WAR REVENUE 
 
 AND 
 
 INCOME TAX 
 
 GUIDE 
 
 BUASH. HENDERSON 
 
 erf the Illinois Bar 
 
 SECOND EDITION 
 
War Revenue 
 
 and 
 
 Income Tax Guide 
 
 for 
 
 1915 
 
 Second Edition 
 
 Price $1.50 
 
 (Copyrighted 1914) 
 
 ELIAS H. HENDERSON 
 
 Attorney and Counselor 
 
 First National Bank Building 
 
 Chicago, Illinois 
 
Table of Contents 
 
 CHAPTER I 
 War Revenue Law 
 
 Treasury Decisions 
 
 War Revenue Law, annotated 
 
 Page 
 ,63-69 
 , 1-63 
 
 ADDITIONAL SPECIAL TAXES IMPOSED BY THE ACT OF 
 
 OCTOBER 22, 1914, TAKING EFFECT NOVEMBER 
 
 1, 1914, TO CONTINUE TO JANUARY 1, 1916. 
 
 Rate of Page 
 Tax 
 
 Bankers, for each $1,000 of capital employed $ 1.00 7-11 
 
 Brokers who have not paid as bankers 30.00 13 
 
 Pawnbrokers 50.00 12 
 
 Commercial brokers 20.00 13 
 
 Customhouse brokers 10.00 14 
 
 Commission merchants who have not paid as commercial 
 
 brokers 20.00 13 
 
 Proprietors of theaters, museums, and concert halls: 
 
 Seating capacity not over 250 25.00 
 
 Seating capacity over 250 and not exceeding 500... 50.00 
 
 Seating capacity over 500 and not exceeding 800... 75.00 
 
 Seating capacity over 800 100.00 
 
 Proprietors of circuses 100.00 16 
 
 Proprietors or agents of other exhibitions -or shows for 
 
 money 10.00 16 
 
 Proprietors of bowling alleys and billiard rooms, for 
 
 each alley or table 5.00 16 
 
 Dealers in leaf tobacco (annual sales of 1,000 pounds or 
 
 less exempt) : 18 
 
 Sales not over 50,000 pounds 6.00 
 
 Sales over 50,000 and not over 100,000 pounds 12.00 
 
 Sales over 100,000 pounds 24.00 
 
 Dealers in tobacco (manufactured touacco, snuff, cigars, 
 and cigarettes) exempt when annmi receipts are not 
 
 over $200 -;-.- 4 - 80 19 
 
 Manufacturers . ^f toba.c' ,o : 19 
 
 Sales not over 100,000 pounds 6.00 
 
 Sales over 100,000 and not over 200,000 pounds. 12.00 
 
 Sales over 200,000 and not over 400,000 pounds. 24.00 
 
 Sales over 400,000 and not over 1,000,000 pounds. 60.00 
 
 Sales over 1,000,000 and not over 5,000,000 pounds. 300.00 
 
 Sales over 5,000,000 and not over 10,000,000 pounds. 600.00 
 
 Sales over 10,000,000 and not over 20,000,000 pounds. 1,200.00 
 
 Sales o,ver 20,000,000 pounds 2,496.00 
 
 Manufacture of cigars: 
 
 Annual sales not over 100,000 cigars 3.00 19 
 
 Annual sales exceed 100,000 and do not exceed 
 
 200,000 cigars -.-. 6.00 
 
 Annual sales exceed 200,000 and do not exceed 
 
 400,000 cigars 12.00 
 
TREASURY DECISIONS 
 
 Rate of Page 
 
 Tax 
 Annual sales exceed 400,000 and d<J notv;xeegd ;:,::. 
 
 1,000,000 cigars .."....,...,...............,..,..,. 
 
 Annual sales exceed 1-,000,00() and do . not exceed 
 
 5,000,000 cigars' .............. ? 150,00 -. 
 
 Annual sales exceed 5,000,000 and do not exceed. 
 
 20,000,000 cigars .. , 600.00 
 
 Annual sales exceed 20,000,000 and do not exceed 
 
 40,000,000 cigars ...... 1,200.00 
 
 Annual sales exceed 40,000,000 cigars ....2,496.00 
 
 Manufacturers of cigarettes: 
 
 Manufacturers whose annual sales do not exceed 
 
 1,000,000 cigarettes 12.00 20 
 
 Annual sales exceed 1,000,000 and do not exceed 
 
 2,000,000 cigarettes ...... ....... ...... .. 24.00 
 
 Annual sales exceed 2,000,000 and do not exceed 
 
 5,000,000 cigarettes 60.00 
 
 Annual sales exceed 5>000,000 and do not exceed 
 
 10,000,000 cigarettes ... 120.00 
 
 Annual sales exceed 10,000,000 and do not exceed 
 
 50,000,000 cigarettes 600.00 
 
 Annual sales exceed 50,000,000 and do not exceed 
 
 100,000,000 cigarettes 1,200.00 
 
 Annual sales exceed 100,000,000 cigarettes ........... 2,496.00 
 
 Distilled Spirits (Act of Oct. 22, 1914). 
 
 Grape brandy or wine spirits used in the fortification of 
 
 sweet wines (to be assessed), per gallon $0.55 . 3 
 
 Fermented Liquors (Act of Oct. 22, 1914). 
 
 Fermented liquors, per barrel, containing not more than 
 
 31 gallons . . . . $1.50 1 
 
 (And at a proportionate rate for any other quantity or 
 for fractional parts of a barrel authorized by law.) 
 
 Wines, Liqueurs, Cordials, Etc., Domestic and Imported. (Act of Oct. 
 
 22, 1914.) 1 
 
 Still wines, per pint. .. $0.01 2 
 
 (In bottles containing less than pint in proportion.) 
 
 Per quart .02 
 
 Per gallon .08 
 
 Champagne and other sparkling wines and artificially 
 
 carbonated wines, per V-2 pint or less .05 3 
 
 More than l / 2 pint and not more than 1 pint .10 
 
 More than 1 pint and not more than 1 quart... .20 
 
 (Larger quantities same rate) 
 
 Liqueurs, cordials, and similar compounds, per l /2 pint.. .01^2 . .1 
 
 More than % pint and not more than 1 pint. ....... .03 
 
 More than 1 pint and not more than 1 quart . .06 
 
 Larger containers, per gallon ..-..- .24 
 
 STAMP TAXES ON AND AFTER DECEMBER 1, 1914, TO CON- 
 TINUE TO JANUARY 1, 1916. 
 Schedule A. Documentary. 
 
 Bonds, debentures, or certificates of indebtedness of. any ' 
 association, company, or- corporation, on each $100 of 
 face value or fraction thereof. / $0.05', - 33 
 
 On each original issue of certificates of stock, whether 
 on organization or reorganization, on each $100 of face 
 value or fraction thereof.. . .. .05 3:> 
 
 :On all sales, agreements t to , sell, memoranda of sales, d- - 
 liveries or transfers of snares, or certificates of stock 
 of any association or corporation, on each $100 of face 
 
 " value TW fraction thereof. . .02 34 
 
 314006 
 
WAR REVENUE LAW 
 
 Rate of Page 
 Tax 
 
 Upon each sale, agreement to sell, or agreement of sale 
 of any products or merchandise at any exchange or 
 board of trade, or other similar place, either for pres- 
 ent or future delivery, for each $100 in value of said 
 sale 01 36 
 
 And for each $100 or fractional part thereof in excess 
 of $100 .01 
 
 Promissory notes, and for each renewal, for a sum not 
 
 exceeding $100 .02 47 
 
 For each additional $100 or fraction thereof .02 
 
 Bills of lading, manifests, etc., issued by express com- 
 panies or public carriers, etc .01 
 
 Bonds, except those required in legal proceedings .50 44 
 
 Certificates of profits or certificates or memoranda show- 
 ing interest in the property or accumulations of any 
 association, company, or corporation, and all transfers 
 thereof, on each $100 of face value or fraction thereof .02 45 
 
 Certificate of damage or otherwise and all other certifi- 
 cates or documents issued by port warden or marine 
 surveyor .25 46 
 
 Certificates of any description required by law, not 
 
 otherwise specified .10 46 
 
 Contract: Broker's note, or memorandum of sale of 
 goods, or merchandise, stocks, bonds, exchange, notes 
 of hand, real estate, or property of any kind, issued 
 by brokers, etc., for each note or memorandum of sale 
 not otherwise provided for in act .10 48 
 
 Conveyance: Deed, instrument, or writing conveying 
 lands, tenements, or other realty, etc., value over $100 
 and not exceeding $500 .50 48 
 
 For each additional $500 or fraction thereof .50 
 
 Entry of goods, wares, or merchandise in customhouse, 
 
 not exceeding $100 in value .25 50 
 
 Exceeding $100 and not exceeding $500 .50 
 
 Exceeding $500 in value 1.00 
 
 Entry for withdrawal of goods or merchandise from 
 customs bonded warehouse .50 50 
 
 Insurance, marine, inland, and fire (except purely co- 
 operative or mutual), lightning or other peril, on each 
 policy, or renewal on amount of premium charged on 
 each $1 or fractional part .OOJ/2 51 
 
 Insurance, fidelity, and guarantee on each policy, on each 
 $1 or fractional part thereof of premium received .00^ 52 
 
 Passage tickets by any vessel from the United States to 
 a foreign port, costing not exceeding $30 (tickets cost- 
 ing $10 or less exempt) 1.00 53 
 
 More than $30 and not exceeding $60 3.00 
 
 More than $60 5.00 
 
 Power of attorney or proxy for voting at an election of 
 officers of any incorporated company or association, 
 except religious, charitable, literary societies, or public 
 cemeteries .10 53 
 
 Power of attorney to sell or convey real estate or to 
 rent or lease the same, to collect or receive rent, to 
 sell or transfer stock, bonds, etc .25 53 
 
 (Papers used in the collection of pension, back pay, or 
 bounty claims, or claims for property lost in military 
 or naval service are exempt) 54 
 
 Protest: Upon the protest of every note, bill of ex- 
 change, acceptance, check, or draft, or any marine pro- 
 test .25 54 
 
TREASURY DECISIONS 
 
 Rate of Page 
 Tax 
 
 Telegraph and telephone messages: Every person, firm, 
 or corporation operating any telegraph or telephone 
 line or lines is required to make a sworn statement 
 to the collector of the number of messages or conver- 
 sations transmitted over their lines during preceding 
 month for which a charge of 15 cents or more was 
 imposed, and for each of such messages or conver- 
 sations to pay a tax of .01 41 
 
 On seats in palace or parlor cars and berths in sleeping 
 cars (to be paid by the company selling the same) . . . .01 54 
 
 Schedule B. In Effect December 1, 1914. 
 Perfumery and cosmetics and other similar articles: 
 For and upon every packet, box, bottle, pot, or phial, 
 etc., where such packet, box, bottle, pot, phial, 
 and contents shall not exceed retail price of 5 
 
 cents , $0.00^ 
 
 When retail price exceeds 5 cents and does not 
 
 exceed 10 cents .00^4 
 
 When retail price exceeds 10 cents and does not 
 
 exceed 15 cents .00^ 
 
 When retail price exceeds 15 cents and does not 
 
 exceed 25 cents 
 
 And for each additional 25 cents of retail price or 
 value or fractional part thereof in excess of 25 
 
 cents 
 
 Chewing gum or substitutes therefor: 
 
 For and upon each box, par, or package containing 
 chewing gum, when the retail value does not ex- 
 ceed $1 .04 56 
 
 If exceeding $1, for each additional dollar or frac- 
 tional part thereof .04 
 
 Note. The act of August 18, 1914, known as 
 the "United States Cotton Futures Act," in effect 
 February 18, 1915, imposes a tax on contracts of 
 sale of cotton for future delivery made on any ex- 
 change, board of trade, or similar institution or 
 place of business, of 2 cents for each pound of cot- 
 ton involved, to be paid by means of stamps to be 
 affixed to the contract or to the memoranda evi- 
 dencing the same. 
 
 The collection of the tax devolves on the Com- 
 missioner of Internal Revenue under regulation of 
 the Secretary of the Treasury. 
 
 Rate of Tax 
 after July 
 
 TAXES IN EFFECT. 1, 1910. 
 
 Tobacco and Snuff. 
 
 Tobacco, however prepared, manufactured and sold, or 
 
 removed for consumption or sale, per pound $0.08 
 
 Snuff, however prepared, manufactured and sold, or re- 
 moved for consumption or sale, per pound .08 
 
 Rate of Tax 
 per Thou- 
 sand after 
 
 Cigars and Cigarettes. July 1, 1910. 
 
 Cigars of all descriptions made of tobacco, or any substi- 
 tute therefor, and weighing more than 3 pounds per 
 
 thousand $3.00 
 
 Cigars of all descriptions made of tobacco, or any substi- 
 tute therefor, and weighing not more than 3 pounds 
 per thousand .75 
 
WAR REVENUE LAW 
 
 , : Rate of Page 
 
 Tax 
 
 Cigarettes weighing not more than 3 pounds per thou- 
 sand _..,.... ., 1.25 
 
 Cigarettes weighing more than 3 pounds per thousand., 3.60 
 
 Distilled Spirits, Etc. 
 
 Distilled spirits, per gallon , $1.10 
 
 Stamps for distilled' spirits intended for export, each.. .10 
 
 Except when affixed to packages containing two or 
 
 more 5-gallpn cans for export .05 
 
 Case stamps for spirits bottled in bond . .10 
 
 Wines, liquors, --or compounds known or denominated as 
 wine, and made in imitation of sparkling wine or 
 champagne, but not made from grapes grown in the 
 United States, and liquors not made from grapes, 
 currants, rhubarb, or berries grown in the United 
 States, but produced by being rectified or rhixed with 
 distilled spirits or by infusion of any matter in spir- 
 its, to be sold as wine, or as a substitute for wine, 
 in bottles containing not more than 1 pint per bottle 
 
 or package .,.-...>. .10 
 
 Same, in bottles containing more than 1 pint, and not 
 
 more than 1 quart, per bottle -or package .20 
 
 (And at the same rate for any larger quantity of 
 such merchandise, however put up or whatever 
 riiay be the package.) 
 
 MISCELLANEOUS TAXES NOT PAYABLE BY STAMP. 
 
 Circulation issued by .any .bank, etc., or person (ex- 
 cept at national bank taxed under sec. 5214, Rev. 
 Stat.,:and sec. .13, .act of .Mar. 14, 1900), per 
 month . ...... 1/12 of 1 p. c. 
 
 Circulation (except ^national banks) exceeding 90 
 per cent of capital, in addition, per month. ..... .1/6 of p. c. 
 
 Banks, etc., on. -arn-ount of notes of -; any person, 
 State bank, or State-banking -association, used 
 for circulation and paid out .................. 10 per cent. 
 
 Banks, etc., bankers,; OF -associations, on amount of 
 notes of any .town, city, or municipal corpora- 
 tion paid out by them 10 per cent. 
 
 Every person, firm; association^, other than na- 
 tional-banking- associations, and every corpora- 
 tion, State bank, or State-banking association, on ". 
 the amount of their own notes used for circula- 
 tion and paid out by them 10 per cent. 
 
 Every sucfr person, firm, association, corporation, 
 St^fe bMiKj;- or State-banking association, and 
 also^very national-banking^ association, on 'the 
 amount of notes of any; person,- firm, associa- 
 tion, other than a .national-banking association.,, 
 or of -.any- corp6ra"tio.n.^ita"te,bahk,.or.Stat^-bank:- ' 
 ing association, 'or ."oKaiiy .t6ww.,.,"city; or munici- 
 pal corporation; usedt For. 'circulation .and -paid . .. ."."_- 
 Qut^h^ thejra ........ i ..................... r. ... 10 per cent. 
 
 Special Taxes. 
 
 Reti}iens ; 6f : less than 500 barrels a year ... $100.00 
 
 Rectifier's of 500 barrels or more a year 200.00 
 
 Wholesale liquor 'dealers .:.'........!....... . . .......... 100.00 
 
 Retail liquor dealers . . ... . . ... . . ... 25.00 
 
 Wholesale dealers in malt liquors 50.00 
 
 Retail dealers in malt liquors . . . . . . . . 20.00 
 
 Manufacturers b-f-'Sttlts i .-- ; . . v , ; ... .-.:... .', ..., } .^. . .~..~. . . .: 50.00 ; 
 
 And" for stills or worms manufactured, each 1; 
 
TREASURY DECISIONS 
 
 Brewers: 
 
 Annual manufacture less than 500 barrels 
 
 Annual manufacture 500 barrels or more 
 
 Manufacturers of filled cheese 
 
 Wholesale dealers in filled cheese 
 
 Retail dealers in filled cheese 
 
 Manufacturers of oleomargarine 
 
 Wholesale dealers in oleomargarine artificially colored in 
 imitation of butter 
 
 Wholesale dealers in oleomargarine free from artificial 
 coloration 
 
 Retail dealers in oleomargarine artificially colored in 
 imitation of butter 
 
 Retail dealers in oleomargarine free from artificial color- 
 ation 
 
 Manufacturers of adulterated butter 
 
 Wholesale dealers in adulterated butter - 
 
 Retail dealers in adulterated butter 
 
 Manufacturers of process of renovated butter 
 
 Manufacturers, packers, or repackers of mixed flour 
 
 Oleomargarine. 
 
 Oleomargarine, domestic, artificially colored to look 
 like butter, of any shade of yellow, per pound.... 
 
 Oleomargarine, free from coloration that causes it to 
 look like butter, of any shade of yellow, per pound. . 
 
 Oleomargarine, imported from foreign countries, per 
 pound 
 
 Adulterated Butter, and Process or Renovated Butter. 
 
 Adulterated butter, per pound 
 
 Process or renovated butter, per pound 
 
 Filled Cheese. 
 
 Rate of 
 Tax 
 
 50.00 
 100.00 
 400.00 
 250.00 
 
 12.00 
 600.00 
 
 480.00 
 
 200.00 
 
 48.00 
 
 6.00 
 
 600.00 
 
 480.00 
 
 48.00 
 
 50.00 
 
 12.00 
 
 $0.10 
 .00^ 
 .15 
 
 $0.10 
 
 .00^4 
 
 $0.01 
 .08 
 
 Page 
 
 Filled cheese, per pound 
 Same, imported, per pound 
 
 Mixed Flour. 
 
 Mixed flour, per barrel of 196 pounds, or more than 98 
 
 pounds $0.04 
 
 Half barrel of 98 pounds, or more than 49 pounds.. .. .02 
 
 Quarter barrel of 49 pounds, or more than 24^2 pounds .01 
 
 Eighth barrel of 24 1 /^> pounds or less .00^ 
 
 (Mixed flour imported from foreign countries, in addi- 
 tion to import duties, must pay internal-revenue tax 
 as above.) 
 
 Opium. 
 Opium manufactured for smoking purposes, per pound.. $300.00 
 
 Playing Cards. 
 
 Playing cards, per pack, containing not more than 54 
 cards . 
 
 White Phosphorus Matches. 
 
 White phosphorus matches, per hundred 
 
 (Rate of tax after Jan. 1, 1915.) 
 
 $0.02 
 
 $0.02 
 
CHAPTER II 
 Income Tax 
 
 Income Tax Law, annotated 43- 63 
 
 Questions and Answers 3- 32 
 
 Syllabus of Income Tax Law 35- 42 
 
 Treasury Department Forms and Certificates. .. .65- 96 
 Treasury Department Regulations, 1913 99-159 
 
 Treasury Decisions, 1914 
 
 Page 
 Aliens, individuals 
 
 Exemption (T. D. 2012) 108 
 
 Non-resident (T. D. 2013) 109 
 
 Bonds 
 
 Foreign corporations (T. D. 1992) .... 99 
 
 Property of aliens, exempt (T. D. 2017) 117 
 
 Tax-free covenant clause (T. D. 1942-1948) 73-79 
 
 Certificates 
 
 Co-operative Dairies, etc., not 
 
 exempted (T. D. 1996) .... 102 
 
 Exemption, firms and organizations . . (T. D. 1998) .... 103 
 
 Monthly list, return of (T. D. 1973) 86 
 
 .Ownership (T. D. 1974) 87 
 
 'Ownership executed by foreign banks(T. D. 1977) .... 93 
 
 Ownership Bonds, foreign (T. D. 1988) 97 
 
 Ownership, Revised forms (T. D. 1976) 88-93 
 
 Substitute, 1059 (T. D. 1986) 95 
 
 Waiver of filling in number of bonds . (T. D. 2022) 118 
 
 Corporations 
 
 Annual net income (T. D. 2001) 104 
 
 Foreign, Fiscal agents (T. D. 2006) 107 
 
 Insurance 
 
 Commissions on renewal premiums . . (T. D. 2011) .... 108 
 
 Dividends on Net Earnings 
 
 Excluded as income,^ when (T. D. 1945-1947) 77-78 
 
 Deductions 
 
 Corporations, capital stock (T. D. 1960) 56 
 
 Expense (T. D. 1993) ..100 
 
 Indebtedness (T. D. I960) 82 
 
 Interest actually accrued (T. D. I960) 
 
 Losses (T. D. 1989-2005) 105 
 
 Depreciation 
 
 Buildings, schedule 72 
 
 Exemption 
 
 Not claimed at source, returned on 
 
 Form 1040 (T. D. 1942) 73 
 
TREASURY DECISIONS 
 
 Page 
 
 Fiduciaries- 
 Return to be made on Form 1041 (T. D. 1943) 73 
 
 Forms 
 
 1044 Revised (T. D. 1973) 86 
 
 Partnerships (T. D. 1957) 81 
 
 Certificate No. 1065 110 
 
 Penalties 
 
 Compromise of (T. D. 2015) 114 
 
 Returns 
 
 Confidential (T. D. 1962) 84 
 
 Extension of time for filing (T. D. 1953) 81 
 
 Inspection of (T. D. 2016) 1 14 
 
 Monthly lists (T. D. 1997) 102 
 
 Penalties (T. D. 1950) 79 
 
 Time for filing (T. D. 1950) .... 
 
 Stamp, indorsement on foreign coupons. . (T. D. 2023) .... . . . .118 
 
 State 
 
 Political subdivision of 
 
 Special assessment districts (T. D. 1946) . . 77 
 
 Tax- 
 Advance payment of withheld by 
 
 agents, etc (T. D. 1965) . . 77 
 
 Constitutionality (T. D. 1983) 94 
 
 Organizations (T. D. 1967) 85 
 
 Withholding agents (T. D. 1967) 
 
WAR REVENUE LAW 
 
 (T, D. 2026.) 
 
 Fermented liquors Additional tax on liquors on storage, and 
 increase in rate of tax under act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 24, 19(4, 
 To collectors of internal revenue and others concerned: 
 
 The act approved October 22, 1914, imposes a tax of $1.50 a 
 barrel on fermented liquors, and provides for the assessment and 
 collection of the additional tax at the rate of 50 cents a barrel on 
 all fermented liquors removed from the brewery premises prior to 
 the date when the act took effect and which on that date were 
 stored in warehouse, and to which a stamp denoting the tax at 
 the rate of $1 per barrel had been affixed at the time of removal. 
 This provision for additional tax on beer stored in warehouse is 
 held to apply to all fermented liquors in the possession of brew- 
 ers or their agents, whether contained in ordinary packages or in 
 bottles, when the act took effect. For the purpose of assessing 
 and collecting such additional tax, every brewer or agent of a 
 brewer having stored in warehouse any fermented liquors which 
 had been removed from the brewery where produced prior to 
 October 23, 1914, bearing the proper stamp at the rate of $1 per 
 barrel shall make and render to the collector of the district a 
 return in duplicate, under oath, on Form 417, Revised October 
 23, 1914, of the quantity thereof so held. Personal investigation 
 will be made in each case by a deputy collector, who will certify 
 to the accuracy of the return, or if he is not satisfied as to its 
 accuracy, he will so state, and indicate the quantity which he 
 believes to be correct. In case of substantial disagreement be- 
 tween the return and the deputy collector's statement the collec- 
 tor will make further investigation to satisfy himself as to the 
 proper quantity and enter the same accordingly on his list, 
 Form 23. 
 
 Collectors will at once furnish blank Forms 417 to each brewer, 
 or agent of a brewer, in their respective districts, and require the 
 returns to be made in accordance with the printed instructions 
 thereon. The return must show the quantity of fermented liquors 
 on hand on the morning of October 23, 1914, before the com- 
 mencement of business. If any liquors subject to the additional 
 tax have been removed in the interval between that time and the 
 time when the return is actually made, the quantity returned will 
 be the quantity of such liquors on hand when the return is made, 
 together with the quantity of such liquors removed in the in- 
 terval. 
 
 One copy of the return with the deputy collector's certificate 
 is to be filed in the collector's office, and the other is to be for- 
 warded to the Commissioner of Internal Revenue, and the addi- 
 tional tax found to be due as shown by the return will be entered 
 by the collector on his next list, Form 23. 
 
 In making up Form 18 for October, 1914, brewers will show 
 separately, by interlineation, the quantities of fermented liquor 
 
TREASURY DECISIONS 
 
 sold or removed for consumption or sale by pipe line (where pipe 
 lines exist) and by the package for the two portions of the month, 
 viz, the portion before the 23d and the portion commencing with 
 the 23d. In the stamp account on Form 18 brewers will also 
 show separately, by interlineation, the number and kind of stamps 
 purchased by them at the old and new rates, and the number and 
 kind of stamps used at the old and new rates on beer transferred 
 by pipe line (where pipe lines exist) and by the package, and also 
 the number and kind of stamps at the old and new rates remain- 
 ing on hand in their possession at the close of the month. Instead 
 of one return, Form 18, for the month of October, the brewer 
 may at his option render two returns, one for the portion of the 
 month prior to the 23d and the other for the remaining portion, 
 care being taken to show in the stamp account the number and 
 kind of stamps, at the rate of $1.50 per barrel, purchased, used, 
 and on hand. Brewers will also make entries in the account of 
 "Stamps purchased" on Record Form 104 in such a way as to 
 distinguish between those at the rate of $1 and those at the rate 
 of $1.50. 
 
 The attention of collectors is called to the fact that the increase 
 in the rate of tax is likely to make necessary the giving of new 
 bonds by brewers, in increased amounts, in order to satisfy the 
 requirements of section 3336, Revised Statutes. Each new bond 
 given on and after December 1, 1914, will by the terms of the 
 act, while the same is in force, require a documentary stamp of 
 the value of 50 cents. 
 
 Collectors will supply brewers and their agents with copies of 
 this Circular. W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 2027.) 
 
 Domestic and imported wines, liqueurs, cordials, etc. 
 Dealers to keep an account of sales pending receipt of appropriate tax stamps. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 24, 1914. 
 To collectors of internal revenue and others concerned: 
 
 In view of the fact that the provisions of the revenue law, ap- 
 proved October 22, 1914, relating to the stamp taxes imposed on 
 domestic and imported wines, cordials, etc., went into effect Octo- 
 ber 23, 1914, and that appropriate stamps for the payment of such 
 taxes have not yet been provided, retail dealers in such un- 
 stamped wines, and wholesale dealers selling such wines to 
 persons other than dealers must, until such stamps may be pro- 
 cured, keep a strict account of all such unstamped wines sold by 
 them on and after October 23, 1914; and, upon procuring the 
 necessary stamps, must at once render to the collector of the 
 district a sworn statement of all such sales made by them and 
 must transmit with such statement canceled stamps showing 
 payment of tax on all such wines so sold. The required state- 
 ment should be in the following form : 
 
WAR REVENUE LAW 
 
 Dealers return of sales of unstamped wines taxable under the revenue act, 
 approved October 22, 1914. 
 
 Special-Tax Stamp No. 
 
 The undersigned a 
 district of - 
 
 DISTRICT OF 
 
 -(2) liquor dealer, doing business at 
 
 1914. 
 
 in the 
 
 , on oath states that the following is a full and true 
 account of all unstamped domestic and imported wines taxable under the pro- 
 visions of an act of Congress, approved October 22, 1914, sold by him (or 
 
 them) on and after October 23, 1914, up to and including the day of 
 
 , 1914; and that the attached canceled stamps cover all taxes due on 
 the unstamped wines so sold. 
 
 Kinds of wine. 
 
 Rate of 
 tax per 
 quart. 
 
 Number of bottles or containers. 
 
 Amount 
 of tax. 
 
 Not more 
 than one- 
 fourth p't. 
 
 Not more 
 than one- 
 half pint. 
 
 Not more 
 than one 
 pint. 
 
 Not more 
 than one 
 quart. 
 
 Gal- 
 lons. 
 
 Still wines 
 
 Cents. 
 2 
 
 20 
 6 
 
 
 
 
 
 
 | 
 
 Champagne and other 
 sparkling or artifi- 
 cially carbonated 
 wines 
 
 
 
 
 
 
 
 Liqueurs, cordials, or 
 other similar com- 
 pounds 
 
 
 
 ' JjT.. J2iu 
 
 MM 
 
 
 
 
 
 
 
 
 
 
 
 In bottles or containers not otherwise here designated. 
 
 Subscribed and sworn to before me this 
 
 day of 
 
 -, 1914. 
 
 Dealer. 
 
 [SEAL.] 
 
 "Wholesale" or "retail." 
 
 Upon receipt of this circular, collectors will see that a copy 
 thereof is at once furnished to each wholesale and retail liquor 
 dealer in their respective districts; and that on receipt of the 
 dealers' statements herein required, the same, with the canceled 
 stamps (in sealed envelopes) securely attached, should be at once 
 forwarded to the Commissioner of Internal Revenue. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 References Cited 
 
 Treasury Decisions T. D. 
 
 U. S. Attorney-General's Opinions , A. G. Op. 
 
 U. S. Supreme Court Reports .' U. S. 
 
 Federal Reporter Fed. Rep. 
 
War Revenue Law 
 
 An Act To increase the internal revenue, and for other purposes. 
 Approved October 22, 1914 
 
 Be it enacted by the Senate and House of Representatives of the te? ce and le other 
 United States of America in Congress assembled, That there shall si i ni 1 l ar u ferm ent- 
 be levied, collected, and paid in lieu of the tax of $1 now imposed 
 by law, a tax of $1.50 on all beer, lager beer, ale, porter, and other 
 similar fermented liquor, brewed or manufactured and sold, or 
 stored in warehouse, or removed for consumption or sale, within 
 the United States, by whatever name such liquors may be called, 
 for every barrel containing not more than thirty-one gallons; and 
 at a like rate for any other quantity or for the fractional parts of a 
 barrel authorized and defined by law. And section thirty-three 
 hundred and thirty-nine of the Revised Statutes is hereby amended 
 accordingly : 
 
 Provided, That the additional tax imposed in this section on all an J e ^cha a n r g e U of 
 fermented liquors stored in warehouse to which a stamp has been old stampTfo be 
 affixed shall be assessed and collected in the manner now provided a te k new l ?ate de " 
 by law for the collection of taxes not paid by stamp : 
 
 Provided further, That until appropriate stamps are prepared 
 and furnished, the stamps heretofore used to denote the payment 
 of the internal-revenue tax on fermented liquor may be stamped 
 or imprinted with a suitable device to denote the new rate of tax 
 herein imposed, and shall be affixed to all packages containing such 
 liquors on which the tax imposed by this Act is paid. Any person 
 having possession of unaffixed stamps heretofore issued for the 
 payment of the tax on fermented liquors shall present the same to 
 the collector of the district, who shall receive them at the price 
 paid for such stamps by the purchaser and issue in lieu thereof new 
 or imprinted stamps at the rate provided in this Act. 
 
 The tax is on fermented liquor in the possession of or stored by a 
 brewer and not on that of a wholesale or retail dealer. 22 A. G., Op. 279; 
 23 Id. 228. 
 
 SEC. 2. That upon all still wines, domestic and imported, when 
 sold or offered for sale or consumption, there shall be levied and ported, 
 collected taxes as follows: On each bottle containing one-fourth 
 pint or less, one-fourth cent; on each bottle containing more than 
 one-fourth pint and not more than one-half pint, one-half cent; on 
 each bottle containing more than one-half pint and not more than 
 one pint, 1 cent; and on each bottle containing more than one pint 
 and not more than one quart, 2 cents ; and on still wines in all 
 other containers, not herein specifically provided for, the tax shall 
 be at the rate of 8 cents per gallon. 
 
WA-R, REVENUE. LAW 
 
 Champagne, 
 domestic and 
 imported. 
 
 Each bottle or 
 container must 
 bear stamp. 
 
 Retail dealer 
 must affix stamp. 
 
 No stamp tax 
 on still wine 
 used by recti- 
 fier, chemist or 
 druggist. 
 
 Stamps to be 
 prepared by 
 Commissioner of 
 Internal R e v e- 
 
 Bottle or con- 
 tainer not bear- 
 ing stamps shall 
 be forfeited to 
 the United 
 States. 
 
 That upon all domestic and imported champagne and other spar- 
 kling wines, and upon all artificially carbonated wines when sold 
 or offered for sale or consumption, there shall be levied and col- 
 lected taxes as follows : Upon each bottle containing one-half pint 
 or less, 5 cents; on each bottle containing more than one-half 
 pint and not more than one pint, 10 cents ; on each bottle containing 
 more than one pint and not more than one quart, 20 cents ; and on 
 other all containers at the rate of 20 cents per quart; and on all 
 liqueurs, cordials, or similar compounds, domestic and imported, by 
 whatever name sold or offered for sale, there shall be levied and 
 collected a tax on each bottle containing not more than one-half 
 pint, \y 2 cents; more than one-half pint and not more than one 
 pint, 3 cents ; more than one pint and not more than one quart, 6 
 cents; and on larger containers a tax at the rate of 24 cents per 
 gallon. 
 
 All of the taxes imposed in the preceding paragraphs of this 
 section shall be paid by stamps to be affixed to each bottle or con- 
 tainer in which such still wines, champagne wines, carbonated wines, 
 liqueurs, or cordials, or similar compounds, are sold or offered for 
 sale: 
 
 Provided, That when such still wines, champagne wines, car- 
 bonated wines, liqueurs, cordials, or similar compounds, taxable 
 under the provisions of this section, are sold or delivered by the 
 producer, importer, or dealer in wholesale quantities to other 
 dealers, including rectifiers > manufacturing chemists, and druggists, 
 the dealer receiving and selling, or offering the same for sale or con- 
 sumption to any person other than a dealer, shall affix thereto the 
 stamps hereinbefore prescribed : 
 
 And provided further, That the stamp tax herein imposed shall 
 not be collected on any still wine used by any rectifier, manufactur- 
 ing chemist, or druggist in the manufacture of any liqueur, cordial, 
 or compound subject to any internal-revenue tax imposed by this 
 Act. 
 
 The Commissioner of Internal Revenue shall cause to be pre- 
 pared suitable and special stamps denoting the tax herein imposed, 
 to be affixed and canceled in such manner as he, with the approval 
 of the Secretary of the Treasury, may prescribe; and in the ab- 
 sence of such stamps from any bottle or container containing wine, 
 liqueur, cordial, or compound taxable under the provisions of this 
 section, sold or offered for sale or consumption, shall be prima facie 
 evidence that the tax thereon has not been paid, and all such wines, 
 liqueurs, cordials, or compounds shall be forfeited to the United 
 States. 
 
 The existence of a bona fide mortgage on property will not prevent it 
 being forfeited under this section. United States v. 246^ Ibs. of Tobacco 
 103 Fed Rep., 791. United States v. 231 patent machines, 99 Fed. Rep., 559. 
 
 The word "compounded" means mixed and does not apply to the 
 chemical union of elements. United States v. Stubbs, 91 Fed Rep 608 
 L. Ellwood Lee Co. v. McCain, 106 Fed. Rep., 164. 
 
 There shall be levied and assessed against the maker or producer 
 of all wines fortified under the provisions and conforming to the 
 
WAR REVENUE LAW 
 
 requirements of the sections of the tariff Act of October first eight- 
 een hundred and ninety, relating to the fortification of pure sweet 
 wines, as amended, and as further amended by this Act, a tax of 55 
 cents on each taxable gallon of grape brandy or wine spirits used by 
 him in the fortification of such wines : 
 
 Provided, however, That the maker or producer of such fortified 
 wines shall, under regulations and suitable bonds, to be prescribed 
 by the Commissioner of Internal Revenue, with the approval of the 
 Secretary of the Treasury, have assessed against him monthly the 
 said tax of 55 cents on each taxable gallon of grape brandy or wine 
 spirits used by him during the preceding month, which assessment 
 shall be paid within ninety days from the date of notice thereof : 
 
 Provided further, That nothing herein contained shall be con- 
 strued as exempting any still wines, cordials, liqueurs, or similar 
 compounds from the payment of any stamp tax provided for in 
 this section. 
 
 The Commissioner of Internal Revenue, with the approval of 
 the Secretary of the Treasury, is hereby authorized to make all 
 necessary regulations to make effective the provisions of this section. 
 
 That sections forty-two, forty-three, forty-five, forty-six and 
 forty-nine of the Act of October first, eighteen hundred and ninety, 
 as amended by section sixty-eight of an Act approved August 
 twenty-eighth, eighteen hundred and ninety-four, and by an Act ap- 
 proved June seventh, nineteen hundred and six, are further amended 
 to read as follows : 
 
 "SEC. 42. That any producer of pure sweet wines may use in the 
 preparation of such sweet wines, under such regulations, and after 
 the filing of such notices and bonds, together with the keeping of 
 such records and the rendition of such reports as to materials and 
 products as the Commissioner of Internal Revenue, with the ap- 
 proval of the Secretary of the Treasury, may prescribe, wine spirits 
 produced by any duly authorized distiller, and the Commissioner of 
 Internal Revenue in determining the liability of any distiller of wine 
 spirits to assessment under section thirty-three hundred and nine of 
 the Revised Statutes, is authorized to allow such distiller credit in 
 his computations for the wine spirits withdrawn to be used in 
 fortifying sweet wines under this Act: 
 
 "Provided, That such wine containing after fortification more 
 than twenty-four per centum of alcohol, as defined by section thirty- 
 two hundred and forty-nine of the Revised Statutes, shall be for- 
 feited to the United States. 
 
 "SEC. 43. That the wine spirits mentioned in section forty-two 
 of this Act is the product resulting from the distillation of fer- 
 mented grape juice, to which water may have been added prior to, 
 during, or after fermentation, for the sole purpose of facilitating 
 the fermentation and economical distillation thereof, and shall be 
 held to include the product from grapes or their residues com- 
 monly known as grape brandy, and shall include commercial grape 
 brandy which may have been colored with burnt sugar or caramel; 
 and the pure sweet wine which may be fortified with wine spirits 
 under the provisions of this Act is fermented or partially fermented 
 
 Grape, brandy 
 or wine spirits 
 used in fortifi- 
 cation of sweet 
 wines taxed 55 
 cents per gallon. 
 
 Fortified still 
 wines not ex- 
 empt from tax 
 provided in Sec- 
 tion 1 of this 
 Act. 
 
 Commissioner 
 of Internal Rev- 
 enue to make 
 regulation. 
 
 Wine spirits 
 defined. 
 
WAR REVENUE LAW 
 
 Addition of 
 
 sugar. 
 
