. T._
aíí, arry . R., estate of
aíí, Martha M
aííock, enry, estate of € _
ancock, G. íían.
anson, Charíes C.
6940
6941
56540
64064
71114
4 617
74910
53647
46746
55299
9404
9403
756 6
3 577
2624
603 1
35102
33694
400 1
41343
24 7
42150
70 91
77997
7 023
7725
67105
67750
67751
70004
7159
64501
76 02
76 03
76927
36 67
1539
3
33
30
33
21
26
27
37
37
37
25
37
31
25
24
22
31
33
31
37
33
32
32
29
31
34
25
23
5 4
512
503
S2 4
719
737
223
512
542
150
1351
317
574
1213
95
2 3
540
1020
115
1013
504
356
356
1255
1013
575
607
590
1 Nonacquíescecce ín foííowíng Issues: Díd the ta payer reaííze ínterest accrued upon a íoan whore ít
forecíosed ííens on certaín bonds píedged as coííateraí Díd ta payer reaííze ínterest as ta abíe net íncome
where notes were e changed for new notes whích íncíuded ínterest and the new notes were not paíd dur-
íng the ta abíe year Where ta payer acquíred the assets and busíness of three other ínsurance companíes
duríng the ta abíe year, was íncome reaíízed upon the coííectíon of Interest that was accrued but nut paíd as
of date o. purchase
Nonaoquíescence reíates to transactíon 5.
Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Inc.. and the basís of aíío-
catíon of cost between saíd common stock and preferred stock of saíd company acquíred at the same tíme
and under the same agreement.
1 Nonacquíescence reíates to íssue whether saíe of S.000 shares of stock of Oakrídge Cemetery Corporatíon
ís a personaí or corporate transactíon.
– . onaM|uíescence reíates to affíííatíon Issue.
. onacquícscence reíates to Issues Invoívíng award of Interstate Commerce Commíssíon ín 1920 for
transportatíon of Uníted States maíís ín 1916 and 1917 and deductíon ín 192 for deprecíatíon on ways and
structures.
Nonacquíescence appííes to the entíre decísíon of the oard ín so far as ít ía adverse to the Commís-
ííoner. Partíaí acquíescence pubííshed In Internaí Revenue uííetín I-2 (1932), revoked.
state ta decísíon.
Oíft ta decísíon-
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50
Nonacquíescences € ” Cofítínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
26
96
26
96
33
249
30
04
24
512
30
966
2
236
37
360
36
1207
39
492
27
952
27
952
26
117
35
173
23
953
arbíson, Raíph W.1
arbíson, Wííííam íbert 1
ardwíck, Mar|ory Tayíor.
arían, George ..
arrís, Símon
arríson, ames M € ” € ”
arríson, .
art, uíían
art, Wííííam . ------
arter ank, The George D., trustee of Gíbbs-
Preyer Trust No. 1
artíey, Cavour, e ecutor..
artíey, G. G., estate of...
auser, W.
awaíían-Phíííppíne Co
awíey Investment Co
azeítíne Corporatíon.
azíeton Corporatíon
eath, arríet
ebert, Pauí Octave, estate of .
eckscher, ugust
edríck, . T
effeífínger, rank T.
eínz, oward - -- €
eííer, . G
emphííí, Cíífford
endríckson, oseph G., estate of
enn, . W
enrítze, .
enrítze, Neíí € ” ---
enrítze, T. It
enrítze, T. W
erder, George, estate of
erder, Mary 6
ermann, ohn C - -
ertensteín, reda M
ertensteín, rederíck
íeronymus, Carí Ríchard, estate of
íghíands, vanston-Líncoínwood Subdívísíon írst
ddítíon, Trust No. 1546, et aí
54346
54347
76545
60500
31632
66193
45361
f 75030
I 7 77
2652
9917
42343
42343
43301
. 43302
69619
45169
. 45170
42277
47011
51931
. 60313
61954
90599
323
2000
33533
41145
4 1 52
53 1
63407
69694
73479
79059
79450
40634
3 573
73029
37102
60609
60607
6060
60606
4051
4052
51959
5593
55936
4 930
74464
32
36
3S
36
491
36
11 1
24
444
32
1232
34
5
25
259
25
1351
32
449
20
1133
2
1172
2
1172
2
1172
2
1172
36
934
36
934
27
409
29
216
29
216
24
269
32
760
1 cquíescence pubííshed In Cumuíatíve uííetín II-1 (1933), wíthdrawn.
Gíft ta decísíon.
1 state ta decísíon.
4 Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Inc., and the basís of aííoca-
tíon of cost between saíd common stock and preferred stock of saíd company acquíred at the same tíme and
under the same agreement.
Nonacquícsceucc ín íssue reíatíng to ínvoíuntary conversíon.
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51
Nonacqfíescences € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Subdívísíon,
íghíands, vanston-Líncoínwood
Trust No. 1521, et aí
íghway Traííer Co
íghíev 4 Co., . .
ígíey Trusts, Merchants Natíonaí ank of Cedar
Rapíds, transferee and fíducíary 1
ííí, D. ., estate of € ”
ííí, Louíse G
níet aí., Pauí ., e ecutors 1 - --
íads, Waíter DeWítt, estate of 1
ítteíí, ohn
ochstetter, Raíph
odges, mes Wííey, e ecutrí
odges, W. L., estate of
odges, W. L., trustee --
oge, rthur ., estate of € ”
oge, íanche C, e ecutrí
oge, ames D., estate of...
oge et aí., theí ., e ecutors
oídíng Corporatíon, O. P. P
oímes akery Confectíonery
oímes, Carí
oímes, . ., trustee
oímes, Margaret .
ome Títíe Insurance Co.
onnoíd, W. L.
ormeí, ay C.3
ousehoíd Products, Inc..
ons man, Cíarence
Rous man, rederíck
ouston asebaíí ssocíatíon.
ouston ros.
ouston, George T.
ouston, orace .
ouston, Phíííp D. .
oyt, 2d, íton
uíburd, Charíes ., estate of
uíburd, De orest, índívíduaííy and as e ecutor
and trustee
ummeí-Ross íbre Corporatíon
umphrey, Dudíey T
unter, G. W., estate of
unter, r., Thomas .
74465
44563
51003
7 576
29399
04 3
29399
49 60
70 20
76160
3 336
3 336
3 337
6 435
6 435
6 11
5 119
5 11
6 119
60674
44943
52 61
51473
53395
44943
62 61
4 631
61570
53394
63737
55211
93572
44 09
5 79
5 774
439 5
45430
12052
13104
2200
22009
22007
64710
70954
2202
2202
59 65
64376
33564
5 490
32
2
25
3
24
: ,7
24
32
33
34
26
26
20
32
32
33
33
30
27
27
27
27
I
0
39
24
2
26
21
22
22
22
22
34
27
27
31
32
25
33
1 state ta decísíon.
€ Nonaoquíesoence reíates oníy to the Issue ínvoívíng the ta abíííty of the íncome of severaí trusts whích
were created for the use and benefít of the grantor s mínor chíídren.
Nonacquícscence reíates to March 1, 191 , vaíue, and to the basís for the deductíon for depíetíon and
for the computatíon of gaín or íoss upon subsequent saíe of tho tímber.
Nonacquíescenco ín íssue Invoívíng questíon of reaíííatíon of ta abíe profít on e change of cíass
common stock for cíass stock.
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-
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1
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/
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3
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0
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6
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3
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2
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52
Nonacqt|íesceítces € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
untíngton, enry ., estate of
utchíson Coaí Co
yde, ames
Iííínoís Lífe Insurance Co
Iííínoís Pípe Líne Co
Imperíaí íevator Co
Imperíaí Investment Co
Independent Oíí Co
Indíanapoíís, Crawfordsvíííe Danvíííe íectríc
Iíy. Co --
Indíanapoíís Northwestern Tractíon Co
Ingram, Thomas - –
Irvíng Trust Co., trustee
Irvíngton Investments Co
í enberg, Otto rnst, estate of
Iten íscuít Co. -
Ives, Charíes
Ives Daíry ,Inc
Iwíckí, . W., transferee.
ackson astern Ry. Co.
ackson, Pauí Wííde, trust-
ackson et aí., Stonewaíí .
ackson, Wermích Trust
amíson Coaí Coke Co
ane oídíng Corporatíon
anotta, Steíía S
efferson Standard Lífe Insurance Co
effríes, ames ., estate of
ohnson, . M
ohnson, ames Lee
ohnston, . aroíd, e ecutor
ohnston, . M., estate of
ohnston, ugh Mc írney, índívíduaííy and as e -
ecutor and trustee
ones, essíe R
ones, Chester ddíson €
ones, red ., estate of 1
unge, Cíaus, transferee
45429
34939
65495
69952
67201
74525
356 S
29291
67700
33 59
33 61
56943
4371
77557
74249
43667
45164
51527
39 73
64653

3 295
42149
7492
72002
72119
72127
72244
73625
75762
7644 -1
76455
769 0
32306
31690
340
7240
51172
43149
196
61345
2263
79029
79029
2202
5 2 5
50206
7203
64637
2
24
31
30
37
25
23
35
21
24
32
35
32
37
2. .
29
23
33
22
33
37
21
24
3
2
25
37
32
7
33
33
27
27
31
3
1 Nonacquíescence reíates to íssue whether ta payer sustaíned a net íoss In any busíness reguíaríy carríed
ín In 1924 whích couíd be carríed forward and deducted from ta abíe Income ín 1925.
1 stato ta decísíon.
1 Nonacquíescence reíates to íssue ínvoívíng deductíon for deprecíatíon on ways and structures.
Oíft ta decísíon.
Nonacquíescence as to íssue regardíng deductíon for depíetíon.
1 cquíescence pubííshed ín Internaí Revenue uííotín 193 -37, page 1, wíthdrawn.
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53
Nonacquíescences € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
ahn, eíía
n, Isídor
n, Lcnora..
Cíty Southern Ry. Co. and affíííated com
panícs 1
eener Oíí Gíass Co.
ecys, dward L-.
ehoc, ohn
ehoe, Sarah
eííy, rancís ., e ecutor
eííy, Rose ., estate of
ensíco Cemetery
erbaugh, enry S
errígan, rthur L
íng, ohn M
írby. Leíía S.
írk et aí., íízabeth S., e ecutríces and e ecutor of
the estat of C. enderson Suppíee 4
írkpatríck, ohn L
ítseíman, C. M., estate of
napp, ít-tíe .
neeíand, Yaíe, estate of
nobíoch, Davíd C
nobíoch, erman
nobíoch, Wesíey
no , Seymour
och, arry
onínkíí|ke , N. ., oííandísche Líoyd 7
ountze, Charíes T
ountze, Luther L., estate of
ountze et aí., Charíes T., e ecutors
rause et aí., rances ., e ecutors
rug, George
L.
La rcada ondhoíders Commíttee
La rum et aí., Catheríne, e ecutors
Lafayette Lífe Insurance Co
Laírd, Wííííam Wínder, estate of1
1 onacqaíescence reíates to the foííowíng íssues: Deductíon of amounts e pended to restore petítíoner s
perty notwíthstandíng the fact that the Dírector Generaí of Raííroads made payment to petítíoner for
faííure to maíntaín the property e cíusíon from gross íncome of íntercompany freíght charges on materíaí
wrf suppííes uvd ín makíng addítíons and betterments to petítíoner s property.
1 state ta decísíon.
1 Nonacquíesoence reíates to íssue Invoívíng tho basís for computíng ta abíe gaín In 1977, 192 , and 1929
from the saíe of bonds of the írby Lumber Co.
Oíft ta decísíon.
1 Nonacqníesoence reíates oníy to the íssue, Díd the Commíssíoner err In vaíuíng, for gíft ta purposes,
eertsín síngíe preír.íum poíícíes upon the basís of the premíums actuaííy paíd rather than the cash surrender
vaíue
acquíescence pubííshed ín Cumuíatíve uííetín II-1 (192 ), wíthdrawn.
acquíescence pubííshed ín Cumuíatíve uííetín -2 (1036), page 13, wíthdrawn.
1 Nonacquíeseence reíates to the íssue ínvoívíng tho vaíuatíon of certaín shares of stock as of tho date of
tb decedent s
73 05
73 91
73 94
2266
35527
3552
35529
35530
35531
607 9
45360
64609
64609
70 99
70 99
76703
6 976
5 794
41549
73753
9363
67474
77 12
2775
7974
727
7275
7276
65203
5531
7 662
37323
37535
37535
49 60
46713
756 4
67217
/ 41721
I 42663
51654
36
36
36
22
32
2
34
34
1
31
as
29
26
26
35
39
2
33
7
34
3
3
3
33
26
34
24
24
24
2
3D
5
34
26
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54
Nonacqt|íescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Lang, uííus C, estate of 1
Langford Investment Co., trustee.
Langford, r., et aí., Píerce P
Langworthy, Mar|oríe C.a
Lansburgh, Lester, estate of
Lashar, Waíter ..
Laube, ustus
Laun, ífred
Laun, .
Lazarus Co., . R_
Leary, Sr., . -
Leary, Myra L
Leeper, rank ., estate of.
Leeper, Pearí -- €
Leetonía urnace Co
Lembcke, George
Leon Son, Inc., íbert € ” -
Leonard, Stephen
Lewís, Wadsworth R
Líberty Maríne Insurance Co
Lícht, Rose
Líebes Co.,
Línderman, Wííííam S., e ecutor
Líquídatíng Co
Líttauer, ugene, estate of4
Líttauer et aí., Lucíus N., e ecutors 4
Lívíngood, Charíes ., e ecutor €
Líoyd, . Darsíe
Líoyd, Waíter €
Loffíand, . M. .
Loffíand, T. S. -
Louís, Cora
Louísvíííe Trust Co. et aí., trustees
Lucas, Mabeííe T
Luquíre uríaí ssocíatíon Co., Inc., W.
Luquíre uneraí omes Insurance Co., Inc..
Lustíg, Davíd L., estate of €
6 316
57203
57203
71961
14 0
37 3
70007
71595
45347
4534
694 1
69750
76 45
76 46
45266
45265
32272
75365
53440
65 05
75957
67263
6716
2 544
3503
5 71
60 50
51 5
51 5
40 99
71445
4 120
13425
13426
49179
65040
72933
7909
79097
705 2
M.
6 56
9719
5121
63553
/ 7913
I 7339
II
34
2
2
30
35
34
29
26
2íí
32
34
2
2
23
33
29
36
34
32
37
23
2
33
25
25
25
33
30
10
10
29
30
34
36
36
33
37
39
36
31
3
Mack, íeanor L__,
Mack, ohn S.
Madíson Raííways Co
Maíernee, D.
Maííínckrodt, r. et aí., dward, trustees.
Maííory, L. W., estate of
1 state ta decísíon: nonacquíescence reíates to deductíon for funeraí e penses Incíudíng cost of crypt.
1 Nonacquíescence reíates to questíon whether dístríbutíon of stock had the effect of dístríbutíon of a
ta abíe dívídend.
€ state ta decísíon.
state ta decísíon nonacquíescence In respect to that part of decísíon whích hoíds that accrued ínterest
paíd on ederaí íncome ta es for 1927 and 192 from date of decedent death to November 5,1930, Is a proper
aííowabíe admínístratíve e pense
1 cquíescence pubííshed ín Cumuíatíve uííetín I-2 fI032). revoked.
€ Nonacquíescence reíates to Issue ínvoívíng the amounts paíd to stockhoíders by . O. Curtís Leather
Co. upon canceííatíon of certaín stock.
Nonacquíescence reíates to deprecíatíon aííowabíe under the Revenue ct of 1913 acquíescence pub-
ííshed ín Cumuíatíve uííetín III-1 (1929). wíthdrawn ín so far as ít appííes to thís Issue.
Gíft ta decísíon.
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2
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55
Nonacqdíescencbs € ” Contínued.
Ta payer.
Maííoy Co
Manchester Coaí Co
Manhattan Lífe Insurance Co.
Mann, George D
Manníng, Charíes N
Manus, Muííer Co., Inc
Margay Oíí Corporatíon
Markham Irrígatíon Co.1
Martínek, eííe C. erehman, estate of.
Marvín, Waíter S.
Marvín, Wííííam Gíenn, estate of
Mason, Mary S., estate of 3
Matagarda Canaí Co. € ”
Mather, Samueí, estate of
Matheson, ugh M .
Mathews, Susan ., e ecutrí
Mathews, W. ., estate of
McCabe, en C
McCabe, George ., estate of
McCabe, ames
McCabe, sames Roscoe
McCabe, Mííton Mathew...
McCabe, Wííííam ohn
McCabe, r., Wííííam ohn.
McCarter, Uzaí ., estate of
McCormíck et aí., Cyrus ., trustees
McCrory, Luke W., trustee
McCurdy, Wííííam ., estate of
McGrath, ames W., and ntonette
McGrath, Maríe Louíse
McGrath, Robert
Mcíívaíne et aí., Wííííam ., trustees
Mc ínney, Ida I
McLauchían, Wííííam, estate of
McLíster, rank
McMííían, Wííííam Northrup, estate of
Mc íekar, Lansíng
Meherín, Dora M.e
Meherín, P. W. . -
Meííon, . W.
Menzíes, Charíes M
Menzíes, Inc., C. M
Merau , Mrs. L. .
57906
33392
60 27
54223
63370
70 90
5977
44 91
41344
79112
3 57
77017
4133
400 2
41345
64712
71353
4320
4320
697 3
69779
6977
697 1
69777
697 0
697 4
69193
44139
32444
G7C.N1
65040
65042
65039
52931
57226
45 23
62905
70952
4 562
45966
77993
0422
1035
76499
7614
76147
2462
33
24
2
33
34
– O
26
24
3
25
34
3
24
34
31
33
33
29
29
29
29
29
29
29
34
26
25
31
30
30
30
29
32
34
27
27
37
35
35
36
34
34
3
1130
577
129
2 1
540
1015
199
95
11
1351
305
425
95
1011
493
6 2
6 2
1096
1096
1096
1096
1096
1096
1096
535
1172
994
379
562
562
562
304
450
1011
155
31
75
472
472
977
163
163
200
1 Nonacquíescence reíates to affíííatíon Issue.
1 Nonacquíescenoe reíates to vaíue of common stock of merícan Chaín Co., Inc., and the basís of aííoca-
tíon of cost between saíd common stock and preferred stock of saíd company acquíred at the same tíme and
under the same agreement.
1 state ta decísíon.
Nonacquíescence reíates oníy to the Issue, Díd the decedent have more than a íífe ínterest ín the estate
of ber mother
1 state ta decísíon nonacquíescence as to questíon of sítus.
€ Nonacquíescence ín Issue wíth respect to Immuníty from ederaí íncome ta of compensatíon of offícers
snd empíoyees of toe oard of State arbor Commíssíoners of Caíífornía.
Nonacquíescence ín oard s actíon wíth respect to the foííowíng: (a) Refusaí of oard to sustaín respond-
ent s affírmatíve íssue wíth respect to appíícatíon of sectíon 112 (c) to McCííntíc-Marshaíí Corporatíon and
Uníon Constructíon Co. ííquídatíons (6) addítíon of (29,101.33 to ta payer s basís of McCííntíc-Marshaíí
nock afttr rather than before makíng any aííocatíon of basís to Uníon stock.
Nonacquíescence reíates oníy to the Issue wíth respect to the dísaííowance of 1, 00 as an aííeged íoss
from the wreckíng of an automobííe ín 1931.
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1
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-
0
1
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2
7
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1
5
0
7
6
0
3
1
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9
2
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#
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56
Nonacquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
et aí.,
Mercantííe-Commerce ank Trust Co.
admínístrators of Pauí . Donneííy 1
Merchants Natíonaí ank of Cedar Rapíds, trans-
feree and fíducíary of ígíey Trusts 1
Merner, Deííght Ward
Merreíí, Irvíng S
Metropoíítan Ice Co.1
Meyer, George L., transferee.
Meyer, Robert R
Míchígan Centraí R. R. Co.1..
Mígííetta, Oíga
Míííer, íbert € ”
Míííer, dward
Míííer Mííí Co., T. R
Mííís, . . Goadby
Mínnesota Tea Co
Míssourí State Lífe Insurance Co.4.
Mítcheíí, Charíes ..
Mítcheíí, . . .
Mítcheíí, Oscar 5
Mítcheíí, Wííííam
Mítten Management, Inc.
Mod|eskí, Raíph
Monarch Lífe Insurance Co.
Montague, Mííes Co., Ino.
Moore, da Smaíí €
Moore, íma
Moore, dward W., estate of
Moore, G.
Moore, ohn R
Moore, Louíse C, e ecutrí ..
Moore read Co
Morganíte rush Co., Ino
Moro Reaíty oídíng Corporatíon.
Morrís, rthur
7103
7 576
73406
70103
53936
69525
64654
44032
19930
36379
4536
50 3
2625
2 79
5 797
54227
5 241
623 6
74720
65 34
416 0
41 74
54673
5 799
42494
53990
61 61
49517
6 61
7441
7651
944
64790
6 219
6 720
3 351
64791
6 21
5 720
41615
26369
37406
44759
60490
64246
3
1234
3
32
33
1343
65
1151
32
5 7
33
27
2
25
2
37
564
44
437
243
236
30
37
43
26
34
1401
145
29
401
32
33
1093
06
27
101
26
1401
29
576
2
1051
3
716
3
39
144
147
30
1197
33
26
10
301
30
1197
33
22
24
10
793
776
25
1135
241
33
1 state ta decísíon.
1 cquíescence pubííshed ín Cumuíatíve uííetín I -2 (1935), wíthdrawn.
4 Nonacquíescence reíates to foííowíng íssues: Whether maíí pay receíved ín 1921 constítuted Income ín
1920 rentaí ínterest receíved on compíeted addítíon and betterments ín fínaí settíement wíth the Dírector
Generaí.
Nonacquíescence reíates to deductíon for reserve set up to meet ííabíííty upon matured coupons ad|ust-
ment of íncome for rentaí of space occupíed ín home ottfee buíídíng and deprecíatíon upon such buíídíng.
1 Nonacquíescence reíates to íssue regardíng deductíon from íncome of sprínkííng ta .
€ Gíft ta decísíon.
1 state ta decísíon nonacquíescence ín the concíusíons on the thírd group of poíícíes that the proceeds
thereof shouíd be e cíuded from the gross estate.
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(
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Y
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U
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í
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s
í
t
y
)

o
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2
0
1
3
-
0
1
-
2
2

0
4
:
4
3

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2
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2
7
/
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3
9
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1
5
0
7
6
0
3
1
6
9
2
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#
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57
Nonacqthescences € ” Contínued.
Docket
No.
oard uf Ta ppeaís.
oíume.
Morríss et aí., uíía L.
Morríss Reaíty Co. Trust No. 1.
Morríss Reaíty Co. Trust No. 2.
More, mma R., estate of 1
Morse Syndícate Nos. 1 and 2, Lííííe
Morton, Sophía P. O
Morton, Sterííng
Moser, Caroívn L
Moeser, Charíes
Mott, Charíes Stewart
Mou, Dee urey
Mueííer, arí W
Muícahy, ohn
Munson, Robert ,_
Murphy et aí., red T., trustees
Murphy Personaí Pro( erty Trust
Mutuaí Lífe Insurance Co. of New York.
Myríck, uíían
N.
Chattanooga 4 St. Louís Ry
Casket Co., Inc.1
Contractíng Co.
Grange Mutuaí Líabíííty Co
í ome Owners Servíce Corporatíon,
Natíonaí Land Constructíon Co
Natíonaí Outdoor dvertísíng ureau, Inc.
aííonaí Pípe oundry Co.4
Neaí et aí., . enry, trustees -
Neíms, rank aywood
Neíms, Mrs. rank aywood- --
Netcher, Charíes, estate of
Seuberger, arry
ewberrv Lumber Chemícaí Co
Newbury, Moíííe Netcher, trustee.
Newport Co
New York Centraí R. R. Co.s.
ít

41023
41024
45 63
45 64
41023
45 63
41024
4 64
44652
9531
9532
9257
6517
91705
55937
55399
51S 5
57506
71903
4,R362
0769
949
43795
43795
9764
51526
63376
33799
50320
24520
73099
91445
40126
65252
701(99
32997
45403
51 7
51
42435
7 919
6 511
42435
35431
19932
34437
62040

23
23
23
27
3
3
3
3
29
27
30
35
2
34
39
25
25
23
29
24
29
25
SI
39
2S
32
IS
26
27
27
31
37
33
31
24
2
1076
1076
1076
1070
269
419
1270
12 3
216
513
1040
195
230
1229
72
724
724
749
22
56
139
407
666
753
562
1025
242
551
65
65
41
223
150
41
1246
437
state ta decísíon.
1 Nonacan|pscence reíates to the appíícatíon of a net amount of operatíng íosses after appíyíng the profíts
fíf a subsídíary daríng tbe períod of affíííatíon to reduce the íoss sustaíned by a parent company on the
qnídatíon of a subsídíary company.
– Nonacquícscencc reíates to Issue 1 of decísíon and íssue regardíng deductíbíííty of overhead costs In 1925.
errofesrcnce pubííshed ín Cumuíatíve uííetín I -2 (1930). revoked. Revocatíon of príor acquíescence
and present nonacquícscence are dup to the faííure of the oard s decísíon to íímít the word dístríbuted
to the cash dístríbutíons made to the stockhoíders.
1 ooacquíescence reíates to foííowíng íssues: Whether maíí pay receíved ín 1921 constítuted íncome ín
t receíved on compíeted addítíon and betterments In fínaí settíement wíth the Dírector
172176
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5
Nonacquíescences € ” Contínued.
Ta payer.
oard of Ta ppeaí .
oíume.
Page.
Co.
New York Lífe Insurance Co
New York, Ontarío Western Ry.
Níbíey-Mínnaugh Lumber Co
Níchoís Co Lumber Co
Níchoíson, ames
Nícoía, .
Níeísen Co., . ... - -
North merícan Investment Co
North merícan Utíííty Securítíes Corporatíon
Northern Coaí Co.1
Northport Shores, Inc
Noyes, ansen €
Nudeíman, Charíes W
3 0
24
1217
52693
30
40
17527
26
97
23601
24
54
66966
32
977
57417
33
111
99
26
223
301 3
24
419
75039
36
320
34945
24
307
64500
31
1013
3 574
25
1351
79126
35
2
Oakman et aí., Mamíe R._
O Donneíí, díth M.
O Donneíí, Thomas .
Ogden, ugh W
Oíd Coíony Trust Co., trustee
Oíd Míssíon Portíand Cement Co
Oíd Natíonaí ank ín vansvíííe, e ecutor
dínger Mortuary ssocíatíon
Oííver, Oííve ume
Oímsted, George W.
Oímsted, Iva C. .
Oístad, Oscar
Omaha Coca-Coía ottííng Co.
O Rear, . C.
Oregon Termínaís Co
Ortíz Oíí Co. .
Oswego aíís Corporatíon.
Owen, III, ohn..
Owens, . T
Owens, Mrs. . T.
Owens, O. O
42917
799 0
529 7
62979
23943
7492
3 53
676 1
36502
65640
44090
45745
4 121
54714
60746
440 9
45746
4 143
54713
60745
766 3
52641
32335
6 93
6112
2 301
32673
34352
797 6
63149
63150
319 6
2-1
35
32
24
33
25
31
23
30
30
30
32
26
2
29
37
26
3
27
27
2G
4
251
1277
1239
311
305
379
12 1
13 0
331
331
670
1123
69
1332
656
60
739
469
469
1147
1 Nonacquíescence reíates to statute of íímítatíons íssue.
Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Inc., and the basís of aíío-
catíon of cost between saíd common stock and preferred stock of saíd company acquíred at the same tíme
and under the same agreement.
1 state ta decísíon.
Nonacquíescence reíates to íssuo Invoívíng the amounts paíd to stockhoíders by . O. Curtís Leather
Co. upon canceííatíon of certaín stock.
Nonacquíescence reíates to íssue regardíng amount of íoss sustaíned by petítíoner by reason of destruct-
íon by fíre of hís resídence and furníture.
€ Nonacquíescence reíates to the foííowíng íssue: Whether respondent erred In computíng the depíetíon
aííowabíe to petítíoner by treatíng as an e pense of operatíng a certaín property the oost of a dry boíe dríííed
thereon.
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1
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-
0
1
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2
2

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3

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3
9
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1
5
0
7
6
0
3
1
6
9
2
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59
NoN C truí C NC € ” Contínued.
Ta payor.
P.
Pacífíc Coast íscuít Co. et aí.1
Pacífíc Nash Motor Co
Rock Graveí Co
radíey W.
r, Stacy-Merrííí, Inc
Pín merícan Lífe Insurance Co. .
Park, Wííííam
Parker, Cíara ., e ecutrí --
Parker, George D., estate of .
Parker, erbert L., estate of 5
Parker et aí., mííy íng, trustees
Paníott, . . -
Patríck Cudahy amííy Co
Patterson, rank ., estate of
Peabody, Corneíía aven, estate of
Peabod v et aí., Stephen, e ecutors
Peace, arvey W --
Pennsyívanía Co. for Insurances on Líves
Grantíng nnuítíes, e ecutor and trustee...
Perkíns, mííy S.s
Perkíns, Yoíande ...
and
Perkíns et aí., Thomas N.
715
45169
45170
2 776
62652
7997
463
7423
90026
5 604
5 604
53320
53320
309 9
3436
765 0
39647
39647
7277
73029
7 532
9905
57 4
5 305
23
26
32
0
3
3
31
31
30
30
2
36
36
24
24
3
32
35
3
33
953
296
550
636
1430
111
644
644
342
342
917
1147
407
7 7
7 7
30
449
100
1 9
606
5 443
5 475
5 770
5 772
5 904
5 905
f s |nr,
5 907
5 917
5 91
5 925
Nor ícrruíescence wíth respect to deductíon of amounts e pended ín connectíon wíth díssoíutíon and
ííquídatíon of a corporatíon.
Non cquíesccnce ín oard s decísíon hoídíng that the Superpower ríghts were not dívídends.
1 Nonacquícscencc reíates to the íssue ínv oívíng the deductíbíííty of an amount equaí to 3 per cent of the
ísan of íts reserve for Incurred but not yet accrued dísabíííty benefíts at the begínníng and end of the ta abíe
|tar.
4 Nonacquícscenee reíates to íssue regardíng e ístence of George D. Parker Co. partnershíp.
1 state ta decísíon.
1 Nonacquícscenee reíates to ínterpretatíon of artícíe 1567, Reguíatíons 4.1), as appííed to e change of stock
of Píttsburgh Te as Oíí Gas Co.
1 state ta decísíon: nonacquíescence reíates to foííowíng íssues: Whether transfer ís ta abíe as effectíve at
aeath, whether transfer ís ta abíe as one concerníng whích decedent aíone, or ín con|unctíon wíth other per-
sons, had power at death to aíter, amend, or revoke the trust,
Nonacquíescence reíates to the foííowíng Issues:
Díd the statute of íímítatíons, at the tíme of the maíííng of the defícíency notíces, bar assessment and
wííectíon of the defícíencíes as to Thompson Oíí Co., astern Carbon íack Co., W. . Davís, Líííían .
Davís, Matíída M. Davís, íton N. Davís, mma Luctte Davís, e ecutrí , u/w O. L. Davís, Lue Davís,
€ fcí Davís ros. Co.. where the Income ta returns were fííed wíth a deputy coííector
Díd the statute of íímítatíons, at the tíme of the maíííng of the defícíency notíces, bar assessment, and
ctíon of the defícíency as to Thompson Oíí Co., where a consoíídated return was orígínaííy íed and the
Commíssíoner íater ruíed agaínst consoíídatíon
b 0. . M. Co. entítíed to a deductíon greater than 14,179.73 as an addítíonaí bonus to Its generaí
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60
Nonacqttíe cences € ” Contínued
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Petaíuma Santa Rosa R. R. Co.1...
Pheíps et aí., Luís ames, e ecutors 1
Phííííps, ben ., estate of
Phííííps, Pamphíía ., estate of
Phííííps, Wííííam S -
Píerce, dward
Píerson Corporatíon, L. D
Píttsburgh Lake ríe R. R. Co.4...
Píaíns Reaíty Co
Píant, enry radíey.
Píat, amíma 5
Píestcheeff, Guendoíen C.
Píestcheeff, Theodore
Píettner, Maude rown.-
P-M- Petroíeum Co.4...
Pontareííí, Míchaeí --
Porter. íe ander ., estate of
Portíand urníture Manufacturíng Co.
Post Sheídon Corporatíon
Pressíngcr, Mabíe L., estate of
Príce, arry
Príester, . C
Proctor Shop, Inc.7
Prosperíty Co., Inc.
Prouty. Oííve .
Prudentíaí Insurance Co. of meríca.
Pryor Lockhart Deveíopment Co...
Pupín, Míchaeí L, estate of
Purdy, Charíes Wesíey
Purse, ames N
13 30
50336
1 02
7519
24446
31769
5 706
74317
42764
4 977
65492
67197
43 9
4 9 4
52094
55659
60923
7 930
0026
0025
33345
50576
54779
3199
79322
01 09
70367
56695
0550
7000
71596
55195
5 909
6626
45 96
5946
57 29
56641
60 4
6723
3 72
4566
51326
63523
92177
2421
54124
11
27
30
3(3
24
26
35
2S
31
30
35
35
35
25
24
35
34
30
2
34
29
30
27
30
33
26
34
3
36
27
uínn, Porte . I 67156 1 31
Nonacqtííescence reíates to that part of decísíon concerníng purchase of ta payer s own bonds at íess
than par whích were heíd as an ínvestment. cquíescence notíce as to thís Issue pubííshed In Cumuíatíve
uííetín I1-2 (192 ). revoked.
state ta decísíon nonacquíescence wíth res íect to the trusts for the son and daughter.
– state ta decísíon.
1 Nonacquíesoence reíates to rentaí ínterest questíon and oard s decísíon wíth respect to portíon of maíí
pay receíved ín 1921.
Nonacquíescence ín íssue wíth respect to Immuníty from ederaí íncome ta of compensatíon of ofSoers
and empíoyees of the oard of State Iííírbor Commíssíoners of Caíífornía.
€ Nonacquíescence reíates to fírst íssue of decísíon.
cquíescence pubííshed ín Cumuíatíve uííetín III-2 (1934), revoked.
€ Nonacquíescence reíates to overstatement of íoss sustaíned as a resuít of ííquídatíon of subsídíary.
G
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1
3
-
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1
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3

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3
9
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1
5
0
7
6
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3
1
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2
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61
Nonacqt|tescences € ” Contínued.
Raínbow Gasoííne Corporatíon
Randoíph, rankíe Carter
Iph, R. D
írgíí P., trurt
Co.1.
oward W
tv ssocíates, as syndícate manager –
Reed, Latham R
Reese, ugusta íísa
Rebtam, Inc € ” €
Reybíne, ípheus, estate of
fíerbíne, Martha ., e ecutrí
Corporatíon 4
Dn et aí., orrest, e ecutors
Oíí Co
Ríchmond, rederícksburg Potomac R. R Co. .
Ríeck, dward
Ríffeí, enry -. -
Rííey, nna .
Rííey Stoker Corporatíon.
Rííey, Thomas ., transferee..
Río Grande Land Canaí Co.
Río Grande Reservoír 4 Dítch Co.
Robbíns, arwood.
Roberta, G. P....
Roberta, Waíter
Robertson, . G
Rock wood, George O
Rockwood, Wííííam M € ”
Rocky Mountaín Oíí Co.7
Rodeo- aííe|o erry Co. .
Roerích, Níchoías €
Rogers, May
Roííandcííí, Guíííano .
Roíííns, arry T
Docket
oard of Taí ppeaís.
No.
oíume.
Page.
/ 65152
72365

1050
5IS90
27
65
51 9
27
65
4 33
2
773
( 43123

45219
4 015
2
1204
61554

5 544
26
1401
27921
17
1173
5SS00
26
1401
70410
30
1
45016
2
666
60660
31
314
60660
31
314
/ 673 6
70795
30
451
44652
27
1070
42921
25
101
6 76
33
95
79157
35
117
3576
3
436
61066
29
160
3íí.-)S4
26
749
6463
33
564
71350
31
507
71351
31
507
67076
33
0
6 434
32
646
37534
24
405
f 49552
I 52370
2
53
72711
31
927
72712
31
927
79421
36
365
/ 36411

936
4 52
3065
3
567
45051
f 31
32
994
1176
/ 57479
672 6
33
43
63954
34
319
1 Nonacquíescence reíates to íssue whether petítíoner was ta abíe for years 192 to 1029, íncíusíve, as a
trust or as an assocíatíon.
€ cquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), wíthdrawn.
state ta decísíon.
1 Nonacquíescence reíates to íncíusíon ín íncome of corporatíon for years ended March 31,1930, and March
tí, 1931, amounts representíng rentaí of premíses occupíed by íts presídent.
1 Nonacquíescence reíates to íssue ínvoívíng the questíon. re payments made to hoíders of guaranteed
ock desígnated ín certífícates as dívídends deductíbíe as ínterest
state ta decísíon acquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), recaííed.
Nonacquícscpncc reíates to reductíon of gross íncome by íntangíbíe drííííng costs and overhead e penses
ín determíníng the 50 per cent íímítatíon on depíetíon.
Nonacquíescence reíates to fírst íssue of decísíon.
1 Nonacquíescence reíatesto aíí íssues e cept íssue Invoívíng saíary and per díem aííowance receíved by
1929 of dívídends decíared ín stock In 192 . certífíeatee
Nonacquíescence reíaíes íu tuí íssues eícepí íssue n
Pftítíooer from the Uníted States Government ín 1934
– .Nonacquíescence as to íssue regardíng ta abíííty ín
to íbích were not deíívered untíí 1929.
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6
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Nonacqutescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Roíííns, Raíph
Rooseveít 4 Son Investment und
Rorímer, Louís
Rosenberg Investment Reaíty Trust.
Rosenbíoom ínance Corporatíon 1
Ross, íanche S.1
Ross, Waíter L
Rosser, . M., e ecutor
Rossheím, Irvíng D.4
Rudman, I.5
Rudman, Rose
Rust et u ., . L
Ruth, rederíck S., estate of3
Sabatína, Rafaeí
St. Louís Southwestern Ry. Co.
St. Louís Uníon Trust Co., e ecutor4.
San Caríos Mííííng Co.. Ltd.7
San acínto Lífe Insurance Co
Sand Spríngs Ry. Co
Sanford et aí., ugh W
Sather Lease € ” Thomas Sather Co..
Sauk Investment Co
Scatena, ívíra
Schíffer, ack W_.
Schíesínger, rmín
Schíesínger, athíeen M
Schíesínger, Rosa
Schmoíí íís ssocíated, Ino
Schoen, Louís
Schoonmakcr, Rebekah C
Schumacher Waíí oard Corporatíon.
Schwartz- asser Improvement Co
Scofíeíd, Maríon, estate of3 9
Scott, Thomas ., estate of10
Scott, Thomas S
Scoveíí, Cíínton ., estate of3
Scrípps, Robert P
Scuííy, nríqueta ngeía –
Seaconnet Coaí Co.
6395
76196
5 50
SI 963
3577
40903
f 1171
732 2
40765
57503
5 6
5 7
9171
0 40
o
í
50134
3319
2776
3393
45966
39525
7534
3243
32439
3421
31979
74642
63920
3249
75960
75961
73 92
7536
000
56776
92022
61602
69719
36 76
062
50336
70SSS
49272
77116
0244
I SOS )
34
34
27
3
24
2
30
24
31
36
36
3
36
32
24
27
24
34
21
37
26
34
32
36
0
39
30
39
33
26
3
27
34
0
33
34
24
1 Nonacquíescence does not reíate to the oard s hoídíng that dístríbutíons receíved from oseph . ínch
Co. were not partíaí ííquídatíng dívídends.
Gíft ta decísíon.
1 state ta decísíon.
Nonaoquírscencc reíates to íssue whether Commíssíoner ís entítíed to íncreased defícíency aa raísed
by hís amended answer fííed wíth the oard.
1 Nonacquíescence reíates to deductíon of drííííng cost ín computíng aííowabíe percentage depíetíon.
1 state ta decísíon nonacquíescence as to questíon oí sítus.
cquíescence as to íssue 2 and nonacquíescence as to Issue 1 pubííshed ín Cumuíatíve uííetín I I
(1U32). wíthdrawn.
1 Nonacquíescence reíates to dívídend íssue.
€ Nonacquíescence reíates to the íssue Invoívíng the íncíusíon ín gross estate of (
ínterest ín a trust created by decedent and her two sísters on November 12, 1927.
10 state ta decísíon: nonacquíescence wíth respect to the trusts for the son t
Nonacauíescence reíates to statute of íímítatíons íssue.
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#
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63
Nonacquíescences € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Page.
Seatree, Wííííam rnest
Securíty írst Natíonaí ank of Lob ngeíes et aí.,
e ecutors 1
Securíty Savíngs Commercíaí ank
Seder, braham, estate of
Seder, Ceíía
Sepíí, arí .,
Sefwyn ddv Co.
Shaffer, C. . .
Shaffer, ohn C
Sharp et aí., díth uggard, e ecutors
Sharp, Waíter P., estate of s.
Pen Co., W.
rederíck R., estate of
Mar|oríe eíí, e ecutrí of rederíck R.

Shepherd Syndícate
Shíenker, Símon
Síbíey et aí., ohn R., e ecutors .
Síbíey, Rufus ., estate of
. . .
L. L..
.
Síack, . ., estate of .
Smaíí s, Inc.
Smathers, . ., estate of _
Smííey, íbert ..
ey, rancís G
C.
Smíth, Mrs. Grant-
Smíth, Mííton
Smíth, Mííton, estate of
Smíth, r., Mííton, e ecutor.
Smíth, Sarah vís_
22094
33640
45429
59523
4934
4934
2397
21612
29259
500 6
69511
4 317
4 317
36604
0961
0961
4 332
51327
5 01
24921
24921
19175
19791
90217
51173
72404
7 525
53791
29260
74424
74425
77417
43300
43305
43306
77414
52132
52132
77416
77415
92177
90703
56465
20
2
29
3
3

25
29
2
30
33
30
33
27
39
39
26
26
í
16
3
2
35
24
29
33
33
34
26
34
2
2
4
4
3
3
34
396
2 9
176
74
74
43
1341
1315
1293
532
290
632
290
1056
3
1062
1401
915
915
9
921
39
271
6 6
1315
19
19
702
117
702
422
422
702
702
121
317
170
6míth Transportatíon Co
Smíth, arvara Pupín, admínístratrí of Míchaeí L
Pupín
Smíth, Wííííam
Smíth, Wííííam íden, estate of
Nonaeqníescence reíates to íssuo whether ta payer sustaíned a net íoss In any busíness reguíaríy carríed
Ofí In 1934 wbích couíd be carríed forward and deducted from ta abío Income In 1925.
1 Nonacquíescence reíates to the foííowíng Issues: Reductíon of cost basís (March 1, 1913, vaíue) of assets
1 1 by a partnershíp In 1919 by deprecíatíon aííowed ín computíng íncome for períod March 1, 1913, to
December 1,1915 computatíon of 1919 partnershíp profít on saíe of assets by consíderíng as part of the saíe
príce, ta es of the partners paíd ín 1920 by the vendee.
1 state ta decísíon.
1 cquíescence pubííshed In Cumuíatíve uííetín III-2 (1929), wíthdrawn.
1 Nonacquíescence reíates to Issues 1 and 4 set forth In syííabus of pubííshed decísíon.
í0íft ta decísíon.
Nooacquíescence ín íssue ínvoívíng questíon of ta abíe gaín by reason of acquísítíon of possessíon of
I by hím. c.
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64
Nonacqotescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Sneed, r., . T
Snyder, Inc., . S. M. W
Southern eí) Teíephone Teíegraph Co.
Southern Caíífornía Rock Graveí Co
Southern Raííway Co. et íí.
Spang, Chaífant fe Co.
Spencer, George rínck, estate of 4.
Speyer, ames
Spítzner 4 Son, Inc., C.
Sprague, C. O. M
Sprague Son Co., C. .
Spríng Cíty oundry Co
Sredíes, Ino
Staníey Co. of meríca
Stante Petroíeum Co., trustee, Lííííe Morse Syn-
dícate Nos. 1 and 2
Stayton, r., Wííííam
Stearns, Marshaíí, admínístrator
Steeíe, Wííííam, estate of
Stern, Martha S
Stern et aí., Samueí . ., e ecutors
Stetson, Ioía Wíse
Stevens, yam € ”
Stevens, Wííííam D
Stevenson Consoíídated Oíí Co.
Stewart, ohn
Stewart, Wííííam Rhíneíander, estate of € --.
Stewart, r., et aí., Wííííam Rhíneíander, e ecu-
tors € €
Stímson Corporatíon, .
Stíne, Doíííe M
St ínc. M. osephíne
Stockhoím nskíída ank
Stone, . C, estate of
Stone, Mrs. . C, e ecutrí
Stone et aí., Irvíng ., e ecutors and trustees 10
Stone, Irvíng Lee, estate of10
45694
366 6
70 7
30 9
214 1
29951
37 7-1
37 9
5 790
72236
56435
0744
65 33
34946
21169
45015
31516
33142
40023
9531
9532
71 67
4 930
73347
90 33
2459
41743
/ 70006
71593
70009
71594
43416
57531
67776
67776
3705
62694
62695
55755
3 336
3 336
43 30
43 30
30
26
34
26
27
31
31
30
37
33
24
25
2
26
3
32
24
34
9
2
26
27
29
29
23
29
31
31
3
32
32
25
26
26
26
26
1 Nonacquíescence reíates to íssue whether certaín Interest In reaí estate sítuated ín Te as was acquíred
by petítíoner príor or subsequent to hís marríage: and that part of decísíon whích hoíds that deíay rentaís
receíved are communíty íncome notwíthstandíng that the íands from whích they aríse may be the separate
property of eíther spouse.
Nonacquíescence reíates to íssues Invoívíng addítíonaí compensatíon, rentaí
betterments, and back maíí pay for use of propertíes duríng ederaí controí.
cquíescence pubííshed In Cumuíatíve uííetín I -2 (1036), wíthdrawn.
4 state ta decísíon.
1 Nonacquíesconco reíates to statute of íímítatíons íssue.
,te ta dec
€ state t
ecísíon acquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), recaííed.
1 Nonacquíescence reíates to íssuo regardíng íncíusíon ín Income for 1026 of 1 0, 23. 6 receíved upon
e change by petítíoner of 250,000 shares of Sunburst Oíí Oas Oo. stock wth that corporatíon.
€ state ta decísíon nonacquíesconco reíates to faír market vaíue of an undívíded or fractíonaí Interest
In certaín reaí property.
€ state ta decísíon nonacquíescence reíates to faír market vaíue of 3,639 shares of stook of híncíaríner
Reaí state Co. as of September 4, 1929. cquíescence as to thís Issue pubííshed ín Internaí Revenue uí-
íetín, I -- (1935), wíthdrawn.
u state ta decísíon nonacquíescence reíates to íssue ínvoívíng property transferred by trust agreement.
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1
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65
Nonacqdíescences € ” Contínued.
, Tccía M
Straus, aron
Strayer, Waíter € ”
Streefkerk, MrR. S
Strong, aroíd C
Sturgeon- ubbard Trust.
Sturgeon et at, Roííín S., trustees..
Suffoík Co., Ltd
Suííívan, oseph
Suncrest Lumber Co
uppíee, C. enderson, estate of1 1
Swartz, Inc., dward G
Swíft, Marv Dodson, estate of
Swísky, Toby W
SníssOíí
Corporatíon
T.
Taft, nna S., estate of4 -
Taft, Robert ., e ecutor €
Taft, Robert ., trustee .--
Taíbot, rederíck C, estate of
Taíbot, . . -
Taíbot et aí., Susan D., e ecutors
Taíbot Wííííam ., estate of
Tant, Waíter ., transferee
Tanzer, Laurence rnoíd
Tavíor, . SeWíon, estate of
Tayíor, r., et aí., . Seídon, e ecutors
Tayíor, essíe Carter
Tayíor, udson L
Ten yck, Peter G
Tennessee Consoíídated Coaí Co.
Termínaí Raííroad ssocíatíon of St. Louís
Termínaí Reaíty Corporatíon
Terrace Corporatíon
Terre aute, Indíanapoíís astern Tractíon Co.
Terre aute Tractíon Líght Co
Terrv, nna Davís
Terry, r., . T
Te as Irrígatíon Co. .
Te as Pípe Líne Co..
Docket
No.
55935
65001
4 564
45363
3 576
37095
37095
1 17
56671
3321)
9363
36650
44909
42032
60177
61002
630
7099
77923
77923
76 13
20411
36191
20409
20409
2434
1355
64444
64444
51 91
51 92
6 197
333 3
49 32
53429
63699
43766
50762
60596
71157
05 4
33 5
33S60
45446
65 35
400 3
41346
59457
oard of Taí ppeaís.
oíume.
29
27
27
L S
25
25
25
37
33
25
25
26
25
32
33
33
34
27
23
27
27
3
37
27
27
27
27
29
24
33
32
37
24
24
33
24
32
and the
1 Nonacquíescence reíates to vaíue of common stock of merícan Chaín Co., Inc.,
ctítm of cost between s íd common stock and preferred stock of saíd company acquíred at the
and under the same agreement.
1 Gíft taí decísíon.
1 Ncmaequíescencc reíates oníy to the íssue, Díd the Commíssíoner err ín vaíuíng, for gíft ta
eprUín síngíe premíum poíícíes upon the basís of the premíums actuaííy paíd rather than the cash
ufart
1 state ta decísíon.
– Nonacquíescence reíates to deprecíatíon aííowance ín computíng íoss ín saíe of a boat.
Nonacquíeacence reíates to affíííatíon íssue.
of aíío-
same tíme
purposes,
surrender
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1
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3

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/
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1
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0
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6
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1
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2
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66
Nonacquíescences € ” Contínued.
Ta payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Te tííe Mííís Securítíes Corporatíon-
Thatcher Son, ohn
The ub, Inc
Thíeman, Mrs. Leo
Thraíí, dna May
353 Le íngton venue Corporatíon..
Tíde Water Oíí Co
Tíernan, Martín ., trustee, Martín . Tíernan
trust for Martín T., Charíes W., ohn W., nn
C., and Mary . Tíernan et aí.1
Tíííotson Manufacturíng Co
Tímken ct aí. Trust, díth ., Cíeveíand Trust Co.,
trustee
Títíe Trust Co -
Títus, C. Díckson
Títus, Inc., C. W --
Todd, Wíííís
Toíerton Warfíeíd Co. .
Torrens, ames .3
Towers Suííívan Manufacturíng Co
Townsend, .
Townsend, W. S -
Toy, arvey M
Transatíantíc Shíppíng Co., Inc
Traveíers ank Trust Co
Traveíers íre Insurance Co.
Traveíers Indemníty Co.
Tresner, my
Tro|an Oíí Co
Trustees of Lumber Investment ssocíatíon.
Turney, W. W
Turney, Mrs. W. W
Tuthííí, r., orace S
Tuttíe, Carí
Twín eíí Oíí Syndícate
Tyíer et aí., Sídney ., trustees.
Tyng, Lucíen
75423
56
65545
4629
65041
52449
55546
650 9
39936
3167
3169
3171
3173
3175
3177
4276-1
4279
4291-
4294
44167
561
737 5
20705
4226
37536
45320
5377
4050
731 6
74541
72932
61932
62 34
71349
62 33
7134
57916
62 32
71347
66703
33757
52274
6525
65257
5244
7055
45052
56449
74 5
3
30
26
30
31
32
27
29
37
27
39
33
24
3
24
23
31
25
32
32
34
31
31
31
: ,í
37
26
35
31
31
31
32
31
26
2
36
1 Nonacquíesccnec reíates to the Issue, Díd the síí trust Instruments ín the assocíated cases create a
síngíe trust or a muítífííe of trusts
1 Nonacquíescence reíates to íssue regardíng deductíon of íoss sustaíned hy two affíííated companíes
duríng físcaí year ended anuary 31, 1924, and the ta abíe períod ebruary 1 to príí 25,1924, In computíng
the consoíídated net íncome for ta abíe períod príí 26 to December 31, 1924, and the year 192S.
1 Nonacquíescence reíates to the trust and dívídend Issues.
Nonacquíescence reíates to íssue ín res| ect of aííowabíe deductíon for depíetíon.
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67
Nonacqt|íesce nces € ” Con tínued.
Taí payer-
Docket
No.
oard of Ta ppeaís.
oíume.
Pare.
íh eín, oseph
IT mann, m nueí Soíomon
nímann, r., oseph
Cíímann, Samueí, estate of
nímann et aí., Theresa, e ecutors
Uníon Guardían Trust Co., admínístrator
Uníon Guardían Trust Co., e ecutor 1
Co. .
Pacífíc R. R. Co. et aí. .
Uníon Trust Co., trustee
Uníted Natíonaí Corporatíon.
Uníted Oíí Co
an Camp Packíng Co., Inc..
ancoh Reaíty Co
m Schaíck, George S., Superíntendent of Insur-
ance of New York, ííquídator
an oret Co., C.
aughan, Wííííam W -
oeíbeí, acob, estate of4
oeíbeí, Waíter W., e ecutor
oíunteer State Lífe Insurance
onnegut ardware Co
Waggoner, íía
Waggoner, W. T
Waít, . Russeíí.
Waít, atharvn
Wsíker, Taíbot C
Waíters, enry, estate of .
Waíters, ohn W.
Ward et aí., Daísy M
Wardman, arry-
Warfíeíd, C. Gríffíth.
51234
56470
56471
56472
56472
75516
44735
51530
701 3
70219
35639-
35649
356 4
356 5
40060
40061
. 40062
42917
67949
3 0 2
42922
51622
46131
52340
67263
70366
67 43
6009
6009
54176
6905
70 51
44940
33517
33516
75772
75773
20407
77074
/ 70010
I 71597
(62644-
62649
2234
9170
30
30
30
30
30
32
26
32
26
24
33
26
33
32
30
:íí
7
7
27
35
21
24
35
35
27
6
29
2(1
24
3
399
764
764
764
764
996
1321
3 3
1401
4
790
101
256
91
736
7
54
276
276
1149
491
7 4
657
657
359
359
29
259
1255
1251
102
907
1 state ta decísíon.
1 onaoquíescence reíates to the Issues regardíng cost of íntercompany transportatíon of materíaí used
wnstractíon of capítaí assets saíe ín 1 2fí of bíock 394, Seattíe Tíde Lands saíe of íand to ansas Cíty
Termínaí Raííway Co. ad|ustment for deprecíatíon sustaíned príor to anuary 1,1909, of equípment retíred
1 Nonacquíescer|ce reíates to Issue regardíng rentaí Interest and íssue concerníng net íoss of Los ngeíes
Saít Lake R. R. Co. for períod anuary 1 to príí 30,1921.
– state ta decísíon: acquíescence pubííshed ín Cumuíatíve uííetín -2 (1931), recaííed.
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6
Nonacqt|íescences € ” Contínued.
Taí payer.
Docket
No.
oard of Ta ppeaís.
oíume.
Warner Coíííeríes Co. of Deíaware-
Watab Paper Co.
Waterbury, Charíotte M.1
Waterbury, Donaíd N.1 €
Waterbury, ugene W.1
Waterbury, Whítford N.1 - €
Watson-Moore Co
Way burn, Ned
Weíís argo ank Uníon Trust Co., admínístrator.
Weíís, ames
West írgínía-Píttsburgh Coaí Co
Wester, Mar|oríe ., estate of
Wester, W. L
Western Power Corporatíon
Wetherííí, Robert, estate of ...
Wheeíer, Dwíght C-
Wheeíer, P. L
Wheeííng Moíd oundry Co. (Deí.)-
Whíppíe, rank ._
Whítcomb, nna S.
Whítcomb, N. ., Coca-Coía Syndícate.
Whíte, uííet C € ”
Whíte Oak Transportatíon Co.4
Whíte, Ríta M. ohíer
Whíte, Sídney ---
Whítíng, Dwíght
Whítíng, George N. --
Whítteíí 4 Co., Inc., George.- --
Wííco Sons, . -
Wííe, dwín € ”
Wííííams, íma €
Wííííams et aí., rank G., e ecutors
Wííííams, R. L. € ž -
Wííííamson, essíe C.7
Wííííamson, Ruth Chandíer
Wíííís, Mary
Wííshíre Oíí Co., Inc
34679
24773
2 0 2
3 6 5
41733
46076
513 7
733 1
733 0
733 3
733 2
62179
7434
20411
6294
20337
25030
67037
67146
67036
67145
72943
6 62
7133
6902
23410
57532
5219
7196
76367
5 775
1 0
36112
5 776
7 532
72414
40619
54451
4001
33564
4000
0545
6746
6671
67179
73955
26
27
33
33
33
33
30
32
27
29
24
37
37
34
36
32
32
27
29
37
35
26
24
25
6
35
34
2
31
36
25
36
34
32
37
35
Nonacquíesoenee reíates to Issue whether gaíns on saíe of stock of the Waterbury Chemícaí Co. were
ta abíe to petítíoner or to trust creatod by them.
state mí decísíon.
€ Nonacquícscencc reíates to the foííowíng Issue: Where the petítíoner, who Is the íwnefícíary of a trust,
makes an assígnment, revocabíe upon notíce of a year and a day, of a portíon of her dístríbutíve share of the
future íncome from the trust, Is the petítíoner ta abíe on the íncomo paíd to the assígnee under such
assígnment
1 Nonacquíesccnce reíates to statute of íímítatíons Issue.
Nonacíuíescenco reíates to the trust and dívídend íssues.
6 Nonacquíescence ín íssue reíatíng to Invoíuntary conversíon.
7 Nonaoquíescence ín íssue whether basís for gaín or íoss on subsequent saíe wíthín meaníng of sectíon
113(a) S, Revenue ct of 1932, was tíme of actuaí dístríbutíon or date of court order of dístríbutíon.
1 Nonacquíescence reíates to Issue ín respect of aííowabíe deductíon for depíetíon.
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69
Nonacquíescenceb € ” Contínued.
Docket
No.
oard of Ta ppeaís.
oíume.
Wííson, ííííngs
Wííson, ohn P -
Wííson et u ., oseph
Wííson, Luke ., estate of
Wííson, Peter ., transferee
Wííson Shípbuíídíng Co.1
Wínne, Waíter G.1
Wínsíow, Sídney W., r
Wínston ros. Co
Wínthrop, eekman - -
W. . oídíng Corporatíon -
Wobber ros.
Wobbere, Inc
Woípert, Urban ... - - --
Rood, ííen yer € ”
Wood urníture Co., .
Wood, r., . O - -
Wood, eremíah --
Wood, Meredíth
Wood, Stuart, estate of..
Wood, Wíííís D -
Woodruff, nníe Stevens..
Woodruff, Stevens
Woodward, ohn S.1
Woodward, George 4 € ” - € ”
Wríghtíngton, Sydney R
Y.
Young, Du oís --
Young, dvthe C, e ecutrí , estate of Wííííam .
Young, r.
Young Corporatíon, .
Young, Wííííam ., r., estate of í
Young, Wííííam 1st.
Youngstown Sheet Tube Co
Yount, Theíma
Z.
Zíegícr, íbert W -
Zíegícr, Cíífford . -
Zímmerman and wífe, Caívín
Zobeíeín, George
Zobeíeín, Mrs. dward -
Zuítor, doíph
77377
62931
57226
661
6619
32444
64655
34337
60900
,NM.().-
59270
79 50
1216
36 75
773 7
30 74
4 563
G5211
40565
65 32
74090
740.SS
426
75624
69 44
797 4
797 5
71962
42279
91371
7 345
90414
74321
90414
1224
2 149
35511
7404
9595
46291
46292
71145
45352
45353
76120
34
29
304
3
1171
25
994
33
664
25
1 2
27
369
39
373
29
905
36
314
3
30
26
322
35
90
26
322
27
155
29
1050
21
564
33
06
31
1141
37
1065
32
926
33
06
3
739
3
739
30
1216
23
125
3
1230
34
64
39
230
35
60
39
230
36
633
24
1246
3S
1460
23
1091
23
1091
31
754
2
236
2.
236
33
324
1 Nonacquíesc nce reíates to Issue 5 of decísíon.
1 Príor acquíescence pubííshed ín Cumuíatíve uííetín II-1, paec 13 (1033), wíthdrawn.
1 Nonacquíescence reíatt
Uíab e dívídend.
1 cquíescence pubííshed In Cumuíatíve uííetín -2 (1931), wíthdrawn.
1 state ta decísíon.
ates to questíon whether dístríbutíon of stock had the effect of dístríbutíon of a
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INCOM T RULINGS. € ” P RT I.
. INT RN L R NU COD .
C PT R I. € ” INCOM T .
SU C PT R . € ” G N R L PRO ISIONS.
P RT II. € ” COMPUT TION O N T INCOM .
S CTION 22(a). € ” GROSS INCOM : G N R L
D INITION.
rtícíe 22 ( a) -2: Compensatíon for personaí 1939-22-9 4
servíces. Mím. 4916
( íso Sectíon 116 Reguíatíons 101. rtícíe 116-2.)
Ta abíííty of compensatíon receíved by ederaí offícers and em-
píoyees and offícers and empíoyees of States or poíítícaí subdívísíons
thereof.
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. C, May 10,1939.
Coííectors of Internaí Revenue, Internaí Revenue gents ín Charge,
and Others Concerned:
On príí 12, 1939, the Presídent approved the Pubííc Saíary Ta
ct of 1939 (Pubííc. No. 32, Seventy-sí th Congress, fírst sessíon
age 47 , thís uííetín). That ct, hereínafter referred to as the ct,
eaís wíth the íncome ta atíon of the compensatíon of pubííc offícers
and empíoyees, State and ederaí. Títíe I thereof, ín so far as ít
reíates to ederaí íncome ta , deaís wíth ta atíon of compensatíon of
certaín pubííc offícers and empíoyees for aíí ta abíe years begínníng
after December 31,193 , whereas Títíe II ís concerned wíth preventíng
the ta atíon of the compensatíon of certaín pubííc offícers and em-
píoyees for years begínníng príor to anuary 1, 1939. s wííí be e -
píaíned beíow, the provísíons of Títíes I and íí of the ct are operatíve
wíthout regard to the nature of the offíce heíd or servíces rendered
by the offícers or empíoyees affected. Ruíes províded bv the appíícabíe
revenue íaw as to the períod for whích íncome must be reported are
unaffected by any provísíon of the ct.
e píanatíon of terms used.
or the purposes of thís mímeograph € ”
(a) Uníess otherwíse specífíed, sectíon numbers mentíoned refer to
sectíons of the ct.
(71)
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í 23(a), rt. 22(a)-2.1
72
(6) The term State empíoyee means an offícer or empíoyee of a
State, or a poíítícaí subdívísíon, or any agency or ínstrumentaííty of
one or more States or poíítícaí subdívísíons, and íncíudes a State or
íocaí |udge and a member of a State or íocaí íegísíatíve body
(sectíon 210).
(c) The term ederaí empíoyee means an offícer or empíoyee
of the Uníted States or any agency or ínstrumentaííty thereof.
(d) The term ta means ederaí íncome ta and íncíudes ínterest,
addítíons to ta , and addítíonaí amounts.
ST T MPLOY S.
cept as affected by sectíon 20 (more fuííy e píaíned beíow) the
foííowíng appííes to the treatment of compensatíon of State empío|-ees
for the purposes of the ta :
(1) Ta abíe years begínníng after December 31, 193 . € ” Sectíon
22(a) of the Internaí Revenue Code, as amended by sectíon 1 of the
ct, requíres that the compensatíon for personaí servíce of aíí State
empíoyees, wíthout e ceptíon, be íncíuded ín gross íncome for ta abíe
years begínníng after December 31, 193 , regardíess of the nature of
the offíce or empíoyment.
(2) Ta abíe years begínníng príor to anuary 1, 193 . € ” Sectíon
201 prevents the ta atíon of compensatíon for personaí servíce as a
State empíoyee for any ta abíe year begínníng príor to anuary 1,
193 . The methods by whích that ís accompííshed are as foííows:
(a) ssessments or such ta íf not aíready made shaíí not now be
made, and no court proceedíng shaíí be begun or prosecuted to coííect
such ta . Coííectíon of ta assessed before anuary 1, 1939 may,
however, be enforced by new or now pendíng court proceedíngs (sec-
tíon 201(a)).
(b) ssessments of such ta made after December 31, 193 , shaíí
be abated and any amounts coííected ín pursuance of such assessments
shaíí be credíted or refunded ín the same manner as ín the case of an
erroneous coííectíon of ta (sectíon 201 (b) .
(0) Coííectíons of such ta made on or before príí 12, 1939, shaíí
be credíted or refunded ín the same manner as ín the case of an er-
roneous coííectíon of ta , under the foííowíng condítíons:
(1) If a cíaím for refund therefor fííed before anuary 19, 1939
(the date of the Presídent s message to Congress on recíprocaí íncome
ta atíon of offícers and empíoyees of the ederaí and State and íocaí
governments), was not dísaííowed príor to príí 13, 1939
(2) If a cíaím for refund therefor fííed before anuary 19, 1939,
has been re|ected but the tíme for begínníng suít wíth respect thereto
had not e píred on príí 12,1939:
3) If a suít for recovery of such ta ís pendíng on príí 12,1939 or
4) If a petítíon to the oard of Ta ppeaís has been fííed wíth
respect to such ta and on príí 12, 1939, the oard s decísíon had
not become fínaí (sectíon 201(c)).
If any one of the tests specífíed ín sectíon 201 ís satísfíed, the State
empíoyee ís entítíed to the reííef províded ín that sectíon regardíess of
the nature of hís offíce or empíoyment. In generaí, State empíoyees
gíven reííef under that sectíon are those engaged ín the e ercíse of
what have for many years been consídered as essentíaí governmentaí
functíons and thus príor to Iíe oeríng v. Oerhardt (193 ) (304 U. S.,
G
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73
22(a), rt. 22(a)-2.
405) and Graves et aí. v. O eefe (1939) (59 S. Ct., 595), were deemed
not to be sub|ect to ederaí ta on theír compensatíon.
(3) Ta abíe years begínníng after December 31, 1037, and before
anuary 1, 1939. € ” Sectíon 202 pre vents the ta atíon of compensatíon
for personaí servíce as a State empíoyee for any ta abíe year begínníng
ín 193 and endíng ín 193 or 1939. That ís accompííshed by pro-
rídíng that such compensatíon shaíí be e empt and not íncíudíbíe
ín gross íncome under Títíe I of the Revenue ct of 193 íf such
empíoyee eíther € ”
(a) díd not íncíude ín hís return for hís ta abíe year begínníng ín
1937 and endíng ín 1937 or 193 compensatíon as a State empíoyee
(sectíon 202 (a)) or
(b) díd íncíude such compensatíon ín hís return for such ta abíe
year but ís otherwíse entítíed to the reííef províded therefor ín sec-
tíon 201 (see sectíon 202(b)).
In generaí the same groups of State empíoyees entítíed to any of
the forms of reííef províded for ín sectíon 201 wííí be reííeved, by
vírtue of sectíon 202, from ta for a ta abíe year sub|ect to Títíe I
of the Revenue ct of 193 . If, however, eíther test specífíed ín
sectíon 202 ís satísfíed, the State empíoyee ís entítíed to the reííef
províded ín that sectíon regardíess of the nature of hís offíce or em-
píoyment. Thus, for e ampíe, an índívíduaí becomíng for the fírst
tíme a State empíoyee ín the caíendar year 193 (hís ta abíe year)
wííí not be ta abíe on hís compensatíon receíved therefor ín that year
even though he may have been engaged ín the e ercíse of a propríetary
functíon.
(4) Ta abíe years begínníng príor to anuary 1, 1939 € ” Refund
cíaíms fíed after anuary 1 , 1939. € ” Sectíon 203 provídes that ta
coííected at any tíme for any ta abíe year begínníng príor to anuary
1,1939, attríbutabíe to compensatíon for servíce as a State empíoyee
shaíí be credíted or refunded as íf ít were erroneousíy coííected, íf
a refund cíaím ís fííed after anuary 1 , 1939, and the Commíssíoner
(under reguíatíons prescríbed by hím and approved by the Secretary
of the Treasury) fínds that the dísaííowance of such cíaím wouíd
resuít ín the appíícatíon of the doctrínes of eheríng v. TherreU
(193 ) (303 U. S., 21 ), eheríng v. Gerhardt (193 ) (304 U. S.,
405). and Graves et aí v. O eefe (1939) (59 S. Ct., 595), e tendíng
the cíasses of offícers and empíoyees sub|ect to ederaí ta atíon. Regu-
íatíons under sectíon 203 are now beíng prepared.
D R L MPLOY S.
(1) Ta abíe years begínníng after December 31, 193 . € ” Sectíon
22(a) of the Internaí Revenue Code, as amended by sectíon 3 of the
ct, requíres that compensatíon for personaí servíce as a |udge of any
court of the Uníted States be íncíuded ín gross íncome for ta abíe
years begínníng after December 31, 193 , regardíess of when the ta -
payer took offíce as |udge. urthermore, compensatíon of schooí
teachers ín íaska and awaíí ís not e empt from the ta for ta abíe
years begínníng after December 31,193 (sectíon 2 of the ct repeaíed
sectíon 116(b) of the Internaí Revenue Code).
(2) Ta abíe years begínníng príor to anuary 1, 1939. € ” Sectíon
209 provídes that the compensatíon of |udges of the Supreme Court
and of aíí the ínferíor courts of the Uníted States created under
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22(a), rt. 22(a)-2.
74
rtícíe III of the Constítutíon, takíng offíce on or before une 6,1932,
shaíí not be sub|ect to íncome ta under the Revenue ct of 193 or
any príor Revenue ct. The term ínferíor courts means círcuít
and dístríct courts (íncíudíng the Uníted States Court of ppeaís
for the Dístríct of Coíumbía and the Dístríct Court of the Uníted
States for the Dístríct of Coíumbía), but does not íncíude so-caííed
íegísíatíve courts.
G N R L.
Títíe II appííes oníy to State empíoyees and not to other persons
havíng deaííngs wíth State and íocaí governments sínce the ta abíííty
of the compensatíon of such other persons was íong recognízed príor
to eíveríng v. Gerhardt, supra. Such persons are generaííy heíd
to be índependent contractors for purposes of ederaí íncome ta and
theír ííabíííty for such ta has been cíearíy estabííshed sínce Metcatf
ddy v. Mítcheíí (1926) (269 U. S., 514). They are not State
empíoyees wíthín the meaníng of thís mímeograph, and, consequentíy,
the reííef provísíons of the ct are not appíícabíe wíth respect to
them.
ny amount of ta attríbutabíe to compensatíon of a State em-
píoyee and assessed príor to anuary 1, 1939, shaíí be abated € ”
(1) íf coííectíon thereof has not yet been made, and
(2) íf coííectíon were made and a refund cíaím fííed, the amount
coííected wouíd have to be refunded under sectíon 203.
The provísíons of sectíons 201, 202, and 203 are ínappíícabíe to
compensatíon receíved by a State empíoyee to the e tent ít ís paíd
dírectíy or índírectíy by the Uníted States or any agency or ínstru-
mentaííty thereof (sectíon 205). Thus, for e ampíe, a State empíoyee
whose compensatíon ís paíd ín whoíe or ín part from funds granted
by the Uníted States under the Smíth-Lever ct ís not entítíed to
any reííef under Títíe II wíth respect to hís compensatíon to the
e tent ít ís paíd from such funds. Such provísíons are appíícabíe,
however, to aíí other compensatíon receíved by an índívíduaí for
servíce as a State empíoyee regardíess of the source (pubííc or
prívate) of such other compensatíon.
Cíaíms for refund, ínstítutíon of suít, and petítíons to the oard
of Ta ppeaís referred to ín sectíons 201 and 203 mean oníy such
cíaíms and petítíons fííed and suíts begun wíthín the períod of
íímítatíon properíy appíícabíe thereto. The provísíons of those sec-
tíons are, therefore, ínoperatíve íf the cíaím or petítíon ís not tímeíy
fííed or íf the suít ís not tímeíy begun (sectíon 204).
The operatíon of the reííef provísíons of sectíons 201, 202, and
203 wíth respect to State empíoyees of any State may, under certaín
condítíons, be termínated. Sectíon 20 provídes that after the Secre-
tary of the Treasury has determíned and procíaímed that ít ís the
poíícy of a State to coííect íncome ta from ederaí empíoyees on
compensatíon receíved príor to anuary 1, 1939, the reííef provísíons
of sectíons 201, 202, and 203 shaíí not thereafter appíy to empíoyees
of that State. fter such determínatíon has been procíaímed ít shaíí
be the duty of the ureau to enforce assessment and coííectíon of
ta for years begínníng príor to anuary 1, 1939, on compensatíon of
State empíoyees of the state affected to the e tent permítted under
appíícabíe statutes of íímítatíon, regardíess of the nature of the
offíce or empíoyment of such empíoyees. In the absence, however, of
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75
22(a), rt. 22(a)-2.
such procíaímed determínatíon by the Secretary the provísíons of
sectíons 201, 202, and 203 shaíí be gíven fuíí force and effect.
In the e amínatíon of returns ín aíí cases ínvoívíng the ta abíííty
of State empíoyees, care shouíd be taken to see that proper effect ís
gíven to the provísíons of the ct. Cases ín whích the soíe íssue
ínvoíved ís tííe ta abíííty of compensatíon of a State empíoyee and
whích have been heíd ín suspense ín accordance wíth prevíous ínstruc-
tíons from thís offíce may now be cíosed ín accordance wíth the proví-
síons of Títíe II of the ct.
Inquíríes regardíng thís mímeograph shouíd refer to the number
thereof and the symboís IT: R .
Gut T. eíveríng,
Comm. íssíoner.
btícíe 22(a)-2: Compensatíon for personaí 1939-25-9 6
servíces. T. D. 4903
( íso Sectíon 116 Reguíatíons 101, rtícíe 116-2.)
TITL 26 € ” INT RN L R NU . € ” C rT I, P RT 9, SU P RT P RT 46 ,
SU P RT € ” INCOM T .
Pubííc Saíary Ta ct of 1939.
rtícíes 22(a)-2 and 116-2 of Reguíatíons 101, as made appííca-
bíe to the Internaí Revenue Code by Treasury Decísíon 4 5
page 396, thís uííetín , amended.
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. O.
To Coííectors of Internaí Revenue and Others Concerned:
In order to conform Reguíatíons 101 (Part 9, Subpart , Títíe 26,
Code of ederaí Reguíatíons), as made appíícabíe to the Internaí
Revenue Code (53 Stat., Part 1) by Treasury Decísíon 4 5, approved
ebruary 11, 1939 (Part 465, Subpart , Títíe 26, Code of ederaí
Reguíatíons page 396, thís uííetín ), to the Pubííc Saíary Ta ct
of 1939 (Pubííc, No. 32, Seventy-sí th Congress, fírst sessíon), such
reguíatíons are amended, as foííows:
1. The foííowíng ís ínserted ímmedíateíy precedíng artícíe 22(a)-í
(sectíon 9.22(a)-í, Títíe 26, Code of ederaí Reguíatíons), as made
appíícabíe to the Internaí Revenue Code:
Sectíon 1 of the Pubííc Saíary Ta ct of 1939 provídes:
Sectíon 1. Sectíon 22(a) of the Internaí Revenue Code (reíatíng to the
defínítíon of gross íncome ) ís amended by Insertíng after the words com-
pensatíon for personaí servíce the foííowíng: ( íncíudíng personaí servíce as
an offícer or empíoyee of a State, or any poíítícaí subdívísíon thereof, or any
agency or ínstrumentaííty of any one or more of the foregoíng) .
Sectíon 3 of the Pubííc Saíary Ta ct of 1939 provídes:
Sec 3. Sectíon 22(a) of the Internaí Revenue Code ís amended by addíng
at the end thereof a new sentence to read as foííows: In the case of |udges
of courts of the Uníted States who took offíce on or before une 6, 1932, the
compensatíon receíved as such shaíí be íncíuded ín gross íncome.
Sectíon 210 of the Pubííc Saíary Ta ct of 1939 provídes:
S o. 210. or the purposes of thís ct, the term offícer or empíoyee ín-
eíudes a member of a íegísíatíve body and a udge or offícer of a court.
2. rtícíe 22(a)-2 (sectíon 9.22(a)-2, Títíe 26, Code of ederaí
Reguíatíons), as made appíícabíe to the Internaí Revenue Code, ís
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23(c). rt. 23(c)- .
76
amended by ínsertíng before the íast sentence thereof the foííowíng
new sentence:
s used ín thís artícíe the term ederaí offícers and empíoyees íncíudes aíí
|udges of courts of the Uníted States írrespectíve of when they took offíce.
3. The foííowíng ís ínserted ímmedíateíy precedíng artícíe 116-1
(sectíon 9.116-1, Títíe 26, Code of ederaí Reguíatíons), as made
appíícabíe to the Internaí Revenue Code:
Sectíon 2 of the Pubííc Saíary Ta ct of 1039 provídes:
Sec. 2. Sectíon 110(b) of the Internaí Revenue Code (e emptíng com-
pensatíon of teachers ín íaska and awaíí from íncome ta ) ís repeaíed.
4. rtícíe 116-2 (sectíon 9.116-2, Títíe 26, Code of ederaí Reguía-
tíons), as made appíícabíe to the Internaí Revenue Code, ís amended
to read as foííows:
rt. 116-2. Compensatíon of State offícers and empíoyees. € ” Compensatíon
receíved for servíces rendered as an offícer or empíoyee of a State or any
poíítícaí subdívísíon thereof, or any agency or ínstrumentaííty of any one or
more of the foregoíng, ís to be íncíuded ín gross íncome, regardíess of the
nature of the offíce or empíoyment. s used ín thís artícíe the term offícer
or empíoyee íncíudes a member of a íegísíatíve body and a udge or offícer
of a court.
Thís Treasury decísíon ís effectíve oníy for ta abíe years begínníng
after December 31, 193 . or provísíons of the Pubííc Saíary Ta
ct of 1939 whích reíate to ta abíe years begínníng príor to anuary
1, 1939, see Títíe II of such ct.
(Thís Treasury decísíon ís prescríbed pursuant to the foííowíng
sectíons of íaw: Sectíons 22 and 116 of the Internaí Revenue Code
(53 Stat., Part 1) sectíons 1, 2, 3, and 210 of the Pubííc Saíary Ta
ct of 1939 (Pubííc, No. 32, Seventy-sí th Congress, fírst sessíon)
and sectíon 62 of the Internaí Revenue Code (53 Stat., Part 1).)
Guy T. eíveríng,
Commíssíoner of Internaí Revenue.
pproved une 13, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster une 15, 1939, 10.07 a. m.)
S CTION 23(c). € ” D DUCTIONS ROM GROSS
INCOM : T S G N R LLY.
rtícíe 23 (c)-í: Ta es. 1939-20-9 31
( íso Sectíon 42, rtícíe 42-1.) I. T. 327
INT RN L R NU COD ND R ND CT O 193 .
The amount equaí to 3 per cent of the pay roíí contríbuted by
an empíoyer to the New York unempíoyment ínsurance fund constí-
tutes a proper deductíon for ederaí íncome ta purposes for the
ta abíe year ín whích paíd or accrued.
Treatment as ta abíe Income to the empíoyer of the amount of
credít or refund of such contríbutíon.
Mím. 395 (C. . I-2, 33 (1932)) and Mím. 4564 (C. .
1937-1, 93) modífíed.
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77 23(c), rt. 23(o)-í.
dvíce Is requested as to the deductíbíííty for ederaí íncome ta
fímposes of the amount equaí to 3 per cent of the pay roíí contríbuted
| an empíoyer to the New York unempíoyment ínsurance fund, and
how a credít or refund receíved under sectíon 516-a of the New York
unempíoyment ínsurance íaw shouíd be treated.
The pertínent provísíons of the State íaw read as foííows:
Sec. 516. Contríbutíons to the unempíoyment ínsurance fund. € ” The contríbu-
tíon reguíaríy payabíe by each empíoyer shaíí be an amount equaí to 3 per cen-
tum of the. pay roíí of the empíoyees .
Ssc, 516-a. Refund of or credít for contríbutíons ín certaín cases. € ” If for
any caíendar year begínníng wíth 193 the totaí contríbutíon under thís artícíe
of any empíoyer who ís ííabíe for the e císe ta íevíed by Títíe I of the
ederaí Socíaí Securíty ct ís ín e cess of 2.7 per centum of the totaí remuner-
atíon paíd by hím duríng such caíendar year to empíoyees for empíoyment, as
hereín defíned, such empíoyer shaíí not be deemed ííabíe under thís artícíe for
such e cess and the amount thereof shaíí be refunded or credíted to hím ín
accordance wíth the provísíons of subdívísíon 3 of sectíon 523 of thís chapter.
(Laws of 193 , ch. 10, effectíve anuary 1, 193 .)
€ € € € € €
Síc 523. 3. Refunds and credíts. € ” If not íater than three years from the pay-
ment of any contríbutíon, ínterest or penaíty an empíoyer shaíí make appííca-
nts for a refund thereof or for a credít and the commíssíoner shaíí determíne
fat such contríbutíon, ínterest or penaíty, or any portíon thereof, was er-
roneousíy coííected, the commíssíoner shaíí refund saíd amount, or aííow a credít
therefor, wíthout ínterest, out of the fund uníess the empíoyer shaíí have aíready
deducted saíd amount by way of credít agaínst contríbutíons payabíe by hím.
or ííke cause and wíthín the same períod a refund may be so made, or a credít
aííowed, on the ínítíatíve of the commíssíoner. (Laws of 1936, ch. 117 Laws
of 1933, ch 10, effectíve anuary 1, 193 .)
It ís heíd that the amount equaí to 3 per cent of the pay roíí con-
tríbuted by an empíoyer to the New York unempíoyment ínsurance
fund constítutes a proper deductíon for ederaí íncome ta purposes
for the ta abíe year ín whích paíd or accrued. The amount of credít
or refund of such contríbutíon to whích the ta payer ís íater entítíed
shouíd be treated as íncome ín the return for the ta abíe year ín
whích the credít ís appííed or the refund ís made, províded the príor
deductíon of the amount íater refunded or credíted had the effect of
offsettíng ta abíe íncome. owever, íf the príor deductíon of such
amount díd not have the effect of offsettíng ta abíe íncome, the
amount refunded or credíted shouíd not be treated as ta abíe íncome.
If oníy a portíon of such amount prevíousíy deducted resuíted ín
offsettíng ta abíe íncome, the amount refunded or credíted wííí bo
treated as ta abíe íncome oníy íf and to the e tent that ít ís ín e cess
of the amount of the príor deductíon whích díd not have the effect of
offsettíng ta abíe íncome. The concíusíons here set forth are ín ac-
cord wíth G. C. M. 20 54 (page 102, thís uííetín. That ruííng ín-
voíved recoveríes of bad debts prevíousíy deducted, but the príncípíes
there set forth are equaííy appíícabíe to refunds or credíts of ta es
prevíous v deducted.
I Mím. 395 (C. . I-2, 33 (1932)) and Mím. 4564 (C. . 1937-1,
93) are hereby modífíed to accord wíth the foregoíng concíusíons.
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44, rt. 44-5. 7
P RT I . € ” CCOUNTING P RIODS ND M T ODS O CCOUNTING.
S CTION 42. € ” P RIOD IN W IC IT MS O
GROSS INCOM INCLUD D.
rtícíe 42-1: When íncíuded ín gross íncome.
INT RN L R NU COD .
Credíts or refunds under sectíon 516-a of the New York unempíoy-
ment ínsurance íaw. (See I. T. 327 , page 76.)
S CTION 44. € ” INST LLM NT SIS.
rtícíe 44-5: Gaín or íoss upon dísposítíon 1939-20-9 39
of ínstaííment obíígatíons. T. D. 4 99
TITL 26 € ” INT RN L R NU . € ” C PT R I SU C PT R , P RT ND
P RT 9, SU P RT SU C PT R , P RT 465. SU P RT .
Income ta . € ” mendíng artícíe 44-5 of Reguíatíons 94, artícíe
44-5 of Reguíatíons 101, and such artícíe as made appíícabíe to
the Internaí Revenue Code by Treasury Decísíon 4 5 page 396,
thís uííetín , aíí reíatíng to gaín or íoss on dísposítíon of ínstaíí-
ment obíígatíons.
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. 0.
To Coííectors of Internaí Revenue and Others Concerned:
The ne t to the íast paragraph of artícíe 44-5 of Reguíatíons 94
(sectíon 3.44-5 of Títíe 26, Code of ederaí Reguíatíons), the ne t
to the íast paragraph of artícíe 44-5 of Reguíatíons 101 (sectíon
9.44-5 of such Títíe 26), and the ne t to the íast paragraph of that
artícíe as made appíícabíe to the Internaí Revenue Code by Treasury
Decísíon 4 5, approved ebruary 11, 1939 (Part 465, Subpart .
of such Títíe 26 page 396, thís uííetín ), are each amended to read
as foííows:
In the case of a decedent who díes possessed of Instaííment obíígatíons, no
gaín on account of the transmíssíon at death of such obíígatíons ís requíred
to be reported as Income ín the return of the decedent for the year of hís death,
íf the e ecutor or admínístrator of the estate of the decedent or any of the
ne t of kín or íegatees fííes wíth the Commíssíoner a bond on orm 1132 con-
dítíoned upon the return as íncome, by any person receívíng any payment ín
satísfactíon of such obíígatíons, of the same proportíon of such payment as
wouíd be returnabíe as Income by the decedent íf he had ííved and receíved
such payment. The bond shaíí be sub|ect to the approvaí of the Commíssíoner,
shaíí be In an amount suffícíent ín hís |udgment to ínsure coííectíon of the ta
resuítíng from the fuífíííment of the condítíons stated ín the bond, and shaíí
be fííed at the tíme of fíííng the return for the decedent for the year of hís
death or at such íater tíme us may be specífíed by the Commíssíoner. The bond
on orm 1132 may be (1) e ecuted by a surety company hoídíng a certífícate
of authoríty from the Secretary of the Treasury as an acceptabíe surety on
ederaí bonds, or (2) secured by deposít of bonds or notes of the Uníted States,
or the Instaííment obíígatíons, ín such amounts as the Commíssíoner may deem
necessary to Insure coííectíon of the ta .
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79
3797, rt. 901-6.
(Thís Treasury decísíon ís prescríbed pursuant to the foííowíng
sectíons of íaw: Sectíons 44(d) and 62 of the Revenue ct of 1936
(49 Stat, 1667, 1673 26 U. S. C, Sup. I , 44(d), 62) sectíons
U(d) and 62 of the Revenue ct of 193 (52 Stat., 473, 4 0 26
U. S. C, Sup. I , 44(d), 62) and sectíons 44(d) and 62 of the
Internaí Revenue Code (53 Stat., Part 1).)
Guy T. eíveríno,
Commíssíoner of Internaí Revenue.
pproved May 9, 1939.
ohn W. anks,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster May 10, 1939, 3.34 p. m.)
SUPPL M NT . € ” COMPUT TION O N T INCOM .
S CTION 116. € ” CLUSIONS ROM GROSS INCOM .
ímcL 116-2: Compensatíon of State offícers and
empíoyees.
INT RN L R NU COD .
Ta abíííty of compensatíon receíved by ederaí offícers and em-
píoyees and offícers and empíoyees of States or poíítícaí subdívísíons
thereof. (See Mím. 4916, page 71.)
101, rtícíe 116-2: Compensatíon of State offícers and
empíoyees,
INT RN L R NU COD .
rtícíe 116-2 of Reguíatíons 101, as made appíícabíe to the Internaí
Revenue Code by Treasury Decísíon 4 5, amended to conform to the
Pubííc Saíary Ta ct of 1939. (See T. D. 4903, page 75.)
C PT R 3 . € ” MISC LL N OUS PRO ISIONS.
S CTION 3797. € ” D INITIONS.
rtícíe 901-5: Límíted partnershíp as cor- 1939-16-979
poratíon. T. D. 4 94
TITL 26 € ” INT RN L R NU . € ” C PT R I, P RTS 3. 9, ND 465.
Income ta . € ” mendíng artícíes 901-5 and 901-6 of Reguíatíons
101 and snch artícíes as made appíícabíe to the Internaí Revenue
Code by Treasury Decísíon 4 5 page 396, thís uííetín , artícíes
1001-5 and 10O1-6 of Reguíatíons 94, and artícíes 01-5 and 01-6
of Reguíatíons 6. aíí reíatíng to cíassífícatíon of íímíted partner-
shíps.
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3797, rt. 601-5.
0
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. C.
To Coííectors of Internaí Revenue and Others Concerned:
rtícíe 901-5 of Reguíatíons 101 (sectíon 9.901-5 of Títíe 26, Code
of ederaí Reguíatíons), and that artícíe as made appíícabíe to the
Internaí Revenue Code by Treasury Decísíon 4 5, approved ebru-
ary 11, 1939 (Part 465, Subpart , of such Títíe 26 page 396, thís
uííetín ), and artícíe 1001-5 of Reguíatíons 94 (sectíon 3.1001-5 of
such Títíe 26), and artícíe 01-5 of Reguíatíons 6 are each amended
to read as foííows:
Límíted partnershíps. € ” íímíted partnershíp ís cíassífíed for the purpose of
the ct as an ordínary partnershíp, or, on the other hand, as an assocíatíon
ta abíe as a corporatíon, dependíng upon íts character ín certaín materíaí re-
spects. If the organízatíon ís not ínterrupted by the death of a generaí partner
or by a change ín the ownershíp of hís partícípatíng ínterest, and íf the man-
agement of íts affaírs ís centraíízed ín one or more persons actíng ín a represent-
atíve capacíty, ít ís ta abíe as a corporatíon. or want of these essentíaí
characterístícs, a íímíted partnershíp ís to be consídered as an ordínary part-
nershíp notwíthstandíng other characterístícs conferred upon ít by íocaí íaw.
The Uníform Límíted Partnershíp ct has been adopted ín severaí States.
íímíted partnershíp organízed under the provísíons of that ct may be eíther
an assocíatíon or a partnershíp dependíng upon whether or not ín the partícuíar
case the essentíaí characterístícs of an assocíatíon e íst.
rtícíe 901-6 of Reguíatíons 101 (sectíon 9 901-6 of Títíe 26, Code
of ederaí Reguíatíons), and that artícíe as made appíícabíe to the
Internaí Revenue Code by Treasury Decísíon 4 5, approved ebru-
ary 11, 1939 (Part 465, Subpart , of such Títíe 26), and artícíe
1001-6 of Reguíatíons 94 (sectíon 3.1001-6 of such Títíe 26), and
artícíe 01-6 of Reguíatíons 6 are each amended to read as foííows:
Partnershíp assocíatíons. € ” partnershíp assocíatíon of the type authorízed
by the statutes of severaí States, such, for ínstance, ns those of the State of
Pennsyívanía (Purdon s Penna. Stat. nn. (Perm. d.), Títíe 59, ch. 3), havíng
by vírtue of the statutory provísíons under whích ít was organízed, the charac-
terístícs essentíaí to an assocíatíon wíthín the meaníng of the ct, ís ta abíe
as a corporatíon.
(Thís Treasury decísíon ís prescríbed pursuant to the foííowíng
sectíons of íaw: Sectíons 3797 and 62 of the Internaí Revenue Code
(53 Stat., Part 1) sectíons 901 and 62 of the Revenue ct of 193 (52
Stat., 5 3, 4 0 26 U. S. C, Sup. I , 1696, 62) sectíons 1001 and 62
of the Revenue ct of 1936 (49 Stat., 1756, 1673 26 U. S. C, Sup. I ,
1696,62) and sectíons 01 and 62 of the Revenue ct of 1934 (4 Stat.,
771, 700, 26 U. S. C, 1696, 62).)
Guy T. eíveríng,
Commíssíoner of Internaí Revenue.
pproved príí 7, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster príí 10, 1039, 12.45 p. m.)
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1 22(a), rt. 22(a)-í.
. R NU CT O 193 .
P RT II. € ” COMPUT TION O N T INCOM .
S CTION 22(a). € ” GROSS INCOM : G N R L
D INITION.
rtícíe 22 (a)-í: What íncíuded ín gross íncome. 1939-23-9 61
I. T. 32 3
R NU CT O 103 .
dvances to corn producers made under sectíon 02 of the grí-
cuíturaí d|ustment ct of 193 ( 52 Stat., 31), known as corn íoans,
shouíd be treated as íoans and not as proceeds from the saíe of the
corn.
dvíce ís requested whether advances obtaíned by corn producers
under the corn storage provísíons of the grícuíturaí d|ustment
ct of 193 shouíd be treated as íoans or as proceeds from the saíe
of the corn ín the year the íoan ís obtaíned.
Sectíon 302 of the grícuíturaí d|ustment ct of 193 (52 Stat.,
31) dírects the Commodíty Credít Corporatíon to make avaííabíe íoans
on corn duríng any marketíng year begínníng ín the caíendar year
ín whích the November crop estímate for corn ís ín e cess of a normaí
year s domestíc consumptíon and e port, or ín any year when on
November 15 the farm príce of corn ís beíow 75 per cent of the paríty
príce as defíned ín the ct. Sectíon 302(h) of that ct provídes that
No producer shaíí be personaííy ííabíe for any defícíency arísíng
from the saíe of the coííateraí securíng any íoan under thís sectíon
uníess such íoan was obtaíned through frauduíent representatíons by
theproducer.
When the íoans are obtaíned, the producer sígns a Corn pro-
ducer s note agreeíng, for vaíue receíved, to pay at a tíme certaín
to the order of the Commodíty Credít Corporatíon, payee, the amount
advanced wíth ínterest at 4 per cent per annum. In consíderatíon of
the íoan evídenced by the note the producer represents ín saíd íoan
agreement (1) that the píedged corn was produced by or for the pro-
ducer on certaín descríbed íand, (2) that the producer ís an eíígíbíe
producer as defíned, and (3) that the corn Is free of undíscíosed
ííens. The íoan agreement further provídes that any hoíder of the
note may decíare the same due and payabíe (1) when and so íong
as the farm príce of corn shaíí be above paríty, (2) upon díscovery
that the producer has made frauduíent mísrepresentatíon ín obtaín-
íng the íoan, ( ) upon díscovery that the coííateraí ís damaged, and
(4) upon the fíííng of a petítíon ín bankruptcy by the producer. Upon
maturíty of the note, the hoíder ís authorízed, to seíí the corn at pubííc,
or prívate saíe, and ín case the saíes príce (after deductíng e penses
ana aíí costs) ís ín e cess of the amount due on the note, the hoíder ís
bound to pay the e cess to the producer. owever, the producer ís
not personaííy ííabíe for any defícíency uníess he obtaíned the íoan
through frauduíent mísrepresentatíon.
It ís heíd that such advances receíved by the producers of corn under
the provísíons of the grícuíturaí d|ustment ct of 193 shouíd be
treated as íoans and not as proceeds from the saíe of corn. (See I. T.
2931, C. . I -2, 56 (1935).)
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22(a), rt. 22(a)- .
2
rtícíe 22(a)-1: What íncíuded ín gross íncome. 1939-24-9 69
I. T. 32 5
R NU CT O 193 .
Where producers of gum turpentíne and gum rosín (known as
navaí stores) deíívered theír products to a cooperatíve assocíatíon
under an agreement whereby absoíute títíe was to be transferred
to the assocíatíon on November 1, 193 , as to products prevíousíy
deíívered ín that year, advances made ín 193 by the assocíatíon to
the producers from funds procured by a íoan from the Commodíty
Credít Corporatíon to the assocíatíon, there beíng no ííabíííty on
the part of the producer to repay such advances, constítute partíaí
payments for such products by the assocíatíon to the producers
and shouíd be íncíuded ín gross íncome for the year 193 .
dvíce ís requested as to the proper treatment for ederaí íncome
ta purposes of payments made to producers of gum turpentíne and
gum rosín (known as navaí stores) by the M Cooperatíve ssocíatíon
wíth funds borrowed by ít from the Commodíty Credít Corporatíon
under a marketíng agreement.
The Commodíty Credít Corporatíon was authorízed by íaw to make
íoans ín 193 to the M Cooperatíve ssocíatíon (hereínafter referred
to as the assocíatíon) on gum turpentíne and gum rosín deíívered to
the assocíatíon by the producer under the terms of the marketíng
agreement whích was requíred to be entered ínto between the assocía-
tíon and the producer. In order to obtaín the íoan, the assocíatíon
was requíred to e ecute a promíssory note ín the amount of the íoan
payabíe to the Commodíty Credít Corporatíon, whích note was
secured by the gum turpentíne and gum rosín deíívered by the pro-
ducer to the assocíatíon.
The marketíng agreement between the producer and the assocíatíon
rovídes ín substance that on November 1, 193 , absoíute títíe shaíí
e conveyed to the assocíatíon of aíí gum turpentíne and gum rosín
revíousíy deíívered ín that year by the producer to, and then heíd
y, the assocíatíon under the terms of the agreement, and such con-
veyance shaíí constítute a saíe by the producer and a purchase by the
assocíatíon of such gum turpentíne and gum rosín. bsoíute títíe
to aíí gum rosín píedged subsequent to November 1, 193 , must be
conveyed to the assocíatíon, and such conveyance shaíí constítute a
saíe by the producer and a purchase by the assocíatíon of such gum
rosín. fter príí 1, 193 , and on or before September 30, 193 , the
assocíatíon shaíí make advances to the producer on the gum turpentíne
and gum rosín deíívered to the assocíatíon under the agreement on
the basís as set forth thereín, whích advances represent the amounts
íoaned by the Commodíty Credít Corporatíon to the assocíatíon on
such gum turpentíne and gum rosín. The advances are made wíthout
recourse or ríght on the part of the assocíatíon to recover any part of
such advances from the producer e cept for fraud or mísrepresenta-
tíon. t any tíme after une 1, 193 , and príor to November 1, 193 ,
the producer may wíthdraw aíí of the gum turpentíne and gum rosín
deíívered to the assocíatíon by payíng to the Commodíty Credít Cor-
poratíon, for the account of the assocíatíon, the amounts advanced
thereon together wíth ínterest and certaín other charges. The gum
turpentíne and gum rosín deíívered under the agreement are com-
míngíed wíth the gum turpentíne and gum rosín of other producers
and soíd by the assocíatíon, commencíng on November 1, 193 , for
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3
22(a). rt. 22(a)-2.
the best príces obtaínabíe. The proceeds from the saíe of the gum
turpentíne and gum rosín are to be appííed by the assocíatíon to (1)
the payment of storage, handííng, and/or seíííng e penses approved
by díe Commodíty Credít Corporatíon, (2) the payment of the íoan
obtaíned by the assocíatíon from the Commodíty Credít Corporatíon
and secured by the gum turpentíne and gum rosín, and (3) the pay-
ment of the admínístratíve e penses of the assocíatíon íncurred ín
connectíon wíth the handííng and marketíng of the gum turpentíne
and gum rosín. Upon saíe of the entíre pooí of gum turpentíne and
gum rosín, the net amount remaíníng after payment of the afore-
mentíoned ítems must be dístríbuted Dy the assocíatíon to the pro-
ducers proportíonateíy.
Sínce there ís no ííabíííty on the part of the producer ín any event
to pay the íoan made by the Commodíty Credít Corporatíon to the
assocíatíon, or to repay ín any event the advances made to hím by the
assocíatíon under the terms of the marketíng agreement, the reíatíon-
shíp of debtor and credítor does not e íst between the producer and
the assocíatíon. Nor does such reíatíonshíp e íst between the pro-
ducer and the Commodíty Credít Corporatíon. It ís heíd, therefore,
that the advances made by the assocíatíon to the producer on the
gum turpentíne and gum rosín, títíe to whích passed to the assocía-
tíon on or after November 1, 193 , do not constítute íoans but, ín
fact, constítute partíaí payments by the assocíatíon to the producers
for the gum turpentíne and gum rosín, and as such shouíd be íncíuded
ín the gross íncome of the producer for the year 193 . (See I. T.
2107, C. . III-2, 74 (1924).)
bttcíe 22(a)-2: Compensatíon for personaí servíces. 1939-17-9 01
I. T. 3272
R NU CT O 193 .
I. T. 2219 (C. . I -2, 41 (1925)), hoídíng that money aííowances
In ííeu of subsístence and quarters paíd by the Uníted States Gov-
ernment to eníísted men and noncommíssíoned offícers ín the Uníted
States rmy are not sub|ect to ederaí íncome ta , ís not appíícabíe
to those retíred from the servíce. The entíre amount, íncíudíng
aííowances ín ííeu of ratíons, cíothíng, quarters, etc., receíved by a
retíred eníísted man ís sub|ect to ederaí íncome ta .
dvíce ís requested as to the ta abíííty of cash aííowances ín ííeu
of subsístence, neat, ííght, etc., receíved by ín addítíon to hís reguíar
pay as a retíred eníísted man of the Uníted States rmy.
receíved compensatíon of 157.50 per month for hís servíces whííe
on actíve duty ín the Uníted States rmy. Upon retírement hís pay
was reduced to 75 per cent of that amount, or 11 .13. In addítíon he
receíved 15.75 monthíy as an aííowance ín ííeu of subsístence, heat,
ííght, etc., makíng the amount of hís monthíy check 133. . It ís
contended that under I. T. 2219 (C. . I -2, 41 (1925)) the aííow-
ance ís not ta abíe.
I. T. 2219, supra, reads as foííows:
oney aííowances ín ííeu of subsístence and quarters made by the Uníted States
Government to eníísted men and noncommíssíoned offícers ín the Uníted States
rmy are not Income sub|ect to ederaí íncome ta . €
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22(a), rt. 22(a)-12.
4
It wííí be noted that the foregoíng appííes to noncommíssíoned of-
fícers and eníísted men ín the Uníted States rmy and ís not, there-
fore, necessarííy appíícabíe to those retíred from the servíce.
The ct of March 2,1907 (34 Stat., 1217), entítíed n ct províd-
íng for the retírement of noncommíssíoned offícers, petty offícers, and
eníísted men of the rmy. Navy, and Maríne Corps of the Uníted
States, reads ín part as foííows:
e ít enacted That when an eníísted man shaíí have served 30
years eíther In the rmy, Navy, or Maríne Corps, or In aíí, he shaíí, upon
makíng appíícatíon to the Presídent, be píaced upon the retíred ííst, wíth
75 per centum of the pay and aííowances he may then be ín receípt of, and that
saíd aííowances shaíí be as foííows: Níne doííars and fífty cents per month ín
ííeu of ratíon and cíothíng and sí doííars and twenty-fíve cents per month
ín ííeu of quarters, fueí, and ííght: Províded, That ín computíng the necessary
30 years tíme aíí servíce ín the rmy, Navy, and Maríne Corps shaíí be
credíted.
The statute does not províde that the retíred noncommíssíoned
offícer or eníísted man shaíí receíve as hís retíred pay a certaín amount
of cash and aííowances ín addítíon thereto. The amount he receíves
ís a certaín sum, thís sum beíng 75 per cent of the pay píus aííowances
he may be ín receípt of at the tíme of retírement. Such percentage
of hís pay and the specífíc cash aííowances, therefore, mereíy constítute
the measure of the retírement pay.
Retírement pay ín generaí has íong been regarded as addítíonaí com-
pensatíon for servíces prevíousíy rendered and, as such, ís ta abíe
íncome to the recípíent. Consequentíy, ít ís heíd that the entíre amount
receíved bv ís sub|ect to ederaí íncome ta . (See aíso G. C. M.
41, C. . -2,23 (192G).)
rtícíe 22(a)-2: Compensatíon for personaí servíces.
R NU CT O 193 .
Ta abíííty of compensatíon receíved by ederaí offícers and em-
píoyees and offícers and empíoyees of States or poíítícaí subdívísíons
thereof. (See Mím. 4916, page 71.)
rtícíe 22(a)-12: nnuítíes and ínsurance 1939-26-9 9
poíícíes. I. T. 3292
R NU CT O 103 .
shouíd Incíude ín hís gross íncome the entíre amount of the
annuíty receíved by hím as a retíred natíonaí bank e amíner sínce
he díd not make any contríbutíons to the retírement fund from
whích the annuíty ís paíd.
dvíce ís requested as to the ta abíííty of a retírement annuíty
receíved bv from the retírement fund estabííshed for retíred na-
tíonaí bank e amíners and admínístered by trustees ín the offíce of
the Comptroííer of the Currency. , who was retíred on December
31, 1937, díd not make any contríbutíons to the retírement fund ín-
asmuch as he was over 65 years of age when the system provídíng for
the retírement of the empíoyees of the offíce of the Comptroííer 01 the
Currency was píaced ín effect on une 1, 1936.
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5
1122(b).
Sectíon 5240 of the Revísed Statutes, as amended (U. S. C, Supp.
I , Títíe 12, sectíon 4 1), reíatíng to the appoíntment of natíonaí
bank e amíners, reads ín part as foííows:
€ € € The e amíners and assístant e amíners makíng the e amínatíons
of natíonaí bankíng assocíatíons and affíííates thereof hereín províded for and
the chíef e amíners, revíewíng e amíners and other persons whose servíces
may be requíred ín connectíon wíth such e amínatíons or the reports thereof,
shaíí be empíoyed by the Comptroííer of the Currency wíth the approvaí of the
Secretary of the Treasury the empíoyment and compensatíon of e amíners,
chíef e amíners, revíewíng e amíners, assístant e amíners, and of the other
empíoyees of the offíce of the Comptroííer of the Currency whose compensatíon,
íncíudíng retírement annuítíes to be fí ed by the Comptroííer of the Currency,
ís and shaíí be paíd from assessments on banks or affíííates thereof shaíí be
wíthout regard to the provísíons of other íaws appíícabíe to offícers or empíoyees
of the Uníted States. € €
Under the foregoíng provísíons of íaw, the e penses of the e amína-
tíon of the varíous banks are to be assessed by the Comptroííer of
the Currency upon banks e amíned ín proportíon to assets or re-
sources heíd by the banks on the dates of e amínatíon of the varíous
banks. The funds deríved from such assessments are deposíted by
tk Comptroííer of the Currency ín accordance wíth the provísíons of
tíe aw and are not Government funds or appropríated moneys. The
retírement fund from whích the annuíty ís paíd ís deríved from such
assessments and specíaí funds heíd ín the Comptroííer s offíce.
It ís heíd that ínasmuch as made no contríbutíons whatever to
the retírement fund, wíth the resuít that he paíd no consíderatíon
for hís annuíty, he shouíd íncíude ín hís gross íncome the totaí
amount of the annuíty receíved by hím ín each year as a retíred
natíonaí bank e amíner.
S CTION 22(b). € ” GROSS INCOM : CLUSIONS
ROM GROSS INCOM .
1939-3-9672
T. D. 4 0
INCOM T
Reguíatíons wíth respect to the ta atíon of rench cítízens and
rench corporatíons as affected by the conventíon and protocoí
on doubíe ta atíon between the Uníted States and the Repubííc
of rance, procíaímed by the Presídent of the Uníted States
príí 16, 1935, effectíve anuary 1, 1936 C. . I -2, 535 .
Treasubt Department,
Offíce or Commíssíoner of Internaí Revenue,
Washíngton, D. 0.
To Coííectors of Internaí Revenue and Others Concerned:
P RT I.
Paragraph . The conventíon and protocoí, procíaímed by the
Presídent of the Uníted States on príí 16, 1935, provídes ín part
as foííows:
rtící|c I.
nterpríses of one of the contractíng States are not sub|ect to ta atíon by
the other contractíng State ín respect of theír índustríaí and commercíaí profíts
e cept In respect of such profíts aííocabíe to theír permanent estabííshments
to the íatter State.
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522(b).
6
No account shaíí be taken, In determíníng the ta ín one of the contractíng
States, of the purchase of merchandíse effected thereín by an enterpríse of the
other State for the purpose of suppíyíng estabííshments maíntaíned by such
enterpríse ín the íatter State.
rtícíe II.
merícan enterpríses havíng permanent estabííshments ín rance are requíred
to submít to the rench físcaí admínístratíon the same decíaratíons and the
same |ustífícatíons, wíth respect to such estabííshments, as rench enterpríses.
The rench físcaí admínístratíon has the ríght, wíthín the provísíons of Its
natíonaí íegísíatíon and sub|ect to the measures of appeaí províded In such
íegísíatíon, to make such correctíons ín the decíaratíon of profíts reaíízed In
rance as may be necessary to show the e act amount of such profíts.
The tame príncípíe appííes mutatís mutandís to rench enterpríses havíng
permanent estabííshments ín the Uníted States.
btícíe III.
Income whích an enterpríse of one of the contractíng States deríves from the
operatíon of aírcraft regístered ín such State and engaged ín transportatíon
between the two States ís ta abíe oníy ín the former State.
btícíe I .
When an merícan enterpríse, by reason of íts partícípatíon In the manage-
ment or capítaí of a rench enterpríse, makes or ímposes on the íatter. In theír
commercíaí or fínancíaí reíatíons, condítíons dífferent from those whích wouíd
be made wíth a thírd enterpríse, any profíts whích shouíd normaííy have ap-
peared ín the baíance sheet of the rench enterpríse, but whích have been, In
thís manner, díverted to the merícan enterpríse, are, sub|ect to the measures
of appeaí appíícabíe ín the case of the ta on Industríaí and commercíaí profíts,
íncorporated In the ta abíe profíts of the rench enterpríse.
The same príncípíe appííes mutatís mutandís, ín the event that profíts are
díverted from an merícan enterpríse to a rench enterpríse.
€ € €
g btícíe II.
Compensatíon paíd by one of the contractíng States to Its cítízens for íabor
or personaí servíces performed ín the other State ís e empt from ta In the
íatter State.
btícíe III.
War pensíons paíd by one of the contractíng States to persons resídíng In the
terrítory of the other State are e empt from ta ín the íatter State.
btícíe I .
The foííowíng cíasses of íncome paíd ín one of the contractíng States to a
corporatíon of the other State, or to a cítízen of the íatter State resídíng there,
are e empt from ta ín the former State:
(a) amounts paíd as consíderatíon for the ríght to use patents, secret processes
and formuías, trade marks and other anaíogous ríghts
(6) Income receíved as copyríght royaítíes
(c) prívate pensíons and íífe annuítíes.
btícíe .
€ € € €
The agreement shaíí become effectíve on the 1st day of anuary foííowíng
the e change of ratífícatíons and shaíí remaín effectíve for a períod of 5 years,
and thereafter untíí 12 months from the date on whích eíther contractíng party
gíves notíce of íts termínatíon.
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7
22(b).
PROTOCOL.
t the moment of sígníng the conventíon on doubíe ta atíon between the
Uníted States of meríca and the Repubííc of rance, the undersígned píení-
potentíaríes, duíy authorízed by theír respectíve Governments, have agreed, aa
foííows:
(1) The ta es referred to ín thís agreement are:
(a) íor the Uníted States:
the ederaí Income ta € ” but ít ís understood that rtícíe I does not e empt
from ta (1) compensatíon for íabor or personaí servíces performed In the
Uníted States (2) Income deríved from reaí property íocated In the Uníted
States, or from any ínterest In such property, íncíudíng rentaís and royaítíes
therefrom, and gaíns from the saíe or the dísposítíon thereof (3) dívídends
(1) ínterest.
(1) for rance:
€ ” In rtícíes I, II, III and I , the ta on índustríaí and commercíaí profíts
(ímpot sur íes benefíces índustríeís et commercíau )
€ ” In rtícíes III, and I, the ta on Income from securítíes (ímpot sur íes
revenus des vaíeurs mobíííeres)
€ ” ín rtícíes II, III and I , the ta on wages and saíaríes, pensíons and
íífe annuítíes (ímpot sur íes traítements et saíaríes, pensíons et rentes víageres),
ud other schedu ar ta es (ímpots ceduíaíres) appropríate to the type of íncome
specífíed ín saíd artícíes
(2) The provísíons of thís agreement shaíí not be construed to affect In any
manner any e emptíon, deductíon, credít or other aííowance accorded by the íaws
of one of the contractíng States ín the determínatíon of the ta Imposed by
men State.
(3) s used ín thís agreement:
( ) The term permanent estabííshment íncíudes branches, mínes and oíí
weíís, factoríes, workshops, warehouses, offíces, agencíes, and other fí ed píaces
of busíness, but does not íncíude a subsídíary corporatíon.
When an enterpríse of one of the States carríes on busíness ín the other
State through an agent estabííshed there who ís authorízed to contract for Its
account, It ís consídered as havíng a permanent estabííshment ín the íatter
State.
ut the fact that an enterpríse of one of the contractíng States has busíness
deaííngs ín the other State through a bona fíde commíssíon agent or broker
shaíí not be heíd to mean that such enterpríse has a permanent estabííshment ín
the íatter State.
(6) The term enterpríse íncíudes every form of undertakíng whether car-
ríed on by an índívíduaí, partnershíp (socíete en nom coííectíf), corporatíon,
(aocíete anonyme), or any other entíty.
(c) The term enterpríse of one of the contractíng States means, as the case
may be, merícan enterpríse or rench enterpríse.
íd) The term merícan enterpríse means an enterpríse carríed on ín the
Uníted States by a cítízen of the Uníted States or by an merícan corporatíon
or other entíty the term merícan corporatíon or other entíty means a
partnershíp, corporatíon or other entíty created or organízed ín the Uníted
States or under the íaw of the Uníted States or of any State or Terrítory of the
tníted States.
(e) The term rench enterpríse ís defíned ín the same manner, mutatís
mutandís, as the term merícan enterpríse.
(f) The merícan corporatíons mentíoned ín rtícíes and I are those
whích, owíng to theír form of organízatíon, are sub|ect to artícíe 3 of the decree
of December 6, 1 72. The present agreement does not modífy the regíme of
abonnement for securítíes.
(0) The term Uníted States, when used ín a geographícaí sense, íncíudes
oníy the States and the Terrítoríes of íaska and awaíí, and the Dístríct of
Coíumbía.
( ) The term rance, when used ín a geographícaí sense, índícates the
country of rance, e cíusíve of ígería and the Coíoníes.
Par. . The procíamatíon of the conventíon by the Presídent of
the Uníted States on príí 16, 1935, reads ín part as foííows:
nd whereas, the saíd conventíon and protocoí have been ratífíed on both
Pats, and the ratífícatíons of the two Governments were e changed at París
on the 9th day of príí, 1935
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22(b).