 Addition of 
 water. 
 
 grape juice only, with the usual cellar treatment, and shall contaia 
 no other substance whatever introduced before, at the time of, or 
 after fermentation, except as herein expressly provided: 
 
 "Provided, That the addition of pure boiled or condensed grape 
 must or pure crystallized cane or beet sugar, or pure dextrose sugar 
 or water, or any or all of them, to the pure grape juice before fer- 
 mentation, or to the fermented product of such grape juice, or to 
 both, prior to the fortification provided in this Act, either for the 
 purpose of perfecting sweet wines according to commercial stand- 
 ards or for mechanical purposes, shall not be excluded by the defini- 
 tion of pure sweet wine aforesaid : 
 
 "Provided, however, That the cane or beet sugar, or pure dext- 
 rose sugar so used shall not be in excess of eleven per centum of the 
 weight of the wine to be fortified under this Act: 
 
 "And provided further, That the addition of water herein au- 
 thorized shall be under such regulations and limitations as the 
 Commissioner of Internal Revenue, with the approval of the Secre- 
 tary of the Treasury, may from time to time prescribe: 
 
 "Provided, however, That records kept in accordance with such 
 regulations as to the percentage of saccharine, acid, alcoholic, and 
 added water content of the wine offered for fortification shall be 
 open to inspection by any official of the Department of Agriculture 
 thereto duly authorized by the Secretary of Agriculture; but in no 
 case shall such wines to which water has been added be eligible for 
 fortification under the provisions of this Act, where the same, after 
 fermentation and before fortification, have an alcoholic strength of 
 less than five per centum of their volume, 
 withdrawal of "SEC. 45. That under such regulations and official supervision, 
 
 wine spirits from , . . - , ~ . . . .. rii i 
 
 bonded ware- and upon the execution of such entries and the giving of such bonds, 
 iey? e r distl1 bills of lading, and other security as the Commissioner of Internal 
 Revenue, with the approval of the Secretary of the Treasury shall 
 prescribe, any producer of pure sweet wines as defined by this 
 Act may withdraw wine spirits from any special bonded warehouse 
 in original packages or from any registered distillery in any quan- 
 tity not less than eighty wine gallons, and may use so much of the 
 same as may be required by him under such regulations, and after 
 the filing of such notices and bonds and the keeping of such records 
 and the rendition of such reports as to materials and products and 
 the disposition of the same as the Commissioner of Internal Revenue, 
 with the approval of the Secretary of the Treasury, shall prescribe, 
 in fortifying the pure sweet wines made by him, and for no other 
 purpose, in accordance with the foregoing limitations and provisions ; 
 and the Commissioner of Internal Revenue, with the approval of the 
 Secretary of the Treasury, is authorized whenever he shall deem 
 it to be necessary for the prevention of violations of this law to pre- 
 scribe that wine spirits withdrawn under this section shall not be 
 used to fortify wines except at a certain distance prescribed by him 
 from any distillery, rectifying house, winery, or other establishment 
 used for producing or storing distilled spirits, or for making or stor- 
 ing wines other than wines which are so fortified, and that in the 
 building in which such fortification of wines is practiced no wines or 
 
 4 
 
WAR REVENUE LAW 
 
 spirits other than those permitted by this regulation shall be stored 
 in any room or part of the building in which fortification of wines is 
 practiced. The use of wine spirits for the fortification of sweet 
 wines under this Act shall be under the immediate supervision of an 
 officer of internal revenue, who shall make returns describing the *{2J nt su ' 
 kinds and quantities of wine so fortified, and shall affix such stamps 
 and seals to the packages containing such wines as may be prescribed 
 by the Commissioner of Internal Revenue, with the approval of the 
 Secretary of the Treasury; and the Commissioner of Internal 
 Revenue shall provide by regulations the time within which wines so 
 fortified with the wine spirits so withdrawn may be subject to in- 
 spection, and for final accounting for the use of such wine 
 spirits and for rewarehousing, or for payment of the tax on any 
 portion of such wine spirits which remain not used in fortifying 
 pure sweet wines. 
 
 "SEC. 46. That wine spirits may be withdrawn from special wi Sdrawn SP f r i t ? 
 bonded warehouses at the instance of any person desiring to use the exportation ^ex- 
 same to fortify any wines, in accordance with commercial demands e 
 of foreign markets, when such wines are intended for exportation, 
 without the payment of tax on the amount of wine spirits used in 
 such fortification, under such regulations, and after making such 
 entries, and executing and filing with the collector of the district 
 from which the removal is to be made such bonds and bills of 
 lading, and giving such other additional security to prevent the use 
 of such wine spirits free of tax otherwise than in the fortification 
 of wine intended for exportation and for the due exportation of 
 the wine so fortified, as may be prescribed by the Commissioner 
 of Internal Revenue, with the approval of the Secretary of the 
 Treasury; and all of the provisions of law governing the exporta- 
 tion of distilled spirits free of tax, so far as applicable, shall apply 
 to the withdrawal and use of wine spirits and the exportation of 
 the same in accordance with this section ; and the Commissioner of 
 Internal Revenue is authorized, subject to the approval of the Sec- 
 retary of the Treasury, to prescribe that wine spirits intended 
 for the fortification of wines under this section shall not be intro- 
 duced into such wines except under the immediate supervision of 
 an officer of internal revenue, who shall make returns describing 
 the kinds and quantities of wine so fortified, and shall affix such 
 stamps and seals to the packages containing such wines as may be 
 prescribed by the Commissioner of Internal Revenue, with the ap- 
 proval of the Secretary of the Treasury. Whenever transportation Transportation, 
 of such wine is to be effected by land carriage the Commissioner of 
 Internal Revenue, with the approval of the Secretary of the Treas- 
 ury, shall prescribe such regulations as to sealing packages and 
 vehicles containing the same, and as to the supervision of trans- 
 portation from the point of departure, which point shall be deter- 
 mined as the place where such wine spirits may be introduced into 
 such wines to the point of destination as may be necessary to insure 
 the due exportation of such fortified wines: 
 
 "Provided, That where, in accordance with regulations of the 
 Commissioner of Internal Revenue, with the approval of the Sec- 
 
WAR REVENUE LAW 
 
 Refund. 
 
 Recovery of 
 wine spirits. 
 
 Condition. 
 
 Allowance or 
 refund. 
 
 Gaugers and 
 storekeepers. 
 
 Allowance. 
 
 Bonds. 
 
 retary of the Treasury, wines fortified under the provisions of this 
 Act with brandy taxable at 55 cents per proof gallon are exported 
 directly from the winery where fortified, there shall be allowed an 
 abatement or refund of tax equivalent to 55 cents per gallon on 
 each proof gallon of wine spirits contained in such wine at the time 
 of exportation, which amount of wine spirits shall be ascertained 
 by the Commissioner of Internal Revenue under regulations ap- 
 proved by the Secretary of the Treasury : 
 
 "Provided, That such wine spirits on which abatement or refund 
 of tax is allowed shall not exceed the total amount of alcohol in 
 such wine over and above fourteen per centum thereof. 
 
 "SEC. 49. That wine spirits used in fortifying wines may be re- 
 covered from such wines only on the premises of a duly authorized 
 grape brandy distiller, and for the purpose of such recovery wine so 
 fortified may be received as material on the premises of such a dis- 
 tiller, on a special permit of the collector of internal revenue in 
 whose district the distillery is located ; and the distiller will be held 
 to pay the tax on the product from such wines as will include both 
 the alcoholic strength therein produced by the fermentation of the 
 grape juice and that obtained from the added distilled wine spirits: 
 
 "Provided, That when application for such special permit for re- 
 distillation shall be made by the producer of any wines fortified with 
 brandy subject to the tax of 55 cents per proof gallon, before such 
 wine shall have been removed from the premises of the winery 
 where fortified and the redistillation is had under regulations made 
 by the Commissioner of Internal Revenue, with the approval of the 
 Secretary of the Treasury, an abatement or refund of the tax 
 assessed against said producer shall be allowed equivalent to 55 
 cents per proof gallon of brandy contained in said spirits at the time 
 of redistillation, which amount of brandy shall be ascertained by the 
 Commissioner of Internal Revenue, under regulations approved by 
 the Secretary of the Treasury, and wine spirits so recovered may 
 be used in the manner provided by law for the fortification of other 
 wine: 
 
 "Provided, That such wine spirits on which abatement or refund 
 of tax is allowed shall not exceed the total amount of alcohol in 
 such wine over and above fourteen per centum thereof." 
 
 That section three and section six of the Act of June seventh, 
 nineteen hundred and six, amending the laws relating to the fortifica- 
 tion of pure sweet wines, are hereby amended to read as follows : 
 
 "SEC. 3. That the Commissioner of Internal Revenue is hereby 
 authorized to assign at each winery where wines are to be fortified 
 such number of gaugers or storekeeper gaugers, in the capacity of 
 gaugers, for special duties as may be necessary for the proper super- 
 Vision of the making and fortifying of such wines, and the com- 
 pensation of such officers shall not exceed $5 per diem while so as- 
 signed, together with their actual and necessary traveling expenses, 
 and ajso a reasonable allowance for their board bills, to be fixed 
 by the Commissioner of Internal Revenue, but not to exceed $2 
 per diem for said board bills. That bonds hereafter given under 
 the provisions of the aforesaid Act of October first, eighteen hun- 
 
 6 
 
WAR REVENUE LAW 
 
 dred and ninety, as amended, shall be conditioned for the payment 
 of the tax on all brandy removed thereunder and not used and ac- 
 counted for within the time and in the manner required by law and 
 regulations, and for the payment of all taxes imposed on the brandy 
 so withdrawn and used for fortifications ; and the said bonds shall 
 contain such other conditions as the Commissioner of Internal 
 Revenue, with the approval of the Secretary of the Treasury, may 
 by regulation prescribe. 
 
 "SEC. 6. That any person who by any process recovers from 
 wines fortified under the provisions of the aforesaid Act approved 
 October first, eighteen hundred and ninety, as amendments thereto, 
 any brandy or wine spirits used in the manufacture or fortification 
 of said wine, otherwise than is provided for in said Act and its 
 amendments, or who shall rectify, mix, or compound with distilled 
 spirits or other materials, except as provided in this Act, such grape 
 brandy, fortified wines or wine spirits unlawfully recovered there- 
 from, shall, on conviction, be punished for each such offense by a 
 fine of not less than $200 nor more than $1,000. But the provisions 
 of this section and the provisions of section thirty-two hundred and 
 forty-four of the Revised Statutes of the United States, as amended, 
 relating to rectification, or other internal revenue laws of the United 
 States, shall not be held to apply to or prohibit the mixing or blend- 
 ing of pure sweet wines fortified under the provisions of this Act 
 with each other or with other wines : 
 
 "Provided, That the pure sweet wines fortified under the provi- 
 sions of this Act may be used in the manufacture of cordials, 
 liqueurs, and similar compounds on which an internal revenue tax of 
 24 cents a gallon is imposed, and otherwise the provision of section 
 thirty-two hundred and forty-four of the Revised Statutes of the 
 United States shall remain in full force and effect." 
 
 Unauthorized 
 
 Penalty. 
 
 SPECIAL TAXES 
 
 SEC. 3. That on and after November first, nineteen hundred and 
 fourteen, special taxes shall be, and hereby are, imposed annually as 
 follows, that is to say: 
 
 First. Bankers shall pay $1 for each $1,000 of capital used or computation 8 
 employed, and in estimating capital surplus and undivided profits tax defined, 
 shall be included. The amount of such annual tax shall in all cases 
 be computed on the basis of the capital, surplus, and undivided 
 profits for the preceding fiscal year. Every person, firm or com- 
 pany, and every incorporated or other bank, having a place of busi- 
 ness where credits are opened by the deposit or collection of money 
 or currency, subject to be paid or remitted upon draft, check, or 
 order, or where money is advanced or loaned on stocks, bonds, 
 bullion, bills of exchange, or promissory notes, or where stocks, 
 bonds, bullion, bills of exchange, or promissory notes are received 
 for discount or sale, shall be a banker under this Act : 
 
WAR REVENUE LAW 
 
 (T. D. 2064.) 
 
 Emergency revenue law Tax on undivided profits. 
 Method of arriving at undivided profits to be entered into the basis upon 
 which tax on bankers, under the act of October 22, 1914, is to be com- 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 23, 1914. 
 . To collectors of internal revenue, revenue agents, and others: 
 
 Subdivision 1, section 3, act of October 22, 1914, imposes an annual 
 tax upon bankers of $1 upon each $1,000 of capital, surplus, and undivide< 
 profits used or employed during the preceding fiscal year. 
 
 Many inquiries have been received from bankers as to the proper meth 
 of arriving at the amount of undivided profits to be used in the basis upon 
 which the tax is computed when such undivided profits have varied or 
 
 In T. D. 19797, dated July 29, 1898, it was held that the undivided profits 
 should be figured for each business day, and the average thereof taken as the 
 amount of undivided profits to be used in computing the tax due. In many 
 instances it is clear that such a method would be more or less impracticable 
 and involve too lengthy a calculation in arriving at the basis desired. There- 
 fore, while, perhaps, the daily average of undivided profits, as set forth above, 
 is the one absolutely accurate method by which to arrive at the amount to be 
 entered into the total of capital, surplus, and undivided profits, this office 
 will accept a return, under oath, from any banker where the undivided profits 
 are computed in any manner whereby a fair and just amount is arrived at 
 representing the average amount of the undivided profits employed by the 
 bank during the fiscal year preceding the year for which the tex is due. 
 
 It should be understood, in the event the amount of undivided profits 
 arrived at by the banker is questioned, that the average undivided profits 
 should be computed for each business day, as set forth in T. D. 19797. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 b a rom Provided, That any postal savings bank, or savings bank having 
 no capital stock, and whose business is confined to receiving de- 
 posits and loaning or investing the same for the benefit of its de- 
 positors, and which does no other business of banking, shall not be 
 subject to this tax. 
 
 (1) The decision of the Supreme Court in the case of Selden v. Equita- 
 ble Trust Co. (94 U. S., 419) construes section 3407, Revised Statutes, the 
 language of which in defining bankers is identical with section 2. 
 
 The test question as to the liability of a company or firm as bankers, 
 as laid down in that case is whether or not, having a place of business, a 
 firm or person is embraced in any one of the three following classes : 
 
 First. Do they have a place of business "where credits are opened (to 
 the general public) by the deposit or collection of money or currency, sub- 
 ject to be paid or remitted upon draft, check, or order"? 
 
 Second. Do they have a place of business where money is advanced or 
 loaned on collaterals (stocks, bonds, etc.) ? 
 
 Third. Do they have a place of business where stocks, bonds, bullion, 
 bills of exchange, or promissory notes are received from another person, 
 for sale, or bills of exchange of promissory notes are received for dis- 
 count, belonging to that other person? (Vol. 2, Treas. Dec. (1898), No. 
 20349.) 
 
 (2) Bankers, as well as all other special-tax payers, must be included in 
 Record No. 10, kept by collectors for public inspection under section 3240, 
 
 8 
 
WAR REVENUE LAW 
 
 Revised Statutes; but nothing is required to be stated in the record but the 
 name of the special-tax payer, his business, the place of business, and the 
 time of payment of the special tax. (Vol. 2, Treas. Dec. (1898), No. 19969.) 
 
 (3) Loaning money on the personal notes of the borrowers, without 
 collateral security, is not the business of banking contemplated by the statute. 
 (Vol. 2, Treas. Dec. (1898), No. 20264.) 
 
 (4) When the charter of a savings bank (or other corporate bank, is sur- 
 rendered, and the same persons who are officers and stockholders thereof 
 carry on a private banking business, a new special tax is required. (Vol. 2, 
 Treas. Dec. (1898), No. 20336.) 
 
 (5) Certain merchants receiving deposits from grain buyers and not 
 from the general public do not thereby become bankers within the meaning 
 of the statute. (Vol. 2, Treas. Dec. (1898), No. 20341.) 
 
 (6) City merchants who receive on deposit money from country mer- 
 chants who are their customers, for the convenience of the latter, but not 
 opening such accounts with the public generally, are not regarded as sub- 
 ject to special tax as bankers. (Vol. 2, Treas. Dec. (1898), No. 20342.) 
 
 (7) The receiving of employees' deposits on interest does not involve a 
 company or firm in special-tax liability as bankers. (Vol. 2, Treas. Dec. 
 (1898), No. 20343.) 
 
 (8) Merchants do not bring themselves within the definition of bankers 
 by reason of selling their own drafts to their customers; they are not, on 
 this account, required to pay special tax as bankers. (Vol. 2, Treas. Dec. 
 (1898), No. 20365.) 
 
 (9) In the case of a bank with branches, a special tax is required of 
 each branch, the special tax being due as to each place where the business 
 of banking is carried on. (Sec. 3235, Rev. Stat., 1st clause; Vol. 2, Treas. 
 Dec. (1898), No. 20397.) 
 
 (10) If tw r o or more bankers, each of whom has paid a special tax, 
 consolidate their business, the consolidated banking firm must pay a new 
 special tax from the date of the consolidation. But in neither case are the 
 capital and surplus of the old (defunct) firm to be considered in reckoning 
 the special tax of the new firm. (Vol. 2, Treas. Dec. (1898), No. 20419.) 
 
 (11) Bank's special tax Change of name. Where a banking firm (not 
 a corporation, changes its name, without any change in its membership, spe- 
 cial tax is not required to be paid again on account of such change. (Vol. 
 2, Treas. Dec. (1899), No. 20786.) 
 
 (12) Private banks having no capital stock are subject to tax as bankers. 
 
 (13) In estimating the amount of special tax based upon capital and 
 surplus, the amount invested in United States bonds is not to be deducted. 
 
 (14) The amount invested in a bank building is not to be deducted. 
 
 (15) A bank in liquidation, doing no business except collecting and 
 dividing assets in closing, is not required to pay special tax. 
 
 (16) A bank engaged in business in the month of July must pay special 
 tax for the entire year, beginning July 1. 
 
 (17) A trust company is liable as a banker if it comes within any one 
 of the three clauses of definition in subdivision 1, section 3, act of October 
 22, 1914. 
 
 (18) Borrowed capital must be taken into account when estimating 
 amount of special tax. 
 
 (19) It is not the subscribed capital, but the capital actually employed 
 during the preceding fiscal year, that is to be taken as the basis for estimat- 
 ing the special tax. (Vol. 2, Treas. Dec., No. 19843.) 
 
 (20) The advancing or loaning of money by brokers on the collateral 
 security of stocks, if these loans or advances are confined by them strictly 
 
WAR REVENUE LAW 
 
 to customers who have given them, as brokers, orders for the purchase of 
 stocks and the collateral is held solely to secure themselves m filling such 
 orders is not regarded as involving them in special-tax liability as bankers 
 within' the meaning of the statute. (Vol. 1, Treas. Dec. (1889), No. 21152.) . 
 Surplus on which bankers are taxed includes all surplus set apart for 
 carrving on the general business of the bank. It also includes undivided 
 profits. 22 A. G., Op, 320; 23 Id. 341. 
 
 (T. D. 2045.) 
 
 Emergency revenue law Preparation of bankers' lists. 
 Instructions as to the preparation of special bankers' lists. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 6, 1914. 
 To collectors of internal revenue: 
 
 In view of the provisions of section 3 of the act approved 
 October 22, 1914, imposing a special tax on bankers (for which 
 special-tax stamps are not provided), each collector will, on or be- 
 fore the 10th of December, 1914, and on or before August 10, 1915, 
 prepare and forward to this office a special bankers' list for the 
 preceding month. 
 
 This list will be prepared on blanks prescribed for the regular 
 assessment list, Form 23, and will be arranged alphabetically, (first) 
 by names of cities or other places, and (second) by names of bank- 
 ers in each city or other place in which two or more banks are 
 located. If the district comprises two or more States or Territories, 
 the names of the bankers should be arranged as above under the 
 names of the States and Territories, also alphabetically arranged. 
 
 The heading of column 3 should be changed to read, "Amount 
 of capital," and in this column will be entered the amount of capital, 
 including the surplus and undivided profits, employed in business 
 during the last fiscal year. 
 
 In column 4 will be entered the period, as "8 months ending 
 June 30, 1915," "6 months ending December 31, 1915." 
 
 In column 5 of the November list will be entered the amount of 
 tax computed on the basis of eight twelfths of the tax at $1 for each 
 $1,000 of capital reported in column 3 in each case, as provided 
 above. 
 
 In column 6 will be entered the basis of the assessment as now 
 required by the regulations of this office, and in column 7 will be 
 entered the date of the receipt of Form 457. 
 
 Bankers whose returns are received after the special bankers' 
 list has been forwarded and those commencing business subsequent 
 to the month of November will be reported on the regular assess- 
 ment lists, Form 23. 
 
 Collectors will receipt for the amounts assessed on the special 
 bankers' list on a special receipt, Form 23^. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
WAR REVENUE LAW 
 
 Second. Brokers shall pay $30. Every person, firm, or company, fin J d roker8 ~" de " 
 whose business it is to negotiate purchases or sales of stocks, bonds, 
 exchange, bullion, coined money, bank notes, promissory notes, or 
 other securities, for themselves or others, shall be regarded as a 
 broker : 
 
 Provided, That any person having paid the special tax as a Bankers not 
 banker shall not be required to pay the special tax as a broker. brokers? b ' 
 
 (21) The loaning of money for oneself or for others on commission does 
 not subject the lender to special tax as a broker; but if a person makes it 
 a business to negotiate purchases or sales of stocks, bond, exchange, bullion, 
 coined money, bank notes, promissory notes, or other securities, for himself 
 or 'others, he is required to pay the tax. "It is only when making sales and 
 purchases is his business, his trade, his profession, his means of getting his 
 living, or making his fortune that he becomes a broker within the meaning 
 of the statute." (Warren et al. v. Shook, 91 U. S., 704.) 
 
 (22) Persons or firms acting as agents for parties loaning money upon 
 promissory notes secured by mortgages are not brokers. 
 
 (23) A lawyer can make investments for clients without being liable, 
 unless he does it to such an extent that it can be called a "business." 
 
 (24) Loan and mortgage companies not liable for loaning money on notes 
 or bonds secured by mortgage or trust deed on real estate. If they purchase 
 notes, bonds, or other securities they become liable as brokers. 
 
 (25) A person engaged in the business of placing loans secured by 
 notes and mortgages upon real estate, acting simply as agent, receiving a 
 commission for his services 'in obtaining the application for the loan and at- 
 tending to the execution of the papers, is not a broker. 
 
 (26) A person engaged in the business of selling real estate, acting as 
 the agent of the owner in finding purchasers and receiving a commission for 
 his services, is not a broker. 
 
 (27) When persons negotiate purchases or sales of promissory notes, 
 if these are only occasional acts and do not constitute their regular business, 
 they are not brokers within the meaning of the act. 
 
 (28) Bucket-shop proprietors giving memorandum of transactions are 
 required to pay special tax as brokers. 
 
 (29) The principal's special-tax stamp for his place of business in an- 
 other city covers the transactions only at that place of business and can not 
 cover the business done elsewhere at a branch office. 
 
 (30) Broker's tax is not required to be paid at branch offices where a 
 clerk is employed whose sole duty is to receive orders and transmit them 
 by wire to the head of the office. The mere receipt and transmission by 
 clerks of orders is not regarded as carrying on the business of a broker. 
 (Vol. 2, Treas. Dec., No. 19843.) 
 
 (31) Special tax must be paid for every branch office where the em- 
 ployee in charge not only receives and transmits orders with the money to 
 the main office, but also receives from the main office moneys for disburse- 
 ment to customers, or keeps accounts with the customers at the branch office, 
 or does other business with relation to the transaction of brokers at such 
 branch office. Separate special tax must be paid and a separate stamp taken 
 out for every "bucket shop," whether such office is called a branch office or 
 a main office. (Vol. 2, Treas. Dec. (1898), No. 20374.) 
 
 (32) It is the language of the statute, and not the ordinary and usual 
 meaning of the word "broker," which must govern in determining who is a 
 broker required to pay a special tax. (Vol. 1, Treas. Dec. (1899), No. 20549.) 
 
WAR REVENUE LAW 
 
 (33) While a mining syndicate or other association issuing certificates 
 " ! of stock in a company organized by it is not required to pay a special tax as 
 
 a broker therefor, a manager or other person employed by it to sell such 
 certificates on commission is a broker and required to pay special tax. (Vol. 
 1, Treas. Dec. (1899), No. 20037.) 
 
 (34) An express or railway agent doing business for his principals 
 only, not a broker. (Vol. 1, Treas. Dec. (1898), No.^10106.) 
 
 (35) Bills of exchange, bonds for the payment of'money, and promissory 
 notes are in the popular acceptation of the term "securities" for money. 
 (Jennings v. Davis, 31 Conn., 139.) 
 
 (36) Securities: "Evidences of indebtedness." "Written assurance for 
 the return or payment of money." (Anderson's Dictionary of Law.) 
 
 (37) Proprietors of bucket shops who issue memoranda of their trans- 
 actions in stocks and in cotton, grain, etc., even though they sell only 
 "futures," are required to pay special tax both as brokers and as commer- 
 cial brokers. (Vol. 2, Treas. Dec. (1899), No. 21007.) 
 
 (38) Loan and mortgage companies are not liable for special tax as 
 brokers unless they engage in the sale of the securities on which they make 
 loans. When they engage in such sales they become brokers and are re- 
 quired to pay special tax accordingly. (Vol. 2, Treas. Dec. (1899), No. 
 21620.) 
 
 (39) An express company engaged in the business of buying or selling 
 foreign money or bills of exchange is required to pay special tax as a 
 broker. (Vol. 2, Treas. Dec. (1899), No. 21709.) 
 
 (40) No person or firm liable to special tax for simply buying or selling 
 real estate on commission. (T. D. 19755.) 
 
 (41) Business of selling land on commission, taking applications for farm 
 loans, and writing insurance, is not the business of a broker, and special tax is 
 not required. (T. D. 19872.) 
 
 (42) Purchase of State, county, school, or district orders, or warrants, by 
 any person does not subject him to special tax as a broker, if not done to 
 an extent constituting it his business. (T. D. 19885.) 
 
 (43) Broker's special tax not required for negotiating loans of money. 
 (T. D. 19894.) 
 
 (44) Occasional transactions in sale of sight draft do not necessitate 
 the payment of special tax as broker. (T. D. 19937.) 
 
 (45) Only those whose business it is to negotiate purchases or sales of 
 the securities contemplated by paragraph two of section 2, act of June 30, 
 1898 (subdivision 2, of section 3, act of October 22, 1914), are brokers and 
 liable to tax. (T. D. 19940.) 
 
 (46) Special tax not required to be paid by a person because of the fact 
 of his holding a seat on the stock exchange, if he transacts no business, 
 directly or indirectly. (T. D. 19943.) 
 
 (47) Special tax as broker not required for the mere cashing of checks 
 for customers by merchants. (T. D. 20026.) 
 
 (48) Persons whose practice it is to buy fee bills of witnesses are not 
 brokers. Such paper is not properly described by any of the terms used in 
 the law, to wit, "stocks, bonds, exchange, bullion, coined money, bank notes, 
 promissory notes, or other securities." (T. D. 21647.) 
 
 An express company which issues money orders and travelers' checks 
 is not taxable as a broker. 23 A. G., Op. 139. 
 
 -d e Tn n e d" ker8 Third. Pawnbrokers shall pay $50. Every person, firm or com- 
 pany whose business or occupation it is to take or receive, by way 
 of pledge, pawn, or exchange, any goods, wares, or merchandise, or 
 
WAR REVENUE LAW 
 
 any kind of personal property whatever, as security for the repay- 
 ment of money loaned thereon, shall be deemed a pawnbroker. 
 
 The actual value of securities pledged is immaterial in computing the 
 tax. 22 A. G., Op. 219. 
 
 (49) A person is not required to pay a special tax as a pawnbroker for 
 rare or occasional acts, which can not be regarded as his business or occupa- 
 tion. (Circular No. 508, Aug. 8, 1898; Vol. 2, Treas. Dec. (1898), No. 19843.) 
 
 (50) Special tax of pawnbroker not required to be paid for making 
 loans when the chattels are not taken or received by way of pledge, pawn, 
 or exchange. (T. D. 20552.) 
 
 (51) A person using no tickets in his business, but making a pretense 
 of buying articles which are brought to him, which he holds with a verbal 
 agreement that the articles can be bought back again by the person selling 
 them, upon the payment of a specified bonus, is liable to special tax as 
 pawnbroker. (T. D. 20439.) 
 
 Fourth. Commercial brokers shall pay $20. Every person, firm, 
 or company whose business it is as a broker to negotiate sales or fined, 
 purchases of goods, wares, produce, or merchandise, or to negotiate 
 freights and other business for the owners of vessels, or for the 
 shippers or consignors or consignees of freight carried by vessels, 
 shall be regarded as a commercial broker under this Act. 
 
 (52) Commercial brokers are those persons only who, without having in 
 their possession goods, wares, or merchandise, negotiate sales or purchases 
 thereof on commission. (Vol. 2, Treas. Dec. (1898), No. 20416.) 
 
 (53)' Commission merchants who receive goods in possession to sell for 
 others are not commercial brokers. The difference between a factor or com- 
 mission merchant and a broker is that a factor may buy and sell in his own 
 name and has the goods in his possession, while a broker, as such, can not 
 ordinarily buy or sell in his own name and has no possession of the goods 
 sold. (Slack v. Tucker, 23 Wall., 321.) 
 
 (54) Cattle brokers, who receive and sell cattle on commission, are not 
 required to pay special tax as commercial brokers. 
 
 (55) A person who is employed by certain firms to solicit and receive 
 orders on commission for their goods and is bound by his agreement with 
 them to give his entire services to them, to the exclusion of other firms or 
 persons, not a commercial broker. 
 
 (56) Warehousemen who receive tobacco, cotton, or any other produce 
 or goods on consignment for sale on commission are not liable as commer- 
 cial brokers, but are liable as commission merchants under act of October 
 22, 1914. 
 
 (57) Auctioneers who receive and sell goods at their auction rooms or 
 on the premises of the owners on commission are not subject to special tax 
 as commercial brokers. 
 
 (58) Drug brokers are subject to the special tax. 
 
 (59) If cotton buyers have possession of cotton which they sell, they 
 are not liable as commercial brokers; if they have not, and sell on commis- 
 sion, they are liable. 
 
 (Circular No. 508, Vol. 2, Treas. Dec. (1898), No. 19843.) * 
 
 (60) Persons representing cigar manufacturers who are furnished with 
 samples and send orders to factories, receiving a commission for furnish- 
 ing orders, are liable as commercial brokers. (T. D. 19575.) 
 
 (61) Warehouse receipts for grain transferred through elevators liable 
 Brokers must pay special tax at branch offices. (T. D. 19615.) 
 
 13 
 
WAR REVENUE LAW 
 
 (62) Definition of commercial broker. Settled ruling modifying prior 
 rulings. (Vol. 2, Treas. Dec. (1898), No. 20417.) 
 
 Decision of Comptroller Tracewell. (VI Comp. Dec., 545.) 
 
 (63) Persons whose business it is to obtain orders from those who desire 
 to buy goods, and who purchase, receive, and forward the goods to their 
 customers, are not on this account commercial brokers, nor are they required 
 to pay special tax under the act of June 13, 1898, for such business, though 
 they make a profit therein through discounts allowed them by merchants and 
 commissions paid them by their customers "Installment purchasers," who 
 have running accounts at stores and give orders to their customers, on which 
 orders these customers themselves buy and receive goods, are required to pay 
 special tax as commercial brokers. (T. D. 19884.) 
 
 (64) A firm negotiating sales of goods not shipped to them nor held in 
 their possession before being sold, but shipped from other points direct to 
 purchasers from the mills, they being liable for all sales and doing their own 
 "billing," making settlements with the mills at the end of each month, retain- 
 ing a stipulated commission, held to be liable to tax as commercial brokers. 
 (T. D. 19938.) 
 
 (65) Persons representing several houses in the negotiation of sales of 
 goods on commission (the goods not being in their possession), if they are 
 not bound by agreement to act solely for these houses, but are at liberty to 
 engage in the same transactions for other houses, are commercial brokers, 
 and must pay special tax as such. (T. D. 19966.) 
 
 (66) Special tax is not required to be paid for representing one, two, or 
 three firms to solicit and receive orders, if person is bound by agreement to 
 give his entire service to them. (T. D. 20117.) 
 
 (67) Leaf tobacco dealers, who are also engaged in the business of 
 negotiating the purchase of tobacco as agents for others, on commission, are 
 commercial brokers under the fourth paragraph of section 2 of the war- 
 revenue act. (T. D. 20592.) 
 
 Customhouse Fifth. Custom-house brokers shall pay $10. Every person, firm, 
 
 brokers de- ... \ J e , t_ 
 
 fined. or company whose occupation it is, as the agent of others, to arrange 
 
 entries and other custom-house papers, or transact business at any 
 port of entry relating to the importation or exportation of goods, 
 wares, or merchandise, shall be regarded as a custom-house broker. 
 
 (68) If the complete business of customhouse brokers is transacted by 
 parties at offices at different ports of one district, a separate and distinct 
 special tax must be paid for each of their offices, under the provisions of sec- 
 tion 3235, Revised Statutes, page 114. (Circular No. 508, Aug. 8, 1898; vol. 2, 
 T. D., No. 19843.) 
 
 (69) Transactions for which customhouse brokers' special tax is not 
 required to be paid. Vol. 2, T. D. (1898), No. 20106.) 
 
 (70) A special-tax stamp taken out by a person in his own name as a 
 customhouse broker is sufficient to cover the business done by him in his 
 own name, at the place of business stated therein, whether such business is 
 done by him on his own account or as an agent for other persons. (T. D. 
 20206.) 
 
 (71) Bills of sale of vessel property are "customhouse papers" in contem- 
 plation of the statute, and a person "whose occupation it is, as the agent of 
 others," to prepare such bills of sale is required to pay special tax as a 
 customhouse broker. (T. D. 20321.) 
 
 (72) Persons whose occupation it is, as agents for others, to enter and 
 clear vessels at the customhouse, can not be relieved from payment of special 
 
 ( 14 
 
WAR REVENUE LAW 
 
 tax as customhouse brokers on the ground that they have paid special tax 
 as commercial brokers, which entitles them "to negotiate freights or other 
 business for the owners of vessels." (T. D. 20725.) 
 
 Sixth. Proprietors of theaters, museums, and concert halls, where Theatres, ma- 
 
 ,.,... j 1 , f scums and con- 
 
 a charge for admission is made, having a seating capacity of not cert hails de- 
 more than two hundred and fifty, shall pay $25 ; having a seating fined * 
 capacity of more than two hundred and fifty and not exceeding five 
 hundred shall pay $50; having a seating capacity of exceeding five 
 hundred and not exceeding eight hundred, shall pay $75 ; having a 
 seating capacity of more than eight hundred, shall pay $100. Every 
 edifice used for the purpose of dramatic or operatic or other repre- 
 sentations, plays, or performances, for admission to which entrance 
 money is received, not including halls or armories rented or used 
 occasionally for concerts or theatrical representations, shall be re- 
 garded as a theater: 
 
 Provided, That whenever such edifice is under lease at the pas- 
 sage of this Act, the tax shall be paid by the lessee, unless other- 
 wise stipulated between the parties to said lease. 
 
 (73) Persons are not required to pay special taxes for the mere occa- 
 sional renting of their hall for public performances to dramatic companies 
 or other persons charging entrance money therefor, but the special tax of 
 $10 is required to be paid by such persons or companies if they give dramatic 
 performances or the other exhibitions specifically mentioned in paragraph 8, 
 section 2. (Subdivision 6, Sec. 3, Act Oct. 22, 1914.) 
 
 (74) Where theaters are entirely closed to performance during the 
 months of July and August, and only open in the month of September, the 
 special tax is to be reckoned from the 1st day of September to the 1st day 
 of July following, at the rate of $100 for the year beginning July 1. (Nov. 
 1. 1914, to June 30, 1915, current year.) (Circular No. 508, Aug. 8, 1898; 
 Vol. 2, Treas. Dec., No. 19843.) 
 
 (75) Moving-picture shows taxable as theaters under Section 6. (T. D. 
 2040.) 
 
 (76) A special-tax stamp taken out by the lessees of a theater can not, 
 upon their transferring their lease to other persons, be transferred and made 
 to answer for the latter persons in conducting the theater. (T. D. 20396.) 
 
 (T. D. 2040.) 
 
 Emergency revenue law Motion-picture theaters. 
 Motion-picture theaters classed as taxable under the sixth paragraph of sec- 
 tion 3, act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 3, 1914. 
 
 SIR : Replying to your communication of the 26th ultimo, you 
 are informed that after careful consideration this office has reached 
 the conclusion that motion-picture theaters come under the sixth 
 paragraph of section 3 of the act of October 22, 1914, and therefore 
 are taxable as theaters. 
 
 Respectfully, G. E. FLETCHER, 
 
 Acting Commissioner of Internal Revenue. 
 COLLECTOR, ELEVENTH DISTRICT, Columbus, Ohio. 
 
 15 
 
WAR REVENUE LAW 
 
 Circuses de- 
 fined. 
 
 Payment 
 of special tax in 
 one state not an 
 exemption in an- 
 other. 
 
 Exhibitions 
 not enumerated 
 herein. 
 
 Seventh. The proprietor or proprietors of circuses shall pay $100. 
 Every building, space, tent, or area where feats of horsemanship or 
 acrobatic sports or theatrical performances not otherwise provided 
 for in this Act are exhibited, shall be regarded as a circus: 
 
 Provided, That no special tax paid in one State, Territory or the 
 District of Columbia shall exempt exhibitions from the tax in 
 another State, Territory, or the District of Columbia, and but one 
 special tax shall be imposed for exhibitions within any one State, 
 Territory, or District. 
 
 (77) Exhibitions of feats of horsemanship (such'as are seen in circuses), 
 which occur on race tracks, are subject to a special tax of $100; but mere 
 tests of speed of horses in racing are not regarded as "feats of horseman- 
 ship" within the meaning of paragraph 7 of section 2, act of June 13, 1898. 
 (Subdivision 7, sec. 3, act of Oct. 22, 1914.) 
 
 (78) Variety shows, whether given at summer resorts or elsewhere, which 
 include "acrobatic sports," come within the definition of a circus in the statute 
 which requires special tax therefor. 
 
 (79) When a circus is exhibiting in any State in the month of July, the 
 special tax of $100 is required to be paid for the year beginning July 1. If 
 in the following month the circus goes into another State, the special tax 
 at the rate of $100 for the year is to be reckoned from the 1st day of 
 August to the 1st day of July following, and a separate special-tax stamp 
 must be taken out accordingly for that State, and so on. 
 
 (80) The "theatrical performances" contemplated by paragraph 7, sec- 
 tion 2, of the act of June 13, 1898 (subdivision 7, sec. 3, act of Oct. 22, 1914), 
 are only those which are given in connection with a circus. 
 
 (81) A show under canvas exhibiting, among other things, acrobatic 
 and athletic exercises, but no feats of horsemanship, and having no menagerie, 
 is not subject to special tax as a circus ($100) under paragraph 7 of section 
 2, act of June 13, 1898, if the acrobatic exercises are so few and simple as to 
 make it unreasonable to hold that they constitute the show a circus. (T. D. 
 19944.) 
 
 (82) A small wagon show having no "circus feats," but only "such acts 
 as trapeze, wire walking, trained ponies, singing, and dancing," is not to be 
 regarded as a circus within the meaning and intent of paragraph 7 of section 2, 
 act of June 13, 1898. It is a show coming under the eighth paragraph, for 
 which the special tax of $10 is required to be paid. (T. D. 19975.) 
 
 Eighth. Proprietors or agents of all other public exhibitions or 
 shows for money not enumerated in this section shall pay $10: 
 
 Provideti, That a special tax paid in one State, Territory, or the 
 District of Columbia shall exempt exhibitions from the tax in 
 another State, Territory, or the District of Columbia, and but one 
 special tax shall be required for exhibitions within any one State, 
 Territory, or the District of Columbia: 
 
 Provided further, That this paragraph shall not apply to Chau- 
 tauquas, lecture lyceums, agricultural or industrial fairs, or exhibi- 
 tions held under the auspices of religious or charitable associations. 
 
 (83) The show of a medicine vender (consisting of various "athletic, 
 humorous, and comic performances," there being given also an exhibition 
 of ropewalking and trapeze performance, the object being merely to attract 
 a crowd), liable to a tax of $10 under paragraph 8, act of June 13/1898, 
 instead of 100 under paragraph 7. (T. D. 19830.) 
 
 16 
 
WAR REVENUE LAW 
 
 (84) The "theatrical performances" contemplated by this paragraph are 
 only those which are given in connection with a circus. 
 
 (85) Agricultural associations are required to pay a special tax at the 
 rate of $10 for exhibitions, including horse racing. 
 
 (86) Exhibitions and shows given on fair grounds, but not under man- 
 agement of the fair association, are required to pay special tax. 
 
 (87) A lecturer using* a stereopticon to illustrate his lectures, and charg- 
 ing an admission fee, is liable to the special tax as giving a public exhibition 
 or show for money. 
 
 (88) If an exhibition is given in more than one State the>law requires 
 payment of special tax for every such State. 
 
 (89) Amateur theatrical exhibitions, either in private houses or licensed 
 public halls, for payment of expenses incurred in giving the exhibition and 
 not for pecuniary profit of the performers or the manager, are not such per- 
 formances as are subject to tax. 
 
 Amateur clubs or local organizations giving exhibitions, even though 
 they charge an admission price, are not required to pay special tax therefor 
 if the proceeds are not for pecuniary profit of the clubs or associations, but 
 are devoted to come charitable or public object and payment of expenses. 
 (Vol. 1, Treas. Dec. (1899), No. 20840.) 
 
 (90) Concert gardens where no admission fee is charged, but where 
 beer and other drinks are sold and shows or stage entertainments are given, 
 are within the meaning of this paragrapk, and the special tax of $10 must 
 be paid therefor. (Vol. 2, Treas. Dec. No. 19843.) 
 
 (91) Exhibitions and shows for which special tax is required to be paid. 
 (Vol. 2, Treas. Dec. (1898), Decisions Nos. 19749, traveling shows; 19826- 
 19830, medicine vender's show ; 19873, horse races ; 19968, exhibition at park 
 or gardens; 19976, exhibition or show in a saloon; 20121, nickel-in-slot ma- 
 chine, liable under certain conditions; 20190, exhibitions by an athletic asso- 
 ciation; 20261, phonograph parlor; 20270, concert hall.) 
 
 (92) Entertainments for which special tax is not required to be paid. 
 (Vol. 2, Treas. Dec. (1898), Decisions Nos. 19752, amateur theatricals; 19941, 
 halls ; 19977, lecturers or elocutionists ; 20029, circus performances at county 
 fairs; 20115, merry-go-round; 20123, illustrated lectures (educational asso- 
 ciation exclusively) ; 20124, harvest show; 20165, fortune telling; 20228, foot- 
 ball, baseball, etc.; 20242, theatrical entertainment for benefit of fire depart- 
 ment; 20273, bands in city parks; 20314, pianoforte lecture recital; 20319, 
 store show (monkeys) ; 20337, university exhibitions.) 
 
 (93) Special tax is not required to be paid by proprietors of restaurants 
 or cafes for employing bands of music or orchestras during meal hours for 
 the benefit of their patrons, no admission price being charged and no per- 
 formance or exhibition being given in connection therewith. Former rulings 
 tending to a different conclusion modified. (Vol. 2, Treas. Dec. (1899), No. 
 21522.) 
 
 (94) An entertainment given by a railway company, to which no admis- 
 sion price is charged, is not regarded as an exhibition or show for money. 
 (Vol. 2, Treas. Dec. (1899), No. 21559.) 
 
 (95) Special tax not required for bands of music playing in saloons to 
 which no price of admission is charged, and where persons visiting such 
 places are not under any obligation to buy. (Vol. 2, Treas. Dec. (1899), No. 
 21636.) 
 
 Ninth. Proprietors of bowling alleys and billiard rooms shall pay Bowling Alleys, 
 $5 for each alley or table. Every building or place where bowls are -defied: *' 
 thrown or where games of billiards or pool are played, and that are 
 
 17 
 
WAR REVENUE LAW 
 
 open to the public with or without price, shall be regarded as a 
 bowling alley or a billiard room, respectively. 
 
 (96) Social clubs open only to members are not required to pay special 
 tax on billiard tables. (Circular No. 508, Aug. 8, 1898; vol. 2, Treas. Dec., 
 No. 19843.) 
 
 (97) Club not required to pay special tax on its billiard tables. (Vol. 2, 
 Treas. Dec. (1898), No. 19743.) 
 
 (98) A person for the time being in the possession and control of a 
 billiard table in a place or building open to the public is prima facie the 
 proprietor of a billiard room and liable to pay the special tax therefor, even 
 if the general property and ultimate control of the table or place, or either 
 of them, be in some one else. (United States v. Howard, 13 Int. Rev. Rec., 
 118.) 
 
 (99) Special-tax stamp to be issued for each bowling alley, pool or 
 billiard table. (Vol. 2, Treas. Dec. (1898), No. 19610.) 
 
 (100) Bagatelle table not liable to special tax. (Vol. 2, Treas. Dec. 
 (1898), No. 20102.) 
 
 (101) Tivoli table not liable to special tax. (Vol. 2, Treas. Dec. (1898), 
 No. 20126.) 
 
 (102) Bowling alley at Sunday-school picnics or at colleges, special tax 
 not required. (Vol. 2, Treas. Dec. (1898), Nos. 19890-20021.) 
 
 (103) When a person who has taken out a special-tax stamp for a bowl- 
 ing alley closes this alley and thereafter opens another to the public, the 
 stamp may be transferred to the latter bowling alley under the provisions of 
 section 3241, Revised Statutes, if it remains in his ownership and control. 
 (Vol. 2, Treas. Dec. (1899), No. 21495.) 
 
 (104) In every building or place where bowls are thrown, each division 
 or track is a separate alley, for which the special tax of $5 must be paid. 
 (Vol. 2, Treas. Dec. (1899), No. 21606.) 
 
 Tenth. Commission merchants shall pay $20. Every person, firm, 
 or company whose business or occupation it is to receive into his or 
 its possession any goods, wares, or merchandise to sell the same on 
 commission shall be regarded as a commission merchant: 
 
 Provided, That any person having paid the special tax as a com- 
 mercial broker shall not be required to pay the special tax as a com- 
 mission merchant : 
 
 Provided junther, That this provision shall not apply to commis- 
 sion houses run upon a cooperative plan. 
 
 Not taxed under act June 30, 1909 ; hence no Treasury Decisions thereon. 
 
 TOBACCO DEALERS AND MANUFACTURERS 
 
 SEC. 4. That on and after November first, nineteen hundred and 
 fourteen, special taxes on tobacco dealers and manufacturers shall 
 be and hereby are imposed annually as follows, the amount of such 
 annual taxes to be computed in all cases on the basis of the annual 
 sales for the preceding fiscal year : 
 
 Leaf Tobacco Dealers in leaf tobacco whose annual sales or transfers do not 
 annual 8 salts X- exceed fifty thousand pounds shall each pay $6. Dealers in leaf 
 ceed 1,000 ibs. tobacco whose annual sales or transfers exceed fifty thousand and 
 
 18 
 
WAR REVENUE LAW 
 
 do not exceed one hundred thousand pounds shall pay $12, and if 
 their annual sales or transfers exceed one hundred thousand pounds 
 shall pay $24: 
 
 Provided, That dealers in leaf tobacco whose annual sales or 
 transfers do not exceed one thousand pounds shall be exempt from 
 the tax herein imposed on dealers in leaf tobacco. 
 
 Dealers in tobacco, not specially provided for in this section, 
 whose annual receipts from the sale of tobacco exceed $200, shall 
 each pay $4.80 for each store, shop, or other place in which tobacco 
 in any form is sold. 
 
 Every person whose business it is to sell, or offer for sale, manu- 
 factured tobacco, snuff, cigars, or cigarettes shall be regarded as a 
 dealer in tobacco : 
 
 Provided, That no manufacturer of tobacco, snuff, cigars, or 
 cigarettes shall be required to pay a special tax as a dealer in 
 manufactured tobacco, snuff, cigars, or cigarettes for selling his 
 own products at the place of manufacture. 
 
 Manufacturers of tobacco whose annual sales do not exceed one 
 hundred thousand pounds shall each pay $6. 
 
 Manufacturers of tobacco whose annual sales exceed one hundred 
 thousand and do not exceed two hundred thousand pounds shall 
 each pay $12. 
 
 Manufacturers of tobacco whose annual sales exceed two hundred 
 thousand and do not exceed four hundred thousand pounds shall 
 each pay $24. 
 
 Manufacturers of tobacco whose annual sales exceed four hundred 
 thousand and do not exceed one million pounds shall each pay $60. 
 
 Manufacturers of tobacco whose annual sales exceed one million 
 and do not exceed five million pounds shall each pay $300. 
 
 Manufacturers of tobacco whose annual sales exceed five million 
 and do not exceed ten million pounds shall each pay $600. 
 
 Manufacturers of tobacco whose annual sales exceed ten million 
 and do not exceed twenty million pounds shall each pay $1,200. 
 
 Manufacturers of tobacco whose annual sales exceed twenty mil- 
 lion pounds shall each pay $2,496. 
 
 Manufacturers of cigars whose annual sales do not exceed one 
 hundred thousand cigars shall each pay $3. 
 
 Manufacturers of cigars whose annual sales exceed one hundred 
 thousand and do not exceed two hundred thousand cigars shall each 
 pay $6. 
 
 Manufacturers of cigars whose annual sales exceed two hundred 
 thousand and do not exceed four hundred thousand cigars shall each 
 pay $12. 
 
 Manufacturers of cigars whose annual sales exceed four hundred 
 thousand and clo not exceed one million cigars shall each pay $30. 
 
 Manufacturers of cigars whose annual sales exceed one million 
 and do not exceed five million cigars shall each pay $150. 
 
 Manufacturers of cigars whose annual sales exceed five million 
 and do not exceed twenty million cigars shall each pay $600. 
 
 Manufacturers of cigars whose annual sales exceed twenty million 
 and do not exceed forty million cigars shall each pay $1,200. 
 
 19 
 
 Dealers whose 
 annual sales less 
 than 1,000 Ibs. 
 e x e m pt from 
 tax. 
 
 Dealers in to- 
 bacco whose an- 
 nual receipts ex- 
 ceed $200. 
 
 Dealers de- 
 nned. 
 
 No manufac- 
 turer shall be 
 taxed as a 
 dealer. 
 
 Manufacturers 
 of tobacco. 
 
 Manufacturers- 
 of cigars. 
 
WAR REVENUE LAW 
 
 Manufacturers 
 of cigarettes. 
 
 Manufacturer 
 denned. 
 
 Penalty 
 failure to 
 tax. 
 
 for 
 pay 
 
 Manufacturers of cigars whose annual sales exceed forty million 
 cigars shall each pay $2,496. 
 
 Manufacturers of cigarettes whose annual sales do not exceed one 
 million cigarettes shall each pay $12. 
 
 Manufacturers of cigarettes whose annual sales exceed one million 
 and do not exceed two million cigarettes shall each pay $24. 
 
 Manufacturers of cigarettes whose annual sales exceed two mil- 
 lion and do not exceed five million cigarettes shall each pay $60. 
 
 Manufacturers of cigarettes whose annual sales exceed five mil- 
 lion and do not exceed ten million cigarettes shall each pay $120. 
 
 Manufacturers of cigarettes whose annual sales exceed ten million 
 and do not exceed fifty million cigarettes shall each pay $600. 
 
 Manufacturers of cigarettes whose annual sales exceed fifty mil- 
 lion and do not exceed one hundred million cigarettes shall each 
 pay $1,200. 
 
 Manufacturers of cigarettes whose annual sales exceed one hun- 
 dred million cigarettes shall each pay $2,496. 
 
 In arriving at the amount of license tax to be paid hereunder, 
 and in the levy and collection of such tax, each person, firm, or cor- 
 poration engaged in the manufacture of cigars, cigarettes (including 
 little cigars), or tobacco shall be considered and deemed a single 
 manufacturer. 
 
 And every person who carries on any business or occupation for 
 which special taxes are imposed by this Act, without having paid 
 the special tax herein provided, shall, besides being liable to the 
 payment of such special tax, be deemed guilty of a misdemeanor, and 
 upon conviction thereof shall pay a fine of not more than $500, or 
 be imprisoned not more than six months, or both, at the discretion 
 of the court: 
 
 Provided, That the special taxes imposed by this Act and pay- 
 able during the special tax year ending June thirtieth, nineteen hun- 
 dred and sixteen, shall be collected and paid proportionately for the 
 period during which such taxes shall remain in force during said 
 year. 
 
 (T. D. 2061.) 
 
 Emergency revenue lain* Special tax Tobacco dealers and manu- 
 facturers. 
 
 Regulations and information as to certain requirements of act of October 22, 
 1914, together with synopsis of decisions made under the act of June 13,' 
 1898, which will be given weight in determining similar questions arising 
 under the emergency revenue act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 10, 1914. 
 
 In answer to numerous inquiries, the following information as to certain 
 requirements of the act of October 22, 1914, is given: 
 
 The law provides that each person, firm, or corporation engaged in the 
 manufacture of cigars, cigarettes (including little cigars), or tobacco shall 
 be considered and deemed a single manufacturer 
 
 Each manufacturer of cigars therefore is required to pay but one special 
 tax at the appropriate rate, no matter how many factories are operated under 
 
 20 
 
WAR REVENUE LAW 
 
 his exclusive ownership and control. Ownership by one corporation manufac- 
 turing cigars, cigarettes, or tobacco of a part or all of the stock of another 
 corporation, also bonded as a manufacturer, is not exclusive ownership or 
 control of the latter, which is a separate legal entity and must pay a separate 
 special tax. 
 
 A corporation which is engaged in the manufacture of cigars and also of 
 cigarettes or tobacco must pay a separate special tax as manufacturer of 
 cigars and as manufacturer of cigarettes or as manufacturer of tobacco, or 
 both, as the case may be. 
 
 For the purposes of calculating the rate of tax under this act, all tobacco 
 cigarettes, commonly known as "little cigars," are rated as cigarettes. 
 
 Where more than one factory or branch is operated by the same manu- 
 facturer, the special tax shall be paid to the collector of the district where 
 the principal factory or place of business is located, and the special tax 
 stamp will be posted at such factory or place of business. The collector issu- 
 ing the special-tax stamp will also issue as many certificates that the tax has 
 been duly paid to him as may be necessary to cover each factory operated 
 by the tax-payer, and one of such certificates must be posted in a conspicuous 
 place at each of such factories. In making return for special tax the man- 
 ufacturer will file a sworn statement of production, including all factories 
 or branches, for the preceding fiscal year. The return should state separately 
 the factory number, district, and State as to each factory operated, the out- 
 put of each factory, and the aggregate output of all factories upon which the 
 special tax is calculated. 
 
 The law provides that the amount of the annual tax is to be computed 
 in all cases on the basis of the annual sales of the preceding fiscal year, and 
 the basis of computation is the total sales during the year, whether business 
 is conducted during the whole or only a part of the year. 
 
 Dealers or manufacturers who were not engaged in such business during 
 the preceding fiscal year must procure special-tax stamps before commencing 
 business. The special-tax stamp purchased at the commencement of busi- 
 ness may be of such grade as, in the opinion of the dealer or manufacturer, 
 may be required to cover his business for the fiscal year, but when the limit 
 of sales allowed under such stamp is reached, the dealer or manufacturer 
 must procure a stamp of a higher grade, so that his liability to special tax 
 on the basis of sales as provided by law will at all times be covered. 
 
 Peddlers of tobacco, whose annual receipts exceed $200, are liable to 
 special tax at the rate of $4.80 per annum. The special-tax stamp in such 
 cases, like special-tax stamps for dining cars, will cover sales made in the 
 United States and should be carried by the peddler on his person, or posted 
 in his wagon, or other conveyance, if he has one. 
 
 Return for register, Form 277, should be made and certificate of registry 
 should be issued only in the case of dealers in leaf tobacco, including retail 
 dealers in leaf tobacco, whose sales do not exceed 1,000 pounds and who 
 are exempt from special tax. 
 
 Dealers in tobacco and dealers in leaf tobacco, including retail dealers in 
 leaf tobacco claiming exemption from special tax under the provisions 
 of this act, will be required to establish same under oath. 
 
 Attached hereto is published for the guidance and information of all 
 concerned a synopsis of decisions made under the act of June 13, 1898, which 
 will be given considerable weight in determining similar questions arising 
 under the present act. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Approved. 
 
 W. G. McAooo, 
 
 Secretary of the Treasury. 
 
 (1) A manufacturer of tobacco or cigars can not sell at retail at place 
 of manufacture. (16 Op. Atty. Gen., 89; 24 Int. Rev. Rec., 227; Crisp v. 
 Proud, 24 ibid., 340; Ludlofif v. United States, 108 U. S., 176; 29 Int. Rev. 
 Rec., 125.) 
 
 (2) Special tax liability of a person buying leaf tobacco exclusively for 
 export by himself. (T. D. 28.) 
 
 21 
 
WAR REVENUE LAW 
 
 (3) Liability to special tax of tobacco dealers and manufacturers under 
 the act of June 13, 1898. (T. D. 138.) 
 
 (4) As to the penalty for failure to make return on Form 11 of special 
 taxes incurred. (T. D. 19748.) 
 
 (5) Manufacturers can not pack goods of another factory on goods 
 made at their own factory. Manufacturers selling their own products at 
 place of manufacture not required to pay special tax as dealers in tobacco. 
 Manufacturers are not permitted to pack stamped packages of smoking to- 
 bacco or stamped caddies of plug tobacco between the chime and the head 
 or bottom of such packages. (T. D. 19765.) 
 
 (6) Dealers in leaf tobacco who improperly qualify as manufacturers of 
 cigars for the purpose of dealing in cigar cuttings, and who made no cigars 
 last year, are not liable to special tax as manufacturers of cigars, but such 
 persons will be required to close their business as cigar manufacturers and 
 may qualify as manufacturers of tobacco. (T. D. 19801.) 
 
 (7) Dealers in leaf tobacco, and manufacturers of tobacco or cigars, 
 who were not engaged in business last fiscal year, required on commencing 
 business to pay minimum rate of special tax, and when sales during the 
 year reach an amount requiring payment of higher rate, will make return 
 and pay tax at the higher rate. (T. D. 19822.) 
 
 (8) Persons who have qualified as manufacturers of tobacco for the 
 sole purpose of handling and dealing in stems, refuse scraps, cuttings, clip- 
 pings, and sweeping of tobacco are required to register and pay the minimum 
 rate of special tax imposed on manufacturers of tobacco. (T. D. 19844.) 
 
 (9) Manufacturers of tobacco, snuff, or cigars may, under special per- 
 mit, * * * sell stemmed or unstemmed leaf tobacco to other qualified 
 manufacturers of tobacco, snuff, _ or cigars without being required to register 
 and pay special tax as dealers in (leaf) tobacco. Special permits are only 
 granted when it is ascertained that the manufacturer has material on hand 
 which he finds not suitable for his business. (T. D. 19876.) 
 
 (10) A farmer who sells and delivers leaf tobacco of his own raising 
 is not required to make return or pay special tax as dealer in leaf tobacco. 
 (T. D. 19962.) 
 
 (11) Auction sales of tobacco in warehouses, or at "tobacco breaks," 
 subject to tax same as upon sales of "any products or merchandise at any 
 exchange or board of trade, or other similar place." (T. D. 19972.) 
 
 (12) No provision of law by which a special-tax stamp issued to one 
 person can be transferred to and made use of by any other person, except 
 in the single instance of the death of the special-tax payer, expressly pro- 
 vided for by section 3241. Revised Statutes. (T. D. 20153.) 
 
 (13) Where farmer or producer brings product to market and sells it 
 in his own name through an auctioneer, the sales will come within the scope 
 of a sale made at an auction house, and stamp tax and memorandum of sale 
 is not required. (T. D. 20236.) 
 
 (14) Under existing law the farmer or grower of tobacco has the right 
 to sell tobacco of his own growth and raising to any person and in any quan- 
 tity which may be desired, provided its condition has not been changed in any 
 manner. This is a personal privilege and can not be delegated by him to 
 another person. The farmer can not employ another person to travel from 
 place to place to sell and deliver tobacco to consumers, nor has he the right 
 to place the tobacco in the hands of another person to be sold for him to 
 consumers, but he may place it in the hands of a qualified dealer in leaf to- - 
 bacco to be sold on commission to other qualified dealers, or to manufac- 
 turers of tobacco or cigars, or to persons who buy leaf tobacco in nackae'es 
 for export. (T. D. 20482.) 
 
 (15) Warehousemen who sell leaf tobacco on commission are required 
 to pay special tax as leaf tobacco dealers; and if they neither acquire posses- 
 sion of, nor right or title to, leaf tobacco, which they sell on commission as 
 
 for others, they must also pay special tax as commercial brokers. 
 
 . ) 
 
 (16) A manufacturer purchasing large quantities of' leaf tobacco, ex- 
 ceeding the demands of his factory, for the purpose of reselling his surplus 
 to other manufacturers, must be regarded as engaged in and carrying 
 
 on 
 
WAR REVENUE LAW 
 
 the business of a dealer in leaf tobacco, and will be required to make return 
 and pay special tax as dealer in leaf tobacco at some place not connected 
 with the factory. (T. D. 20605.) 
 
 (17) Dealers in leaf tobacco who have several warehouses at which 
 they receive tobacco, and from which the same is delivered to the purchaser, 
 required to pay special tax at each place. (T. D. 20638.) 
 
 The imposing an additional tax on tobacco on which the tax had 
 already been paid is constitutional. Patton v. Brady, 184 U. S., 616. 
 
 ADHESIVE STAMPS 
 
 SEC. 5. That on and after the first day of December, nineteen Tax on bonds, 
 hundred and fourteen, there shall be levied, collected, and paid, for cates? ^tc. 06 ' 
 and in respect of the several bonds, debentures, or certificates of 
 stock and of indebtedness, and other documents, instruments, mat- 
 ters, and things mentioned and described in Schedule A of this Act, 
 or for or in respect of the vellum, parchment, or paper upon which 
 such instruments, matters, or things, or any of them, shall be written 
 or printed by any person or persons, or party who shall make, sign, . By whom paid, 
 or issue the same, or for whose use or benefit the same shall be made, 
 signed, or issued, the several taxes or sums of money set down in 
 figures against the same, respectively, or otherwise specified or set 
 forth in the said schedule. 
 
 REGULATIONS. 
 
 Section 5 of the act of October 22, 1914, provides under the title of ad- 
 hesive stamps, for the collection, on and after December 1, 1914, of certain 
 taxes on documents, instruments, and things mentioned and described in 
 Schedule A of said act, as follows : 
 
 STAMP DUTIES ON AND AFTER DECEMBER 1, 1914. 
 Schedule A. Documentary. 
 
 1. Bonds, debentures, or certificates of indebtedness of any associa- 
 
 tion, company, or corporation, on each $100 of face value or 
 fraction thereof $0.05 
 
 2. On each original issue of certificates of stock, whether on organi- 
 
 zation or reorganization, on each $100 of face value or frac- 
 tion thereof ^ 05 
 
 On all sales, agreements to sell, memoranda of sales, deliveries or 
 transfers of shares, or certificates of stock of any association or 
 corporation, on each $100 of face value or fraction thereof 02 
 
 3. Upon each sale, agreement to sell, or agreement of sale of any 
 
 products or merchandise at any exchange or board of trade, for 
 
 future delivery, for each $100 in value of said sale 01 
 
 And for each $100 or fractional part thereof in excess of $100. . . .01 
 
 4. Promissory notes (except bank notes issued for circulation), and 
 
 for each renewal of same, for a sum not exceeding $100 02 
 
 And for each additional $100, or fractional part thereof, in excess 
 of $100 02 
 
 5. Bills of lading, manifests, etc., issued by express companies, or 
 
 public carriers, etc., where a charge exceeding 5 cents is made, a 
 stamp to each of the value of 01 
 
 6. Bond, indemnifying, etc. (except those required in legal proceed- 
 
 ings), not otherwise provided for 50 
 
 7. Certificates of profits, or certificates or memoranda showing 
 
 interest in the property or accumulations of any association, 
 company, or corporation, and all transfers thereof, on each $100 
 
 of face value or fraction thereof 02 
 
 23 
 
WAR REVENUE LAW 
 
 8 Certificates of damage, or otherwise, and all other certificates or 
 
 documents issued by port warden or marine surveyor. ....... .~o 
 
 9. Certificates of any description required by law, not otherwis< 
 
 specified / ' ' '1 ' ' ' r J 
 
 10 Contract, broker's note, or memorandum of sale ot goods, o 
 
 chandise, stock, bonds, exchange, notes of hand, real estate, or 
 property of any kind, issued by brokers, etc., for each note or 
 memorandum of sale not otherwise provided for 10 
 
 11 Conveyance deed, instrument, or writing conveying lands, tene- 
 
 ments or other realty, etc., value over $100 and not exceeding 
 
 $500 50 
 
 For each additional $500 or fraction thereof 50 
 
 12. Entry of goods, wares, and merchandise in customhouse, not ex- 
 
 ceeding $100 in value 25 
 
 Exceeding $100 and not exceeding $500 50 
 
 Exceeding $500 in value l- 
 
 13. Entry for withdrawal of goods or merchandise from customs 
 
 bonded warehouse 50 
 
 14. Insurance, marine, inland and fire or lightning (except purely 
 
 co-operative or mutual), on each policy, or renewal, on amount 
 
 of premium charged on each $1 or fractional part 00^ 
 
 15. Insurance, casualty, fidelity, and guarantee, on each policy, on each 
 
 $1 or fractional part thereof of premium charged 00 V 2 
 
 16. Passage ticket, for each passenger sold in the United States for 
 
 passage by any vessel to a foreign port or place, cost not ex- 
 ceeding $30 1-00 
 
 More than $30 and not exceeding $60 3.00 
 
 More than $60 5.00 
 
 Cost not exceeding $10 exempt. 
 
 17. Power of attorney or proxy for voting at an election for officers 
 
 of any incorporated company or association, except religious, 
 charitable, literary societies, or public cemeteries 10 
 
 18. Power of attorney to sell or convey real estate or to rent or lease 
 
 the same, to collect or receive rent, to sell or transfer stock, 
 
 bonds, etc 25 
 
 (Papers used in the collection of pension, back pay, 'or bounty 
 claims, or claims for property lost in military or naval service 
 are exempt.) 
 
 19. Protest: Upon the protest of every note, bill of exchange, accept- 
 
 ance, check, or draft, or any marine protest 25 
 
 20. Telegraph and telephone messages : Every person, firm, or cor- 
 
 poration operating any telephone line or lines is required to - 
 make, within 30 days after the expiration of each month, a sworn 
 statement to the collector of the number of messages or con- 
 versations transmitted over their lines during preceding month 
 for which a charge of 15 cents or more was imposed, and for 
 each of such messages or conversations a tax shall be paid of.. 0.01 
 
 21. Every seat sold in a palace or parlor car and every berth sold in a 
 
 sleeping car, to be paid by the company selling the same 01 
 
 Under authority conferred upon the Commissioner of Internal Revenue 
 in section 22 of said act, the following adhesive stamps have been prepared: 
 
 Documentary stamps, Schedule A. */ 2 cent, 1 cent, 2 cents, 3 cents, 4 
 cents, 5 cents, 10 cents, 25 cents, 40 cents, 50 cents, 80 cents, $1, $2, $3, $5, 
 $10, $30, $50, $100, $500, $1,000. 
 
 Procurement of Adhesive Stamps. 
 
 All of the above stamps may be purchased from collectors and deputy 
 collectors of internal revenue. 
 
 In addition,_ provision has been made in the act for the delivery of stamps 
 by collectors _ without prepayment to any Assistant Treasurer of the United 
 States, depository of the United States, or postmaster, who may be required 
 to give bond for the value of stamps deposited with him. It is not manda- 
 tory upon the persons named to make the required bond and secure the 
 
 24 
 
WAR REVENUE LAW 
 
 stamps. When stamps are so furnished without prepayment, the post- 
 master or other officer is not entitled to any discount, but discount of 1 per 
 cent will be allowed to those who purchase to the amount of $100 of face 
 value at one time, paying cash therefor at the time of purchase or receipt, 
 either from the collector or the persons with whom stamps have been de- 
 posited without prepayment as noted in the foregoing. 
 
 Stamps to be affixed to articles manufactured in a foreign country and 
 imported into the United States may be purchased and forwarded to the place 
 of manufacture and there affixed to the articles before the same are packed 
 for importation. 
 
 And there shall also be levied, collected, and paid, for and in On perfumes, 
 respect to the preparations, matters, and things mentioned and c lcs> etc> 
 described in Schedule B of this Act, manufactured, sold, or removed 
 for sale, the several taxes or sums of money set down in words or 
 figures against the same, respectively, or otherwise specified or set 
 forth in Schedule B of this Act. 
 
 SEC. 6. That if any person or persons shall make, sign, or issue, or fa u e r n ^7tamp! 
 cause to be made, signed, or issued, any instrument, document, or 
 paper of any kind or description whatsoever, without the same being 
 duly stamped for denoting the tax hereby imposed thereon, or with- 
 out having thereupon an adhesive stamp to denote said tax, such 
 person or persons shall be deemed guilty of a misdemeanor, and 
 upon conviction thereof shall pay a fine of not more than $100, at 
 the discretion of the court. 
 
 SEC. 7. That if any person shall forge or counterfeit, or cause or penalty for 
 procure to be forged or counterfeited, any stamp, die, plate, or terfeftmg^tamps 
 other instrument, or any part of any stamp, die, plate, or other in- and d * es - etc - 
 strument which shall have been provided, or may hereafter be pro- 
 vided, made, or used in pursuance of this Act, or shall forge, coun- 
 terfeit, or resemble, or cause or procure to be forged, counterfeited, 
 or resembled, the impression, or any part of the impression, of any 
 such stamp, die, plate, or other instrument, as aforesaid, upon any 
 vellum, parchment, or paper, or shall stamp or mark, or cause or 
 procure to be stamped or marked, any vellum, parchment, or paper 
 with any such forged or counterfeited stamp, die, plate, or other 
 instrument, or part of any stamp, die, plate, or other instrument, as 
 aforesaid, with intent to defraud the United States of any of the 
 taxes hereby imposed, or any part thereof; or if any person shall 
 utter, or sell, or expose for sale, any vellum, parchment, paper, 
 article, or thing having thereupon the impression of any such coun- 
 terfeited stamp, die, plate, or other instrument, or any part of impressions of 
 any stamp, die, plate, or other instrument, or any such forged, stam P s or dies - 
 counterfeited, or resembled impression, or part of impression, as 
 aforesaid, knowing the same to be forged, counterfeited, or resem- 
 bled; or if any person shall knowingly use or permit the use of 
 any stamp, die, plate, or other instrument, which shall have been 
 so provided, made, or used as aforesaid, with intent to defraud the 
 United States ; or if any person shall fraudulently cut, tear, or re- Sale of p. a P. er > 
 
 , j . etc., containing 
 
 move, or cause or procure to be cut, torn, or removed, the impres- forged stamps or 
 sion of any stamp, die, plate, or other instrument which shall 
 have been provided, made, or used in pursuance of this Act from any 
 vellum, parchment, or, paper, or any instrument or writing charged or 
 
 25 
 
WAR REVENUE LAW 
 
 Removing im- 
 pressions etc. 
 
 Use of washed 
 
 or restored 
 stamps. 
 
 Possession of 
 washed or re- 
 stored stamps. 
 
 Punishment. 
 
 Cancellation of 
 stamps by user. 
 
 Penalty 
 failure. 
 
 for 
 
 chargeable with any of the taxes imposed by law ; or if any person 
 shall fraudulently use, join, fix, or place, or cause to be used, joined, 
 fixed, or placed, to, with, or upon any vellum, parchment, paper, or 
 any instrument or writing charged or chargeable with any of the 
 taxes hereby imposed, any adhesive stamp, or the impression of any 
 stamp, die, plate, or other instrument, which shall have been pro- 
 vided,' made, or used in pursuance of law, and which shall have been 
 cut, torn, or removed from any other vellum, parchment, or paper, 
 or any instrument or writing charged or chargeable with any of the 
 taxes imposed by law; or if any person shall willfully remove or 
 cause to be removed, alter or cause to be altered, the canceling or 
 defacing marks of any adhesive stamp with intent to use the same, 
 or to cause the use of the same, after it shall have been once used, 
 or shall knowingly or willfully sell or buy such washed or restored 
 stamp, or offer the same for sale, or give or expose the same to any 
 person for use, or knowingly use the same, or prepare the same with 
 intent for the further use thereof ; or if any person shall knowingly 
 and without lawful excuse (the proof whereof shall lie on the per- 
 son accused) have in his possession any washed, restored, or altered 
 stamp which has been removed from any vellum, parchment, paper, 
 instrument, or writing, then, and in every such case, every person 
 so offending, and every person knowingly and willfully aiding, abet- 
 ting, or assisting in. committing any such offenses as aforesaid shall 
 be deemed guilty of a misdemeanor, and, upon conviction thereof, 
 shall forfeit the said counterfeit stamps and the articles upon which 
 they are placed, and shall be punished by fine not exceeding $1,000, 
 or by imprisonment and confinement at hard labor not exceeding 
 five years, or both, at the discretion of the court. 
 
 SEC. 8. That in any and all cases where an adhesive stamp shall 
 be used for denoting any tax imposed by this Act, except as herein- 
 after provided, the person using or affixing the same shall write or 
 stamp thereupon the initials of his name and the date upon which 
 the same shall be attached or used, so that the same may not again 
 be used. And if any person shall fraudulently make use of an adhe- 
 sive stamp to denote any tax imposed by this Act without so effect- 
 ually canceling and obliterating such stamp, except as before men- 
 tioned, he, she, or they shall be deemed guilty of a misdemeanor, 
 and upon conviction thereof shall pay a fine of not exceeding $500, 
 or be imprisoned not more than six months, or both, at the discre- 
 tion of the court : 
 
 Cancellation of Documentary Stamps. 
 
 In any and all cases where an adhesive stamp shall be used for denoting 
 any tax imposed by Schedule A of the act of October 22, 1914, the person 
 using or affixing the same shall write or stamp thereon, with ink, the initials 
 of his name and the date (year, month, and day) in which the same shall be 
 attached or used; or shall, by cutting and canceling said stamp with a ma- 
 chine or punch, which will affix the initials and date as aforesaid, so deface 
 the stamp as to render it unfit for reuse. The cancellation by either method 
 should not so deface the stamp as to prevent its denomination and genuine- 
 ness from being readily determined. 
 
 In addition to the foregoing, stamps of the value of 10 cents or more 
 
 26 
 
WAR REVENUE LAW 
 
 shall have three parallel incisions made by some sharp instrument length- 
 wise through the stamp after the stamp has been attached to the document : 
 Provided, This will not be required where stamps are canceled by per- 
 foration. , 
 
 Documentary Stamps. 
 
 1. Documentary revenue stamps issued prior to October 22, 1914, under 
 former revenue laws can not be used for the payment of taxes required by 
 existing law, and the redemption or exchange of such old stamps is prohibited 
 by statute. 
 
 2. Ordinary postage stamps can not be used for the payment of any 
 internal-revenue taxes. 
 
 As adhesive stamps may be sold by any person and readily pass at their 
 face value in the market, provision has not been made for their exchange or 
 redemption by the Government. Where, however, such stamps are rendered 
 useless by gumming or sticking together in transit or otherwise without the 
 fault of the purchaser, they may be exchanged by a collector for other stamps 
 of exactly the same quantity and denomination. 
 
 4. Documentary and proprietary stamps can not be used interchange- 
 ably. Documentary stamps only must be used upon papers, documents, and 
 instruments subject to tax as provided in Schedule A. 
 
 5. Where a stamp of the proper denomination to pay the tax due on an 
 article or document can not be procured, two or more stamps may be used. 
 In such case as few stamps as possible should be attached, and each stamp 
 used should be canceled in the manner provided by regulation. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Approved : 
 
 BYRON R. NEWTON, 
 
 Acting Secretary of the Treasury. 
 
 Provided, That instead of cancellation by initials and date, the 
 stamps on the articles enumerated in Schedule B shall be so affixed 
 on the box, bottle, or package that in opening the same, or using the 
 contents thereof, the said stamp shall be effectually destroyed; and 
 in default thereof the party making default shall be liable to the 
 same penalty imposed for neglect to affix said stamp. as hereinbefore 
 prescribed in this Act. 
 
 Affixing Stamps. 
 
 Section 8 provides that instead of cancellation by initials and date, the 
 stamps on the articles enumerated in Schedule B shall be so affixed on the 
 box, bottle, or package that in opening the same or using the contents 
 thereof the said stamp shall be effectually destroyed, but section 22 author- 
 izes the Commissioner of Internal Revenue to prescribe such method of 
 cancelling stamps as he may deem expedient in lieu of the method provided 
 in the act. In pursuance of this requirement, where articles are sold to the 
 public in boxes, bottles, tins, or other similar packages without any other 
 covering, the stamp shall be so affixed to the box. bottle, tin, or other package 
 of such character that in opening the same the stamp will be destroyed. 
 Wliere the boxes, bottles, tins or other containers are usually offered to the 
 public in wrappers or cartons, the stamp shall be affixed in such manner as to 
 seal the wrapper or carton. In case of double-end cartons, the stamps shall be 
 affixed to the top end lapping over on the side. 
 
 There are some articles not usually offered to the public in cartons, 
 containing patent stoppers, etc., which make it impossible to affix a stamp in 
 the manner provided by law. Where it is clearly impracticable to affix the 
 stamp so that it will be destroyed in using the contents, the stamp may be 
 affixed upon one side or the bottom of the bottle. 
 
 Where articles subject to tax are usually displayed for sale in fancy or 
 expensive outer cases or containers to which it is impossible, without marring 
 
 27 
 
WAR REVENUE LAW 
 
 Promissory 
 note or bill of 
 exchange, giving 
 and acceptance 
 of, prohibited 
 unless stamped. 
 
 Penalty. 
 
 Sale of stamps 
 by postmaster, 
 etc. 
 
 Furnished 
 without prepay- 
 ment of costs. 
 
 Regulations. 
 
 Register, sale 
 and transfer of 
 unstamped in- 
 struments, etc., 
 forbidden. 
 
 Penalty. 
 
 the container, to affix the stamp in such manner as to break it on opening, 
 the stamp may be affixed in such place as will not mar the appearance of the 
 
 Where articles are usually offered for sale in small containers mounted 
 on cards, the stamp covering all articles affixed may be attached to the 
 
 Where several articles, all taxable or some taxable and some untaxable, 
 are packed together for sale as entireties, the stamp covering the tax on the 
 taxable contents may be placed on the container. 
 
 In all cases where the stamps are not so affixed as to be broken when 
 the container is opened, the stamp shall be canceled with the initials of the 
 manufacturer and the month and year. 
 
 SEC. 9. That if any person or persons shall make, sign, or issue, 
 or cause to be made, signed, or issued, or shall accept or pay, or 
 cause to be accepted or paid, with design to evade the payment of 
 any stamp tax, any promissory note liable to any of the taxes imposed 
 by this Act, without the same being duly stamped, or having there- 
 upon an adhesive stamp for denoting the tax hereby charged there- 
 on, he, she, or they shall be deemed guilty of a misdemeanor, and 
 upon conviction thereof shall be punished by a fine not exceeding 
 $200, at the discretion of the court. 
 
 SEC. 10. That the collectors of the several districts are hereby 
 authorized and required to furnish to any assistant treasurer of the 
 United States or designated depositary thereof, or any postmaster 
 located in their collection districts, respectively, a suitable quantity 
 of adhesive stamps, without prepayment therefor, and may in ad- 
 vance require of any designated depositary, assistant treasurer of the 
 United States, or postmaster a bond, with sufficient sureties, to an 
 amount equal to the value of the adhesive stamps which may be 
 placed in his hands and remain unaccounted for, conditioned for the 
 faithful return, whenever so required, of all quantifies or amounts 
 undisposed of, and for the payment monthly of all quantities or 
 amounts sold or not remaining on hand. And it shall be the duty of 
 such collectors to supply their deputies with, or sell to other parties 
 within their respective districts who may make application therefor, 
 adhesive stamps, upon the same terms allowed by law or under the 
 regulations of the Commissioner of Internal Revenue, who is hereby 
 authorized to make such other regulations, not inconsistent herewith, 
 for the security of the United States and the better accommodation 
 of the public, in relation to the matters hereinbefore mentioned, as 
 he may judge necessary and expedient. And the Secretary of the 
 Treasury may from time to time make such regulations as he may 
 find necessary to insure the safe-keeping or prevent the illegal use of 
 all such adhesive stamps. 
 