nd whereas, ít Is stípuíated ín rtícíe of the saíd conventíon that the
conventíon shaíí become effectíve on the 1st day of anuary foííowíng the
e change of ratífícatíons, that ís to say on the 1st day of anuary, 1936
Now, therefore, be ít known that I, rankíín D. Rooseveít, Presídent of
the Uníted States of meríca, have caused the saíd conventíon and the saíd
protocoí to be made pubííc, to the end that the same and every artícíe and
cíause thereof may be observed and fuífíííed wíth good faíth by the Uníted
States of meríca and the cítízens thereof on and from the 1st day of anuary .
1030.
In testímony whereof, I have hereunto set my hand and caused the Seaí of
the Uníted States of meríca to be affí ed.
Done at the cíty of Washíngton thís 16th day of príí ín the year of our
Lord one thousand níne hundred and thírty-fíve, and of the Inde-
seaí pendence of the Uníted States of meríca the one hundred and
fífty-nínth.
bankíín D. Rooseveít.
y the Presídent:
Cordeíí. uíí,
Secretary of State.
Par. C. Sectíon 22(b)7, evenue ct of 193 , provídes ín part as
foííows:
Sec. 22. Gross Income.
€ € . € €
(b) cíusíons from gross íncome. € ” The foííowíng ítems shaíí not be Incíuded
In gross íncome and shaíí be e empt from ta atíon under thís títíe:
€ € € € € € €
(7) Income e empt under treaty. € ” Income of any kínd, to the e tent requíred
by any treaty obíígatíon of the Uníted States:
Pursuant to the provísíons of sectíon 62 of the Revenue ct of
193 , the foííowíng reguíatíons are hereby prescríbed to carry ínto
effect the quoted provísíons of the conventíon and protocoí, or treaty,
between the Uníted States of meríca and the Repubííc of rance,
hereínafter referred to as the conventíon, for ta abíe years begínníng
after December 31, 1937:
P RT II.
ffect of the Conventíon Upon the Determínatíon of Uníted States Ta abíe
Income of rench Cítízens and rench Corporatíons.
rtícíe 1. Generaí. € ” The prímary purposes of the conventíon are to reguíate
the method of ta atíon of corporatíons of eíther of the contractíng States car-
ryíng on índustríaí or commercíaí actívítíes through a permanent estabííshment
or a subsídíary corporatíon ín the other State and to avoíd doubíe ta atíon upon
certaín specíaí cíasses of íncome.
The specífíc cíasses of íncome reííeved from Uníted States íncome ta are:
(a) Industríaí and commercíaí profíts of a rench enterpríse havíng no per-
manent estabííshment ín the Uníted States.
(6) Income deríved by a rench enterpríse from the operatíon of aírcraft
regístered ín rance and engaged ín transportatíon between the Uníted States
and rance.
(c) Compensatíon paíd by rance to íts cítízens for íabor or personaí servíces
performed ín the Uníted States.
(d) War pensíons paíd by rance to persons resídíng ín the Uníted States.
(e) Income paíd to a rench corporatíon, or to a cítízen of rance resídíng
ín rance € ”
(1) as consíderatíon for the ríght to use patents, secret processes and for-
muías, trade marks and other anaíogous ríghts
(2) as copyríght royaítíes
(3) as prívate pensíons and íífe annuítíes.
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9
22(b).
cept as to those Items of íncome e pressíy e empted by the conventíon,
the ta ííabíííty of rench cítízens, not resídents of the Uníted States, and
rench corporatíons, ís determíned In accordance wíth the provísíons of the
revenue íaws of the Uníted States and the reguíatíons thereunder appíícabíe
generaííy to nonresídent aííen índívíduaís and to foreígn corporatíons.
The conventíon does not affect the ííabíííty to ta of rench cítízens resídent
In the Uníted States uníess and to the e tent such cítízens are entítíed to the
benefíts of rtícíe II or III of the conventíon. See artícíes 5 and 6 of these
reguíatíons. The ta ííabíííty of a Uníted States cítízen or Uníted States resí-
dent, a member of a rench partnershíp carryíng on a rench enterpríse, ís not
affected by rtícíe I of the conventíon. Such cítízen or resídent ís sub|ect to
Uníted States íncome ta upon hís dístríbutíve share of íts net íncome even
though the other members of such partnershíp are not sub|ect to ta upon theír
share of the partnershíp s Industríaí and commercíaí profíts from sources wíthín
the Uníted States.
The conventíon has no reference to the rates of ta atíon ímposed by the
respectíve countríes and concerns oníy the determínatíon of íncome arísíng In
raw of the contractíng States to cítízens or corporatíons of the other contractíng
State and sub|ect to ta atíon ín the former State.
These reguíatíons are íímíted to a consíderatíon of the factors Invoíved ín the
appíícatíon of: (a) the provísíons of the conventíon aíone and (b) the proví-
síons of the conventíon as e tended by the Revenue ct of 193 . These regu-
íatíons are not concerned wíth rtícíe or I of the conventíon as such
artícíes affect oníy the appíícatíon of certaín rench ta íaws and decrees.
n. 2. Defínítíon . € ” ny word or term used ín these reguíatíons whích ía
defíned hí the conventíon shaíí be gíven the defínítíon assígned to such word or
term to such conventíon. ny word or term used ín these reguíatíons whích
Is not defíned ín the conventíon but ís defíned ín the Revenue ct of 193 shaíí
be gíven the defínítíon contaíned ín the Revenue ct.
The term permanent estabííshment íncíudes branches, mínes and oíí weíís,
factoríes, work shops, warehouses, offíces, agencíes and other fí ed píaces of
busíness. rench enterpríse, as defíned ín the conventíon, carryíng on busí-
ness to the Uníted States through an agent estabííshed there who ís authorízed
to contract tor íts account, ís consídered to have a permanent estabííshment
In the Uníted States. owever, the carryíng on of busíness deaííngs ín the
Uníted States by a rench enterpríse through a bona fíde commíssíon agent
or broker does not constítute a permanent estabííshment ín the Uníted States.
rench corporatíon doíng busíness ín the Uníted States through a domestíc
subsídíary corporatíon has not, mereíy by reason of such fact, a permanent
estabííshment ín the Uníted States.
The term enterpríse means any commercíaí or índustríaí undertakíng
whether conducted by an índívíduaí, partnershíp, corporatíon or any other
entíty. It íncíudes such actívítíes as manufacturíng, merchandísíng, míníng,
bankíng and ínsurance. It does not íncíude the operatíon of, or the tradíng ín,
reaí property íocated ín the Uníted States. It does not íncíude the rendítíon
of personaí servíces. ence, a rench cítízen renderíng personaí servíces
wíthín the Uníted States ís not, mereíy by reason of such servíce, engnged ín
an enterpríse wíthín the meaníng of the conventíon and hís ííabíííty to ederaí
Income ta ís unaffected by rtícíe I of the conventíon.
The term rench enterpríse means an enterpríse carríed on ín rance by a
cítízen cf rance or by a rench corporatíon or other entíty. The term rench
corporatíon or other entíty of the conventíon means a partnershíp, corpora-
tíon or other entíty created or organízed ín rance or under the íaw of
rance. If, for e ampíe, a rench cítízen or rench corporatíon does not
carry on an enterpríse In rance It ís not a rench enterpríse wíthín the mean-
íng of the conventíon even though ít carríes on an enterpríse ín some other
foreígn country and hence such enterpríse ís not reííeved by the conventíon
from Uníted States íncome ta upon íts índustríaí and commercíaí profíts from
sources wíthín the Uníted States even though ít has no permanent estabííshment
thereín.
The term índustríaí and commercíaí profíts means the profíts arísíng from
the Industríaí, mercantííe, or manufacturíng or ííke undertakíngs of a rench
enterpríse, as denned ín thís artícíe. or the purpose of the e emptíon under
rtícíe I of the conventíon such term does not íncíude gaíns from the saíe
or e change wíthín the Uníted States of capítaí assets as defíned ín sectíon
172176 € ” 39 € ” pt 1
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522(b).
90
117 of the Revenue ct of 193 uníess ít can be shown by cíear and convíncíng
evídence that such saíe or e change was íncídent, and had a necessary reíatíon,
to the commercíaí nnd índustríaí actívítíes of the rench enterpríse. or
treatment of such gaíns under the Revenue ct of 193 , see artícíes (6) and
9(b). Such term does not íncíude dívídends, ínterest, compensatíon for íabor
or personaí servíces, or íncome deríved from reaí property or from any ínterest
ín such property íncíudíng rentaís and royaítíes therefrom and gaíns from
the saíe or dísposítíon thereof.
rt. 3. Scope of conventíon wíth respect to determínatíon of ta abíe íncome
of rench cítízen or a rench corporatíon carryíng on a rench enterpríse ín
the Uníted States. € ” (a) Generaí. € ” rtícíe I of the conventíon adopts the
príncípíe that an enterpríse of one of the contractíng States shaíí not be
ta abíe ín the other contractíng State ín respect of íts índustríaí and com-
mercíaí profíts uníess It has a permanent estabííshment ín the íatter State.
ence, n rench enterpríse Is sub|ect to ta upon íts índustríaí and commer-
cíaí profíts from sources wíthín the Dníted States oníy íf ít has a permanent
estabííshment wíthín the Uníted States. rom the standpoínt of ederaí
íncome ta atíon the artícíe has appíícatíon oníy to a rench enterpríse and
to the índustríaí and the commercíaí íncome thereof from sources wíthín the
Uníted States. It has no appíícatíon to compensatíon for íabor or personaí
servíces performed ín the Uníted States, nor to íncome deríved from reaí prop-
erty íocated ín the Uníted States, or from any ínterest ín such property, íncíud-
íng rentaís and royaítíes therefrom, and gaíns from the saíe or the dísposítíon
thereof, nor to dívídends or ínterest. Such íatter ítems of íncome are, e cept as
otherwíse províded ín the conventíon and ín these reguíatíons, sub|ect to ta as
íncome of rench cítízens or rench corporatíons, ín the same manner and sub-
|ect to the same provísíons as are appíícabíe to other nonresídent aííens and
foreígn corporatíons. s to what ís a rench enterpríse, a permanent estab-
ííshment, and índustríaí and commercíaí profíts, see artícíe 2.
(6) No Uníted States permanent estabííshment. € ” rench cítízen or a rench
corporatíon carryíng on a rench enterpríse but havíng no permanent estab-
ííshment ín the Uníted States ís not sub|ect to Uníted States Income ta upon
Its índustríaí and commercíaí profíts from sources wíthín the Uníted States.
s to what constítutes a rench enterpríse see artícíe 2. s to what con-
stítutes índustríaí and commercíaí profíts see artícíe 2. or e ampíe, íf
such rench corporatíon seíís stock ín trade, such as wíne or cosmetícs, through
a bona fíde commíssíon agent or broker ín the Uníted States, the resuítíng
profít ís, under the terms of the conventíon, reííeved from Uníted States íncome
ta . Such rench corporatíon, however, remaíns sub|ect to ta upon aíí other
ítems of íncome from sources wíthín the Uníted States and not e pressíy e -
empted from such ta under the conventíon. owever, under the provísíons of
rtícíe I of the conventíon the foííowíng ítems, otherwíse ta abíe, paíd to
cítízens of rance resídíng ín rance, or to rench corporatíons, are e pressíy
e empt from the ta :
(1) mounts paíd as consíderatíon for the ríght to use patents, secret proc-
esses, and formuías, trade marks and other anaíogous ríghts
(2) Income receíved as copyríght royaítíes
(3) Prívate pensíons and íífe annuítíes.
The e emptíon as to such ítems does not e tend to rench cítízens resídíng
eísewhere than ín rance nor to índívíduaís resídíng ín rance who are not
cítízens of rance.
(c) Uníted States permanent estabííshment. € ” rench cítízen or a rench
corporatíon carryíng on a rench enterpríse whích has a permanent estabíísh-
ment ín the Uníted States ís sub|ect to ta upon hís or íts entíre net íncome
(íncíudíng índustríaí and commercíaí profíts) from sources wíthín the Uníted
States, sub|ect to the e emptíons e pressíy províded for ín rtícíe I of the
conventíon. See artícíe 7. In the determínatíon of the íncome of such rench
cítízen or corporatíon from sources wíthín the Uníted States aíí índustríaí and
commercíaí profíts from sources wíthín the Uníted States shaíí be deemed to
be aííocabíe to the permanent estabííshment wíthín the Uníted States. The net
íncome from sources wíthín the Uníted States of such enterpríse wííí be deter-
míned ín accordance wíth the provísíons of sectíon 119, Revenue ct of 193 . In
determíníng such íncome no account shaíí be taken of the purchase of goods,
wares, or merchandíse wíthín the Uníted States for the purpose of suppíyíng
estabííshments of the enterpríse maíntaíned by such cítízen or corporatíon ín
rance.
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91
522(b).
rench cítízen or corporatíon carryíng on a rench enterpríse havíng
busíness deaííngs ín the Uníted States through a bona fíde commíssíon agent
or broker thereín has not, mereíy by reason of such transactíons, a permanent
estabííshment ín the Uníted States and hence ís reííeved by the conventíon
from Uníted States íncome ta upon hís índustríaí and commercíaí profíts arís-
íng from such transactíons. owever, a rench cítízen or rench corporatíon
not carryíng on a rench enterpríse, havíng busíness deaííngs ín the Uníted
States through a bona fíde commíssíon agent or broker, ís not by the conventíon
reííeved from Uníted States Income ta on the resuítíng profít. Such rench
cítízen or rench corporatíon ís sub|ect to ta upon the íncome resuítíng from
such transactíons ín the same manner and sub|ect to the same provísíons and
e ceptíons, under the Revenue ct of 193 , as are appíícabíe to other non-
resídent aííens and foreígn corporatíons. See artícíes (a) and 9. or defínítíon
of the terms rench enterpríse, permanent estabííshment, and commercíaí
and índustríaí profíts, see artícíe 2.
írr. 4. Controí of a domestíc enterpríse by a rench enterpríse. € ” rtícíe I
of the conventíon provídes that íf a rench enterpríse by reason of íts controí
of a domestíc busíness ímposes condítíons dífferent from those whích wouíd re-
mít from normaí bargaíníng between índependent enterpríses, the accounts
between the enterpríses wííí be ad|usted so as to ascertaín the true net íncome
of the domestíc enterpríse. The purpose ís to píace the controííed domestíc
enterpríse on a ta paríty wíth an uncontroííed domestíc enterpríse
b| determíníng, accordíng to the standard of an uncontroííed enterpríse,
the true net íncome from the property and busíness of the controííed
enterpríse. The conventíon contempíates that íf the accountíng records do not
truíy refíect the net íncome from the property and busíness of such domestíc
enterpríse the Commíssíoner shaíí íntervene and, by makíng such dístríbutíons,
apportíonments, or aííocatíons as he may deem necessary of gross íncome or
deductíons or of any ítem or eíement affectíng net íncome as between such
domestíc enterpríse and the rench enterpríse by whích ít ís controííed or
dírected, determíne the true net Income of the domestíc enterpríse.
rt. 5. Compensatíon paíd by the Repubííc of rance to íts cítízens for serv-
íce rendered ín the Uníted States. € ” Under rtícíe II of the conventíon,
rench cítízens are reííeved from Uníted States íncome ta upon wages, fees,
saíary, remuneratíons or other amounts paíd by the Repubííc of rance to íts
cítízens as compensatíon for Inbor or personaí servíces performed ín the Uníted
States. Sucb e emptíon ís effectíve on and after anuary 1, 1930. The character
of the servíces has no bearíng upon the e emptíon from the ta and hence
the test set forth ín sectíon 116(h)í( ), Revenue ct of 193 , has no appííca-
tíon ín so far as the year 193 and subsequent years are concerned.
rt. 6. War pensíons. € ” Under rtícíe III of the conventíon, war pensíons
paíd by the Repubííc of rance to persons resídíng ín the Uníted States are
e empt from Uníted States íncome ta . The term war pensíons, for the
purposes of these reguíatíons, Incíudes pensíons receíved under the provísíons
of the rench Mííítary Pensíons ct of March 1, 1919, or for the servíces of
the benefícíary or another ín the mííítary or navaí forces of the Repubííc of
rance ín tíme of war. It ís not necessary that the recípíent of such pensíon
be a cítízen of rance. Such pensíon ín the bands of a Uníted States cítízen
recípíent, íf resídíng ín the Uníted States, ís e empt from ta .
bt. 7. Patents, formuías and copyríght royaítíes, pensíons and annuítíes. € ”
The foííowíng ítems of íncome paíd to a corporatíon organízed under the íaws
of rance or to a cítízen of rance resídíng In rance are e empt from ederaí
íncome ta under the provísíons of rtícíe I of the conventíon:
(0) mounts paíd as consíderatíon for the ríght to use patents, secret
processes and formuías, trade marks and other anaíogous ríghts
(1) Income receíved as copyríght royaítíes
(c) Prívate pensíons and íífe annuítíes.
Such ítems are, therefore, not sub|ect to the wíthhoídíng provísíons of the
Revenue ct of 193 . To avoíd wíthhoídíng of the ta at the source the rench
cítízen or corporatíon, as the case may be, shouíd notífy by íetter the payor
thereof that such íncome ís e empt from ta atíon under the provísíons of the
conventíon. Such íetter from a cítízen of rance shaíí contaín hís address and
a statement that he ís a cítízen of rance resídíng In rance. The íetter from
such corporatíon shaíí contaín the address of íts offíce or píace of busíness and
a statement that ít ís a corporatíon organízed under the íaws of the Repubííc
of rance, and shaíí be sígned by an offícer of the corporatíon, gívíng hís
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22(b).
92
offícíaí títíe. The íetter of notífícatíon, or a copy thereof, shouíd be Immedíateíy
forwarded by the recípíent to the Commíssíoner of Internaí Revenue, Sortíng
Sectíon, Washíngton, D. O.
P RT I.
Ta Líabíííty of rench Cítízens and bench Cobpobatíons Undeb the
Revenue ct of 193 , as Modífíed by the Conventíon.
rt. . Ta atíon of a rench cítízen (not a resídent of the Uníted State))
under the Revenue ct of 193 , as modífíed by the conventíon. € ” Generaí. € ”
rench cítízen, not a resídent of the Uníted States, ís sub|ect to the provísíons
of the Revenue ct of 193 appíícabíe to nonresídent aííen índívíduaís generaííy,
but such cítízen ís entítíed to the e emptíons províded ín the conventíon to whích
other nonresídent aííens are not entítíed. Sectíon 211 of the Revenue ct of 193
cíassífíes nonresídent aííen índívíduaís Into three cíasses: (1) nonresídent
aííen índívíduaís not engaged ín trade or busíness wíthín the Uníted States
and not havíng an offíce or píace of busíness thereín at any tíme duríng the
ta abíe year, and derívíng ín the ta abíe year not more than 21,600 gross
amount of fí ed or determínabíe annuaí or períodícaí íncome from sources wíthín
the Uníted States (2) nonresídent aííen índívíduaís not engaged In trade or
busíness wíthín the Uníted States and not havíng an offíce or píace of busíness
thereín at any tíme duríng the ta abíe year and derívíng ín the ta abíe year
more than 21,600 gross amount of fí ed or determínabíe annuaí or períodícaí
íncome from sources wíthín the Uníted States and (3) nonresídent aííen
índívíduaís who at any tíme duríng the ta abíe year are engaged In trade or
busíness ín the Uníted States or have an offíce or píace of busíness thereín.
Whether a nonresídent aííen has an offíce or píace of busíness wíthín the
Uníted States depends upon the facts of the partícuíar case. The term offíce
or píace of busíness, however, Impííes a píace for the reguíar transactíon of
busíness and does not íncíude a píace where casuaí or íncídentaí transactíons
míght be, or are, effected.
Whííe rtícíe I of the conventíon (ín so far as concerns índívíduaís) appííes
oníy to rench cítízens carryíng on a rench enterpríse and has no appíícatíon
to those not carryíng on such enterpríse, sectíon 211 makes no dístínctíon between
the two cíasses, and appííes aííke to both groups.
Thís artícíe treats of the ta atíon of rench cítízens, not resídent ín the
Uníted States, under sectíon 211, Revenue ct of 193 , as modífíed by the conven-
tíon, foííowíng the cíassífícatíon prescríbed ín that sectíon.
(a) No Uníted States busíness or offíce. € ” Generaí ruíe. € ” rench cítízen, not
a resídent of the Uníted States, comíng wíthín cíass (a) of the cíassífícatíon
prescríbed ín sectíon 211 (whether or not he carríes on a rench enterpríse),
ís ííabíe to the ta at the rate of 10 per cent, ímposed by sectíon 211(a),
Revenue ct of 193 , upon the gross amount of hís fí ed or determínabíe annuaí
or períodícaí gaíns, profíts, and íncome from sources wíthín the Uníted States.
Such gaíns, profíts, and íncome are to be determíned under the provísíons of
sectíon 119, Revenue ct of 193 . Specífíc ítems of fí ed or determínabíe annuaí
or períodícaí íncome are enumerated ín the ct as ínterest (e cept ínterest on
deposíts wíth persons carryíng on the bankíng busíness whích ís nonta abíe
under the ct), dívídends, rents, saíaríes, wages, premíums, annuítíes, com-
pensatíon, remuneratíons, and emoíuments, but other fí ed or determínabíe
annuaí or períodícaí gaíns, profíts, and Income are aíso sub|ect to the ta , as,
for ínstance, royaítíes. owever, a rench cítízen who ís a resídent of rance
ís not ta abíe upon those ítems of íncome enumerated ín rtícíe I of the
conventíon and ín artícíe 3(6) of these reguíatíons. See artícíe 7.
The term fí ed or determínabíe annuaí or períodícaí íncome wíthín the
meaníng of sectíon 211(a) does not íncíude índustríaí and commercíaí profíts
as that term ís used ín the conventíon. Under the Revenue ct of 193 , as
modífíed by the conventíon, a rench cítízen comíng wíthín sectíon 211(a) or
sectíon 211(c) of that ct ís e empt from Uníted States íncome ta on índus-
tríaí and commercíaí profíts. or e ampíe, the conventíon e empts from ta
profíts reaíízed by such rench cítízen who carríes on a rench enterpríse from
transactíons ín the Uníted States ín goods, wares, or merchandíse through a
resídent broker or commíssíon agent If, however, such cítízen does not carry
on such enterpríse such transactíons are not e empt under the conventíon and
constítute engagíng ín trade or busíness wíthín the Uníted States and he ís
accordíngíy ta abíe upon the profít resuítíng from such transactíons under
sectíon 211(b), Revenue ct of 193 . On the other hand, a rench cítízen, not
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93
15122(b).
a resídent of the Uníted States, but ta abíe under sectíon 211(a) of the ct,
whether or not he carríes on a rench enterpríse, ís not ííabíe to Uníted States
íncome ta npon profíts reaíízed from transactíons ín stocks, securítíes, or com-
modítíes In the Uníted States through a resídent broker, commíssíon agent, or
custodían. owever, a rench cítízen who performs personaí servíces ín the
Uníted States at any tíme wíthín the ta abíe year ís ííabíe to the ta upon
profíts arísíng from transactíons ín stocks, securítíes, or commodítíes, e cept
where ít can be shown that such cítízen ís oníy temporarííy present ín the
Uníted States and meets the other condítíons wíth respect to personaí servíce
íaíd down ín sectíon 211(b), Revenue ct of 103 . s to when such profíts
constítute índustríaí and commercíaí profíts, see artícíe 2. s to wíthhoídíng
of the ta at the source, see sectíon 143, Revenue ct of 193 .
(6) o Uníted States busíness or offíce. € ” ggregate more than 21,600. € ”
rench cítízen, not a resídent of the Uníted States, comíng wíthín cíass (c) of
the cíassífícatíon prescríbed ín sectíon 211 (whether or not he carríes on a
rench enterpríse) ís, under the provísíons of sectíon 211(c), sub|ect to ta oníy
upon hís fí ed or determínabíe annuaí or períodícaí íncome specífíed ín sectíon
211(a) determíned under the provísíons of sectíon 119, mínus (1) the deductíons
properíy aííocabíe to such íncome and (2) the so-caííed charítabíe contríbu-
tíons deductíon províded ín sectíon 213(c). Such nonresídent aííen ís en-
títíed to the credíts agaínst net íncome aííowabíe to an índívíduaí by sectíon
S. sub|ect to the íímítatíons províded ín sectíon 214. owever, the ta thus
o|mpnted under sectíons 11 and 12 shaíí ín no such case be íess than 10 per
ant of the gross amount of such fí ed or determínabíe annuaí or períodícaí
íwme from sources wíthín the Uníted States.
(c) Uníted States busíness or offíce. € ” . Tench cítízen not a resídent of the
Uníted States and not carryíng on a rench enterpríse, comíng wíthín cíass (b)
of the cíassífícatíon prescríbed ín sectíon 211, or a rench cítízen carryíng on
a rench enterpríse and who has a permanent estabííshment In the Uníted
States ís, ííke other nonresídent aííens, ííabíe to the normaí ta of 4 per cent ím-
posed by sectíon 11 of the ct and to the graduated surta ímposed by sectíon
12(b) of the ct, upon hís net íncome from sources wíthín the Uníted States
(gross íncome from sources wíthín the Uníted States mínus the statutory deduc-
tíons províded ín sectíons 23 and 213) íess the credíts agaínst net íncome aííowed
an Indívíduaí by sectíon 25. Such net íncome Incíudes aíí índustríaí and com-
mercíaí profíts from sources wíthín the Uníted States. Such net íncome ís to
be determíned under the provísíons of sectíon 119, Revenue ct of 193 , but
ín determíníng such íncome no account shaíí be taken of the purchase of mer-
chandíse wíthín the Uníted States for the purpose of suppíyíng estabííshments
of the enterpríse, íf any, maíntaíned by such cítízen ín rance. In the deter-
mínatíon of the íncome of such rench cítízen from sources wíthín the Uníted
States aíí índustríaí and commercíaí profíts from sources wíthín the Uníted
tates shaíí be deemed to be aííocabíe to hís permanent estabííshment wíthín
the Uníted States. If, however, such rench cítízen ís a resídent of rance,
be ís not ta abíe upon those ítems of Income enumerated ín rtícíe I of the
conventíon and referred to ín paragraph (a) of thís artícíe wíth respect to
rench cítízens sub|ect to ta under sectíon 211(a). See artícíe 7.
rench cítízen havíng an offíce or píace of busíness wíthín the Uníted
States wíthín the meaníng of sectíon 211 of the Revenue ct of 193 , shaíí
be presumed (íf he carríes on a rench enterpríse) to have a permanent estab-
ííshment ín the Uníted States wíthín the meaníng of the conventíon.
rench cítízen carryíng on a rench enterpríse who carríes on busíness
transactíons through a bona fíde commíssíon agent or broker ín the Uníted
States and who has no permanent estabííshment ín the Uníted States ís not
ííabíe to íncome ta on the índustríaí and commercíaí profíts arísíng to hím
from such transactíons. owever, a rench cítízen not carryíng on a rench
enterpríse ís heíd to be engaged ín trade or busíness In the Uníted States íf
he seíís thereín through a commíssíon agent or broker goods, wares, or mer-
chandíse (not íncíudíng stocks, securítíes, or commodítíes) and, hence, ís ííabíe
to Income ta on the resuítíng profít. Such rench cítízen, whether or not he
carríes on a rench enterpríse, comíng wíthín cíass (a) or cíass (c) of the
cíassífícatíon prescríbed ín sectíon 211 of the Revenue ct of 193 ís, however,
not ííabíe to tíe ta upon profíts arísíng from transactíons ín stocks, securítíes,
or commodítíes through a resídent broker, commíssíon agent, or custodían. s
to what constítutes a rench enterpríse, see artícíe 2. s to what constí-
pates a permanent estabííshment, see artícíe 2.
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22(b).
94
s to the computatíon of gross Income, the aííowance of deductíons and
credíts, the requírements as to fíííng of returns and payment of the ta ín the
case of nonresídent aííens generaííy, íncíudíng rench cítízens, see sectíons 211
to 219, íncíusíve, Revenue ct of 193 .
(d) Member of rench partnershíp. € ” Whether the ííabíííty to the ta of a
rench cítízen who ís a member of a partnershíp ís affected by rtícíe I of the
conventíon depends upon the status of the partnershíp. rtícíe I does not appíy
uníess such partnershíp: (1) ís created or organízed ín rance and (2) carríes
on a rench enterpríse. Thus, a partnershíp created or organízed ín the
Uníted States, even though composed In whoíe or In part of rench cítízens,
ís not a rench enterpríse and hence ís not affected by the conventíon.
rench cítízen, not resídent ín the Uníted States, a member of such partnershíp,
ís ta abíe under the provísíons of sectíon 211 as are other nonresídent aííens.
If, however, such rench cítízen ís a member of a partnershíp meetíng the
tests set forth ín thís paragraph, the Uníted States ta ííabíííty of such rench
cítízen shaíí be determíned as províded ín paragraph (a) or (6) or (c) of thís
artícíe, whíchever ís appíícabíe, dependent upon whether or not the partnershíp
has a permanent estabííshment ín the Uníted States.
rt. 9. Ta atíon of a rench corporatíon under the Revenue ct of 19S
as modífíed by the conventíon. € ” Generaí. € ” corporatíon organízed under the
íaws of rance ís sub|ect to those provísíons of the Revenue ct of 193 appíí-
cabíe to foreígn corporatíons generaííy but such corporatíon ís entítíed to the
e emptíons províded ín the conventíon to whích other foreígn corporatíons are
not entítíed.
Sectíon 231 of the Revenue ct of 193 cíassífíes foreígn corporatíons ínto
two groups: (1) those not engaged ín trade or busíness wíthín the Uníted
States and not havíng an offíce or píace of busíness thereín (hereínafter re-
ferred to as nonresídent foreígn corporatíons) and (2) those whích at any
tíme wíthín the ta abíe year are engaged ín trade or busíness wíthín the Uníted
States or have an offíce or píace of busíness thereín (hereínafter referred to
as resídent foreígn corporatíons).
Whether a foreígn corporatíon has an offíce or píace of busíness wíthín
the Uníted States depends upon the facts of the partícuíar case. The term
offíce or píace of busíness, however, Impííes a píace for the reguíar trans-
actíon of busíness and does not Incíude a píace where casuaí or Incídentaí trans-
actíons míght be, or are, effected.
Whííe rtícíe I of the conventíon, ín so far as corporatíons are concerned,
appííes oníy to rench corporatíons carryíng on a rench enterpríse and has
no appíícatíon to those not carryíng on such enterpríse, sectíon 231 makes no
dístínctíon between the two cíasses, such sectíon appíyíng aííke to both groups.
Thís artícíe treats of the ta atíon of rench corporatíons under that sectíon,
as modífíed by the conventíon, foííowíng the cíassífícatíon prescríbed ín that
sectíon.
(a) Nonresídent rench corporatíons. € ” rench corporatíon (whether or
not ít carríes on a rench enterpríse) not engaged In trade or busíness wíthín
the Uníted States and not havíng an offíce or píace of busíness thereín at any
tíme wíthín the ta abíe year ís ííabíe to the ta at the rate of 15 per cent
(10 per cent In the case of dívídends) Imposed by sectíon 231(a), Revenue ct
of 193 , upon the gross amount of íts fí ed or determínabíe annuaí or períod-
ícaí gaíns, profíts, and íncome from sources wíthín the Uníted States. Such
gaíns, profíts, and íncome are to be determíned under the provísíons of sectíon
119, Revenue ct of 193 . Specífíc ítems of fí ed or determínabíe annuaí or
períodícaí íncome are enumerated ín the ct as Interest (e cept Interest on
deposíts wíth persons carryíng on the bankíng busíness whích Is nonta abíe
under the ct), dívídends, rents, saíaríes, wages, premíums, annuítíes, com-
pensatíons, remuneratíons, emoíuments, but other fí ed or determínabíe annuaí
or períodícaí gaíns, profíts, and Income are aíso sub|ect to ta , as, for ínstance,
royaítíes. owever, a rench corporatíon Is not ta abíe upon those ítems of
Income enumerated ín rtícíe I of the conventíon and referred to ín artícíe
(a) wíth respect to rench cítízens sub|ect to ta under sectíon 211(a).
Revenue ct of 193 . See artícíe 7.
The term fí ed or determínabíe annuaí or períodícaí íncome wíthín the
meaníng of sectíon 231(a), Revenue ct of 193 , does not íncíude Industríaí
and commercíaí profíts as that term ís used ín the conventíon. Under the Rev-
enue ct of 193 as modífíed by the conventíon a rench corporatíon ta abíe
under sectíon 231(a) of that ct Is e empt from Uníted States Income ta on
Industríaí and commercíaí profíts. or e ampíe, under the conventíon profíts
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95
22(b).
reaíízed by such rench corporatíon, whích carríes on a rench enterpríse,
from transactíons ín the Uníted States ín goods, wares, or merchandíse through
í resídent broker or commíssíon agent are not sub|ect to ta . If, however, such
corporatíon does not carry on such enterpríse such transactíons are not e empt
under the conventíon and constítute engagíng ín trade or busíness wíthín the
Uníted States and ít ís accordíngíy ta abíe upon the resuítíng profít under
sectíon 231(b), Revenue ct of 193 . On the other hand, a rench corporatíon
ta abíe under sectíon 231(a), whether or not ít carríes on a rench enterpríse,
ía not ííabíe to Uníted States Income ta upon profíts reaíízed from transactíons
In stocks, securítíes, or commodítíes ín the Uníted States through a resídent
broker, commíssíon agent, or custodían.
(6) Resídent rench corporatíons. € ” rench corporatíon, not carryíng on
a rench enterpríse, whích at any tíme wíthín the ta abíe year ís engaged ín
trade or busíness wíthín the Uníted States or has an offíce or píace of busíness
thereín, or a rench corporatíon, carryíng on a rench enterpríse, whích has
a permanent estabííshment In the Uníted States, ís, ííke other foreígn cor-
poratíons, ííabíe to the ta of 19 per cent ímposed by sectíon 14(e), Revenue
ct of 193 , npon íts specíaí cíass net íncome from sources wíthín the Uníted
States (gross íncome from sources wíthín the Uníted States mínus the statu-
tory deductíons províded ín sectíons 23 and 232 and the credíts províded ín
sectíon 26 (a) and (b) of the Revenue ct of 193 ). Such net íncome íncíudes
U índustríaí and commercíaí profíts from sources wíthín the Uníted States. See
ankíe 3(c). Such net íncome ís to be determíned under the provísíons of
sectíon 119, Revenue ct of 193 , but ín determíníng such íncome no account
scan be taken of the purchase of goods, wares, or merchandíse wíthín the
Uníted States for the purpose of suppíyíng estabííshments maíntaíned by such
corporatíon In rance. In the determínatíon of the íncome of such rench
corporatíon from sources wíthín the Uníted States aíí índustríaí and com-
mercíaí profíts from sources wíthín the Uníted States shaíí be deemed to be
aííocabíe to íts permanent estabííshment wíthín the Uníted States. Such cor-
poratíon ís not ta abíe upon those ítems of Income enumerated ín rtícíe I
of the conventíon and referred to ín paragraph (a) of thís artícíe wíth respect
to nonresídent rench corporatíons. See artícíe 7.
rench corporatíon havíng an offíce or píace of busíness wíthín the Uníted
States wíthín the meaníng of sectíon 231 of the Revenue ct of 193 , shaíí be
presumed (íf ít carríes on a rench enterpríse) to have a permanent estabíísh-
ment In the Uníted States wíthín the meaníng of the conventíon.
rench corporatíon carryíng on a rench enterpríse whích carríes on
busíness transactíons through a bona fíde commíssíon agent or broker ín the
Uníted States and whích has no permanent estabííshment In the Uníted States
Is not ííabíe to íncome ta on the Industríaí and commercíaí profíts arísíng to
It from such transactíons. owever, a rench corporatíon not carryíng on a
rench enterpríse ís heíd to be engaged ín trade or busíness ín the Uníted
States íf ít seíía thereín, through a commíssíon agent or broker, goods, wares, or
merchandíse (not íncíudíng stocks, securítíes, or commodítíes) and, hence, ís
ííabíe to íncome ta on the resuítíng profít. Such rench corporatíon, whether
or not ít carríes on a rench enterpríse, otherwíse ííabíe to the ta ímposed
by subsectíon (a) of sectíon 231 of the Revenue ct of 193 ís, however, not
ííabíe to the ta upon profíts arísíng from transactíons ín stocks, securítíes,
or commodítíes through a resídent broker, commíssíon agent, or custodían. s
to what constítutes a rench enterpríse, see artícíe 2. s to what constítutes
a permanent estabííshment, see artícíe 2. s to the computatíon of gross
Income, the aííowance of deductíons and credíts, the requírements as to fíííng
of returns and payment of the ta , ín the case of foreígn corporatíons gen-
eraííy, íncíudíng rench corporatíons, see sectíons 231 to 236, íncíusíve, Revenue
ct of 193 .
Mííton . Carter,
ctíng Commíssíoner of Internaí Revenue.
pproved anuary 5, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster anuary 7, 1939, 11.16 a. m.)
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í 22(b), rt. 22(b)(4M. 96
rtícíe 22(b) (3)-í: Gífts and bequests.
R NU CT O 193S.
Poíítícaí contríbutíons. (See L T. 3276, page 10 .)
rtícíe 22(b)(4)- : Interest upon Uníted 1939-12-975
States obíígatíons. I. T. 32G2
R NU CTS O 1934, 1935, 1936, 1937, ND 193 .
emptíon of ínterest (íncrement ín vaíue) on Uníted States
savíngs bonds.
Interest (íncrement ín vaíue) on Uníted States savíngs bonds ís
entíreíy e empt from ta es now or hereafter ímposed by the Uníted
States, any State, or any of the possessíons of the Uníted States,
or by any íocaí ta íng authoríty thereof, upon íncome or profíts
e cept graduated addítíonaí íncome ta es (commoníy known as sur-
ta es) and e cess-profíts and war-profíts ta es now or hereafter ím-
posed by the Uníted States. The ínterest (íncrement ín vaíue) on
Uníted States savíngs bonds ís e empt from such e cepted ta es to
the e tent of ínterest on an amount of the bonds the príncípaí of
whích does not e ceed ín the aggregate 5,000 (íncíudíng other Donds
and certífícates owned by the ta payer whích were íssued under the
authoríty of the Secona Líberty ond ct, as amended). In de-
termíníng whether the príncípaí amount of such bonds and certífí-
cates owned by a ta payer ís wíthín or ín e cess of 5,000, the íssue
or purchase príce oníy ís consídered as príncípaí of Uníted States
savíngs bonds.
The above-mentíoned e ceptíon to e emptíon from ta es upon
ínterest on such bonds ís not appíícabíe whííe they are benefícíaííy
owned by a nonresídent aííen índívíduaí, or a foreígn corporatíon,
artnershíp, or assocíatíon, not engaged ín busíness ín the Uníted
tates.
The rates of surta es now ímposed by the Uníted States on íncome
of índívíduaís, estates, and trusts, to whích ínterest (íncrement ín
vaíue) on Uníted States savíngs bonds may be sub|ect, are dependent
upon the amount of the ta payer s net íncome after aííowance of
credíts for personaí e emptíon and/or dependents. Under the Rev-
enue cts of 1934, 1936, and 193 , there ís no surta due on such
surta net íncome of 4,000 or íess, and íf the surta net íncome
e ceeds 4,000, the surta rates appíy oníy to the e cess.
Surta es, to whích ínterest (íncrement ín vaíue) on Uníted States
savíngs bonds may be sub|ect, are now ímposed by the Uníted States
on corporatíons oníy ín certaín specíaí cases. See Títíe I of the
Revenue ct of 193 , and correspondíng provísíons of the Revenue
cts of 1934, 1935, 1936, and 1937, reíatíve to surta on personaí
hoídíng companíes and sectíon 102 of the Revenue ct of 193 , and
correspondíng provísíons of the Revenue cts of 1934, 1936, and
1937, reíatíve to surta on corporatíons ímproperíy accumuíatíng
surpíus.
The e cess-profíts ta now ímposed by the Uníted States, to whích
ínterest (íncrement ín vaíue) on Uníted States savíngs bonds may be
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07
23(a). rt. 23(a)-í.
sub|ect, ís appíícabíe oníy to corporatíons (íncíudíng assocíatíons
and |oínt stock companíes).
There ís no war-profíts ta now ímposed by the Uníted States to
whích ínterest (íncrement ín vaíue) on Uníted States savíngs bonds
ís sub|ect.
Sectíon- 22(b) 5: Compensatíon for ín|uríes 1939-22-9 49
or síckness. L T. 32 1
R NU CT O 103 .
Comí e::satíon paíd by the Uníted States under tííe provísíons of
the ederaí Compensatíon ct of September 7, 191 ( (39 Stnt., 742),
on account of the dísabíííty or death of an empíoyee of the ederaí
Government resuítíng from a personaí ín|ury sustaíned by the em-
píoyee whííe ín the performance of hís duty ís not sub|ect to
ederaí íncome ta .
dvíce ís requested whether compensatíon paíd under the ederaí
Compensatíon ct of September 7,1916 (39 Stat., 742), ís ta abíe for
Yederaí íncome ta purposes.
The ct provídes, among other thíngs, that the Uníted States shaíí
pay compensatíon on account of the death or dísabíííty of an em-
píoyee of the ederaí Government resuítíng from a personaí ín|ury
sustaíned whííe ín the performance of hís duty.
Sectíon 22(b) of the Revenue ct of 193 provídes that the foííow-
íng ítems shaíí not be íncíuded ín gross íncome and shaíí be e empt
from íncome ta atíon:
€ € €
(5) Compensatíon for ín|uríes or síckness. € ” mounts receíved, through ac-
cídent or heaíth ínsurance or under workmen s compensatíon acts, as com-
pensatíon for personaí ín|uríes or síckness, píus the amount of nny damages
receíved whether by suít or agreement on account of such ín|uríes or síckness
€ €
The provísíons of the ct of September 7, 1916, are símííar ín
many respects to those of the so-caííed workmen s compensatíon acts
of the varíous States. Whííe there ís no provísíon ín the ct of
September 7, 1916, supra, desígnatíng or defíníng ít as a workmen s
compensatíon act, ít ís heíd that by reason of íts stated purposes
and the provísíons for the payment of the compensatíon ín questíon,
such amounts receíved under the provísíons of the ct are not sub-
|ect to ederaí íncome ta .
S CTION 23(a). € ” D DUCTIONS ROM GROSS
INCOM : P NS S.
rtícíe 23(a)-í: usíness e penses. 1939-13-9764
I. T. 3265
R NU CT O 10.1 .
n empíoyer who keeps hís accounts on eíther the ensh receípts
and dísbursements basís or the accruaí basís, and who makes voíun-
tary contríbutíons to the Míchígan unempíoyment compensatíon
fund under the provísíons of sectíon 14 of the Míchígan Unempíoy-
ment Compensatíon ct, as amended, ís entítíed to deduct such
contríbutíons as ordínary and necessary busíness e penses ín hís
ederaí Income ta return for the year of payment.
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5 23(b), rt. 23(b)- .
9
dvíce ís requested as to the deductíbíííty, for ederaí íncome ta
purposes, of voíuntary contríbutíons paíd ínto the Míchígan unem-
píoyment compensatíon fund under sectíon 14 of the Míchígan Unem-
píoyment Compensatíon ct, as amended.
Pertínent provísíons of the Míchígan Unempíoyment Compensa-
tíon ct, as amended, read as foííows:
Sec. 14. Contríbutíons voíuntary contríbutíons. € ” ny empíoyer sub|ect to thís
act may make voíuntary contríbutíons In addítíon to the contríbutíons requíred
hereín, and any such voíuntary contríbutíons shaíí be credíted to such em-
píoyer s reserve account for the purposes of sectíon 19 of thís act, and shaíí
become a part of the unempíoyment compensatíon fund.
€ € € € € € €
Sec. 17. uture rates based on benefít e períence reserve account. € ” The com-
míssíon shaíí maíntaín a separate reserve account for each empíoyer, credítíng
hís reserve account wíth 0 per cent of the contríbutíons whích he has paíd
duríng each caíendar year, and chargíng hís reserve account wíth aíí amounts
paíd wíthín such year as benefíts whích, under sectíon 20 of thís act, were
charged agaínst wages earned ín empíoyment ín hís servíce: Províded, That
100 per cent of níí voíuntary contríbutíons paíd by an empíoyer ín pursuance
of the provísíons of sectíon 14 of thís act shaíí be credíted to such empíoyer s
reserve account. ut nothíng ín thís act shaíí be construed to grant any em-
píoyer or índívíduaís In hís servíce príor cíaíms or ríghts to the amount paíd
by hím to the unempíoyment compensatíon fund eíther on hís own behaíf or on
behaíf of such índívíduaís. íí contríbutíons to the saíd fund shaíí be pooíed
and avaííabíe to pay benefíts to any índívíduaí entítíed thereto under thís act,
írrespectíve of the source of such contríbutíons.
It ís to the empíoyer s advantage to make voíuntary contríbutíons
to íncrease hís reserve account, sínce by thus íncreasíng hís reserve
ratío he materíaííy reduces the rate of hís contríbutíons.
It ís heíd that an empíoyer, keepíng hís books of account eíther
on the accruaí or cash receípts and dísbursements basís, who makes
voíuntary contríbutíons to the Míchígan unempíoyment compensa-
tíon fund under the provísíons of sectíon 14 of the Míchígan Unem-
píoyment Compensatíon ct, as amended, ís entítíed to deduct such
contríbutíons as ordínary and necessary busíness e penses ín hís
ederaí íncome ta return for the year of payment.
S CTION 23(b). € ” D DUCTIONS ROM GROSS
INCOM : INT R ST.
rtícíe 23(b)-í: Interest. 1939-9-9730
L T. 3254
R NU CT O 103 .
ínance charges paíd ín connectíon wíth the purchase of an
nutomobííe, aíthough denomínated as ínterest, are not deductíbíe
as ínterest where such amounts are ín fact a part of the purchase
príce.
dvíce ís requested whether any part of the fínance charges paíd
ín connectíon wíth the purchase of an automobííe may be deducted
as ínterest under the provísíons of sectíon 23(b) of the Revenue ct
of 193 .
Whether any part of the fínance charges paíd ín connectíon wíth
the purchase of an automobííe shouíd be treated as ínterest and,
therefore, deductíbíe to the e tent aííowed by sectíon 23(b) of the
Revenue ct of 193 , or shouíd be treated as a part of the cost of
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99
23(c), rt. 23(c)-í.
the automobííe and therefore, a capítaí e pendíture, ís to be deter-
míned by the provísíons of the contract or saíe. enríetta Mííís,
Inc., v. Commíssíoner, 52 ed. (2d), 931 and Daníeí ros. Co. v.
Commíssíoner, 2 ed. (2d), 761.) owever, amounts, even though
specífícaííy denomínated as ínterest, are not deductíbíe under the
provísíons of sectíon 23(b), supra, ín sítuatíons where ít ís cíear
from an e amínatíon of the entíre contract that such amounts were
íntended as a part of the purchase príce and were not actuaííy paíd
as ínterest. (Pratt-Maííory Co., Inc., v. Uníted States, 12 ed. Supp.,
1020 ppeaí of nderson fc Co., 6 . T. ., 713 and ppeaí of
Marsh Se Marsh, Inc., 5 . T. ., 902.)
S CTION 23(c). € ” D DUCTIONS ROM GROSS
INCOM : T S G N R LLY.
stícíe 23(c) -1: Ta es. 1939-17-9 02
í íso Sectíon 43, rtícíe 43-1.) L T. 3273
R NU CT O 193 .
or ederaí Income ta purposes, personaí property ta es In the
State of Pennsyívanía and the cíty (county) of Phííadeíphía, Pa.,
accrue on anuary 1 of the ta (caíendar) year for whích the ta es
are assessed.
dvíce ís requested as to the accruaí date, for ederaí íncome ta
purposes, of personaí property ta es ín the State of Pennsyívanía
and ín the cíty (county) of Phííadeíphía, Pa.
Wíth reference to the State of Pennsyívanía personaí property
ta es, the provísíons of the State personaí property ta act (approved
May 1 , 1937) whích controí are found ín Títíe 72 of Purdon s
Pennsyívanía Statutes, nnotated, and are as foííows:
Sec. 3244. € €
íí personaí property of the cíasses hereínafter enumerated, owned, heíd or
possessed by any resídent ís hereby made ta abíe, annuaííy, for
tate purposes, at the rate of 4 mííís on each doííar of the vaíue thereof, as of
t date to be fí ed annuaííy, In the manner províded ín sectíon € 3240,
ínfra € € .
s to the cíty (county) of Phííadeíphía personaí property ta es,
the provísíons of the Pennsyívanía íaws whích controí are found ín
Títíe 72 of Purdon s Pennsyívanía Statutes, nnotated, and are as
foííows:
Sec. 4 21. € €
íí personaí property of the cíasses hereínafter enumerated, owned, heíd, or
possessed by any person, persons, copartnershíp, or uníncorporated assocíatíon
or company, resídent, íocated, or ííabíe to ta atíon wíthín thís Commonweaíth,
or by any oínt-stock company or assocíatíon, íímíted partnershíp, bank or
corporatíon whatsoever, formed, erected, or íncorporated by, under, or ín pur-
suance of any íaw of thís Commonweaíth or of the Uníted States, or of any other
State or government, and ííabíe to ta atíon wíthín thís Commonweaíth € €
1 hereby made ta abíe, annuaííy, for county purposes, and, ín cítíes coe tensíve
wíth countíes, for cíty and county purposes, at the rate of 4 mííís on each
doííar of the vaíue thereof € € .
There ís no State statute whích specífíes the date on whích such
ta es accrue. owever, reíatíve to the questíon as to ííabíííty for
fte ta es, the Supreme Court of Pennsyívanía saíd ín the ppeaí of
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23(o), rt. 23(c)- .
100
Caííery (272 Pa., 255, 116 tí., 222) that personaí property ta
ís a personaí íevy agaínst resídent hoíders, computed on the vaíue
of the property owned by them.
No cases have been found ín whích the courts of Pennsyívanía have
determíned the date on whích ííabíííty for the State and county
ta es attaches. owever, wíth reference to Phííadeíphía reaí prop-
erty ta , as to whích there ís no statutory provísíon specífyíng the
date on whích such ta accrues, the courts of Pennsyívanía have
determíned the date on whích ííabíííty for the ta attaches.
In Wood v. Uníted States Natíonaí uíídíng and Loan ssocíatíon
(105 Pa. Super. Ct., 1 4, 160 tí., 244), the Superíor Court of Penn-
syívanía saíd ín part:
No matter what píaíntíff may have done ín the way of seíííng the
premíses, upon advantageous terms, defendant faííed to pay the cíty of
Phííadeíphía ta es for whích ít was ííabíe on anuary 1, 1930, and has done
absoíuteíy nothíng to reííeve ítseíf of that ííabíííty.
In Provídent Trust Co. of Phííadeíphía v. udícíaí uíídíng and
Loan ssocíatíon et aí. (112 Pa. Super. Ct., 352, 171 tí., 2 7), the
Superíor Court of Pennsyívanía saíd ín part:
Ta es In Phííadeíphía are assessed príor to the begínníng of the ta year,
and the whoíe ta ís due at the begínníng of the year. I íng. v. ít. ernon
ídg. ss n., 100 Pa.. 165 Cíty of Phííadeíphía v. Pcnna. Instítutíon, 2 Pa.
Super. Ct., 421, 424 Theobaíd v. Syívester, 27 Pa. Super. Ct, 362, 3G5.)
Whííe the Wood and Provídent Trust Co. cases, supra, reíate to
reaí property ta es ín the cíty of Phííadeíphía, ít ís, nevertheíess,
thought that the reasoníng used ín those cases ís equaííy appíícabíe
to the ínstant case where State of Pennsyívanía and cíty (county) of
Phííadeíphía personaí property ta es are ín questíon.
In víew of the foregoíng, ít ís heíd that the accruaí date, for
ederaí íncome ta purposes, of the State of Pennsyívanía personaí
property ta es and of the cíty (county) of Phííadeíphía, Pa., per-
sonaí property ta es ís anuary 1 of the ta (caíendar) year for
whích the ta es are assessed. (See I. T. 290 , C. . I -2, 72
(1935), reíatíng to Phííadeíphía reaí property ta es.)
rtícíe 23(c)-í: Ta ee.
R NU CT O 103 .
Percentage of pay roíí contríbuted by an empíoyer to New York
unempíoyment ínsurance fund. (See I. T. 327 , page 76.)
rtícíe 23(c)-í: Ta es.
R NU CT OP 193 .
Ta ímposed under artícíes 20 and 21 of the Me ícan íaw, Ley
deí Impuesto sobre ía Renta. (See I. T. 3 2S , page 139.)
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23(e). rt. 23(e)-í.
S CTION 23(e). € ” D DUCTIONS ROM GROSS INCOM :
LOSS S Y INDI IDU LS.
rtícíe 23(e)-í: Losses by índívíduaís. 1939-23-9 62
G. C. M. 21013
R NU CT O 193 .
Where a resídentíaí estate contaíníng ornamentaí trees and
shrubbery Is damaged by hurrícane and many of the trees de-
stroyed, the íoss deductíbíe under sectíon 23(e)3 of the evenue
ct of 193 ís the dín rence between the vaíue of the estate ímme-
díateíy precedíng the casuaíty and the vaíue after the casuaíty,
but not ín e cess of an amount equaí to the ad|usted basís of the
property. Thís concíusíon Is appíícabíe whether the vaíue of the
estate ímmedíateíy precedíng the casuaíty ís greater or íess than
an amount equaí to the ad|usted basís.
n opíníon ís requested reíatíve to the method of determíníng the
deductíbíe íoss, under sectíon 23(e)3 of the Revenue ct of 1915 ,
resuítíng from damage to a resídentíaí estate caused by a hurrícane.
In the case presented, the estate contaíned vaíuabíe ornamentaí trees
and shrubbery whích were, ín a íarge part, destroyed. The vaíue of
the estate when the hurrícane occurred was ín e cess of íts basís.
The fírst questíon whích wííí be consídered ís whether ín deter-
míníng the oss the trees and shrubbery shouíd be treated as an
íntegraí part of the estate and no separate basís apportíoned thereto.
In Mary Cheney Davís v. Commíssíoner (16 . T. ., 65, acquíes-
cence, C. . ííI-2, 13 (1929)), the facts were that consíderabíe
damage was caused to ornamentaí trees and shrubbery on the ta -
payers resídentíaí estate by a hígh wínd, accompaníed by raín and
síeet. Many of the trees and shrubs were badíy damaged and others
were destroyed. The oard heíd that the ta payer was entítíed to
deduct a íoss equaí to the dífference ín the market vaíue of the entíre
estate ímmedíateíy before the storm and the vaíue after the storm.
In ohn S. aíí et aí. v. Commíssíoner (16 . T. ., 71, acquíescence,
C. . III-2, 21 (1929)), ornamentaí trees and shrubs on the ta -
payer s estate were damaged by a severe íce storm. The oard
aííowed a íoss equaí to the dífference between the reasonabíe vaíue
of the estate ímmedíateíy before and after the storm. To the same
effect ís rederíck . Nash v. Commíssíoner (22 . T. ., 4 2, acquí-
escence, C. . -2, 50 (1931)). Those cases foííow Whíppíe v.
Uníted States (25 . (2d), 520), whích adopts as a measure of dam-
age the dífference between the vaíue of the entíre estate before and
after the casuaíty. In none of those cases was the questíon e pressíy
raísed whether ornamentaí trees and shrubs míght be treated sep-
arateíy from the entíre estate ín computíng íoss from casuaíty. It
seems to have been assumed that the trees and shrubbery shouíd be
consídered as an íntegraí part of the entíre estate ín determíníng the
íoss. owever, ín arry ohnston Grant v. Commíssíoner (30
. T. ., 102 , acquíescence, C. . III-2, (1934)), the questíon
here presented appears to have been specífícaííy raísed. In that case
an e tensíve deep sínkíng of the ta payer s íand cíose to hís house
took píace. Thís sínkíng was heíd to be a casuaíty wíthín the
meaníng of sectíon 214(a)6 of the Revenue ct of 1926, whích was
símííar, ín so far as here pertínent, to sectíon 23(e)3 of the Revenue
ct of 193 . The Commíssíoner contended that the amount of the íoss
shouíd be ímíted to the íand as the house was ín no way physícaííy
damaged. The oard heíd, however, that the íand and ímprovements
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23(k), rt. 23(k)-í.
102
shouíd be treated as a unít ín determíníng the íoss, and stated that
the ímprovements become an íntegraí part of ít the íand and to
dívorce them ín the sítuatíon here present wouíd be contrary to the
common, ordínary understandíng and conceptíon of such vaíues.
(See aíso 17 C. ., 91 20 C. ., 79 50 C. .. 749 Tíffany on Reaí
Property (1920), 2d ed., voíume 1, pages 76, 3, 6.)
In víew of the foregoíng, ít ís heíd ín the present case that the
trees and shrubbery shouíd be consídered as an íntegraí part of the
entíre estate and no separate basís apportíoned thereto ín determín-
íng the íoss sustaíned.
In regard to the amount of the deductíbíe íoss, ít ís the opíníon of
thís offíce that such íoss ís the dífference between the vaíue of the
estate ímmedíateíy precedíng the casuaíty and the vaíue after the
casuaíty, but not ín e cess of an amount equaí to the ad|usted basís
of the estate. Thís ís true even though the vaíue of the estate ím-
medíateíy precedíng the casuaíty ís far ín e cess of the vaíue after
the casuaíty. or e ampíe| owns an estate, the ad|usted basís of
whích ís 100,000. Immedíateíy precedíng the casuaíty, the estate
has a market vaíue of 200,000. Immedíateíy after the casuaíty, the
estate has a market vaíue of 190,000, the damage beíng caused by
the casuaíty. In thís case s íoss ís 10,000 and ís deductíbíe ín íta
entírety sínce such íoss does not e ceed the ad|usted basís of the
estate. The ad|usted basís of the estate, however, shouíd be reduced
by the amount of the íoss aííowabíe. (See sectíon 113(b).) Thí9
concíusíon ís ín accord wíth the decísíons of the Uníted States Su-
preme Court ín eíveríng v. Owens (59 S. Ct., 260 Ct. D. 137 ,
page 234, thís uííetín). In that case the Court stated ín part as
foííows:
€ we thínk sectíon 113(b) ) must be read as a íímítatíon upon the
amount of the deductíon so that It may not e ceed cost, and ín the case of
deprecíabíe nonbusíness property may not e ceed the amount of the íoss
actuaííy sustaíned ín the ta abíe year, measured by the then deprecíated vaíue
of the property. The Treasury ruííngs have not been consístent, but thís con-
structíon ís the one whích has fínaííy been adopted. Itaíícs suppííed.
Thís method of computíng íosses ín such cases ís ííkewíse ín accord
wíth the ruíe íaíd down ín G. C. M. 16255 (C. . -1,115 (1936)),
ín whích ít was concíuded that:
Therefore, aíthough computatíon must be made In accordance wíth
sectíon 23(h) and sectíon 113, the amount deductíbíe ís the íoss actuaííy sus-
taíned, and not In e cess of the amount computed under sectíon 113. € €
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
S CTION 23(k). € ” D DUCTIONS ROM GROSS
INCOM : D D TS.
btícíe 23 (k) -1: ad debts. 1939-9-9731
G. C. M. 20 54
R NU CT O 193 ND PRIOR R NU CTS.
Recoveríes of debts prevíousíy deducted for ederaí íncome ta
purposes do not constítute ta abíe íncome uníess the deductíon of
the debts ín príor years resuíted ín a reductíon of ta ííabíííty.
S. R. 2040 (C. . I -1, 129 (1925)) modífíed. Recommended that
I. T. 31T2 (C. . 193 -1, 150) be modífíed.
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103
23(k), rt. 23(k)-í-
dvíce ís requested whether the ruííng ín G. C. M. 1 525 (C. .
1937-1, 0), to the effect that recoveríes of debts prevíousíy charged
off at the dírectíon of ederaí or State supervísory offícers by banks
and other corporatíons under ederaí or State supervísíon do not