 SEC. 11. That any person or persons who shall register, issue, 
 sell, or transfer, or who shall cause to be issued, registered, sold, or 
 transferred, any instrument, document, or paper of any kind or 
 description whatsoever mentioned in Schedule A of this Act, with- 
 out the same being duly stamped, or having thereupon an adhesive 
 stamp for denoting the tax chargeable thereon, and canceled in the 
 manner required by law, with intent to evade the provisions of this 
 Act, shall be deemed guilty of a misdemeanor, and upon conviction 
 thereof shall be punished by a fine not exceeding $50, or by im- 
 
 28 
 
WAR REVENUE LAW 
 
 prisonment not exceeding six months, or both, in the discretion of 
 the court: 
 
 Provided, That hereafter, in all cases where the party has not 
 affixed to any instrument the stamp required by law thereon at the 
 time of issuing, selling, or transferring the said bonds, debentures, instruments - 
 or certificates of stock or of indebtedness, and he or they, or any 
 party having an interest therein, shall be subsequently desirous of 
 affixing such stamp to said instrument, or, if said instrument be lost, 
 to a copy thereof, he or they shall appear before the collector of 
 internal revenue of the proper district, who shall, upon the payment 
 of the price of the proper stamp required by law, and of a penalty 
 of $10, and, where the whole amount of the tax denoted by the Tax penalty, 
 stamp required shall exceed the sum of $50, on payment also of in- 
 terest, at the rate of six per centum, on said tax from the day on 
 which such stamp ought to have been affixed, affix the proper stamp 
 to such bond, debenture, certificate of stock or of indebtedness or 
 copy, and note upon the margin thereof the date of his so doing, 
 and the fact that such penalty has been .paid ; and the same shall 
 thereupon be deemed and held to be as valid, to all intents and pur- 
 poses, as if stamped when made or issued : 
 
 And provided further, That where it shall appear to said collec- instruments 
 
 , J ^ '. . J _. ,. , . , . not stamped by 
 
 tor, upon oath or otherwise, to his satisfaction, that any such mstru- mistake or acci- 
 ment has not been duly stamped, at the time of making or issuing dent< 
 the same, by reason of accident, mistake, inadvertence, or urgent 
 necessity, and without any willful design to defraud the United States 
 of the stamp, or to evade or delay the payment thereof, then and in 
 such case, if such instrument, or, if the original be lost, a copy 
 thereof, duly certified by the officer having charge of any records 
 in which such original is required to be recorded, or otherwise duly 
 proven to the satisfaction of the collector, shall, within twelve cal- 
 endar months after the making or issuing thereof, be brought to the 
 said collector of internal revenue to be stamped, and the stamp tax o{ a 
 chargeable thereon shall be paid, it shall be lawful for the said may?? re'mtte 
 collector to remit the penalty aforesaid and to cause such instrument 
 to be duly stamped. And when the original instrument, or a certified 
 or duly proven copy thereof, as aforesaid, duly stamped so as to enti- 
 tle the same to be recorded, shall be presented to the clerk, register, 
 recorder, or other officer having charge of the original record, it 
 shall be lawful for such officer, upon the payment of the fee legally 
 chargeable for the recording thereof, to make a new record thereof, New record 
 or to note upon the original record the fact that the error or omis- ? T paym< 
 sion in the stamping of said original instrument has been corrected 
 pursuant to law; and the original instrument or such certified 
 copy, or the record thereof, may be used in all courts and places in 
 the same manner and with like effect as if the instrument had been 
 originally stamped : 
 
 And provided further, That in all cases where the party has not ^StaSfUin. 
 
 affixed the stamp required by law upon any such instrument issued, there is no coi- 
 registered, sold, or transferred at a time when and at a place where 
 no collection district was established, it shall be lawful for him or 
 
 29 
 
WAR REVENUE LAW 
 
 not affected. 
 
 them, or any party having an interest therein, to affix the proper 
 stamp thereto, or, if the original be lost, to a copy thereof. But 
 no right acquired in good faith before the stamping of such instru- 
 ment, or copy thereof, as herein provided, if such record be required 
 Accrued rights bv law, shall in any manner be affected by such stamping as 
 
 ^*- nf*.s*4-**A * I 
 
 aforesaid. 
 
 A mortgage may be registered, although unstamped, provided the 
 bond or note which is given to secure has been stamped. 22 A. G., 
 Op. 533. 
 
 Unstamped instruments are not invalid for lack of stamp, unless the 
 failure to attach the stamp was intentionally done with intent to evade 
 payment of the tax. Weinkert v. Ziegler, 91 Md., 318; Bryan v. First 
 National Bank, 205 Pa., St. 7; Rowe v. Bowman, 183 Mass., 488; T. D. 
 (1902) 474. 
 
 An unstamped forged instrument is admissible in a criminal action 
 for forgery. State v. Shields (la.) 83, N. W., 807; Bottorff v. Lewis (la.) 
 95 N. W., 262. 
 
 SEC. 12. That hereafter no instrument, paper, or document re- 
 quired by law to be stamped, which has been signed or issued with- 
 out being duly stamped, or with a deficient stamp, nor any copy 
 thereof, shall be recorded until a legal stamp or stamps, denoting 
 the amount of tax, shall have been affixed thereto, as prescribed by 
 law; 
 
 Provided, That any bond, debenture, certificate of stock, or cer- 
 tificate of indebtedness issued in any foreign country shall pay the 
 same tax as is required by law on similar instruments when issued, 
 sold, or transferred in the United States ; and the party to whom the 
 same is issued, or by whom it is sold or transferred, shall, before 
 selling or transferring the same, affix thereon the stamp or stamps 
 indicating the tax required. 
 
 SEC. 13. That it shall not be lawful to record or register any in- 
 strument, paper, or document required by law to be stamped unless 
 a stamp or stamps of the proper amount shall have been affixed and 
 canceled in the manner prescribed by law. 
 
 SEC. 14. That no instrument, paper, or document required by law 
 to be stamped shall be deemed or held invalid and of no effect for 
 the want of a particular kind or description of stamp designated for 
 and denoting the tax charged on any such instrument, paper, or 
 document, provided a legal documentary stamp or stamps denoting 
 a tax of equal amount shall have been duly affixed and used thereon. 
 
 SEC. 15. That all bonds, debentures, or certificates of indebtedness 
 issued by the officers of the United States Government, or by the 
 officers of any State, county, town, municipal corporation, or other 
 corporation exercising the taxing power, shall be, and hereby are, 
 exempt from the stamp taxes required by this Act : 
 
 Provided, That it is the intent hereby to 'exempt from the stamp 
 taxes imposed by this Act such State, county, town, or other munici- 
 pal corporations in the exercise only of functions strictly belonging 
 to them in their ordinary governmental, taxing, or municipal 
 capacity : 
 
 30 
 
 Recording _ of 
 unstamped i n- 
 struments f o r- 
 bidden. 
 
 Bonds, stock 
 certificates is- 
 sued in foreign 
 countries sub- 
 ject to tax. 
 
 Unlawful to re- 
 cord instrument 
 unless stamps of 
 proper amount 
 are affixed and 
 cancelled. 
 
 Instrument not 
 invalid for want 
 of particular 
 kind of stamp. 
 
 State, munici- 
 pal corporations, 
 etc., exercising 
 governmental 
 function, etc. 
 
WAR REVENUE LAW 
 
 Provided further, That stock and bonds issued by cooperative ^ of k b * ^ 
 building and loan associations, mutual ditch or irrigating companies, ing. and loan as- 
 and building and loan associations or companies that make loans 
 only to their shareholders, shall be exempt from the tax herein 
 provided. 
 
 (T. D. 2044.) 
 
 Emergency revenue law Building and loan associations. 
 
 The exemption of co-operative building and loan associations extends only 
 to stocks and bonds issued by such associations or companies. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 9, 1914. 
 
 SIR: This office is in receipt of your letter of the 26th ultimo 
 in reference to liability of building and loan associations or compa- 
 nies under the internal-revenue act of October 22, 1914. 
 
 In reply, you are informed that the exemption extended by the 
 revenue act of October 22, 1914, to cooperative building and loan 
 associations, etc., extends only to stocks and bonds issued by such 
 associations or companies. 
 
 The law appears clear on this subject in that it specifies "stocks 
 and bonds issued by," etc., and thereby excludes from such exemp- 
 tion all other taxable instruments which may be executed or deliv- 
 ered by the associations or companies contained in the provision. 
 
 Respectfully, W. H. OSBORN, 
 
 Mr. - . Commissioner of Internal Revenue. 
 
 SEC. 16. That all the provisions of this Act relating to dies, 
 stamps, adhesive stamps, and stamp taxes shall extend to and include 
 (except where manifestly inapplicable) all the articles or objects 
 enumerated in Schedule B, subject to stamp taxes, and apply to the 
 provisions in relation thereto. 
 
 SEC. 17. That on and after December first, nineteen hundred and 
 fourteen, any person, firm, company, or corporation that shall make, 
 prepare, and sell, or remove for consumption or sale, perfumery, 
 cosmetics, preparations, compositions, articles, or things upon which 
 a tax is imposed by this Act, as provided for in Schedule B, without 
 affixing thereto an adhesive stamp or label denoting the tax before 
 mentioned shall be deemed guilty of a misdemeanor, and upon con- 
 viction thereof shall pay a fine of not more than $500, or be impris- . Penalty for 
 
 , r / . , . I , f failure to affix 
 
 oned not more than six months, or both, at the discretion of the stamps to per- 
 
 t fumery prepara- 
 
 ll - tions, etc. 
 
 SEC. 18. That any manufacturer or maker of any of the articles 
 for sale mentioned in Schedule B, after the same shall have been 
 so made and the particulars hereinbefore required as to stamps have 
 been complied with, or any other person who shall take off, remove, 
 or detach, or cause, or permit, or suffer to be taken off, or removed 
 or detached, any stamp, or who shall use any stamp, or any wrapper Removal or 
 or cover to which any stamp is affixed, to cover any other article 81 * 
 
 31 
 
WAR REVENUE LAW 
 
 Penalty. 
 
 Sale 'er re- 
 moval or con- 
 cealment of ar- 
 ticles before pay- 
 ment of tax. 
 
 Penalty. 
 
 Articles for 
 exportation ex- 
 empted. 
 
 Monthly state- 
 ment of manu- 
 facturer of com- 
 p 1 i a n c e with 
 stamp tax. 
 
 Penalty. 
 
 or commodity than that originally contained in such wrapper or 
 cover, with such stamp when first used, with the intent to evade the 
 stamp duties, shall for every such article, respectively, in respect 
 of which any such offense shall be committed, be deemed guilty of 
 a misdemeanor, and upon conviction thereof shall pay a fine of not 
 more than $500, or be imprisoned not more than six months, or 
 both, at the discretion of the court, and every such article or -com- 
 modity as aforesaid shall also be forfeited. 
 
 SEC. 19. That any maker or manufacturer of any of the articles 
 or commodities mentioned in Schedule B, as aforesaid, or any other 
 person who shall sell, send out, remove, or deliver any article or 
 commodity, manufactured as aforesaid, before the tax thereon shall 
 have been fully paid by affixing thereon the proper stamp, as in this 
 Act provided, or who shall hide or conceal, or cause to be hidden or 
 concealed, or who shall remove or convey away, or deposit, or cause 
 to be removed or conveyed away from or deposited in any place, any 
 such article or commodity, to evade the tax chargeable thereon, or 
 any part thereof, shall be deemed guilty of a misdemeanor, and upon 
 conviction thereof shall pay a fine of not more than $500, or be 
 imprisoned not more than six months, or both, at the discretion of 
 the court, together with the forfeiture of any such article or com- 
 modity ; 
 
 Provided, That articles upon which stamp taxes are required by 
 this Act may, when intended for exportation, be manufactured and 
 sold or removed without having stamps affixed thereto, and without 
 being charged with tax as aforesaid; and every manufacturer or 
 maker of any article as aforesaid* intended for exportation, shall 
 give such bonds and be subject to such rules and regulations to 
 protect the revenue against fraud as may be from time to time pre- 
 scribed by the Commissioner of Internal Revenue, with the approval 
 of the Secretary of the Treasury. 
 
 SEC. 20. That every manufacturer or maker of any of the articles 
 or commodities provided for in Schedule B, or his foreman, agent, 
 or superintendent shall at the end of each and every month make, 
 sign, and file with the collector of internal revenue for the district 
 in which he resides a declaration in writing that no such article or 
 commodity has, during such preceding month or time when the last 
 declaration was made, been removed, or carried, or sent, or caused 
 or suffered or known to have been removed, carried, or sent from the 
 premises of such manufacturer or maker other than such as have 
 been duly taken account of and charged with the stamp tax, on pain 
 of such manufacturer or maker forfeiting for every refusal or 
 neglect to make such declaration $100; and if any such manufac- 
 turer or maker, or his foreman, agent, or superintendent, shall make 
 any false or untrue declaration, such manufacturer or maker, or 
 foreman, agent, or superintendent making the same shall be deemed 
 guilty of a misdemeanor, and upon conviction shall pay a fine of 
 not more than $500, or be imprisoned not more than six months, 
 or both, at the discretion of the court. 
 
 SEC. 21. That the stamp taxes prescribed in this Act on the 
 
 32 
 
WAR REVENUE LAW 
 
 articles provided for in Schedule B shall attach to all such articles 
 and things sold or removed for sale thirty days after the approval of 
 this Act. Every person, except as otherwise provided in this Act, 
 who offers or exposes for sale any article or thing provided for in 
 said Schedule B, whether the article so offered or exposed is of for- 
 eign manufacture and imported or of domestic manufacture, shall 
 be deemed the manufacturer thereof, and shall be subject to all the 
 taxes, liabilities, and penalties imposed by law for the sale of articles 
 without the use of the proper stamp denoting the tax paid thereon; 
 and all such articles of foreign manufacture shall, in addition to the 
 import duty imposed on the same, be subject to the stamp tax pre- 
 scribed in this Act : 
 
 Provided further, That internal revenue stamps required by ex- 
 isting law on imported merchandise shall be affixed thereto and 
 canceled at the expense of the owner or importer before the with- 
 drawal of such merchandise for consumption, and the Secretary 
 of the Treasury is authorized to make such rules and regulations 
 as may be necessary for the affixing and canceling of such stamps, 
 not inconsistent herewith. 
 
 SEC. 22. That the Commissioner of Internal Revenue shall cause 
 to be prepared and distributed for the payment of the taxes pre- 
 scribed in this Act suitable stamps denoting the tax on the docu- 
 ment, article, or thing to which the same may be affixed, and he is 
 authorized to prescribe such method for the cancellation of said 
 stamps, as substitute for or in addition to the method provided in 
 this Act, as he may deem expedient. The Commissioner of Internal 
 Revenue, with the approval of the Secertary of the Treasury, is 
 authorized to procure any of the stamps provided for in this Act by 
 contract whenever such stamps can not be speedily prepared by the 
 Bureau of Engraving and Printing; but this authority shall expire 
 on the first day of November, nineteen hundred and fifteen, except 
 as to imprinted stamps furnished under contract, authorized by the 
 Commissioner of Internal Revenue. That the adhesive stamps used 
 in the payment of the tax levied in Schedules A and B of this Act 
 shall be furnished for sale by the several collectors of internal reve- 
 nue, who shall sell and deliver them at their face value to all persons 
 applying for the same, except officers or employees of the Internal 
 Revenue Service : 
 
 Provided, That such collectors may sell and deliver such stamps 
 in quantities of not less than $100 of face value, with a discount of 
 one per centum, except as otherwise provided in this Act. 
 
 Schedule B 
 Tax operative 30 
 days after ap- 
 proval of Act. 
 
 Stamps to be 
 prepared. 
 
 Contracts for. 
 
 Stamps for 
 sale by collect- 
 ors. 
 
 One per cent- 
 um discount on 
 purchase of 
 stamps. 
 
 SCHEDULE A 
 STAMP TAXES 
 
 Bonds, debentures, or certificates of indebtedness issued on and tur ^ n o r ' cer 
 after the first day of December, nineteen hundred and fourteen, by oat* of imiebt- 
 any association, company, or corporation, on each $100 of face value edness 
 or fraction thereof, 5 cents, and on each original issue, whether on 
 organization or reorganization, of certificates of stock by any such 
 association, company, or corporation, on each $100 of face value or su e 
 
 33 
 
WAR REVENUE LAW 
 
 fraction thereof, 5 cents, and on all sales, or agreements to sell, or 
 Shares or cer- memoranda of sales or deliveries or transfers of shares or cer- 
 tificates of stock. tificates stoc k- j n anv association, company, or corporation, 
 
 whether made upon or shown by the books of the association, com- 
 pany, or corporation, or by any assignment in blank, or by any 
 delivery, or by any paper or agreement or memorandum or other 
 evidence of transfer or sale, whether entitling the holder in any 
 manner to the benefit of such stock, or to secure the future payment 
 of money or for the future transfer of any stock, on each $100 of 
 face value or fraction thereof, 2 cents : 
 
 Sales of Transfer of Stock. 
 
 (13) In reckoning the stamp tax on transfer or certificates of stock, the 
 tax is reckqned on the face value. In reckoning this tax, the fact that only 
 part of the face value of shares subscribed for and issued has been paid by 
 the shareholders is not to be taken into consideration. 
 
 (14) Where stock is sold at the par value of $100, and upon which it 
 appears that only $25 have been paid, the tax is to be reckoned upon the 
 face value of $100, and not upon the $25. 
 
 (15) W T here one certificate represents several shares, the tax of 2 cents 
 on each $100 or fraction thereof is to be reckoned on the face value of the 
 certificate, and not on the face value of each separate share. 
 
 (16) On transfer of one certificate representing 500 shares, $5 par value, 
 the stamp tax required is 50 cents. 
 
 (17) When stock is transferred for which no certificate has been issued, 
 and the evidence of transfer is shown only by books of the company, the 
 stamps should be placed upon such books. Where the change of owner- 
 ship is by the transfer of a certificate, and the certificate contains a blank 
 form of assignment on the back, which is filled in by the insertion of the 
 name of the person to whom the stock is transferred, the stamp should 
 be placed upon the certificate. 
 
 (18) In case of an agreement to sell, or where the transfer is, by the de- 
 livery of the certificate, signed in blank, the name of the transferee or ven- 
 dee to be filled in afterwards, there should be made and delivered by the 
 seller to the buyer a bill or memorandum of sale, to which the stamp should 
 be affixed. 
 
 (19) Where certificates of shares were sold and delivered before July 
 1, 1898, entry of transfer on corporate books after June 30 does not require 
 stamp. 
 
 (20) New certificates of stock issued to holder in lieu of original cer- 
 tificate, and remaining in his ownership, do not require stamps. 
 
 (21) When certificate of stock is sold and stamp tax is paid on memoran- 
 dum thereof, upon transfer of this certificate to purchaser's name no ad- 
 ditional tax for such transfer is required. Where one certificate represents 
 several shares of stock (however large the number of shares), on transfer 
 of this certificate the stamp tax is to be reckoned on its face value and 
 not on the face value of each separate share of stock which it represents. 
 
 (22) Transfers of stock from parties occupying fiduciary relationships 
 to those for whom they held the stock are transfers subject to taxation. 
 
 (23) A owes a certificate of 100 shares of stock; he transfers 50 shares 
 to B ; there are two certificates of 50 shares each issued in lieu of the 100- 
 share certificate, 50 shares going to A and 50 shares to B. The tax imposed 
 is on the transfer to B ; there is no tax on A's transfer to himself. 
 
 po^nTstock^s Provided, That it is not intended by this Act to impose a tax upon 
 coital ex- an agreement evidencing a deposit of stock certificates as collateral 
 security for money loaned thereon, which stock certificates are not 
 actually sold, nor upon such stock certificates so deposited : 
 
 Where written instruments or securities deposited in a bank are to 
 
 34 
 
WAR REVENUE LAW 
 
 Transfer of 
 ownership by de- 
 
 be held as collateral for a loan or indebtedness of the owner it is 
 not taxable under this paragraph. 23 A. G., Op. 219. 23 A. G., Op. 54. 
 
 Stock hypothecated by delivery of certificates without a written agree- 
 ment accompanying it is not taxable under this paragraph. 22 A. G., 
 Op. 54. 
 
 Pledging of stock under a written agreement which contains a power 
 of sale on default of condition is- taxable. 23 A. G., 616. A tax on sales 
 is constitutional. U. S. v. Thomas, 115 Fed. Rep., 207. 
 
 Bonds provided for in a mortgage , are not taxable until issued. 22 
 A. G., Op. 532. 
 
 Provided further, That in case of sale where the evidence of sta ^ p e k d s . to be 
 transfer is shown only by the books of the company the stamp shall 
 be placed upon such books ; and where the change of ownership is 
 by transfer certificate the stamp shall be placed upon the certificate ; 
 and in cases of an agreement to sell or where the transfer is by 
 delivery of the certificate assigned in blank there shall be made and iivery, method of 
 delivered by the seller to the buyer a bill or memorandum of such stam P in &- 
 sale, to which the stamp shall be affixed; and every bill or memo- 
 randum of sale or agreement to sell before mentioned shall show 
 the date thereof, the name of the seller, the amount of the sale, and 
 the matter or thing to which it refers. And any person or persons 
 liable to pay the tax as herein provided, or anyone who acts in the 
 matter as agent or broker for such person or persons, who shall 
 make any such sale, or who shall in pursuance of any such sale 
 deliver any such stock, or evidence or the sale of any such stock or 
 bill or memorandum thereof, as herein required, without having the 
 proper stamps affixed thereto, with intent to evade the foregoing 
 provisions, shall be deemed guilty of a misdemeanor, and upon con- 
 viction thereof shall pay a fine of not exceeding $1,000, or be im- Penalty, 
 prisoned not more than six months, or both, at the discretion of the 
 court. 
 
 (1) When a bond is said to be issued. Whenever a corporation issues a 
 bond, and there accrues to the corporation a benefit or consideration for 
 issuing the same, the bond is subject to taxation. (Vol. 2, Treas. Dec. (1898), 
 No. 20156.) 
 
 (2) Stamp tax; certificates of stock; sales and transfers of certificates 
 of stock. (Vol. 2, Treas. Dec. (1898), No. 19607). 
 
 (3) In reckoning the stamp tax on transfers of certificates of shares, 
 the tax is reckoned on the face value. (Vol. 2, Treas. Dec. (1898), No. 
 19710.) 
 
 (4) Transfers of shares or certificates of stock; how stamps are to be 
 attached; stamp tax to be reckoned on face value of certificate. (Vol. 2, 
 Treas. Dec. (1898), No. 19888.) 
 
 (5) Transfers of stock from guardian to ward subject to taxation. 
 (Vol. 2, Treas. Dec. (1898), No. 20070.) 
 
 (6) Preferred stock issued in lieu of common stock not taxable when 
 there is no change of ownership. (Vol. 1, Treas. Dec. (1898), No. 20694.) 
 
 (7) Where brokers acting in behalf of their principals buy stock and 
 receive stamped bills of sale in their own name, they may transfer such 
 stock on the books of the corporation to the names of their principals with- 
 out additional stamp tax. (Vol. 1, Treas. Dec. (1899), No. 20727.) 
 
 (8) Certificates of stock of a foreign corporation when sold or delivered 
 within the United States are liable to the same tax as certificates of stock 
 of any domestic corporation. (Vol. 1, Treas. Dec. (1899), No. 20793.) 
 
 (9) "Puts" and "calls." The Attorney General decided that the former 
 are not subject to tax, but that the latter, being agreements to sell, are tax- 
 able. (Vol. 1, Treas. Dec. (1899), No. 21151.) 
 
 35 
 
WAR REVENUE LAW 
 
 Sales or agree- 
 ments to sell 
 products at ex- 
 changes or 
 boards of trade. 
 
 Memorandum 
 of sale to be 
 stamped. 
 
 Form of. 
 
 Penalty. 
 
 (10) When a certificate of stock is presented for transfer and the power 
 of attorney on the back thereof is dated prior to July 1, 1898, although the 
 name of the transferee is not filled in until after that date, both the power 
 of attorney and the certificate are required to be stamped. (Vol. 1, Treas. 
 Dec. (1899), No. 21277.) 
 
 (11) No tax on the closing of a stock transaction caused by margin be- 
 ing exhausted because of market going against speculator. (Vol. 2, Treas. 
 Dec. (1899), No. 21707.) 
 
 (12) The circumstances under which the memoranda issued by brokers 
 evidencing the sale or purchase of stock need or need not be stamped. (Vol. 
 2, Treas. Dec. (1899), No. 21711.) 
 
 Upon each sale, agreement of sale, or agreement to sell, any prod- 
 ucts or merchandise at any exchange, or board of trade, or other 
 similar place, either for present or future delivery, for each $100 
 in value of said sale or agreement or sale or agreemnt to sell, 1 
 cent, and for each additional $100 or fractional part thereof in 
 excess of $100, 1 cent. 
 
 Provided, That on every sale or agreement of sale or agreement 
 to sell as aforesaid there shall be made and delivered by the seller to 
 the buyer a bill, memorandum, agreement, or other evidence of such 
 sale, agreement of sale, or agreement to sell, to which there shall be 
 affixed a lawful stamp or stamps in value equal to the amount of the 
 tax on such sale. And every such bill, memorandum, or other 
 
 After an agreement to sell stock on future delivery, no delivery is 
 made but a settlement is had, such settlement not involving a re-sale 
 does not require new memorandum and stamps. McClain v. Fleshman, 
 106 Fed. Rep., 880. 
 
 Unless a memorandum or instrument required by this paragraph is 
 made a stamp tax can not be collected and the remedy of the govern- 
 ment is on the penalty. McClain v. Fleshman, 106 Fed. Rep., 880. 
 
 A "call," being agreement to sell, is taxable. Treat v. White, 181 
 U. S., 265. ^ 
 
 The tax imposed by this paragraph is constitutional. Nichol v. Ames, 
 173 U. S., 510. 
 
 Sales of live stock at stockyards are included. 
 
 evidence of sale or agreement to sell shall show the date thereof, the 
 name of the seller, the amount of the sale, and the matter or thing 
 to which it refers ; and any person or persons liable to pay the tax 
 as herein provided, or anyone who acts in the matter as agent or 
 broker for such person or persons, who shall make any such sale or 
 agreement of sale, or agreement to sell, or who shall, in pursuance 
 of any such sale, agreement of sale, or agreement to sell, deliver 
 any such products or merchandise without a bill, memorandum, or 
 other evidence thereof as herein required, or who shall deliver such 
 bill, memorandum, or other evidence of sale, or agreement to sell, 
 without having the proper stamps affixed thereto, with intent to 
 evade the foregoing provisions, shall be deemed guilty of a misde- 
 meanor, and upon conviction thereof shall pay a fine of not exceeding 
 $1,000, or be imprisoned not more than six months, or both, at the 
 discretion of the court. 
 
 That no bill, memorandum, agreement, or other evidence of such 
 sale, or agreement of sale, or agreement to sell, in case of products 
 or merchandise actually delivered at the time of sale or while in 
 vessel, boat, or car, and actually in course of transportation, shall be 
 
 36 
 
WAR REVENUE LAW 
 
 subject to this tax, provided such bill, memorandum, agreement, or 
 other evidence of such sale, or agreement or sale, or agreement to 
 sell shall be accompanied by bills of lading or vouchers showing that 
 the said products are actually in course of transportation as afore- 
 said. 
 
 SAI,E OF PRODUCTS OR MERCHANDISE ON EXCHANGE, ETC. 
 
 (24) The provision relative to sales, or agreements to sell, of products 
 or merchandise at any exchange or board of trade, or other similar place, 
 and requiring the seller to give a bill or memorandum which shall be stamped, 
 declared constitutional. 
 
 (25) Sales of live stock at stock yards come within the law, the same 
 being a similar place to an exchange or board of trade. 
 
 (26) The tax is not a direct tax, nor a tax upon the business itself 
 which is so transacted, but is a duty upon the facilities made use of and 
 actually employed in the transaction of the business, separate and apart from 
 the business itself. (Nicol v. Ames, 173 U. S., 509; vol. 1, Theas, Dec. 
 (1899), No. 20984.) 
 
 (27) Transactions of live-stock exchanges Duty of exchanges, when 
 sale is made, or an agreement of sale, or an agreement to sell entered into, 
 to give to buyer a bill, memorandum, or other evidence of such sale, and to 
 place thereon the required stamp. (Vol. 2, Treas. Dec. (188), No. 19739.) 
 
 (28) Tax on sales "at any exchange, or board of trade, or other similar 
 place;" live stock comes within the classification of "any products or mer- 
 chandise;" similar place" defined in reference to the selling of live stock; 
 sales of live stock at such places as those defined subject to taxation. (Vol. 
 2, Treas. Dec. (1898), No. 20031.) 
 
 (29) To constitute an exchange, board of trade, or other similar place, 
 so as to subject the evidence of sale to tax, there must be more than one 
 person, company, or partnership authorized to negotiate sales thereat. (Vol. 
 1, Treas. Dec. (1899), No. 21148.) 
 
 (30) Bucket shops defined; tax on agreements to sell shares of stock 
 or merchandise at such places. (Vol. 1, Treas. Dec. (1899), No. -21279.) 
 
 (31) Sales of grain made at an exchange and sales of grain made by 
 brokers in their own offices, held taxable. (Vol. 2, Treas. Dec. (1899), No. 
 21396.) 
 
 (32) Transactions of live-stock exchanges Duty of exchanges, when 
 sale is made, or an agreement of sale, or an agreement to sell entered into, 
 to give to buyer a bill, memorandum, or other evidence of such sale, and to 
 place thereon the required stamp. (T. D. 19739.) 
 
 Promissory notes, except bank notes issued for circulation, and 
 for each renewal of the same, for a sum not exceeding $100, 2 cents ; 
 and for each additional $100 or fractional part thereof in excess of 
 $100, 2 cents. 
 
 PROMISSORY NOTES. 
 
 Promissory notes, except bank notes issued for circulation, and for each 
 renewal of the same, for a sum not exceeding $100, 2 cents; and for each 
 additional $100 or fractional part thereof in excess of $100, 2 cents. 
 
 (33) A judgment note is a promissory note and is required to be stamped 
 as such. (T. D. 19652.) 
 
 (34) Receipts accepted in lieu of promissory note, as evidence of money 
 loaned, must be stamped as promissory notes. (T. D. 20985.) 
 
 (35) Promissory notes under seal taxable same as other promissory 
 notes, and not as bonds. T. D. 21691 revoked. (T. D. 21815.) 
 
 (36) Checks used in lieu of promissory notes must be stamped at the 
 rate of 2 cents per $100. (Vol. 2, Treas. Dec. (1898), No. 20463.) 
 
 Following rulings are taken from Supplement to Internal Revenue Cir- 
 cular No. 503, dated August 16, 1898: 
 
 (37) Where a note or notes with detached interest-coupon notes are 
 
 37 
 
WAR REVENUE LAW 
 
 given, each coupon note requires a stamp in addition to the stamp placed 
 on the principal note. 
 
 (38) Interest coupons attached to bonds and surrendered as receipts 
 for interest paid do not require a stamp. 
 
 (39) Nd stamp is required upon the transfer by indorsement . 
 issory notes. 
 
 (40) Where notes secured by a deed of trust are used as collateral, the 
 deed of trust and the notes are required to be stamped not on the basis of 
 their face value, but on the amount for which they are pledged (that is to 
 say, the memorandum of their pledge must be so stamped). This pledge of 
 notes and deed trust does not require to be stamped again because of re- 
 newals of the notes held as collateral if the pledge itself is not renewed. 
 (Pledges not taxable under act of Oct. 22, 1914.) 
 
 (41) Promissory notes which have matured and have been allowed to 
 run without suit are held not to be renewed by the payment of interest. 
 This is looked upon as a "forbearance" and not a renewal, the holder not 
 relinquishing his right of action for any stated period. 
 
 Bills .of lading Express and freight: It shall be the duty of every railroad or 
 steamboat company, carrier, express company, or corporation or per- 
 son whose occupation is to act as such, to issue to the shipper or 
 consignor, or his agent, or person from whom any goods are accepted 
 for transportation where a charge exceeding 5 cents is made a bill 
 of lading, manifest, or other evidence of receipt and forwarding for 
 each shipment received for carriage and transportation, whether in 
 bulk or in boxes, bales, packages, bundles, or not so inclosed or h> 
 cluded; and such shipper, consignor, agent, or person shall duly 
 attach and cancel, as is in this Act provided, to each of said bills of 
 lading, manifests, or other memorandum, a stamp of the value of 1 
 cent: 
 
 EXPRESS AND FREIGHT BILLS OF LADING, ETC. 
 
 United States v. Wells, Fargo & Co. Express (96 Fed., 835). 
 Crawford v. Hubbell (89 Fed., 961). 
 
 (42) The common carrier shall issue bills of lading, manifest, or other 
 evidence of receipt and forwarding. "Shipment" defined! On a through bill 
 of lading it is one shipment, though several modes of conveyance are em- 
 ployed. Every separate shipment requires evidence that it has been made, 
 and to the evidence the stamp is affixed. (Vol. 2, Treas. Dec. (1898), No. 
 19829.) 
 
 (43) Opinion of the Attorney General, August 17, 1898, on the ques- 
 tion whether the word "goods" includes money : Where an express com- 
 pany receives money for transportation, it is regarded as "goods" under 
 Schedule A, and a bill of lading must be issued therefor and a stamp affixed. 
 (Vol. 2, Treas. Dec. (1898), No. 19970.) 
 
 (44) Receipts, bills of lading, or manifests issued by express companies 
 in cases of shipment of money and securities of the United States Govern- 
 ment under contract for transportation of same are subject to stamp tax 
 under act of 1898. (Vol. 2, Treas. Dec. (1898), No. 19996.) 
 
 (45) The Attorney General holds that the law which makes it the duty 
 of the carrier to issue a bill of lading or a receipt to a person from whom 
 any goods are accepted for transportation, and to stamp the same, does not 
 apply to baggage received by railroad companies and carried upon the same 
 train with the owner, whether such baggage be the quantity allowed or- 
 dinarily by the rules of the railroad company or is in excess of such amount. 
 (Vol. 2. Treas. Dec. (1898), No. 20169.) 
 
 (46) Exemption from tax of express matter carried for railroad com- 
 pany free under contract with express company. (Vol. 2, Treas. Dec. 
 (1898). No. 20240.) 
 
 (47) Memorandum receipts for freight, afterwards exchanged for bills 
 of lading, must be stamped when issued. (Vol. 2, Treas. Dec. (1899) No. 
 21688.) 
 
 38 
 
WAR REVENUE LAW 
 
 (48) Concerning the business of local expressmen and common car- 
 riers. (Vol. 2, Treas. Dec. (1899), No. 21692.) 
 
 (49) No tax on receipts issued for special-delivery baggage. T. D. 
 21668 revoked. (T. D. 13.) 
 
 (50) When tax is paid on general bundle of newspapers, each pack- 
 age in the general bundle which is taken therefrom and delivered at in- 
 termediate points does not require a stamp. (T. D. 19846.) 
 
 (51) Dray tickets or shipping receipts not surrendered for a stamped 
 bill of lading must be themselves stamped. (T. D. 19887.) 
 
 (52) Tax on bills of lading or receipts for goods accepted for trans- 
 portation by express and freight companies Definition of "express business" 
 within the meaning of the law. (T. D. 19965.) 
 
 (53) Bills of lading or receipts from transportation companies may 
 include more than one shipment therein, provided that a stamp or stamps 
 amounting in value to 1 cent for each shipment shall be affixed thereto and 
 canceled. (T. D. 20194.) 
 
 (T. D. 2059.) 
 
 Emergency revenue law Bills of lading. 
 
 It is the duty of the carrier to see that the stamp is duly affixed and canceled 
 when the bill of lading is issued and delivered to the shipper. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 18, 1914. 
 
 SIR: This office is in receipt of your letter of the 14th instant, calling 
 attention to the provision of the internal-revenue act of October 22, 1914, 
 relative to bills of lading. 
 
 You inquire whether the whole duty of the railroad company is performed 
 when it issues such bill of lading, or whether it is the duty of the railroad 
 company not only to issue the bill of lading but to refuse to accept the ship- 
 ment until the shipper affixes the necessary internal-revenue stamp and can- 
 cels it as required by law. 
 
 In reply, you are informed that this matter has received consideration, 
 and it is the opinion of this office that it is the duty of the railroad company 
 to see that the stamp is duly affixed and canceled when the bill of lading 
 is issued and delivered to the shipper. 
 
 In reply to your other inquiries in regard to messages sent over the lines 
 on the railroad, you are informed that messages or dispatches of the officers 
 or employees concerning the affairs and service of the company sent over the 
 wires on their respective railroads are exempt. If they do not relate to the 
 business of the company, the exemption does not apply. 
 
 Respectfully, 
 
 ROBT. WILLIAMS, JR., 
 
 Actinq Commissioner of Internal Revenue. 
 Mr. . 
 
 (T. D. 2065) 
 
 Emergency revenue laze Bills of lading. 
 
 The law requiring bills of lading to be stamped does not apply to local 
 operators for the delivery of packages, baggage, and such like, within 
 the limits of the same town or city. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 23, 1914. 
 
 SIR: In reply to your letter of the 13th instant, you are informed that 
 mere local operators for the delivery of packages, baggage, and such like, 
 within the limits of the same town or city, are not required to give bills of 
 lading. Although such operators may give a receipt for articles to be deliv- 
 ered, such receipt is not required to be stamped. A mere carrier, as, for in- 
 stance, a person with a horse and wagon, who does a local delivery business 
 
 39 
 
WAR REVENUE LAW 
 
 in a city or town, is not included within the above requirement. The car- 
 riers which were intended to be included within the terms of Schedule A, 
 under the head of "Express and freight," are such as are engaged in the 
 transportation of express matter and freight from one place to another in 
 the ordinary course of commerce and trade. 
 Respectfully, 
 
 ROBT. WILLIAMS, JR., 
 
 Acting Commissioner of Internal Revenue. 
 Mr. . 
 
 The* tax on foreign bills of lading is unconstitutional as a tax on 
 exports. Fairbanks v. United States, 181 U. S., 284. 
 
 Goods shipped from the United States to Canada or Mexico by rail 
 are not taxable under this paragraph. 24 A. G., Op. 44. 
 
 The word "goods" includes money. 22 A. G., Op. 178. This applies 
 to money and goods transported for the government under a contract. 
 
 An excess baggage receipt issued by a railroad company does not re- 
 quire a stamp. 22 A. G., Op. 246. 
 
 Goods carried by an express company for a railroad company over 
 the lines of the latter, free of charge, are not subject to this paragraph. 
 22 A. G., 252. 
 
 The tax on the manifest of a ship for clearance for a foreign port 
 is void as a tax on exports. New York & Cuba Mail S. S. Co. v. United 
 States, 125 Fed. Rep., 320. 
 
 No liability is imposed on a carrier for refusal to accept goods. Wil- 
 kins v. United States, 96 Fed. Rep., 835. 
 
 The carrier is not required to pay the tax itself. American Express 
 Co. v. Michigan, 177 U. S., 404. Reversing Attorney General v. American 
 Express Co., 77 N. W., 317. 
 
 But this paragraph does not prevent a state commission from fixing 
 rates in such a manner that the carrier must pay the tax itself. Trammel! 
 v. Dinsmore, 102 Fed. Rep. 794, reversing Dinsmore v. Southern Express 
 Co., 92 Fed. Rep., 714; also 183 U. S., 116. 
 
 Freight and Express Receipts. 
 
 Paragraph 5 of Schedule A requires every railroad or steamboat com- 
 pany, carrier, express company, or corporation or person whose occupation 
 is to act as such, to issue to the shipper or consignor, or his agent, or person 
 from whom any goods are accepted for transportation when a charge ex- 
 ceeding 5 cents is made a bill of lading, manifest, or other evidence of receipt 
 and forwarding for each shipment received. 
 
 A literal compliance with this requirement is in some cases impracticable 
 or impossible. 
 
 It is, therefore, provided that where freight is accepted at nonagency 
 stations, it must be receipted for by conductors accepting it. He must see 
 to it that an internal-revenue stamp of 1 cent denomination is attached to 
 each of such receipts and canceled as required by these regulations before 
 such shipments are accepted for transportation: Provided, however, That in 
 the event shipments, so offered are of a perishable nature, or are likely to 
 deteriorate by delay, or to obstruct sidings or other facilities by being refused 
 for lack of a compliance with the provisions of the act, or if snippers or their 
 representatives are not at such nonagency stations to receive or to stamp such 
 receipts, conductors may accept and transport such nonagency shipments to 
 destination in advance of the affixing of the stamp. In such cases, receipts 
 issued by the conductors must not be surrendered to the shipper, but must 
 be delivered with the freight to the destination agent, who, in such cases, 
 must present the consignor's receipt to the consignee and demand that it be 
 stamped and the stamp canceled by him as agent for the shipper before 
 delivery of the shipment. If a nonagency shipment be destined to another 
 nonagency station, and the tax is not paid by the shipper, the conductor's 
 receipt therefor must be indorsed "Stamp tax not paid," and it must be 
 delivered with the freight to the agent at the nearest agency station to the 
 destination of the shipment for execution and delivery of the receipt by and 
 to the consignee. If a nonagency shipment, upon which the tax is not paid 
 
 \ 
 
WAR REVENUE LAW 
 
 by the shipper, be destined to a point on another railway, the agent at the 
 junction point at which the shipment is delivered to the connecting line must 
 indorse on the delivery slip or manifest for such shipment "Stamp tax not 
 paid," which delivery slip shall follow to the delivery station, the agent at 
 which shall collect the tax before delivery of the freight. 
 
 Shipments of milk or cream, consisting of one or more cans, shipped 
 by one shipper to one consignee on the same date and train to which milk 
 or cream tickets are attached, will be regarded as one shipment, and to one 
 of the milk tickets a stamp must be affixed, unless other evidence of receipt 
 is issued, in which case the other evidence shall be properly stamped. 
 
 Switching tickets covering local switching orders for which a charge is 
 made, covered by no bill of lading, will be regarded and stamped as evi- 
 dences of receipt. 
 
 Dray tickets, or shippers tickets, will be regarded and stamped as evi- 
 dences of receipt, unless surrendered for a bill of lading. 
 
 Baggage checks for the transportation of bicycles, dogs, baby carriages, 
 etc., will be regarded as evidences of receipt and should be properly stamped. 
 
 No stamp is required upon Federal and State Government shipments of 
 Government or State property, for which, if a stamp were issued, the Federal 
 Government or State government would be required to pay. 
 
 Passage Tickets. . 
 
 A tax is imposed on tickets sold in the United States for passage by any 
 vessel to a foreign port where the amount charged is in excess of $10, and 
 whether the vessel for which the ticket is sold sails from a port of the 
 United States or not. It is the duty of the person selling the ticket to affix 
 and cancel the stamp to the ticket or paper which evidences the sales, namely, 
 the coupon or order, at the time same is sold. 
 
 Where a single ticket is issued for transportation of more than one 
 passenger, the ticket, coupon, or prepaid order must be stamped at the proper 
 rate for each passenger based upon the number of passengers and the total 
 amount paid for the transportation. 
 
 Where proxies are sent out by corporations to be executed and returned 
 to the corporation or to the person named in proxy, such proxies may be 
 stamped after execution and delivery by the person receiving same as the 
 agent of the person executing the proxy. 
 
 Provided, That a consignment of newspapers to any one point ?ut one re- 
 
 1 . rr . , .. . i i 1 quired on bun- 
 
 or to different points by the same tram or conveyance when inclosed dies of news- 
 
 in one general bundle at the point of shipment shall be considered as papers - 
 
 one shipment, an, in lieu of a bill of lading therefor, the publisher 
 
 of such newspaper shall file on or before the fifteenth day of each 
 
 month with the collector of internal revenue for the district in 
 
 which such newspaper is published a report under oath showing the 
 
 number of such shipments during the preceding month, to which 
 
 report such publisher shall affix and cancel stamps equal in value to 
 
 1 cent for each shipment so reported : 
 
 Provided further, That the report herein required shall not include 
 shipments of newspapers delivered to points within the county in 
 which the same are published. Any failure to issue such bill of 
 lading, manifest, or other memorandum, as herein provided, shall 
 subject such railroad or steamboat company, carrier, express com- 
 pany, or corporation or person to a penalty of $50 for each offense. 
 
 Telegraph and telephone messages : It shall be the duty of every Telephone 
 person, firm, or corporation owning or operating any telegraph or r 
 telephone line or lines to make within thirty days after the expiration 
 of each month a sworn statement to the collector of internal revenue 
 in each of their respective districts, stating the number of dispatches, 
 
 41 
 
WAR REVENUE LAW 
 
 Monthly state- 
 ment. 
 
 One cent tax. 
 
 But one tax 
 to be imposed. 
 
 Messages of of- 
 ficers and em- 
 ployes exempt. 
 
 messages, or conversations originated at each of their respective 
 exchanges, toll stations, or offices, and transmitted thence over their 
 lines during the preceding month for which a charge of 15 cents or 
 more was imposed, and for each of such messages or conversations 
 the said person, firm, or corporation shall collect from the person 
 paying for the message or conversation a tax of 1 cent in addition 
 to the regular charges for the message or conversation, which tax 
 the said person, firm, or corporation shall in turn pay to the said 
 collector of internal revenue of their respective districts : 
 
 Provided, That only one payment of said tax shall be required, 
 notwithstanding the lines of one or more persons, firms, or corpora- 
 tions shall be used for the transmission of each of said messages or 
 conversations : 
 
 Provided further, That the messages or dispatches of the officers 
 and employees of any telegraph or telephone company concerning 
 the affairs and service of the company, and like messages or dis- 
 patches of the officials and employees of railroad companies sent 
 over the wires on their respective railroads shall be exempt from 
 this requirement: 
 
 And provided -further, That messages of officers and employees of 
 the Government on official business shall be exempt from the taxes 
 herein imposed upon telegraphic and telephonic messages. 
 
 (T. D. 2058.) 
 
 Emergency revenue law Telegraph and telephone messages. 
 
 Law and instructions relative to the tax imposed on telegraph and telephone 
 
 messages by the act of October 22, 1914, effective December 1, 1914. 
 
 TREASURY DEPARTMENT, 
 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 on, D. (,., November 13, 
 
 Instructions. 
 
 1. A company shall make one report and one return for the company 
 as a whole and not for each of its exchanges and toll stations separately. 
 Such report and return shall be made to the collector of internal revenue of 
 the district in which the company's principal office is located. 
 
 2. Every company shall include in its report all taxable messages orig- 
 inated by it without regard to the ownership of toll lines used in transmitting 
 those messages. Telephone companies receiving messages to be retransmitted 
 over the lines of a telegraph company, or telegraph companies receiving mes- 
 sages to be retransmitted over the line of a telephone company, will be re- 
 garded as the point where such messages originate. In such cases the com- 
 pany retransmitting such messages will not be required to include the same 
 in its monthly return. Where, however, a message sent over a telephone line 
 is received directly from the sender, the company receiving and transmitting 
 the same will, in such case, be regarded as the point of origin, and will in- 
 clude all such taxable messages in its 'monthly return. A reversed message 
 shall be considered as originating at the point of collection. 
 
 3. Reports and returns may be made by a company for its fiscal month 
 or billing period to be filed within 30 days after expiration of fiscal month, 
 provided full return is made for the period during which the tax is to be 
 collected. 
 
 4. Additions may be made any month for errors on the previous month's 
 reports and returns. Reductions covering items reported in excess in previous 
 months not allowable. In such cases amended returns may be filed before 
 assessment is made, otherwise claim for abatement or refund, as the case 
 may be, should be filed. 
 
 5. Messages originating at automatic telephone stations, for each of 
 
 42 
 
WAR REVENUE LAW 
 
 which a charge of 15 cents or more was made, are subject to tax, and com- 
 panies owning or operating such stations must include all such messages in 
 their monthly returns. The method of collecting the tax from the senders 
 of such messages is a matter wholly within the province of the companies 
 receiving and transmitting the messages. 
 
 6. All overtime telephone messages, where the initial rate is less than 
 15 cents, but the total charge, on account of the overtime, brings the charge 
 to 15 cents or more, are subject to tax. 
 
 7. Messages transmitted over private leased circuits and relating ex- 
 clusively to the business for which the circuit was leased are held to be 
 exempt from tax. Where, however, any such leased circuit is used for the 
 transmission of messages other than above stated, return for all such mes- 
 sages for which a charge of 15 cents or more would ordinarily be made must 
 be rendered monthly by tne lessee. 
 
 8. Messages or dispatches of officers and employees 'of the company 
 concerning the affairs and service of the company, and like messages or dis- 
 patches of officials and employees of railroad companies sent over the wires 
 on their respective railroads, are exempt from tax. Franked messages, if 
 of a private character, for which a charge of 15 cents or more would other- 
 wise be charged, do not come within the exemption above referred to, and 
 should be included in the return made. 
 
 9. Messages of officers and employees of the United States Government 
 on official business and like messages of State officials are exempt from tax. 
 
 ROBT. WILUAMS, JR., 
 
 Acting Commissioner of Internal Revenue. 
 Approved. 
 
 W. G. McAooo, 
 
 Secretary of the Treasury. 
 
 Regulations. 
 
 1. A company shall make one report and one return for the company 
 as a whole and not for each of its exchanges and toll stations separately; such 
 report and return shall be made to the collector of internal revenue of the 
 district in which the company's principal office is located. 
 
 2. Every company shall include in its report all taxable messages origi- 
 nated by it without regard to the ownership* of toll lines used in transmit- 
 ting those messages. Telephone companies receiving messages to be re- 
 transmitted over the lines of a telegraph company, or telegraph companies 
 receiving messages to be retransmitted over the line of a telephone company, 
 will be regarded as the point where such messages originate. In such cases 
 the company retransmitting such messages will not be required to include 
 the same in its monthly return. Where, however, a message sent over a 
 telephone line is received directly from the sender, the company receiving and 
 transmitting the same will, in such case, be regarded as the point of origin, 
 and will include all such taxable messages in its monthly return. A reversed 
 message shall be considered as originating at the point of collection. 
 
 3. Reports and returns may be made by a company for its fiscal month 
 or billing period to be filed within 30 days after expiration of fiscal month, 
 provided full return is made for the period during which the tax is to be 
 collected. 
 
 4. Additions may be made any month for errors on the previous 
 month's reports and returns. Reductions covering items reported in excess 
 in previous months not allowable. In such cases amended returns may be 
 filed before assessment is made, otherwise claim for abatement or refund, as 
 the case may be, should be filed. 
 
 5. Messages originating at automatic telephone stations for each of 
 which a charge of 15 cents or more was made are subject to tax, and com- 
 panies owning and operating such stations must include all such messages in 
 their monthly returns. The method of collecting the tax from the senders 
 of such messages is a matter wholly within the province of the companies 
 receiving and transmitting the messages. 
 
 6. All overtime telephone messages where the initial rate is less than 
 15 cents, but the total charge, on account of the overtime, brings the charge 
 to 15 cents or more, are subject to tax. 
 
 43 
 
WAR REVENUE LAW 
 
 7. Messages transmitted over private leased circuits and relating exclu- 
 sively to the business for which the circuit was leased are held to be exempt 
 from tax. Where, however, any such leased circuit is used for the trans- 
 mission of messages other than above stated, return for all such messages 
 for which a charge of 15 cents or more would ordinarily be made must be 
 rendered monthly by the lessee. 
 
 8. Messages or dispatches of officers and employees of the company 
 concerning the affairs and service of the company, and like messages or dis- 
 patches of officials and employees of railroad companies sent over the wires 
 on their respective railroads, are exempt from tax. Franked messages, if of 
 a private character, for which a charge of 15 cents or more would otherwise 
 be charged, do not come within the exemption above referred to, and should 
 be included in the return made. 
 
 9. Messages of officers and employees of the United States Government 
 on official business, and like messages of State officials, are exempt from 
 tax. 
 
 Messages or dispatches of officials and employees of railroad companies 
 sent over wires not on their respective roads, for which a charge of 15 cents 
 or more is made (including pro rata charges on messages sent in excess of 
 free messages allowed under contracts with such railroads), are subject to 
 tax. 
 
 A telegraph company is not required to send a message on which 
 the sender has not affixed the stamp. Kirk v. Western Union Tel. Co., 
 90 Fed. Rep., 809. Western Union Tel. Co. v. Henley (1901), 157 Ind. 50. 
 
 TELEGRAPH AND TELEPHONE MESSAGES. 
 
 (54) Exemption in favor of dispatches sent by State officers in dis- 
 charge of their official duties. (T. D. 19704.) 
 
 (55) Telegraphic messages of railroad companies concerning the affairs 
 and service of the companies, when exempt. (T. D. 19794.) 
 
 (56) Exemption from stamp tax of telegrams of foreign diplomatic 
 officers residing in this country. (T. D. 20060.) 
 
 (57) Telegraph messages of associated steamship lines, or fast freight 
 lines operating over railroads, not entitled to exemption from stamp tax 
 under section 18, act of June 13, 1898. (T. D. 20066.) 
 
 (58) The fact that an individual holds a telegraph frank has no bear- 
 ing upon the question of liability or nonliability to stamp tax of the mes- 
 sage sent by such frank holder. (T. D. 20066.) 
 
 Bonds. Bond : For indemnifying any person or persons, firm, or corpora- 
 
 tion who shall have become bound or engaged as surety for the pay- 
 ment of any sum of money, or for the due execution or performance 
 of the duties of any office or position, and to account for money 
 received by virtue thereof, and all other bonds of any description 
 except such as may be required in legal proceedings, not otherwise 
 provided for in this schedule, 50 cents. 
 
 INDEMNITY OR OTHER BONDS. 
 
 (59) Bonds of municipal officers required to be stamped. (Vol. 2, Treas. 
 Dec. (1898), No. 19686.) 
 
 (60) Tax on renewal of bonds of fidelity companies taking effect on or 
 after July 1, 1898. (Vol. 2, Treas. Dec. (1898), No. 19845.) 
 
 (61) Tax on bonds required before a person can enter on the duties of 
 a State office not a tax on the functions of a State government. (Vol. 1, 
 Treas. Dec. (1899), No. 20510.) 
 
 (62) Bonds of notaries public are subject to a tax. (Vol. 1, Treas. Dec. 
 (1899), No. 20547.) 
 
 (63) Dramshop bonds. (United States v. Ambrosini, vol. 3, Treas. Dec. 
 (1900), Int. Rev. No. 40.) 
 
 (64) Bonds required in legal proceedings. Bonds of administrators, 
 executors, guardians, and receivers appointed by the courts not taxable. (Vol. 
 1, Treas. Dec. (1899), No. 20756.) 
 
 (65) Opinion of the Attorney General that bonds given by private in- 
 
 44 
 
WAR REVENUE LAW 
 
 clividuals secured by mortgages are taxable as bonds of any description not 
 otherwise provided for, and not as promissory notes. (Vol. 1, Treas. Dec. 
 (1899), No. 20788.) 
 
 (66) Bonds given under section 3297, Revised ^Statutes, by officers of 
 State institutions for alchohol to be used for scientific purposes not subject 
 to stamp tax. (Vol. 1, Treas. Dec. (1899), No. 20876.) 
 
 (67) Stamps required on bonds of distillers, brewers, and other manu- 
 facturers, when given in duplicate or triplicate, only the original to be 
 stamped. Modification of Treasury ruling No. 19707, of July 18, 1898. (Vol. 
 1, Treas. Dec. (1899), No. 21312.) 
 
 (68) Guaranties accompanying proposals taxable the same as bonds. 
 (Vol. 2, Treas. Dec. (1899), No. 21609.) 
 
 (69) Bonds of industry, and fidelity and guaranty insurance. (Vol. 
 3, Treas. Dec. (1900), Int. Rev. No. 15.) 
 
 (70) Warehousing bonds taxable under Schedule A, act of June 13, 
 1898. (T. D. 19609.) 
 
 (71) Instructions in regard to stamping bonds of brewers, manufacturers 
 of tobacco, manufacturers of cigars, distillers, etc. (T. D. 19707.) 
 
 (72) Bonds issued by guaranty companies in Canada guaranteeing the 
 fidelity of employees, individuals, or corporations in the United States. (T. 
 D. 19738.) 
 
 (73) When a bond is said to be issued Whenever a corporation issues 
 a bond and there accrues to the corporation a benefit or consideration for 
 issuing the same the bond is subject to taxation. (T. D. 20156.) 
 
 (74) Bond or private person secured by mortgage considered in rela- 
 tion to opinion of the Attorney General and amendment to Schedule A, 
 approved February 28, 1899. (T. D. 20796.) 
 
 (75) Where fidelity or guaranty companies become sureties on bonds", 
 tax is due and payable whenever the premiums are paid. Method of paying 
 tax. Tax on renewal of bonds. (T. D. 21666.) 
 
 (76) The conveyance used under the statutes of the State of Georgia 
 in cases where the payment of a debt is secured by pledging of real estate 
 is taxable under the paragraph in Schedule A relating to mortgage or pledge. 
 The "bond to reconvey" is subject to a tax of 50 cents. (T. D. 21667.) 
 
 (77) A bond filed by order of court to obtain a decree or order for 
 the sale of real estate is a bond given in a legal proceeding and is exempt 
 from tax. 
 
 (78) Bonds given by public officers, such as sheriffs, clerks, registers 
 or recorders of deeds treasurers of counties, cities, or towns, or other public 
 officers of like character are required to be stamped. 
 
 (79) Mere agreements to build houses are not taxable, but if bonds are 
 included for the faithful performance of work or contracts, they are held 
 to be subject to tax as bonds. 
 
 (80) Bonds issued by guaranty companies in Canada guaranteeing the 
 fidelity of employees, of individuals, or corporations in the United States, 
 executed and delivered in Canada, are not taxable, but if they are not valid 
 until countersigned or delivered by the agent in the United States, they 
 should be stamped. 
 
 (81) Marriage bond requires a stamp of 50 cents. 
 
 (82) Bonds "required in legal proceedings" are exempt from stamp tax. 
 
 Bonds required by the City of Chicago or State of Illinois as a con- 
 dition precedent to granting a liquor license are not taxable. Ambrosini v. 
 United States, 187 U. S., 1; United States y. Owens, 100 Fed. Rep., 70. 
 
 A bond required by a notary as qualification for office is exempt. 
 Warwick v. Bettman, 102 Fed. Rep., 127, affirmed 108 Fed. Rep., 46. 
 
 Certificate of profits, or any certificate or memorandum showing r o| t r s tifi e t a c te of 
 an interest in the property or accumulations of any association, com- 
 pany, or corporation, and on all transfers thereof, on each $100 of 
 face value or fraction thereof, 2 cents. 
 
 45 
 
WAR REVENUE LAW 
 
 Certificate of Certificate : Any certificate of damage, or otherwise, and all other 
 certificates or documents issued by any port warden, marine sur- 
 veyor, or other person acting as such, 25 cents. 
 
 Certificates Certificate of any description required by law not otherwise speci- 
 
 not enumerated. 1Q 
 
 CERTIFICATES. 
 
 (83) Liability for recording or registering documents required by law 
 to be stamped, unless stamps are affixed and canceled. (T. D. 19681.) 
 
 (84) Certain certificates made by national banking associations not 
 liable. (T. D. 19698. 
 
 (85) Stamping certificates of damage to vessels, 25-cent stamp required 
 on originals but none on copies. (T. D. 19706.) 
 
 (86) Letters of administration and other probate papers, certificates of 
 sale for unpaid taxes, and certificates of redemption, no stamp required. 
 (T. D. 19837.) 
 
 (87) Teachers' certificates issued by State or county officers do not re- 
 quire a stamp Certificates required by law, issued by State officers at re- 
 quest of private persons, solely for private use, require a stamp. (T. D. 
 19883.) 
 
 (88) Certificates of inspection of steam vessels and all copies thereof 
 are exempt from taxation. (T. D. 20387.) 
 
 (89) Certificates of authority issued to insurance agents by State of- 
 ficers are subject to taxation, and the rate imposed is 10 cents on each certifi- 
 cate. (T. D. 20551.) 
 
 (90) Certificates as to use of alcohol withdrawn from bond for scien- 
 tificate purposes under section 3297, Revised Statutes, held to be not subject 
 to ;gtamp tax under act of June 13, 1898. (T. D. 20980.) 
 
 (91) Certificates attached to depositions to be used in legal proceedings 
 not taxable. (T. D. 9.) 
 
 Following rulings are taken from supplement to Internal Revenue Cir- 
 cular No. 503, dated August 16, 1898: 
 
 (92) Certificates required by law issued by any department or officer 
 of the Government at the request of private persons, solely for private use, 
 should be stamped. The stamp should be furnished by the person applying 
 for the instrument and for whose use and benefit the same is issued, and 
 should be affixed before the document is delivered. 
 
 (93) Certificates of officers of the United States given in the discharge 
 of official functions necessary in carrying on the machinery of the Gov- 
 ernment are exempt. 
 
 (94) Certificates issued by an officer of the State, in the interest of the 
 State, are not liable to tax. 
 
 (95) Any documents, the stamping of which would make it necessary 
 that the State should furnish and affix the stamp, are held to be exempt 
 from the stamp tax. 
 
 (96) Return of birth, certificate of death, and certificates of the regis- 
 trar as to the facts declared concerning birth, marriage, and death are none 
 of them held to be subject to the stamp tax imposed upon certificates, in 
 view of the fact that these certificates are given in pursuance of State laws 
 for public purposes. 
 
 (97) Certificates issued by the health officer of New York, under State 
 statute, relative to the employment of children, are exempt, being issued 
 in the discharge of a duty connected with the operations of the Govern- 
 ment. 
 
 (98) A marriage certificate, to be returned to any officer of a State, 
 county, city, or town, to constitute part of a public record, requires no stamp. 
 A marriage certificate issued by the officiating clergyman or magistrate and 
 given to the parties, if required by law, must be stamped at the rate of 
 10 cents. 
 
 (99) A teacher's certificate issued by a county superintendent of public 
 instruction or other officer of State, county, or municipality comes within the 
 exemption provided by section 17 of the act, and does not require a stamp. 
 
 46 
 
WAR REVENUE LAW 
 
 These certificates, given under regulations adopted in connection with public 
 schools, are held to be for governmental purposes rather than for private 
 use. 
 
 (100) A mercantile license or liquor dealer's license, being a certificate 
 required by the law of a State or ordinance of a city in the exercise of the 
 functions governmental, taxing, or municipal of the State or corporation, 
 comes within the exemption. 
 
 (101) Inspectors and weighers of grain who give certificates under 
 State laws are not required to stamp such certificates. They are exempt 
 under section 17. 
 
 (102) No stamp is required upon certificates of the sufficiency of sure- 
 ties upon bonds. 
 
 (103) A stamp is required on a certificate of incorporation. 
 
 (104) The certificate of a clerk of court to the qualifications of a 
 notary public, or justice of the peace, is held to be a certificate requiring 
 a stamp. 
 
 (105) An architect's certificate requires no stamp, unless, by an in- 
 dorsement, it becomes an order for the payment of money. 
 
 (106) A certificate of acknowledgment to a deed where the con- 
 sideration of the deed is $100 or less, or to a mortgage where the con- 
 sideration is $1,000 or less, does not require a stamp. (See also No. 119.) 
 
 (107) Certificates issued at tax sale or certificates of redemption from 
 tax sale do not require stamps. 
 
 (108) Certificate of "proof of loss" for use of an insurance company, 
 being a statement made as to the facts and circumstances attending a fire, 
 is not a certificate requiring a stamp. 
 
 (109) Certificates required by law, which are made by court officers 
 unnder the direction and authority of the court, and which are necessary to 
 give proper effect to the court proceedings, are exempt. 
 
 (110) Court processes, such as summonses, writs of attachment, sub- 
 poenas, warrants, orders of court, etc., are not required to be stamped. 
 
 (111) Certificates of protest of every note, bill of exchange, etc., 
 whether protested by a notary public or by any officer duly authorized by 
 law, must be stamped. 
 
 Rulings from Circular No. 503, revised November 14, 1898 : 
 
 (112) "Certificates of any description required by law not otherwise 
 specified in this act, 10 cents." The first requirement necessary to sub- 
 ject any given certificate thus generally described to tax is that it shall 
 be one which is required to be given by law, national, State, or municipal. 
 All such are taxable those coming within the exemption of section 17 
 that is to say, those which are given strictly in the exercise of the func- 
 tions govermental, taxing, or municipal of the State or corporation. 
 
 (113) Certificates given by an officer, not for a public or governmental 
 purpose, but for private interests and use, are liable to the tax if they are 
 given in obediance to any law which requires them to be given when called 
 for. 
 
 (114) A certificate of search showing that the dockets or records of 
 a court have been searched, and show either that lines exist or do not 
 exist as to property, or that judgments are recorded or are not recorded, 
 and also certificates of search to ascertain whether or not titles are good, 
 whether taxes have been paid, and other certificates of this character are 
 not such as are required in the general discharge of governmental func- 
 tions on the part of the officers giving them, but are such as are needed 
 for private use and private interests, and are, therefore, subject to the 
 tax, as being required by law to be given when called for. 
 
 (115) If the act performed, or the certificate issued by the officer is 
 in the discharge of an official function necessary in operating the general 
 machinery of the Government, it is exempt. 
 
 (116) Certificates of acknowledgment of deeds and mortgages are not 
 required to be stamped. The memorandum on the back of a deed or mort- 
 gage, made by the register or recorder, that the instrument has been placed 
 upon record, is not subject to taxation. It is not a certificate such as is 
 contemplated by the law. It is a brief note on the back of the deed or 
 mortgage citing date of filing and date and place of record. 
 
 47 
 
Brokers' 
 tract. * 
 
 WAR REVENUE LAW 
 
 (117) Certificates of birth, marriage, and death, given in pursuance of 
 the laws of the State requiring the collection and registration of vital 
 statistics as a basis for the administration of public health laws, come 
 within the exemption of section 17. Such certificates, however, when is- 
 sued to private persons for private use, are subject to the 10-cent stamp 
 tax. 
 
 Contract : Broker's note, or memorandum of sale of any goods or 
 merchandise, stocks, bonds, exchange, notes of hand, real estate, or 
 property of any kind or description issued by brokers or persons 
 acting as such, for each note or memorandum of sale, not otherwise 
 provided for in this Act, 10 cents. 
 
 Conveyance. 
 
 CONTRACTS. 
 
 (118) The original note or memorandum of sale is alone subject to 
 the tax of 10 cents when made by a broker or one acting as such, and 
 the tax in payable by said broker or one acting as such; the duplicate or 
 the copy of the original memorandum of sale is not taxed. 
 
 (119) A mere memorandum accompanying an offer to purchase is 
 subject to the tax only provided the offer is accepted, and should be 
 stamped by the broker on the acceptance of the offer. 
 
 (120) A statement of account showing the receipts and disbursements 
 in connection with a sale, and not being the contract of sale, does not 
 require a stamp. 
 
 (121) A broker's memorandum of a sale of promissory notes ("notes 
 of hand") requires the 10-cent stamp. 
 
 Conveyance : Deed, instrument, or writing, whereby any lands, 
 tenements, or other realty sold shall be granted, assigned, trans- 
 ferred, or otherwise conveyed to, or vested in, the purchaser or pur- 
 chasers, or any other person or persons, by his, her, or their direc- 
 tion, when the consideration or value of the interest or property 
 conveyed, exclusive of the value of any lien or encumbrance thereon, 
 exceeds $100 and does not exceed $500, 50 cents; and for each addi- 
 tional $500 or fractional part thereof in excess of $500, 50 cents: 
 
 (T. D. 2042.) 
 
 Emergency revenue law Stamp tax on deeds. 
 
 Deeds delivered on and after December 1, 1914, must be stamped. Registers 
 and recorders are required to take ^notice that instruments are stamped 
 before accepting for record. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 31, 1914. 
 
 SIR: This office is in receipt of your letter of the 27th instant, in which 
 you request to be informed if it would be necessary, under the internal- 
 revenue act of October 22, 1914, to attach stamps to a deed of real property 
 dated, executed, and acknowledged prior to December 1, 1914, and also 
 delivered prior to that date to a third party for account of the grantee 
 named in the deed, the delivery, however, from such third party to the 
 grantee named in the deed taking place subsequent to December 1, 1914. 
 
 In reply, you are informed that the deed should be stamped before de- 
 livery, which takes place after the law goes into effect. 
 
 You also request to be informed if a deed delivered to the grantee 
 
 48 
 
WAR REVENUE LAW 
 
 named therein subsequent to December 1, 1914, could be recorded without the 
 recording officer being required to see that stamps were attached. 
 
 In reply to this inquiry you are informed that section 13 of the act 
 reads as follows : 
 
 That it shall not be lawful to record or register any instrument, paper, 
 or document required by law to be stamped unless a stamp or stamps of 
 the proper amount shall have been affixed and canceled in the manner pre- 
 scribed by law. 
 
 As this section of the law will become effective December 1, 1914, reg- 
 isters and recorders will be required on and after that date to take notice 
 that all instruments required to be stamped are stamped before accepting same 
 for record. 
 
 Respectfully, 
 
 ROBT. WILUAMS, JR., 
 
 Acting Commissioner of Internal Revenue. 
 Mr. . 
 
 Provided, That nothing contained in this paragraph shall be so 
 construed as to impose a tax upon any instrument or writing given 
 to secure a debt. 
 
 CONVEYANCES. 
 
 (122) Referee's deed. Decision of New York Supreme Court. (Lor- 
 ing v. Chase, Vol. 1, Treas. Dec. (1899), No. 2079*4.) 
 
 (123) A conveyance of realty by a master commissioner must have 
 necessary stamps to be receivable for record. (Farmers' Loan and Trust 
 Co. v. Council Bluffs Gas and Electric Light Co. (1898,) 90 Fed., 806. 
 Vol. 1, Treas. Dec. (1899), No. 20952.) 
 
 (124) Taxation of conveyances of realty sold subject to mortgage. 
 Decision of Judge Taft in United States Circuit Court for Southern Dis- 
 trict of Ohio considered. (Vol. 1, Treas. Dec. (1899), No. 21314.) 
 
 (125) Escrow deeds are not subject to taxation until final delivery. 
 (Vol. 2, Treas. Dec. (1898), No. 20096.) 
 
 (126) A contract for deed used in selling real estate is not subject to 
 stamp tax. (Vol. 2, Treas. Dec. (1898), No. 20065.) 
 
 (127) Releases of mortgages and deeds of trust operating as mort- 
 gages are not subject to taxation, no matter in what form they are executed. 
 (Vol. 2, Treas. Dec. (1898), No. 20440.) 
 
 (128) Deeds of masters in chancery are required to be stamped. (Vol. 
 2, Treas. Dec. (1898), No. 20311.) 
 
 (129) Warranty deed with vendor's lien taxed as a conveyance of 
 land. No mortgage tax imposed thereon. (Vol. 2, Treas. Dec. (1898), No. 
 20320.) 
 
 (130) When a partition deed is operative in defining boundary lines 
 or in showing by location each tenant in common's interest, no tax accrues. 
 (Vol. 1, Treas. Dec. (1899), No. 20792.) 
 
 (131) A deed or mortgage executed and delivered prior to July 1, 
 1898, is subject to stamp tax when offered for registration after that date 
 in States where, by State law, registration is necessary to pass title or 
 establish valid lien. (Vol. 1, Treas. Dec. (1899), No. 20838.) 
 
 (132) Conveyance of a mine located on unpatented land is subject to 
 taxation. (Vol. 1, Treas. Dec. (1899), No. 20986.) 
 
 (133) Decision construing the clause in Schedule A relative to stamps 
 on conveyances. United States Circuit Court, Western District of Missouri. 
 (Vol. 3, Treas. Dec. (1900), Int. Rev. No. 51.) 
 
 (134) Deeds of conveyance executed by and between tenants in com- 
 
 49 
 
WAR REVENUE LAW 
 
 Entry of goods 
 at Custom 
 House. 
 
 Withdrawal. 
 
 mon not taxable. Deeds of conveyance executed by and between joint 
 tenants taxable. (Vol. 1, Treas. Dec. (1899), No. 21283.) 
 
 (135) Conveyance of realty to trustees or other persons without a valu- 
 able consideration not taxable. (Vol. 3, Treas. Dec. (1900), Int. Rev. No. 
 52; Circular 555, Mar. 9, 1900.) 
 
 (136) A deed of conveyance conveying real estate that lies in countries 
 that are not United States territory is not subject to taxation, though the 
 
 frantor and grantee may both be citizens and residents of the United 
 tates. (Vol. 2, Treas. Dec. (1899), No. 21562.) 
 
 (137) Deeds that are simply confirmatory and do not vest title not 
 already vested are exempt from tax; same as to deeds of partition. (Cir- 
 cular No. 503, 2d revision. Compilation of decision for year 1899, p. 293.) 
 
 (138) If a deed does not grant, assign transfer, or convey to the pur- 
 chaser any lands, tenements, or other realty, but only the right to burial, 
 to erect monuments, etc., it does not require a stamp. (T. D. 19838.) 
 
 (139) The words of purchase in the paragraph of the law relating to 
 stamps on conveyances include all changes of title except those occurring 
 by descent or operation of law. (T. D. 20195.) 
 
 Modified by circular 555 of March 9, 1900. Only those where a valu- 
 able consideration, capable of estimation in money value, passes. 
 
 (140) Quitclaim deed taxable according to value of the property in- 
 terest conveyed. (T. D. 20232.) 
 
 (141) Contracts for sale of land taxable if they vest title; if pro- 
 vision is made for future delivery of deed, they are not taxable. (T. D. 
 20310.) 
 
 (142) Ground-rent deed incorporated in the following ruling taxable 
 as a conveyance and not as a lease. (T. D. 21537.) 
 
 (T. D. 2060.) 
 
 Emergency revenue law Stamp tax on deeds and mortgages. 
 
 Stamp required on bond accompanying a mortgage ; stamp not required on 
 
 certificate of officer taking acknowledgment of deeds and mortgages. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 20, 1914. 
 
 SIR: This office has received letters from parties in your district making 
 inquiries in regard to stamp tax on deeds and mortgages under the internal- 
 revenue act of October 22, 1914. 
 
 You are informed that a stamp is required upon the bond accompanying 
 a mortgage. It comes under the provision for stamp tax of 50 cents on all 
 bonds of any description, except such as may be required in legal proceed- 
 ings. A stamp is not required upon the certificate of the officer taking ac- 
 knowledgment of deeds and mortgages. 
 
 Respectfully, 
 
 ROBT. WILUAMS, JR., 
 
 Acting Commissioner of Internal Revenue. 
 Mr. . 
 
 NOTE. The act of June 13, 1898, taxed conveyances upon 
 the whole value of the consideration, while the act of October 
 22, 1914, taxes such instruments on the value exclusive of the 
 value of any lien or incumbrance thereon. 
 
 Entry of any goods, wares, or merchandise at any customhouse, 
 either for consumption or warehousing, not exceeding $100 in 
 value, 25 cents ; exceeding $100 and not exceeding $500 in value 
 50 cents; exceeding $500 in value, $1. 
 
 Entry for the withdrawal of any goods or merchandise from cus- 
 toms bonded warehouse, 50 cents. 
 
 CUSTOMHOUSE ENTRIES. 
 
 143) btamps on customhouse entries, bonds, etc. (T. D. 19605 ) 
 
 50 
 
WAR REVENUE LAW 
 
 Insurance : Each policy of insurance or other instrument, by what- j c ? surance po1 " 
 ever name the same shall be called, by which insurance shall be 
 made or renewed upon property of any description (including rents 
 or profits), whether against peril by sea or on inland waters, or by 
 fire or lightning, or other peril, made by any person, association, or 
 corporation, upon the amount of premium charged, one-half of 1 
 cent on each dollar or fractional part thereof : 
 
 (T. D. 2043.) 
 
 Emergency revenue lazv Policies of fire insurance. 
 Stamp tax on policies of fire insurance under act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 6, 1914. 
 
 SIR: This office is in receipt of your letter of the 6th instant in regard 
 to stamp tax on policies of fire insurance under the act of October 22, 1914. 
 You desire a ruling on policies made, signed, and issued by brokers and 
 agents prior to December 1, 3914, on renewals of business expiring after 
 December 1, 1914. A policy does not require a stamp until it is issued. If 
 the policy is issued in due course of business, delivered and accepted in such 
 a way as to be legally binding upon the parties before December 1, 1914, it 
 would not be subject to the tax imposed by the recent act. 
 
 Respectfully, 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2062.) 
 
 Emergency revenue law Stamp taxes. 
 
 Stamp tax on bonds and policies of insurance. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 20, 1914. 
 
 SIR: This office is in receipt of your letter of the 19th inst., in regard 
 to the stamp tax on bonds and policies of insurance under Schedule A, act 
 of October 22, 1914, effective December 1. The ruling of this office is as 
 follows : 
 
 Had Congress made no other provision for the taxation of bonds except 
 in the language here quoted, every bond, in its broadest term, would have 
 been subject to but one tax fixed specifically at 50 cents. 
 
 Following this, however, and under the head of "Insurance," the law 
 says : . 
 
 "Each policy of insurance, or bond, or obligation of the nature of indem- 
 nity for loss, damage, or liability issued, or executed, or renewed by any 
 person, association, company, or corporation, transacting the business of 
 fidelity, employer's liability, * * * or other branch of insurance, * * * 
 and each bond undertaking or recognizance, conditioned for the performance 
 of the duties of any office or position, or for the doing or not doing of any- 
 thing therein specified, or other obligation of the nature of indemnity, * * * 
 upon the amount of premium charged, one-half of 1 cent on each dollar or 
 fractional part thereof." 
 
 There appears to be no ambiguity or difficulty of interpretation or recon- 
 ciliation of the two provisions of this act. 
 
 First. Every bond of every description and kind, in its broadest sense 
 
WAR REVENUE LAW 
 
 panics exempted. 
 
 and meaning, without regard to its form, where sureties are added, for in- 
 demnifying any person or corporation, government or otherwise, is subjqc 
 to the 50 cent tax if the sureties consist of any person, corporation, or other 
 entity, except "persons, companies or corporations transacting the business 
 of fidelity, etc., insurance." 
 
 Second. If the sole surety or sureties upon any bond undertaking, 
 recognizance" of any character, kind or description, "conditioned for the 
 performance of the duties of any office or position, or for the doing or not 
 doing of anything therein specified, or other obligation of the nature of in- 
 demnity," is executed or guaranteed by any liability, fidelity, or guaranty or 
 surety company, the tax upon the amount of premium charged is one-half of 
 1 cent on each dollar or fractional Dart thereof, and no other tax of any 
 character or kind is required to be paid upon such bond, undertaking,^ agree- 
 ment, or clause made for the purpose of indemnifying any person, Govern- 
 ment, or any other thing. 
 
 This office will not be governed by any interpretation, regulation, or 
 ruling of construction on this subject made under the similar provisions of 
 the war revenue act of 1898 inconsistent with the above. 
 
 Respectfully, 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
 Mr. -- . 
 
 Co - operative Provided, That purely cooperative or mutual fire insurance com- 
 panics or associations carried on by the members thereof solely for 
 ^ p ro t e ction of their own property and not for profit shall be 
 exempted from the tax herein provided : 
 
 And provided further, That policies of reinsurance shall be ex- 
 empt from the tax herein imposed by this paragraph. 
 
 INSURANCE MARINE, FIRE, UGHTNING, ETC. 
 
 (144) Tax on insurance policies issued by foreign insurance com- 
 panies having agencies in the United States. (Vol. 2, Treas. Dec. (1898), 
 No. 20034.) 
 
 (145) Fire insurance policy, when assigned or transferred, taxed in 
 proportion to the unearned premium. (Vol. 2, Treas. Dec. (1898), No. 
 20068.) 
 
 (146) Policies of insurance (marine) issued by foreign companies 
 having no established agencies in the United States are nevertheless sub- 
 ject to the stamp tax when obtained by or through insurance brokers re- 
 siding in this country. (Vol. 2, Treas. Dec. (1898), No. 20259.) 
 
 (147) Stamps must be affixed to premium notes as well as to policies. 
 (T. D. 19620.) 
 
 (148) Ruling as to mutual insurance companies In what cases ex- 
 emption applies. (T. D. 19651.) 
 
 (149) Policies of mutual insurance companies, when taxable and when 
 exempt When the receipts of the company are invested and profit accrues 
 the policies are subject to taxation. (T." D. 20020.) 
 
 Re-insurance* policies need not be stamped. 22 A. G., Op. 318; 376. 
 The tax is on the policies and not applications therefor. 23 A. G., 
 Op. 211. 
 
 Each policy of insurance, or bond or obligation of the nature of 
 indemnity for loss, damage, or liability issued, or executed, or re- 
 newed by any person, association, company, or corporation, trans- 
 acting the business of fidelity, employer's liability, plate glass, steam 
 boiler, burglary, elevator, automatic sprinkler, or other branch of 
 insurance (except life, personal accident, and health insurance, and 
 insurance described and taxed or exempted in the preceding para- 
 graph and excepting also workmen's compensation insurance carried 
 
 52 
 
 Casualty, fidei- 
 tee insurance?"" 
 
WAR REVENUE LAW 
 
 on by the members thereof solely for their own protection and not 
 for profit), and each bond undertaking or recognizance, conditioned Bond under- 
 for the performance of the duties of any office or position, or for n1zance. r 
 the doing or not doing of anything therein specified, or other obliga- 
 tion of the nature of indemnity, and each contract or obligation 
 guaranteeing the validity or legality of bonds or other obligations Contract of 
 issued by any State, county, municipal, or other public body or udi a ty an of e 'bonds] 
 organization, or guaranteeing titles to real estate or mercantile etc - 
 credits executed or guaranteed by any liability, fidelity, guarantee, 
 or surety company upon the amount of premium charged, one-half 
 of 1 cent on each dollar or fractional part thereof. 
 