constítute ta abíe íncome uníess the príor charge-off accompííshed a
reductíon ín ta ííabíííty, ís equaííy appíícabíe to recoveríes of debts
otherwíse ascertaíned to be worthíess and charged off by banks and
corporatíons under ederaí and State supervísíon and to recoveríes
of debts prevíousíy charged off by other ta payers generaííy.
The ínquíry ís dírected partícuíaríy to the foííowíng paragraphs
of G. CM. 1 525, supra:
(a) The order of the bank e amíner reíatíng to the charge-off ín whoíe
or ín part of a debt owed to the bank ís materíaí oníy as estabííshíng con-
cíusíveíy eíther totaí or partíaí worthíessness of such debt
€ € € €
(g) If a debt has been so ascertaíned to be worthíess eíther ín whoíe or
ín part ín any partícuíar ta abíe year but has not been aííowed as a deductíon
for íncome ta purposes ín whoíe or ín part as the case may be, amounts sub-
quentíy coííected on account of such debt are not requíred to be íncíuded ín
gross íncome for the ta abíe year of such receípt (artícíe 191, Reguíatíons 77
trade 23(k)-í, Reguíatíons 6 and 94).
€ € € €
The deductíons for bad debts contempíated by the cíause aííowed as a deduc-
tíon for íncome ta purposes (as used ín (g) above) refer
to deductíons for bad debts whích accompííshed a reductíon ín ta ííabíííty and
do not refer to deductíons for bad debts ín cases ín whích the ta payer, on
account of other aííowabíe deductíons, had no net íncome írrespectíve of the
deductíon for bad debts.
The íssue presented requíres a generaí díscussíon of the proper
treatment, for ederaí íncome ta purposes, of recoveríes of debts
charged off and cíaímed as deductíons ín príor years and ínvoíves
an ínterpretatíon of the foííowíng provísíons of Reguíatíons 94:
ny amount subsequentíy receíved on account of a bad debt or on account
of a part of such debt prevíousíy charged off and aííowed as a deductíon for
íncome ta purposes, must be íncíuded ín gross Income for the ta abíe year ín
whích receíved. ( rtícíe 23(k)-í.)
ad debts or accounts charged off subsequent to March 1, 1913, because of the
fact that they w re determíned to be worthíess, whích are subsequentíy re-
covered, whether or not by suít, constítute íncome for the year ín whích re-
covered, regardíess of the date when the amounts were charged off. (See
artícíe 23(k)-í.) ( rtícíe 42-1.)
It ís weíí settíed that ín the ordínary case amounts receíved ín
repayment of íoans do not constítute íncome but are reímbursements
of capítaí. (Charíes M. oweíí, dmr., 21 . T. ., 757, petítíon to
revíew dísmíssed on motíon of the Commíssíoner, urnet v. oweíí,
dmr., 59 ed. (2d), 1053.) Thís ís aíso true wíth respect to amounts
receíved ín payment of debts arísíng from unpaíd wages, saíaríes,
rents, and símííar ítems of ta abíe íncome whích have been íncíuded
ín gross íncome. Uníess a ta payer has aíready recovered hís capítaí
for íncome ta purposes, recoveríes wíth respect to a debt, ín the
opíníon of thís offíce, can not be consídered as íncome.
In any case ín whích a bad debt has been aííowed as a deductíon
and has had the effect of offsettíng ta abíe íncome (meaníng, for
present purposes, íncome whích wouíd be the basís for the computa-
tíon of a ta ííabíííty), the ta payer has, to that e tent, ín effect had
the benefít of a recovery of capítaí for íncome ta purposes. In
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23(k), rt. 23(k)-í.
104
determíníng the e tent, íf any, to whích a ta payer has thus benefíted,
the credíts agaínst net íncome províded ín the Revenue cts must
be taken ínto account. To the e tent that a deductíon does not resuít
ín such a benefít to the ta payer, the deductíon can not be saíd to
have accompííshed a return of capítaí. Untíí a ta payer has had the
íncome ta equívaíent of a fuíí return of the capítaí represented by
hís debt, there ís no vaííd ground for treatíng as íncome any amount
receíved ín recovery of the debt. ccordíngíy, the above-quoted pro-
vísíons of the reguíatíons are not to be ínterpreted as requíríng the
íncíusíon ín íncome of amounts receíved ín recovery of a debt untíí
the ta payer has fuííy recovered the capítaí represented by the debt
eíther by the means referred to above or partíy by such means and
partíy by repayment by the debtor.
G. C. M. 1 525, supra, ínvoíved oníy bad debt deductíons by banks
or other corporatíons sub|ect to supervísíon of ederaí or State au-
thorítíes as a resuít of the concíusíve presumptíon of partíaí or totaí
worthíessness estabííshed by orders of ederaí or State supervísory
offícers. (I. T. 3172, C. . 193 -1, 150.) owever, the príncípíe
stated thereín, that recoveríes of debts prevíousíy deducted do not
constítute ta abíe íncome uníess the deductíon of the debts ín príor
years resuíted ín a reductíon of ta ííabíííty, ís equaííy appíícabíe
ín cases of recoveríes of debts voíuntarííy deducted by banks or other
corporatíons sub|ect to ederaí or State supervísíon and to recoveríes
of debts deducted by other ta payers.
In any case where the totaí of the aííowabíe deductíons, íncíudíng
bad debt deductíons, taken by a ta payer ín hís return e ceeds the
gross íncome íess the credíts agaínst net íncome, the questíon wííí
aríse as to the e tent to whích the deductíon of the bad debt resuíts
ín a benefít. In such case ít wííí be assumed that aíí deductíons other
than bad debt deductíons fírst appíy ín reductíon of the ta abíe
íncome. or e ampíe, íf ín hís return for 1933 a ta payer showed
gross íncome (íess the credíts agaínst net íncome) of 6,000 and
cíaímed a bad debt deductíon of 10,000 and other deductíons aggre-
gatíng 2,000, ít wouíd be consídered that oníy 4,000 of the deduc-
tíon for the bad debt operated to offset ta abíe íncome. There
wouíd thus remaín 6,000 of the debt as to whích the ta payer díd
not have a return of capítaí.
If, ín any one year, two or more bad debt deductíons are taken and
the aggregate amount deducted on account thereof ís more than
suffícíent to offset the ta abíe net íncome remaíníng after appíyíng
the other aííowabíe deductíons, the bad debt deductíons wííí be treated
as a unít (as íf they constítute a síngíe bad debt deductíon) and
íf amounts are subsequentíy recovered on any of such debts, they
wííí be treated as returns of capítaí untíí the aggregate coííected
on any and aíí such debts equaís that portíon of the unít whích
díd not operate to offset ta abíe íncome. fter the capítaí has
been thus recovered, any amounts receíved ín recovery of any of the
debts wííí be treated as gross íncome. I. T. 3172, supra, sets forth
a dífferent ruíe, and ít ís recommended that that ruííng be modífíed
to accord wíth the foregoíng concíusíon.
What has been saíd hereín wíth respect to the e tent to whích
bad debt deductíons operate to offset ta abíe íncome appííes to debts
deducted both before and after the effectíve date of the Revenue ct
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105
15 23(o). rt. 23(o)-í.
of 1934. owever, as to debts deducted before tbe effectíve date
of the Revenue ct of 1934, another factor must be taken ínto
consíderatíon. Under the príor Revenue cts, a net íoss sustaíned
by a ta payer ín one ta abíe year ís aííowabíe as a deductíon ín
computíng net íncome of other ta abíe years ín the manner and to
the e tent províded ín the varíous Revenue cts. See sectíon 117
of the Revenue cts of 1932 and 192 sectíon 206 of the Revenue
cts of 1926 and 1924 and sectíon 204 of the Revenue cts of 1921
and 191 . In determíníng whether the deductíon of a bad debt
ín any year príor to the effectíve date of the Revenue ct of 1 )34
resuíted ín offsettíng ta abíe íncome (or, ín other words, resuíted ín
a return of capítaí), ít must be determíned whether such a resuít was
accompííshed by means of the appíícatíon of a net íoss.
In víew of the fact that ít wííí be ímpractícabíe for the ureau
to undertake the great amount of research necessary to determíne
whether any partícuíar debt whích has been prevíousíy deducted
had the effect of offsettíng ta abíe íncome, every ta payer who re-
ceíves any amount ín compíete or partíaí recovery of a debt prevíousíy
deducted and who cíaíms that such amount constítutes ín whoíe or
ín part capítaí rather than íncome wííí be requíred to submít wíth
Ms return a statement íncíudíng compíete detaíís wíth respect to the
príor deductíon and other facts necessary for the ureau to deter-
míne the e tent, íf any, to whích the deductíon served to offset ta -
abíe íncome. In the event that the ta payer does not reasonabíy
substantíate hís cíaím that the amount receíved ín recovery, or a
portíon thereof, constítutes a return of capítaí, the fuíí amount
receíved ín recovery wííí be íncíuded ín gross íncome for the year
ín whích receíved.
S. R. 2940 (C. . I -1, 129 (1925)), ín so far as ít hoíds that
amounts whích míght be receíved ín recovery of debts under the
círcumstances there presented wouíd constítute ta abíe íncome, ís
hereby modífíed.
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
S CTION 23(o). € ” D DUCTIONS ROM GROSS INCOM :
C RIT L ND OT R CONTRI UTIONS.
btícíe 23 (o) -1: Contríbutíons or gífts by 1939-16-9793
índívíduaís. I. T. 3271
R NU CT O 103 .
ppíícatíon of the decísíon of the Supreme Court of the Uníted
States ín Uníted States v. Píeasants (59 Sup. Ct., 2 1, Ct D. 1379,
page 239. thís uííetín), rendered under the Revenue ct of 1932, to
the determínatíon of the deductíon for charítabíe contríbutíons aí-
íowabíe under the Revenue ct of 193 ín cases where net íong-term
capítaí gaín or íoss requíres the computatíon of a partíaí ta
as prescríbed ín sectíon 117(c) of that ct
dvíce ís requested reíatíve to the appíícatíon of the decísíon of
the Supreme Court of the Uníted States ín Uníted States v. Píeasants
(59 Sup. Ct., 2 1, Ct. D. 1379, page 239, thís uííetín), rendered under
the Revenue ct of 1932, ín determíníng the 15 per cent deductíon for
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23(o), rt. 23(o)-í.
106
charítabíe contríbutíons aííowabíe under the Revenue ct of 193 ín
cases ínvoívíng the computatíon of a partíaí ta as prescríbed ín
sectíon 117 of that ct.
The effect of the Supreme Court decísíon ín the Píeasants case ís
very símííar under the Revenue cts of 1932 and 193 , and may be
summarízed as foííows: In cases where the specíaí ta províded by
sectíon 101 (b) of the Revenue ct of 1932 and by sectíon 117(c)2 of
the Revenue ct of 193 ís appíícabíe, the 15 per cent ma ímum deduc-
tíon whích may be taken for charítabíe contríbutíons under sectíon
23(n) of the Revenue ct of 1932 and sectíon 23(o) of the Revenue
ct of 193 ís based upon the same net íncome upon whích the
specíaí ta ís ín fact computed and paíd.
In the foííowíng díscussíon ít shouíd be borne ín mínd that the
term net íong-term capítaí íoss ís defíned by sectíon 117(a)9 of
the Revenue ct of 193 as meaníng the e cess of íong-term capítaí
íosses for the ta abíe year over the íong-term capítaí gaíns for such
year. It therefore foííows that ín the very process of ascertaíníng
the net íong-term capítaí íoss aíí the íong-term capítaí gaíns
and an equívaíent amount of íong-term capítaí íosses are ín effect
made use of to canceí each other, íeavíng oníy the e cess of íosses over
gaíns, nameíy, the u net íong-term capítaí íoss. When thís e cess
ís aíso e cíuded from the computatíon of the amount upon whích the
partíaí ta ís to be computed, the effect ís that the partíaí ta
ís based upon what the ta payer s net íncome wouíd have been íf he
had no íong-term capítaí gaíns and no íong-term capítaí íosses
whatever.
Under the Revenue ct of 1932, the specíaí ta províded by sec-
tíon 101(b) ís appíícabíe whenever ít ís greater than the ta com-
puted ín the ordínary manner. Under the Revenue ct of 193 , the
specíaí ta províded by sectíon 117(c)2 ís aíso appíícabíe whenever
ít ís greater than the ta computed ín the ordínary manner. Under
sectíon 101(b) of the Revenue ct of 1932, the specíaí ta ís deter-
míned by fírst computíng a partíaí ta ín the ordínary manner
upon the ta payer s ordínary net íncome (that ís, upon what hís
net íncome wouíd be íf there were e cíuded ín computíng such net
íncome aíí ítems of capítaí gaín, capítaí íoss, and aíí deductíons prop-
eríy aííocabíe to the capítaí assets dísposed of duríng the year) and
then subtractíng from such partíaí ta an amount equaí to 12
per cent of the capítaí net íoss. Under sectíon íí7(c)2 of the
Revenue ct of 193 , the specíaí ta ís determíned by fírst comput-
íng a partíaí ta ín the ordínary manner upon the ta payer s
net íncome íncreased by the amount of the net íong-term capítaí
íoss (that ís, upon what hís net íncome wouíd be íf there were e -
cíuded ín computíng ít aíí the íong-term capítaí gaíns and aíí the
íong-term capítaí íosses) and then subtractíng from such partíaí
ta an amount equaí to 30 per cent of the net íong-term capítaí íoss.
s defíned ín sectíon 101 (c)6 of the Revenue ct of 1932, the term
capítaí net íoss means the e cess of the sum of the capítaí íosses
píus the capítaí deductíons over the totaí amount of capítaí gaín, and
capítaí deductíons are defíned ín sectíon 101(c)3 of that ct as
beíng such deductíons as are aííowed by sectíon 23 and
are properíy aííocabíe to capítaí assets soíd or e changed
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23(o), rt. 23(o)-í.
duríng the ta abíe year. In sectíon íí7(a)9 of the Revenue ct
of 193 , the term net íong-term capítaí íoss ís defíned as beíng
the e cess of íong-term capítaí íosses for the ta abíe year over the
íong-term capítaí gaíns for such year.
The reasoníng of the Court ín the Píeasants case ís that (1)
sínce, ín computíng the specíaí ta under sectíon 101(b) of the
Revenue ct of 1932 the capítaí net íoss ís not aííowed as a
deductíon from gross íncome, but oníy as an offset (to the e tent
of 12y2 per cent of such capítaí net íoss ) agaínst a partíaí ta
determíned by e cíudíng capítaí íosses from the computatíon, ít
foííows that the net íncome upon whích the ta ís actuaííy paíd
ín such cases ís the ordínary net íncome, that ís, the net íncome
wíth capítaí íosses e cíuded and (2) sínce, when the specíaí ta
under sectíon 101(b) appííes, the net íncome upon whích a ta
í actuaííy paíd ís the net íncome wíth capítaí íosses e cíuded, ít
foííows that whenever such specíaí ta appííes, the term net ín-
come ín the phrase 15 per centum of the ta payer s net íncome
ín sectíon 23 (n) of the Revenue ct of 1932 must be gíven a cor-
respondíng meaníng and, therefore, (3) the ta payer, whenever
the specíaí ta appííes, may have a deductíon for charítabíe contrí-
butíons to the e tent of not more than 15 per cent of the net ín-
come upon whích hís specíaí ta ís actuaííy computed, that ís, 15
per cent of hís ordínary net íncome, whích ín turn means 15
per cent of hís net íncome computed by e cíudíng aíí ítems of cap-
ítaí gaín, capítaí íoss, and capítaí deductíons.
ppíyíng the same reasoníng to a case arísíng under the Revenue
ct of 193 , ít ís heíd that (1) sínce, ín computíng the specíaí ta
under sectíon 117(c) 2 of the Revenue ct of 193 the net íong-term
capítaí íoss ís not aííowed as a deductíon from gross íncome, but
oníy as an offset (to the e tent of 30 per cent of such net íong-
term capítaí íoss) agaínst a partíaí ta determíned by e cíud-
íng from the computatíon the amount of the net íong-term capítaí
íoss, ít foííows that the net íncome upon whích the specíaí ta
ís actuaííy paíd ín such cases ís the net íncome computed by
e cíudíng tne amount of the net íong-term capítaí íoss (or, ín
the words of sectíon 117(c)2, the net íncome íncreased by the
amount of the net íong-term capítaí íoss ) and (2) sínce, when
tbe specíaí ta under sectíon 117(c)2 ís appíícabíe, the net ín-
come upon whích a ta ís actuaííy paíd ís the net íncome wíth
net íong-term capítaí íoss e cíuded, ít foííows that whenever such
specíaí ta appííes, the term net íncome ín the phrase 15 per
centum of the ta payer s net íncome ín sectíon 23(o) of the Rev-
enue ct of 193 must be gíven a correspondíng meaníng and,
therefore, (3) the ta payer, whenever the specíaí ta appííes, ís
entítíed to a deductíon for charítabíe contríbutíons to the e tent
of not more than 15 per cent of the net íncome upon whích hís
specíaí ta ís actuaííy computed, that ís, 15 per cent of hís net ín-
come computed by e cíudíng the amount of hís net íong-term capítaí
íoss.
The Supreme Court s opíníon ín the Píeasants case ímpííes that
where the ta payer has a capítaí net íoss under the Revenue ct
of 1932 but the specíaí ta under sectíon 101(b) of that ct ís not
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t 23(o), rt. 23(o)-í.
10
appíícabíe because not greater than the ta computed ín the ordínary
manner, the 15 per cent íímítatíon ís ííkewíse based upon the net
íncome upon whích the ordínary ta ís computed, but sínce, ín com-
putíng the ordínary ta , the capítaí net íoss ís deducted from gross
íncome, ít foííows that when the ordínary ta ís appíícabíe, the ma í-
mum deductíon for charítabíe contríbutíons whích the ta payer may
take ís 15 per cent of the net íncome computed by íncíudíng ín the
computatíon (í. e., deductíng from gross íncome) the amount of the
capítaí net íoss. In cases under the Revenue ct of 193 , where
the ta payer has a net íong-term capítaí íoss, but the specíaí ta under
sectíon 117(c)2 ís not appíícabíe because not greater than the ta
computed ín the ordínary manner, ít ís, therefore, heíd that the 15
per cent íímítatíon ís aíso based upon the net íncome upon whích the
ordínary ta ís computed, and that sínce, ín computíng the ordínary
ta , the net íong-term capítaí íoss ís deducted from gross íncome, ít
foííows that when the ordínary ta ís appíícabíe, the ma ímum deduc-
tíon for charítabíe contríbutíons whích the ta payer may take ís 15
per cent of the net íncome computed by íncíudíng ín the computatíon
(í. e., deductíng from gross íncome) the amount of the net íong-term
capítaí íoss.
rtícíe 23(o)-í: Contríbutíons or gífts by índívíduaís.
R NU CT O 193 .
Contríbutíons to the merícan Natíonaí Red Cross and íts chapters
and branches. (See I. T. 325 , page 123.)
rtícíe 23(o)-í: Contríbutíons or gífts by 1930-19-9 22
índívíduaís. I. T. 276
( íso Sectíon 22(b) rtícíe 22(b) (3)-í.)
R NU CT O 103 .
Contríbutíons to a poíítícaí organízatíon are not deductíbíe by tbc
donor. poíítícaí gíft receíved by an índívíduaí or by a poíítícaí
organízatíon ís not ta abíe íncome to the recípíent.
dvíce ís requested whether (1) contríbutíons to poíítícaí organíza-
tíons are aííowabíe deductíons ín the donor s ederaí íncome ta
return, and whether (2) poíítícaí gífts or donatíons to índívíduaís
or to poíítícaí organízatíons are sub|ect to ederaí íncome ta .
Wíth respect to the fírst ínquíry, ít ís heíd that contríbutíons to a
poíítícaí organízatíon are not proper deductíons ín the donors ed-
eraí íncome ta return, there beíng no provísíon ín the Revenue ct
of 193 whích aííows such deductíons.
Wíth respect to the second ínquíry, ít ís heíd that a poíítícaí gíft
receíved by an índívíduaí or by a poíítícaí organízatíon ís not
ta abíe íncome to the recípíent.
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109 25, rt. 25-6.
S CTION 23(p). € ” D DUCTIONS ROM GROSS
INCOM : P NSION TRUSTS.
rtícíe 23(p)-í: Payments to empíoyees pensíon trusts.
R NU CT O 193 .
Lump sum and current annuaí contríbutíons to an empíoyees trust.
(See L T. 3266, page 144.)
S CTION 23(q). € ” D DUCTIONS ROM GROSS INCOM :
C RIT L ND OT R CONTRI UTIONS
Y CORPOR TIONS
rtícíe 23(q)-í: Contríbutíons or gífts by corporatíons.
R NU CT OP 193 .
Contríbutíons to the merícan Natíonaí Red Cross and íts chapters
and branches. (See L T. 325 , page 123.)
S CTION 25. € ” CR DITS O INDI IDU L
G INST N T INCOM .
rtícíe 25-5: Personaí e emptíon of marríed 1939-19-9 23
person. I. T. 3277
R NU CTS OP 1936 ND 193 .
Determínatíon of personaí e emptíon ín the case of persons who
marríed duríng the year and who had dífferent accountíng períods.
equírements whích are necessary ín such a case to change
accountíng períod and fííe a |oínt return.
dvíce ís requested reíatíve to the personaí e emptíons aííowabíe
ín the returns fííed by for the year ended anuary 31, 193 , and
by , hís wífe, for the caíendar year 1937, and aíso what requíre-
ments must be met by and who were marríed ín the íatter part
of October, 1937, ín order properíy to fííe |oínt returns for físcaí years
endíng anuary 31, begínníng wíth the físcaí year ended anuary 31,
1939.
, the wífe, ís entítíed for the períod of her ta abíe year duríng
whích she was síngíe ( anuary 1 to the íatter part of October, 1937)
to a personaí e emptíon of ten-tweífths of 1,000, or 33.33, and ,
the husband, ís entítíed for the períod of hís ta abíe year duríng
whích he was síngíe ín 1937 ( ebruary 1 to the íatter part of October,
1937) to a personaí e emptíon of níne-tweífths of 1,000 or 750.
IThe personaí e emptíon appíícabíe to marríed persons íívíng to-
gether duríng a ta abíe year of 12 months ís 2,500, whích e emptíon
ís apportíoned, íf the status of the ta payers changes duríng the
ta abíe year, accordíng to the number of months duríng whích they
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110
occupy the marríed status. Therefore, there may be added to the
personaí e emptíon aííowabíe to and for the períods they were
síngíe ( 750 and 33.33, respectíveíy, as índícated above), a |oínt
personaí e emptíon of three-tweífths of 2,500, or 625, whích
amount may be taken by eíther or dívíded between them ín any
proportíon agreed upon, so íong as the amount thereof cíaímed by
does not e ceed two-tweífths of 2,500. or 416.67, sínce she occu-
píed the marríed status but two months of her ta abíe year, 1937.
Reíatíve to the fíííng of a |oínt return by and for the físcaí
year ebruary 1, 193 , to anuary 31, 1939, attentíon ís ínvíted to
I. T. 1514 (C. . 1-2, 174 (1922)), whích provídes that ít ís not per-
míssíbíe under the statute for a husband and wífe to fííe a |oínt
return uníess theír accountíng períods are concurrent, sínce such
return wouíd not refíect the aggregate íncome for the ta abíe year
wíthín the meaníng of the statute. ccordíngíy, ín order to fííe a
|oínt return for the físcaí year ended anuary 31, 1939, ít was neces-
sary for , the wífe, to request permíssíon to change her ta abíe year
from the caíendar year to the físcaí year endíng anuary 31, effectíve
as of anuary 31,193 . In thís connectíon the íncome ta reguíatíons
províde that íf a ta payer changes hís accountíng períod he shaíí,
príor to the e píratíon of 30 days from the cíose of the proposed
períod for whích a return wouíd be requíred to effect the change,
furnísh to the coííector, for transmíssíon to the Commíssíoner, the
ínformatíon requíred on orm 112 (appíícatíon for change ín ac-
countíng períod). (See artícíe 46-1 of Reguíatíons 94 and 101.)
ssumíng that permíssíon had been granted to change her account-
íng períod from the caíendar year to the físcaí year endíng anuary
1, effectíve as of anuary 31, 193 , ít was wíth the stípuíatíon that
proper ad|ustments be made on her books of account and returns of
íncome. (See paragraph 2 of the ínstructíons on the back of orm
112 .) urther, she was requíred to cíose her books as of anuary 31,
193 , and to fííe a return on or before príí 15, 193 , coveríng the
períod anuary 1 to anuary 31, 193 . er returns for subsequent
ears shouíd then be made on the basís of the fuíí físcaí year endíng
anuary 31, the ta abíe year aíready estabííshed by for the fíííng
of hís returns, ín whích case the husband and wífe couíd eíect to fííe
a |oínt return or separate returns as províded by the statute.
Credít for a net operatíng íoss sustaíned by the M Corporatíon
for the year 1037 Is not aííowabíe under sectíon 26(c) of the Reve-
nue ct of 1915 In determíníng Its ta ííabíííty for the year 193 .
Such credít ís aííowabíe oníy as a part of the basíc surta credít
under sectíon 27(b)2 of the ct, whích íímíts the credít to ta abíe
years begínníng after December 31, 193 .
S CTION 26. € ” CR DITS O CORPOR TIONS.
1939-25-9 0
I. T. 3290
R NU CT OP 193 .
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5 2 (d), rt. 2 (d)- .
dvíce ís requested whether, under the provísíons of sectíon 26(c)
of the Revenue ct of 193 , the M Corporatíon ís entítíed to a credít
ín determíníng íts ta ííabíííty for the year 193 on account of íts net
íoss for the year 1937.
Sectíon 26(c) of the Revenue ct of 193 provídes for the aííow-
ance of a credít to a corporatíon for the amount of the net operatíng
íoss of the precedíng year to the e tent províded ín the varíous sec-
tíons ímposíng ta . Thís net operatíng íoss ís aííowed oníy as a
part of the basíc surta credít under sectíon 27(b) 2, whích íímíts the
credít to ta abíe years begínníng after December 31, 193 .
Sínce under the specífíc provísíons of the ct no credít ís aííowabíe
for the net operatíng íoss of a corporatíon for the caíendar year 1937,
the M Corporatíon ís not entítíed to a credít on account of íts net
operatíng íoss for that year.
S CTION 27(b). € ” CORPOR TION DI ID NDS P D3
CR DIT: SIC SURT CR DIT.
rtícíe 27(b)-í: asíc surta credít.
R NU CT O 1 3
Credít for net operatíng íoss for year 1937. (See I. T. 3290, page
110.)
S CTION 2 (d). € ” CONS NT DI ID NDS CR DIT:
S R OLD RS CONS NTS.
rtícíe 2 (d)-í: Makíng and fíííng of consents. 1939-7-9709
I. T. 250
R NU CT OP 193 .
Sharehoíders consents requíred In connectíon wíth the consent
dívídends credít under sectíon 2 of the Revenue ct of 193 may
be e ecuted by the sharehoíders at any tíme on or before the due
date of the corporatíon s íncome ta return for the ta abíe year
for whích the credít Is cíaímed.
dvíce ís requested as to the tíme wíthín whích the sharehoíders
consents províded for ín sectíon 2 (d) of the Revenue ct of 193
may be e ecuted by the sharehoíders.
Sectíon 2 (d) of the Revenue ct of 193 provídes ín part as
foííows:
(d) Sharehoíder consents. € ” The corporatíon shaíí not be entítíed to a con-
sent dívídends credít wíth respect to any ta abíe year € ”
(1) Uníess It fííes wíth íts return for such year (ín accordance wíth reguía-
tíons prescríbed by the Commíssíoner wíth the approvaí of the Secretary)
sígned consents made under oath by persons who were sharehoíders, on the
íast day of the ta abíe year of the corporatíon, of any cíass of consent stock
and
(2) Uníess ín each such consent the sharehoíder agrees that he wííí íncíude
as a ta abíe dívídend, ín hís return for the ta abíe year In whích or wíth
whích the ta abíe year of the corporatíon ends, a specífíc amount .
s the consents must be fííed wíth the return, they may be sígned
and sworn to at any tíme before the return ís requíred to be fííed.
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31.
112
It ís heíd, therefore, that a sharehoíder s consent, províded for
under sectíon 2 (d) of the evenue ct of 193 , may be e ecuted as
thereín prescríbed at any tíme on or before the due date of the corpo-
ratíon s íncome tu return for the ta abíe year for whích the consent
dívídends credít ís cíaímed by the corporatíon.
P RT III. € ” CR DITS G INST T .
S CTION 31. € ” T S O OR IGN COUNTRI S ND
POSS SSIONS O UNIT D ST T S.
1939-4-96 4
I. T. 3245
R NU CT O 193 .
The ta known as the ondo Obrero ímposed by the Repubííc
of Panama ís an íncome ta and ís aííowabíe as a credít under
sectíon 31 of the Revenue ct of 193 to the e tent províded ín
sectíon 131 of that ct.
dvíce ís requested whether the ta known as ondo Obrero ím-
posed by the Repubííc of Panama ís aííowabíe as a credít agaínst
ederaí íncome ta under the provísíons of sectíon 31 of the Revenue
ct of 193 .
Tííe ta referred to was íevíed by Law 49 of 1934 and became
effectíve December 24, 1934. The pertínent provísíons of the íaw are
as foííows:
The Natíonaí Congress of Panama Decrees:
rtícíe 1. That there be estabííshed a ta on the profíts or Income that are
obtaíned or deríved from empíoyment, busíness, professíon or any occupatíon
performed ín the Repubííc or gaíns from property or fees of any nature. Thís
ta wííí be caííed the Reserve und of the Laborer and armer.
bt. 2. Wíth the e emptíons set forth ín paragraph 1 of thís artícíe, the
ta created by thís íaw wííí he determíned and coííected on the foííowíng scaíe:
(o) If the net monthíy íncome reaches a totaí of more than 50 baí-
boas and íess than 73 baíboas 2 per cent
€ € € € €
Of more than 2,000 baíboas 5 per cent
P íí OR rn 1. There ís estabííshed an e emptíon of 10 baíboas for each head
of a famííy and 10 addítíonaí baíboas for each chííd or dependent havíng no
íncome. Tííís e emptíon wííí be e tended oníy to those ta payers wíth a net
íncome íess than 75 baíboas.
Par. 2. or those that resíde outsíde of the country under the urísdíctíon of
the Government of Panama, the ta here estabííshed wííí carry an addítíonaí
ta of 20 per cent
rt. 3. The revenues comíng from thís ta wííí be entered ín a pubííc fund,
artícíe 010 of the Department of grícuíture, to be ínvested ín farmíng and ín
saíaríes of íaborers, and there wííí be made on them n specíaí account by the
treasury ín order that they be appííed to the ends desígnated by the íaw.
It ís heíd that the ta known as ondo Obrero ímposed bv the
Repubííc of Panama ís an íncome ta whích, under the provísíons
of sectíon 31 of the Revenue ct of 193 , ís aííowabíe as a credít
agaínst ederaí íncome ta to the e tent províded ín sectíon 131 of
that ct.
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113
41, rt. 41-1.
P RT I . € ” CCOUNTING P RIODS ND M T ODS O
CCOUNTING.
S CTION 41. € ” G N R L RUL .
stícíe 41-1: Computatíon of net íncome. 1939-6-9702
I. T. 3247
R NU CT OP 193 .
The foííowíng rates of e change are accepted by the ureau of
Internaí Revenue as the current or market rates of e change prevaíí-
íng as of December 31, 193 :
Country or cíty.
Monetary unít.
aíue In
terms of
I ííít.-í
Staíes
Itaíy
apan
Me íco .
Netheríands
New Zeaíand
Norway
Panama
Peru _
Phíííppíne Isíands...
Poíand .
Portugaí
Rumanía.
South í
Spaín...
Straíts Settíements.
Sweden ......
Swítzeríand ..
Uruguay .
enezueía ....
Yugosíavía
Líra....
Yen....
Peso...
(íuííder
Pound.
rone..
aíbua.
Soí
Peso...
Zíoty
scu
Leu.
Pound
Peseta
Doííar.
rona
ranc.
Peso...
oíívar
Dínar..
n
270315
. 1W250
. 43W4
. 707750
.233103
1.00UO00
.200132
. 500000
. 1 100
.042243
.00727
4.593333
.540000
. mm
.225405
. 10705
.313479
.02270
41-1: Computatíon of net íncome.
R NU CT O 193 .
1939-7-9710
I. T. 3251
Company, whích keeps íts books of account ..n cash
receípts.and debasements basís, shouíd amortíze over the íífe of the
ease of a buíídíng the amount paíd as íegaí fees for drawíng the
íease, the amount paíd for aíteratíons to the buíídíng, and the
amount paíd as a íeasíng commíssíon. G. C. M 20307 (C 193 -1
157) Is not appíícabíe to the e pendítures In questíon.
dvíce ís requested whether G. C. M. 20307 (C. 193 -1 157)
affects the M Company s method of treatíng certaín e pendítures for
íncome ta purposes.
The M Company reports íts íncome on the cash receípts and dís-
bursements basís. In 193 ít íeased a buíídíng and paíd a íegaí fee of
32 doííars for drawíng the íease whích e píres ín 194 . íteratíons
costíng 41a doííars were aíso made to the buíídíng ín 193 and a
íeasíng commíssíon of 96 doííars was paíd ín that year. The M
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44, rt. 44-5.
114
Company ís amortízíng these e pendítures over the íífe of the íease
and ínquíres whether ín víew of G. C. M. 20307, supra, such actíon
ís correct.
G. C. M. 20307, supra, was based upon the decísíon of the Uníted
States Círcuít Court of ppeaís for the írst Círcuít ín Weích v.
Dc íoís et aí., Trustees (94 ed. (2d), 42), where ít was heíd that a
ta payer who renders ederaí íncome ta returns on the basís of cash
receípts and dísbursements may deduct as ordínary and necessary
busíness e pense ín the year of payment ínsurance premíums on busí-
ness property even though such premíums are paíd ín advance for a
períod of more than one year. G. C. M. 20307 reíates to prepaíd ín-
surance and ís not appíícabíe to the ítems ínvoíved ín the ínstant case
whích shouíd be prorated and deducted over the íífe of the íease.
(See generaííy artícíe 23(a)-10, Reguíatíons 94 I. T. 2263, C. .
-í, 66 (1926).) The M Company, therefore, shouíd contínue to
amortíze over the íífe of the íease of the buíídíng the amount of 32a
doííars paíd as íegaí fees, the amount of 41a doííars paíd for aítera-
tíons to the buíídíng, and the amount of 96a doííars paíd as a íeasíng
commíssíon.
S CTION 42. € ” P RIOD IN W IC IT MS O
GROSS INCOM INCLUD D.
rtícíe 42-1: When íncíuded ín gross íncome.
R NU CT O 193 .
Credíts or refunds under sectíon 516-a of the New York unempíoy-
ment ínsurance íaw. (See I. T. 327 , page 76.)
S CTION 43. € ” P RIOD OR W IC D DUCTIONS
ND CR DITS T N.
rtícíe 43-1: Paíd or íncurred and paíd or accrued.
R NU CT O 193 .
Personaí property ta es ín the State of Pennsyívanía and cíty
(county) of Phííadeíphía, Pa. (See I. T. 3273, page 99.)
S CTION 44. € ” INST LLM NT SIS.
rtícíe 44-5: Gaín or íoss upon dísposítíon of ínstaíí-
ment obíígatíons.
R NU CT O 193 .
mendment of Reguíatíons 101, artícíe 44-5. (See T. D. 4 99,
page 7 .)
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115 555.
P RT . € ” R TURNS ND P YM NT O T .
S CTION 55. € ” PU LICITY O R TURNS.
1939-3-9673
T. D.4 7
Income, e cess-profíts, capítaí stock, estate, gíft ta returns
returns made under Títíe III of the Revenue ct of 1936 and
returns made under Títíe I of the Socíaí Securíty ct
Use of orígínaí returns or en to ínspectíon ín accordance wíth
Use of orígínaí returns open to Inspectíon ín accordance wíth
of returns Inspectíon of returns of corporatíons by State offícers
and sharehoíders and Inspectíon of estate and gíft ta returns.
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. 0.
Coííectors of Internaí Revenue and Others Concerned:
y ecutíve Order dated November 12 193 , the Presídent
ordered that íncome, e cess-profíts, and capítaí stock ta returns,
estate and gíft ta returns made under the Revenue ct of 1932 and
fííed after une 16, 1933, and returns made under Títíe I of the
Socíaí Securíty ct, shaíí be open to ínspectíon ín accordance and
upon compííance wíth the ruíes and reguíatíons promuígated ín
Treasury Decísíon 4 73 approved by the Presídent on the same date
C. . 193 -2, 261 . That Treasury decísíon deaís wíth the ínspec-
tíon of returns ín so far as ínspectíon ís permíssíbíe oníy upon
order of the Presídent and under reguíatíons approved by the
Presídent. Under authoríty of íaw, and wíthout actíon by the
Presídent, returns of corporatíons, e cept íncome and e cess-
rofíts ta returns and returns for the purpose of surta on personaí
oídíng companíes for years begínníng after December 31, 1934,
are open to ínspectíon by the proper offícers of any State
11 returns of corporatíons are open to ínspectíon by bona fíde
sharehoíders of record owníng 1 per cent or more of the outstand-
íng stock and aíí returns under Títíe III of the Revenue ct
01 1936 (or copíes thereof) are open to ínspectíon by any offícíaí,
body, or commíssíon, íawfuííy charged wíth the admínístratíon of
any State ta íaw, íf the ínspectíon ís for the purpose of such ad-
mínístratíon or for the purpose of obtaíníng ínformatíon to be
furníshed to íocaí ta íng authorítíes.
Pursuant to sectíons 62, 409, 601(e), and 602(c) of the Revenue
ct of 193 , sectíons 62, 351(c), and 503(a) of the Revenue ct of
1936, sectíons 105(d) and 106(c) of the Revenue ct of 1935, sectíons
62, 351(c), 701(d), and 702(b) of the Revenue ct of 1934, sectíons
62,403, and 530 of the Revenue ct of 1932, sectíon 62 of the Revenue
ct of 192 , sectíons 257 and 1101 of the Revenue ct of 1926, sectíon
905(c) of the Socíaí Securíty ct, and sectíons 215(e) and 216(b)
of the Natíonaí Industríaí Recovery ct, the foííowíng reguíatíons
re hereby prescríbed wíth respect to the use of orígínaí, and the
furníshíng of copíes of, returns open to ínspectíon ín accordance wíth
Treasury Decísíon 4 73, or otherwíse wíth respect to e amínatíons
by sharehoíders of the returns of corporatíons by State offícers of
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55.
116
returns of corporatíons made under the íncome, capítaí stock, or
e cess-profíts ta provísíons of the Revenue ct 01 1926, the Revenue
ct of 192 , the Revenue ct of 1932, sectíons 215 and 216 of the
Natíonaí Industríaí Recovery ct, the Revenue ct of 1934, the Rev-
enue ct of 1935, the Revenue ct of 1936, the Revenue ct of 193 ,
and under Títíe I of the Socíaí Securíty ct, e cept íncome and
e cess-profíts ta returns and returns for the purpose of surta on
personaí hoídíng companíes for years begínníng after December 31,
1934 wíth respect to the ínspectíon of returns under Títíe III of the
Revenue ct of 1936 by any offícíaí, body, or commíssíon, íawfuííy
charged wíth the admínístratíon of any State ta íaw and wíth
respect to the ínspectíon of estate and gíft ta returns made under
the Revenue ct of 1932 and fííed príor to une 17, 1933, and made
under the Revenue ct of 1926 and under príor Revenue cts. or
ínspectíon by State ta íng offícíaís of íncome returns other than
returns under Títíe III of the Revenue ct of 1936, for any ta abíe
year begínníng after December 31, 1934, see artícíes 55(b)-í to
55(b)-4, íncíusíve, of Reguíatíons 6, as substítuted by Treasury
Decísíon 4626 (C. . -1, 61, 71) and artícíes 55(b)-í to 55(b)-4,
íncíusíve, of Reguíatíons 94, both as amended by Treasury Decísíon
4732 (C. . 1937-1, 145), and sectíon 55 of the Revenue ct of 193 :
P RT I.
Income and cess-Profíts Ta Returns, cept Returns Under Títíe III
op the Revenue ct op 1936, Capítaí Stock Ta Returns, and Returns
Under Títíe I of the Socíaí Securíty ct.
rtícíe 1. Defínítíons. € ” When used In Part I of these reguíatíons € ”
(a) the term return means the orígínaí return (e cept a return under
Títíe III of the Revenue ct of 1936) made for íncome, e cess-profíts, or capítaí
stock ta purposes, or for purposes of the ta ímposed by Títíe I of the
Socíaí Securíty ct
(6) the term corporatíon íncíudes assocíatíons, |oínt-stock companíes, and
ínsurance companíes
(c) the term partnershíp íncíudes a syndícate, group, pooí, |oínt venture,
or other uníncorporated organízatíon, through or by means of whích any busí-
ness, fínancíaí operatíon, or venture ís carríed on, and whích Is not, wíthín the
meaníng of the ederaí ta íaws, a trust or estate or a corporatíon
( Z) the term stock íncíudes shares ín an assocíatíon, |oínt-stock company,
or ínsurance company and the term sharehoíder íncíudes a member ín an
assocíatíon, |oínt-stock company, or ínsurance company.
rt. 2. ccess to returns by State offícers. € ” (1) The proper offícers of a State
are entítíed as of ríght upon the request of íts governor to have access to the
returns of a corporatíon or to an abstract thereof, showíng íts name and íncome.
(2) The request or appíícatíon of the governor must be ín wrítíng, sígned by
hím under the seaí of hís State, and must show why access ís desíred, and the
names and offícíaí posítíons of the offícers desígnated to have the access. The
request or appíícatíon shouíd be addressed to the Commíssíoner, who wííí set
a conveníent tíme and píace for the access to the returns (or to an abstract
thereof as he may determíne).
(3) ccess shaíí bo gíven oníy ín the offíce of the Commíssíoner, uníess such
returns are ín the custody of a coííector of ínternaí revenue or ínternaí revenue
agent ín charge, ín whích event the return may be ínspected ín the offíce of
such coííector or agent, but oníy ín the presence of an ínternaí revenue offícer
desígnated by the coííector or agent for that purpose.
rt. 3. amínatíon of returns by sharehoíder. € ” bona fíde sharehoíder of
record owníng 1 per cent or more of the outstandíng stock of a corporatíon shaíí
be entítíed as of ríght, upon makíng request of the Commíssíoner, to e amíne the
returns of such corporatíon and of Its subsídíaríes. ís request for permíssíon
to e amíne such returns must be made ín wrítíng, verífíed by affídavít, and shaíí
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117
show bís address, the name of the corporatíon, the períod of tíme covered by the
return he desíres to Inspect, the amount of the corporatíon s outstandíng capítaí
stock, the number of shares owned by hím, the date when he acquíred them, and
whether he has the benefícíaí as weíí as the record títíe to such shares. It shaíí
aíso show that he has not acquíred hís shares for the purpose of the e amínatíon
of the returns of the corporatíon. If he has acquíred them for such purpose,
he ís not a bona fíde sharehoíder wíthín the meaníng of the statute. The appííca-
tíon shaíí be supported by satísfactory evídence showíng that the appíícant
ís a bona fíde sharehoíder of record of the requíred amount of stock of the cor-
poratíon. The supportíng evídence may be In the form of a certífícate sígned by
the presídent or více presídent of the corporatíon and countersígned by the secre-
tary under the corporate seaí. Upon beíng satísfíed from the evídence presented
that the appíícant has fuííy met these condítíons, the Commíssíoner wííí grant
the permíssíon to e amíne the returns and set a conveníent tíme and píace for
the e amínatíon. Thís prívííege ís personaí and wííí be granted oníy to the
sharehoíder, who can not deíegate ít to another. In the case of a corporatíon
whích has been díssoíved, the returns may be e amíned by any person who wouíd
have been entítíed to e amíne them at the date of díssoíutíon.
bt. 4. Penaítíes for díscíosure of returns. € ” Sectíon 3167, Revísed Statutes,
as amended by the Revenue ct of 191 and reenacted wíthout change by
sectíon 1115 of the Revenue ct of 1926, makes It a mísdemeanor puníshabíe
by a fíne not e ceedíng 1,000 or by ímprísonment not e ceedíng one year, or
both, at the díscretíon of the court, for any person to prínt or pubíísh ín any
manner whatever not províded by íaw ínformatíon contaíned ín any Income
return, and further provídes that íf the offender be an offícer or empíoyee of the
Uníted States he shaíí be dísmíssed from offíce or díscharged from empíoyment
The penaítíes províded ín sectíon 3167, Revísed Statutes, are appíícabíe aíso to
díscíosure of ínformatíon contaíned ín e cess-profíts and capítaí stock ta returns
and returns made under Títíe I of the Socíaí Securíty ct
P RT II.
etubns Undeb Títíe III of the Revenue ct or 1936.
rtícíe 1. Inspectíon of returns by State ta íng offícíaís. € ” Orígínaí returns
of ta es ímposed by Títíe III shaíí be open to Inspectíon, at conveníent tímes
and píaces, by any offícíaí, body, or commíssíon íawfuííy charged wíth the ad-
mínístratíon of any State ta íaw, or by the representatíves of such offícíaí,
body, or commíssíon desígnated ín wrítíng by the governor of the State, for
the purpose of such admínístratíon, or for the purpose of obtaíníng Informatíon
to be furníshed to íocaí ta íng authorítíes, as províded In sectíon 55(b) (1)
and (2) of the Revenue ct of 1936. Requests for permíssíon to ínspect the
returns must be ín wrítíng sígned by the governor under the seaí of hís State,
and must be addressed to the Commíssíoner of Internaí Revenue, Records
Dívísíon, Washíngton, D. C. The request shaíí state (a) the kínd of returns
ít Is desíred to ínspect, (6) the ta abíe year or years covered by the returns ít
ís desíred to ínspect (c) the name of the offícíaí, body, or commíssíon by whom
or whích the ínspectíon ís to be made, (d) the name of the representatíve of
snch offícíaí, body, or commíssíon, desígnated to make the Inspectíon, (e) by
specífíc references, the State ta íaw whích such offícíaí, body, or commíssíon
ís charged wíth admínísteríng and the íaw under whích he, she, or It Is so
charged, (f) the purpose for whích the ínspectíon Is to be made, and (g) If
the ínspectíon ís for the purpose of obtaíníng ínformatíon to be furníshed to
íocaí ta íng authorítíes, (1) the name of the offícíaí, body, or commíssíon of
any poíítícaí subdívísíon of the State, íawfuííy charged wíth the admínístra-
tíon of the ta íaws of such poíítícaí subdívísíon, íf any, to whom or to whích
the ínformatíon secured by the ínspectíon Is to be furníshed, and (2) the pur-
pose for whích the ínformatíon ís to be used by such offícíaí, body, or
commíssíon.
rt. 2. amínatíon of returns by sharehoíder. € ” bona fíde sharehoíder of
record owníng 1 per cent or more of the outstandíng stock of a corporatíon
shaíí be entítíed as of ríght, upon makíng request of the Commíssíoner, to
e amíne the returns of such corporatíon and of íts subsídíaríes. ís request
for permíssíon to e amíne such returns shaíí be made ín wrítíng, verífíed by
affídavít, ant) shaíí show hís address, the name of the corporatíon, the períod
of tíme covered by the return he desíres to ínspect the amount of the corpora-
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11
tíon s outstandíng capítaí stock, the number of shares owned by hím, the date
when he acquíred them, and whether he has the benefícíaí as weíí as the record
títíe to such shares. It shaíí aíso show that he has not acquíred hís shares
for the purpose of the e amínatíon of the returns of the corporatíon. If he
has acquíred them for such purpose, he ís not a bona fíde sharehoíder wíthín
the meaníng of the statute. The appíícatíon shaíí be supported by satísfactory
evídence showíng that the appíícant ís a bona fíde sharehoíder of record of
the requíred amount of stock of the corporatíon. The supportíng evídence may
be ín the form of a certífícate sígned by the presídent or více presídent of the
corporatíon and countersígned by the secretary under the corporate seaí. Upon
beíng satísfíed from the evídence presented that the appíícant has fuííy met these
condítíons, the Commíssíoner wííí grant the permíssíon to e amíne the returns
and set a conveníent tíme and píace for the e amínatíon. Thís prívííege ís
personaí and wííí be granted oníy to the sharehoíder, who can not deíegate ít
to another. In the case of a corporatíon whích has been díssoíved, the returns
may be e amíned by any person who wouíd have been entítíed to e amíne
them at the date of díssoíutíon.
part ín.
state and Gíft Ta Returns ííed on oe efore une 16, 1933.
state ta returns and notíces, and gíft ta returns, shaíí be treated as
prívííeged communícatíons and shaíí not be ínspected nor theír contents dís-
cíosed, e cept as foííows:
rtícíe 1. Inspectíon by e ecutor or donor. € ” Upon appíícatíon to the Commís-
síoner an estate ta return or notíce may be ínspected by the e ecutor, or hís
successor ín offíce, or by hís duíy authorízed attorney ín fact. Upon ííke
appíícatíon a gíft ta return may be ínspected by the donor or by hís duíy
authorízed attorney ín fact.
rt. 2. Díscíosure of ínformatíon by revenue offícer. € ” n ínternaí revenue
offícer engaged ín an offícíaí ínvestígatíon of an estate ta or gíft ta ííabíííty
may díscíose the returned vaíue of any ítem or the amount of any specífíc
deductíon or other íímíted Informatíon, íf such díscíosure ís necessary ín order
to verífy the same or to arríve at a correct determínatíon of the ta . Thís
ríght of díscíosure, however, ís íímíted to the purposes of the Investígatíon,
and ín no case e tends to such ínformatíon as the amount of the estate, the
amount of ta , or other generaí data.
rt. 3. Inspectíon by State offícers. € ” Upon wrítten appíícatíon to the Com-
míssíoner, a return or notíce may be e híbíted, or ínformatíon contaíned thereín
may be díscíosed, to an offícer of any State, for offícíaí use ín connectíon
wíth an estate, ínherítance, íegacy, successíon, gíft, or other ta of the State,
províded a ííke cooperatíon ís gíven by the State to the Commíssíoner of Internaí
Revenue or hís representatíves for use ín the admínístratíon of the ederaí ta
íaws. Such offícer may aíso be permítted to ínspect scheduíes, íísts, and other
statements desígned to be suppíementaí to, or to become a part of, the orígínaí
return, and other records and reports whích contaín ínformatíon Incíuded
or requíred by statute to be íncíuded ín the return.
rt. 4. Inspectíon by person havíng materíaí ínterest. € ” If any other person
has a materíaí ínterest ín ascertaíníng any fact díscíosed by the return, or ín
obtaíníng ínformatíon as to the payment of the ta , he may make a wrítten
appíícatíon to the Commíssíoner of Internaí Revenue for such ínformatíon,
settíng forth the nature of hís ínterest and the purpose of the appíícatíon.
Thereupon, the Commíssíoner may permít an ínspectíon of, or furnísh a copy
of, the return, or may furnísh such ínformatíon as he deems advísabíe.
rt. 5. Inspectíon by Government attorneys. € ” Returns shaíí be open to ín-
spectíon by a Uníted States attorney or by an attorney of the Department of
ustíce ín the course of hís offícíaí dutíes. The request for ínspectíon shaíí be
In wrítíng and, e cept as províded ín artícíe 6, shaíí be addressed to the Com-
míssíoner, and shaíí state the purpose for whích ínspectíon ís desíred. It may
be sígned by the ttorney Generaí, the ssístant to the ttorney Generaí, an
ssístant ttorney Generaí, or a Uníted States attorney.
rt. 6. Returns ín custody of coííector or revenue agent ín charge. € ” If the re-
turn ís ín the custody of a coííector or ínternaí revenue agent ín charge, such
coííector or agent ín charge may, upon ííke wrítten request made to hím, permít
ínspectíon thereof by a Uníted States attorney or an attorney of the Deímrtment
of ustíce. Upon wrítten appíícatíon to hím such coííector or agent ín charge
may aíso permít ínspectíon by the e ecutor or hís successor ín offíce, or hís duíy
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119
So.
authorízed attorney In fact, ín case of estate ta returns, or the donor or hís
duíy authorízed attorney In fact In case of gíft ta returns, ín accordance wíth
these reguíatíons.
P RT I .
Generaí Provísíons.
rtícíe 1. Use of returns ín íítígatíon. € ” The return of an índívíduaí, partner-
shíp, corporatíon, or fíducíary, or a copy thereof, may be furníshed to a Uníted
States attorney for offícíaí use In proceedíngs before a Uníted States grand ury
or ín íítígatíon In any court, íf the Uníted States ís ínterested ín the resuít, or
for use In preparatíon for such proceedíngs or íítígatíon or to an attorney of the
Department of ustíce, for ííke use, upon wrítten request of the ttorney Gen-
eraí, the ssístant to the ttorney Generaí, or an ssístant ttorney Generaí.
If a return or copy ís thus furníshed, It shaíí be íímíted ín use to the purpose for
whích It Is furníshed and Is under no condítíon to be made pubííc e cept to the
e tent that pubíícíty necessarííy resuíts from such use. The orígínaí return wííí
be furníshed oníy In e ceptíonaí cases, and then oníy íf ít ís made to appear
that the ends of |ustíce may otherwíse be defeated. Neíther the orígínaí nor a
copy of a return desíred for use ín íítígatíon ín court wííí be furníshed íf the
Uníted States Government ís not ínterested ín the resuít, but thís provísíon ís
not a íímítatíon on the use of copíes of returns by the persons entítíed thereto.
bt. 2. urníshíng of copíes of returns. € ” copy of a return may be furníshed
to any person who ís entítíed to ínspect such return upon wrítten appíícatíon
therefor and the submíssíon of evídence satísfactory to the Commíssíoner of hís
ríght to receíve the same, e cept that íf a return ís ín the custody of a coííector
or of an ínternaí revenue agent ín charge, such coííector or agent ín charge
may furnísh a copy of such return to a Uníted States attorney, or an attorney
of the Department of ustíce, or to the ta payer or hís duíy authorízed attorney
ín fact, ín accordance wíth these reguíatíons. Certífíed copíes wííí be furníshed
oníy upon specífíc request therefor sent to the Commíssíoner at Washíngton.
The Commíssíoner may prescríbe a reasonabíe fee for furníshíng copíes of
returns.
arr. . Suppíementaí documents, records, and reports. € ” Persons entítíed to
ínspect returns may have access to ínformatíon returns, scheduíes, íísts, and
other statements desígned to be suppíementaí to, or to become a part of, the
returns to whích they are gíven access, and the Commíssíoner may, ín hís
díscretíon, permít such persons to ínspect other records and reports whích
contaín Informatíon íncíuded or requíred by statute to be íncíuded ín the
return.
rt. 4. Thís Treasury decísíon supersedes Treasury Decísíon 479 , approved
March 25, 19 C. . 1933-1, 364 ,
Gut T. eívertnq,
Commíssíoner of Internaí Revenue.
pproved anuary 4, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster anuary 6, 1939, 12.IT p. m.)
1939-21-9 41
T. D.4900
Reguíatíons governíng the ínspectíon of íncome, e cess-profíts,
and capítaí stock ta returns by the Specíaí Commíttee on Un-
merícan ctívítíes, ouse of Representatíves.
Treasury Department,
Washíngton, D. C.
Coííectors of Internaí Revenue and Others Concerned:
Pursuant to the provísíons of sectíon 257(a) of the Revenue ct
of 1926 sectíon 55 of the Revenue ct of 1932, as amended by sectíon
21 (h) of the Natíonaí Industríaí Recovery ct sectíons 215(e) and
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55.
120
216(b) of the Natíonaí Industríaí Recovery ct sectíons 55(a),
701(e), and 702(b) of the Revenue ct of 1934 sectíons 105(e) and
106(c) of the Revenue ct of 1935 sectíons 55(a), 351(c), and
503(a) of the Revenue ct of 1936 and sectíons 55(a), 409, 601(e),
and 602(c) of the Revenue ct of 193 , íncome ta returns made
under the Revenue ct of 1932, the Revenue ct of 1932, as amended
by the Natíonaí Industríaí Recovery ct, the Revenue ct of 1934,
the Revenue ct of 1936, the Revenue ct of 1936, as amended by
the Revenue ct of 1937, and the Revenue ct of 193 , and capítaí
stock and e cess-profíts ta returns made under the Natíonaí Indus-
tríaí Recovery ct, the Revenue ct of 1934, the Revenue ct of
1935, as amended by the Revenue ct of 1936, the Revenue ct of
1936, and the Revenue ct of 193 , for the caíendar year 1932 and
subsequent ta abíe years, shaíí be open to ínspectíon by the Specíaí
Commíttee on Un- merícan ctívítíes, ouse of Representatíves, or
any duíy authorízed subcommíttee thereof, for the purpose of carry-
íng out the provísíons of ouse Resoíutíon 26 (Seventy-sí th Con-
gress, fírst sessíon), passed ebruary 3, 1939. The ínspectíon of
returns hereín authorízed may be by the commíttee or a duíy author-
ízed subcommíttee thereof, actíng dírectíy as a commíttee or a sub-
commíttee, or by or through such e amíners or agents as the com-
míttee or subcommíttee may desígnate or appoínt. Upon wrítten
notíce by the chaírman of the commíttee or of the authorízed sub-
commíttee to the Secretary of the Treasury, gívíng the names and
addresses of the ta payers whose returns ít ís necessary to ínspect
and the ta abíe períods covered by the returns, the Secretary and any
offícer or empíoyee of the Treasury Department shaíí furnísh such
commíttee or subcommíttee wíth any data reíatíng to or contaíned
ín any such return, or shaíí make such return avaííabíe for ínspectíon
by the commíttee or subcommíttee or by such e amíners or agents as
the commíttee or subcommíttee may desígnate or appoínt, ín the offíce
of the Commíssíoner of Internaí Revenue. ny ínformatíon thus
obtaíned by the commíttee or the subcommíttee thereof, whích ís reíe-
vant or pertínent to the purpose of the ínvestígatíon, may be sub-
mítted by the commíttee or the subcommíttee to the ouse.
. Moroknthau, r.,
Secretary of the Treasury.
pproved May 11, 1939.
rankíín D. Rooseveít,
The Whíte ouse.
( ííed wíth the Dívísíon of the ederaí Regíster May 13, 1939, 10.29 a. m.)
CUTI ORD R € ” INSP CTION O INCOM , C SS PRO ITS, ND C PIT L
TOC T R TURNS Y T SP CI L COMMITT ON UN- M RIC N
CTI ITI S, OUS O R PR S NT TI S.
y vírtue of the authoríty vested ín me bv sectíon 257(a) of the
Revenue ct of 1926 (44 Stat., 9, 51) sectíon 55 of the Revenue ct
of 1932 (47 Stat., 169, 1 9) as amended by sectíon 21 (h) of the
Natíonaí Industríaí Recovery ct (4 Stat., 195, 209) sectíons 215(e)
and 216(b) of the Natíonaí Industríaí Recovery ct (4 Stat., 195,
20 ) sectíons 55(a), 701(e), and 702(b) of the Revenue ct of 1934
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121
101, rt. 101-1.
(43 Stat., 6 0, 69 , 770) sectíons 105(e) and 106(c) of the Revenue
d of 1935 (49 Stat., 1014, 101 , 1019) sectíons 55(a), 351(c), and
5.03(a) of the Revenue ct of 1936 (49 Stat., 161 , 1671, 1733, 173 ):
and sectíons 55(a), 409, G01(e), and 602(c) of the Revenue ct of
193 (52 Stat., 447, 47 , 564, 566, 56 ), ít ís hereby ordered that ín-
come, e cess-profíts, and capítaí stock ta returns made under the
Revenue ct of 1932, the Revenue ct of 1932, as amended by the
Natíonaí Industríaí Recovery ct, the Natíonaí Industríaí Recovery
ct, the Revenue ct of 1934, the Revenue ct of 1935, as amended
by the Revenue ct of 1936, the Revenue ct of 1936, the Revenue
ct of 1930, as amended by the Revenue ct of 1937, and the Rev-
enue ct of 193 , for the caíendar year 1932 and subsequent ta abíe
vears, shaíí be open to ínspectíon by the Specíaí Commíttee on Un-
merícan ctívítíes, ouse of Representatíves, or any duíy author-
ízed subcommíttee thereof, for the purpose of carryíng out the
provísíons of ouse Resoíutíon 26, passed ebruary 3,1939 (Seventy-
sí th Congress, fírst sessíon) such ínspectíon to be ín accordance and
upon compííance wíth the ruíes and reguíatíons prescríbed by the
Secretary of the Treasury ín the Treasury decísíon reíatíng to the
ínspectíon of returns by that commíttee, approved by me thís date.
Thís order shaíí be pubííshed ín the ederaí Regíster.
rank | D. Rooseveít.
The Whíte ouse,
May 11, 1939.
( 131)
( ííed wíth the Dívísíon of the ederaí Regíster May 13, 1939, 10.29 a. m.)
SU TITL C € ” SUPPL M NT L PRO ISIONS.
suppíement a. € ” rates of ta .
S CTION 101. € ” MPTIONS ROM T
ON CORPOR TIONS.
etíc e 101-1: Proof of e emptíon. 1939-12-9760
I. T. 3264