 Provided, That policies of reinsurance shall be exempt from the 
 tax herein imposed by this paragraph. 
 
 INSURANCE CASUALTY, FIDELITY, AND GUARANTEE. 
 
 (150) When the policies should be stamped as policies of insurance 
 and not as bonds. (T. D. 20781.) 
 
 (151) Bonds of indemnity, and fidelity and guaranty insurance. (Vol. 
 3, Treas. Dec. (1900), Int. Rev. No. 15.) 
 
 Passage ticket, for each passenger, sold in the United States Passage, ticket 
 
 e , , ( .. ,...to foreign ports. 
 
 for passage by any vessel to a foreign port or place, if costing 
 not exceeding $30, $1 ; costing more than $30 and not exceeding 
 $60, $3 ; costing more than $60, $5 : 
 
 Provided, That such passage tickets, costing $10 or less, shall be 
 exempt from taxation. 
 
 
 
 (152) Revocation of ruling that tickets issued in Canada for passage 
 on a vessel sailing from a United States port are not subject to stamp tax. 
 (Vol. 2, Treas. Dec. (1898), No. 20004.) 
 
 (153) Members of foreign diplomatic corps are not required to pay 
 tax on passage tickets by vessel from a port in the United States to a 
 foreign port. (Vol. 2, Treas. Dec. (1898), No. 20196.) 
 
 (154) If one ticket only is issued, though it contains several names, 
 only one stamp tax required. Circular 503, revised November 14, 1898. 
 
 No stamp on rebate checks given to passengers who pay their fare 
 on the train is required. 22 A. G., Op. 248. 
 
 Power of attorney or proxy for voting- at any election for . Power of At- 
 
 /v. - i torney, proxy to 
 
 officers or any incorporated company or association, except re- vote, 
 ligious, charitable, or literary societies, or public cemeteries, 
 10 cents. 
 
 Power of attorney to sell and convey real estate, or to rent or Power of At- 
 lease the same, to receive or collect rent, to sell or transfer any ney t( 
 stock, bonds, scrip, or for the collection of any dividends or in- 
 terest thereon, or to perform any and all other acts not herein- 
 before specified, 25 cents : 
 
 Where securities are pledged with power to sell in case of default 
 such instrument is not taxable as a power of attorney. 22 A. G., Op. 218. 
 
 A certificate authenticating the official acts of a Notary Public engaged 
 in taking depositions to be used in evidence before a judicial tribunal 
 is not taxable. Stirneman v. Smith, 100 Fed. Rep., 435. 
 
 A warrant or clause attached to or printed in a promissory note 
 authorizing an attorney to confess judgment for the maker is not 
 taxable as a power of attorney under this paragraph. Treat v. Tolman, 
 113 Fed. Rep., 892. 
 
 53 
 
WAR REVENUE LAW 
 
 Provided, That no stamps shall be required upon any papers nec- 
 essary to be used for the collection of claims from the United 
 States for pensions, back pay, bounty, or for property lost in 
 the military or naval service. 
 
 POWER OF ATTORNEY OR PROXY. 
 
 (155) An instrument authorizing the secretary to transfer stock on 
 the books of the company held not to be taxable as a power of attorney. 
 (Vol. 2, Treas. Dec. (1899), No. 21467.) 
 
 (156) An instrument appointing an attorney in fact to transfer stock 
 on the books of the company requires to be stamped as a power of attorney, 
 but an instrument authorizing the secretary to make the transfer is held 
 not to be a power of attorney. (Vol. 2, Treas. Dec. (1899), No. 21563.) 
 
 (157) Proxies Contracts Receipts Sales of certificates of stock 
 Powers of attorney, etc. (T. D. 19700.) 
 
 (158) Where judgment notes, so called, contain a clause authorizing 
 any attorney at law to confess judgment in favor of the holder of the note, 
 such authorization is held to be a power of attorney, and taxable as such, 
 in addition to the tax required on the judgment note as promissory note. 
 (Cir. No. 503, revised November 14, 1898.) 
 
 (159) Powers of attorney to sell or transfer Government bonds are 
 taxable. (Cir. No. 503, revised November 14, 1898.) 
 
 Protest: Upon the protest of every note, bill of exchange, 
 acceptance, check or draft, or any marine protest, whether pro- 
 tested by a notary public or by any other officer who may be 
 authorized by the law of any State or States to make such 
 protest, 25 cents. 
 
 PROTESTS. 
 
 No Rulings Found. 
 
 BERTHS AND SEATS IN SLEEPING OR PARLOR CARS. 
 
 e car Every seat sold in a palace or parlor car and every berth 
 ' sold in a sleeping car, 1 cent, to be paid by the company selling 
 the same. 
 
 Tax on Sales of Seats or Berths in Palace, Parlor, or Sleeping 
 
 Cars. 
 
 Until otherwise provided, every railroad company or other company 
 owning or operating any palace or parlor car or sleeping car will, after 
 January 1, 1915, and not later than the 20th day of each month, render to 
 the collector of internal revenue of the district in which its principal office is 
 located a sworn return of the number of seats or berths in any such car sold 
 by it during the preceding month, and will pav to said collector the tax 
 imposed by the revenue act of October 22, ,1914, of 1 cent on each seat or 
 berth so sold. 
 
 Protest. 
 
 54 
 
WAR REVENUE LAW 
 
 The return to be rendered in such cases will be in the following form: 
 
 (Form 674.) 
 
 UNITED STATES INTERNAL REVENUE. 
 
 Return of sales of seats and berths in palace, parlor, or sleeping cars taxable 
 under act of October 22, 1914. 
 
 District of , 
 
 , 191... 
 
 The undersigned, , of the 
 
 (President or chief officer.) (Here give name of company.) 
 
 having its principal office at , State of 
 
 , hereby certifies that the said company owns or controls certain 
 
 palace, parlor, and sleeping cars in use on its or other railroad lines, and 
 
 that during the month of 191. . ., the total number of seats or 
 
 berths in said cars sold by or on account of this said company was as 
 follows : 
 
 Total number of seats sold 
 
 Total number of berths sold , 
 
 Total of seats and berths sold 
 Amount of tax due 
 
 (Title.) 
 
 Subscribed and sworn to before me this ... .day of , 191. . 
 
 [SEAL.] 
 
 SCHEDULE B 
 
 Perfumery and cosmetics and other similar articles : For and Perfumes and 
 upon every packet, box, bottle, pot, phial, or other inclosure sfmSar^ai-ticks 
 containing any essence, extract, toilet water, cosmetic, vaseline, t' ns prepara ~ 
 petrolatum, hair oil, pomade, hair dressing, hair restorative, hair 
 dye, tooth wash, dentifrice, tooth paste, aromatic cachous, or 
 any similar substance or article, by whatsoever name the same 
 heretofore have been, now are, or may hereafter be called, known, 
 or distinguished, used, or applied as perfumes or as cosmetics, 
 and sold or removed for consumption and sale in the United 
 States, where such packet, box, bottle, pot, phial, or other in- 
 closure, with its contents, shall not exceed at the retail price Costing not 
 
 , r i- 1 , 1 r 1 more tnan five 
 
 or value the sum of 5 cents, one-eighth of I cent. cents. 
 
 Where such packet, box, bottle, pot, phial, or other inclosure, Costing not 
 with its contents, shall exceed the retail price or value of 5 cents, SSL*** 
 and shall not exceed the retail price or value of 10 cents, two- 
 eighths of I cent. 
 
 Where such packet, box, bottle, pot, phial, or other inclosure, Fifteen cents. 
 with its contents, shall exceed the retail price or value of 10 
 cents and shall not exceed the retail price or value of 15 cents, 
 three-eighths of 1 cent. 
 
 Where such packet, box, bottle, pot, phial, or other inclosure, Twenty-five 
 with its contents, shall exceed the retail price or value of 15 
 cents and shall not exceed the retail price or value of 25 cents, 
 five-eighths of 1 cent. And for each additional 25 cents of 
 retail price or value or fractional part thereof in excess of 25 
 cents, five-eighths of 1 cent. 
 
 55 
 
WAR REVENUE LAW 
 
 Chewing gum. Chewing gum or substitutes therefor : For and upon each 
 box, carton, jar, or other package containing chewing gum of 
 not more than $1 of actual retail value, 4 cents; if exceeding 
 $1 of retail value, for each additional dollar or fractional part 
 thereof, 4 cents; under such regulations as the Commissioner 
 of Internal Revenue, with the approval of the Secretary of the 
 Treasury, may prescribe. 
 
 Chewing Gum. 
 
 On and after December 1, 1914, stamps must be affixed by the maker or 
 manufacturer to packages of chewing gum or substitutes therefor before 
 the same are removed from the factory for consumption or sale. 
 
 Stamps of the denomination of 4 cents have been provided for the pay- 
 ment of this tax. When packages exceed $1 of retail value the manufacturer 
 shall affix additional stamp or stamps to cover the amount of tax due on 
 such packages. 
 
 There shall be affixed to each and every box, carton, jar, or other pack- 
 age, containing chewing gum, before its removal from the factory, a label, 
 on which shall be printed in plain, legible letters, the number of small tablets, 
 one-cent packages, or other small packages of chewing gum contained therein, 
 and the retail price of each such tablet or small package of gum, in form as 
 follows : 
 
 100 1-cent packages, retail value $1.00 
 
 20 packages, 2 for 5 cents, retail price \ 50 
 
 60 packages, 3 for 5 cents, retail price 1.00 
 
 12 packages, 5 cents each 60 
 
 There shall also be affixed to each package a label, upon which shall be 
 printed in plain and legible letters the manufacturer's name, with town or 
 city address, and the number of district and the State in which the factory 
 is located, for example: "John Doe, Manufacturer, Philadelphia, First Dis- 
 trict of Pennsylvania." These labels may be printed on the boxes or car- 
 tons if preferred. 
 
 Samples for salesmen, or for mailing, or for free distribution, shall be 
 taken only from packages which have been duly stamped and shall be 
 marked as provided elsewhere in these regulations. 
 
 The stamps on emptied packages will be destroyed. 
 
 When chewing gum and cachous are to be sold through automatic vend- 
 , ing or selling machines, the same are to be kept in the regularly stamped 
 
 boxes, packages, or containers until placed in the machines, when the stamps 
 shall be destroyed. The chewing gum and cachous shall be securely locked 
 in the machine and shall not be removed therefrom except through the 
 regular aperture controlled by the mechanism. 
 
 Imported Articles. 
 
 All perfumeries, cosmetics, chewing gum, etc., imported from foreign 
 countries are liable to the stamp tax as similar articles of domestic manu- 
 facture, in addition to the import duty on the same, and the stamps must 
 be affixed by the owner or importer before the same are sold or offered for 
 sale, and affixed in the same manner, upon every packet, box, bottle, phial, 
 or other inclosure containing the same. 
 
 No exception is made in this respect for articles sold in original and 
 unbroken packages in which the bottles or other inclosures were packed by 
 the manufacturer before the importation. All such must be unpacked for 
 the purpose of stamping the primary package. Importers may, however, 
 supply manufacturers abroad with internal-revenue stamps to be there 
 affixed to the respective articles before shipment. 
 
 Collectors to Make Examinations. 
 
 Collectors and revenue agents will make examinations of the retail drug 
 stores, pharmacies, and other places in their districts to ascertain if the 
 
 56 
 
WAR REVENUE LAW 
 
 medicinal articles. and other articles mentioned in Schedule B, contained in 
 stock and offered for sale, are stamped according to law wherever liable 
 under the foregoing instructions. 
 
 In cases where the officer is not able to determine liability to tax, or 
 where there is reasonable doubt, samples should be sent to this office marked 
 "Law Division" for decision. Samples sent for this purpose should include 
 all wrappings, circulars, advertisements, etc., pertaining to the sampla in 
 question, and should be accompaned by a letter of transmission giving full 
 information concerning the same. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Approved. 
 
 BYRON R. NEWTON, 
 
 Acting Secretary of the Treasury. 
 
 (T. D. 2052.) 
 
 Emergency revenue law Stamp tax Chewing gum. 
 The tax on chewing gum is based on the retail value, whether sold in small 
 packages or in bulk, on and after December 1, 1914. The article must 
 be retailed from stamped packages, whether sold over the counter or 
 by means of a slot machine. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 5, 1914. 
 
 GENTLEMEN: Your letter dated the 2d instant, in which you 
 make several inquiries relative to the stamp tax imposed on chewing 
 gum as provided in the act of October 22, 1914, has been received. 
 You state that you manufacture your products in several forms, 
 and generally sell in bulk, in all manner of quantities, and at prices 
 which vary considerably, such prices being based largely on the 
 quantity sold, and that your goods are retailed over the counter and 
 by means of slot machines. Also, that one form of gum produced 
 and put out by you can be soM by the dealer from two to four pieces 
 for a penny. This particular form of gum you state is sold generally 
 in barrel lots. 
 
 In reply, you are informed that the act of October 22, 1914, im- 
 poses on you as manufacturer the duty of stamping your product, on 
 and after December 1, 1914, in whatever manner it may be put up, 
 at the rate of 4 cents for each $1 of its actual retail value. If the 
 contents of a package should exceed $1 and be less than $2 in value, 
 it should be stamped 8 cents, and similarly larger quantities in multi- 
 ples of the initial tax. The law does not provide for stamping chew- 
 ing gum valued at retail at less than $1 at any other rate than 4 cents. 
 Chewing gum may be sold at retail in small packages either over 
 the counter or by means of a slot machine without the same being 
 stamped, provided it is sold from the original stamped packages. 
 
 The law requires the manufacturer to stamp his product on a 
 basis of its actual retail value. You state you can not control this 
 price. Nevertheless, it is believed that no one is so competent as the 
 manufacturer to determine the retail price or value of his products, 
 and he will be held strictly responsible for due compliance with the 
 statute. This retail price or value is a price such as a single package 
 or other small quantity would be sold at to consumers at the place of 
 manufacture. 
 
 57 
 
WAR REVENUE LAW 
 
 In reply to your inquiry as to the meaning of section 21 of the 
 act, you are informed that the provision that "every person, except 
 as otherwise provided in this act, who offers or exposes for sale any 
 article or thing provided for in said Schedule B * * * shall be 
 deemed the manufacturer thereof, and shall be subject to all the 
 taxes, liabilities, and penalties, etc.," refers to wholesalers and re- 
 tailers who may have taxable goods on hand December 1, when the 
 several articles enumerated in Schedule B must be stamped as pro- 
 vided therein. On and after December 1, the manufacturer is re- 
 quired to stamp his products before delivery on a sale ; and such 
 goods, if in possession of any other person, firm, or corporation on 
 said date, must be stamped by such person, firm, or corporation, or, 
 failing so to do, they will incur the liabilities and penalties denounced 
 by the act. 
 
 Respectfully, 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Messrs. 
 
 Articles on That all articles and preparations provided for in this sched- 
 
 hand Dec. i, ^ ^^ are j n t j ie hands of manufacturers or of wholesale 
 or retail dealers on and after December first, nineteen hundred 
 and fourteen, shall be subject to the .payment of the stamp 
 taxes herein provided for, but it shall be deemed a compliance 
 with this Act as to such articles on hand in the hands of whole- 
 sale or retail dealers as aforesaid who are not the manufacturers 
 
 May be thereof to affix the proper adhesive tax stamp at the time the 
 
 retaii. n packet, box, bottle, pot, or phial, or other inclosure with its 
 contents is sold at retail. 
 
 Articles on Hand, December 1, 1914. 
 
 Under this provision it is held that articles liable to tax in the hands of 
 a retail dealer who is not the manufacturer thereof, December 1, 1914, must 
 be stamped by such retail dealer when he sells them at retail. 
 
 Articles liable to tax in the hands of wholesale dealers who are not the 
 manufacturers thereof on and after December 1, 1914, may be sold by such 
 wholesale dealer to other wholesale dealers or to retail dealers without 
 stamping the same, the obligation to stamp being limited to sales at retail. 
 
 All articles in the hands of manufacturers on said date liable to tax must 
 be stamped before removal from the place of manufacture. 
 
 Retail Price. 
 
 Dealers, in stamping articles on hand December 1, 1914, when sold at 
 retail, must adhere to the normal retail price and stamp the article accord- 
 ingly, and not according to some "cut price." Where a price is printed or 
 stamped on the article or container, that will be considered as the normal 
 retail price. 
 
 The manufacturer or importer shall pay the tax upon the normal retail 
 price or value of the taxable articles under Schedule B manufactured or 
 imported by him, and affix the corresponding adhesive stamps to the same 
 before removal from the place of manufacture or importation. This duty 
 is imposed on the manufacturer or importer by law, and he will be held 
 strictly responsible for a due compliance with the statute. 
 
 This retail price or value is a price such as a single package or other 
 small quantity would be normally sold at to consumers at the place of man- 
 
 58 
 
WAR REVENUE LAW 
 
 ufacture or importation. If the manufacturer pays the tax upon the retail 
 price in good faith according to this rule, he need apprehend no complaint 
 if at different times and in different places the article is retailed for a greater 
 or less sum than denoted by the stamps affixed thereto. 
 
 Five cents being the lowest retail price mentioned in Schedule fi, taxable 
 articles retailing for a less sum may be packed together under one wrapper, 
 band, or other inclosure, when the retail price of said package shall not in 
 the aggregate exceed 5 cents, and a stamp of the value of one-eighth of one 
 cent shall be affixed to the outside band or wrapper, or other inclosure, in 
 such a manner that the stamp shall be wholly destroyed in opening it. In 
 such cases each subpackage shall have printed thereon the words : "Sold 
 from a duly stamped package." 
 
 (T. D. 2066.) 
 
 Emergency revenue law Talcum powders, etc. 
 
 Relative to tax on tacum powders, bay rum, witch-hazel, and vaseline, under 
 the act of Congress approved October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 23, 1914. 
 
 SIR: Replying to your letter of the 19th instant, you are informed that 
 it is held that talcum powders of all kinds, although not specifically named 
 in Schedule B of the act of Congress approved October 22, 1914, are clearly 
 such similar substances or articles to those enumerated therein as to be sub- 
 ject to the tax. Talcum powder must, therefore, as a class, be stamped. 
 
 Witch-hazel, bay rum, white vaseline, perfumed vaseline, and so-called 
 blue-label vaseline are subject to the tax. 
 Respectfully, 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Mr. . 
 
 There shall be an allowance of drawback on articles mentioned Drawbacks on 
 in Schedule B of this Act on which any internal-revenue tax | n whicl^Ster- 
 shall have been paid, equal in amount to the stamp tax paid , p s al p afd venue tax 
 thereon, and no more when exported, to be paid by the warrant 
 of the Secretary of the Treasury on the Treasurer, of the 
 United States, out of any money arising from internal taxes 
 not otherwise appropriated : 
 
 Provided, That no allowance of drawback shall be made for any NO allowance 
 such articles exported prior to the date this Act becomes effec- ber r i, 
 tive. The evidence that any such tax has been paid as afore- 
 said shall be furnished to the satisfaction of the Commissioner 
 of Internal Revenue by the person claiming the allowance of 
 drawback, and the amount shall be ascertained under such 
 regulations as shall be prescribed from time to time by said 
 commissioner with the approval of the Secretary of the Treas- 
 ury. 
 
 REGULATIONS. 
 
 These include all perfumeries, eau de cologne, and all other scented 
 waters ; pastilles and all scented powders, papers, medallions, aromatic 
 cachous, or other materials used to impart their odor to the breath, the air, 
 or other substances ; all cosmetics, lotions, and powders for beautifying, 
 restoring, improving, or preserving the skin, hair, mouth, teeth, nails, or 
 other parts of the body. 
 
 Articles under the head of perfumes and cosmetics are taxable under 
 
 59 
 
WAR REVENUE LAW 
 
 the statute, regardless of the style or manner in which they are put up and 
 sold. It is immaterial how they are labeled, recommended, or advertised, 
 or whether they are labeled at all, so long as they are known to come within 
 the provisions of the law. 
 
 Bulk Packages. 
 
 Articles subject to stamp tax under Schedule B are equally liable to 
 stamp tax when sold in what are termed bulk packages as when sold in 
 retail packages, and the value of the stamp or stamps to be affixed must 
 correspond with and be proportionate to the price of a single retail package. 
 
 Dealers may retail directly to the consumer from such bulk packages as 
 have been properly stamped by the manufacturer or importer, drawing from 
 the same in quantities to suit their customers without any additional stamp- 
 ing, but the stamps attached to such bulk packages will only protect the 
 original contents. 
 
 If bulk packages are broken up by the dealer drawing off the contents 
 into smaller vessels to be put upon his shelves, or otherwise kept for future 
 sales, the contents so drawn off thereby ceases to be identified with the 
 stamped package in which they were originally put up by the manufacturer 
 or sold by the importer, and such contents so put up become liable to seizure 
 if stamps are not affixed to them. 
 
 The contents of bulk packages, liable to tax under Schedule B, which 
 were in the hands of retailers on the 1st day of December, 1914, and there- 
 fore unstamped, must be stamped when sold at retail from said packages 
 proportionately to the retail price of the whole package. 
 
 Unclarified Petrolatum and Other Incomplete Manufactures 
 
 Shipped in Bulk. 
 
 While the act specifically provides that the stamp taxes shall apply to 
 petrolatum, it is held to be the intent of the statute to impose the tax mainly 
 upon the clarified product. The unclarified is an unfinished product requir- 
 ing to be treated with heat and otherwise manipulated before it will be 
 accepted by manufacturing druggists as a basis for various ointments, or 
 drawn off into small packages and sold as vaseline, and may be shipped in 
 bulk without stamps. 
 
 If, however, the unclarified, unfinished petrolatum is sold for use by 
 consumers, either at wholesale or retail, it is liable to the stamp tax at the 
 same rate as the finished product: 
 
 Many articles which ultimately become taxable are not so when they 
 are first removed from the manufacturing chemist's laboratory, but are in- 
 complete manufactures, the process of manufacture not being completed 
 until they are bottled, labeled, or otherwise placed in a salable condition. 
 
 This regulation particularly applies to articles manufactured for dealers, 
 to be bottled, packed, and labeled by them, and sold under their own names, 
 when it becomes the duty of the dealers who pack and sell the goods under 
 their own names and not the manufacturers, to affix the tax stamps due. 
 
 Soaps. 
 
 Soaps are ordinarily either laundry or toilet articles. They may, how- 
 ever, and do become cosmetic articles, whenever the manufacturer or vendor 
 holds them out and recommends them to the public for the softening and 
 beautifying effects produced by their use upon the hair, mouth, skin, or com- 
 plexion. In other words, whenever the manufacturer or vendor takes them 
 out of the category of laundry or toilet articles and places them in the' 
 category of cosmetic articles, he must stamp them according to the pro- 
 visions of Schedule B. 
 
 Samples. 
 
 Samples of perfumery and cosmetics, taxable under Schedule B, may be 
 removed from the place of manufacture for free distribution, without 
 stamps or payment of tax. 
 
 60 
 
WAR REVENUE LAW 
 
 Every sample so removed, however, must have legibly printed thereon 
 the following notice: 
 
 "This is a free sample removed from the factory for gratuitous distri- 
 bution. Any person selling or exposing for sale this sample, unstamped, at 
 any time will be liable to all the pains and penalties of the law denounced 
 against persons selling, or exposing for sale, unstamped articles taxable under 
 Schedule B." 
 
 But where, owing to the minute size of the sample, the above prescribed 
 cautionary notice can not be legibly and neatly printed and affixed thereto, 
 the following may be substituted : ^ 
 
 "Free sample. Penalty for safe, $500." 
 
 Where several small free samples are packed together in a box, the 
 whole being given as an entirety, it will be sufficient if the free sample label 
 is placed upon the box. 
 
 Manufacturer's Statements. 
 
 At the end of each and every month, the manufacturer or maker or 
 packer for distribution of any of the articles or commodities provided for in 
 Schedule B must make a declaration as provided in- section 20 of the act as 
 follows : 
 
 "That every manufacturer or maker of any of the articles or commodi- 
 ties provided for in Schedule B, or his foreman, agent, or superintendent 
 shall at the end of each and every month make, sign, and file with the col- 
 lector of internal revenue for the district in which he resides a declaration 
 in writing that no such article or commodity has, during such preceding 
 month or time when the last declaration was made, been removed or car- 
 ried, or sent, or caused or suffered or known to have been removed, carried, 
 or sent from the premises of such manufacturer or maker other than such as 
 have been duly taken account of and charged with the stamp tax, on pain of 
 such manufacturer or maker forfeiting for every refusal or neglect to make 
 such declaration $100 ; and if any such manufacturer or maker, or his fore- 
 man, agent or superintendent, shall make any false or untrue declaration, 
 such manufacturer, or maker, or foreman, agent, or superintendent making 
 the same shall be deemed guilty of a misdemeanor, and upon conviction shall 
 pay a fine of not more than $500, or be imprisoned not more than six months, 
 or both, at the discretion of the court." 
 
 Articles Exported Without Stamping and Drawback on 
 Stamped Articles Exported. 
 
 Articles liable to tax under Schedule B, when intended for exportation, 
 may be manufactured and sold or removed without having the stamps 
 affixed thereto and without being charged with tax as aforesaid, by giving 
 bond and complying with regulations tq be provided by the Commissioner of 
 Internal Revenue and approved by the Secretary of the Treasury. See sec- 
 tion 19, act of October 22, 1914. An allowance of drawback on articles men- 
 tioned in Schedule B, which have already been stamped and afterwards ex- 
 ported, is allowed by the last paragraph of Schedule B. 
 
 SEC. 23. That all administrative, special, or stamp provisions of ke?t ec as r< ieciuire! 
 law, including the law relating to the assessment of taxes, so b y regulation, 
 far as applicable, are hereby extended to and made a part of 
 this Act, and every person, firm, company, corporation, or asso- 
 ciation liable to any tax imposed by this Act, or for the collec- 
 tion thereof, shall keep such records and render, under oath, 
 such statements and returns, and shall comply with such regu- 
 lations as the Commissioner of Internal Revenue, with the ap- 
 proval of the Secretary of the Treasury, may from time to time 
 prescribe, and every such person, firm, company, corporation, 
 
 61 
 
WAR REVENUE LAW 
 
 or association who evades or attempts to evade any of the 
 Penalty. taxes imposed by this Act, or shall fail to truly account for 
 
 and pay all taxes collected by them under this Act, or any 
 regulations issued thereunder, shall be subject to a penalty of 
 double the amount of the taxes evaded or attempted to be 
 evaded or unlawfully withheld, to be assessed and collected as 
 other penalties incurred under internal-revenue laws are as- 
 sessed and collected ; and for the expense connected with the 
 assessment and collection of the taxes provided by this Act 
 Appropriation, there is hereby appropriated $200,000, or so much thereof as may 
 be required, out of any money in the Treasury not otherwise ap- 
 propriated; $170,000 to be added to and made a part of the 
 appropriations for "salaries and expenses of collections of in- 
 ternal-revenue, nineteen hundred and fifteen; and $30,000 to the 
 appropriation for paper for internal-revenue stamps, nineteen 
 hundred and fifteen." 
 
 The fact that a fermented or distilled liquor tax has already been 
 paid does not exempt it from this section. United States v. J. D. Her 
 Brewing Co., 121 Fed., 41. 
 
 iitn1t C ati e on pir De- by SEC * 24 ' That the provisions of this Act shall take effect on the 
 cember si, 1915. day next succeeding the date of its passage, except where other- 
 wise expressly provided: 
 
 Provided, That on the day after the thirty-first day of December, 
 nineteen hundred and fifteen, the taxes levied under this Act 
 shall no longer be levied and collected, but all taxes arising or 
 accruing before said date shall continue to be collectible under 
 the terms of this Act: 
 
 Provided, however, That on and after the first day of January, 
 nineteen hundred and sixteen, the provisions of section thirty- 
 three hundred and thirty-nine of the Revised Statutes, as 
 amended by an Act approved April twelfth, nineteen hundred 
 and two, imposing a tax on fermented liquors shall not be af- 
 fected by any limitation as to the levying or collecting of the 
 additional tax imposed by this Act on such fermented liquors, 
 but shall then be in full force and effect on and after the said 
 first day of January, nineteen hundred and sixteen. All stamps 
 provided for in this Act unused after the aforesaid date shall 
 be redeemed from the holder thereof, under such rules as the 
 Secretary -of the Treasury may prescribe. 
 
 62 
 
Treasury Decisions 
 
 (T. D. 2036.) 
 
 Consignment of newspapers under Schedule A, act of October 22, 
 
 1914. 
 
 Reports of shipments of newspapers to be made monthly to collectors in lieu 
 
 of bills of lading 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 28, 1914. 
 
 SIR: This office is in receipt of your letter of the 23d instant, 
 relative to that portion of the internal-revenue act of October 22, 
 1914, relating to the consignment of newspapers. 
 
 In reply, you are informed that in lieu of a bill of lading, the 
 publisher of the newspaper must file on or before the 15th day of 
 each month with the collector of the district a report, under oath, 
 showing the number of shipments during the preceding month, to 
 which report a stamp shall be affixed equal in value to one cent for 
 each shipment so reported. The portion of the act relating to this 
 subject goes into effect December 1. The first report to be made, 
 therefore, will be on or before January 15, 1915, for the number of 
 bundles shipped during the month of December. * * * 
 Respectfully, 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Mr. 
 
 (T. D. 2037.) 
 
 Supplemental instructions relative to paying taxes imposed upon 
 wines by the act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 30, 1914. 
 To collectors of internal revenue: 
 
 In office telegram of October 23, 1914, collectors were in- 
 structed to require dealers who sell wine to consumers to keep ac- 
 count of sales on and after that date and to delay collection of tax 
 until further advised. 
 
 T. D. 2027 of October 24 prescribes method of procedure and 
 form of report. 
 
 Collectors should collect no tax on wines sold by dealers on 
 and after October 23 until they receive from this office the 
 special wine stamps which they will require all dealers in wines who 
 sell to consumers to purchase in quantities sufficient for their needs. 
 
 63 
 
WAR REVENUE LAW 
 
 So many of these stamps as will be necessary to represent the tax 
 on wines sold up to the date of making the report required in T. D. 
 2027 will be canceled by each dealer and disposed of in the manner 
 provided in said Treasury decision. 
 
 fhe special wine stamps that will be forwarded to collectors 
 about the 15th proximo must be used exclusively to indicate the pay- 
 ment of the wine tax, and under no circumstances shall documentary 
 or proprietary stamps be used to indicate the payment of tax on 
 sale of wines or cordials, and it must be borne in mind by every 
 collector that no discount can be allowed on the sale of wine stamps. 
 
 Collectors may allow a discount of 1 per cent on the sale of ad- 
 hesive stamps used in the payment of the tax levied in Schedules A 
 and B of the act in quantities of not less than $100 face value cov- 
 ered in one sale, except to officers and employees of the Internal 
 Revenue Service. 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2038.) , 
 
 Emergency revenue law. 
 Taxes imposed under Schedule B effective on and after December 1, 1914 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 3, 1914. 
 To collectors of internal revenue: 
 
 Referring to the discrepancy in the act of October 22, 1914, as 
 to the date when Schedule B goes into effect, the act providing in 
 section 21 that the said schedule shall go into effect 30 days after 
 the passage of the act and in the schedule itself that it shall go into 
 effect December 1, you are advised that as originally drafted the act 
 provided in both places that Schedule B was to go into effect 30 
 days after passage. This was later amended by paragraph 6 of 
 Schedule B to December 1, 1914, and it is therefore held by this 
 office that the schedule in question is effective on and after Decem- 
 ber 1, 1914. 
 
 GEO. E. FLETCHER, 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2049.) 
 
 Emergency revenue law Income-tax certificates. 
 
 Income-tax certificates which are not required by specific statute, but by 
 regulations only, are not subject to tax as "certificates required by law" 
 under act of October 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 12, 1914. 
 
 SIR: In reply to your verbal inquiry as to whether certificates 
 
 6 4 
 
TREASURY DIVISIONS 
 
 of ownership, certificates, of exemption, and other certificates re- 
 quired by the income-tax regulations, but not by specific statute, are 
 subject to tax as certificates required under the internal-revenue act 
 of October 22, 1914, I beg to advise you that they are not. 
 
 While regulations made pursuant to and under authority of law 
 as a rule have the force and effect of law, it is held by this office that 
 it was not the intent of Congress to tax certificates which are re- 
 quired by regulations of the department for its own purposes and 
 not by any express provision of law. 
 
 Respectfully, W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Mr. 
 
 (T. D. 2050.) 
 
 Emergency revenue law. 
 Relative to classification of liqueurs, cordials, and similar compounds. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 13, 1914. 
 
 SIR : Replying to your letter of the 7th instant, you are in- 
 formed that the words "liqueurs, cordials, and similar compounds," 
 as used in the act of Congress approved October 22, 1914, are not 
 held to include alcohol, whiskies, rums, brandies, and gins, except 
 when so compounded as to be known to the trade as cordials and 
 liqueurs. Compounds classed by this office as medicines are also 
 excepted. The word "liqueur," as defined by Webster, is an alco- 
 holic aromatic cordial, and obviously a cordial is practically the 
 same. It would appear, therefore, that the words "liqueurs, cor- 
 dials, or similar compounds," under whatever name sold or offered 
 for sale, would include those beverages commonly known to the 
 trade as liqueurs and cordials. Further, the term "similar com- 
 pounds" would appear to include vermuths and like wine com- 
 pounds, bitters used as beverages, cocktails, maraschino, cordialized 
 liquors, fortified fruit juices, and all other compounds the formulas 
 of which, methods of preparation, or use, make them sufficiently like 
 liqueurs and cordials to place them in the class with liqueurs and 
 cordials. 
 
 Respectfully, 
 
 G. E. FLETCHER, 
 
 Acting Commissioner of Internal Revenue. 
 Mr. 
 
 (T. D. 2053.) 
 
 Emergency revenue law Wines, etc. 
 
 Relative to affixing and canceling stamps on containers of wines, cordials, 
 liqueurs, and similar compounds. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November jj, 1914. 
 
 SIR : Replying to your letter of the 9th instant, you are informed 
 
 65 
 
WAR REVENUE LAW 
 
 that the act of Congress approved October 22, 1914, imposing taxes 
 upon wines, liqueurs, and cordials, is silent as to where such stamps 
 must be affixed to the bottles or other containers. It is held, there- 
 fore, that these stamps must be affixed conspicuously to the bottles 
 or other actual containers of the wines and cordials and must be 
 canceled by the person affixmg same, and that the initials of the 
 person, as well as the date when affixed, must be written or stamped 
 indelibly upon the adhesive stamp. When the bottle or other con- 
 tainer to which the stamp is affixed is empty, the person emptying 
 same must completely efface and obliterate the adhesive stamp or 
 stamps, as the case may be. 
 
 In reply to your second inquiry, this office is unable to state how 
 bottles or other containers from which sales are made may be kept 
 constantly filled and at the same time be stamped and the stamps be 
 duly canceled in conformity with the law. Bottles from which wines 
 and cordials are sold to consumers for immediate consumption must 
 be stamped with properly canceled stamps, and when empty the 
 stamps should be, as above stated, completely effaced and obliter- 
 ated and new ones substituted therefor upon each refilling. It would 
 seem, therefore, to be necessary to completely empty the bottles in 
 order to comply with the law. 
 
 Respectfully, 
 
 ROBT. WILLIAMS, JR V 
 
 Acting Commissioner of Internal Revenue. 
 Mr. . 
 
 (T. D. 2054.) 
 
 Emergency revenue lazv Certificates of deposits. 
 
 Certificates of deposit issued by banks not taxable under the act of October 
 
 22, 1914. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 14, 
 SIR: In reply to your letter of the 9th instant, you are informed 
 that under the internal-revenue act of October 22, 1914, stamps are 
 not required to be affixed to certificates of deposits issued by banks. 
 Respectfully, 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 Mr. --- . 
 
 (T. D. 2055.) 
 
 Emergency revenue law Discount on purchases of documentary 
 
 stamps. 
 
 Postmasters and others authorized to be furnished stamps without prepay- 
 
 66 
 
TREASURY DIVISIONS 
 
 ment not allowed discount unless stamps are paid for by them at the 
 time. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 16, 
 To collectors of internal revenue: 
 
 You are informed that postmasters who buy from you and pay 
 for the stamps issued under the internal-revenue act of October 22, 
 1914, are allowed a discount of 1 per cent on purchases amounting 
 to $100 or more. If they are furnished with the stamps under bond 
 without prepayment therefor they are not allowed the 1 per cent 
 discount. 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2056.) 
 
 Emergency revenue law Poivcr of attorney to transfer stock. 
 An instrument appointing an attorney in fact to transfer stock on the 
 books of the company requires it to be stamped as a power of attorney, 
 but an instrument authorizing the secretary to make the transfer is 
 held not to be a power of attorney. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 14, 1914. 
 
 SIR: This office is in receipt of your letter of the 9th instant, 
 asking for a ruling under Schedule A of the act of October 22, 1914. 
 You make the following inquiry : 
 
 1. Does the tax of 25 cents imposed in Schedule A on powers of at- 
 torney to sell or transfer stock apply to the ordinary formal power of at- 
 torney to transfer on the books? In other words, is the sale and the 
 transfer of the stock itself taxed separately? 
 
 If this so-called power of attorney on the back of the certificate 
 simply authorizes the secretary of the company to transfer the same 
 on the books of the company, it is held not to be a power of attor- 
 ney within the meaning of the internal-revenue law. In that case the 
 secretary of the corporation can not be said to be the agent or 
 attorney for the transfer of stock, as the effect of the instrument is 
 only to give the secretary authority to do an act which he is re- 
 quired to do by the by-laws of the organization when properly au- 
 thorized, just as a cashier of a bank is required to pay a check when 
 the check is properly signed and presented for payment. In that 
 case, therefore, this instrument would only be taxable as a transfer 
 of stock. An instrument appointing an attorney in fact to transfer 
 stock on the books of the company will require stamp as a power 
 of attorney. 
 
 Respectfully, 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
 Mr. . 
 
 67 
 
WAR REVENUE LAW 
 
 (T. D. 2057.) 
 
 Annual inventories. 
 
 Annual inventories to be made by cigar and tobacco manufacturers and 
 verified by collectors and their deputies. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November if, 1914. 
 To collectors of internal revenue: 
 
 Every manufacturer of tobacco or snuff and every manufac- 
 turer of cigars or cigarettes shall make a true inventory of the stock 
 of tobacco materials, stamped and unstamped manufactured tobacco 
 and snuff, or cigars and cigarettes, and attached and unattached in- 
 ternal-revenue stamps on hand in the factory on the 1st day of Jan- 
 uary of each year, and shall verify the same by his own oath, as 
 provided in sections 3358 and 3390 of the Revised Statutes, respect- 
 ively. These statutes also require that the collector (or his deputy) 
 shall make personal examination of the stock sufficient to satisfy 
 himself as to the correctness of the inventory, and shall verify the 
 fact of such examination by oath to be indorsed on the inventory. 
 
 These inventories are important elements in settlement of manu- 
 facturers' accounts for the year or period. It is absolutely essential 
 that the accuracy of an inventory shall not be questioned by a manu- 
 facturer when his accounts show deficiencies and he is, in conse- 
 quence, called upon to show cause against assessment for omitted 
 tax. Each manufacturer shall see to it tJiat a proper inventory of 
 his factory is made, for the reason that such inventory having been 
 sworn to by the manufacturer and verified under oath by a deputy 
 collector, no claim of failure to include certain tobacco, ,made in 
 response to a deficiency notice, will be entertained. Therefore the 
 following instructions in regard to making the required inventory 
 must be observed : 
 
 (a) All tobacco material within the metes and bounds of the 
 bonded factory premises, as described on Form 41 J^ posted in cigar 
 factory and on Form 36 of tobacco factory shall be segregated into 
 classes corresponding strictly with the headings provided therefor 
 in Form 70a and Form 70b. 
 
 (b) Each class of tobacco shall be weighed separately. 
 
 (c) Tobacco dust, sif tings, sweepings, and waste which has ac- 
 cumulated in manufacturing shall not be included under any class of 
 tobacco except under the head of "Waste," which is provided for in 
 inventory Form 70b. The quantity of each of these by-products 
 may there be shown separately. 
 
 (d) Inventory must include all unstemmed leaf tobacco debited 
 on manufacturers' books and returns which is stored off the bonded 
 factory premises for which outside storage permission has been 
 granted. 
 