R NU CT O 193 .
The M uíídíng Corporatíon, Incorporated for the partícuíar
purpose of buíídíng and maíntaíníng a chapter hou.se for the N
Chapter of the M raterníty, whose stock ís heíd by others than an
e empt corporatíon, Is not entítíed to e emptíon from ederaí
Income ta atíon under the provísíons of sectíon 101(14) of the
Revenue ct of 193 .
dvíce ís requested whether the M uíídíng Corporatíon ís entítíed
to e emptíon from ederaí íncome ta atíon under sectíon 101(14)
of the Revenue ct of 193 .
The organízatíon was íncorporated under the íaws of the State of
R for the foííowíng purposes:
(a) To at aíí tímes and ín every manner possíbíe promote the Interests of the
M raterníty and especíaííy to maíntaín among the aíumnae of the N Chapter
172170 € ” 39 € ” pt. 1 6
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1101, rt. 101(3)- .
122
of the M raterníty fríendshíp and communícatíon aíso to maíntaín contínuous
communícatíon wíth the actíve chapter there nnd to gíve to saíd actíve chapter
aíí possíbíe support and assístance, whether socíaí or fínancíaí
( ) To buííd and maíntaín for saíd N Chapter a chapter house and to thís
end to buy, purchase, or otherwíse acquíre, hoíd, mortgage, encumber, íease, seíí
or otherwíse transfer, híre, rent and deaí ín reaí, personaí or mí ed property of
every kínd and descríptíon sítuated ín the State of R or In any of the Statea
of the Uníted States, and to dírect and do any and aíí of saíd thíngs.
There are nearíy 400 shares of stock of thís corporatíon outstand-
íng, aíí of whích are owned by índívíduaís.
Sectíon 101(14) of the Revenue ct of 193 provídes for the
e emptíon of:
Corporatíons organízed for the e cíusíve purpose of hoídíng títíe to property,
coííectíng íncome therefrom, and turníng over the entíre amount thereof, íess
e penses, to an organízatíon whích ítseíf Is e empt from the ta Imposed by
thís títíe .
The capítaí stock of the corporatíon ís heíd by others than the N
Chapter. It can not be saíd that the property ís heíd e cíusíveíy for
the benefícíaí use of that organízatíon. It ís, therefore, heíd that the
M uíídíng Corporatíon, whích has capítaí stock outstandíng ín the
hands of others than an e empt organízatíon for whích the benefícíaí
use. of the property ís heíd, ís not entítíed to e emptíon under sectíon
101(14) of the Revenue ct of 193 .
rtícíe 101(3)-1: raternaí benefícíary socíetíes. 1939-11-9750
I. T. 32G1
R NU CT OP 193 .
The grand íodge of the order of N, whích Incíudes the N ome
estabííshed for the care of the members of the order, theír depend-
ents, and members of an affíííated order unabíe to earn a ííveííhood
by reason of the Infírmítíes of age. Is entítíed to e emptíon as a
fraternaí benefícíary socíety under sectíon 101(3) of the Revenue
ct of 193 , and contríbutíons to the organízatíon by índívíduaí
donors for the use of the N ome are deductíbíe by such Indívíduaís
ín the manner and to the e tent províded by sectíon 23(o)0 of
the Revenue ct of 103 .
dvíce ís requested whether the grand íodge of the order of ,
whích íncíudes the N ome, ís entítíed to e emptíon from ederaí
íncome ta as a fraternaí benefícíary socíety under the provísíons
of sectíon 101(3) of the Revenue ct of 193 , whích e empts € ”
raternaí benefícíary socíetíes, orders, or assocíatíons, ( ) operatíng under
the íodge system or for the e cíusíve benefít of the members of a fraterníty
ítseíf operatíng under the íodge system and ( ) provídíng for the payment
of íífe. síck, accídent, or other benefíts to the members of such socíety, order,
or assocíatíon or theír dependents
The evídence shows that the organízatíon ís íncorporated under the
íaws of the State of R, that ít ís a fraternaí benefícíary socíety-
operatíng under the íodge system, and that ít ís the governíng organ-
ízatíon of aíí subordínate reíated branches throughout the State of R.
The N ome was chartered by that State but surrendered íts charter
to the grand íodge and conveyed aíí the property heíd by ít to the
and íodge, whích now controís and manages the home through a
ard of trustees. ach subordínate íodge ín the State ís requíred,
to pay to the grand íodge semíannuaííy such amount per member
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123
101, rt. 101(6)-1.
as ís prescríbed by the grand íodge for the support of the grand íodge
and the home. In addítíon the home receíves íncome from the N
ome ndowment und. Thís fund consísts of voíuntary contrí-
butíons and bequests of money or other property and ís controííed
by the endowment fund trustees under the dírectíon of the grand
íodge. The home ís not founded as a hospítaí for the care of persons
temporarííy dísabíed by síckness or accídent. It ís estabííshed for
the care and maíntenance of the members of the order who are
unabíe to earn a ííveííhood by reason of the ínfírmítíes of age and
affííctíons íncídent thereto and who are ín índígent círcumstances
wíthout other means of support and for the care of ínfírm and heíp-
íess wíves and wídows of members of the order, and of heípíess
orphans of members of the order who are wíthout other and proper
provísíons for theír care and educatíon. íí such persons on beíng
admítted to the home are cared for whííe they are members thereof
and are requíred to reíínquísh aíí cíaíms upon theír respectíve íodges
for benefíts (such as wídow s, orphan s, and funeraí benefíts) of any
kínd as a condítíon of theír admíssíon to and support ín the home.
ased upon the facts presented, ít ís heíd that the grand íodp|e
of the order of N, whích íncíudes the N ome of the State of R, ís
entítíed to e emptíon under the provísíons of sectíon 101(3) of the
Revenue ct of 103 .
Contríbutíons to thís organízatíon by índívíduaí donors for the
use of the N ome of the State of R are deductíbíe by such índívídu-
aís ín arrívíng at theír ta abíe net íncomes ín the manner and to the
e tent províded by sectíon 23 (o) 5 of the Revenue ct of 193 .
htk e 101(G)-1: Reíígíous, charítabíe, scíen- 1939-10-9741
tífíc, ííterary, and educatíonaí organízatíons I. T. 325
and communíty chests.
( íso Sectíon 23 (o), rtícíe 23(o)-í, and
Sectíon 23(q), rtícíe 23(q)-í.)
R NU CT O 103 .
The merícan Natíonaí Red Cross and Its varíous chapters,
branches, and au íííaríes are e empt from ederaí íncome ta a-
tíon under sectíon 101(G) of the Revenue ct of 193 , and contrí-
butíons thereto are deductíbíe ín the manner and to the e tent
províded ín sectíon 23(o) and sectíon 23(q) of the Revenue ct
of 193 .
dvíce ís requested whether the merícan Natíonaí Red Cross
and íts constítuent chapters and brandíes are e empt from ederaí
íncome ta atíon under the provísíons of sectíon 101(G) of the Reve-
nue ct of 193 , and whether contríbutíons thereto are aííowabíe
deductíons ín the íncome ta returns of the donors.
The actívítíes of the organízatíon are conducted through chap-
ters, each of whích has one or more branches and au íííaríes through
whích ít operates. ach chapter ís responsíbíe to the natíonaí
organízatíon for the poíícy pursued ín íts dístríct.
It ís heíd that the merícan Natíonaí Red Cross and íts varíous
chapters, branches, and au íííaríes are entítíed to e emptíon from
ederaí íncome ta atíon under the provísíons of sectíon 101(G) of
the .Revenue ct of 193 . Contríbutíons to such organízatíons are
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101, rt. 101(7)-1.)
124
aííowabíe deductíons ín the íncome ta returns of índívíduaís ín the
manner and to the e tent províded by sectíon 23 (o) of the Revenue
ct of 193 . The deductíbíííty of contríbutíons by ta abíe corpora-
tíons ís governed by sectíon 23 (q) of the Revenue ct of 193 .
ktícíe 101 (7)-1: usíness íeagues, chambers 1939-15-97 2
of commerce, reaí estate boards, and boards G. C. M. 21000
of trade.
R NU CT O 193 .
The M ssocíatíon, the membershíp of whích ís composed of
persons, fírms, assocíatíons, and corporatíons, each representíng a
dífferent trade, busíness, occupatíon, or professíon, ín whích any
fírm, assocíatíon, corporatíon, or person whose maín actívíty or
professíon ís not ín competítíon wíth the maín actívíty or professíon
of a member ís eíígíbíe for membershíp, ís entítíed to e emptíon
from ederaí íncome ta atíon as a busíness íeague under the pro-
vísíons of sectíon 101(7) of the Revenue ct of 193 .
dvíce ís requested whether the M ssocíatíon ís entítíed to e emp-
tíon from ederaí íncome ta atíon as a busíness íeague under the
provísíons of sectíon 101(7) of the Revenue ct of 193 .
The purposes for whích the organízatíon was íncorporated, as
províded ín the artícíes of íncorporatíon, are as foííows:
To ínstítute and maíntaín a method of e changíng busíness ínformatíon
among íts members
To create and encourage cooperatíon, busíness effícíency, and servíce to íts
members and to bríng íts members ín touch wíth prospectíve busíness
To encourage íocaí, natíonaí, and foreígn trade e pansíon for the benefít of
íts members
To deveíop the busíness effícíency of íts members, and to promote a better
acquaíntance and cíoser assocíatíon among them.
The by-íaws províde that the membershíp ín the assocíatíon shaíí
be composed of persons, fírms, assocíatíons, and corporatíons, each
representíng a dífferent trade, busíness, occupatíon, or professíon
that any fírm, assocíatíon, corporatíon, or person whose maín actív-
íty or professíon ís not ín competítíon wíth the maín actívíty or
professíon of a member ís eíígíbíe for membershíp ín the assocíatíon
that an appíícatíon for membershíp shaíí not be deníed by reason
of any confííct between the maín actívíty of such appíícant and the
íncídentaí actívíty of a member and that each member of the asso-
cíatíon shaíí desígnate an e ecutíve of íts fírm to be íts representatíve
ín the assocíatíon, and such representatíve shaíí not be changed wíth-
out the approvaí of the board of dírectors of the assocíatíon. The
by-íaws further províde that there shaíí be an admíssíon membershíp
fee, that each member shaíí pay doííars per month for the generaí
e penses of the assocíatíon, and that the management of the organí-
zatíon shaíí ííe vested ín a board of trustees composed of the presí-
dent, více presídent, treasurer, secretary, and fíve others.
The organízatíon hoíds weekíy meetíngs, maíntaíns an offíce, and
empíoys a manager ín order to facííítate the e change of busíness
ínformatíon among íts members, and ín order to create and encourage
coo|)eratíon, busíness effícíency, and servíce to íts members and to
bríng them ín touch wíth prospectíve busíness. It ís stated that the
character of busíness ínformatíon e changed among íts members ís
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125
101(9).
of a saíes and saíes prospect nature. Upon admíssíon to the asso-
cíatíon, each member submíts to the manager a ííst of busíness men
wíth whom he ís acquaínted and to whom he wííí furnísh another
member (or members) a íetter of íntroductíon. ach member of
the assocíatíon agrees to keep other members of the assocíatíon ín-
formed of any busíness changes whích come to hís attentíon and
whích may, by theír nature, índícate potentíaí markets for the saíe
of the products of such other members. t each meetíng of
the assocíatíon certaín members are caííed upon to e píaín
how other members of the assocíatíon can heíp them to secure more
busíness. The íncome of the assocíatíon ís deríved from íts mem-
bers and ís e pended for saíaríes and generaí offíce e penses.
rtícíe 101(7)-1 of Reguíatíon 101, deaííng wíth the e emptíon
of busíness íeagues, reads ín part as foííows:
usíness íeagues, chambers of commerce, reaí estate boards, and boards of
trníe. € ” busíness íeague Is an assocíatíon of persons havíng some common
busíness ínterest, the purpose of whích ís to promote such common ínterest
amí not to engage ín a reguíar busíness of a kínd ordínarííy carríed on for profít.
Ií ís an organízatíon of the same generaí cíass as a chamber of commerce or
board of trade. Thus íts actívítíes shouíd be dírected to the ímprovement of
busíness condítíons of one or more íínes of busíness as dístínguíshed from the
performance of partícuíar servíces for índívíduaí persons.
It wííí be noted that the reguíatíons recogníze that a busíness
íeague wíthín the contempíatíon of sectíon 101(7) ís an organíza-
tíon whích has for íts purpose the promotíon of the busíness ínterests
of those who compose íts membershíp. There ís nothíng ín the regu-
íatíons whích requíres that a busíness íeague promote the betterment
of generaí commercíaí weífare. The reguíatíons mereíy requíre that
the actívítíes of the organízatíon be dírected to the ímprovement
of busíness condítíons of one or more íínes of busíness. Whííe the
ínterests of the members of the ínstant organízatíons are díversífíed,
they are no more so than the busíness ínterests of the members of a
íocaí board of trade or a chamber of commerce.
It ís, accordíngíy, the opíníon of thís offíce that the M ssocíatíon
ís a busíness íeague wíthín the contempíatíon of sectíon 101(7)
of the Revenue ct of 193 .
. P. Wencheí,
Chíef Coumeí, ureau of Internaí Revenue.
Sectíon 101 (9) : Socíaí cíubs. 1939-5-9693
G. C. M. 20647
R NU CTS O 1030 ND 193 .
The M Socíaí Cíub, whích deríves over 75 per cent of íts íncome
from íeasíng part of Its property and ís not supported by member-
shíp fees, dues, and assessments, Is not entítíed to e emptíon from
ederaí íncome ta atíon under sectíon 101(9) of the Revenue cts
of 1936 and 193S.
dvíce ís requested whether the M Socíaí Cíub ís entítíed to e emp-
tíon from ederaí íncome ta atíon under sectíon 101(9) of the Reve-
nue cts of 1936 and 193 , whích e empt € ”
Cíubs organízed and operated e cíusíveíy for píeasure, recreatíon, and other
onprofítabíe purposes, no part of the net earníngs of whích ínures to the benefít
of any prívate sharehoíder
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101(9), rt. 101(10)-1.)
126
or the year 1936 over 75 per cent of the íncome of the M Socíaí
Cíub consísted of íncome from íeasíng a part of íts property, and the
same condítíon e ísted throughout the years 1937 and 193 . The cíub
ín rentíng íts property ís engaged ín a busíness ordínarííy carríed on
for profít. Such actívít ís not carríed on for the accommodatíon of íts
members. It ís, therefore, not operated e cíusíveíy for píeasure,
recreatíon, or other nonprofítabíe purposes wíthín the meaníng of the
statute and ís not supported by membershíp fees, dues, and assessments.
(See artícíe 101 (9)-í of Reguíatíons 94, reíatíng to the Revenue ct of
1936.) It ís evídent from the statement of receípts and e pendítures
for the year 193G that íf the organízatíon díd not have thís source of
íncome, ít wouíd have to modífy or díscontínue íts other actívítíes or
raíse íts membershíp dues, whích ís índícatíve that the rentaís ínure to
the benefít of íts members wíthín the meaníng of the statute. (See
G. C. M. 16 07, C. . -2, 157 (1936), whereín a tennís cíub was
deníed e emptíon under substantíaííy símííar círcumstances.) ur-
thermore, the fact that the íncome may be used entíreíy ín the further-
ance of íts other nonprofítabíe actívítíes ís not suffícíent to |ustífy the
e emptíon. (G. C. M. 16 07, supra G. C. M. 9470, C. . -2, 162
(1931) and The ssocíates v. Commíssíoner, 2 . T. ., 521.)
It ís, therefore, heíd that the M Socíaí Cíub ís not entítíed to e emp-
tíon from ederaí íncome ta atíon under sectíon 101(9) of the Reve-
nue cts of 1936 and 193 .
. P. Wencííeí,
Chíef Counseí, ureau of Internaí Revenue.
rtícíe 101(10)-1: Locaí benevoíent íífe ínsur- 1939-24-9 70
ance assocíatíons, mutuaí írrígatíon and teíe- I. T. 32 6
phone companíes, and ííke organízatíons.
R NU CTS O 1S36 ND 193 .
The M Company, organízed for the purpose of enteríng Into a
contract wíth the Uníted States or Its agencíes for the protectíon
of the banks of the R Ríver agaínst erosíon, the oníy Income of
whích consísts of assessments agaínst property owners affected
soíeíy to meet e penses, no part of such íncome ínuríng to the
benefít of any prívate sharehoíder or índívíduaí, Is e empt from
ederaí íncome ta under sectíon 101(10) of the Revenue cts of
1936 and 193 .
dvíce ís requested whether the M Company ís entítíed to e emp-
tíon from ederaí íncome ta under sectíon 101(10) of the Revenue
cts of 1936 and 193 , whích e empts from ederaí íncome
ta atíon € ”
Renevoíent íífe Insurance assocíatíons of a pureíy íocaí character, mutuaí
dítch or Irrígatíon companíes, mutuaí or cooperatíve teíephone companíes,
or ííke organízatíons but oníy If 5 per centum or more of the Income consísts
of amounts coííected from members for the soíe purpose of meetíng íosses
and e penses.
The M Company was íncorporated ín 1937 for the purpose of en-
teríng ínto contracts wíth the Uníted States or íts duíy constítuted
agencíes for the protectíon of the banks of the R Ríver, that ís, to pre-
vent the banks from beíng damaged by erosíon. The company has
compííed wíth the requírements of the Government by enteríng ínto
an agreement to furnísh the Government a ríght of way and save ít
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127
|us.
harmíess from damages due to constructíon work. It further agreed
to maíntaín the work after compíetíon. Its source of íncome ís from
contríbutíons or assessments agaínst íts members and such amounts
are used to pay e penses. No part of íts íncome ínures to the benefít
of any prívate sharehoíder or índívíduaí.
It ís heíd that the M Company ís e empt from ederaí íncome
ta atíon under the provísíons of sectíon 101(10) of the Revenue cts
of 1936 and 193 .
SUPPL M NT . € ” COMPUT TION O N T INCOM .
S CTION 116. € ” CLUSIONS ROM GROSS INCOM .
1930-10-9742
I. T. 3259
R NU CT O 193 .
The compensatíon for overtíme, paíd pursuant to artícíe 1242,
subdívísíons (a) and (e) of the Customs Reguíatíons of 1937,
to empíoyees of the Customs Servíce statíoned ín Canada ís not
e empt from ederaí íncome ta atíon.
dvíce ís requested as to the treatment for ederaí íncome ta
purposes of compensatíon for overtíme, paíd pursuant to artícíe 1242,
subdívísíons (a) and (e) of the Customs Reguíatíons of 1937, to
empíoyees of the Customs Servíce statíoned ín Canada.
rtícíe 1242(a) of the Customs Reguíatíons of 1937 reads as
foííows:
kt. 1242. tra compensatíon. € ” (a) Customs offícers and empíoyees per-
formíng servíces at níght, or on Sundays and hoíídays, for íadíng or uníadíng
of cargo or merchandíse, or íadíng cargo or merchandíse for transportatíon
ín bond or for e portatíon ín bond or for e portatíon wíth benefít of drawback,
or ín connectíon wíth the receívíng or deíívery of cargo or merchandíse on or
from the wharf, or ín connectíon wíth the uníadíng, receívíng or e amínatíon
of passengers baggage, or In boardíng vesseís, or In the entrance and cíearance
of vesseís, or ín the íssuance and recordíng of theír maríne documents and
ínstruments of títíe, shaíí receíve e tra compensatíon, to be paíd by the master,
owner, or agent of the vesseí, or by the transportatíon company.
rtícíe 1242(e) of the Customs Reguíatíons of 1937 reads as
foííows:
(e) The e tra compensatíon for overtíme servíces ís ín addítíon to the reguíar
compensatíon paíd by the Government ín the case of offícers and empíoyees
whose compensatíon ís fí ed on the ordínary per díem basís and those receívíng
a compensatíon per month or per annum.
ouchers coveríng e tra compensatíon for overtíme servíces are
paíd from the appropríatíon Coííectíng the revenue from customs
for the físcaí year ín whích the servíces are rendered. Coííectíons
from the persons ín ínterest ín payment for such servíces are de-
posíted as a repayment to the appropríatíon from whích the e tra
compensatíon ís paíd. No deductíons are made from the e tra com-
pensatíon for the retírement fund for ederaí empíoyees.
Sectíon 116 of the Revenue ct of 193 provídes ín part:
In addítíon to the ítems specífíed ín sectíon 22(b), the foííowíng ítems shaíí
not be íncíuded ín gross íncome and shaíí be e empt from ta atíon under thís
títíe:
ía) arned íncome from sources wíthout Uníted States. € ” In the case of an
índívíduaí cítízen of the Uníted States, a bona fíde nonresídent of the Uníted
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116.1
12
States for more than sí months duríng the ta abíe year, amounts receíved
from sources wíthout the Uníted States (e cept amounts paíd by the Uníted
States or any agency thereof) íf such amounts wouíd constítute earned íncome
as defíned ín sectíon 25(a) íf receíved from sources wíthín the Uníted States
but such índívíduaí shaíí not be aííowed as a deductíon from hís gross Income
any deductíons properíy aííocabíe to or chargeabíe agaínst amounts e cíuded
from gross íncome under thís subsectíon.
The four controíííng factors ín the appíícatíon of the foregoíng
provísíon of íaw to the case of a partícuíar ta payer are: (í) the
ta payer must be a natíve born or fuííy naturaíízed cítízen of the
Uníted States, (2) he must be away from the Uníted States for more
than sí months of the ta abíe year, (3) he must receíve earned ín-
come wíthín the meaníng of that term as defíned ín sectíon 25(a) of
the Revenue ct of 193 for personaí servíces rendered wíthout the
Uníted States, and (4) the payor of the saíary, wages, or compensa-
tíon must not be the Uníted States or any agency thereof. The ín-
stant empíoyees quaíífy as to requírements (1) and (2), and the
e tra compensatíon receíved for the servíces rendered by the em-
píoyees at níght, on Sundays, and on hoíídays unquestíonabíy con-
stítutes earned íncome wíthín the meaníng of that term as defíned
ín sectíon 25(a) of the Revenue ct of 193 . The soíe questíon at
íssue ís, therefore, whether the payor of the e tra compensatíon ís
the Uníted States, or any agency thereof, or the transportatíon com-
paníes or other persons who are requíred to pay for the overtíme
servíce.
The íast paragraph of sectíon 4 of the ct of May 29, 1930 (46
Stat., 46 ), provídes:
The term basíc saíary, pay. or compensatíon, wherever used ín thís ct,
shaíí be so construed as to e cíude from the operatíon of the ct aíí bonuses,
aííowances, overtíme pay, or saíary, pay, or compensatíon gíven ín addítíon to
the base pay of the posítíon as fí ed by íaw or reguíatíon.
s the overtíme compensatíon of empíoyees of the Uníted States
Government ís not sub|ect to deductíons for the retírement fund ín
whích such empíoyees partícípate, the fact that no deductíons are
made from the e tra compensatíon of customs empíoyees for the
retírement fund ís no test that the amounts so receíved are not paíd
by the Uníted States Government or any agency thereof.
In an opíníon rendered by the ttorney Generaí on ebruary 16,
1933 (37 Ops. tty. Gen., 121), whích reíated to the status of em-
íoyees ín the Insoívent Natíonaí ank Dívísíon of the Offíce of
omptroííer of Currency, ít was heíd that, notwíthstandíng the fact
that the e penses of preíímínary and other e amínatíons made by
such empíoyees are paíd out of the assets of the ínsoívent banks from
funds obtaíned by assessments on the natíonaí banks ín receívershíp
and not from ederaí appropríatíons, the empíoyees must bo regarded
as empíoyees of the Uníted States, and the fact that they are not paíd
from funds appropríated by Congress does not affect theír status as
empíoyees ín the e ecutíve cívíí servíce of the Uníted States.
ppíyíng that príncípíe to the facts ín the ínstant case, thís offíce
ís of the opíníon that the payment ínto the Treasury by the transpor-
tatíon companíes, or others símííaríy ínterested, of the amount of
compensatíon due empíoyees of the Customs Servíce for overtíme
resuíts ín the moneys so paíd beíongíng to the Uníted States.
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129
116, rt. 116-2.
It ís, accordíngíy, heíd that the compensatíon for overtíme paíd to
empíoyees of the Customs Servíce statíoned ín Canada for servíces
rendered at níght, on Sundays, and on hoíídays ís not e empt from
ederaí íncome ta , and that such compensatíon faíís wíthín the e -
ceptíon from earned íncome from sources wíthout the Uníted States
contaíned ín sectíon 116(a) of the Revenue ct of 193 .
rtícíe 116-2: Compensatíon of State offícers 1939-15-97 3
and empíoyees. Ct. D. 1390
state íncome ta € ” ta íaw of new york € ” decísíon of supreme court.
1. Ta on Saíary of mpíoyee op Corporate Instrumentaííty op
the ederaí Government € ” Constítutíonaííty.
The ímposítíon by the State of New York of an íncome ta on the
saíary of an empíoyee of the ome Owners Loan Corporatíon, a
corporate ínstrumentaííty of the ederaí Government, does not
ímpose an unconstítutíonaí burden upon that Government.
2. ederaí Income Ta € ” Decísíon Overruíed.
Coííector v. Day (11 Waíí., 113) overruíed, so fnr as It recognízes
an ímpííed constítutíonaí ímmuníty from íncome ta atíon of the
saíaríes of offícers or empíoyees of a State government or íts ínstru-
mentaíítíes.
Supreme Court op the Uníted States.
ark Graven, ohn . Merrííí and ohn P. Iícnnessíí, as Commíssíoners Constí-
tutíng the State Tu Commíssíon of the State of cw York, petítíoners, v. The
Peopíe of the State of eíc York, Upon the Reíatíon of ames . O cefe.
59 S. Ct., r.95.
On wrít of certíorarí to the Supreme Court of the State of New York.
March 27, 1939.
opíníon.
Mr. ustíce Stone deíívered the opíníon of the Court.
We are asked to decíde whether the ímposítíon by the State of New York
of an íncome tu on the saíary of an empíoyee of the ome Owners Loan Cor-
poratíon píaces an unconstítutíonaí burden upon the ederaí Government
Respondent, a resídent of New York, was empíoyed duríng 1931 as an e amín-
íng attorney for the ome Owners Loan Corporatíon at an annuaí saíary of
2,400. In Lís íncome ta return for that year ííe íncíuded hís saíary as sub|ect
to the New York State íncome ta ímposed by artícíe 10 of the ta íaw of New
York (Consoí. Laws, ch. CO). Subdívísíon 2f of sectíon 359, sínce repeaíed,
e empted from the ta Saíaríes, wages and other compensatíon receíved from
the Uníted States of offícíaís or empíoyees thereof, íncíudíng persons ín the
mííítary or navaí forces of the Uníted States. Petítíoners, New York
State ta commíssíoners, re|ected respondent s cíaím for a refund of the ta
based on the ground that hís saíary was constítutíonaííy e empt from State
ta atíon because the ome Owners Loan Corporatíon Is an ínstrumentaííty of
the Uníted States Government and that he, duríng the ta abíe year, was an
empíoyee of the ederaí Government engaged ín the performance of a gov-
ernmentaí functíon.
On revíew by certíorarí the board s actíon was sot asíde by the ppeííate
Dívísíon of the Supreme Court of New York (253 pp. Dív., 91), whose order
n-as affírmed by the Court of ppeaís. (27 N. Y., 221.) oth courts heíd re-
spondent s s|í ary was free from ta on the authoríty of cw York c reí. Rogers
– Graves (209 . S., 401), whích sustaíned the cíaím that New York couíd not
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116, rt. 116-2.
130
constítutíonaííy ta the saíary of an empíoyee of the Panama Raíí Road Co., a
whoííy-owned corporate ínstrumentaííty of the Uníted States. We granted
certíorarí December 10, 193 , the constítutíonaí questíon presented by the
record beíng of pubííc ímportance.
The ome Owners Loan Corporatíon was created pursuant to sectíon 4(a)
of the ome Owners Loan ct of 1933 ( 4 Stat, 12 , 12 U. S. O., sectíon 14 1
et seq.), whích was enacted to províde emergency reííef to home owners, partícu-
íaríy to assíst them wíth respect to home mortgage índebtedness. The corpora-
tíon, whích ís authorízed to íend money to home owners on mortgages and to
refínance home mortgage íoans wíthín the purvíew of the ct, ís decíared by
sectíon 4(a) to be an ínstrumentaííty of the Uníted States. Its shares of stock
are whoííy Government-owned. (Sectíon 4(b).) Its funds are deposíted In
the Treasury of the Uníted States, and the compensatíon of íts empíoyees Is
paíd by drafts upon the Treasury.
or the purposes of thís case we may assume that the creatíon of the ome
Owners Loan Corporatíon was a constítutíonaí e ercíse of the powers of the
ederaí Government. (Cf. ay Uníted States, 303 U. ., 1.) s that
Government deríves íts authoríty whoííy from powers deíegated to ít by the
Constítutíon, íts every actíon wíthín íts constítutíonaí power ís governmentaí
actíon, and sínce Congress ís made the soíe udge of what powers wíthín the
constítutíonaí grant are to be e ercísed, aíí actívítíes of government constítu-
tíonaííy authorízed by Congress must stand on a paríty wíth respect to theír
constítutíonaí ímmuníty from ta atíon. (McCuííoch v. Maryíand, 4 Wheat.,
316, 432 an rockíín v. Tennessee. 117 U. S., 151, 15 -159 South Caroíína v.
Uníted States, 199 U. ., 437, 451-452 eívcrírtg v. crhardt, 04 U. S., 405,
412-115 Ct. D. 1343, C. . 193 -1, 246 .) nd when the Natíonaí Government
íawfuííy acts through a corporatíon whích ít owns and controís, those actívítíes
are governmentaí functíons entítíed to whatever ta ímmuníty attaches to those
functíons when carríed on by the Government ítseíf through íts departments.
(See McCuííoch v. Maryíand, supra, 421-422 Smíth v. ansas Cíty Títíe Co.,
255 U. S., 1 0, 20 ederaí Land ank y. Crosíand, 261 U. S., 374 New York
em reí. Rogers v. Graves, supra.)
The síngíe questíon wíth whích we are now concerned Is whether the ta
íaíd by the State upon the saíary of respondent, empíoyed by a corporate ínstru-
mentaííty of the ederaí Government, Imposes an unconstítutíonaí burden upon
that Government. The theory of the ta ímmuníty of eíther Government, State
or Natíonaí, and íts ínstrumentaíítíes, from ta atíon by the other, has been
rested upon an Impííed íímítatíon on the ta íng power of each, such as to fore-
staíí undue Interference, through the e ercíse of that power, wíth the govern-
mentaí actívítíes of the other. That the two types of ímmuníty may not, In
aíí respects, stand on a paríty has been recognízed from the begínníng
McCuííoch v. Maryíand, supra, 435-430), and possíbíe dífferences ín appíícatíon,
derívíng from dífferences ín the source, nature and e tent of the Immuníty of the
Governments and theír agencíes, were poínted out and díscussed by thís Court
ín detaíí duríng the íast term. eívcrína v. Oerhardt, supra, 412-413, 416.)
So far as now reíevant, those dífferences have been thought to be traceabíe
to the fact that the ederaí Government ís one of deíegated powers ín the
e ercíse of whích Congress Is supreme so that every agency whích Congress can
constítutíonaííy create ís a governmentaí agency. nd sínce the power to create
the agency Incíudes the ímpííed power to do whatever ís needfuí or appropríate,
íf not e pressíy prohíbíted, to protect the agency, there has been attríbuted to
Congress some scope, the íímíts of whích It ís not now necessary to defíne, for
grantíng or wíthhoídíng ímmuníty of ederaí agencíes from State ta atíon.
(See an ííen v. The ssessors, 3 Waíí., 573, 5 3, 5 5 ank v. Supervísors,
7 Waíí., 26, 30, SI Thomson v. Pacífíc Raííroad. 9 Waíí., 579, 5S , 590 Peopíe v.
Weaver, 100 U. S., 539, 5-13 Mercantííe ank v. New York, 121 U. S., 13 , 154
Owensboro Natíonaí ank v. Owcvsboro, 173 U. S., 604, 66 Shaw v. íbson-
Zahníser Oíí Corporatíon, 276 U. S., 575, 5 1 Okíahoma v. arnsdaíí Corporatíon,
290 U. S € ž 521, 525-526 aítímore Natíonaí ank v. State Tan Comm n, 297
U. S., 209, 211-212 Rr tísh-.Unerícan Co. v. oard, 299 U. S., 159 amrs v. Draro
Contrartírv Co., 302 U s., 134, 161 eíverínn v. Ocrhardt, supra, 411, 412, 417
cf. Uníted States v. ckíns, C4 U. S., 27, 62.) Whether íts power to grant
ta e emptíons as an íncídent .to the e ercíse of powers specífícaííy granted by
the Constítutíon can ever, ín any círcumstances, e tend beyond the constítutíonaí
Immuníty of ederaí agencíes whích courts have Impííed, Is a questíon whích
need not now be determíned.
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131
5 116, rt. 116-2.
Congress has decíared In sectíon 4 of the rt that the Iíome Owners Loan
Corporatíon Is au ínstrumentaííty of the Uníted States and that íts bonds
are e empt, as to príncípaí and ínterest, from ederaí and State ta atíon, e cept
surta es, estate, ínherítance and gíft ta es. The corporatíon ítseíf, íncíud-
íng íts franchíse, íts capítaí, reserves and surpíus, and íts íoans and íncome, ís
ííkewíse e empted from ta atíon íts reaí property ís sub|ect to ta to the
same e tent as other reaí property. ut Congress has gíven no íntímatíon of
any purpose eíther to grant or wíthhoíd ímmuníty from State ta atíon of the
saíary of the corporatíon s empíoyees, and the congressíonaí íntentíon ís not to be
gathered from the statute by Impíícatíon. (Cf. aítímore Natíotwí ank v.
State Ta Comm n, supra.)
It Is true that the sííence of Congress, when It has authoríty to speak, may
tometímes gíve ríse to an ímpíícatíon as to the congressíonaí puríwse. The
nature and e tent of that ímpíícatíon depend upon the nature of the con-
gressíonaí power and the effect of íts e ercíse.1 ut there ís ííttíe scope for the
appíícatíon of that doctríne to the ta ímmuníty of governmentaí Instrumentaíí-
tíes. The constítutíonaí ímmuníty of eíther government from ta atíon by the
other, where Congress ís sííent, has íts source In an ímpííed restríctíon upon the
powers of the ta íng government. So far as the ímpíícatíon rests upon the pur-
pose to avoíd ínterference wíth the functíons of the ta ed government or the ím-
posítíon upon ít of the economíc burden of the ta , ít ís píaín that there ís no
basís for ímpíyíng a purpose of Congress to e empt the ederaí Government
or Its agencíes from ta burdens whích are unsubstantíaí or whích courts are
unabíe to díscern. Sííence of Congress ímpííes ímmuníty no more than does
the sííence of the Constítutíon. It foííows that when e emptíon from State
ta atíon Is cíaímed on the ground that the ederaí Government ís burdened by
the ta , and Congress has díscíosed no íntentíon wíth respect to the cíaímed
ímmuníty, ít ís ín order to consíder the nature and effect of the aííeged burden,
and íf ít appears that there ís no ground for ímpíyíng a constítutíonaí ímmuníty,
there Is equaííy a want of any ground for assumíng any purpose on the part of
Congress to create an ímmuníty.
The present ta ís a nondíscrímínatory ta on Income appííed to saíaríes at
a specífíed rate. It Is not ín form or substance a ta upon the ome Owners
Loan Corporatíon or Its property or Income, nor ís ít paíd by the corporatíon
or the Government from theír funds. It ís íaíd upon íncome whích becomes the
property of the ta payer when receíved as compensatíon for hís servíces and
the ta íaíd upon the prívííege of receívíng ít ís paíd from hís prívate funds
and not from the funds of the Government, eíther dírectíy or índírectíy. The
theory, whích once won a quaíífíed approvaí, that a ta on íncome ís íegaííy
or economícaííy a ta on Its source, ís no íonger tenabíe ( eíc York c reí. Oohn
v. Graves, 300 U. S., 30 , 313, 314 aíe v. State oard, 302 U. S., 95, 106
e veríno v. Gerhardt, supra cf. Metcaíf t ddy v. Mítcheíí, 269 U. S., 514
T. D. 3 24, C. . -í, 21 (1926) o íím Corporatíon v. Doyaí, 2S0 U. .,
123 ames v. Dravo Contractíng Co., supra, 149 eívcríng v. Mountaín Pro-
ducers Corporatíon, 303 U. S., 376 Ct D. 1321, O. . 193 -1, 343 ), and the
oníy possíbíe basís for ímpíyíng a constítutíonaí ímmuníty from State íncome
ta of the saíary of an empíoyee of the Natíonaí Government or of a govern-
mentaí agency ís that the economíc burden of the ta ís ín some way passed
on so as to ímpose a burden on the Natíonaí Government tantamount to an
ínterference by one Government wíth the other ín the performance of íts
functíons.
In the four cases In whích thís Court has heíd that the saíary of an offícer or
empíoyee of one government or íts ínstrumentaííty was ímmune from ta atíon
by the other, ít was assumed, wíthout díscussíon, that the Immuníty of a govern-
ment or íts ínstrumentaííty e tends to the saíaríes of Its offícers and em-
1 The faííure of Congress to rcsuíntc Interstate commerce has generaííy boon taken to
Sírní/y a cmíRTessíonaí purpose to íeave undísturbed the authoríty of the States to make
reguíatíons affectíng the commerce In matters of pecuííaríy íocaí concern, but to wíthhoíd
from them authoríty to make reguíatíons fíft ctíne those phases of It whích, because of the
Deed of a natíonaí uníformíty, demand that theír reguíatíon, íf any, he prescríbed by a
índe authoríty. (Cooícy v. hoard ní Wardens, 12 ow.. 200, . 110 Mínnenota Rate Canes,
€ O r S 352 9 -400 e u v. Washít íton. 02 U. .. 12. 14 nuth Caroíína State
íhqhu-ay Dtpnrtment . arnweíí íos., 303 D. S., 177, 1 4-1S. , Míík Controí oard v.
uenbera arm Products, decíded ebruary 27, 1030.) s to the Impíícatíons from eon-
rrMíínnní sííence In the fíeíd of State ta atíon of ínterstato commerce and Its Instrumen-
ímí. nee Western Líve Stock v. ureau of Revenue, 303 U. S., 250: c ícín, Whíte í
trtítt, Inc., v. Uenneford, decíded anuary 3, 1930.)
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116, rt. 116-2.
132
píoyees Thís assumptíon, made wíth respect to the saíary of a governmentaí
offícer In Dobbíns v. Commíssíoners of ríe County (16 Pet., 435) and In
Coííector v. Day (11 Waíí., 113), was íater e tended to confer ímmuníty on
íncome deríved by a íessee from íands íeased to hím by a government ín the
performance of a governmentaí functíon (Gíítespíc v. Okíahoma, 257 U. S., 501
urnet v. Coronado Oíí d Oas Co., 2 5 U. 393 Ct. D. 4 5, C. . I-1, 2G5
(1932) and cases cíted), aíthough the cíaím of a ííke e emptíon from ta on
the íncome of a contractor engaged ín carryíng out a Government pro|ect was
re|ected both ín the case of a contractor wíth a State (Metcaíf f ddy v.
Mítcheíí, supra), and of a contractor wíth the Natíonaí Government ( ames
v. Dravo Contractíng Co., supra).
The uítímate repudíatíon In eíveríng v. Mountaín Producers Corporatíon,
supra, of the doctríne that a ta on the Income of a íessee deríved from a íease
of government owned or controííed íands Is a forbídden ínterference wíth the
actívítíes of the government concerned íed to the ree amínatíon by thís Court,
In the Gerhardt case, of the theory underíyíng the asserted ímmuníty from
ta atíon by one government of saíaríes of empíoyees of the other. It was there
poínted out that the ímpííed ímmuníty of one government and íts agencíes from
ta atíon by the other shouíd, as a príncípíe of constítutíonaí constructíon, be
narrowíy restrícted. or the e pansíon of the Immuníty of the one government
correspondíngíy curtaíís the sovereígn power of the other to ta , and where
that ímmuníty Is ínvoked by the prívate cítízen ít tends to operate for hís benefít
at tho e pense of the ta íng government and wíthout correspondíng benefít
to the government ín whose name the ímmuníty ís cíaímed. (See Metcaíf
ddy v. Mítcheíí, supra, 523-524 ames v. Dravo Contractíng Co., supra, 156-
15 .) It was further poínted out that, as appííed to the ta atíon of saíaríes of
the empíoyees of one government, the purpose of the ímmuníty was not to confer
benefíts on the empíoyees by reííevíng them from contríbutíng theír share of
the fínancíaí support of the other government, whose benefíts they en|oy, or to
gíve an advantage to that government by enabííng ít to engage empíoyees at
saíaríes íower than those paíd for ííke servíces by other empíoyers, pubííc or
€ In Dobbíns v. Commíssíonsrs of ríe County (1 Pet., 4 5) a Pennsyívanía ta . nomí-
naííy íaíd upon the offíce of the captaín of a ederaí revenue cutter, hut roughív measured
by the saíary paíd to the offícer, was heíd Invaííd. The Court seems, to have rested Its
decísíon ín part on the ground that a ta on the emoíuments of hís offíce was the equíva-
íent of a ta upon an actívíty of the Natíonaí Government, and In part on the ground th:ít
It was an Infríngement of the Impííed superíor power of Congress to tí the compensatíon
of Government empíoyees wíthout dímínutíon by State ta atíon.
In Coííector v. Day (11 Waíí.. 113). thís Court hoíd that the saíary of a State probate
udge was constítutíonaííy Immune from ederaí Income ta on the grounds that the saí-
ary of an offícer of a State Is e empt from ederaí ta atíon If the functíon he performs
as an offícer Is e empt, cítíng Dobbíns . Commíssíoner of ríe County, supra, and that
there was an Impííed constítutíonaí restríctíon upon the power of the Natíonaí Govern-
ment to ta a State In the e ercíse of those functíons whích were essentíaí to the maínte-
nance of State governments as they were organízed at the tíme when the Constítutíon
was adopted. The possíbíííty thnt a nondíscrímínatory ta upon the íncome of a State
offícer díd not ínvoíve any substantíaí ínterference wíth the functíoníng of the State
government was not díscussed eíther In thís or the Dobbíns case.
In Netv York e ret. Ropers . O-raves (200 U. S., 401) the questíon was whether the)
saíary of tho generaí counseí of the Panama Raíí Road Co. was e empt from State Income
ta because the raííroad company was an Instrumentaííty of the ederaí Government.
The soíe questíon raísod by the ta íng State was whether the raííroad company was a
Government Instrumentaííty. The court, havíng found that the raííroad company was
such an Instrumentaííty, dísposed of the matter of ta e emptíon of the saíary of Its
empíoyees by decíaríng: The raííroad company beíng Immune from State ta atíon. It
necessarííy resuíts that fí ed saíaríes and compensatíon paíd to Its offícers and empíoyees
In theír capacíty as such are ííkewíse Immune. ( ew York e reí. Rogers . Craves,
supra, 40S.)
In rush v. Commíssíoner (300 . S.. 352 Ct. D. 1212, C. . 1037-1. 217 ) the appíí-
cabíe Treasury reguíatíon upon whích the Government roííed e empted from ederaí ín-
come ta the compensatíon of State offícers and empíoyees for servíces rendered In
connectíon wíth the e ercíse of an essentíaí governmentaí functíon of tho State. The
Court heíd that the maíntenance of the pubííc water system of New York Cíty was an
essentíaí governmentaí functíon, and In determíníng whether the saíary of the engíneer
In charge of that pro|ect was sub|ect to ederaí Income ta the Court decíared, cítíng
ew York rm reí. Rogers v. Craves, supra, 40 : The answer depends upon whether the
water system of the cíty was created and Is conducted In the e ercíse of the cíty s gov-
ernmentaí functíons. If so, Its operatíons are ímmune from ederaí ta atíon and. as a
necessary coroííary, fí ed saíaríes and compensatíon paíd to Its offícers and empíoyees In
theír capacíty as such are ííkewíse Immune. ( rush v. Commíssíoner, supra, SCO.)
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133
116. rt. 116-2.
príTate, but to prevent undue Interference wíth the one government by Imposíng
on It the ta burdens of the other.
In appíyíng these controíííng príncípíes ín the Gerhardt cnse the Court heíd
that the saíaríes of empíoyees of the New York Tort uthoríty, a State ínstru-
mentaííty created by New York and New ersey, were not Immune from ederaí
íncome ta , even thougn the uthoríty be regarded as not sub|ect to ederaí
ta atíon. It was saíd that the ta payers en|oyed the benefít and protectíon
ot the íaws of the níted States and were under a duty, common to aíí cítízens,
to contríbute fínancíaí support to the Government that the ta íaíd on theír
s íaríes and paíd by them couíd be saíd to affect or burden theír empíoyer, the
Port uthoríty, or the States creatíng ít, oníy so far as the burden of the ta
was economícaííy passed on to the empíoyer that a nondíscrímínatory ta
m on the íncome of aíí members of the communíty couíd not be assumed to
obstruct the functíon whích New York and New ersey had undertaken to per-
form, or to cast an economíc burden upon them, more than does the generaí
ta atíon of property and Income whích, to some e tent, íncapabíe of measure-
ent by economísts, may tend to raíse the príce íeveí of íabor and materíaís.
The Court concíuded that the cíaímed ímmuníty wouíd do no more than reííevo
the ta payers from the duty of fínancíaí support to the Natíonaí Government ín
order to secure to the State a theoretícaí advantage, specuíatíve íu character
and measurement and too unsubstantíaí to form the basís of an Impííed constí-
tutíonaí ímmuníty from ta atíon.
The concíusíon reached In the Gerhardt case that ín terms of constítutíonaí
ta ímmuníty a ederaí Income ta on the saíary of an empíoyee ís not a pro-
híbíted burden on the empíoyer makes ít ímperatíve that we shouíd consíder
anew the ímmuníty here cíaímed for the saíary of an empíoyee of a ederaí
Instrumentaííty. s aíready índícated, such dífferences as there may be be-
tween the ímpííed ta ímmuníty of a State and the correspondíng ímmuníty
of the Natíonaí Government and Its ínstrumentaíítíes may be traced to the
fact tbat the Natíonaí Government ís one of deíegated powers, ín the e ercíse
cf whích ít ís supreme. Whatever scope thís may gíve to the Natíonaí Govern-
ment to cíaím Immuníty from State ta atíon of aíí ínstrumentaíítíes whích ít
may constítutíonaííty create, and whatever authoríty Congress may possess as
íncídentaí to the e ercíse of íts deíegated powers to grant or wíthhoíd ímmuníty
from State ta atíon, Congress has not sought ín thís case to e ercíse such power.
ence these dístínctíons between the two types of ímmuníty can not affect
the questíon wíth whích we are now concerned. The burden on government
of a nondíscrímínatory íncome ta appííed to the saíary of the empíoyee of a
government or íts ínstrumentaííty ís the same, whether a State or Natíonaí
Government ís concerned. The determínatíon ín the Gerhardt case that the
ederaí íncome ta ímposed on the empíoyees of the Port uthoríty was not
a burden on the Port uthoríty made ít unnecessary to consíder whether the
uthoríty ítseíf was ímmune from ederaí tn ntíon the cíaímed ímmuníty
faííed because even íf the Port uthoríty were ítseíf ímmune from ederaí
íncome ta , the ta upon the íncome of íts empíoyees cast upon ít no unconstí-
tutíonaí burden.
€ The fact that the e penses of the one government míght be íessened íf níí those who
– .íí wíth ít were e empt from ta atíon by tbe other was thought not to e. an adequate
basís for ta ímmuníty ín Metraíf . ddy v. Mítcheíí (269 U. S. 514) : Group No. 1 Oíí
Corporatíon v. ass (2 3 U. ., 279 Ct I). 330, C. . - 1, 53 (11)31)1) urnet v.
ergíns Trust (26 U. S., 50 Ct, D. 653, C. . II-1, 214 (1933)1) .íame v. Druro
Contractíng Co. (302 . S., 134) Ueíveríng v. Mountaín Producers Corporatíon (303
. S.. 376).
That the economíc burden of a ta on saíaríes ís passed on to the empíoyer or that
empíoyees wííí accept a íower Government saíary because of íts ta Immuníty, are for-
muías whí h have not won acceptance by economísts and can not be |udícíaííy assumed.
s to the passíng on of the economíc burden of the ta . see Rcíígman. Income Ta .
II ncycíopedía of Socíaí Scíences, 626-03 í íehn, Pubííc ínatue (5th I M ), page 320
íí Ií1 t. Pubííc ínance, pa e 240 Lutíí. Pubííc ínance (2d d.), pace 3. .íí. and sec,
Indían Motonícíe Co. v. Untíed Mates (2:3 . S.. 570. 5 1. footnote 1 Ct. It. 354, C. .
€ ” 1, 439 (1931) ). s to preference for Government empíoyment because the saíary Is
ta e empt, ree Díckínson, Compensatíng Industríaí ffort (1937). paces 7- Dougía .
The eaííty of Non-Commercíaí Incentíves ín Industríaí Lífe. Ch. of Tbe Trend of
conomícs (1924) oíume I, etter. conomíc Príncípíes (1915), page 203.
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116, rt. 116-2.
134
ssumíng, as we do, that the ome Owners Loan Corporatíon Is cíothed
wíth the same Immuníty from State ta atíon as the Government ítseíf, we
can not say that the present ta on the íncome of íts empíoyees íays any un-
constítutíonaí burden upon ít. íí the reasons for refusíng to ímpíy a con-
stítutíonaí prohíbítíon of ederaí íncome ta atíon of saíaríes of State empíoyees,
stated at íength ín the Gerhardt case, are of equaí force when ímmuníty ís
cíaímed from State íncome ta on saíaríes paíd by the Natíonaí Government
or íts agencíes. In thís respect we perceíve no basís for a dífference ín resuít
whether the ta ed íncome be saíary or some other form of compensatíon, or
whether the ta payer be an empíoyee or an offícer of eíther a State or the
Natíonaí Government, or of íts ínstrumentaíítíes. In no case ís there basís for
the assumptíon that any such tangíbíe or certaín economíc burden ís ímposed
on the government concerned as wouíd |ustífy a court s decíaríng that the ta -
payer ís cíothed wíth the ímpííed constítutíonaí ta ímmuníty of the govern-
ment by whích he ís empíoyed. That assumptíon, made ín Coííector v. Day,
supra, and ín New York e reí. Rogers v. Graves, supra, ís contrary to the
reasoníng and to the concíusíons reached ín the Gerhardt case and ín Metcaíf
d ddy v. Mítcheíí, supra: Group No. 1 Oíí Corporatíon v. ass (2 3 U. S., 279)
ames v. Dravo Contractíng Co., supra eívcríng v. Mountaín Producers Cor-
poratíon, supra McLoughíín v. Commíssíoner (UO .í U. S., 21 Ct. D. 1316, C. .
193 -1, 243 ). In theír ííght the assumptíon can no íonger be made. Coííector
v. Dap, supra, and New York e reí. Rogers v. Graves, supra, are overruíed so
far as they recogníze an ímpííed constítutíonaí ímmuníty from íncome ta atíon
of the saíaríes of offícers or empíoyees of the Natíonaí or a State Government
or theír ínstrumentaíítíes.
So much of the burden of a nondíscrímínatory generaí ta upon the Incomes
of empíoyees of a government. State or Natíonaí, as may be passed on economí-
caííy to that government, through the effect of the ta on the príce íeveí of
íabor or materíaís, Is but the normaí íncídent of the organízatíon wíthín the
same terrítory of two governments, each possessíng the ta íng power. The
burden, so far as ít can be saíd to e íst or to affect the government ín any
índírect or íncídentaí way, ís one whích the Constítutíon presupposes, and
hence ít can not ríghtíy be deemed to be wíthín an Impííed restríctíon upon the
ta íng power of the Natíonaí and State Governments whích the Constítutíon
has e pressíy granted to one and has confírmed to the other. The ímmuníty
ís not one to be ímpííed from the Constítutíon, because íf aííowed ít wouíd
ímpose to an ínadmíssíbíe e tent a restríctíon on the ta íng power whích the
Constítutíon has reserved to the State governments.
Reversed.
Mr. Chíef ustíce ughes concurs ín the resuít.
Mb. ustíce rankfurter, Concurríno.
I |oín ín the Court s opíníon but deem ít appropríate to add a few remarks.
The voíume of the Court s busíness has íong sínce made ímpossíbíe the earíy
heaíthy practíce whereby the ustíces gave e pressíon to índívíduaí opíníons.1
ut the oíd tradítíon stííí has reíevance when an Important shíft ín constítu-
tíonaí doctríne ís announced after a reconstructíon ín the membershíp of the
Court. Such shífts of opíníon shouíd not deríve from mere prívate udgment.
They must be duíy míndfuí of the necessary demands of contínuíty ín cívííízed
socíety. reversaí of a íong current of decísíons can be ustífíed oníy If rooted
ín the Constítutíon ítseíf as an hístoríc document desígned for a deveíopíng
natíon.
or 120 years thís Court has been concerned wíth cíaíms of ímmuníty from
ta es ímposed by one authoríty ín our duaí system of government because of
the ta payer s reíatíon to the other. The basís for the Court s Interventíon ín
thís fíeíd has not been any e píícít provísíon of the Constítutíon. The States,
after they formed the Uníon, contínued to have the same range of ta íng
power whích they had before, barríng oníy dutíes affectíng e ports. Imports, and
on tonnage. Congress, on the other hand, to íay ta es ín order to pay the
Debts and províde for the common Defense and generaí Weífare of the Uníted
States ( rtícíe I, sectíon ), can reach every person and every doííar ín tho
íand wíth due regard to constítutíonaí íímítatíons as to the method of íayíng
Tho state of the (íocket of the íích Court of ustraíía and that of the Supreme Court
6f Canada 1 ííí permíts them to contínue the cíassíc practíce of seríatím opíníon .
€ rtícíe I, sectíon 10, Uníted States Constítutíon.
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135
116. rt. 116-2.
toes. ut, as Is true of other great actívítíes of the State and Natíonaí Gov-
ernments, the fact that we are a federaíísm raíses probíems regardíng these
vítaí powers of ta atíon. Sínce two governments have authoríty wíthín the
same terrítory, neíther through íts power to ta can be aííowed to críppíe the
operatíons of the other. Therefore State and ederaí Governments must avoíd
e actíons whích díscrímínate agaínst each other or obvíousíy ínterfere wíth one
another s operatíons. These were the determíníng consíderatíons that íed the
great Chíef ustíce to stríke down the Maryíand statute as an unambíguous
measure of díscrímínatíon agaínst the use by the Uníted States of the ank
of the Uníted States as one of íts ínstruments of government.
The arguments upon whích McCuííoch v. Maryíand (4 Wheat., 310) rested
had theír roots ín actuaííty. ut they have been dístorted by sterííe refínements
unreíated to affaírs. These refínements deríved authoríty from an unfortunate
remark ín the opíníon ín McCuííoch v. Maryíand. Partíy as a fíourísh of rhet-
oríc and partíy because the ínteííectuaí fashíon of the tímes índuíged a free
use of absoíutes, Chíef ustíce Marshaíí gave currency to the phrase that the
power to ta ínvoíves the power to destroy. (Id., at page 431.) Thís díctum
was treated as though ít were a constítutíonaí mandate. ut not wíthout pro-
test. One of the most trenchant mínds on the Marshaíí court, ustíce Wííííam
ohnson, earíy anaíyzed the dangerous ínroads upon the poíítícaí freedom of
the States and the Uníon wíthín theír respectíve orbíts resuítíng from a doc-
trínaíre appíícatíon of the generaíítíes uttered In the course of the opíníon
ín McCuííoch v. Maryíand. The seductíve cííchd that the power to ta ínvoíves
the power to destroy was fused wíth another assumptíon, ííkewíse not to be
found ín the Constítutíon ítseíf, nameíy the doctríne that the ímmunítíes are
correíatíve € ” because the e ístence of the Natíonaí Government ímpííes ímmuní-
tíes from State ta atíon, the e ístence of State governments ímpííes equívaíent
ímmunítíes from ederaí ta atíon. When thís doctríne was fírst appííed Mr.
ustíce radíey regístered a powerfuí díssent, the force of whích gathered
rather than íost strength wíth tíme. (Coííector v. Day, 11 Waíí., 113, 12 .)
íí these doctrínes of íntergovernmentaí ímmuníty have untíí recentíy been
movíng ín the reaím of what Líncoín caííed pernícíous abstractíons. The
web of unreaííty spun from Marshaíí s famous díctum was brushed away by
one stroke of Mr. ustíce oímes s pen: The power to ta ís not the power
to destroy whííe thís Court síts. (Panhandíe Oíí Co. v. Míssíssíppí, 277 U. S.,
21 , 223 (díssent).) aííure to e empt pubííc functíonaríes from the uníversaí
dutíes of cítízenshíp to pay for the costs of government was hypothetícaííy
transmuted ínto hostííe actíon of one government agaínst the other. suc-
cessíon of decísíons thereby wíthdrew from the ta íng power of the States and
Natíon a very consíderabíe range of weaíth wíthout regard to the actuaí work-
íngs of our federaíísm, and thís, too, when the fínancíaí needs of aíí governments
began steadííy to mount. These decísíons have encountered íncreasíng díssent.
In víew of the powerfuí puíí of our decísíons upon the courts charged wíth
maíntaíníng the constítutíonaí equíííbríum of the two other great ngíísh
federaíísms, the Canadían and the ustraíían courts were at fírst íncííned to
foííow the earííer doctrínes of thís Court regardíng íntergovernmentaí Immuníty.
oth the Supreme Court of Canada and the ígh Court of ustraíía on fuííer
TTestnn v. Cíty Councíí of Charíeston (2 Pet.. 449. 472-473).
I díssent from the opíníon of the Court In thís case because, It seems to me that ttíe
Generaí Government has the same power of ta íng the íncome of offícers of the State
írorernments as ít has of ta íng that of íts own offícers. € € € In my tudgment, the
íímítatíon of the power of ta atíon ín the. Generaí Government, whích the present decí-
síon estabííshes, wííí be found very díffícuít of controí. Where are we to stop ín enumer-
atíng the functíons of the State governments whích wííí ho ínterfered wíth by ederaí
ta atíon € € € ow can we now teíí what the effect of thís decísíon wííí be I can
not but regard ít as founded on a faííacy, and that ít wííí íead to míschíevous conse-
quences. (11 Waíí., 113. 12S-129.)
g., Gíííespíe v. Okíahoma (2 7 T . S., 5011 Panhandíe Oíí Co. v. Ifíssíssíppí (277
T S 01 ) – Mara 11 en Co. v. Massachusetts (279 U. S., 020) : Indían Motacyeíe Co. v.
nítr d btates I2S3 U. ., f 70) urnet . Coronado Oíí íf (ías Co. (2 5 T . S., 393) : . eto
Tort e rcí. ogert . Uraves (299 U. S., 401) rush . Commíssíoner vf Internaí
Revenue (300 T . S., 352).
g Mr ustíce randeís, díssentíng. In aybírd Míníng Co. v. Wc.tr (271 T . € ž 009,
613)- ustíce oímes, díssentíng. In Panhandíe Oíí Co. v. Míssíssíppí (277 T . S., 21 ,
€ ) € Mr ustíce Stone, díssentíng, ín Indían Motocycír Co. . Uníted Stats (2 3 TT. S.,
r t kwn ífr ustíce Roberts, díssentíng, ín rush v. Commíssíoner of Internaí Rcrcnua
t3 í v s 352, 374). See, aíso, Mr. ustíce íack, concurríng, In eíveríng v. Oerhardt
antSof4Toro4nt r. Lambe (12 pp. Cas.. 573) D mdcn v. redder (1 C. L. It.. 91).
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116, rt. 116-1.
136
consíderatíon € ” and for present purposes the rítísh North meríca ct ( 0 and
31 íct, ch. 3), and the Commonweaíth of ustraíía Constítutíon ct (63 and
64 íct, ch. 12), raíse the same íegaí Issues as does our Constítutíon € ” haye
compíeteíy re|ected the doctríne of Intergovernmentaí Immuníty. In thís
Court díssents have graduaííy become ma|oríty opíníons, and even before the
present decísíon the ratíonaíe of the doctríne had been undermíned.10
The |udícíaí hístory of thís doctríne of Immuníty ís a stríkíng íííustratíon of