 (e) To enable the deputy collector to verify the inventory, a 
 list should be made of each unopened hogshead, case, or bale, or 
 other package of tobacco, with sufficient description for identifica- 
 tion by the deputy, of all broken packages or loose tobacco within 
 
 68 
 
TREASURY DIVISIONS 
 
 the factory, and of all unstemmed tobacco stored off the bonded 
 premises, shall be made on the back of the inventory form or pre- 
 served on separate sheets of the same size and attached thereto. 
 
 (/) An accurate record should also be kept of the quantity of 
 each class of tobacco (as inventoried) used in production between 
 the time inventory is taken and the time the deputy calls to verify 
 the same. 
 
 Collectors will instruct their deputies so to arrange their routes 
 as to make these verifications at the earliest practicable date after 
 January 1 next. In verifying an inventory each deputy collector 
 
 1. Will see that each class of tobacco has been properly inven- 
 toried and instructions above observed. 
 
 2. Will determine from the quantities of each different kind of 
 tobacco purchased, sold, and used between the date inventory was 
 taken and the time of his verification as to the correctness of the 
 inventory, and will require any necessary amendments before the 
 manufacturer makes oath to same before him. 
 
 "Deficiencies found by examining officers" should be immedi- 
 ately reported to the collector, and shall be treated in accordance 
 with the instructions under that head on page 60 of Regulations No. 
 8, revised July 1, 1910. 
 
 Upon receipt of these inventories, properly verified, collectors 
 will prepare their abstracts on loose leaves Record 11 and Form 146 
 of the accounts of cigar and tobacco manufacturers in their districts 
 for the year or period ending December 31, 1914, observing in such 
 preparation instructions in T. D. 1726 and T-Mim-980, as modified 
 by T-Mim-1006, and Treasury Decision No. 1479 and T-Mim-993, 
 respectively, and will forward said accounts to this office as fast as 
 they are completed, not later than 90 days from the 1st day of Jan- 
 uary, 1915. An account showing a deficiency should not be held 
 until the tax on same is collected, but forwarded at once, after hav- 
 ing made sure it is correctly stated. Formal notice to show cause 
 will then be forwarded for service on the manufacturer. 
 
 Collectors are hereby instructed to cause a copy of this circular, 
 together with the necessary inventory blank, to be delivered to each 
 manufacturer of tobacco, snuff, cigars, or cigarettes registered within 
 their respective districts, not later than the 15th day of December 
 next, for the taking of the required inventories on January 1, 1915. 
 
 ROBT. WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
Income Tax 
 
 CHAPTER II 
 
 RETURNS FOR THE YEAR, 1914. 
 
 Statement by Secretary McAdoo: 
 
 The following table shows the total number of income tax re- 
 turns filed during the fiscal year, 1914, classified according to the 
 amount of net income shown on the returns: These returns for 
 the first year of the operation of the new income tax law cover 
 income for the ten months from March 1 to December 31, 1913: 
 
 CLASSIFICATION. 
 
 No RETURNS. 
 
 $ 2,500.00 to 
 
 $ 3,333.00 
 
 79,426 
 
 3,333.33 to 
 
 5,000.00 
 
 114,484 
 
 5,000.00 to 
 
 10,000.00 
 
 101,718 
 
 10,000.00 to 
 
 15,000.00 
 
 26,818 
 
 15,000.00 to 
 
 20,000.00 
 
 11,977 
 
 20,000.00 to 
 
 25,000.00 
 
 6,817 
 
 25,000.00 to 
 
 30,000.00 
 
 4,164 
 
 30,000.00 to 
 
 40,000.00 
 
 4,553 
 
 40,000.00 to 
 
 50,000.00 
 
 2,427 
 
 50,000.00 to 
 
 75,000.00 
 
 2,618 
 
 75,000.00 to 
 
 100,000.00 
 
 998 
 
 100,000.00 to 
 
 150,000.00 
 
 785 
 
 150,000.00 to 
 
 200,000.00 
 
 311 
 
 200,000.00 to 
 
 250,000.00 
 
 145 
 
 250,000.00 to 
 
 300,000.00 
 
 94 
 
 300,000.00 to 
 
 400,000.00 
 
 84 
 
 400,000.00 to 
 
 500,000.00 
 
 44 
 
 500,000.00 to 
 
 1,000,000.00 
 
 91 
 
 1,000,000.00 to 
 
 and over 
 
 44 
 
 Total 
 
 
 ..357,598 
 
 Married 
 
 
 278,835 
 
 Single 
 
 
 
 Men 
 
 
 55,212 
 
 Women. . 
 
 
 23.551 357.598 
 
 Married women rendering separate returns in- 
 cluded above . 
 
 6,682 
 
INCOME TAX 
 
 DEPRECIATION SCHEDULE. 
 
 The following percentages have been adopted as a guide by the 
 Chicago Real Estate Board -for the computation of depreciation of 
 buildings in the absence of a Treasury Department ruling on the 
 subject. Each building must be considered in its individual detail, 
 reasonable depreciation is deducted: 
 
 Fire-proof Steel Buildings Reinforced Concrete Buildings. 
 
 Depreciation One (1%) Per Cent, on buildings five years old or 
 less; Two (2%) Per Cent, on buildings more than five years old. 
 Mill Constructed Buildings and Fire-proof Apartment Buildings. 
 
 Depreciation Two (2%) Per Cent, on buildings five years old 
 or less; Three (3%) Per Cent, on buildings more than five years 
 old. 
 Brick and Lath Buildings, Including Ordinary Flat Buildings. 
 
 Depreciation Three (3%) Per Cent, to Four (4%) Per Cent. 
 
 Old Frame and Nearly Obsolete Buildings. 
 
 Depreciation Five (5%) Per Cent, and upward. 
 
 Note. Where the value of the power plant and machinery, in- 
 cluding elevators, can be separated from the total value of the 
 building, compute depreciation at Ten (10%) Per Cent, on it; the 
 remainder being figured at the percentages heretofore named. 
 
 The estimated value of buildings, power plants, etc., as of March 
 1, 1915, to be taken as a basis on which deductions are to be made. 
 
 72 
 
TREASURY DECISIONS, 1914 
 
 (T. D. 1942.) 
 
 Income tax ruling as to income derived from bonds containing "tax-free 
 covenant clause," and how same may be returned on Form 1040 when. 
 exemption is not claimed at the source. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., February 3, 1914. 
 To collectors of internal revenue: 
 
 This office is in receipt of numerous letters asking whether in- 
 come paid at the source, although not withheld at the source, can be 
 placed in column A, page 2, of Form 1040, and in reply to this 
 inquiry you will advise as follows : 
 
 The stipulation in bonds whereby the tax which may be assessed 
 against them or the income therefrom is guaranteed is a contract 
 wholly between the corporation and the bondholder, and in so far as 
 the income tax law applies the Government will not differentiate 
 between coupons from bonds of this character and those from bonds 
 carrying no such guarantee. The debtor corporation, or its duly 
 authorized withholding agent, will be held responsible for the nor- 
 mal tax due on the coupons on which no tax has been withheld in 
 cases wherein no exemption is claimed. 
 
 Income paid by "debtors" from March 1 to November 1, 1913, 
 shall be included in the return of the individual (under column B, 
 page 2, of Form 1040) as income upon which the normal tax of 1 
 per cent has not been withheld and paid at the source. 
 
 Income received by individuals between November 1 and Decem- 
 ber 31, 1913, upon which the normal tax has been withheld at the 
 source shall be included in their annual return (under column A, 
 page 2, of Form 1040) as income upon which the tax has been paid. 
 
 W. H. OSBORN, 
 .Commissioner of Internal Revenue. 
 
 (T. D. 1943.) 
 
 Instructions to collectors relative to fiduciaries and returns to be made by 
 
 them on Form 1041. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., February 4, 1914. 
 To collectors of internal revenue: 
 
 T. D. 1908 provides that all fiduciaries shall on or before March 1 
 of each year, when the annual interest of any beneficiary in the in- 
 come of the estate or trust is in excess of $3,000 ($2,500 for the 
 year 1913), make and render a return of the income of the person 
 or persons (the beneficiaries) for whom they act to the collector 
 of internal revenue of the district in which the fiduciary resides. 
 
 73 
 
INCOME TAX 
 
 
 Where a decedent died after March 1 in the year 1913, and from 
 March 1 up to the date of his death had a net income of $2,500 or 
 more, the fiduciary (i. e., the executor or administrator) should 
 make a return for the decedent on Form 1040, and the income tax, 
 both normal and additional, shown to be due thereon will be a debt 
 against the estate of the decedent. The same principle will apply 
 * to subsequent years if the net income of the decedent from January 
 1 to the date of his death amounts to $3,000 or more. No other 
 return is required to be made by the fiduciary until the settlement 
 of the estate has reached the stage when the beneficiaries thereof 
 and their respective interests in the income derived from the estate 
 are determinable, and then the fiduciary is required to file a return 
 on or before March 1 of each year, as prescribed by the regula- 
 tions. 
 
 The fiduciary will enter on page 2 of Form 1041, under the ap- 
 propriate heads, all income accruing to the beneficiaries of the 
 trust or estate from March 1 to December 31, 1913, inclusive; 
 but the interest derived from the obligations of a State or any 
 political subdivision thereof and the obligations of the United States 
 or its possessions is not to be included. 
 
 The fiduciary will enter on page 3 of Form 1041 for the year 
 1913 five-sixths of the deductions allowable under paragraph B 
 of the law, and on line 1 it will be proper for the fiduciary to enter 
 all legitimate expenses incurred in administering the estate or 
 trust. If the fiduciary holds and rents business or residential 
 property and pays insurance, water rents, commissions for the col- 
 lection of rents, or any other necessary expenses in managing the 
 estate or trust, it will be proper to enter same on line 1 as an 
 allowable deduction. 
 
 The amount to be shown on page 1, line 3, will represent the 
 total amount of income accruing through the fiduciary to the bene- 
 ficiaries of the estate or trust which is subject to the normal tax, 
 and when the interest of any one beneficiary in this amount from 
 November 1 to December 31, 1913, inclusive, was in excess of 
 $3,000, whether distributed or not, the fiduciary was required to 
 withhold and pay the normal tax on the whole $3,000 and excess 
 thereof, unless the beneficiary filed with the fiduciary Form 1007, 
 as prescribed by the regulations, claiming exemption under para- 
 graph C, and in that event the fiduciary was only required to with- 
 hold and pay the normal tax on the amount in excess of the exemp- 
 tion claimed. 
 
 T. D. 1906 prescribes that when fiduciaries make their annual 
 return they shall give the name and full address of each beneficiary 
 and the share of income to which each may be entitled, which 
 information shall be given on page 1 of Form 1041. In the column 
 "Amount of income paid or accrued to beneficiaries" should be 
 entered the respective interest of the beneficiary in the amount of 
 income as shown on page 1, line 3. 
 
 When the interest of any beneficiary in the amount of income 
 subject to the normal tax, as shown on Form 1041, page 1, line 3, 
 
 74 
 
TREASURY DECISIONS 
 
 is in excess of $3,000, and the same was paid to the beneficiary 
 within the period from November 1 to December 31, 1913, both 
 dates inclusive, the fiduciary was required to withhold and pay the 
 normal tax as prescribed by the regulations, and the information 
 required should be given on Form 1041, page 1, giving the name 
 and full address of each beneficiary, the amount of income paid or 
 payable to each beneficiary (this amount would be the beneficiary's 
 interest in the amount of income subject to the normal tax as shown 
 on line 3), the amount of exemption claimed under paragraph C 
 (if any), the amount of income on which normal tax should be 
 withheld, and the amount of tax withheld, all to be given in the 
 respective columns in the order named. 
 
 A fiduciary acting for a minor or insane person who had a net 
 income of $2,500 or more for the year 1913 will make the return 
 for his ward on Form 1040 and will not be required to file a re- 
 turn on Form 1041, unless he has more than one ward by reason of 
 the same estate or trust; then in that event a -return will be required 
 on Form 1041, and a separate return on Form 1040 for each ward 
 having a net income of $2,500 or more for the year 1913. 
 
 The income accruing or paid to a beneficiary through a fiduciary 
 may be composed in part of dividends, or income upon which the 
 normal tax has been withheld and paid or to be paid at the source, 
 or income derived from the obligations of a State or any political 
 subdivision thereof or from the obligations of the United States or 
 its possessions (income from obligations of a State or any political 
 subdivision thereof and from the obligations of the United States 
 or its possessions is not subject to the tax and should not be in- 
 cluded). If a beneficiary has other income which, added to the in- 
 come accruing to him through his fiduciary, gives him a net income 
 of $2,500 or more for the period from March 1 to December 31, 
 1913, inclusive, he should make a return of his gross income on 
 Form 1040, as required by the regulations. 
 
 To illustrate: If a fiduciary's gross income was $10,000, derived 
 from the following sources: 
 
 1. Interest upon the obligations of the United States $1,000 
 
 2. Dividends on stock or net earnings of corporations 2,000 
 
 3. Interest from bonds containing "tax-free covenant clause," upon 
 
 which the fiduciary did not claim any exemption at source and 
 which he entered on Form 1041, on page 2, column A, as income 
 on which normal tax was withheld 2,000 
 
 4. Income from rents, etc 5,000 
 
 10,000 
 
 the fiduciary's return on Form 1041 would show as follows: 
 
 Page 2. Line 3, column B, amount of rents $5,000 
 
 Line 5, interest from bonds, "tax-free clause," column A 2,000 
 
 Line 10, dividends 2,000 
 
 Aggregate total of gross income 9,000 
 
 75 
 
INCOME TAX 
 
 (No entry of interest on United States bonds, $1,000.) 
 Page 3. Line 1, Accessary expenses actually paid in carrying on busi- 
 ness, including compensation of fiduciary, water rents, insur- 
 ance, etc 450 
 
 Line 3, taxes paid 400 
 
 Line 6, actual repairs made on building, or amount allowed for 
 
 wear and tear 150 
 
 Line 7, dividends not subject to normal tax 2,000 
 
 Line 8, amount of income on which normal tax has been de- 
 ducted and withheld at source, bonds with "tax-free clause". 2,000 
 
 Total deductions 5,000 
 
 Page 1. Line 1, gross' income 9,000 
 
 Line 2, total deductions 5,000 
 
 Line 3, amount of income due beneficiary, which -is subject to 
 normal tax 4,000 
 
 The beneficiary has filed with the fiduciary as a withholding agent 
 a claim for exemption under paragraph C for $2,500 (exemption 
 of single person for 1913), and the return on Form 1041 would 
 show on page 1, in addition to the foregoing entries, the following: 
 
 John Doe, 76 B- Street, New York City. 
 
 In third column, amount of income paid or accrued to beneficiary $4,000 
 
 In fourth column, amount of exemption claimed 2,500 
 
 In fifth column, amount of income on which fiduciary is liable to tax. . 1,500 
 In sixth column, amount of normal tax withheld 15 
 
 In the foregoing illustration the beneficiary, in his return on 
 Form 1040, would make no return of item 1, interest on United 
 States bonds. Item 2, dividends, would be entered on page 2, line 
 11, and for the purpose of calculating the normal tax would be an 
 allowable deduction on page 1, line 4. Item 3, interest on bonds, 
 would be entered on page 2, line 7, column A, and for the purpose 
 of calculating the normal tax would be an allowable deduction on 
 page 1, line 5. Item 4, rents, would be entered on page 2, line 7; 
 $1,500 in column A, and $2,500 in column B (exemption of $2,500 
 claimed and no tax withheld on this amount). This would show- 
 Income received from fiduciary subject to be returned on Form 1040. . $8,000 
 
 Deductions and exemption allowable in calculating normal tax 8,000 
 
 No normal tax due, it having been paid at the source by the fiduciary 
 
 as shown by his return on Form 1041. 
 
 In making the foregoing entry on Form 1040, on line 11, there 
 should be written just above the printed heading, " Amount received 
 from fiduciary," and the amount should be entered in the appro- 
 priate column. 
 
 No illustration is given of income accruing to the beneficiary 
 from other sources, an illustration of this not being deemed neces- 
 sary, as such income is entered in the usual way. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 76 
 
TREASURY DECISIONS 
 (T. D. 1945.) 
 
 Regulation relative to exclusion of income derived from dividends or net 
 earnings of corporations, joint-stock companies or associations, and in- 
 surance companies by persons subject to the normal tax only in computing 
 their net income for the taxable year. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington D. C., February J, 1914. 
 To collectors of internal revenue: 
 
 Referring to that portion of the income-tax law which reads as 
 follows : 
 
 Provided further, That persons liable for the normal income tax only, on 
 their own account or in behalf of another, shall not be required to make 
 return of the income derived from dividends on the capital stock or from the 
 net earnings of corporations, joint-stock companies or associations, and insur- 
 ance companies taxable upon their net income as hereinafter proyided 
 you are informed that returns of individuals, when such individuals 
 are subject to the normal tax only, need not include the income 
 derived from the dividends or net earnings referred to above. 
 When individuals are subject to the additional tax, such income 
 derived from said dividends or net earnings must be shown on the 
 return. 
 
 Persons having an annual net income of $3,000 or more, includ- 
 ing the income derived from dividends or net earnings of corpora- 
 tions, etc., but whose total net income is less than $20,000 and 
 whose net income, exclusive of the income derived from dividends 
 or net earnings of such corporations, etc., is less than $3,000 for the 
 taxable year ($2,500 for the year 1913), shall not be required to 
 make a return of annual net income. 
 
 Returns which have been or may be received from persons sub- 
 ject to the normal tax only, in which such dividends are included 
 and deducted, need not be changed to meet the provisions of this 
 regulation. 
 
 All previous rulings of the department, including the general 
 regulations No. 33, are amended accordingly. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 1946.) 
 
 Special assessment districts created under the laws of the several States for 
 public purposes, such as the improvement of streets and public highways, 
 the provision for sewerage, gas, and light, and the reclamation, drainage, 
 or irrigation of bodies of land, and levee and school districts are held to 
 be political subdivisions of a State. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., February 10, 1914. 
 To collectors of internal revenue: 
 
 Referring to paragraph B, section 2, of the income-tax law, which 
 reads as follows: 
 
 77 
 
INCOME TAX 
 
 That in computing net income there shall be excluded interest upon the 
 obligations of a State or any political subdivision thereof 
 
 you are informed that under date of January 30, 1914, the honor- 
 able the Attorney General held that special assessment districts 
 created under the laws of the several States for public purposes, 
 such as the improvement of streets and public highways, the provi- 
 sion for sewerage, gas, and light, and the reclamation, drainage, 
 or irrigation of bodies of land within such special assessment dis- 
 tricts when such districts are for public use, are political subdivi- 
 sions of the State within the meaning of the above proviso. 
 
 It is held that the term "political subdivision" includes special 
 assessment districts or divisions of a State created by the proper 
 authority of the State acting within its constitutional powers and 
 under its general laws, for the purpose of carrying out a portion of 
 those functions of the State which by long usage and inherent 
 necessities of government have always been regarded as public. 
 
 Levee and school districts when lawfully created under the au- 
 thority of the State and which are authorized by the laws of the 
 State to levy a tax to meet the obligations of such districts are also 
 held to be political subdivisions of a State within the meaning of 
 the income-tax law. 
 
 The income derived from interest upon the obligations of all 
 such public districts shall therefore be excluded in computing net 
 income for the income tax. 
 
 This decision supersedes T. D. 191CX 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1947.) 
 
 Extending T. D. 1945 to cover returns made by fiduciaries in their fiduciary 
 
 capacity. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., February 12, 1914. 
 To collectors of internal revenue: 
 
 You are advised that the provisions of T. D. 1945 in matter 
 of exclusion of dividends or net earnings of corporations, joint- 
 stock companies or associations, and insurance companies, by per- 
 sons subject to the normal tax only, in computing their net income 
 for the taxable year are extended to cover such returns by fidu- 
 ciaries. 
 
 To make clear any doubt on the subject, the provisions of T. D. 
 1945 are hereby specifically extended to include returns made by 
 fiduciaries as such. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue, 
 
TREASURY DECISIONS 
 
 (T. D. 1948.) 
 
 Amendment of T. D. 1942. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., February 12, 1914. 
 To collectors of internal revenue: 
 
 T. D. 1942 is hereby amended as follows : 
 
 In the first paragraph, after the word "income," insert tax on 
 which is, and after the word "paid" insert or to be paid. In the 
 second paragraph, for words "on the coupons on which," substitute 
 in such cases when, and for words "in cases wherein," substitute 
 the word and. In the third paragraph, for the word "paid," sub- 
 stitute the word withheld. 
 
 So that the decision as amended will read: 
 
 "This office is in receipt of numerous letters asking whether in- 
 come, tax on which is paid or to be paid at the source, although 
 not withheld at the source, can be placed in column A, page 2, of 
 Form 1040, and in reply to this inquiry you will advise as follows : 
 
 "The stipulation in bonds whereby the tax which may be assessed 
 against them or the income therefrom is guaranteed, is a contract 
 wholly between the corporation and the bondholder, and in so far 
 as the income-tax law applies, the Government will not differen- 
 tiate between coupons from bonds of this character and those 
 from bonds carrying no such guaranty. The debtor corporation, 
 or its duly authorized withholding agent, will be held responsible 
 for the normal tax due in such cases when no tax has been with- 
 held and no exemption claimed. 
 
 "Income paid by 'debtors' from March 1 to November 1, 1913, 
 shall be included in the return of the individual (under column B, 
 page 2, of Form 1040) as income upon which the normal tax of 1 
 per cent has not been withheld and paid at the source. Income 
 received by individuals between November 1 and December 31, 
 1913, upon which the normal tax has been withheld at the source 
 shall be included in their annual return (under column A, page 2, 
 of Form 1040) as income upon which the tax has been withheld." 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1950.) 
 
 Time for filing returns of income, and penalties in connection therewith. 
 
 Washington, D. C., February 19, 1914. 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 TREASURY DEPARTMENT, 
 To collectors of internal revenue: 
 
 You are advised, and will so announce from your respective 
 offices, that the law and regulations require returns of income for 
 the taxable period, March 1 to December 31, 1913, to be made and 
 
 79 
 
INCOME TAX 
 
 filed on or before March 1, 1914. The law is mandatory and 
 allows no discretion to be exercised by any officer. Section 3176, 
 Revised Statutes of the United States, as amended and made 
 part of the income-tax law, gives to collectors of internal revenue 
 (they being satisfied as to the merits of the claim, and in the rea- 
 sonable exercise of their judgment and discretion) authority to 
 grant extension of time not to .exceed 30 days from the time pre- 
 scribed by law in which to file a return of net income, and then 
 only in cases where such failure, neglect, or refusal is the result 
 of "sickness or absence." 
 
 You are also advised, and will so announce, that there will be no 
 change in income-tax regulations as they now exist prior to March 
 1, 1914, and that all persons and corporations required to make a 
 return which have not as yet done so should make and file their 
 returns at the earliest opportunity and on or before March 1. 
 
 Collectors will forward to this office immediately a report show- 
 ing the number of returns filed in their respective offices as of 
 February 20, 1914. 
 
 Penalties and additional tax, in connection with refusal or neglect 
 to file return of income within the prescribed time. 
 
 As to corporations. For neglect or refusal to make a return 
 within the prescribed time, corporations are liable to a penalty not 
 to exceed $10,000; and in case of neglect or refusal to make, or for 
 a false or fraudulent return made, 100 per cent is to be added 
 to the tax ; and in the case of neglect or refusal to make and verify 
 a return within the prescribed time (except in case of sickness or 
 absence) 50 per cent is to be added to the tax; and in case of an 
 officer of a corporation or like institution charged with the duty 
 and responsibility of making and verifying a return who makes a 
 false or fraudulent return with the intent to defeat or evade any 
 assessment or tax, he shall be guilty of a misdemeanor, and be sub- 
 ject to a fine not to exceed $2,000, or to imprisonment not to ex- 
 ceed one year, or both, at the discretion of the court, together with 
 costs. 
 
 As to individuals. For neglect or refusal to make a return 
 within the prescribed time, the penalty is not less than $20 nor 
 more than $1,000; and in case of intentional neglect or refusal 
 to make, or for a false or fraudulent return made, there shall be 
 added 100 per cent to the tax; and in case of neglect or refusal 
 to make a return within the prescribed time (except in case of 
 sickness or absence) there shall be added 50 per cent to the tax. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 80 
 
TREASURY DECISIONS 
 (T. D. 1953.) 
 
 Extension of time for filing returns under income-tax law by citizens of the 
 United States living abroad. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 2, 1914. 
 To collectors of internal revenue: 
 
 Referring to that portion of section 3176, as incorporated in 
 the income-tax law, which provides that 
 
 In case of neglect occasioned by sickness or absence as -aforesaid, the col- 
 lector may allow such further time for making and delivering such list or 
 return as he may deem necessary, not exceeding thirty days 
 
 you are infprmed as follows: 
 
 Various citizens of the United States living abroad were unable 
 through such absence from this country to inform themselves as 
 to the requirements of the law, and were also unable to obtain the 
 necessary blank forms on which to make their returns of annual 
 net income for the income tax. You are therefore authorized to 
 mark the returns received from foreign countries after March 2, 
 and up to and including March 31 as having the time extended to 
 cover the period of filing such return. 
 
 The State Department has cabled the consular service and others 
 residing in foreign countries that they shall forward a letter, in 
 which their income shall be stated, and that such letter will be re- 
 ceived in lieu of the return so far as the date of filing is con- 
 cerned. 
 
 Such letters are now coming to this office, and they are being for- 
 warded to the various collection districts to be held as tentative 
 returns until the returns on Form 1040 shall be received. The 
 regular returns on Form 1040 when received should be attached to 
 the tentative returns and both should be forwarded to this office 
 with the assessment lists on which the same shall be listed. The 
 date of filing the returns should be considered that on which such 
 tentative returns were filed. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1957 ) 
 
 Partnerships are not subject to income tax, but are required to file certificates 
 of ownership of bonds, etc., in connection with coupon and registered in- 
 terest payments to prevent withholding of their income at the source. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 12, 1914. 
 To collectors of internal revenue: 
 
 Referring to the following provision in paragraph D of the in- 
 tome-tax law 
 
 81 
 
INCOME TAX 
 
 That any persons carrying on business in partnership shall be liable for in- 
 come tax only in their individual capacity, and the share of the profits of a 
 partnership to which any taxable partner would be entitled if the same were 
 divided, whether divided or otherwise, shall be returned for taxation and the 
 tax paid, under the provisions of this section, and any such firm, when re- 
 quested by the Commissioner of Internal Revenue, or any district collector, 
 shall forward to him a correct statement of such profits and the names of the 
 individuals who would be entitled to the same, if distributed 
 
 it is held that the income of partnerships per se is not subject to 
 the income tax. The provisions of the law "relating to the de- 
 duction and payment of the tax at the source of income" do not 
 apply to the income of partnerships as such. Taxable members of 
 partnerships will be required to account, in their individual re- 
 turns, for their respective shares or interest in the partnership 
 profits, whether the same are divided and distributed or not. 
 
 Partnerships owning "bonds and mortgages, or deeds of trust, and 
 other similar obligations of corporations, joint stock companies or 
 associations, and insurance companies," shall file certificates of 
 ownership, in Form 1001, evidencing the fact of partnership owner- 
 ship when presenting for collection or payment coupons or interest 
 orders for interest upon said obligations; and when such certifi- 
 cates are filed, the tax on such interest payments to partnerships 
 shall not be withheld. 
 
 The last sentence in article 14, page 35, and article 47 of Income 
 Tax Regulations No. 33, providing for claim by partnerships for 
 deduction for legitimate expense incurred in conducting the busi- 
 ness of a partnership, are hereby superseded and repealed. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1960.) 
 
 Corporations are allowed by law to deduct interest actually accrued and paid 
 within the year on an amount not in excess of paid-up capital stock out- 
 standing at the close of the year, plus one-half the interest-bearing indebt- 
 edness then also outstanding. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 18, 1914. 
 To collectors of internal revenue: 
 
 Your attention is called to that provision of the income-tax law 
 designated as the third deduction, subdivision (b), paragraph G, 
 reading as follows: 
 
 The amount of interest accrued and paid within the year on its indebtedness 
 to an amount of such indebtedness not exceeding one-half of the sum of its 
 interest-bearing indebtedness and its paid-up capital stock outstanding at the 
 close of the year, and if no paid-up capital stock, the amount of interest paid 
 within the year on an amount of its indebtedness not exceeding the amount 
 of capital employed in the business at the close of the year. 
 
 It is held that in the case of a corporation having capital stock 
 this deductible interest is interest actually accrued and paid within 
 the year on an amount of indebtedness not exceeding the paid-up 
 
 82 
 
TREASURY DECISIONS 
 
 capital stock outstanding at the close of the year, increased by the 
 addition thereto of one-half the interest-bearing indebtedness out- 
 standing at the close of the year. 
 
 The qualifying phrase, "outstanding at the close of the year," 
 appearing in the foregoing quotation, is held to apply to both 
 paid-up capital stock and indebtedness, and "one-half the sum of" 
 qualifies only the indebtedness, which indebtedness, like the paid-up 
 capital stock, is required, by the law to be reported, in making re- 
 turn of annual net income, as outstanding at the close of the year. 
 
 If no indebtedness is outstanding at the close of the year, the 
 maximum deduction allowable on account of interest paid will be 
 the amount of interest actually accrued and paid on an amount of 
 indebtedness not exceeding at any time within the year the entire 
 paid-up capital stock outstanding at the close of the taxable year; 
 that is, in such case, the paid-up capital stock outstanding at the 
 close of the year measures the highest amount of indebtedness upon 
 which deductible interest can be computed. 
 
 For the purpose of an allowable deduction, interest on the maxi- 
 mum amount of indebtedness, determined in the manner above indi- 
 cated, can be computed upon such amount only for the time during 
 which such amount of indebtedness is not in excess of the paid-up 
 capital stock, increased by one-half the sum of the interest-bear- 
 ing indebtedness outstanding at the close of the year. 
 
 In any event, the amount of interest, in order to constitute an 
 allowable deduction, must not only be within the limit of the law as 
 herein defined, but must have actually accrued and been paid within 
 the year for which the return is made. 
 
 In cases where no capital stock exists, the limitation as to deduc- 
 tion is confined to interest actually paid on an amount of indebted- 
 ness not exceeding at any time during the year the capital employed 
 in the business at the close of the year. 
 
 Any provision in the regulations heretofore issued inconsistent 
 with the foregoing is hereby revoked. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1961.) 
 
 Fiduciaries. 
 
 Forms^ 1015 and 1019 may be adapted so that but one certificate will be re- 
 quired to be filed with coupons from the same issue of bonds, the property 
 of different estates or trusts. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 19, 1914. 
 To collectors of internal revenue: 
 
 Under income-tax regulations No. 33, article 39 and 70, fidu- 
 ciaries are required to file certificates on Form 1015 or Form 1019, 
 
INCOME TAX 
 
 according to the nature of the claim to be made by the fiduciary, 
 for each issue of bonds and for each trust. 
 
 It is therefore provided that where fiduciaries have the custody 
 and control of more than one estate or trust, and said estates or 
 trusts have as assets bonds of corporations, etc., of the same issue, 
 said fiduciaries may adapt certificates Form 1015 or Form 1019 by 
 changing the words "estate or trust" in lines 2 and 3 of said forms 
 to the plural, and inserting in the blank space provided in line 3 
 of said forms for the description of the estate or trust the words 
 "As noted on the back hereof." In such cases the notation on the 
 back of the certificate should show for each estate or trust (a) the 
 name of the estate or trust, (b) the amount of the bond, (c) the 
 amount of the interest. In all other respects the certificates should 
 be filled out as indicated thereon. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1962.) 
 
 Information contained in income-tax returns to be treated as inviolably 
 
 confidential. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 20, 1914. 
 
 To collectors of internal revenue, internal-revenue agents, and 
 others concerned: 
 
 The attention of collectors of internal revenue, internal- revenue 
 agents, and other officers concerned is invited to section 3167 of 
 the United States Revenue Statutes, which prohibits the disclosure 
 of information contained in income and other returns of internal- 
 revenue taxpayers. 
 
 All internal-revenue officers will preserve as inviolably confiden- 
 tial all income-tax returns, as the slightest infraction of law upon 
 this subject will be severely punished. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1963.) 
 
 Acceptance of certified checks in payment of internal-revenue taxes. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 18, 1914. 
 
 SIR: This office is in receipt of your letter of the 16th instant in 
 reference to certified checks offered in payment of internal-revenue 
 taxes and to the refusal of your depository to accept such checks 
 where you indorse the same "ivithout recourse." 
 
 8 4 
 
TREASURY DECISIONS 
 
 In reply you are informed that such qualified indorsement is un- 
 necessary, and that any instructions on Forms 17, 21, and 647 con- 
 trary to this view are hereby rescinded. 
 
 In this connection attention is called to the act of March 2, 1911 
 (p. 108, Comp., 1911), respecting such checks not duly paid by 
 the bank certifying to the same. 
 
 Respectfully, W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 COLLECTOR FIRST DISTRICT, Brooklyn, N. Y. 
 
 (T. D. 1965.) 
 
 Advance payment of tax withheld by withholding agents not to be made prior 
 to 30 days preceding the date on which the annual return is required to be 
 filed. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 23, 1914. 
 To collectors of internal revenue: 
 
 Attention is directed to note A appearing on the bottom of Forms 
 1012, 1012c, 1043, and 1044, providing that- 
 Withholding agents may, if they so desire, pay at the time this list is filed, 
 to the collector of internal revenue with whom the list is filed, the amount of 
 tax withheld during the month for which the list is made, 
 And to note A, Form 1042, providing that 
 
 The amount of the tax withheld during the year for which the list is made, 
 may be paid to the collector at the time the list is filed. 
 
 In order that persons whose income tax is deducted and withheld 
 and is to be paid at the source, may have an opportunity to file 
 with the source which is required to withhold and pay tax for them 
 certificates claiming the benefit of deductions and exemptions pro- 
 vided for in paragraph B and allowed in paragraph C of the law, 
 withholding agents will not pay to collectors of internal revenue the 
 tax withheld by them under the law until after the time for filing 
 claims for deductions and exemptions has expired. See Regula- 
 tions No. 33, art. 33, (a) and (b). 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1967.) 
 
 Organizations, etc., exempted by the first proviso of paragraph G of section 2 
 of the act of October 3, 1913, from payment of the income tax, are not 
 subject to the provisions of the income-tax law as withholding agents. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., March 25, 1914. 
 To collectors of internal revenue: 
 
 This office is in receipt of several communications relative to the 
 duty as withholding agents of religious corporations and other or- 
 
 85 
 
INCOME TAX 
 
 ganizations which are specifically enumerated in the first proviso 
 of paragraph G of section 2 of the act of October 3, 1913. 
 
 The language of said proviso is as follows : 
 
 That nothing in this section shall apply to labor, agricultural, or horticul- 
 tural organizations, or to mutual savings banks not having a capital stock 
 represented by shares, or to fraternal beneficiary societies, orders, or associa- 
 tions operating under the lodge system or for the exclusive benefit of the 
 members of a fraternity itself operating under the lodge system, and providing 
 for the payment of life, sick, accident, and other benefits to the members of 
 such societies, orders, or associations and dependents of such members; nor 
 to domestic building and loan associations ; nor to cemetery companies, organ- 
 ized and operated exclusively for the mutual benefit of their members ; 
 nor to any corporation or association organized and operated exclusively for 
 religious, charitable, scientific, or educational purposes, no part of the net in- 
 come of which inures to the benefit of any private stockholder or individual ; 
 nor to business leagues ; nor to chambers of commerce or boards of trade, not 
 organized for profit or no part of the net income of which inures to the benefit 
 of the private stockholder or individual ; nor to any civic league or organiza- 
 tion not organized for profit but operated exclusively for the promotion of 
 social welfare. 
 
 You are therefore advised that the words "this section" are held 
 to refer to and mean the whole of section 2 of the act of October 3, 
 1913, which section comprises the income-tax law, and that the 
 words "nothing in this section shall apply to" were intended to 
 relieve such organizations, etc., as properly come within the classi- 
 fications referred to in the proviso quoted, not only from the pay- 
 ment of an income tax but from every obligation or requirement 
 imposed by any or all of the provisions of said section upon with- 
 holding agents. 
 
 ROBT. WILLIAMS, JR., 
 Acting Cmmissioner of Internal Revenue. 
 
 (T. D. 1973.) 
 
 Revision of Form 1044, monthly list return of amount of normal income tax 
 withheld by first bank or collecting agency. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., April 21, 1914. 
 To collectors of internal revenue: 
 
 Collectors are hereby advised that Form 1044, for monthly list 
 return of amount of normal tax withheld by first bank or collecting 
 agency, has been revised in the following particulars, so that the tax 
 withheld from interest on bonds of different classes or of more than 
 one organization can be reported thereon : 
 
 In the section of reading matter beginning, "To be made in dupli- 
 cate," in the fourth line thereof, change "coupon" to "coupons," and 
 strike out "and interest orders." 
 
 In the last line, next above the tabular list, strike out the blank 
 lines and the words thereunder, "Describe the particular issue of 
 bonds," and "State name and address of debtor organization." 
 Strike out the headings in the tabular list and substitute therefor, 
 
 86 
 
TREASURY DECISIONS 
 
 in separate columns, "Party presenting coupons/' and immediately 
 thereunder, in separate columns, "Name" and "Address," "Name 
 of debtor corporation," "Name of particular issue of bonds," 
 "Amount of income subject to tax," and "Amount of tax with- 
 held." 
 
 Immediately after and under the line of totals of the tabular list 
 there shall be a double rule line. Strike out the words now appear- 
 ing below the total line of the tabular list on Form 1044, viz, 
 "Amount of tax remitted herewith (if any) to collector," and 
 strike out the dotted line following these words, and also the dollar 
 mark on the same line, and strike out the double rule line appear- 
 ing immediately thereunder. 
 
 Strike out all of Note A appearing at the bottom of the form. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1974.) 
 
 Change of regulations as to certificates of ownership in connection with inter- 
 est orders or checks for interest on registered bonds. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 'Washington, D. C., April 21, 1914. 
 To collectors of internal revenue: 
 
 Articles 41 to 46 of the regulations are hereby amended so as to 
 require, in the case of interest payments on bonds registered as to 
 both principal and interest, that debtors in such cases shall deduct 
 the normal tax of 1 per cent from accruing interest on all such 
 bonds before sending out orders or checks for said interest to regis- 
 tered owners, unless there shall be filed with said debtors, at least 
 five days before the due date of said interest, the prescribed certifi- 
 cates claiming exemption. 
 
 Where such certificates are so filed the said debtors shall stamp 
 or write on the interest orders or checks, as the case may be, "Ex- 
 emption claimed by certificate filed with debtor." 
 
 Where prescribed certificates are not so filed, said debtor shall 
 deduct and withhold the normal tax of 1 per cent from the amount 
 of such payment, and shall stamp or write on the interest order or 
 check, as the case may be, "Income iax withheld by debtor/' 
 
 Responsible banks, bankers, or collecting agents receiving for 
 collection interest orders or checks bearing the aforesaid indorse- 
 ments may present said interest orders or checks for collection 
 without requiring that certificates of ownership be filed therewith. 
 
 Certificates of ownership are not required to accompany interest 
 orders or checks in payment of interest on fully registered bonds, as 
 information as to ownership of bonds will be furnished by debtor 
 organizations on monthly list returns, Form 1012; but claim for 
 exemption must be filed with debtors, or the tax must be withheld ; 
 and the form of certificate provided for use of owners of coupon 
 
 7 
 
INCOME TAX 
 
 bonds may be used by owners of registered bonds for the purpose 
 of claiming this exemption. 
 
 Where, because of failure to file certificates claiming exemption, 
 in compliance with above regulations, a part of the income from 
 interest on registered bonds has been withheld for the payment of 
 the normal income tax, debtors may, upon the filing of the proper 
 certificates as providedsin article 42, Income Tax Regulations/ to 
 the extent of exemption claimed, release and pay to the persons 
 entitled thereto the amount of such income so withheld. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1976.) 
 
 Supplemental regulations prescribing revised forms of certificates of owner- 
 ship, exemption, and substitute certificates in lieu of such certificates now 
 in use. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., May 2, 1914. 
 