an occasíonaí tendency to encrust unwarranted ínterpretatíons upon the Con-
stítutíon and thereafter to consíder mereíy what has been |udícíaííy saíd about
the Constítutíon, rather than to be prímarííy controííed by a faír conceptíon of
the Constítutíon. udícíaí e egesís Is unavoídabíe wíth reference to an organíc
act ííke our Constítutíon, drawn ín many partícuíars wíth purposed vagueness
so as to íeave room for the unfoídíng future. ut the uítímate touchstone of
constítutíonaííty Is the Constítutíon ítseíf and not what we have saíd about ít.u
Neíther Dobbíns v. Commíssíoners (16 Pet., 435), and Its offspríng, nor Coííector
v. Day. supra, and íts, can stand appeaí to the Constítutíon and íts hístoríc
purposes. Sínce both are the startíng poínts of an ínterdependent doctríne,
both shouíd be, as I assume them to he, overruíed thís day. Whether Congress
may, by e press íegísíatíon, reííeve íts functíonaríes from theír cívíc obíígatíons
to pay for the benefíts of the State governments under whích they ííve Is matter
for another day.
Mb. ustíce utíer, Díssentíng.
Mr. ustíce McReynoíds and I are of opíníon that the ome Owners Loan
Corporatíon, beíng an ínstrumentaííty of the Uníted States heretofore deemed
ímmune from State ta atíon, ít necessarííy resuíts, as heíd ín New York e
reí. Ropers v. Graves (1937) ( OS) U. S., 401), that fí ed saíaríes and com-
pensatíon paíd to íts offícers and empíoyees In theír capacíty as such are ííke-
wíse ímmune and that the |udgment of the State court, unquestíonabíy
requíred by that decísíon, shouíd be affírmed.
rom the decísíon |ust announced, ít Is cíear that the Court has overruíed
Dobbíns v. The Commíssíoners of ríe County (1S42) (1C Pet., 4, )), Coííector v.
Day (1 71) (11 Waíí., 113), New York e reí. Rogers v. Graves, supra, and
rush v. Commíssíoner (1937) (300 U. S., 352). Thus now It appears that the
Uníted States has aíways had power to ta saíaríes of State offícers and
empíoyees and that símííaríy free have been the States to ta saíaríes of offícers
and empíoyees of the Uníted Síates. The compensatíon for past as weíí as for
future servíce to be ta ed and the rates prescríbed In the e ertíon of the newíy
díscíosed power depend on íegísíatíve díscretíon not sub|ect to |udícíaí revísíon.
utííe índeed are the vague íntímatíons that thís Court may protect agaínst
e cessíve or destructíve ta atíon. Where the power to tn e ísts, íegísíatures
may e ert ít to destroy, to díscourage, to protect or e cíusíveíy for the purpose
of raísíng revenue. (See e. g. cazíe ank v. enno, Waíí., 533, 54S MrCray
v. Uníted States, 195 U. S., 27, UZ et seq. Magnaíw Co. v. amííton, 292 U. S.,
40, 44 et seq. Cíncínnatí Soap Co. v. Uníted States, 301 U. S., 30S Ct. D. 1227,
C. . 1937-1, 317 .)
ppraísaí of íurkíng or apparent ímpíícatíons of the Court s opíníon can serve
no usefuí end for, shouíd occasíon aríse, they may be Ignored or gíven dírectíon
dífferíng from that at fírst seemíngíy Intended. ut safeíy ít may be saíd that
presentíy marked for destructíon ís the doctríne of recíprocaí Immuníty that
by recent decísíons here has been so much Impaíred.
specíaííy ís thís true of the ustraíían Constítutíon. One of Its framers. who after-
wards became one of the most dístínguíshed of ustraíían |udges, Mr. ustíce íggíns,
characterízed It as havíng foííowed our Constítutíon wíth pedantíc Imítatíon. í u -
trííínstnn Temperance and Generaí Mutuaí Lífe ssurance Co., Ltd., v. ííowe, 31 C. L. R..
200, 330.)
€ booft v. Cítu of t. ohn (40 Can. Sup. Ct., 507) Caron v. The ínq (1924) ( . C,
900) mníqamated Socíety of ngíneers v. deíaíde Steamshíp Co., Ltd. (2 C. L. R.,
120) : Went v. Commíssíoner of Ta atíon (56 C. L. R., 657).
10 . g., ames v. Dravo Contractíng Co. (302 D. ., 134) : ííeíveríng . Mountaín Pro-
ducers Corporatíon (303 . S., 37( ) : freívertno . Oerhardt ( í04 . 9., 405).
u Compare Taney C. ., In Passenger Cases (7 ow., 2 3, 470) : I € € € am
quíte wííííng that ít be regarded as the íaw of thís court, that Its opíníon upon the con-
structíon of the Constítutíon ís aíways open to díscussíon when It Is supposed to have been
founded In error, and that Its udícíaí authoríty shouíd hereafter depend aítogether on
the force of the reasoníng by whích It Is supported.
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137
I 117, rt. 117-1.
btícíe 116-2: Compensatíon of State offícers and empíoyees.
R NU CT O 193 .
Ta abíííty of compensatíon receíved by ederaí offícers and em-
píoyees and offícers and empíoyees of States or poíítícaí subdívísíons
thereof. (See Mím. 4916, page 71.)
S CTION 117. € ” C PIT L G INS ND LOSS S.
rtícíe 117-1: Meaníng of terms. 1939-4-96 5
I. T. 324G
R NU CT O 193 .
In appíyíng sectíon 117(a )1 of the Revenue ct of 103 to a
saíe or other dísposítíon of reaí property consístíng of íand and ím-
provements, the net proceeds of saíe shouíd be apportíoned on the
basís of the vaíue of the íand and the vaíue of the deprecíabíe ím-
provements on the date of saíe.
I. T. 3217 (C. . 193 -2, 94) ampíí ed.
dvíce ís requested wíth respect to the appíícatíon of I. T. 3217
(C. . 193 -2, 94), whích ínvoíved the ínterpretatíon of sectíon
117(a) 1 of the Revenue ct of 19.5 , ín connectíon wíth a síde of cer-
taín ímproved reaí estate used ín busíness.
I. T. 3217 heíd, syííabus, as foííows:
Under sectíon 117(a)í of the Revenue ct of 193 , whích e cíudes from the
term capítaí assets property, used ín the trade or busíness, of a character
whích Is sub|ect to the aííowance for deprecíatíon províded ín sectíon 23(1),
the gaín deríved or íoss sustaíned upon the saíe of ímproved reaí property used
ín trade or busíness constítutes a capítaí gaín or íoss ín so far as such gaín
or íoss Is aííocabíe to the íand and an ordínary gaín or íoss ín so far as aííocabíe
to the deprecíabíe Improvements.
Informatíon ís desíred whether gaín reaíízed ín such a case
shouíd be apportíoned to the íand and ímprovements thereon on the
basís of the vaíues thereof on the date of saíe or on the basís of the
ad|usted costs.
Upon the saíe of reaí property consístíng of íand and ímprove-
ments thereon, the net proceeds of the saíe shouíd be apportíoned on
the basís of the vaíue of the íand and the vaíue of the deprecíabíe
ímprovements on the date of saíe ín order to determíne the amount
reaíízed from the íand and from the deprecíabíe ímprovements sep-
arateíy, and the net profít on each shouíd then be determíned by de-
ductíng the cost or other basís of each part from the respectíve
amounts reaíízed. If the commíssíon on the saíe ís not deducted from
the seíííng príce ín determíníng the proceeds of the saíe, and the
amount appíícabíe to each cíass of assets can not be separateíy de-
termíned, ít shouíd be aííocated on the basís of the separate seíííng
príces.
In the case presented for an appíícatíon of the ruíe, the ta payer
has satísfactorííy estabííshed that the seíííng príce of the property,
13,000, shouíd be aííocated on the basís of 1, 00 to the íand and
1,200 to the buíídíng. The cost of the íand was 1,550 and the cost
of the buíídíng was 1,100. Deprecíatíon on the buíídíng ín the
amount of 233.74 has been sustaíned and aííowed as a deductíon.
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117, rt. 117-1.
13
seíííng commíssíon of 1G5.22 was paíd. The profít on the saíe
was 41 .52, whích shouíd be aííocated to the íand and buíídíngs as
foííows:
|
Land.
uíídíng.
Totaí.
1, 00.00
99.13
1, 200. 00
60.09
3,000.00
165.23
1,700. 7
1,550.00
1,133.91
2, 34.7
Cost € ”
uíkííns 1,100.00
6 .2
2,41(1.29
Net profít
160. 7
267.6
41 . 52
Therefore, ín the case presented, 150. 7 of the gaín ís aííocabíe to
the íand and 267.65 to the buíídíng. I. T. 3217 (C. . 193 -2, 94)
ís ampíífíed accordíngíy.
rtícíe 117-1: Meaníng of terms. 1939-24-9 71
L T. 32 7
R NU CT O 193 .
or the purpose of determíníng capítaí gaíns and íosses under
sectíon 117 of the Revenue ct of 193 , the períod duríng whích an
asset was heíd ís to he computed hy e cíudíng the day on whích the
asset was acquíred by the ta payer and íncíudíng the day on whích
soíd by hím.
dvíce ís requested whether for the purpose of determíníng short-
term capítaí gaíns and íosses for ederaí íncome ta purposes, both
the date of purchase and the date of saíe shouíd be íncíuded ín arrívíng
at the períod duríng whích an asset was heíd.
Sectíon 117 of the Revenue ct of 193 reads ín part as foííows:
Sec. 117. Capítaí Gaíns and Losses.
(a) Defínítíons. € ” s used ín thís títíe € ”
€ € € € €
(2) Short-term capítaí gaín. € ” The term short-term capítaí gaín means
gaín from the saíe or e change of a capítaí asset heíd for not more than
1 months, íf and to the e tent such gaín ís taken ínto account In com-
putíng net íncome
(3) Short-term capítaí íoss. € ” The term short-term capítaí íoss means
íoss from the saíe or e change of a capítaí asset heíd for not more than
1 months, íf and to the e tent such íoss ís taken ínto account ín computíng
net íncome
It ís heíd that for the purpose of determíníng short-term capítaí
gaíns and íosses under sectíon 117 of the Revenue ct of 193 , the
períod duríng whích an asset was heíd ís to be computed by e cíudíng
díe day on whích the asset was acquíred by the ta payer and íncíudíng
the day on whích soíd by the ta payer. Thís hoídíng ís aíso appíí-
cabíe ín aíí other cases ínvoívíng determínatíon of capítaí gaín or íoss
under sectíon 117 of the Revenue ct of 193 . (See L ooper v. Com-
míssíoner, 26 . T. ., 75 , cítíng Sheets v. Scíden s Lessee, 2 Waíí.,
177, Síegehchíffer v. Penn Mutuaí Lífe Ins. Co., 24 ed., 226, and
other cases.)
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139
131. rt. 131-1.
SUPPL M NT C € ” CR DITS G INST T .
S CTION 131. € ” T S O OR IGN COUNTRI S ND
POSS SSIONS O UNIT D ST T S.
rtícíe 131-1: naíysís of credít for ta es. 1939-24-0 72
( íso Sectíon 23(c), rtícíe 23(c)-í.) I. T. 32
R NU CT O 193 .
The tn ímposed under artícíes 20 and 21 of the Me ícan íaw,
Ley deí Impuesto 6obre ía Renta Is not an íncome ta , and
credít therefor ís not aííowabíe under sectíon 131 of the Revenue
ct of 1S . The amount of such ta , however, ís aííowabíe as a
deductíon under sectíon 23(c) of that ct.
dvíce ís requested whether the ta ímposed under artícíes 20 and
21 of the Me ícan íaw Le| deí Impuesto sobre ía Renta ís an
íncome ta , credít for whích ís aííowabíe under sectíon 131 of the
Revenue ct of 193 , reíatíng to credíts for íncome ta es ímposed by
foreígn countríes.
Pertínent provísíons of the íaw are found ín Chapter III, second
scheduíe, artícíes 20 and 21, whích, together wíth the reguíatíons
thereon, read as foííows:
rt. 20. Ta payers who, normaííy or occasíonaííy, receíve Income from any
of the foUowíng sources, are Incíuded under thís scheduíe:
€ € € € € € €
III. € ” € € €
€ € the persons or companíes whích receíve Income ín the country from
the e píoítatíon of movíng pícture fííms shaíí be especíaííy consídered as
íncíuded under thís sectíon.
€ € € € € €
rt. 21. € € .
The ta shaíí be payabíe at the rate of 5 per cent ín the case referred to
ín Sectíon III of the foregoíng artícíe, on the totaí revenue of the dístríbutor
or íessor of the fííms, and be coííectíbíe at the tíme of receípt. €
rtícíe 74 of the reguíatíons reads ín part as foííows:
rt. 74. Persons who are granted the ríght to e píoít cínematograph fííms
by e híbítíng them, shaíí e act a receípt from the dístríbutors or íessors of the
fííms when payíng the amount specífíed ín Sectíon III of artícíe 20 of the íaw.
These receípts shaíí state the totaí amount paíd, 5 per cent beíng payabíe
thereon ín accordance wíth the íast paragraph of artícíe 21 of the íaw. Stamps
for thís amount shaíí be canceíed thereon for account of saíd dístríbutors or
íessors.
It wííí be noted that under artícíes 20 and 21 of the íaw, supra, the
ta payabíe by a motíon pícture company shaíí be at the rate of 5 per
cent on the totaí revenue of the dístríbutor of the fííms. In I. T. 2596
(C. . -2, 1 4 (1931)), ít was heíd that ín generaí a ta based on
gross receípts ís an e císe ta and may not be cíaímed as a credít
under sectíon 131 of the Revenue ct of 193 . Sínce the basís for the
ta here ínvoíved ís totaí revenue, the ta ís ín the nature of an e císe
ta based on the gross receípts of the ta payer. (See I. T. 3193,
C. . 193 -1, 193, whích ínvoíved a dífferent sectíon of the same
Me ícan statute.)
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143, rt. 143-1.
140
It ís heíd, therefore, that the ta ímposed under artícíes 20 and 21
of the Me ícan íaw, Ley deí Impuesto sobre ía Renta, ís not an
íncome ta , and credít therefor ís not aííowabíe under sectíon 131 of
the Revenue ct of 193 . owever, the amount of such ta ís aííow-
abíe as a deductíon under sectíon 23(c) of the Revenue ct of 193 .
SUPPL M NT D. € ” R TURNS ND P YM NT O T .
S CTION 142. € ” IDUCI RY R TURNS.
rtícíe 142-1: íducíary returns. 1939-6-9703
( íso Sectíon 147.) I. T. 324
R NU CT OP 193 .
íducíary returns under the Revenue ct of 193 .
dvíce ís requested whether under the Revenue ct of 193 a
fíducíary ís requíred to fííe a return for a trust whích had a gross
íncome for the year 193 of íess than 5,000 and a net íncome of íess
than 100 (sectíon 142(a) (5) and (G), Revenue ct of 193 ) after
deductíons aííowabíe under sectíon 162 (b) and (c) of that ct, that
ís, dístríbutíons to benefícíaríes.
It ís heíd that where the gross íncome of a trust for the caíendar
year 193 ís íess than 5,000 and the net íncome of the trust under
sectíon 162 of the Revenue ct of 193 ís íess than 100, no return
for ederaí íncome ta purposes ís requíred of the fíducíary uníess a
dístríbutíon of 1,000 or more ís made to a benefícíary, ín whích case
an ínformatíon return under sectíon 147 ís requíred on orm 1041
ínstead of on orm 1099.
S CTION 143. € ” WIT OLDING O T
T SOURC .
rtícíe 143-1: Wíthhoídíng ta at source. 1939-25-9 1
I. T. 3291
R NU CT O ífí .
Where a Canadían cítízen ís actuaííy resídíng ín ngíand and
íías no address ín Canada, a wíthhoídíng agent shouíd, ín accord-
ance wíth the provísíons of sectíon 143(h) of the Revenue ct of
103 , wíthhoíd íncome ta at the rate of 10 per cent, ínstead of 5
per cent, from a dívídend payment upon stock of a domestíc cor-
poratíon.
dvíce has been requested reíatíve to the amount of ta to be de-
ducted at the source from dívídends paíd to upon stock of a domes-
tíc corporatíon.
It appears that ís a Canadían cítízen but resídes ín ngíand for
busíness reasons. The questíon presented ís whether ín víew of the
recíprocaí ta conventíon between the Uníted States and Canada, an
íncome ta of oníy 5 per cent shouíd be wíthheíd from the dívídend
payment or whether 10 per cent shouíd be wíthheíd.
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141
5 143, rt. 143. 3.
rtícíe 1(a) of the recíprocaí ta conventíon between the Uníted
States and Canada, ratífíed ugust 13, 1937, provídes ín part:
The rate of Income ta Imposed by one of the contractíng States, In respect
of Income deríved from sources thereín, upon índívíduaís resídíng ín the other
Stoíe, who are not engaged ín trade or busíness ín the ta íng State and have
no offíce or píace of busíness thereín, shíííí not e ceed 5 per centum for each
ta abíe year € € Itaíícs suppííed.
rtícíe 3 of Treasury Decísíon 4 3 (page 66 of Reguíatíons 101,
page 147, thís uííetín), contaíníng the reguíatíons promuígated
under the Revenue ct of 193 to carry ínto effect the provísíons of
the conventíon between the Uníted States and Canada, provídes ín
part:
Resídent of Canada or corporatíon organízed under the íaws of Canada. € ”
or the purpose of wíthhoídíng, every índívíduaí whose address ís ín Canada
(íncíudíng a nonresídent aííen índívíduaí, fíducíary, or partnershíp) shaíí be
consídered by Uníted States wíthhoídíng agents as a resídent of Canada
€ € € . Itaíícs suppííed.
In the ínstant case, the nonresídent aííen stockhoíder, , ís not
resídíng ín Canada but ís resídíng ín ngíand, and apparentíy he
was resídíng ín ngíand duríng the year 193 when the dívídend wa
paíd. The provísíons of the ta conventíon between the Uníted
States and Canada appíy oníy to índívíduaís resídíng ín the other
State. Moreover, from a readíng of the íanguage contaíned ín sec-
tíon 143(b) of the Revenue ct of 193 , ít ís cíear that íncome ta
6haíí be wíthheíd from dívídends at the rate of 10 per cent where the
nonresídent aííen índívíduaí ís not a resídent of a contíguous country.
It ís heíd, therefore, that where a Canadían cítízen ís actuaííy re-
sídíng ín ngíand and has no address ín Canada, a wíthhoídíng agent
shouíd, ín accordance wíth the provísíons of sectíon 143(b), supra,
wíthhoíd íncome ta at the rate of 10 per cent, ínstead of 5 per cent,
from a dívídend payment upon stock of a domestíc corporatíon.
rtícíe 143-3: emptíon from wíthhoídíng. 1939-1 -9 13
G. C. M. 211 7
R NU CT OP 193 .
rench cítízen resídíng In rance ís e empt from ederaí
Income ta atíon on annuíty payments made to her by a domestíc
Insurance company. owever, ínterest on the proceeds of a íífe ín-
surance poííry paíd to her by the ínsurance company constítutes
ta abíe Income and Is sub|ect to the wíthhoídíng provísíons of sec-
tíon 143(b) of the Revenue ct of 193 .
dvíce ís requested as to the ta abíííty for ederaí íncome ta
purposes of ínterest and annuíty payments made by a domestíc com-
pany to , a rench cítízen.
The ta payer, , acquíred rench cítízenshíp on une € ” , 1937,
the date of her marríage to a rench cítízen. Under the terms of a
poíícy of ínsurance íssued by the M Lífe Insurance Co. of the Uníted
States, and ín accordance wíth an agreement wíth the ínsured, ,
made duríng hís íífetíme, the proceeds of the poíícy are heíd ín
trust by the ínsurance company and ínterest thereon ís paíd monthíy
to the ta payer ín addítíon to an annuíty of doííars a month untíí
uíy 7, 1954. The specífíc questíon ínvoíved ís whether the annuíty
payments and the ínterest on the proceeds of the poíícy are e empt
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143, rt. 143- .
142
from ederaí íncome ta ín víew of the conventíon and protocoí on
doubíe ta atíon between the Uníted States and rance, procíaímed
bv the Presídent of the Uníted States príí 16, 1935, effectíve an-
uary 1, 1936. (See T. D. 4 0, page 5, thís uííetín.)
rtícíe I of the conventíon provídes ín part as foííows:
The foííowíng cíasses of íncome paíd ín one of the contractíng States to a
corporatíon of the other State, or to a cítízen of the íntter State resídíng there,
are e empt from, ta ín the former State:
€ € € €
(c) prívate pensíons and íífe annuítíes.
The term íífe annuítíes ís not defíned ín the conventíon and
protocoí but the term annuíty ís denned ín S. O. 160 (C. . III-2,
CO (1024)) as a stated sum payabíe períodícaííy at stated tímes
duríng íífe, or a specífíed number of years, under an obíígatíon to
make the payments ín consíderatíon of a gross sum paíd for such
obíígatíon. Inasmuch as the annuíty ín the ínstant case ís paíd
by an ínsurance company períodícaííy duríng íífe, or a specífíed
number of years, under an obíígatíon contaíned ín an ínsurance
poíícy, the annuíty ís heíd to come wíthín the provísíons of rtícíe
I (c) of the conventíon quoted above. s the ta payer ís a rench
cítízen resídíng ín rance, the annuíty paíd to her ís e empt from
ta atíon and ís, therefore, not sub|ect to the deductíon of íncome
ta at the source. owever, ínasmuch as there ís no provísíon ín
the conventíon and protocoí, or the reguíatíons íssued thereunder,
whích e empts ínterest from ta atíon, ít foííows that ínterest on
the proceeds of a íífe ínsurance poíícy paíd to by a domestíc
ínsurance company constítutes ta abíe íncome and ís sub|ect to the
wíthhoídíng provísíons of sectíon 143(b) of the Revenue ct of 193 .
(Cf. I. T. 3000, C. . 1937-1, 113 T. D. 4 0, page 5, thís uííetín.)
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
rtícíe 143- : Ownershíp certífícates ín the 1930-20-9 32
case of fíducíaríes and |oínt owners. I. T. 3279
R NU CT O 193 .
In the case of |oínt owners of bonds, íncíudíng estates by the en-
tíretíes, separate ownershíp certífícates must be e ecuted ín behaíf
of e ích |oínt owner showíng hís or her proportíonate part of the
ínterest.
Reference ís made to the íast sentence of artícíe 143- of Reguía-
tíons 101, readíng as foííows:
If bonds are owned oíntíy by two or more persons, a separate ownershíp
certífícate must be e ecuted ín behaíf of each of the owners.
dvíce ís requested as to the appíícabíííty of that sentence to the
case where a bond ís owned |oíntíy by husband and wífe ín a State
where a |oínt tenancy between the two spouses ís recognízed as an
estate by the entíretíes.
The above-quoted sentence of the reguíatíons ís based upon sectíon
143 of the Revenue ct of 193 deaííng wíth the wíthhoídíng of ín-
come ta at the source and sectíon 147 of that ct reíatíng to ín-
formatíon at the source.
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143
íí 14 , rt. 1-1 -2.
or ederaí íncome ta purposes, the State íaw ís controíííng on
the questíon of who ís entítíed to the íncome from property owned
|oíntíy by a husband and wífe as tenants by the entíretíes. Sínce
the specífíc wordíng of the above-quoted provísíon of the reguíatíons
ís broad enough to íncíude ín íts scope aíí forms of |oínt ownershíp,
one form of whích ís tenancy by the entítíes, ít foííows that separate
ownershíp certífícates must be prepared ín behaíf of ea h |oínt owner
showíng hí or her proportíonate part of the ínterest. If separate
íncome ta rvturns are fííed by the husband and wífe, each shouíd
íncíude ín hís or her return the respectíve portíon of the ínterest as
díscíosed by the ownershíp certífícate.
S CTION 147. € ” IN ORM TION T SOURC .
rtícíe 147-1: Return of ínformatíon as to payments of 1,000.
R NU CT O 103 .
Return requíred of fíducíary. (See I. T. 324 , page 140.)
S CTION 14 . € ” IN ORM TION Y CORPOR TIONS.
rtícíe 14 -2: Return of ínformatíon respectíng 1939-6-9704
contempíated díssoíutíon or ííquídatíon. L T. 3249
R NU CT O 193 .
Where under the íaw of the State a corporatíon may be voíuntar-
ííy díssoíved wíthout the adoptíon of a corporate resoíutíon, aníí a
certífícate of díssoíutíon ís e ecuted ín the form requíred and for-
warded to the proper State offícíaí, such actíon wííí be consídered
as the adoptíon of a pían by the corporatíon for íts díssoíutíon
wíthín the meaníng of sectíon 14 (d) of the Revenue ct of 193 ,
requíríng the fíííng of an Informatíon return ín the ease of con-
tempíated díssoíutíon or ííquídatíon of a corporatíon.
dvíce ís requested by the M Company whether ít ís requíred to
fííe an ínformatíon return under sectíon 14 (d) of the Revenue ct
of 193 , and, íf so, the due date of such return.
It ís stated that the corporatíon was duíy díssoíved on ugust 2,
193 , ín accordance wíth the íaws of the State of R by the fíííng of a
certífícate of voíuntary díssoíutíon e ecuted by , who was then the
owner and hoíder of aíí the authorízed and outstandíng stock of the
corporatíon. Sínce neíther a resoíutíon nor a pían for díssoíutíon
was ever adopted, the questíon aríses whether an ínformatíon return
ís requíred pursuant to sectíon 14 (d) of the Revenue ct of 193 ,
whích provídes:
(d) Contempíated díssoíutíon or ííquídatíon. € ” very corporatíon shaíí, wíthín
30 days after the adoptíon by the corporatíon of a resoíutíon or pían for the
díssoíutíon of the corporatíon or for the ííquídatíon of the whoíe or any part
of íts capítaí stock, render a correct return to the Commíssíoner, verífíed under
oath, settíng forth the terms of such resoíutíon or pían and such other ínfor-
matíon as the Commíssíoner shaíí, wíth the approvaí of the Secretary, hí
reguíatíons prescríbe.
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165, rt. 165-1.
144
If such a return ís requíred from the M Company, advíce ís re-
quested as to the due date of the return.
Under the provísíons of artícíe 14 (d)-í of Treasury Decísíon
4 11 (C. . 193 -1, 67), promuígated under the provísíons of sectíon
14 (d) of the Revenue ct of 193 , a corporatíon ís requíred, wíthín
30 days after the adoptíon on or after May 2 ,193 , of any resoíutíon
or pían for or ín respect of the díssoíutíon of the corporatíon or the
ííquídatíon of the whoíe or any part of íts capítaí stock, to fííe wíth the
Commíssíoner an ínformatíon return on orm 966. ííke return ís
requíred to be fííed by the corporatíon ín the case of any amendment
of, or suppíement to, a resoíutíon or pían for or ín respect of the
díssoíutíon of the corporatíon or the ííquídatíon of the whoíe or any
part of íts capítaí stock adopted on, before, or after May 2 , 193 ,
íf such amendment or suppíement was adopted on or after May
2 , 193 .
If under a State íaw a corporatíon may be voíuntarííy díssoíved
wíthout the adoptíon of a corporate resoíutíon or pían símpíy by
compíyíng wíth certaín statutory requírements, and a certífícate of
díssoíutíon ís e ecuted ín the form requíred and forwarded to the
proper State offícíaí, such actíon wííí be consídered as the adoptíon of
a pían by a corporatíon for íts díssoíutíon wíthín the meaníng of sec-
tíon 14 (d) of the ct. The date the certífícate was e ecuted ís heíd
to be the date of adoptíon of the pían.
ccordíngíy, ínasmuch as ugust 2,193 , was the date on whích the
certífícate of díssoíutíon was e ecuted ( and ít was subsequentíy fííed
wíth the proper offícer of the State of R), the return on orm 966 was
cíue to be fííed wíth the ureau wíthín 30 days after ugust 2, or on
or before September 1, 193 . In such a case the date the certífícate of
díssoíutíon was e ecuted shouíd be stated on ííne 4 of the return
and a duíy certífíed copy of such certífícate of díssoíutíon shouíd be
attached to the return. (See ítem 6 of orm 966.)
SUPPL M NT . € ” ST T S ND TRUSTS.
S CTION 165. € ” MPLOY S TRUSTS.
rtícíe 165-1: mpíoyees trusts. 1939-13-9765
( íso Sectíon 23(q) rtícíe 23(p)-í.) I. T. 3266
R NU CT O íOoS.
The pensíon trust created by the M Company and íts subsídíaríes,
effectíve anuary 1, 1939, soíeíy for the purpose of provídíng retíre-
ment annuítíes for aíí of íts empíoyees, íncíudíng offícers, no bene-
fíts or reímbursements from whích may Inure to the empíoyers,
meets the requírements of sectíons 23(p) and 163 of the Revenue
ct of 193 . To the e tent that contríbutíons by the empíoyers to
the fund wííí províde reasonabíe pensíons based on servíces príor
to anuary 1, 1939, they are deductíbíe over a 10-year períod as pro-
víded ín sectíon 23(p) of the Revenue ct of 193 . Contríbutíons
made by the empíoyers wíth respect to servíces rendered by em-
píoyees after anuary 1, 1939, are deductíbíe ín the year contríbuted,
províded the amount of the contríbutíon wíth respect to each
empíoyee when added to hís stípuíated compensatíon does not
e ceed reasonabíe compensatíon for servíces rendered by hím.
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145
I 165. rt. 165-1.
dvíce ís requested € whether the empíoyees pensíon trust created
by the M Company and íts subsídíaríes meets the requírements of
sectíons 23(p) and 165 of the Revenue ct of 193 . dvíce ís aíso
requested as to the proper treatment for íncome ta purposes of
contríbutíons made to the pensíon trust fund by the M Company
and íts subsídíaríes.
Príor to anuary 1, 1939, the M Company had a pensíon pían
whích was a noncontríbutíng pían, the company assumíng the entíre
cost of pensíons. ffectíve anuary 1, 1939, a new pían, under whích
both the empíoyer and empíoyees contríbute, was adopted. The trust
agreement creatíng the pensíon trust effectíve anuary 1, 1939, was
entered ínto wíth a trust company of the cíty of R. Partícípatíon
ín the pensíon pían ís whoííy voíuntary. mpíoyees who had been
ín the servíce of the company or íts controííed subsídíaríes for one
year on December 31,193 , and who had not attaíned the age of more
than 65 years were eíígíbíe to partícípate ín the pensíon pían on an-
uary 1, 1939. The empíoyees ín the servíce of the company and
controííed subsídíaríes on December 31, 193 , and those híred there-
after are eíígíbíe to partícípate ín the pensíon pían on the date on
whích they compíete one year of servíce, províded they have not
attaíned the age of 65 years.
The pensíon pían ís dívíded ínto two maín parts. One part reíates
to servíces rendered príor to anuary 1, 1939, and the other part
reíates to servíces rendered on and after anuary 1, 1939. Under the
fírst part, the M Company and controííed subsídíaríes made a íump-
sum payment to the trustee wíth respect to servíces rendered by em-
píoyees príor to anuary 1, 1939, as to those empíoyees who sígnífíed
theír íntentíon príor to ebruary 1. 1939, to partícípate ín the pen-
síon pían. The fínancíng of the ííabíííty on account of servíces ren-
dered príor to anuary 1, 1939, ís beíng spread over an índefíníte
períod ín amounts dependent on the future fínancíaí condítíons of
the empíoyíng companíes. It ís píanned, however, to make pay-
ments as amounts can be spared up to not more than € ” per cent of
the consoíídated annuaí net earníngs after ederaí ta es. The pen-
síon trust may be amended, modífíed, aítered, or termínated at any
tíme, províded, however, that aíí of the fund shaíí be wed for the
e cíusíve benefít of the trust benefícíaríes. It ís aíso províded that
the trust fund ís created soíeíy for the benefít of the trust benefí-
cíaríes and that no contríbutíon made thereto nor any earníngs of
the fund shaíí under any círcumstances whatsoever be returned to
any one or more of the empíoyers.
Under the second part, reíatíng to servíces rendered after Decem-
ber 31, 193 , equaí contríbutíons are made by the empíoyee and the
empíoyer. Contríbutíons of empíoyees are deducted from theír pay.
The |oínt contríbutíons of empíoyer and empíoyee wíth respect to
servíces rendered after December 31, 193 , are transmítted each
month to the empíoyees trust. Contríbutíons wííí cease when an
empíoyee s monthíy retírement íncome for servíces rendered after
December 31, 193 , reaches a specífíed amount. If an empíoyee
shouíd díe before retírement payments commence, there wííí be pay-
abíe to a benefícíary or benefícíaríes desígnated by hím a sum whích
wííí equaí the empíoyee s own contríbutíons to the pensíon fund,
píus ínterest compounded annuaííy. In case of termínatíon of servíce
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5 165, rt. 165-1.
146
before the retírement date and before the compíetíon of 10 years of
servíce, an empíoyee may eíect to receíve a cash payment equaí to
the amount of hís contríbutíons, píus ínterest compounded annuaííy.
fter 10 years of servíce but before retírement, an empíoyee receíves
a vested ríght to hís ínterest ín the fund acquíred by hís own and
the empíoyer s contríbutíons for servíces rendered after December 31,
193 . n empíoyee who reaches normaí retírement age, and an em-
píoyee who ís retíred wíth the consent of the empíoyer before the
normaí retírement age, receíves a vested ríght to aíí of the retírement
íncome províded for hím for servíces rendered after December 31,
193 . íí of the empíoyees, íncíudíng offícers, of the M Company and
controííed subsídíaríes are eíígíbíe to partícípate ín the pensíon pían.
Sectíon 165 of the Revenue ct of 193 provídes:
mpíoyees Trusts.
(a) emptíon from ta . € ” trust formíng part of a stock bonus, pensíon,
or profít-sharíng pían of an empíoyer for the e cíusíve benefít of some or aíí
of hís empíoyees € ”
(1) íf contríbutíons are made to the trust by such empíoyer, or em-
píoyees, or both, for the purpose of dístríbutíng to such empíoyees the earn-
íngs and príncípaí of the fund accumuíated by the trust ín accordance wíth
such pían, and
(2) íf under the trust ínstrument ít ís Impossíbíe, at any tíme príor
to the satísfactíon of aíí ííabííítíes wíth respect to empíoyees umíer the
trust, for any part of the corpus or íncome to be (wíthín the ta abíe year
or thereafter) used for, or díverted to, purposes other than for the e cíusíve
benefít of hís empíoyees,
shaíí not be ta abíe under sectíon 161, but the amount actuaííy dístríbuted or
made avaííabíe to any dístríbutee shaíí be ta abíe to hím ín the year ín whích
so dístríbuted or made avaííabíe to the e tent that ít e ceeds the amounts paíd
ín by hím. Such dístríbutees shaíí for the purpose of the normaí ta be aííowed
as credíts agaínst net íncome such part of the amount so dístríbuted or made
avaííabíe as represents the ítems of ínterest specífíed ín sectíon 25(a).
(b) Ta abíe year begínníng before anuary 1, 1930. € ” The provísíons of cíause
(2) of subsectíon (a) shaíí not appíy to a ta abíe year begínníng before
anuary 1, 1039.
ased on the foregoíng, ít ís heíd that the pensíon trust ín questíon
quaíífíes as an empíoyees trust under sectíon 165 of the Revenue ct
of 193 . The earníngs of such pensíon trust, therefore, wííí not
constítute ta abíe íncome ín the hands of the trustee. To the e tent
that contríbutíons to the pensíon trust fund by the M Company and
controííed subsídíaríes wíth respect to servíces rendered by empíoyees
príor to anuary 1, 1939, províde reasonabíe pensíons for the em-
píoyee partícípants, the amounts so contríbuted by each company are
deductíbíe over a 10-year períod as províded ín sectíon 23(p) of the
Revenue ct of 193 . Wíth respect to the amounts contríbuted by the
M Company and controííed subsídíaríes for servíces rendered by em-
píoyees after December 31,193 , ít ís heíd that such contríbutíons are
deductíbíe ín the year ín whích contríbuted, províded, however, that
the amount of the contríbutíon for each empíoyee when added to hís
stípuíated compensatíon does not e ceed a reasonabíe compensatíon
for servíces rendered by hím.
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147
| 211, rt. 211-7.
SUPPL M NT . € ” NONR SID NT LI N INDI IDU LS.
S CTION 211. € ” T ON NONR SID NT
LI N INDI IDU LS.
rtícíe 211-71 Ta atíon of nonresídent aííen 1939-4-9690
índívíduaís. T. D. 4 3
( íso Sectíon 231, rtícíe 231-1: Ta atíon of
foreígn corporatíons.
INCOM T .
Reguíatíons wíth respect to the ta atíon of nonresídent aííen
índívíduaís and foreígn corporatíons not engaged ín trade or busí-
ness wíthín the Uníted States and not havíng an offíce or píace of
busíness thereín as affected by the recíprocaí ta conventíon
between the Uníted States and Canada, effectíve anuary 1, 1930.
Treasury Department,
Offíce of Commíssíoner of Internaí Revenue,
Washíngton, D. C.
To Coííectors of Internaí Revenue and Others Concerned:
Paragraph . The recíprocaí ta conventíon between the Uníted
States and Canada whích was ratífíed ugust 13, 1937, provídes as
foííows:
TICI L
The hígh contractíng partíes mutuaííy agree that the Income ta atíon ímposed
ín the two States shaíí be sub|ect to the foííowíng recíprocaí provísíons:
(0) The rate of íncome ta ímposed by one of the contractíng States, ín
respect of íncome deríved from sources thereín, upon índívíduaís resídíng ín the
other State, who arc not engaged ín trade or busíness ín the ta íng State and
have no offíce or píace of busíness thereín, shaíí not e ceed 5 per centum for
each ta abíe year, so íong as an equívaíent or íower rate of Income ta atíon
ís ímposed by the other State upon índívíduaís resídíng ín the former State
who are not engaged ín trade or busíness In such other State and do not have
an offíce or píace of busíness thereín.
(6) The rate of Income ta ímposed by one of the contractíng States, ín
respect of dívídends deríved from sources thereín, upon nonresídent foreígn
corporatíons organízed under the íaws of the other State, whích are not engaged
In trade or busíness ín the ta íng State and have no offíce or píace of busíness
thereín, shaíí not e ceed 5 per centum for each ta abíe year, so íong as an
equívaíent or íower rate of íncome ta atíon on dívídends ís ímposed by the
other State upon corporatíons organízed under the íaws of the former State
whích are not engaged ín trade or busíness ín such other State and do not
have an offíce or píace of busíness thereín.
(c) íther State shaíí be at ííberty to íncrease the rate of ta atíon pre-
scríbed by paragraphs (a) and (6) of thís artícíe, and ín such case the other
State shaíí be reíeased from the requírements of the saíd paragraphs (o)
and (6).
(1) ffect shaíí be gíven to the foregoíng provísíons by both States as and
from the 1st day of anuary, 1936.
rtícíe II.
The provísíons of thís conventíon shaíí not appíy to cítízens of the Uníted
States of meríca domícííed or resídent ín Canada.
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211, rt. 211-7.
14
ettcí.e III.
Thís conventíon shaíí be ratífíed and shaíí take effect Immedíateíy npon
the e change of ratífícatíons whích shaíí take píace at Washíngton as soon as
possíbíe.
Sígned, ín dupíícate, at Washíngton by the duíy authorízed representatíves
of Canada and the Uníted States of meríca, thís 30th day of December, ín the
year of our Lord, one thousand níne hundred and thírty-sí .
Par. . Sectíon 211 of the Revenue ct of 193 provídes:
Sec. 211. Ta on Nonresídent ííen Indívíduaís.
(a) No Uníted States busíness or offíce, € ”
(1) Generaí ruíe. € ” There shaíí be íevíed, coííected, and paíd for
each ta abíe year, ín ííeu of the ta ímposed by sectíons 11 and 12,
upon the amount receíved, by every nonresídent aííen índívíduaí
not engaged ín trade or busíness wíthín the Uníted States and not
havíng an offíce or píace of busíness thereín, from sources wíthín the
Uníted States as ínterest (e cept ínterest on deposíts wíth per-
sons carryíng on the bankíng busíness), dívídends, rents, saíaríes,
wages, premíums, annuítíes, compensatíons, remuneratíons, emoíu-
ments, or other fí ed or determínabíe annuaí or períodícaí gaíns,
profíts, and íncome, a ta of 10 per centum of such amount, e cept
that such rate shaíí be reduced, ín the case of a resídent of a con-
tíguous country, to such rate (not íess than 5 per centum) as may
be províded by treaty wíth such country. or Incíusíon ín com-
putatíon of ta of amount specífíed ín sharehoíder s consent, see
sectíon 2 .
(2) ggregate more than 21,600. € ” The ta ímposed by para-
graph (1) shaíí not appíy to any Indívíduaí íf the aggregate
amount receíved duríng the ta abíe year from the sources thereín
specífíed ís more than 21,600.
(3) Resídents of contíguous countríes. € ” Despíte the provísíons
of paragraph (2), the provísíons of paragraph (1) shaíí appíy to
a resídent of a contíguous country so íong as there ís ín effect
a treaty wíth such country (ratífíed príor to ugust 26, 1937) under
whích the rate of ta under sectíon 211(a) of the Revenue ct of
1 36, príor to íts amendment by sectíon 501(a) of the Revenue ct
of 1937, was reduced.
€ € € €
(c) No Uníted States busíness or offíce and gross íncome op
more than 21,6C0. € ” nonresídent aííen índívíduaí not engaged ín trade
or busíness wíthín the Uníted States and not havíng an offíce or píace
of busíness thereín who has a gross íncome for any ta abíe year of
more than 21.G00 from the sources specífíed ín subsectíon (a) (1), shaíí
be ta abíe wíthout regard to the provísíons of subsectíon (a)(1), e cept
that € ”
(1) The gross íncome shaíí íncíude oníy íncome from the sources
specífíed ín subsectíon (a)(1)
(2) The deductíons (other than the so-caííed charítabíe deduc-
tíon províded ín sectíon 213(c)) shaíí be aííowed oníy íf and to
the e tent that they are properíy aííocabíe to the gross íncome
from the sources specífíed ín subsectíon (a) (1)
(3) The aggregate of the normaí ta and surta under sectíons
11 and 12 shaíí, ín no case, be íess than 10 per centum of the gross
íncome from the sources specífíed ín subsectíon (a)(1) and
(4) Thís subsectíon shaíí not appíy to a resídent of a contíguous
country so íong as there ís ín effect a treaty wíth such country
(ratífíed príor to ugust 26, 1937) under whích the rate of ta
under sectíon 211(a) of the Revenue ct of 1936, príor to íts
amendment by sectíon 501(a) of the Revenue ct of 1937, was
reduced.
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149
211, rt. 211-7.
Par. C. Sectíon 231(a) of the Revenue ct of 193 provídes:
Nonresídent CORPOR TIONS. € ” There shaíí be íevíed, coííected, and
paíd for euch ta abíe |ear, ín ííeu of the ta ímposed by sectíons 13
and 14, upon the amount receíved by every foreígn corporatíon not
engaged ín trade or busíness wíthín the Uníted States and not havíng
au offíce or píace of busíness thereín, from sources wíthín the Uníted
States as ínterest (e cept ínterest on deposíts wíth persons carryíng on
the bankíng busíness), dívídends, rents, saíaríes, wages, premíums,
annuítíes, compensatíons, remuneratíons, emoíuments, or other fí ed or
determínabíe annuaí or períodícaí gaíns, profíts, and íncome, a ta of
15 per centum of such amount, e cept that ín the case of dívídends
the rate shaíí be 10 per centum, and e cept that ín the case of corpora-
tíons organízed under the íaws of a contíguous country such rate of
10 per centum wíth respect to dívídends shaíí be reduced to such rate
(not íess than 5 per centum) as may be províded by treaty wíth such
country. or íncíusíon ín computatíon of ta of amount specífíed ín
sharehoíder s consent, see sectíon 2 .
Pah. D. Sectíon 143(a) of the Revenue ct of 193 provídes ín
part:
Ta - bkz Covenant onds. € ”
(1) Requírement of wíthhoídíng. € ” In any case where bonds,
mortgages, or deeds of trust, or other símííar obíígatíons of a cor-
poratíon, íssued before anuary 1, 1934, contaín a contract or pro-
vísíon by whích the obíígor agrees to pay any portíon of the ta
Imposed by thís títíe upon the obíígee, or to reímburse the obííge
for any portíon of the ta , or to pay the ínterest wíthout deductíon
for any ta whích the obíígor may be requíred or permítted to
pay thereon, or to retaín therefrom under any íaw of the Uníted
States, the obíígor shaíí deduct and wíthhoíd a ta equaí to 2 per
centum of the Interest upon such bonds, mortgages, deeds of trust,
or other obíígatíons, whether such Interest ís payabíe annuaííy or
at shorter or íonger períods, íf payabíe to an índívíduaí, a part-
nershíp, or a foreígn corporatíon not engaged ín trade or busíness
wíthín the Uníted States and not havíng an offíce or píace of busí-
ness thereín: Províded, That íf the ííabíííty assumed by the obíígor
does not e ceed 2 per centum of the Interest, then the deductíon
and wíthhoídíng shaíí be at the foííowíng rates: ( ) 10 per centum
ín the case of a nonresídent aííen índívíduaí (e cept that such
rate shaíí be reduced, In the case of a resídent of a contíguous
country, to such rate, not íess than 5 per centum, as may be pro-
víded by treaty wíth such country), or of any partnershíp not
engaged ín trade or busíness wíthín the Uníted Síates and not
havíng any offíce or píace of busíness thereín and composed ín
whoíe or ín part of nonresídent aííens, ( ) ín the case of such a
foreígn corporatíon, 15 per centum, and (C) 2 per centum ín the
case of other índívíduaís and partnershíps: Províded further, That
If the owners of such obíígatíons are not known to the wíthhoídíng
agent the Commíssíoner may authoríze such deductíon and wíth-
hoídíng to be at the rate of 2 per centum, or, íf the ííabíííty
assumed by the obíígor does not e ceed 2 per centum of the ínter-
est, then at the rate of 10 per centum.
Pae. . Sectíon 143(b) of the Revenue ct of 193 provídes:
Nonkesídent ííens. € ” íí persons, ín whatever capacíty actínff, In-
cíudíng íessees or mortgagors of reaí or personaí property, fíducíaríes,
empíoyers, and aíí offícers and empíoyees of the Uníted States, hav-
íng the controí, receípt, custody, dísposaí, or payment of ínterest
(e cept Interest on deposíts wíth persons carryíng on the bankíng
busíness paíd to persons not engaged ín busíness ín the Uníted States
and not havíng an offíce or píace of busíness thereín), dívídends, rent,
saíaríes, wages, premíums, annuítíes, compensatíons, remuneratíons,
emoíuments, or other fí ed or determínabíe annuaí or períodícaí
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211, rt. 211-7.
150
gaíns, profíts, and Income (but oníy to the e tent that any of the
above ítems constítutes gross íncome from sources wíthín the Uníted
States), of any nonresídent aííen índívíduaí, or of any partnershíp
not engaged ín trade or busíness wíthín the Uníted States and not
havíng any offíce or píace of busíness thereín and composed ín whoíe
or ín part of nonresídent aííens, shaíí (e cept ín the cases províded for
ín subsectíon (a) of thís sectíon and e cept as otherwíse províded
ín reguíatíons prescríbed by the Commíssíoner under sectíon 215) de-
duct and wíthhoíd from such annuaí or períodícaí gaíns, profíts, and
íncome a ta equaí to 10 per centum thereof, e cept that such rate shaíí
be reduced, ín the case of a nonresídent aííen índívíduaí a resídent of a
contíguous country, to such rate (not íess than 5 per centum) as may
be províded by treaty wíth such country: Províded, That no such de-
ductíon or wíthhoídíng shaíí be requíred ín the case of dívídends paíd by
a foreígn corporatíon uníess (1) such corporatíon Is engaged ín trade or
busíness wíthín the Uníted States or has an ofííce or píace of busíness
thereín, and (2) more than 5 per centum of the gross íncome of such
corporatíon for the three-year períod endíng wíth the cíose of íts ta abíe
year precedíng the decíaratíon of such dívídends (or for such part of
such períod as the corporatíon has been ín e ístence) was deríved from
sources wíthín the Uníted States as determíned under the provísíons
of sectíon 119: Províded further, That the Commíssíoner may au-
thoríze such ta to be deducted and wíthheíd from the ínterest upon
any securítíes the owners ot whích are not known to the wíthhoídíng
agent. Under reguíatíons prescríbed by the Commíssíoner, wíth the
approvaí of the Secretary, there may be e empted from such deductíon
and wíthhoídíng the compensatíon for personaí servíces of nonresídent
aííen índívíduaís who enter and íeave the Uníted States at frequent
íntervaís.
Par. . Sectíon 143(c) of the Revenue ct of 193 provídes:
It TT N and Patment. € ” very person requíred to deduct and wíth-
hoíd any ta under thís sectíon shaíí make return thereof on or before
March 15 of each year and shaíí on or before une 15, ín ííeu of the
tíme prescríbed ín sectíon 56, pay the ta to the offícíaí of the Uníted
States Government authorízed to receíve ít. very such person ís
hereby made ííabíe for such ta and Is hereby Indemnífíed agaínst the
cíaíms and demands of any person for the amount of any payments
made ín accordance wíth the provísíons of thís sectíon.
Par. G. Sectíon 144 of the Revenue ct of 193 provídes:
In the case of foreígn corporatíons sub|ect to ta atíon under thís
títíe not engaged ín trade or busíness wíthín the Uníted States and not
havíng any offíce or píace of busíness thereín, there shaíí be deducted
and wíthheíd at the source ín the same manner and upon the same
ítems of íncome as Is províded ín sectíon 143 a ta equaí to 15 per
centum thereof, e cept that ín the case of dívídends the rate shaíí be
10 per centum, and e cept that ín the case of corporatíons organízed
under the íaws of a contíguous country such rate of 10 per centum
wíth respect to dívídends shaíí be reduced to such rate (not íess than
5 per centum) as may be províded by treaty wíth such country and
such ta shaíí be returned and paíd ín the same manner and sub|ect
to the same condítíons as províded ín that sectíon: Províded, That ín
the case of ínterest descríbed ín subsectíon (a) of that sectíon (reíat-
íng to ta -free covenant bonds) the deductíon and wíthhoídíng shaíí
be at the rate specífíed In such subsectíon.
Par. . Sectíon 901 of the Revenue ct of 193 provídes ín part:
(a) When used In thís ct € ”
(1) The term person means an índívíduaí, a trust or estate,
a partnershíp, or a corporatíon.
(2) The term corporatíon íncíudes assocíatíons, |oínt-stock
companíes, and ínsurance companíes.
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151
211. rt. 211-7.
(3) The term partnershíp Incíudes a syndícate, group, pooí,
oínt venture, or other uníncorporated organízatíon, through or by
means of whích any busíness, fínancíaí operatíon, or venture ís
carríed on, and whích Is not, wíthín the meaníng of thís ct,
a trust or estate or a corporatíon and the term partner In-
cíudes a member ín such a syndícate, group, pooí, |oínt venture, or
organízatíon.
(4) The term domestíc when appííed to a corporatíon or
partnershíp means created or organízed ín the Uníted States or
under the íaw of the Uníted States or of any State or Terrítory.
(5) The term foreígn when appííed to a corporatíon or part-
nershíp means a corporatíon or partnershíp whích ís not domestíc.
(6) The term fíducíary means a guardían, trustee, e ecu-
tor, admínístrator, receíver, conservator, or any person actíng ín
any fíducíary capacíty for any person.
(7) The term wíthhoídíng agent menus any person requíred
to deduct and wíthhoíd any ta under the provísíons of sectíon
143 or 144.
€ € € €
(b) The terms Incíudes and íncíudíng when used ín a defí-
nítíon contaíned ín thís ct shaíí not be deemed to e cíude other
thíngs otherwíse wíthín the meaníng of the term defíned.
Pursuant to the provísíons of sectíon 62 of the Revenue ct of
193 the foííowíng reguíatíons are hereby prescríbed to carry ínto
effect the quoted provísíons of the conventíon between the Uníted
States of meríca and Canada under the Revenue ct of 19:5 (the
provísíons of T. D. 4766, C. . 1937-2, 15 , appíícabíe under the
Revenue cts of 1936 and 1937, remaíníng ín fuíí force and effect as
to ta abíe years begínníng príor to anuary 1, 193 ):
btíc e 1. Rate of taw. € ” The conventíon was ratífíed and became effcetíve
ugust 13, 1937. Under the terms of the conventíon, the provísíons of whích
are retroactíve to anuary 1, 1936, the ta at the rate of 10 per cent ímposed
by sectíon 211(a) ís reduced to 5 per cent wíth respect to the amount receíved
from sources wíthín the Uníted States as Interest (e cept ínterest on deposíts
wíth persons carryíng on the bankíng busíness), dívídends, rents, saíaríes,
wages, premíums, annuítíes, compensatíons, remuneratíons, emoíuments, or
other fí ed or determínabíe annuaí or períodícaí gaíns, pr fíts. and íncome, by
every nonresídent aííen índívíduaí not engaged ín trade or busíness wíthín the
Uníted States and not havíng an offíce or píace of busíness thereín, províded
he Is a resídent of Canada.
Under the terms of the conventíon the ta at the rate of 10 per cent Imposed
by sectíon 231(a) ís reduced to 5 per cent wíth respect to the amount receíved
from sources wíthín the Uníted States as dívídends, by every foreígn corpora-
tíon not engaged In trade or busíness wíthín the Uníted States and not havíng an
offíce or píace of busíness thereín, províded It ís organízed under the íaws of
Canada.
rt. 2. Wíthhoídíng ín generaí. € ” The ítems of Income from sources wíthín the
Uníted States enumerated ín sectíons 211(a) and 231(a) are sub|ect to the
wíthhoídíng provísíons of sectíons 143 and 144, at the rates specífíed thereín, wíth
the e ceptíon that aíí Items of fí ed or determínabíe annuaí or períodícaí íncome
paíd to nonresídent aííen índívíduaís who are resídents of Canada (other than
the compensatíon for personaí servíces receíved by such resídents who enter
and íeave the Uníted States at frequent íntervaís) and dívídends paíd to non-
resídent foreígn corporatíons whích are organízed under the íaws of Canada
are sub|ect to wíthhoídíng at the reduced rate of 5 per cent.
rt. 3. Resídent of Canada or corporatíon organísed undrr the íaws of
Canada. € ” or the purpose of wíthhoídíng, every Indívíduaí whose address Is
In Canada (Incíudíng a nonresídent aííen índívíduaí, fíducíary, or partnershíp)
shaíí be consídered by Uníted States wíthhoídíng agents as a resídent of Canada,
and every corporatíon whose address ís In Canada shaíí he consídered by such
wíthhoídíng agents as a corporatíon organízed under the íaws of Canada. These
provísíons reíatíve to Canadían resídents and Canadían corporatíons are based
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211, rt. 211-7.
152
upon the assumptíon that the payee Is the actuaí owner of the property from
whích the íncome ís deríved and consequentíy ís the person ííabíe to the ta
upon such íncome.
person receívíng íncome whích ís dístríbutabíe to an organízatíon e empt
from ederaí íncome ta under sectíon 101 of the Revenue ct of 193 , or
correspondíng sectíons of príor Revenue cts, shaíí be consídered mereíy a
conduít through whích the íncome fíows and not a ta abíe entíty. In preparíng
ownershíp certífícate, orm 1001, the person receívíng the ínco-íe shouíd make
a notatíon thereon substantíaííy as foííows: s thís organízatíon has been heíd
to be e empt from the payment of íncome ta by the Commíssíoner of Internaí
Revenue under date of , the ínterest on thís certífícate ís
not sub|ect to wíthhoídíng, gívíng the date of the offícíaí íetter ín whích the
organízatíon was heíd to be e empt. símííar statement made wíth respect
to other ítems of fí ed or determínabíe annuaí or períodícaí íncome whích are
sub|ect to wíthhoídíng wííí reííeve the wíthhoídíng agent from ííabíííty to
wíthhoíd the ta .
bt. 4. Recípíent not actuaí owner. € ” If the recípíent ín Canada ís a nomínee
or agent through whom the íncome fíows to a person who ís not entítíed to the
reduced rate of 5 per cent, L e., a nonresídent aííen índívíduaí who ís not a
resídent of Canada, or a nonresídent foreígn corporatíon not organízed under
the íaws of Canada, the recípíent In Canada from whom a ta of oníy 5 per
cent was wíthheíd, becomes ín turn a wíthhoídíng agent, and U requíred to
wíthhoíd an addítíonaí ta of 5 per cent (10 per cent on íncome other than
dívídends receíved for such foreígn corporatíon) before transmíttíng the Income.
(o) íducíaríes and partnershíps. € ” íducíaríes and partnershíps wíth an
address ín Canada are ííabíe to have 5 per cent íncome ta deducted at the
source. If the fíducíary or partnershíp ís actíng as a nomínee or agent receívíng
the íncome for and on behaíf of a person other than a resídent of Canada or
a corporatíon organízed under the íaws of Canada, an addítíonaí ta of 5 per
cent or 10 per cent, as the case may be, must be deducted by such Canadían
fíducíary or partnershíp and remítted to the Uníted States Treasury. If the
fíducíary or partnershíp receíves the íncome ín íts own ríght and dístríbutes íts
íncome under a trust deed or partnershíp agreement, then no further ta ín
Canada need be deducted.
(6) Ta -free covenant bonds. € ” No addítíonaí wíthhoídíng ís requíred wíth
respect to ínterest on so-caííed ta -free covenant bonds íssued príor to anuary
1, 1034, where the ííabíííty assumed by the obíígor e ceeds 2 per cent but under
sectíon 143(a) of the Revenue ct of 193 oníy 2 per cent íncome ta ís requíred
to be wíthheíd at the source. n addítíonaí ta of 5 per cent or 10 per cent,
as the case may be, ís requíred to be wíthheíd, however, by Canadían wíthhoíd-
íng agents as above províded, (1) where the bonds were íssued príor to anuary
1, 1934, and the ííabíííty assumed by the obíígor does not e ceed 2 per cent
(2) where the bonds were íssued on or after anuary 1, 1934, írrespectíve of
the ííabíííty assumed by the obíígor (3) where the bonds do not contaín a
ta -free covenant, regardíess of the date of íssue.
rt. 5. Return of ta wíthheíd from persons whose addresses are ín
Canada. € ” very Uníted States wíthhoídíng agent shaíí make and fííe wíth the
coííector, ín dupíícate, an ínformatíon return on orm 1042 , for the caíendar
year 193 and each subsequent caíendar year, ín addítíon to wíthhoídíng
return, orm 1042, wíth respect to the ítems of íncome from whích a ta of
oníy 5 per cent was wíthheíd from persons whose addresses are ín Canada.
There shaíí he reported on orm 1042 not oníy such ítems of íncome íísted on
orm 10-12, but aíso such ítems of ínterest íísted on monthíy returns, orm
1012, íncíudíng ítems of ínterest where the ííabíííty for wíthhoídíng Is oníy 2
per cent. In the case of corporatíons whose addresses are wíthín Canada,
oníy the fí ed or determínabíe annuaí or períodícaí íncome from sources wíthín
the Uníted States consístíng of dívídends shouíd be reported.
rt. 0. Returns fííed by Canadían wíthhoídíng agents. € ” orm 1042 ís the
form to be prepared annuaííy for the caíendar year 193 and each subsequent
caíendar year by persons ín Canada who receíve for the account of any person
(other than a resídent of Canada or a corporatíon organízed under the íaws
of Canada) fí ed or determínabíe annuaí or períodícaí íncome from sources
wíthín the Uníted States whích ís sub|ect to ta at the rate of 10 per cent or 15
per cent, as the case may be, but from whích oníy 5 per cent has been wíthheíd
as a resuít of the conventíon. nnuaí wíthhoídíng return. orm 1042, shouíd
be forwarded to the coííector of ínternaí revenue, aítímore, Md., accompaníed
by the ta shown to be due ín Uníted States doííars. n e tensíon of tíme to
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153
15 231, rt. 231-1.
sne 15 Is hereby granted to Canadían wíthhoídíng agents ín whích to fííe such
returns.
The foííowíng tabíe of wíthhoídíng rates nnder the Revenue ct of 193 and
tíe ta conventíon between the Uníted States and Canada has been prepared
íor the purpose of makíng a summary of such rates readííy avaííabíe to
wíthhoídíng agents:
Wíthhoídíng rates under the Revenue ct of 193 .
1
Corporate bond ínterest € ”
Other
Wíth ta -free
covenant and
íssued before
an. 1, 1 34 € ”
Wíthout
ta -free
covenant
or íssued
Díví-
dends
from do-
Díví-
dends
from
Saíary
fí ed or
deter-
mínabíe
annuaí
or perí-
odícaí
Cíasses of ta payers.
If corpo-
ratíon
If eorpo-
ratíon
assumes
not over 2
per cent
of the
ta .
on or
after
an. 1,
1934,
wíth
ta -free
covenant.
mestíc
corpora-
tíon.
foreígn
corpora-
tíon.
or other
com íerí-
satíun for
persona
servíces.
Income
from
rou-oM
wíthín
í
assumes
over 2
I he
Uníted
Staíes.
I

per cent
of the
ta .
1 1. Ctívn or resídent Indívíd-
1 mí. fíducíary, or partner-
( íhíp
Per cent.
3
Per cent.
2
Per cent.
Per cent.
Per cent.
Per cent.
Per cent.
t Nonresídent índívíduaí, fí-
ducíary, or partnershíp
| taoepí as staíed ín ítem
. Domestíc corporatíon or
resídent foreígn corpora-
2
10
10
10
10
no
10
tíon íeímuí as stated
In ítem 0 beíow)
a amríduaí fíducíary, or
e rtnerstup, íuUcnt of
2
IS
15
10
10
16
15
– Nonresídent corporatíon or-
ganízed under íaws of
Canada
a
6
6
(
g
0)

. fn nown owner
2
1
10
15
5
5
15
1
2
10
Saíary or compensatíon for personaí servíces rendered ín the Uníted States ís not sub|ect to wíthhoídíng
e the case of nonresídent aííens, resídents of Canada or Me íco, who enter and íeave the Uníted States at
treqoent íntervaís.
Gut T. eíveríng,
Commíssíoner of Internaí Revenue.
pproved anuary 16, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster anuary 17, 1039, 3.47 p. m.)
SUPPL M NT I. € ” OR IGN CORPOR TIONS.
S CTION 231. € ” T O O IGN CORPOR TIONS.
btícíe 231-1: Ta atíon of foreígn corporatíons.
R NU CT O 10.1 .
Reguíatíons wíth respect to ta atíon of nonresídent aííen índívíd-
uaís and foreígn corporatíons not engaged ín a trade or busíness
wíthín the Uníted States and not havíng an offíce or píace of busí-
ness thereín as affected by the recíprocaí ta conventíon between the
Uníted States and Canada, effectíve anuary 1, 1936. (See T. D.
4 3, page 147.)
172176 € ” 39 € ” Pt. 1 6
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5 1 . 154
TITL . € ” MISC LL N OUS PRO ISIONS.
S CTION 1 . € ” T S O INSOL NT N S.
1939_4_9Gfí
T. D. 4S
R NU CT OP 193 .
Reguíatíons reíatíng to assessment and coííectíon of ta es oí
Insoívent banks and trust companíes.
Treasukt Department,
Offíce of Commíssíoner of Internaí Reventte,
Washíngton, D. G.
To Coííectors of Internaí Revenue and Others Concerned:
Sectíon 1 of the Revenue ct of 193 , enacted May 2 , 193:
(Pubííc, No. 554, Seventy-fífth Congress, chapter 2 9, thírd sessíon)
provídes:
Sec. 1 . Ta es of Insoívent anks.
Sectíon 22 of the ct of March 1, 1 79 (20 Stat. 351 12 U. S. O.
570), ís amended to read as foííows:
Sec. 22. (a) Whenever and after any bank or trust company, a
substantíaí portíon of the busíness of whích consísts of receívíng de-
posíts and makíng íoans and díscounts, has ceased to do busíness by
reason of ínsoívency or bankruptcy, no ta shaíí be assessed or coííected,
or paíd ínto the Treasury of the Uníted States on account of such bank,
or trust company, whích shaíí dímínísh the assets thereof necessary for
the fuíí payment of aíí íts deposítors and such ta shaíí be abated from
such natíonaí banks as are found by the Comptroííer of the Currency to
be ínsoívent and the Commíssíoner of Internaí Revenue, when the
facts shaíí appear to hím, ís authorízed to remít so much of the saíd
ta agaínst any such ínsoívent banks and trust companíes organízed
under State íaw as shaíí be found to affect the cíaíms of theír deposítors.
(b) Whenever any bank or trust company, a snbstantíaí portíon of
the busíness of whích consísts of receívíng deposíts and makíng íoans
and díscounts, has been reíeased or díscharged from Its ííabíííty to
íts deposítors for any part of theír cíaíms agaínst ít, and such de-
posítors have accepted, ín ííeu thereof, a ííen upon subsequent earníngs
of such bank or trust company, or cíaíms agaínst assets segregated by
such bank or trust company or agaínst assets transferred from ít to an
índívíduaí or corporate trustee or agent, no ta shaíí be assessed or
coííected, or paíd ínto the Treasury of the Uníted States on account of
such bank, or trust company, such índívíduaí or corporate trustee or
such agent, whích shaíí dímínísh the assets thereof whích are avaííabíe
for the payment of such deposítor cíaíms and whích are necessary for
the fuíí payment thereof.
(c) ny such ta so coííected shaíí be deemed to be erroneousíy
coííected, and shaíí bo refunded sub|ect to aíí provísíons and íímíta-
tíons of íaw, so far as appíícabíe, reíatíng to the refundíng of ta es, but
ta so abated or refunded after the date of the enactment of the Reve-
nue ct of 103 shaíí be reassessed whenever ít shaíí appear that pay-
ment of the ta wííí not dímínísh the assets as aforesaíd. The runníng
of the statute of íímítatíons on the makíng of assessment and coííectíon
shaíí be suspended duríng, and for nínety days beyond, the períod
for whích, pursuant to thís sectíon, assessment or coííectíon may not be
made, and a ta whích has been abated may be reassessed and coííected
duríng the tíme wíthín whích, had there been no abatement, coííectíon
míght have been made.
(d) Thís sectíon shaíí not appíy to any ta ímposed by the Socíaí
Securíty ct
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1 .
sncía: 1. ffectíve date of amendment. € ” The amendment of sectíon 22, made
by sectíon 1 of the Revenue ct of 193 , ís effectíve on May 2 , 193 , the date
of enactment of the Revenue ct of 1S 3 .
m. 2. anks and trust companíon covered. € ” Sectíon 22 (as amended) of the
ct of March 1, 1S70. appííes to any natíonaí bank, or bank or trust company
organísed under State íaw, a substantíaí portíon of the busíness of whích con-
sísts of receívíng deposíts and makíng íoans and díscounts, and whích has € ”
(a) ceased to do busíness by reason of ínsoívency or bankruptcy, or
(b) been reíeased or díscharged from íts ííabíííty to íts deposítors for any
|ssrt of theír deposít cíaíms, and the deposítors have accepted ín ííeu thereof a
fen upon íts subsequent earníngs or cíaíms agaínst íts asfets eíther (1) segre-
gated and heíd by ít for benefít of the deposítors or (2) transferred by ít to an
índívíduaí or corporate trustee or agent who hoíds the assets for the benefít of
ííe deposítors.
ct. 3. Defínítíons. € ” s hereínafter used ín these reguíatíons:
(a) The term sectíon, uníess otherwíse índícated by the conte t, means
sectíon 22 of the ct of March 1, 1 79, as amended by sectíon 1 of the
Revenue ct of 193 .
(6) The term bank, uníess otherwíse índícated by the eonte t, means
any natíonaí bank, or bank or trust company organízed under State íaw,
wíthín the scope of the sectíon. See artícíe 2.
(c) The term effectíve date means May 2 , 193 .
d) The term Commíssíoner means the Commíssíoner of Internaí
Revenue.
(e) The term coííector means coííector of ínternaí revenue.
n. 4. Scope of sectíon generaííy. € ” The sectíon príor to amendment was
Intended to assíst deposítors of a bank whích had ceased to do busíness by
reason of ínsoívency to recover theír deposíts, by prohíbítíng coííectíon of
ta es of the bank whích wouíd dímínísh the assets necessary for payment of Its
deposítors. y the amendment ííke assístance ís gíven to deposítors of banks
whích are ín fínancíaí díffícuítíes but whích, ín certaín condítíons, contínue ín
busíness.
In order that the sectíon shaíí operate ín a case where the bank contínues
busíness ít ís necessary that the deposítors shaíí agree to accept, ín ííeu of aíí
or a part of theír deposít cíaíms as such, cíaíms agaínst segregated assets, or a
ííen upon subsequent earníngs of the bank, or both. When such an agreement
e ísts no ta dímíníshíng such assets or earníngs, or both, otherwíse avaííabíe
and necessary for payment of deposítors, may be coííected therefrom. If, under
snch an agreement, the deposítors have the ríght aíso to íook to the unsegre-
gated assets of the bank for recovery, In whoíe or part, the unsegregated assets
are ííkewíse, to the e tent of the deposítors cíaíms, unavaííabíe for ta coí-
íectíon.
To íííustrate the workíng of the sectíon, assume that deposítors agree to
forego 30 per cent of theír deposít cíaíms, that as to 45 per cent they wííí íook
to segregated assets and 60 per cent of the earníngs from bank operatíons, and
that as to the remaíníng 25 per cent of the deposít cíaíms the bank remaíns
ííabíe. The segregated assets and 60 per cent of the earníngs from bank
operatíons are ímmune from ta coííectíon untíí the totaí reaíízatíons from
such source are suffícíent to meet the percentage of the deposítors chums pay-
abíe from that source. When the reaíízatíon from such source Is suffícíent to
satísfy the percentage of the deposítors cíaíms chargeabíe thereto, any
baíance of the segregated assets, and the stated percentage of bank earníngs,
wííí be avaííabíe for ta coííectíon. The unsegregated assets and the other 40
per cent of bank earníngs wííí be avaííabíe for ta coííectíon to the e tent that
coííectíon therefrom wííí not dímínísh the amount necessary for payment of out-
standíng deposítors cíaíms other than those aííocated to the segregated assets.
See artícíe 11.
or the purposes of the sectíon, deposítors cíaíms íncíude bona fíde ínterest,
eíther on the deposíts as such, or on the cíaíms accepted íu ííeu of deposíts
as such.
The sectíon Is not íntended for the reííef of banks as such, and does not
prevent coííectíon of ta from assets not necessary, or not avaííabíe, for pay-
ment of deposítors. The sectíon ís not for the reííef of credítors other than
deposítors, aíthough It may íncídentaííy operate for theír benefít See artícíe 11.
sr. 5. Segregated or transferred assets. € ” In a case ínvoívíng segregated
or transferred assets, It ís not necessary, for appíícatíon of the sectíon, that
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1 .
156
the assets shaíí technícaííy constítute a trust fund. It Is suffícíent that segre-
gated assets be defíníteíy separated from other assets of the bank and that
transferred assets be defíníteíy separated both from other assets of the bank and
from other assets heíd or owned by the trustee or agent to whom assets of the
bank have been transferred that the bank be whoííy or partíaííy reíeased
from ííabíííty for repayment of deposíts made wíth ít as such and that the
deposítors have cíaíms agaínst the separated assets. ny e cess of separated
assets over the amount necessary for payment of such deposítors wííí be avaíí-
abíe for ta coííectíon.
Where the segregated assets are transferred to a separate corporate trustee
or corporate agent the assets are wíthín the protectíon of the sectíon no
matter by whom the stock of such corporatíon ís heíd.
owever, property of a separate corporatíon not conveyed by the bank pur-
suant to an ínsoívency agreement wíth deposítors, ís not wíthín the ímmuníty of
the sectíon, even though the corporatíon s stock ís owned by the bank. Ta
due from a separate corporatíon to whích assets of an ínsoívent bank are
conveyed ís coííectíbíe, even though such ta be due to the property so con-
veyed, e cept ín so far as ta coííectíon wííí dímínísh assets conveyed by the
bank for benefít of deposítors or the earníngs from such assets to whích the
deposítors are entítíed, and whích are necessary for payment of the deposítors
cíaíms. Other assets and earníngs of a separate corporatíon are avaííabíe for
coííectíon of the ta es of such corporatíon even though the assets and earníngs
of such corporatíon If receíved by the bank wouíd be avaííabíe for satísfactíon
of cíaíms of the bank s deposítors and such cíaíms can not otherwíse be paíd
rt. 6. Unsegregated assets. € ” (a) Deposítors cíaíms agaínst assets. € ” Cíaíms
of deposítors, to the e tent that they are to be satísfíed out of segregated assets,
wííí not be consídered ín determíníng the avaííabíííty of nnsegrogated assets for
ta coííectíon. If deposítors have agreed to accept payment out of segregated
assets oníy, coííectíon of ta from unsegregated assets wííí not dímínísh the
assets avaííabíe and necessary for payment of the deposítors cíaíms. Thus, ít
may be possíbíe to coííect ta es from the unsegregated assets of a bank aíthough
the segregated assets are Immune under the sectíon.
If the unsegregated assets of the bank remaín sub|ect to any portíon of the
deposítors cíaíms, such unsegregated assets wííí be wíthín the ímmuníty of
the sectíon oníy to the e tent necessary to satísfy the cíaíms to whích such
assets are sub|ect Ta es wííí stííí be coííectíbíe from the unsegregated assets
to the e tent of the amount by whích the totaí vaíue of such assets e ceeds the
ííabíííty to deposítors to be satísfíed therefrom.
(6) Deposítors cíaíms agaínst earníngs. € ” ven though under a bona fíde
agreement a bank has been reíeased from deposítors cíaíms as to unsegregated
assets, íf aíí or a portíon of íts earníngs are sub|ect to deposítors cíaíms, aíí
assets the earníngs from whích, ín whoíe or part, are charged wíth the payment
of deposítors cíaíms, wííí be ímmune from ta coííectíon. ut see artícíe 7.
kt. 7. Income. € ” (a) vaííabíííty for ta coííectíon € ” Income, whether from
segregated or unsegregated assets, whích ís necessary for, appíícabíe to, and
actuaííy used for, payment of deposítors cíaíms, ís wíthín the ímmuníty of the
sectíon. If oníy a portíon or percentage of íncome from segregated or unsegre-
gated assets ís avaííabíe and necessary for payment of deposítors cíaíms, the
remaíníng íncome ís avaííabíe for ta coííectíon.
(6) Ta ííabíííty. € ” The fact that earníngs may be whoííy or partíy unavaíí-
abíe under the sectíon for coííectíon of ta es does not e empt the íncome, or
any part thereof, from ta ííabíííty. The sectíon affects coííectíbíííty oníy, and
ís not concerned wíth ta abíííty. ccordíngíy, the ta on íncome of a gíven
year shaíí ordínarííy be determíned, even though, under the sectíon, assessment
and coííectíon must be postponed. The ta shaíí be determíned wíth respect to
the entíre ta abíe íncome and not mereíy wíth respect to the portíon of the
earníngs out of whích ta may be coííected.
(c) ampíe: n agreement between a bank sub|ect to ta under sectíon
14(d) of the Revenue ct of 193 and íts deposítors provídes (a) that certaín
assets are to be segregated for the benefít of the deposítors who have waíved a
percentage of theír deposíts (6) that CO per cent of the bank s earníngs shaíí
be paíd to the deposítors untíí the portíon of theír cíaíms not waíved has been
I ííd: and (c) that the unsegregated capítaí assets shaíí not be sub|ect to
deí wítors cíaíms. The specíaí cíass net íncome of the bank for the caíendar
year 103 ís 10,000, and that amount aíso constítutes íts earníngs for that
year. The bank has an outstandíng ta ííabíííty for príor years of 7,000.
The íncome ta ííabíííty of the bank for 193 ís 16 | per cent of 10,000, or
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157
5 1 .
(1. 50, makíng a totaí outstandíng ta ííabíííty of ,650. The portíon of the
earníngs of the bank for 193 avaííabíe for ta coííectíon after provísíon for
deposítors ís 4,000 ( 10,000 íess 60 per cent, or 6,000). Of the totaí outstand-
íng ta ííabíííty of ,G50, 4,000 may be assessed and coííected Immedíateíy,
tearíng 4,650 to be coííected from the 40 per cent of future annuaí earníngs
sat covered by the agreement, from any e cess of the segregated assets over
the amount due deposítors therefrom, and from unsegregated assets to the
eítent that coííectíon of ta therefrom wííí not reduce the earníngs to whích
deposítors are entítíed under the agreement See artícíe 6(6).
ít. . batement and refund. € ” n assessment or coííectíon, whether made
fcfore or after the amendment, contrary to the sectíon when made, ís sub|ect
to abatement or refund wíthín the appíícabíe statutory períod of íímítatíons.
n abatement or refund after the amendment ís equaííy aííowabíe whether
ísessment or coííectíon was erroneous because coííectíon wouíd dímínísh assets
cessary for payment of deposítors, or because the same ta had been properíy
ífated or refunded on or before the effectíve date of the amendment, and
assessed or coííected after such date. See artícíe 12. owever, In the
íhsnce of príor abatement or refund on or before the date of the amendment, a
daím for abatement or refund wííí not be aííowed If, at the tíme of e amínatíon
. the cíaím, coííectíon wouíd not dímínísh the assets necessary for payment of
í sítors. If there was a príor proper abatement or refund on or before the
Sertíve date of the amendment, a cíaím for abatement or refund of the same
reassessed or re-coííected after the effectíve date of the amendment may be
med even though the assets are suffícíent to meet cíaíms of deposítors,
í ta assessed príor to the effectíve date of the amendment and ín accordance
€ Sh the sectíon as ít then e ísted Is sub|ect to abatement where assessment,
b2d ít been made after the effectíve date of the amendment, wouíd have been
Mrary to the amended sectíon. owever, ta properíy coííected ín accord-
S|fewíth the sectíon príor to amendment, may not be refunded thereafter even
íoogh coííectíon after the effectíve date of the amendment wouíd have been
€ oatrary to the amended sectíon.
ny abatement or refund Is sub|ect to e ístíng statutory períods of íímíta-
tíon, whích períods are not suspended or e tended by the amended sectíon.
r.9. stabííshment of ímmuníty. € ” The mere showíng of Insoívency, or that
– osítors have cíaíms agaínst segregated or other assets or earníngs wííí not
1 ítseíf secure Immuníty from ta coííectíon. It must be affírmatíveíy estabííshed
to the satísfactíon of the Commíssíoner that coííectíon of ta wííí dímínísh the
asets necessary for payment of deposítors cíaíms. See aíso artícíe 10.
ny cíaím of ímmuníty under the sectíon shaíí be supported by a statement,
sder oath or affírmatíon, whích shaíí show (a) the totaí of deposítors cíaíms
standíng, and (6) separateíy and ín detaíí, the amount of each of the foí-
díng, and the amount of deposítors cíaíms properíy chargeabíe agaínst each € ”
í segregated or transferred assets (2) unsegregated assets: (3) estímated
future average annuaí earníngs and profíts: (4) amount coííectíbíe from share-
hoíders and (5) any other resources avaííabíe for payment of deposítors cíaíms,
ííe detaíí shaíí show the fuíí amount of deposítors cíaíms chargeabíe agaínst
rt of the ítems (1) to (5), íncíusíve, even though part or aíí of the amount
€ íargeabíe agaínst a partícuíar ítem ís aíso chargeabíe agaínst some other ítem
-Items. There shaíí aíso be fííed a copy of any agreement between the bank
raí íts deposítors, and any other agreement bearíng on the cíaím of ímmuníty
ttdcr the sectíon.
ít. 10. Procedure duríng ímmuníty.- € ” s íong as. pursuant to the sectíon, any
-í remaíns unpaíd, the bank shaíí fííe wíth each íncome ta return a statement
rt-qníred by artícíe 9. ín dupíícate, and shaíí aíso fííe such addítíonaí state-
sríts as the Commíssíoner may requíre. Whether or not such addítíonaí
mttmcnts shaíí be requíred, and the frequency thereof, wííí depend on the
f-rnímstnnces, íncíudíng the fínancíaí status and apparent prospects of the
– ínk. and the tíme whích ís avaííabíe for assessment and coííectíon after the
|Mk becomes fínancíaííy abíe to pay ta es wíthout dímíníshíng the assets neces-
Síry for payment of deposítors cíaíms.
kt. 11. Termínatíon of ímmuníty. € ” Immuníty under the sectíon ís termínated
tenever, wíthín the statutory períod of íímítatíons as e tended by the sectíon,
the ta can be coííected wíthout dímíníshíng the assets necessary for payment
f deposítors cíaíms, íncíudíng cíaíms of new deposítors secured duríng the
t íod of ímmuníty from ta coííectíon. or the ímmuníty to end, the assets
must be suffícíent to cover any remaíníng baíance stííí due under the agreement
wíd any outstandíng addítíonaí deposíts made by the same or other deposítors
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I 901. rt. 901-5.1
15
subsequent to the agreement In other words, the bar of the sectíon, when once
ín force, ís termínated oníy as, and to the e tent that, coííectíon may be made
wíthout dímíníshíng assets avaííabíe for satísfactíon of aíí outstandíng deposítors
cíaíms, regardíess of when theír deposíts were made.
Whííe the ímmuníty from ta coííectíon ís for protectíon of deposítors oníy
ín some cases the ímmuníty wííí not end untíí the assets are suffícíent to coveí
índebtedness of credítors generaííy. Thís sítuatíon wííí e íst where undeí
appíícabíe íaw the cíaíms of generaí credítors are on a paríty wíth those oí
deposítors, so that to pay deposítors ín fuíí ít Is necessary to pay aíí credítor
In fuíí.
In determíníng the suffícíency of the assets to satísfy the deposítors cíaíms
sharehoíders ííabíííty to the e tent coííectíbíe shaíí be treated as avaííabíe
assets. See artícíe 9. Deposít ínsurance payabíe to deposítors shaíí not be
treated as an asset of the bank and shaíí be dísregarded ín determíníng the
suffícíency of the assets to meet the cíaíms of deposítors.
rt. 12. Coííectíon of taw after termínatíon of ímmuníty. € ” (a) Generaí. € ” 11
assets ín e cess of those necessary for payment of outstandíng deposíts become
avaííabíe, such e cess assets shaíí be appííed toward satísfactíon of accumuíated
outstandíng ta es, coííectíbíe under the sectíon, and not barred by the statute
of íímítatíons. ut see artícíe 5. Where suffícíent assets are avaííabíe, statutory
Interest shaíí be coííected wíth the ta . Generaííy, uníess the ínterests of the
Uníted States wííí be |eopardízed thereby, ít wííí be suffícíent íf the amount
avaííabíe for payment of coííectíbíe ta es wíthout dímíníshíng assets necessary
for payment of deposítors, ís determíned and paíd by the ta payer each tíme a
ederaí íncome ta return ís fííed. owever, assessments and coííectíons may
be made at such other tímes as the coííector or Commíssíoner shaíí fínd appro-
príate and necessary to protect the ínterests of the Uníted States.
(6) Ta due before the effectíve date of the amendment. € ” The sectíon does
not permít assessment or reassessment or coííectíon of ta properíy abated or
refunded pursuant to the sectíon on or before May 2 , 193 . Ta due on or
before that date, and not so abated or refunded, and stííí outstandíng on the
saíd date, Is wíthín the provísíons of the amended sectíon and coííectíbíííty ís
determínabíe ín accordance wíth the amended sectíon the same as In the case
of ta due after such date. ccordíngíy, a ta due príor to the effectíve date
of the amendment and then coííectíbíe under the sectíon may not be assessed or
coííected thereafter íf such assessment or coííectíon wouíd be contrary to the
sectíon as amended. See artícíe .
If the statutory períod for assessment or coííectíon had e píred before the
effectíve date of amendment, the sectíon does not revíve ít ccordíngíy, ín
such sítuatíon the ta ís not coííectíbíe under the amended sectíon, regardíess
of the bank s fínancíaí condítíon.
bt. 13. Socíaí securíty ta es. € ” These reguíatíons do not reíate to socíaí
securíty ta es, sínce the ímmuníty granted by the amended sectíon does not
appíy to ta es ímposed by the Socíaí Securíty ct.
rt. 14. uthoríty for reguíatíons. € ” These reguíatíons are íssued under au-
thoríty of sectíon 3447, evísed Statutes of the Uníted States.
Guy T. eíveríng,
Commíssíoner of Internaí Revenue,
pproved anuary 16, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí egíster anuary 17, 1939, .47 p. m.)
TITL I. € ” G N R L PRO ISIONS.
S CTION 901. € ” D INITIONS.
rtícíe 901-5: Límíted partnershíp as corporatíon.
R NU CT O 19 .
mendment of Reguíatíons 101, artícíes 901- and 901-6. (See
T. D. 4 94, page 79.)
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159 22(a), rt. 22(a)-í.
INCOM T RULINGS. € ” P RT II.
R NU CTS O 1937 ND 1934
SU TITL . € ” G N R L PRO ISIONS.
P RT IL € ” COMPUT TION O N T INCOM .
S CTION 22(a). € ” GROSS INCOM : G N R L
D INITION.
btícíe 22(a)-í: What íncíuded ín gross íncome. 1939-3-9674
T. D.4 79
INCOM T .
rtícíe 22(a)-í of Refíatíons 94 and 6, reíatíng to ítems to be
íncíuded ín gross íncome, amended.
Treasury Department,
Offíce or Commíssíoner of Intern aí Revenue,
Washíngton, D. C.
To Coííectors of Internaí Revenue and Others Concerned:
The fírst sentence of the second paragraph of artícíe 22(a)-í of
Reguíatíons 94 and of artícíe 22(a)-í of Reguíatíons 6 readíng as
foííows:
If property ía transferred by a corporatíon to a sharehoíder, or by an empíoyer
to an empíoyee, for an amount substantíaííy íess than íts faír market vaíue, such
sharehoíder of the corporatíon or such empíoyee shaíí íncíude In gross íncome
the dífference between the amount paíd for the property and the amount of Its
faír market vaíue. € ”
ís amended to read as foííows:
If property ís transferred by a corporatíon to a sharehoíder, or by an em-
píoyer to an empíoyee, for an amount substantíaííy íess than íts faír market
vaíue, regardíess of whether the transfer ís ín the guíse of a saíe or e change,
such sharehoíder or empíoyee shaíí íncíude ín gross íncome the dífference
between the amount paíd for the property and the amount of íts faír market
Taíue to the e tent that such dífference ís ín the nature of (1) compensatíon for
eerríces rendered or to be rendered or (2) a dístríbutíon of earníngs or profíts
ta abíe as a dívídend, as the case may be.
The second sentence of the second paragraph of artícíe 22 (a)-1 of
Reguíatíons 6 readíng as foííows:
In computíng the gaín or íoss from the subsequent saíe of such property Its
wst shaíí be deemed to be íts faír market vaíue at the date of acquísítíon by
the sharehoíder or the empíoyee. € ”
ís amended to read as foííows:
In computíng the gaín or íoss from the subsequent saíe of such property íts
basís shaíí be the amount paíd for the property, íncreased by the amount of
men dífference Incíuded ín gross íncome.
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22(a), rt. 22(a)-2.1 160
Thís Treasury decísíon ís prescríbed pursuant to the provísíons of
sectíon 62 of the Revenue cts of 1936 and 1934.
Mííton . Carter,
ctíng Commíssíoner of Internaí Revenue.
pproved anuary 4, 1939.
ohn W. anes,
ctíng Secretary of the Treasury.
( ííed wíth the Dívísíon of the ederaí Regíster anuary 6, 1039. 12.17 p. m.)
rtícíe 22 (a)-2: Compensatíon for personaí servíces.
R NU CT OP 1930.
Ta abíííty of compensatíon receíved by ederaí offícers and em-
píoyees and offícers and empíoyees of States or poíítícaí subdívísíons
thereof. (See Mím. 4916, page 71.)
rtícíe 22(a)-2: Compensatíon for personaí 1939-23-9 63
servíces. Ct. D. 1401
INCOM T € ” R NU CTS O 1932 ND 1936 € ” D CISION OP SUPR M
COURT.
Gross Income € ” Compensatíon of udges of Uníted States Courts € ”
Constítutíonaííty ok Statute.
The provísíon of sectíon 22 of the Revenue ct of 1932, reenacted
by sectíon 22(a) of the Revenue ct of 1936, ís not unconstítutíonaí
In so far as It íncíudes ín gross Income, on the basís of whích
ta es are to be paíd, the compensatíon of |udges of courts of the
Uníted States takíng offíce after une 6, 1932.
Supreme Coítrt of the Uníted States.
eorge W. O Maííey, Indívíduaííy and as Coííector of Internaí Revenue, appeí-
íant, v. oseph W. Woodrough and íía . Woodrough.
59 . Ct, 3 .
On appeaí from the Dístríct Court of tha Uníted States for the Dístríct of Nebraska.
May 22, 1939.
opíníon.
Mr. ustíce rankfubtkb deíívered the opíníon of the Court.
The case Is here under sectíon 2 of the ct of ugust 23, 1937 (50 Stat, 751),
as a dírect appeaí from a |udgment of a dístríct court whose decísíon waí
agaínst the constítutíonaííty of an ct of Congress. The suít beíow, an actíon
at íaw to recover a ta on íncome cíaímed to have been íííegaííy e acted, wag
dísposed of upon the píeadíngs and turned on the síngíe questíon now before us,
to wít: Is the provísíon of sectíon 22 of the Revenue ct of 1932 ( 47 Stat, 169,
17 ), reenacted by sectíon 22(a) of the Revenue ct of 1930 ( 49 Stat, 164 ,
1057), constítutíonaí ín so far as ít Incíuded In the gross Income, on the basís
of whích ta es were to be paíd, the compensatíon of |udges of courts of the
Uníted States takíng offíce after une 6, 1932.
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161
22(a), rt. 22(a)-2.
That thís Is the soíe Issue wííí emerge from a símpíe statement of the fnot
índ of the governíng íegísíatíon. oseph W. Wood rough wns appoínted a Uníted
States círcuít |udge on príí 12, 1933, and quaíífíed as such on M:íy 1. 11)33.
ur the caíendar year of 1936 a oínt íncome ta return of udge WooUrougU
wd hís wífe díscíosed hís |udícíaí saíary of 12,500, but cíaímed ít to be con-
stítutíonaííy ímmune from ta atíon. Sínce ít wns not íncíuded ín gross ín-
tome no ta was payabíe. Subsequentíy a defícíency of (131.00 was assessed
co the basís of that ítem, whích, wíth ínterest, was paíd under protest. Cíaím
íor refund havíng been re|ected, the present suít was brought, and |udgment went
agaínst the coííector. The assessment of the present ta was technícaííy under
tb ct of 1936, but that ct mereíy carríed forward the provísíons of the ct
of 1932, for the íncíusíon of compensatíon of |udges of tourts of the Uníted
States, takíng offíce after une 6, 1932, whích had been símííaríy íncorporated
ín the Revenue ct of 1S31 (4 Stat., C 0, G 0-O 7). Therefore, the power of
Ccasress to íncíude udge Woodrough s saíary as a círcuít |udge ín hís gross
í ceme must be |udged on the basís of the vaíídíty of sectíon 22 of the Revenue
rt of 1932, and not as though that power had been orígínaííy asserte í by the
Revenue ct of 1930. or ít was the ct of une 6, 1932, that gave notíce to aíí
udges thereafter to be appoínted, of the new congressíonaí poíícy to íncíude
the |udícíaí saíaríes of such |udges ín the assessment of íncome ta es. The
Ifact that udge Woodrough before he became a círcuít |udge and príor to une 6,
1932. had been a dístríct udge ís whoííy írreíevant to the matter ín íssue. The
two offíces have dífferent statutory orígíns, are fíííed by separate nomínatíons and
wnfírmatíons, and en|oy dífferent emoíuments. new appoíntee to a círcuít
court of appeaís occupíes a new offíce no íess when he ís taken from the dístríct
I bench than when he ís drawn from the bar.
I y means of sectíon 22 of the Revenue ct of 1932, Congress sought to avoíd,
ít íeast In part, the consequences of van v. Gore (253 U. S., 245 T. D. 3037, C. .
, 93 (1920) ). That case, decíded on une 1, 1920, ruíed for the fírst tíme that
í provísíon requíríng the compensatíon receíved by the |udges of the Uníted
States to be íncíuded ín the gross íncome from whích the net íncome Is to be
vmnuted, aíthough mereíy part of a ta íng measure of generaí, nondíscrímínatory
sppíícatíon to aíí earners of Incomes, ís contrary to rtícíe III, sectíon 1, of the
Constítutíon whích provídes that the Compensatíon of the udges shaíí
w r be dímíníshed duríng theír Contínuance ín Offíce. (See aíso the separate
opíníon of Mr. ustíce íeíd ín Poííock v. armers Loan d Trust Co., 157 U. ., 429,
5 5, 604 et seq.) To be sure, ín a íetter to Secretary Chase, Chíef ustíce Taney
e pressed símííar víews.1 In doíng so, he mereíy gave hís e tra-|udícíaí opíníon,
ínsertíng at the same tíme that the questíon couíd not be ad|udícated. Chíef
ustíce Taney s vígorous víews were shared by ttorney Generaí oar. There-
sfter, both th Treasury Department and Congress acted upon thís constructíon
of the Constítutíon. owever, the meaníng whích vans v. Oore ímputed to the
hístory whích e píaíns rtícíe III. sectíon 1, was contrary to the way ín whích
It was read by other ngíísh-speakíng courts. The decísíon met wíde and steadííy
frowíng dísfavor from íegaí schoíarshíp and professíonaí opíníon. vans v. Oore
The íetter was wrítten on ebruary 16, 1 03, and wííí be found In 157 T7. ., 701.
€ € I shouíd not have troubíed you wíth thís íetter, íf there was any mode by
hích the níteatíon roníd be decíded In a íudí íaí proceedíng Rut aíí of the íunges of the
f- rtí of the I níted Suítes have an Interest ín the questíon, and couíd not therefore wíth
pru íríety undertake to hear amí deríde It. (157 U. .. at 702.)
€ 1 . Op. . G., 1G1 : hut see the opíníon of ttorney Generaí Tnímer (31 Op. . G., 475).
fí e Mr. ustíce íeíd, concurríng, In Poííock v. armers Loan tí Trust Co. (157 U. .,
5SS. í 0 C07).
See Wayne v. Uníted States (26 Ct. CI., 274) ct of uíy 2 , 1 92 (ch. 311, 27 Stat.,
See |udgments In Cooper v. Commíssíoner of Income Ta (4 Comm. L. R., 1304), con-
níng sectíon 17 of the ueensíand Constítutíon ct of 1 G7 whích prohíbíted any re-
íwtíon or dímínutíon of the saíary of a |udge duríng hís term of offíce aíso, udges v.
tttorneu-Oeneroí for a. katchr can 19371 (2 D. L. R., 209), construíng sectíon 90 of the
rítísh North meríca ct, 1 67, that The saíaríes € € of the udges € €
thaí be fí ed and províded by the I arííament of Canada In connectíon wíth the Income
a ct 1932 of Saskatchewan.
:Se Cíark urther Límítatíons T pon ederaí Income Ta atíon (-10 Yníe I,. .. 75)
Owín Oonstírtíríonaí í-nv ín 1919-1920 (15 m. Poí. Scí. Rev., 635, 641-644) cííman,
ttaíntí fnn of tídícínI Saíaríes (24 Iowa L. Rev.. 9) Lowndes, Ta íng Income of ed-
frsí udícíary (10 a. L. Rev., 15.1) Poweíí, Constítutíonaí Law In 1919-1920 (19 Mích.
L Rer 7_tíSí I Poweíí, The Sí teenth mendment and Income from State Securítíes
í a , n í íncome Ta Magazíne ( uíy, 1923), 5-0 20 Coí. L. Rev.. 794 43 arv. L. Rev.,
íís 2CThí. L. Rev- 376 : 45 L. . Rev.. 291 7 a L. Rev., 09: 3 t| of Chí. L. Rev., 141).
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22(b).
162
ítseíf was re|ected by most of the courts before whom the matter came after tííaí
derísíon.
avíng rc|rard to these círcumstances, the questíon ímmedíateíy before n íí
whether Congress e ceeded íts constítutíonaí power ín provídíng that Uníte
States |udges appoínted after the Revenue ct of 1932 shaíí not en|oy ímmuníty
from the íncídences of ta atíon to whích everyone eíse wíthín the defíned cíasses
of íncome ís sub|ected. Thereby, of course, Congress has commítted ítseíf tt
the posítíon that a nondíscrímínatory ta íaíd generaííy on net íncome ís not
when appííed to the íncome of a ederaí |udge, a dímínutíon of hís saíary wíthín
the prohíbítíon of rtícíe III, sectíon 1 of the Constítutíon. To suggest that ít
makes ínroads upon the índependence of |udges who took offíce after Congress
had thus charged them wíth the common dutíes of cítízenshíp by makíng Uíorn
bear theír aííquot share of the cost of maíntaíníng the Government, ís to trívíaííze
the great hístoríc e períence on whích the framers based the safeguards of
rtícíe III, sectíon 1. To sub|ect them to a generaí ta ís mereíy to recogníze
that |udges are aíso cítízens, and that theír partícuíar functíon ín government
does not generate an Immuníty from sharíng wíth theír feííow cítízens the mate-
ríaí burden of the Government whose Constítutíon and íaws they are charged
wíth admínísteríng.
fter thís case came here. Congress, by sectíon 3 of the Pubííc Saíary Ta ct
of 1930, amended sectíon 22(a) so as to make ít appíícabíe to |udges of courts
of the nífed States who took offíce on or before une , 1932. That sectíon,
however, ís not now before us. ut to the e tent that what the Court now says ís
ínconsístent wíth what was saíd ín Mííe v. Graham (20 U. 501), the hítter
can not survíve.
udgment reversed.
Mr. ustíce McReynoíds díd not hear the argument ín thís cause and took no
part ín íts consíderatíon or decísíon.
ír. ustíce trruaí díssents ín an opíníon adheríng to the theory that tííe
Imposítíon of an íncome ta on compensatíon of |udges of constítutíonaí courts ís
víoíatíve of the prohíbítíon contaíned ín rtícíe III, sectíon 1 of the Constítutíon,
agaínst díníhííaUng such compensatíon duríng theír contínuance ín offíce.
S CTION 22(b). € ” GROSS INCOM : CLUSIONS
ROM GROSS INCOM .
1930-3-9675
L T. 3243
R NU CT O 193 .
It nítaí receíved by , a míníster of the gospeí, who íeased the
house furníshed to hím by the M Church and used the rentaí there-
from to pay for an apartment occupíed by hím, ís e empt from
ederaí Income ta .
dvíce ís requested whether , a míníster of the gospeí, ís ta abíe
on the money he receíved ín 1937 from rentíng the house furníshed
to hím by the M Church of whích he ís the míníster, whích money
he used to pay for an apartment occupíed by hím.
It ís stated that (he church of whích ís the míníster owns the
house whích ít furníshes for the use of íts míníster. Sínce was
€ The rases, pro and con. are coííected In the recent díssentíng opíníon by Chíef udge
ond of tííe Court of ppeaí of Mar| íand In Gorrfy v. nenms (5 . (2d), 69, 2). Par-
tícuíar attentíon shouíd be raííed to the decísíon ef the Supreme Court of South fríca
( rause v. Commíssíoner for Iníand Revenue 11)20 , So. ír. Ií. ( . I ). 2 6), construíng
sectíon 100 of the South fríca ct. whích had taken over the Identícaí cíause from
rtícíe III, sectíon 1, of our Constítutíon.
Tííe provísíons regardíng securíty of saíary came from the ct of Settíement of ITOO
(12 and í:í Wííí. III. ííí. 2, Sectíon III), and the ct of 1760 (1 Geo. Iíí, ch. 23). See
aídswortíu The Constítutíon I osttíon of the udges (43 L. . Rev., 2,r ) 2 oMsworth.
The ístory of ngíísh Law (5GO-S 4 6 íd., 234, 514.
u ubUc, No. 32, Seventy-sí th Congress, fírst sessíon, chapter 59. Sectíon 209 of the
same statute, however, provídes that In the case of the udges of the Supreme Court,
and of the ínferíor courts of the Uníted States created under rtícíe III of the Constítu-
tíon, who took offíce on or before une 6, 1932, the compensatíon receíved as such shaíí
not be sub|ect to íncome ta under the Revenue ct of 193 or any príor Revenue ct.
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1C3
22(b), rt. 22(b)(4)-ft.
síngíe and díd not requíre a house for hís resídence, the church ap-
proved the íeasíng thereof by the míníster and the rentíng of an
apartment by hím wíth tííe money receíved as rentaí from the house.
Sectíon 22(b)6 of the Revenue ct of 1936 provídes as foííows:
(b) cíusíons from gro ínrímír. € ” The foííowíng ítems shaíí not be ín-
cíuded ín gross íncome and shaíí be e empt from ta atíon under thís títíe:
. € € €
( ) Mmísters. € ” The rentaí vaíue of a dweíííng house and appurtenances
thereof furníshed to a míníster of the gospeí as part of hís compensatíon
€ €
It ís heíd that the rentaí receíved by from the house furníshed
to hím by the church, whích rentaí he used to pay for an apartment
occupíed by hím, comes wíthín the above provísíons of íaw and ía
e empt from ederaí íncome ta .
rtícíe 22(b) (4)-4: Interest upon Uníted States obíígatíons.
R NU CT OP 103 .
emptíon of ínterest (íncrement ín vaíue) on Uníted States sav-
íngs bonds. (See I. T. 3262, page 96.)
rtícíe 22(b) (4)-5: Treasury bond e emptíon 1939-15-97 4
ín the case of trusts or partnershíps. I. T. 3269
R NU CT O 1036.
Where a trust owns bonds íssued under the Second Líberty ond
ct, and the ínterest on such bonds ís apportíoned between the
trust and the benefícíary, each ís entítíed to the e emptíon províded
under sectíon 7 of the Second Líberty ond ct, as amended, wíth
respect to ínterest on 5,000 príncípaí amount of such bonds.
dvíce ís requested wíth respect to the e emptíon from íncome ta
of ínterest upon Uníted States Treasury bonds íssued under the Sec-
ond Líberty ond ct ín the case of a trust created by the wííí of ,
the íncome of whích ís ta abíe ín part to the trust and ín part to the
benefícíary.
y the terms of the trust created under the wííí of , one-haíf of
the íncome of the trust ís to be paíd to , and the remaínder of the
íncome ís to be accumuíated. The íncome of the trust consísts of
ínterest on munícípaí bonds. Treasury bonds, and bonds íssued by
prívate corporatíons. The cíasses of ínterest íncome are apportíoned
between the trust and the benefícíary, one-haíf to each. The trust
owns Uníted States Treasury bonds íssued under the Second Líberty
ond ct on whích the totaí ínterest receíved amounted ín 1937 to
14| doííars. Of thís ínterest, the trustee aííotted one-haíf to the
íncome to be reported by the trust and one-haíf to the íncome to be
reported for the account of the benefícíary. Inasmuch as the
amounts apportíoned to the trust and to the benefícíary represent
ínterest on such Treasury bonds ín e cess of 5,000, the questíon has
arísen whether the trust and the benefícíary are each entítíed to cíaím
the e emptíon ín respect of ínterest on 5,000 of such Treasury bonds
M províded ín sectíon 7 of the Second Líberty ond ct, as amended.
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23(a), rt. 23(a)- .
164
Sectíon 7 of the Second Líberty Loan ond ct, approved Sep-
tember 24, 1917, provídes as foííows:
That none of the bonds authorízed by sectíon 1, nor of the certífícates author-
ízed by sectíon 5, or by sectíon 6, of thís ct, shaíí bear the círcuíatíon prívííege.
íí such bonds and certífícates shaíí be e empt, both as to príncípaí and ínterest
from aíí ta atíon now or hereafter ímposed by the Dníted States, any State,
or any of the possessíons of the Uníted States, or by any íocaí ta íng authoríty,
e cept (a) estate or ínherítance ta es, and (b) graduated addítíonaí íncome
ta es, commoníy known as surta es, and e cess profíts and war-profíts ta es,
now or hereafter ímposed by the Uníted States, upon the íncome or profíts of
índívíduaís, partnershíps, assocíatíons, or corporatíons. The ínterest on an
amount of such bonds aud certífícates the príncípaí of whích does not e ceed
ín the aggregate 5,000, owned by any índívíduaí, partnershíp, assocíatíon, or
corporatíon, shaíí be e empt from the ta es províded for ín subdívísíon (h)
of thís sectíon. (40 Stat., 2 .)
rtícíe 22(b) (4)-5 of Reguíatíons 94 provídes ín part as foííows:
Treasury bond e emptíon ín the oase of trusts or partnershíps. € ” (a) When
the íncome of a trust ís ta abíe to benefícíaríes, as ín the case of a trust the
íncome of whích ís to be dístríbuted to the benefícíaríes currentíy, each bene-
fícíary ís entítíed to e emptíon as íf he owned dírectíy a proportíonate part of
the Treasury bonds heíd ín trust. When, on the other hand, íncome ís ta abíe
to the trustee, as ín the case of a trust the íncome of whích ís accumuíated for
the benefít of unborn or unascertaíned persons, the trust, as the owner of the
bonds heíd ín trust, Is entítíed to the e emptíon on account of such ownershíp.
In víew of the provísíons of sectíon 7 of the Second Líberty ond
ct and artícíe 22(b) (4)-5 of Reguíatíons 94, whích are quoted
above, ít ís heíd (bat where a trust owns Treasury bonds íssued under
authoríty of the Second Líberty ond ct, and the ínterest on such
bonds ís apportíoned between the trust and the benefícíary, each ís
entítíed to cíaím the e emptíon from íncome ta , as províded ín sec-
tíon 7 of that ct, ín respect of the ínterest on 5,000 príncípaí
amount of such bonds.
S CTION 23(a). € ” D DUCTIONS ROM GROSS
INCOM : P NS S.
rtícíe 23(a)-í: usíness e penses.
R NU CT OP 1936.
ppíícabíííty of G. C. M. 20307 (C. . 193 -1, 157) to ítems other
than prepaíd ínsurance. (See L T. 3251, page 113.)
rtícíe 23(a)-í: usíness e penses. 1939-2 -9S90
G. C. M. 21103
R NU CTS O 1934 ND 1936.
The ordínary and necessary e penses Incurred by In operatíng
hís farm for the breedíng and deveíopment of horses and ín con-
ductíng a racíng stabíe are deductíbíe for ederaí íncome ta pur-
poses sínce the enterpríse was carríed on for the purpose and wíth
reasonabíe e pectatíon of derívíng a profít
dvíce ís requested reíatíve to the deductíbíííty, for ederaí ín-
come ta purposes, of the ordínary and necessary e penses íncurred
by the ta payer ín operatíng a farm and racíng stabíe.
The ta payer ís a man of índependent means and resídes ín the
State of R. e has numerous busíness ínterests ín that State. e-
gínníng wíth the year 192 € ” , he was engaged ín the purchasíng, de-
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165
23(a), rt. 23(a)- .
Teíopíng, and seíííng of saddíe horses and show horses, usíng rented
quarters for that purpose. Later he acquíred an ínterest ín a racíng
stabíe. orses were purchased and entered ín varíous racíng meets
and severaí purses were won by the horses so entered. owever,
Ithese operatíons were not profítabíe and substantíaí íosses were ín-
curred. The ta payer states that as the resuít of the e períence thus
obtaíned be became convínced that the best prospects for makíng
profíts out of such a busíness íay ín breedíng, deveíopíng, and seíí-
íng saddíe horses and show horses and ín breedíng, racíng, and seíí-
íng thoroughbred horses, and that thís couíd oníy be done by the acquí-
sítíon and ownershíp of suffícíent acreage, buíídíngs, and equípment
to carry out a contínuous program of breedíng and deveíopíng and
ín estabííshíng a reputatíon for an outstandíng farm and stabíe. It
was wíth thís ín mínd that he acquíred the íand, buíídíngs, and
equípment íocated ín the State of S. rom tíme to tíme he has ac-
quíred addítíonaí acreage and added necessary buíídíngs and equíp-
ment.
The ta payer further states that príor to, and at the tíme of, the
acquísítíon of the farm he was fuííy aware of the fact that ít wouíd
requíre consíderabíe tíme to deveíop outstandíng bíood íínes ín the
saddíe horse, show horse, and thoroughbred dívísíons of the busíness
that he was aíso aware of the fact that the deveíopment of a few out-
standíng horses wouíd resuít ín íarge earníngs ana profíts that he ac-
quíred the orígínaí farm and the addítíonaí acreage, buíídíngs, and
tcpment as a busíness venture for the purpose and wíth the ínten-
tíon of makíng profíts from the operatíon of thís busíness and that
aíí of hís programs and poíícíes duríng aíí of the years of hís opera-
tíon of the farm were determíned wíth that ín víew.
It has been the poíícy of the ta payer at aíí tímes to híre e perí-
enced and competent managers, traíners, assístants, and other farm
heíp, and from tíme to tíme he has changed the personneí ín order
that e penses couíd be reduced and the effícíency of operatíons ím-
proved. , whom he híred as generaí farm manager, had been
m the busíness of horse breedíng, traíníng, and showíng of horses for
many years and was recognízed as one of the outstandíng men ín
the country ín that busíness. e was empíoyed at an annuaí saíary
píus a bonus based upon the fínancíaí and busíness progress of the
farm and especíaííy upon the profít deríved from the saíe of horses.
It was the understandíng that hís empíoyment wouíd contínue oníy so
íong as the operatíons of the farm showed a profít or had good pros-
pects of showíng a profít. rom the outset there was ínstaííed, and
there has been contínuousíy maíntaíned, at the farm a compíete and
detaííed accountíng system ín charge of a resídent accountant. n
assístant accountant empíoyed ín the ta payer s offíce ín the State of
vísíts the farm severaí tímes each year to audít the books. The ac-
countant s reports are carefuííy revíewed by the ta payer and dís-
cussed wíth the accountant and secretary and wíth the generaí farm
manager. The ta payer devotes a great deaí of hís tíme and atten-
tíon to the operatíons and busíness affaírs of the farm. e consuíts
wíth hís empíoyees as to operatíng poíícíes and at aíí tímes has ín-
sísted on rígíd economy of operatíons, reductíon of e penses, and the
necessíty of puttíng the enterpríse on a payíng basís. íí costs and
e penses íncídent to hís tríps to the farm and to attend race meetíngs
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í 23(a), rt. 23(a)-í.
166
and horse shows are paíd by hím personaííy and are not charged as
e penses of operatíng the farm. None of hís offíce e penses ín the
State of R ís charged to the operatíon of the farm. The entíre cost
of the operatíon and maíntenance of the ta payer s resídence on the
farm ís paíd by the ta payer personaííy and has never been charged
to the operatíons of the farm, nor ís the farm resídence used as a
píace of socíaí entertaínment.
The e penses íncurred ín the operatíon of the enterpríse mate-
ríaííy e ceeded the gross íncome for the years 1930 to 1937, íncíusíve,
but the prospects of makíng a profít are now much ímproved as índí-
cated by resuíts ín recent months. The íncome deríved consísts prín-
cípaííy of receípts from saíes of horses and from racíng purses.
There ís aíso some íncome from saíes of cattíe, sheep, mísceííaneous
ííve stock, stud fees, etc. The príncípaí e pendítures consíst of op-
eratíng e penses, íncíudíng deprecíatíon on buíídíngs and equípment
The ta payer states that, ín hís |udgment, hís faííure thus far to
píace the farm on a payíng basís has been due íargeíy to two factors,
(1) the ínabíííty thus far to breed, deveíop, and contínue to maín-
taín severaí outstandíng race horses, and (2) unfavorabíe economíc
condítíons. e poínts out that the bíood ííne of hís horses has been
constantíy ímprovíng and the saíes have been bríngíng better príces
and greater revenue. In each of the years sínce 1932, saíes of horses
have resuíted ín substantíaí profíts. conservatíve estímate of the
vaíue of horses on hand on December 31, 1937, shows that such vaíue
far e ceeded theír cost. It ís stated, and the evídence índícates, that
the farm ís now ín a posítíon to capítaííze on íts outstandíng reputa-
tíon whích has been buíít up over the years. The traíner of thorough-
bred horses for the ta payer states that the decísíon upon the ques-
tíon of whether to keep or seíí a horse has at aíí tímes been made by
reference to whether the saíe or keepíng of the horse wííí bríng ín the
most money. e further states that the same consíderatíon governs
ín the matter of whích horses to race and whích meets to attend.
The fundamentaí questíon ís whether, under the facts presented,
the ta payer s operatíon of the enterpríse constítutes a trade or busí-
ness entítííng hím to the deductíons províded by sectíon 23 of the
Revenue cts of 1934 and 1936 for e penses, etc., íncurred ín carryíng
on a trade or busíness.
Numerous cases have been decíded by the courts and by the oard
of Ta ppeaís ínvoívíng the questíon of whether horse breedíng
and racíng actívítíes constítute a trade or busíness. In a few cases
such actívítíes have been heíd not to constítute a trade or busíness.
(Regínaíd C. anderbUt v. Commíssíoner. 5 . T. ., 1055, affírmed
ín Deerínq v. íaír, 23 . (2d), 975: arry C. ísher v. Commís-
síoner, 29 . T. ., 1041, affírmed per curíam ín ísher v. Commís-
síoner, 74 . (2d), 1014. See aíso Thache.r v. Lowe, 2 ed.. 994,
and Louíse Cííeney v. Commíssíoner, 22 . T. ., 672, ín whích farm-
íng operatíons were heíd not to constítute a busíness.) In other
cases, whích are much more numerous, the decísíon has been to the
contrary. ( moner such cases are Wííson, v. ísner, 2 2 ed., 3
Commíssíoner v. Wídener, 33 . (2d), 33 Commíssíoner v. íeíd.
67 . (2d), 76 Whítney v. Commíssíoner, 73 . (2d), 5 9 Smíth v.
Commíssíoner, 7 . (2d), 40 Margaret . mon/ v. Commíssíoner,
22 . T. ., 139 , acquíescence, C. . -2, 3 (1931) ames Cíark
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167
23(a), rt. 23(a)-í.
et aí, ecutor, v. Commíssíoner, 24 . T. ., 1235, acquíescence,
C . I-1, 2 (1932) and Laura M. Curtís v. Commíssíoner, 2
. T. ., 631, acquíescence. C. . II-2, 4 (1933). See aíso Píant v.
Waísh, 2 0 ed., 722, ín whích ít was heíd that a farm was conducted
a. s busíness.)
n anaíysís of the above-cíted cases díscíoses that the operatíon
of horse breedíng farms and racíng stabíes may constítute a trade
or busíness that the questíon of whether or not such operatíons con-
stítute a trade or busíness depends upon whether the actívítíes are
for the purpose or wíth the íntentíon of makíng a profít, províded
the e pectatíon of profít ís reasonabíe that the questíon of ínten-
tíon ís a questíon to be determíned ín each case upon the partícuíar
facts presented that, the ta payer s íntentíon or purpose of makíng
a profít, as díscíosed by hís own testímony and by other evídence,
ís suffícíent to estabíísh the busíness character of the enterpríse, pro-
víded the e pectatíon of profít ís reasonabíe and that the fact that
íosses are íncurred year after year does not necessarííy índícate that
the prospect of profít ís not reasonabíe or that the ta payer s ínten-
tíon ís not to make a profít. It ís true that ín Thacher v. Lowe,
supra, díe court stated that ín ascertaíníng the íntentíon of the ta -
payer ít couíd see no escape from makíng the cru of the determína-
tíon hís receípts and e pendítures. owever, as poínted out ín
Commíssíoner v. íeíd, supra, the oníy evídence submítted ín the
Lowe case was a statement of the ta payer s receípts and íosses.
In the ínstant case the ta payer states that hís íntentíon and pur-
pose ín operatíng the farm and racíng stabíe ís to make a profít and
that, ín hís opíníon, the prospects for profít are reasonabíe. The eví-
dence ín the case índícates that there ís a reasonabíe prospect that
the operatíons may be profítabíe ín the near future. The operatíons
are carríed on ín a busínessííke manner and economy ís stressed. The
farm ís not used by the ta payer for entertaínment, socíaí actívítíes,
or other nonbusíness purposes. The ta payer hímseíf devotes a great
deaí of tíme and attentíon to the operatíons ín an effort to make them
successfuí from a fínancíaí standpoínt.
Lí the ííght of the facts ín thís case and the cíted decísíons, ít ís
the opíníon of thís offíce that the ta payer, ín carryíng on the actíví-
tíes ín questíon, ís engaged ín carryíng on a trade or busíness. The
tase of Regínaíd C. anderbíít, supra, ís dístínguíshabíe from the
ínstant case ín that the oard of Ta ppeaís díd not there have
tetímony of the ta payer hímseíf as to hís íntentíon. urthermore,
ín that case there was evídence to índícate that the farm was operated
as a píace of píeasure, e híbítíon, and socíaí díversíon. Líkewíse, ín
the case of arry C. ísher, supra, the oard had no evídence as to
the ta payer s íntentíon or ob|ect ín carryíng on the enterpríse. The
case of Louíse Cheney, supra, ís dístínguíshabíe ín that there the
oard found that there was mereíy a vaín hope that on some remote
day a profít míght resuít.
Sínce the operatíon of the farm and racíng stabíe ín the present
case constítutes a trade or busíness, the ta payer ís entítíed to deduct
such ordínary and necessary e penses and other ítems as the statute
permíts to be deducted ín carryíng on a trade or busíness.
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
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í 23(c), rt. 23(c)- .
16
rtícíe 23(a)-6: Compensatíon for personaí servíces.
R NU CT O 1936.
Purchase of íífe ínsurance poíícíes for empíoyees. (See I. T. 326 ,
page 196.)
S CTION 23(c). € ” D DUCTIONS ROM GROSS
INCOM : T S G N R LLY.
rtícíe 23(c) -1: Ta es. 1939-1-9661
I. T. 3241
R NU CT O 193 .
purchaser of reaí estate In írgínía, In whích State reaí estate
ta es accrue for the entíre year on anuary 1, ís not entítíed to a
deductíon for any ta es assessed for the fírst caíendar year ín whích
he owns the property, even though by the terms of the contract of
saíe the ta es are apportíoned between the vendor and vendee as of
the date of saíe. ny part of the ta es for the fírst caíendar year
paíd by the purchaser shouíd be added to the cost of the property.
dvíce ís requested whether ta es paíd ín 1937 on reaí estate sít-
uated ín the cíty of R, State of írgínía, purchased duríng that year
by , constítute a part of the cost of the property or whether such
ta es are an aííowabíe deductíon for ederaí íncome ta purposes.
Duríng 1937 the ta payer purchased certaín parceís of reaí estate
sítuated ín the cíty of R, írgínía. In accordance wíth the custom ín
that State, ta es for the year were prorated to the date of purchase
and charged to the seííer and the purchaser assumed the ta es after
that date. The ta payer treated the ta es accrued to the date of
purchase as part of the cost of the property and cíaímed the ta es
paíd for the períod from the date of purchase to the end of the year
as a deductíon ín hís return for 1937.
Pertínent sectíons of the íaw appíícabíe, contaíned ín the ta code
of írgínía, írgínía Code of 1936, nnotated, read as foííows:
Sec. 251. What reaí estate to be ta ed ííen for ta es ™ . € ” íí reaí es-
tate, e cept such as Is e empted by the constítutíon of írgínía, shníí be sub-
|ect to such annuaí ta atíon as may be prescríbed by íaw, and there shaíí be a
ííen on such reaí estate for the payment of ta es and íevíes ímposed thereon,
hereafter assessed, príor to any other ííen or encumbrance thereon. € € €
Seo. 252. When commíssíoners of the revenue to commence assessments. € ”
ach commíssíoner of revenue shaíí commence, annuaííy, on the 1st day of
anuary, and proceed wíthout deíay to ascertaín aíí the reaí estate ín hís
county or cíty, as the case may be, and the person to whom the same Is charge-
abíe wíth ta es on that day. The begínníng of the ta year for the assessment
of ta es on reaí estate shaíí be anuary the 1st, amí the owner of reaí estate
on that day shaíí be assessed for the ta es for the year begínníng on that day.
€ € € € € €
Sko. 424. Ta year. € ” cept where otherwíse specífícaííy províded, the ta
year shaíí begín on the 1st day of anuary of each year and shaíí end on the
31st day of December of each year and aíí assessments shaíí be made as of the
1st day of anuary of each year.
Under sectíon 297 of the ta code, the councíí of any cíty or town
ín írgínía may by ordínance províde for the coííectíon of cítv or
town ta es ín equaí semíannuaí ínstaííments. The cíty of R, írgínía,
has províded by actíon of the councíí that the reaí estate ta es for
each year are due and payabíe on une 30 and December 31 of each
year ín equaí ínstaííments.
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169
523(e), rt. 23(e)-3.
Under the statutes of írgínía, ta es on reaí property are assessed
to the owner as of anuary 1 for the períod of the caíendar year
begínníng on that date. Inasmuch as ownershíp of the property on
anuary 1 ís the event whích determínes ííabíííty for the ta es
thereon, ít ís heíd that írgínía reaí property ta es accrue, for
ederaí íncome ta purposes, on anuary 1 of each year.
Under the íaws of írgínía, as a generaí ruíe proratíon of ta es
ís not aííowed, and when an assessment has been made, the then owner
and the property become ííabíe for the ta for the whoíe year.
Warwíck County v. Cíty of Newport News, 153 a., 7 0, 151 S. .,
417.) ceptíons to the generaí ruíe agaínst proratíon e íst ín cases
where the property ís acquíred for pubííc purposes and the statute
reííeves the ta payer from the payment of ta es for the portíon of
the year after the date of saíe. Símííaríy, ta payers whose íands
are acquíred by the Uníted States are reííeved from payment of ta
for the períod subsequent to the date of saíe. (Sectíons 277 and 27 .)
Sínce the purchaser of reaí estate subsequent to anuary 1 takes
ít sub|ect to the ííen whích attaches on that date, and sínce reaí
property ís ordínarííy conveyed by warranty deed ín whích the
grantor covenants to convey free from aíí encumbrances ít becomes
the duty of the grantor to díscharge the ííen for ta es whích attached
on anuary 1. íthough ít ís the generaí custom ín írgínía to pro-
víde for the apportíonment of ta es for the year ín whích the saíe
takes píace, ít ís a matter of agreement between grantor and grantee
and does not affect the date as of whích ííabíííty for property ta es
becomes fí ed. In other words, íf the grantee, by agreement wíth
the grantor, chooses to pay part of the ta ííabíííty of the grantor,
he mereíy adds the amount to the cost of hís property.
In the ínstant case, therefore, the ta es paíd by the grantee, whích
had prevíousíy accrued agaínst the grantor, are not deductíbíe, and
such payment must be treated, for ederaí íncome ta purposes, as a
capítaí e pendíture constítutíng part of the purchase príce of the
property.
S CTION 23(e). € ” D DUCTIONS ROM GROSS INCOM :
LOSS S Y INDI IDU LS.
rtícíe 23 (e) -3: Loss of usefuí vaíue. 1939-22-9 50
G. C. M. 21171
R NU CT CI I03ML
The M Raííroad Co. Is entítíed to deductíons, ín accordance wíth
the provísíons of artícíe 23(e)-3, Reguíatíons 94, on account of the
díscardíng of roadway property ín connectíon wíth two constructíon
pro|ects regardíess of the fact that the pro|ects are paíd for hy the
State out of funds aííotted ín whoíe or ín part by the ederaí
Government.
n opíníon ís requested reíatíve to the aííowance of deductíons from
the gross íncome of the M Raííroad Co. for the year 1936 on account
of certaín roadway property díscarded or retíred duríng that year ín
connectíon wíth constructíon pro|ects, the cost of whích pro|ects was
borne by the States out of funds aííotted ín whoíe or ín part by the
ederaí Government from unempíoyment reííef funds.
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I 23(e), rt. 23(e)-3.
170
The constructíon ínvoíved two pro|ects. The fírst consísted of a
subway under two brídges ín order to eíímínate a dangerous grade
crossíng. The second consísted of the ínstaííatíon of fíashíng ííght
sígnaís at sí grade crossíngs to repíace ordínary wooden and metaí
sígns whích were díscarded. The cost of compíetíng the two pro|ects
was borne entíreíy by the States from funds aííotted ín whoíe or ín
part by the ederaí Government, the cost of the fírst pro|ect beíng 35a
doííars and of the second, 5a doííars. The deductíon cíaímed by the
ta payer, representíng the retírement vaíue of the roadway property
removed to make way for the new constructíon and ínstaííatíon, ís
shown as 2 doííars as to the fírst pro|ect and doííars as to the
second, or a totaí of ta doííars. The díscarded or retíred roadway
property and facííítíes consísted ín generaí of oíag, píank, fence
guards, crossíngs, sígns, etc. The M Raííroad Co. handíes íts roadway
accounts by the retírement method of accountíng rather than by
deprecíatíon.
The questíon has been raísed whether the retírement of the oíd
roadway property represented an ínvoíuntary conversíon of property
wíthín the meaníng of sectíon 112(f) of the Revenue ct of 1936,
recompense for whích was receíved ín e cess of the vaíue of the oíd
property through the award coveríng the new ínstaííatíon. If so, no
deductíon wouíd be aííowabíe ín víew of the provísíons of sectíon
112(f). If the transactíon díd not represent an ínvoíuntary conver-
síon under sectíon 112(f), the questíon ís presented whether any de-
ductíon ís aííowabíe for ederaí íncome ta purposes sínce any íoss
whích the ta payer may have sustaíned by reason of díscardíng or
retíríng the property ín questíon appears to have been compensated
for wíthín the meaníng of sectíon 23(f) of the ct (provídíng for
the deductíon of íosses sustaíned by corporatíons and not compensated
for by ínsurance or otherwíse) by the new and better facííítíes erected
ín íts píace at the e pense of the ederaí and State Governments.
Sectíon 112(f) of the Revenue ct of 1936 provídes ín part as
foííows:
(f) Invoíuntary conversíons. € ” If property (as a resuít of Its destructíon In
whoíe or In part or an e ercíse of the power of requísítíon or con-
demnatíon, or the threat or ímmínence thereof) ís compuísorííy or ínvoíuntarííy
converted Into property símííar or reíated ín servíce or use to the property so
converted, or ínto money whích ís forthwíth ín good faíth, under reguíatíons
prescríbed by the Commíssíoner wíth the approvaí of the Secretary, e pended
ín the acquísítíon of other property símííar or reíated ín servíce or use to the
property so converted, no gaín or íoss shaíí be recognízed.
Under the facts of thís case, thís offíce ís of the opíníon that the
díscardíng or retírement of the oíd roadway property díd not con-
stítute an ínvoíuntary conversíon wíthín the meaníng of sectíon 112(f)
of the Revenue ct of 1936 and artícíe 112(f) of Reguíatíons 94.
In connectíon wíth the second questíon raísed ín the case, ít appears
that no part of the award for the new facííítíes was made by way of
compensatíon to the ta payer for the vaíue of the oíd facííítíes dís-
carded or retíred to make way for the new constructíon. It ís stated
that the entíre amount of the award was made after the roadway
had been cíeared of the oíd property. The mere fact that the cost of
the new facííítíes was borne by the ederaí and State Governments
rather than by the ta payer does not of ítseíf change the character
of the íoss to the ta payer – /. To offset any portíon of the vaíue of the
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171
23(e). rt. 23(e)-í.
new property agaínst the oíd property díscarded or retíred wouíd
requíre that such portíon be sub|ect to a deductíon whenever the new
property ís díscarded or retíred. In other words, such portíon wouíd
then constítute a capítaí asset on whích íosses and/or deprecíatíon
míght be taken. Moreover, ít wouíd seem that íf the award ís treated
as havíng been receíved ín payment for the retírement of the oíd
property, the e cess of the award over such retírement vaíue wouíd
constítute gaín or íncome to the ta payer, a concíusíon contrary to
that reached by the Supreme Court of the Uníted States ín dwards
v. Cuba Raííroad Go. (26 U. S-, 62 T. D. 372 , C. . I -2, 122
(1925)). The transactíon ís aíso cíearíy not an e change of propertíes
of ííke kínd wíthín the meaníng of sectíon 112(b)í of the ct.
In víew of the foregoíng, thís offíce ís of the opíníon that, for ed-
eraí íncome ta purposes, a íoss was sustaíned by the ta payer through
díscardíng or retíríng the property ín questíon, whích íoss ís aííowabíe
ín accordance wíth the provísíons of artícíe 23(e)-3 of Reguíatíons 94,
reíatíng to u íoss of usefuí vaíue of assets and the permanent dís-
cardíng thereof.
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
rtícíe 23(e)-4: Shrínkage ín vaíue of stocks. 1939 9-9732
L T. 3255
R NU CT O 1036.
I. T. 3215 (C. . 193S-2, 152), hoídíng that a stockhoíder of the
M Corporatíon whose oníy asset, reaí estate íocated ín Wísconsín,
was soíd at forecíosure was not entítíed to deduct n íoss In hís return
for 1930 on account of the worthíessness of such stock based on the
forecíosure udgment because the ríght of redemptíon bad not e -
píred at the cíose of the year 1936, reíates oníy to a determínatíon of
worthíessness based soíeíy on the forecíosure and does not precíude
a deductíon on account of worthíessness based on other facts.
dvíce ís requested reíatíve to I. T. 3215 (C. . 193 -2, 152), whích
ínvoíves the deductíbíííty of a íoss by a stockhoíder of the M Corpora-
tíon on account of worthíessness of the stock of the corporatíon where
íts oníy asset, reaí estate ín Wísconsín, was soíd under forecíosure
proceedíngs.
The íast paragraph of I. T. 3215 reads as foííows:
ít ís heíd that the stock of the M Corporatíon díd not become worthíess
through the forecíosure |udgment obtaíned on March € ” , 1930. Under the State
íaw, the property was sub|ect to redemptíon untíí pubííc saíe thereof at íeast one
year after the date of the |udgment, uníess an earííer saíe was made pursuant to
stípuíatíon of the partíes. Untíí fínaí saíe occurs, wberennder the pro erty Is no
íonger sub|ect to redemptíon by the corporatíon. It can not be saíd that the corpo-
ratíon has íost íts oníy asset (G. C. M. 19367 (C. . 1937-2, 115)), and the
(acts do not índícate that the stork ícííí he teorthíess for other reasons príor
thereto. (Cf. I. T. 1697, C. . II-í, 95 (1923), and íram R. I oyd v. Commít-
ííoncr, 34 . T. ., 301.) Itaíícs suppííed.
It ís contended that I. T. 3215 ís authoríty for the posítíon that ínas-
much as the M Corporatíon díd not íose íts oníy asset through the fore-
cíosure untíí the períod of redemptíon e píred, the stock of the corpora-
tíon couíd not have become worthíess ín the hands of a stockhoíder untíí
e píratíon of the períod of redemptíon and that, therefore, no íoss ís
deductíbíe by a stockhoíder príor to the e píratíon of such períod.
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S 24, rt. 24-7.
172
In I. T. 1697, cíted ín the above-quoted paragraph, the foííowíng
íanguage occurs:
The fact that the M Company had an equíty of redemptíon untíí Octo-
ber, 1919, was a condítíon subsequent whích wouíd not of Itseíf prevent the stock
from beíng determíned worthíess at the tíme of the forecíosure saíe íf the other
e ístíng facts at that tíme showed the stock to be ín fact worthíess. € € €
It ís apparent that I. T. 3215 reíates oníy to a determínatíon of
worthíessness based soíeíy on the forecíosure |udgment on the oníy asset
(reaí estate) of the corporatíon there ínvoíved where the períod of
redemptíon aííowed under State íaw had not e píred that the ruííng ín
that case ís íímíted ín íts appíícatíon to the sítuatíon ínvoíved thereín
where the facts díd not índícate worthíessness for other reasons and
that each case of thís nature must be decíded on the partícuíar facts
ínvoíved.
S CTION 23(k). € ” D DUCTIONS ROM GROSS
INCOM : D D TS.
rtícíe 23(k)-í: ad debts. 1939-9-9733
I. T. 3256
R NU CT O 193 .
I. T. 3172 (C. . 193 -1, 150), concerníng ta abíííty of amounts
recovered on debts deducted by banks ín a príor year pursuant to
charge-offs at the specífíc dírectíon of ederaí or State supervísory
offícers, ís modífíed, ín víew of G. C. M. 20 54. (See page 102.)
rtícíe 23(k)-í: ad debts.
R NU CT O 1936.
Recoveríes of bad debts charged off ín príor years. (See G. C. M.
20 54, page 102.)
S CTION 24. € ” IT MS NOT D DUCTI L .
rtícíe 24-7: Dísaííowance of deductíons for 1939-2-9064
unpaíd e penses and ínterest. I. T. 3242
R NU CTS O 193G ND 1937.
Sectíon 21(c) of the Revenue ct of 1930, as added by sectíon
301 of the Revenue ct of 1937, docs not prohíbít the deductíon
by as ordínary busíness e penses of the amounts of accrued
saíaríes payabíe for 1937 to hís sons for servíces rendered by them
ín that year, where such amounts were credíted ín 1937 to the sons
accounts wíthout íímítatíon or restríctíon and were returned by
them as Income constructíveíy receíved for that year.
dvíce ís requested reíatíve to the appíícatíon of sectíon 24(c) of
the Revenue ct of 1936, as added by sectíon 301 of the Revenue
ct of 1937, to the case of , who keeps hís books on the accruaí basís
and cíaímed deductíons for the year 1937 on account of saíaríes pay-
abíe to hís two sons ín e cess of amounts actuaííy paíd to them.
Duríng the year 1937, was the propríetor of an índívíduaí busí-
ness empíoyíng hís two sons, ana C, who performed servíces for
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173
24. rt. 24-7.
the compensatíon accrued by the ta payer. Duríng that year,
accrued on hís books as saíary e pense 3,000 payabíe to and
3,000 payabíe to C. The amounts actuaííy paíd duríng the year
were 1,900 to and 1, 00 to C. ach reported on hís índívíduaí
return for 1937 the entíre amount of 3,000 as compensatíon for that
year. The questíon ís presented whether, sínce each son reported
the entíre amount of 3,000 and paíd the ta thereon, shouíd be
aííowed a deductíon of 6,000 ín hís return for 1937 as a busíness
e pense even though the entíre amount was not paíd duríng that
ta abíe year or wíthín two and one-haíf months thereafter. The
questíon aríses by reason of the provísíons of sectíon 24(c) of the
Revenue ct of 1936, as added by sectíon 301 of the Revenue ct
of 1937, readíng as foííows:
(e) Unpaíd e penses and ínterest.- € ” In computíng net Income no deductíon
shaíí be aííowed ín respect of e penses íncurred under sectíon 23(a) or
ínterest accrued under sectíon 23(b) € ” -
(1) If not paíd wíthín the ta abíe year or wíthín two and one-haíf months
after the cíose thereof and
(2) If, by reason of the method of accountíng of the person to whom the
payment ís to be made, the amount thereof ís not, uníess paíd, íncíudíbíe ín
the gross íncome of such person for the ta abíe year ín whích or wíth whích
the ta abíe year of the ta payer ends and
3) If, at the cíose of the ta abíe year of the ta payer or at any tíme
wíthín two and one-haíf months thereafter, both the ta payer and the person
to whom the payment ís to be made are persons between whom íosses wouíd
be dísaííowed under sectíon 24(b).
The report of the Ways and Means Commíttee of the ouse of
Representatíves (report No. 1546, dated ugust 13, 1937) ín e -
píanatíon of the purpose of sectíon 301 of the Revenue ct of 1937
states ín part as foííows (page 29):
Your commíttee recommends that sectíon 24 of the Revenue ct of 19 6
be amended by addíng a new subsectíon under whích ít ís províded that
where the credítor, by reason of Ms method of accountíng, ít not requíred
to íncíude ín hís gross íncome the amount of the e penses or the ínterest untíí
ít í paíd, no deductíon shaíí be aííowed to the debtor under sectíon 23(a) (for
e penses) or sectíon 23(b) (for ínterest) for sums not paíd by the debtor
duríng hís ta abíe year or wíthín two and one-haíf months after the cíose of
such ta abíe year. € € Itaíícs suppííed.
rtícíe 24-7, Treasury Decísíon 4791 (C. . 193 -1, 3), amendíng
Reguíatíons 94, provídes as foííows:
bt. 24-7. Dísaííowance of deductíons for unpaíd e penses and ínterest.
The appíícatíon of sectíon 24(c), as added by the Revenue ct of 1937, may
be íííustrated by the foííowíng e ampíe:
ampíe: ís the hoíder and owner of an ínterest-bearíng note e ecuted by
the M Corporatíon aíí of the stock of whích ís owned by hím. and the M
Corporatíon make theír íncome returns on the basís of a caíendar year but
the M Corporatíon makes íts returns on the accruaí basís and makes hís
returns on the cash receípts and dísbursements basís. The M Corporatíon does
not pay any ínterest on such note duríng the caíendar year 1937 or wíthín
two and one-haíf months after the cíose thereof, but cíaíms a deductíon for the
year 1937 wíth respect to the ínterest accruíng on the note ín that year. ,
íeíng on the cash receípts and dísbursements basís, does not íncíude such
ínterest ín hís return for the year íf)37. y the appíícatíon of sectíon 24(c),
as added by the Revenue ct of 1937, no deductíon for such ínterest ís aííow-
abíe ín computíng the net íncome of the M Corporatíon for the year 1937.
The provísíons of such sectíon 24(c) do not otherwíse affect the generaí ruíes
governíng the aííowance of deductíons under the accruaí basís. ence In the
event the M Corporatíon shouíd pay such ínterest after March 15, 193 , no
deductíon therefor wouíd be aííowabíe ín computíng íts net Income for the
year ín whích the payment was made. Itaíícs suppííed.
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I 25, rt. 25-4.
174
It wííí be noted that the report of the Ways and Means Commíttee
and the e ampíe gíven under artícíe. 24-7 (T. D. 4791, supra) índícate
that the questíon of the deductíbíííty of e penses and ínterest under
sectíon 24(c) of the Revenue ct of 1936, as added by sectíon 301 of
the Revenue ct of 1937, depends ín part on whether the credítor ta -
payer ís requíred to íncíude ín gross íncome ín hís return for the same
ta abíe year the sums for whích deductíon ís taken by the debtor
ta payer.
rtícíe 42-2 of Reguíatíons 94, ínterpretíng the provísíons of sectíon
42 of the Revenue ct of 1936 wíth respect to the questíon of construc-
tíve receípt of íncome, provídes that:
Income whích ís credíted to the account of or set apart for a ta payer and
whích may be drawn upon by hím at any tíme ís sub|ect to ta for the year
duríng whích so credíted or set apart, aíthough not then actuaííy reduced to
possessíon. To constítute receípt In such a case the Income must be credíted
t r set apart to the ta payer wíthout any substantíaí íímítatíon or restríctíon as
to the tíme or manner of payment or condítíon upon whích payment ís to be
made, and must be made avaííabíe to hím so that ít may be drawn at any tíme,
and íts receípt brought wíthín hís owu controí and dísposítíon. book entry, íf
made, shouíd índícate an absoíute transfer from one account to another.
In víew of the íntent and purpose of Congress ín enactíng the
provísíons of sectíon 24(c) of the Revenue ct of 1936, as added by
sectíon 301 of the Revenue ct of 1937, ít ís the opíníon of thís offíce
that where ít ís concíusíveíy shown that amounts deducted for accrued
e penses (and ínterest) by a debtor ta payer have been credíted to
the account of the person to whom such amounts are due under cír-
cumstances whích wouíd requíre the reportíng of the sums credíted
as íncome constructíveíy receíved under the provísíons of artícíe 42-2
of Reguíatíons 94 the deductíon for such amounts ís aííowabíe sínce
factor (2) of sectíon 24(c), supra, ís absent ín such a case and there
ís no basís for the dísaííowance of the deductíon.
In the ínstant case the estabííshed method of reportíng íncome by
and C ís the cash basís and the accrued saíary was credíted by ,
wíthout restríctíon or íímítatíon, to theír accounts ín the year 1937,
so that ít ís properíy íncíudíbíe m theír returns for that year on the
basís of constructíve receípt. In thís case, factor (2) of sectíon 24(c),
eupra, ís absent, as a consequence of whích a deductíon by the payor
ín 1937 for the accrued saíaríes shouíd be aííowed.
S CTION 25. € ” CR DITS O INDI IDU L
G INST N T INCOM .
rtícíe 25-4: Personaí e emptíon of head of 1939-2-9665
famííy. G. C. M. 20921
R NU CT OP 1936.
, who contríbuted the greater part of the amount e pended ín
193t for the maíntenance of the home and the support of the fam-
ííy consístíng of hís father, mother, two mínor brothers, and hím-
seíf, ís not entítíed to a personaí e emptíon of 2,500 as head of
a famííy nor to a credít for dependents, sínce he díd not have the
ríght to e ercíse famííy controí, hís father s íncome, though íess
than s Income, was avaííabíe for famííy support, and the mem-
bers of the famííy can not be saíd to have been dependent on hím
chíefíy for support. . ......
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175
L 25, rt. 25-4.
n opíníon ís requested whether ís entítíed to credíts under
sectíon 25 of the Revenue ct of 1936 as head of a famííy and for
dependents, the círcumstances beíng as foííows:
Duríng the year 1936, resíded ín the same househoíd wíth hís
mother, father, and two brothers, 17 and 15 years of age, respectíveíy.
s earníngs for the year were 2, 00 and the earníngs of hís father,
the oníy other member of the famííy who had any íncome duríng the
year, were 1,900. The totaí amount e pended by and hís father
duríng the year 1936 for maíntenance of the home and support of the
entíre famííy was 3,600 of whích contríbuted ín e cess of 2,000.
The íncome of and hís father was deposíted ín a síngíe checkíng
account and wíthdrawaís from thís account were under s super-
vísíon and couíd be made oníy over hís sígnature. The íease for the
house occupíed by the famííy was ín the name of . It ís contended
that under these círcumstances shouíd be aííowed a personaí e -
emptíon as head of a famííy and credít for dependents.
Sectíon 25(b), Revenue ct of 1936, provídes ín part € ”
Credíts for both normaí ta and surta . € ” There shaíí he aííowed for the pur-
poses of the normaí ta and the surta the foííowíng credíts agaínst net íncome:
(1) Personaí e emptíon. € ” In the case of a síngíe person, a personaí e emp-
tíon of 1,000 or ín the ease of the head of a famííy or a marríed person íívíng
wíth husband or wífe, a personaí e emptíon of 2,f 00.
(2) Credít for dependents. € ” 400 for each person (other thnn husband or
wífe) dependent upon and receívíng hís chíef support from the ta payer íf such
dependent person ís under 1 years of age or ís Incapabíe of seíf-support
because mentaííy or physícaííy defectíve.
rtícíe 25-4 of Reguíatíons 94, based upon sectíon 25 of the Reve-
nue ct of 1936, provídes ín part as foííows:
head of a famííy ís an índívíduaí who actuaííy supports and maíntaíns ín
one househoíd one or more índívíduaís who are cíoseíy connected wíth hím by
bíood reíatíonshíp, reíatíonshíp by marríage, or by adoptíon, and whose ríght to
e ercíse famííy controí and províde for these dependent índívíduaís ís based
upon some moraí or íegaí obíígatíon.
Under the facts presented ín the ínstant case, ít does not appear
that the ta payer had the ríght to e ercíse famííy controí wíthín
the meaníng of the above-quoted provísíons of the reguíatíons. The
facts regardíng the amount whích the ta payer contríbuted to the
famííy s maíntenance, the íeasíng of the house ín hís name, and hís
controí of the |oínt checkíng account, are not suffícíent to rebut the
presumptíon that the ríght to e ercíse famííy controí contínued to
remaín ín the father, whose íncome was avaííabíe and used for fam-
ííy support. It was, of course, necessary that the ta payer e pend a
certaín amount of hís íncome for íívíng quarters, food, etc.. for hím-
seíf wherever he resíded. mounts paíd by hím for such benefíts
ore not contríbutíons to the support of dependent members of hís
famííy. (I. T. 199 , C. . 111-1, 20 (1924).) In víew of thís fact
and consíderíng the amount of the father s íncome avaííabíe for fam-
ííy maíntenance ín the ta abíe year, ít does not appear that any of
the other members of the famííy were dependent chíefíy upon the ta -
payer for support ín that year. Contríbutíons to the support of per-
sons who are not dependent chíefíy upon hím do not entítíe the ta -
payer to e emptíon as head of a famííy. annah D. Stratton v.
Commíssíoner, 5 . T. ., 1025 Chester . Morrow v. Commíssíoner,
. T. ., 44 Louíse íngsíey v. Commíssíoner, 11 . T. ., 296
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25, rt. 25-5.
176
Louíse C. aíí v. Commíssíoner, 1G . T. ., 7 5 oseph . Rudíger
v. Commíssíoner 22 . T. ., 204.)
It ís the opíníon of thís offíce, therefore, that the ta payer ís not
entítíed to the credít of 2,500 as head of a famííy nor to a credít for
dependents for the year 1930.
. P. Wencheí,
Chíef Counseí, ureau of Internaí Revenue.
rtícíe 25-4: Personaí e emptíon of head of 1939-14-9770
famííy. I. T. 3267
R NU CT O 1936.
Two brothers, and , own the house In whích they nnd theír
dependent mother ííve. , who Is absent from home the greater
part of the tíme, makes the ma|or contríbutíon toward the maín-
tenance of the home and the support of the mother. eíd, Is
entítíed to personaí e emptíon as head of a famííy and to credít for
one dependent under sectíons 25(b)í and 23(b)2 of the Revenue
ct of 1936.
dvíce ís requested whether ís entítíed to the personaí e emptíon
aííowed the head of a famííy under sectíon 25(b)í of the Revenue ct
of 1936, and artícíe 25-4 of Reguíatíons 94, and whether he ís aíso
entítíed to a credít for one dependent under sectíon 25-b)2 of that
ct and artícíe 25-6 of Reguíatíons 94.
and hís brother, , both síngíe men, own the house ín whích
they and theír mother ííve. The ta payer, , ís away from the homo
a great deaí of the tíme as a traveííng saíesman. The brother, ,
resídes at home aíí of the tíme. In the year 1937, the ta payer. ,
contríbuted over 1,200 toward the maíntenance of the home whííe
hís brother duríng the same year contríbuted appro ímateíy 600.
ís mother, the dependent for whom the e emptíon and credít are-
cíaímed, ís physícaííy íncapacítated and has no íncome.
Inasmuch as duríng the year 1937 furníshed more than one-haíf
of the amount requíred for the maíntenance of the home and the sup-
port of hís dependent mother who resíded ín the same househoíd
wíth hím, he ís entítíed to cíassífícatíon as the head of a famííy for
the ta abíe year 1937 regardíess of hís frequent absences from home.
urthermore, ínasmuch as he contríbuted the chíef support of hís
mother ín 1937, he ís aíso entítíed to a credít of 400 for her as a
dependent.
rtícíe 25-5: Personaí e emptíon of marríed person.
R NU CT O 103U.
Dívísíon of the marríed person s e emptíon between husband and
wífe where theír ta abíe years are not concurrent. (See I. T. 3277,
page 109.)
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177
25, rt. 25-6.
btíc e 25-6: Credít for dependents. 1939-17-9 03
L T.3274
NU CT O 1936.
, who ís requíred by court order to pay 2 doííars monthíy for
aíímony and support money for hís dívorced wífe and hís two
chíídren under 1 years of age íívíng wíth theír mother, Is entítíed
to a credít for two dependents wíth respect to ttíe mínor chíídren,
the aíímony payments beíng the oníy means of support of the
dívorced wífe míd the chíídren, even though no specífíc amount ís
desígnated ín the court order for support of the chíídren.
I. T. 2090 (C. . II1-2, 163 (1924)) dístínguíshed.
dvíce ís requested whether a credít of 00 cíaímed by ín hís
íncome ta return for 1937 on account of the support furníshed hís
two mínor chíídren ís aííowabíe under the círcumstances hereín set
forth.
In the year 1936 the ta payer and hís wífe were dívorced. The
foííowíng ís a part of the order íssued by the court ín connectíon
wíth the dívorce proceedíngs:
It ís further ordered that the defendnnt. , be and he hereby ís requíred
to pay to the píaíntíff for aíímony and support money for the píaíntíff and
the mínor chíídren of the partíes, the sum of 2 doííars per month: the fírst
payment to commence as of the 1st day of September, 193 , and to contínue ín
a ííke amount m :thíy untíí the further order of the court.
Duríng th , ta abíe year 1937, the mínor chíídren resíded wíth
theír mother. Payments aggregatíng 24a doííars were made duríng
that year by the ta payer ín accordance wíth the court order. The
ta payer s former wífe had no íncome other than the payments made
by the ta payer. It appears that the provísíons of the court order
were ín effect for the entíre ta abíe year 1937. It ís noted that no
specífíc mentíon was made ín the court order as to any amount to be
set asíde for the support of the chíídren. The evídence índícates,
however, that ín the |urísdíctíon ín questíon sometímes no mentíon
ís made ín the court order as to the amount whích represents aíímony
to be paíd to the wífe and the amount whích represents money for
the support of the chíídren.
The contentíon ís made that sínce , the ta payer, contríbuted
the chíef support of hís mínor chíídren he shouíd be aííowed the
credít províded for dependents írrespectíve of the provísíons of I. T.
2096 (C. . III-2,163 (1924)), whích reads as foííows:
father who furníshes the chíef support of hís chííd ís entítíed to the credít
for a dependent whether the custody of the chííd has been awarded to the
mother under the court decree or whether the support ís furníshed as the resuít
of an agreement between husband and wífe not entered ínto through court
proceedíngs. If the court orders the father to pay the wífe aíímony and no
specífíc mentíon Is made ín the decree as to any amount to be set asíde for the
support of the chííd, the father ís not entítíed to the credít for a dependent,
eTen though the aíímony ís the oníy means whích the wífe has for the support
of herseíf and chííd.
The ínstant case does not faíí squareíy wíthín the provísíons of
I. T. 2096, supra, whích contempíated a case ín whích the court díd
not requíre that any portíon of the payments be used for the support
of the chííd. ere the court ordered the payment by the ta payer
of a desígnated amount each month for aíímony and support money
for the píaíntíff (wífe) and the mínor chíídren of the partíes
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27(a), rt. 27(a)- .
17
. In víew of the provísíons of the court order and the
fact that the wífe had no other source of íncome, ít ís evídent that
duríng the ta abíe year 1937 the husband furníshed the chíef sup-
port of hís two chíídren, both of whom were under 1 years of age.
It ís heíd, therefore, that he ís entítíed to the credít for two de-
pendents under sectíon 25(b)2 of the Revenue ct of 1936, that ís,
a credít of 00.
I. T. 2096, supra, has not been amended or revoked and ís to be
foííowed ín any case where the facts are substantíaííy the same as
those set forth ín that ruííng.
S CTION 26. € ” CR DITS O CORPOR TIONS.
rtícíe 26-2: Credít ín connectíon wíth contracts
restríctíng payment of dívídends.
R NU CT O 1936.
Deíívery to sínkíng fund trustee ín 1937 of dívídend notes receíved
ín 1937 but payabíe ín 193 . (See I. T. 3270, page 179.)
S CTION 27(a). € ” CORPOR TION CR DIT OR DI ID NDS
P ID: DI ID NDS P ID CR DIT IN G N R L.
rtícíe 27(a)-í: Dívídends paíd credít ín generaí. 1939- -9719
I. T. 3253
R NU CT O 19S0.
In determíníng the amount of dívídends paíd credít under sectíon
27 of the Revenue ct of 1936, a capítaí íoss whích ís an unaííow-
abíe deductíon and accrued íncome ta reduce the earníngs or
profíts avaííabíe for dívídend dístríbutíon wíthín the meaníng of
sectíon 115(a) of that ct
dvíce ís requested ín the case of the M Corporatíon reíatíve to the
dívídends paíd credít províded ín sectíon 27 of the Revenue ct of
1936 ín the computatíon of surta on undístríbuted profíts ímposed
by sectíon 14 of that ct.
The M Corporatíon keeps íts books of account on the accruaí basís.
t the cíose of busíness on December 31 1936, ít had no accumuíated
earníngs and for the caíendar year 1937 íts books showed net earníngs
or profíts of 5,000 after takíng ínto consíderatíon a íoss of 5,000
duríng the year from the saíe of securítíes. s the corporatíon, for
ederaí íncome ta purposes, was íímíted to a capítaí net íoss of 2,000.
íts net íncome for such purposes amounted to ,000. The amount ot
,000 was dístríbuted to stockhoíders duríng the year. The questíon
ínvoíved ís the amount of the dívídends paíd credít aííowabíe to the
corporatíon.
Sectíon 27(a) of the Revenue ct of 1936 provídes as foííows:
(a) Dívídends Paíd Credít ín Generaí. € ” or the purposes of thís títíe, the
dívídends paíd credít shaíí be the amount of dívídends paíd duríng the ta abíe
year.
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179
27(d), rt. 27(d)-í.
The term dívídend ís defíned ín sectíon 115(a) of the Revenue
ct of 1936 as any dístríbutíon made by a corporatíon to íts share-
hoíders (1) out of íts earníngs or profíts accumuíated after
ebruary 2 ,1913, or (2) out of the earníngs or profíts of the ta abíe
year .
Sectíon 27(h) of the Revenue ct of 1936 provídes as foííows:
(h) Nohta ahí Dwno r|no S. € ” If any part of a dístríbutíon (íncíudíng stock
dívídends and stock ríghts) ís not a ta abíe dívídend ín the hands of such of the
sharehoíders as are sub|ect to ta atíon under thís títíe for the períod ín whích
the dístríbutíon ís made, no dívídends paíd credít shaíí be aííowed wíth respect
to such part.
rtícíe 27(h)-í of Reguíatíons 94 provídes ín part as foííows:
nonta abíe dístríbutíon . € ” No dívídends paíd credít shaíí be aííowed wíth re-
spect to any part of the dístríbutíon by a corporatíon to íts sharehoíders whích
ía-
ta) not out of earníngs or profíts of the ta abíe year or out of earníngs or
profíts of the corporatíon accumuíated subsequent to ebruary 2 , 1913 € € .
Whííe the corporatíon s net íncome, for ederaí íncome ta pur-
poses, was ,000, ín determíníng íts actuaí earníngs or profíts for the
year avaííabíe for dístríbutíon as dívídends thís amount must be re-
duced by 3,000. the amount of the íoss not aííowabíe for íncome ta
purposes. urthermore, a proper reserve for the payment of accrued
íncome ta es ís deductíbíe ín the computatíon of the earníngs or profíts,
whích, ín thís ínstance, amounts to 20. ccordíngíy, the earníngs
or profíts avaííabíe for dístríbutíon as dívídends amounted to 4,1 0
( ,000 íess 3,000 and 20). (Cf. . C. M. 2951, C. . II-1, 160
(192 ).) Sínce a dívídends paíd credít ís not aííowabíe when the dís-
tríbutíon ís not paíd out of earníngs or profíts, and sínce oníy 4,1 0
of the ,000 dístríbutíon ín 1937 by the M Corporatíon was so paíd,
the corporatíon ís entítíed to a dívídends paíd credít of 4,1 0 under
sectíon 27 (a) of the Revenue ct of 1936.
S CTION 27(d). € ” CORPOR TION CR DIT OR DI ID NDS
P ID: DI ID NDS IN O LIG TIONS O
T CORPOR TION.
Dívídends paíd credíts are aííowabíe for 1937, under sectíon 27(d)
of the Revenue ct of 193 , to the subsídíaríes of the M Company
for the face vaíue of dívídend notes íssued by such subsídíaríes
duríng that year. Such credíts are not aííowabíe to the subsídíaríes
under sectíon 27(a)4 of the Revenue ct of 193 wíth respect to the
same notes when redeemed In 193 . No dívídends paíd credít ís
aííowabíe under sectíon 27(a)4 of the Revenue ct of 193 to the
M Company, Itseíf, for the year 193 when payments In redemptíon
of the notes were receíved by the M Company and paíd over to the
sínkíng fund trustee under a trust índenture coveríng the Issuance of
coííateraí trust certífícates by the M Company.
rtícíe 27(d)-í: Dívídends ín obíígatíons of
the corporatíon.
( íso Sectíon 26 rtícíe 26-2.)
1939-15-97 5
L T.3270
R NU CT OP 1933.
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