 The following certificates are prescribed in lieu of certificates 
 now in use, and are to be used in complying with the income-tax 
 regulations requiring the filing of certificates when presenting cou- 
 pons or interest orders for collection : 
 
 Revised Form 1000, 
 
 Ownership Certificate Individual EXEMPTION NOT CLAIMED, 
 shall be in the following form and shall be printed on white paper : 
 
 Form 
 1000. 
 
 KYled. 
 
 Ownership Certlflcate-Indlvidual-EXEMPTION NOT CLAIMED. 
 
 (To be furnished with coupons or interest < 
 
 . . . , 191 . Amount of coupon or registered interest, $ 
 
 (Dale of* maturity of in tires 
 
 I do solemnly declare that I am a citizen or resident of the United States and am the owner of the above-described bonds from 
 which were detached the accompanying coupons, or from which I am entitled to the above-described registered interest, and that 
 all of the information as given in this certificate is true and correct. I do not now claim exemption from having the normal tax 
 of 1 per cent withheld from said income by the debtor at the source. 
 
 Date, ,191 """ ~(Usu'J busiiltsi 'si,;oalur'e of owner of bonda.) 
 
 NOTE 1. To he filled in inly when duly authorized agent executes this 
 
 certificate for ouTter, in which case the name ami address of owner must be t evil nost-oflice address of owner ) 
 
 given, and collecting aseat first receiving certificate must stamp across face 
 "Satisfied as to identity and responsibility of agent" (giving name and 
 address ot collecting agent). 
 
 NOTE 2. It securities arc owned jointly by severs! persons one may sifjn, 
 and the names, addresses, and proportion of ownership of each, indorsed on 
 the back hereof. 
 
 NOTE 3. When numbers of bonds are required to lie given, same are to (Full post-offio* address of agent.) 
 
 be entered on back hereof. 
 
 By Agent 
 
 (Usual business ignature of agent authorized to sign for owner.) 
 
 88 
 
TREASURY DECISIONS 
 
 On the back of said certificate there shall be printed, for the use 
 of joint owners of bonds, the following form, to wit: 
 
 JOINT OWNERS. 
 
 If securities described on other side are owned jointly, tbo names and addresses of owners and the proportion of ownership 
 of each should be given. . : ?:M 
 
 NAMES. 
 
 FULL Posi-OrncE ADDEESSES. 
 
 PBOPOKTIOX OWNED. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Revised Form 1000 B, 
 
 Ownership Certificate Individual EXEMPTION CLAIMED, 
 shall be in the following form, and shall be printed on yellow paper 
 
 Form 
 1000 B 
 
 
 Ownership Certificate Individual EXEMPTION CLAIMED. 
 
 (Full description of bonds, giving name of issue nd Interest rate.) 
 191 Amount at coupon or registered interest, $ . 
 
 (Date of maturity of Interest.) 
 Total exemption allowed under paragraph C, $ ............... ..... Amount of exemption now claimed, $ ............... 
 
 I do solemnly declare that I am a citizen or resident of the United States and am the owner of the above-described bonds from 
 which were detached the accompanying coupons, or from which I am entitled to the above-described registered interest, and that 
 all of the information aa given in this certificate is true and correct. 
 
 Date 
 
 191 
 
 (Usual business signature of o 
 
 NESS zfuff arowned jointly by several persons one may 
 and the names, addresses, and proportion of ownership of each. Indorsed o 
 the back hereof. 
 
 NOTE 3. When numbers of bonds are required to be given, same are to 
 be entered on back hereof. 
 
 (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) 
 
 and -^ejBv Agent 
 
 sign, 6^ '*& slgLamrVoV agint amho'riz'ed'* aign foYowner.) 
 
 (Full post-Kjfflce address of agent.) 
 
 On the back of said certificate there shall be printed, for the use 
 of joint owners of bonds, the following form, to wit : 
 
 JOINT OWNERS. 
 
 If -I-' ' '. "=; described on other side are cTmcd jointly, the narnea nd addresses of owners and the proportion of ownership 
 of each 6h'j*i;u '(.- gi/cu. 
 
 FULL POST-OT7ICE Ar 
 
 BBOPOKTlOlT OWHZD. 
 
 89 
 
INCOME TAX 
 
 ' Revised Form 1001, 
 
 Ownership Certificate FIRMS AND ORGANIZATIONS, 
 shall be in the following form, and shall be printed on yellow paper 
 
 Form 
 1001. 
 
 KeYised. 
 
 Ownership Certificate FIRMS OR ORGANIZATIONS. 
 
 (Showing ownership of bond*, which la to be furnished by flrma or organizations not subject tp withholding of I 
 
 '{>uU description of iwndsYtfvuig naoie'of" issue ai>d~interest ratio "*" 
 
 ,191 Amount of coupon or registered interest, $. . 
 
 (Dale of maturity of Interest.) 
 
 I do solemnly declare that -the firm or organization named below, and of which I am a member or an officer, is the owner ol 
 the above-described bonds from which were detached the accompanying coupons, or upon which there is due the above-described 
 registered interest, and that under the provisions of the Income Tax Law and Regulations said interest is exempt from having the 
 tax withheld at the source, and that all the information given herein is true and correct. 
 
 Date, ,.,..., s ..,,-lW 
 
 Addre*:..., 
 
 (Qlve full pos^offlce address of firm or organliation.) 
 Jtafe-Vfett Bombers ot bond* art required tt be gf /, M me are to be entered on back hereof. 
 
 Revised Form 1002, 
 
 CERTIFICATE FOR USE OF FIRST BANK OR COLLECTING 
 
 AGENCY, 
 
 shall be in the following form, and shall be printed on green paper : 
 
 Form 
 1002. 
 
 Certificate of BANK OB COLLECTING AGENCT. 
 <t. b* arewaM wllb ctmpons or Interest order, whm Ml aec.mpa.kd bj certlflcat* '**,) 
 
 (Give name of debtor.) 
 
 (Full deacriptlon of bonds, giving name of issue and Interest rate.) 
 ,191 . Amount of coupon or registered interest, $.. 
 
 (Date of maturity of Interest.) 
 
 I (we) do solemnly declare that the bank or collecting agency named below has purchased or accepted for collection the 
 
 accompanying coupons or interest orders from , of 
 
 (Name of party from whom received.) (Full posU>fflce addreu of said party.) 
 
 and that no certificate of ownership accompanied said coupons or interest orders, and that I (we) have no knowledge as to who 
 is the owner or owners of the bonds (except as noted on back hereof ) upon which the above-described interest is due, and the 
 bank or collecting agency hereby acknowledges responsibility of withholding therefrom the normal income tax of 1 per cent, in 
 accordance with the regulations of the Treasury Department. 
 
 (Bank or collecting agency.) 
 
 By 
 
 (Signature of officer authorized to sign and official position.) 
 
 (Full 'address of "bank'cV withhoioUng 'agency'.) 
 
 Nora. If the ownership of bonds Is known to person signing this certificate, he must give the name and address of the owner on the back hereof. 
 (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) 
 
 Revised Form 1004, 
 
 Ownership Certificate NONRESIDENT ALIENS, 
 shall be in the following form, and shall be printed on yellow paper 
 
 Ownership Certificate NONRESIDENT ALIENS. 
 
 (To be hralsbed with coupons detached from bonds or other obligations owned bj citizens or subjects, firms, corporations, or < 
 countries and who are not residents of the United Slates.) 
 
 , , 191 Amount of coupon or registered interest, $ 
 
 (Data of maturity of Interest.) 
 
 1 do solemnly declare that the owner of the bonds from which were detached the accompanying coupons, or upon which 
 there matured the aforesaid registered interest, is a nonresident alien in respect to the United States, and is exempt from the 
 income tax imposed on such income by the United States Government under the law enacted October 3, 1913; that no citizen of 
 the United States wherever residing, or foreigner residing in the United States or in any of its possessions, has any interest in 
 said bonds; and that all of the information as given in this certificate is true and correct. 
 
 Date, 
 
 (Signature of owner or, if organization, name.) 
 
 ' ' ' "(If organtea't Ion ,~ signature' of "official" authortted" to "sign", "and" official" 
 position.) 
 
 (FuU post-office address i 
 
 [.-When numbers of bonds an required to be given, same are to be entered on back hereof. 
 (SIGNATURES MUST BE CLEARLY AND LEOIBLY WRITTEN.) 
 
TREASURY DECISIONS 
 
 Revised Form 1007, 
 
 CERTIFICATE CLAIMING EXEMPTION, 
 
 allowed citizens and resident aliens* under paragraph C, shall be in 
 the following form, and shall be printed on yellow paper: 
 
 EXEMPTION CEBTIFICATI 
 
 : as provided In p.r.rtph C o 
 
 > Tu Law of October J, 1I3.) 
 
 eut withholding agent. 
 
 (FuU post-office address.) 
 
 I hereby serve you wltli notice tnat I am single married, with my (wife husband) living 
 
 with me, and that I now claim the benefit of the exemption of $ , as allowed 
 
 In paragraph C of the Federal Income Tax Law of October 3, 1913 (my .total exemption under 
 said paragraph being 8 ). 
 
 Date, ,191 
 
 Signed: .... 
 Address: ... 
 
 ( Full post-olnce address.) 
 
 the debtor or withholding agent at any time, not less than 30 days prior to March first next 
 ng the year for which exemption Is claimed. 
 
 AND LEQIBLY WRITTEN.) 
 
 shall 
 
 Form 
 1015. 
 
 ttorliMl. 
 
 Revised Form 1015, 
 
 Ownership Certificate FIDUCIARY, THE SOURCE, 
 be in the following form, and shall be printed on yellow paper 
 
 Ownership Certificate FIDUCIARY, THE SOURCE, 
 
 (To be Hied with debtor or withholding agents by fiduciaries claiming exemption from withholding at the source.) 
 (Give uarae of debtor.) 
 
 (FuU description of bonds, giving i 
 
 .., , 191 Amount of coupon or registered interest, $ 
 
 (Date -of maturity ol Interest.) 
 
 I (we) do solemnly declare that the estate or trust named below is the owner of the above-described bonds from which were 
 detached the accompanying coupon*, or upon which there is due the above-described registered interest, and acting for the estate 
 or trust in the capacity herein stated, I (we) hereby declare that I (we) do now. claim exemption from having the normal 
 tax of 1 per cent withheld from said income by the debtor at the source. I (we) hereby assume the duty and responsibility , 
 imposed upon withholding agents under the law, of withholding and paying the income tax due, for which I (we) may be liable. 
 
 Date, 
 
 (Xame of fiduciary.) 
 for ... 
 
 (Nam. of estate ort 
 
 (Full post-oincc address.) 
 
 s of bonds arc required to be Riven, same are to be entered on the back hereof. 
 (SIGNATURES MUST BE CLEARLY AND LEQIBLY WRITTEN.) 
 
 Revised Form 1019, 
 
 Certificate of Ownership FIDUCIARY, NOT SOURCE, 
 shall be in the following form, and shall be printed on white paper 
 
 Form 
 1019. 
 
 g 
 
 PS* 
 
 S 5 
 i 
 
 Ownership Certificate FIDUCIARY, NOT SOURCE. 
 
 (To be Bled with debtor or withholding agent, by fldodariea when not claiming any eiemptlon. as an alternative to the I 
 
 (Full description at bonds, giving name of issuo and interest rule.) 
 
 (i>ate'of'inatJr"itVofinwrt) W1 ' Amount of coupon or registered interest, ?.... 
 
 I (we) do solemnly declare that the estate or trust named below is the owner of the above-described bonds from 
 detached the accompanying coupon*, or upon which there is due the above-described n-sj istercd interest,, and actiii" f. 
 or trust in the capacity herein stated, I (we) hereby declare that I (we) do not now claim exemption from having 
 tax of 1 per cent withheld from said income by the debtor at the source. 
 
 which wore 
 >rthecsl:ilu 
 the normal 
 
 (1'upucity In xv Inch 
 unto of csljteoi trust.) 
 
 numbers of bonds are required to be given, same are to bo entered on the b.ick !,. 
 (SIGNATURES MUST bE CLEARLY AND LEGIBLY WRITTEN,) 
 
INCOME TAX 
 
 Form 1058, 
 
 Substitute Certificate EXEMPTION CLAIMED, 
 shall be in the following form, and shall be printed on yellow paper 
 
 Form 
 1058. 
 
 I 
 
 K P f 
 
 K 
 Si' 
 
 Substitute Certificate-EXEMPTION CLAIMED. 
 
 Ibe collecting agent's certificate ta substituted for the certificate of owner in which < 
 
 (Full description of bonds, giv s 
 ,191 
 
 iV of 'issue and'i'riterest rate!) ' 
 Amount of coupon < 
 
 registered interest, ij 
 
 (Date of maturity of Interest.) 
 
 Total exemption allowed under paragraph C, $ Amount of exemption claimed, $ 
 
 I (we) do solemnly declare that the owner of the above-described bonds from which were detached the accompanying 
 
 interest coupons has filed with me (us) a certificate of ownership, Form No. duly executed and filled in according to 
 
 Treasury Regulations, which certificate has been indorsed by me (us) as required by Treasury Regulations, aiid that under 
 the provisions of the income tax law and regulations, said interest is exempt from the withholding and payment of the income 
 tax at the source, or that exemption was claimed as stated herein; and I (we) do hereby promise and pledge myself (ourselves) 
 to forward the said certificate to the Commissioner of Internal Revenue at Washington, D. C., not later than the 20th day of 
 next month, in accordance with Treasury Regulations. 
 
 101 
 
 By.., 
 
 (Name of bank or collecting agenc-y.) 
 '(signature of person 'authorized to sign" aud'l'its official' position.V 
 
 (Full post-uffico address of collecting t 
 
 Form 1059, 
 
 Substitute Certificate EXEMPTION NOT CLAIMED, 
 shall be in the following form, and shall be printed on white paper 
 
 I 
 
 II. 
 
 i' 
 
 Substitute Certlfleate-EXEMPTIOy NOT CLAIMED. 
 
 m when collecting agent's certificate Is substituted for ccrtidcmte of owner I:; hlch < 
 
 (Full description of bonds, giving name 01 Issue ami Interest rate ) 
 
 ,191 Amount of coupon or registered interest, $ 
 
 (Da; a of m&tci Ity of Interest.) 
 I (we) do solemnly declare that the owner cf the above-described bonds from which were detached the accompanying 
 
 coupons has filed with me (us) a certificate of ownership, Form No duly executed and fillc;! ia according to Treasury 
 
 e haa been indorsed by me (us) as required bv Treasury ReguiVuona, and which < .T! 'In viti- did not 
 
 claim any exemption from having the normal tax of 1 per cent withheld by the debtor at the source; and I (we) do hereby 
 promise and pledge myself (ourselves) to forward the said certificate to the Comraisaioner of Internal Revenue at Washington, 
 D. C., aoc later than tuo 20ti day of nxt month, in accordance with Treasury Regulations. 
 
 Date, 
 
 By 
 
 >[ bank or collecting agency.) 
 
 (8igiiature ), JICTSOII authorized to sign, end his offl'cial position.) 
 (Full post-office address of collecting agency.) 
 
 All certificates shall be, in size, 8 by 3^ inches, and shall be 
 printed to read from left to right along the 8-inch dimension. 
 
 All certificates claiming exemption shall be printed on yellow 
 paper; all certificates not claiming exemption shall be printed on 
 white paper; and certificate Form 1002, for use by the first bank 
 or collecting agency, shall be printed on green paper. 
 
 All paper upon which certificates shall be printed shall correspond 
 in weight and texture to white writing paper 21 by 32, about 40 
 pounds to the ream of 500 sheets. 
 
 Certificates heretofore authorized, when properly executed, will 
 be accepted up to October 1, 1914. 
 
 The revised certificates hereby provided will be printed by the 
 Government and furnished without cost for the use of bond owners. 
 
 92 
 
TREASURY DECISIONS 
 
 All existing regulations which may be in conflict with the pre- 
 scriptions of this regulation are hereby superseded. 
 
 Individuals or organizations desiring to print their own certifi- 
 cates may do so, but certificates so printed must conform in size 
 and be printed in similar type, upon the same color, shade, and 
 weight of paper as used by the Government.* 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1977.) 
 
 Ownership certificate to be executed by foreign banks, bankers, etc., claiming 
 exemption of nonresident alien from income tax on interest on bonds 
 owned by said nonresident alien, viz: Citizens or subjects, firms, corpora- 
 tions, or organizations of foreign countries who are not residents of the 
 United States. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C. } May 2, 1914. 
 
 For the purpose of complying with income-tax regulations re- 
 quiring the filing of certificates of ownership of bonds when pre- 
 senting coupons or interest orders for collection of interest on 
 bonds of domestic corporations of the United States owned by non- 
 resident aliens as to the United States, a certificate in the form 
 following is provided, which may be executed by responsible banks 
 or bankers in foreign countries for and in behalf of nonresident 
 alien owners of bonds of United States corporations : 
 
 Form 
 
 1060. I (For use by forelsn banks or bankers, to accompany coupons detacltod from bonds or other obligations owned by citizens or (objects, firms, corporations, r 
 organizations of foreign countries and who are not residents of the United Wales.) 
 
 2' 
 
 I 
 
 gl 
 
 
 
 
 Ownership Certlflcate-NONRESIDENT ALIEN-TO BE EXECUTED BY BANES, BANKERS, ETC. 
 
 (Full description of bonds, giving name of issue and 
 
 191 Amount of coupon 
 
 (uaio 01 maturity 01 interest.) 
 I (we) do solemnly docbro tha'. the owners of the bo 
 oglstercd interest are nonresident aliens as to the t 
 nment under the law enacted October 3. 1913; that n 
 
 any time within three years from the date of this oertiflcat 
 
 Internal J*eve^ue, C wSta g toV^^ 
 
 further agree thai whenever in the Judgment of the Commissioner of Internal Revenue It shall be necessary in or to the administration of the Income tax law, 
 f th bo d U? fresaJd UeSt ^ Comml3sloaer ' I"" 31 Revenue, dfccloso and furnish to him the names and addresses of the owners and the BmounU 
 
 by tot Unltod Stetta, opon preSntatlorTof p?S5o th? TfSf to m^usfbyTfroS, th?o$* Tf 
 I (we) will pay and remit to the United State Government the amount of tax claimed to be doe; 
 
 Date, 
 
 (Name of bonk or banker.) 
 
 By 
 
 (Signature of official authorized to sign.) 
 
 When foreign banks or bankers shall use the foregoing certifi- 
 cate, they may include in one certificate all the coupons from bonds 
 of the same class and same issue, and may include in one certifi- 
 cate all the interest orders or checks for interest on registered bonds 
 of the same class and same issue. 
 
 The above certificate shall* be in size 8 by 3 l /2 inches, and shall 
 be printed to read from left to right along the 8-inch dimension. 
 
 *Sample certificates showing size of type and color of paper can be secured 
 from collectors of internal revenue in their several districts or from the Com- 
 missioner of Internal Revenue at Washington, D. C. 
 
 93 
 
INCOME TAX 
 
 The certificate shall be printed on yellow paper and such paper 
 shall correspond in weight and texture to white writing paper 21 
 by 32, about 40 pounds to the ream of 500 sheets. 
 
 The revised certificate hereby authorized will be printed by the 
 Government and furnished without cost. 
 
 Individuals or organizations desiring to furnish their own certifi- 
 cates may do so, but certificates so printed must conform in size 
 to that prescribed above and be printed in similar type upon the 
 same color, shade, and weight of paper as used by the Government. 
 
 Sample certificates showing size of type and color of paper can 
 be secured from collectors of internal revenue in their several dis- 
 tricts, or from the Commissioner of Internal Revenue, Washing- 
 ton, D. C. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 1983.) 
 
 Decision of Court. 
 
 1. CONSTITUTIONALITY. 
 
 The income tax law is not unconstitutional. 
 
 2. INJUNCTION. 
 
 As the taxes, if collected illegally, may be recovered back, there is no 
 occasion for interference of a court of equity by injunction. 
 
 3. DISMISSAL OF BILL. 
 
 The motion for injunction was overruled and the bill of complaint dis- 
 missed with costs. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., May 28, 1914. 
 
 The appended decision of the Supreme Court of the District of 
 Columbia in the case of John F. Dodge and Horace E. Dodge, v. 
 William H. Osborn, Commissioner of Internal Revenue, is pub- 
 lished for the information of internal-revenue officers and others 
 concerned. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 SUPREME COURT OF THE DISTRICT OF COLUMBIA HOLDING EQUITY COURT. 
 
 No. 32515. 
 
 John F. Dodge and Horace E. Dodge, plaintiffs, v. William H. Osborn, Com- 
 missioner of Internal Revenue, defendant. 
 
 [Decided May 14, 1914.] 
 
 STAFFORD, Judge: * * * In my best opinion that act is not unconstitu- 
 tional in either respect in which it is challenged by the plaintiffs. I think the 
 contentions are satisfactorily met and answered in the brief filed in behalf of 
 the Government, so that I will not take the trouble to write an opinion in 
 the case or go into it fully at this time. 
 
 ******* 
 
 The plaintiffs are amply able to pay the tax, and I think the act provides a 
 proper and reasonable method for the recovery of any taxes illegally exacted 
 
 94 
 
TREASURY DECISIONS 
 
 under the act. The defendant is proceeding in accordance with the explicit 
 directions of the statute, and there is a provision that if the taxes are collected 
 illegally they may be recovered back ; and inasmuch as no irreparable damage 
 will be inflicted upon the plaintiffs by the payment of such taxes, even if ille- 
 gal, and subsequent recovery of them is provided for by the statute, I think 
 there is no occasion for the interference of a court of equity by injunction. I 
 make this statement because the same question may arise in some future 
 case with reference to the scope and effect of section 3224 of the Revised 
 Statutes. So that this bill will be dismissed with costs. 
 
 NOTE. Counsel for the plaintiffs noted an appeal to the Court 
 of Appeals of the District of Columbia. 
 
 (T. D. 198.V) 
 
 Extension to October 31, 1914, of waiver of regulations providing for the fill- 
 ing in on certificates used in connection with the income tax of the num- 
 bers of bonds of corporations, etc. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., May 28, 1914. 
 
 Notice is hereby given that T. D.' 1955, issued May 10, 1914, 
 waiving until June 30, 1914, the requirement that the numbers of 
 bonds or other like obligations of corporations, etc., from which 
 interest coupons are detached or upon which registered interest is 
 to be paid, shall be rilled in on the certificates to be used in con- 
 nection with the income tax is hereby extended to October 31, 1914. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1986.) 
 
 Execution of income tax substitute- certificates 1058 and 1059 by banks or 
 
 collection agents. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., May 29, 1914. 
 To collectors of internal revenue: 
 
 You are advised that as a convenience to banks and collecting 
 agents who desire to substitute their certificates, Forms 1058 and 
 1059, for the owner's certificate accompanying the coupons de- 
 posited for collection, it is hereby provided that the name of the 
 bank or collecting agent may be printed or stamped, and that a fac- 
 simile of the signature of the person authorized to sign the sub- 
 stitute certificate for the bank or collecting agent may also be 
 printed or stamped on the certificate : 
 
 Provided, That in all cases the bank shall first file with the Com- 
 missioner of Internal Revenue a certificate of its authorization in 
 substantially the form following: 
 
INCOME TAX 
 
 '"(City.)" "(Date'.)" 
 
 The COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C. 
 
 The undersigned hereby authorizes the use of the facsimile signature shown 
 below upon all substitute income tax certificates issued in its name until this 
 authorization is revoked by written notice to you. 
 
 (Name of bank or collecting agent.) 
 
 By 
 
 (Signature of person authorized to sign.) 
 
 (Facsimile signature of person (Official position.) 
 
 authorized to sign.) 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 1987.) 
 
 Fiduciaries. 
 
 Forms 1015 and 1019, revised, may be adapted so that but one certificate will 
 be required to be filed with coupons from the same issue of bonds the 
 property of different estates or trusts. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., May 29, 1914. 
 
 To collectors of internal revenue: 
 
 Under Income Tax Regulations No. 33, articles 39 and 70, fidu- 
 ciaries are required to file certificates on Forms 1015 or 1019 (now 
 1015 and 1019 revised), according to the nature of the claim to be 
 made by the fiduciary, for each issue of bonds and for each trust. 
 -It is therefore provided that where fiduciaries have the custody 
 and control of more than one estate or trust, and said estates or 
 trusts have as assets bonds of corporations, etc., of the same issue, 
 said fiduciaries may adapt certificates, Forms 1015 or 1019, revised, 
 by changing the words "estate or trust" in lines 1, 2, and 3 of said 
 forms to the plural, and writing on blank line provided for (the 
 name of the estate or trust) the words, "As noted on the back 
 hereof." 
 
 In such cases the notation on the back of the certificate should 
 show for each estate or trust 
 
 (a) The name of the estate or trust. 
 
 (fr) The amount of the bonds. 
 
 (c) The amount of the interest. 
 
 In all other respects the certificates should be filled out as indi- 
 cated thereon. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 96 
 
TREASURY DECISIONS 
 
 (T. D. 1988.) 
 
 Certificate of ownership of bonds nonresident alien (Form 1060) provided 
 to be executed by foreign banks or bankers may be used by domestic 
 banks or bankers. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 2, 1914. 
 To collectors of internal revenue: 
 
 The provisions of T. D. 1977 permitting responsible banks or 
 bankers of foreign countries to execute certificates of ownership 
 (Form 1060) for nonresident alien owners of bonds of domestic 
 corporations are hereby extended to and for the use of responsible 
 banks or bankers in the United States for and in behalf of non- 
 resident alien owners of bonds of United States corporations. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1989.) 
 
 Designation of losses which are deductible from gross income within a tax- 
 able year. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 2, 1914. 
 To collectors of internal revenue: 
 
 Several letters have been received in which inquiry has been 
 made as to whether losses resulting from the sale of real estate by 
 individuals are properly deductible from gross income in the re- 
 turns of annual net income of individuals for the income tax. 
 
 Under paragraph B of the income tax law it is provided that 
 among the deductions to be allowed shall be "losses actually sus- 
 tained during the year incurred in trade or arising from fires, 
 storms, or shipwreck, and not compensated for by insurance or 
 otherwise." 
 
 Losses arising from 'fires, storms, or shipwreck and not compen- 
 sated for by insurance or otherwise are easily ascertained and 
 there would not appear to be any chance of an erroneous construc- 
 tion as to these. Losses actually sustained during the year in- 
 curred in trade are limited by the language of the act itself. 
 
 "In trade" is synonymous with business. 
 
 "Business" has been defined as 
 
 That which occupies and engages the time, attention, and labor of any one 
 for the purpose of livelihood, profit, or improvement ; that which is his per- 
 sonal concern or interest employment, regular occupation, but it is not neces- 
 sary that it should be his sole occupation or employment. 
 
 The doing of a single act incidentally or of necessity not per- 
 taining to the particular business of the person doing the same 
 will not be considered engaging in or carrying on the business. 
 
 It is therefore held that no losses are deductible in a return of 
 
 97 
 
INCOME TAX 
 
 income save and only those losses permitted and provided for by 
 the statute, viz., those actually sustained during the year 
 Which are "incurred in trade," 
 
 Or which arise from "fires, storms, or shipwreck and not com- 
 pensated for by insurance or otherwise." 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Approved : 
 
 CHARLES S. HAMLIN, - 
 
 Acting Secretary of the Treasury. 
 
 (T. D. 1990.) 
 
 Use of certified checks and other forms of commercial exchange in payment 
 of internal-revenue taxes. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June i, 1914. 
 
 SIR : Your letter of the 28th ultimo has been received, in which 
 you quote a letter of the 27th idem, addressed to you by the presi- 
 dent of the First National Bank of Abingdon, calling attention 
 to the fact that you are receiving from taxpayers in payment of 
 income tax certified checks from various points in your district. 
 The bank requests you to require the income tax to be paid in 
 New York, Washington, Baltimore, or Philadelphia funds which 
 can be used in New York at par, for the reason that they are re- 
 quired to remit every day in New York funds. 
 
 You call attention to the instructions on Form 647, "Notice of 
 assessment of special excise and income tax," which you state 
 instruct taxpayers that they may remit by certified check and that 
 most of them are doing so. You ask what steps shall be taken 
 by you in case the bank declines to accept certified checks for 
 deposit. 
 
 In reply to your request as to what action should be taken in case 
 the bank declines to accept certified checks, your careful attention 
 is invited to the regulations published as Department Circular 
 No. 11, dated March 27, 1913, copy inclosed. You will note that 
 you are required to accept in payment of all internal-revenue taxes 
 certified checks drawn in your favor on national and State banks 
 and trust companies located in the city of Abingdon, and in addi- 
 tion such "out of town" certified checks as you can cash without 
 cost to the Government. In the event that the depositary will not 
 accept for deposit "out of town" certified checks, you are not re- 
 quired by law or regulations to accept such checks in payment of 
 internal-revenue taxes. 
 
 The law does not specifically authorize the acceptance of any 
 form of exchange in payment of internal-revenue taxes other than 
 currency and such certified checks as are specifically described in 
 Department Circular No. 11, reference to which is made above. 
 
 98 
 
TREASURY DECISIONS 
 
 If, however, the collector elects to accept drafts or other mediums 
 of exchange not specifically authorized by law, he does so at his 
 own risk, but it may be said that, if the depositary bank will accept 
 such forms of exchange indorsed by the collector without recourse 
 and issue therefor regular certificates of deposit, the monetary 
 responsibility would appear to be shifted from the collector to the 
 depositary, inasmuch as the collector would be entitled to credit in 
 his accounts by reason of the issuance of such certificates of deposit 
 (see sec. 3211, Rev. Stat, and notation found on page 108 of Com- 
 pilation of Internal Revenue Laws, 1911). 
 Respectfully, 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 COLLECTOR OF INTERNAL REVENUE, 
 
 Sixth District, Abingdon, Va. 
 
 (T. D. 1992.) 
 
 Bonds of foreign corporations payable, as to interest, wholly within the 
 United States, or within or without the United States, at the option of 
 the owner of the bonds, to be treated for income-tax purposes as domestic 
 bonds when accompanied by certificates of ownership properly executed. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C. } June 4, 1914. 
 To collectors of internal revenue:" 
 
 Where foreign corporations have an issue of bonds, the interest 
 upon which is payable wholly within the United States, or within 
 or without the United States, at the option of the owner of the 
 bonds, in all cases where said foreign corporations have fiscal 
 agents within the United States and the said bonds are owned by 
 citizens of the United States or aliens resident within the United 
 States, the collection of interest on said bonds shall be considered 
 to be and treated as a domestic transaction upon the filing with 
 said coupons certificates of ownership properly executed: 
 
 Provided, That whenever coupons from foreign bonds not ac- 
 companied by certificates of ownership are presented for collection 
 they shall be treated as foreign items, and the first bank or collect- 
 ing agency receiving or accepting the same for collection or other- 
 wise shall deduct, withhold, and pay the tax as provided by in- 
 come-tax regulations for the collection of foreign income. 
 
 Where a foreign corporation has an issue of registered bonds, the 
 interest on which is payable through a fiscal agent in the United 
 States, certificates of exemption may be filed with said fiscal agent 
 in manner and form as prescribed by T. D. 1974 and payment by 
 said fiscal agent shall be made in accordance with the provisions 
 of T. D. 1974. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 99 
 
INCOME TAX 
 
 (T. D. 1993.) 
 
 Income Ta.r. 
 
 Interest paid on indebtedness wholly secured by collateral the subject of sale 
 in the ordinary business of a corporation may be deducted as a part of its 
 expense of doing business. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 5, 1914. 
 To collectors of internal revenue: 
 
 This office is in receipt of numerous letters asking a ruling of 
 this office as to the application of the following proviso quoted 
 from subdivision (b) of subsection G of section 2, act of Congress 
 approved October 3, 1913, to-wit: 
 
 Provided, That in the case of indebtedness wholly secured by collateral the 
 subject of sale in the ordinary business of such corporation, joint-stock com- 
 pany or association, the total interest secured and paid by such company, 
 corporation, or association, within the year on any such indebtedness may be 
 deducted as a part of its expense of doing business. 
 
 Many of these inquiries come from corporations engaged in buy- 
 ing and selling real estate, which real estate is pledged for the 
 payment of indebtedness, and the question submitted is whether 
 or not such real estate is "collateral" within the meaning of the 
 proviso quoted and whether or not corporations paying interest 
 on indebtedness wholly secured by such collateral may deduct from 
 gross income as "an expense of doing business" the amount of in- 
 terest paid on such indebtedness^ 
 
 Relative to this you are informed that "collateral," as used in 
 this proviso, comprehends and includes real estate or any form of 
 physical or tangible property bound for the performance of certain 
 covenants, the payment of certain obligations, and if such real 
 estate or other physical or tangible property is the "subject of sale 
 in the ordinary business of the corporation" owning the same, that 
 is, if such corporation is, as a matter of its ordinary business, en- 
 gaged in buying and selling, or dealing in such property, the in- 
 terest actually paid within the year on indebtedness wholly secured 
 by such collateral (a mortgage on such property) may be allowably 
 deducted from gross income under item 4 (a) of the return form 
 as an expense of doing business, without regard to the limit of 
 deductible interest as set out in subdivision "Third," paragraph (b), 
 subsection G of the Federal income tax law hereinbefore cited. 
 
 This construction of the proviso quoted is not intended to and 
 does not authorize the deduction as "an expense of doing business" 
 of any interest paid or indebtedness secured by property, real or 
 personal, which is not the "subject of sale in the ordinary business 
 of the corporation," but which is held by it for the purpose of, or as 
 an instrument in carrying on, its ordinary business such as the 
 rights of way and other property of public utility companies, per- 
 manent office buildings and property of like character held or occu- 
 pied for their own particular use or purpose in the furtherance of 
 the objects of the corporation, but which property is not the sub- 
 
 100 
 
TREASURY DECISIONS- - J 
 
 ject of sale in their ordinary business, and -which is simply occupied 
 or used as an instrument or means of, or essential to, the carrying 
 on of the ordinary business for the transaction of which they" are 
 organized. The fact that such property may be subject to sale 
 under extraordinary or peculiar conditions does not qualify, but 
 father disqualifies, it as "collateral" such as is contemplated by 
 this provision of the act cited. 
 
 The only corporations, joint-stock companies, or associations 
 which will be allowed under this proviso as herein interpreted to 
 deduct as "an expense of doing business" interest paid on indebted- 
 ness wholly secured by mortgage on real estate, or other physical 
 and tangible property, are those corporations, joint-stock com- 
 panies, or associations which are organized and operated for the 
 exclusive purpose of buying, selling, and dealing in the particular 
 kind of property upon which the mortgage is given, and the par- 
 ticular property pledged for the debt upon which the interest is 
 paid must be the "subject of sale in the ordinary business of the 
 corporation." 
 
 Any corporation whose indebtedness is secured by a trust, mort- 
 gage, or by any form of indenture which covers and includes in the 
 lien any property which is not the subject of sale in the ordinary 
 business of such corporation, will be and is excluded from the 
 benefit of this proviso, as hereinbefore construed, and its interest 
 deduction will be limited to the amount authorized in subdivision 
 "third" above referred to that is, the interest actually paid within 
 the year at the contract rate on an amount of bonded or other in- 
 debtedness at no time within the year in excess of a sum ascertained 
 by adding to the paid-up capital stock outstanding at the close of 
 the year one-half of the total amount of the interest-bearing in- 
 debtedness also then outstanding. 
 
 Corporations which under this ruling are entitled to deduct as 
 "an expense of doing business" the total amount of interest paid 
 within the year on "indebtedness wholly secured by collateral the 
 subject of sale in the ordinary business of such corporations," are 
 required to state separately in their returns the amount of indebt- 
 edness upon which such interest is paid, segregating it from the 
 indebtedness not so secured and upon which the interest paid is 
 taken credit for or deducted under item 6 (a) of the return form. 
 The interest-bearing indebtedness stated under item 2 of the return 
 form as one of the bases for determining the amount of interest 
 which may be allowably deducted under item 6 (a) must not in- 
 clude any "indebtedness wholly secured by collateral the subject 
 of sale in the ordinary business of the corporation." Failure to seg- 
 regate the two forms of indebtedness will render the interest de- 
 duction under item 6 (a) subject to suspension and disallowance. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
INCOME TAX 
 
 (T. D. 1996.) 
 
 Cooperative dairies and like organizations do not fall within the classes of 
 organizations enumerated in subsection G, section 2, act of October 3, 
 1913, as exempt, and are required to make returns of annual net income. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 15, 1914* 
 To collectors of internal revenue: 
 
 Attention is called to article 92 of Regulations No. 33, approved 
 January 5, 1914, in which it is provided that cooperative dairies not 
 issuing stock and allowing patrons dividends based on the percent- 
 age of butter fat in milk furnished are not liable to the require- 
 ments of section 2, act of October 3, 1913. 
 
 This* article is amended to the effect that cooperative dairy asso- 
 ciations, whether issuing capital stock or not, are required to make 
 returns of annual net income pursuant to the requirements of this 
 act. 
 
 The only corporations, joint-stock companies or associations, or 
 insurance companies, exempt from the requirements of this act are 
 those which fall within one or another of the classes specifically 
 enumerated in the first proviso of subsection G of the act cited as 
 exempt. 
 
 Cooperative dairies, no matter how organized, do not appear to 
 fall within any of these exempted classes, and will, therefore, be 
 required to make returns. 
 
 In the preparation of their returns, cooperative dairies may in- 
 clude in their deductions from gross income the amount actually 
 paid to members and patrons for milk, but any amount retained at 
 the end of the year over and above expenditures will be returned as 
 net income, upon which the tax will be computed and assessed. 
 
 In so far as article 92, hereinbefore referred to, is in conflict 
 with this ruling, it is hereby revoked, and collectors will require all 
 organizations of this character to make returns of annual net in- 
 come and in other respects comply with the requirements of the 
 Federal income tax law as it applies to corporations, joint-stock 
 companies or associations, and insurance companies. 
 
 In so far as applicable, this ruling also applies to mutual or co- 
 operative telephone companies, farmers' insurance companies, and 
 like organizations. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 1997.) 
 
 Monthly list returns not to be made under oath. 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C. } June 16, 1914. 
 To collectors of internal revenue: 
 The requirement that monthly list returns be made under oath 
 
 102 
 
TREASURY DECISIONS 
 
 (as provided by articles 35, 50, 53, and 59, Income Tax Regula- 
 tions No. 33, when filed by withholding agents on or before the 
 20th of the month following that in which withholding occurred) 
 is hereby waived. 
 
 In all cases the annual list return required of withholding agents 
 (of which the monthly list returns will form a part as required by 
 regulations) will be made, sworn to, and filed as now required by 
 existing regulations, and the jurat for the annual list return will 
 cover the entire return as thus made up. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T .D. 1998.) 
 
 Exemption certificate provided for use of firms, organizations, and fiduciaries 
 claiming exemption from withholding of tax at source on income other 
 than interest on bonds. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 16, 1914. 
 To collectors of internal revenue: 
 
 The following certificate is hereby provided for use of firms, 
 organizations, and fiduciaries for the purpose of establishing their 
 identity and nonliability to withholding at the source of income 
 (other than interest on bonds) payable to them. Said certificates 
 shall be of the size and be printed on yellow paper of the weight 
 and texture all as provided by T. D. 1976, the requirements of 
 which are hereby made applicable to the certificate hereby pro- 
 vided. 
 
 Form 
 1063. 
 
 Exemption Certificate FIRMS, ORGANIZATIONS, OR FIDUCIARIES. 
 
 withholding < Uie source.) 
 
 (Character of Income, otber than Interest on bonds, as, rent, dividend] trom foreign corporations, etc. ) 
 
 I do solemnly declare that the firm, organization, or person named below is, entitled to receive the above-described Income, 
 and that under the provisions of the income tax law and regulations aaid income is exempt from having the tax Mrithheld at the 
 source, and that all the information given herein is true and correct. 
 
 Date, 191 
 
 r 
 
 (Name of firm, organHatloo, or Cdoctary.) 
 
 (Give full post-office address of firm or organisation or fiduciary.) 
 
 The exemption certificate provided for the use of individuals is 
 Form 1007, w 1 'ch will be use by individuals in all cases except 
 for interest on bonds, for which forms 1000 and 1000B are pro- 
 vided. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 103 
 
(T. D. 2001.) 
 
 Corporations desiring to make returns of annual net income on the basis of 
 a fiscal year must give notice in writing to the collector not less than 30 
 days prior to March 1, designating in such notice the last day of some 
 month as the close of the fiscal year. Failure to give such notice at least 
 30 days prior to March 1, or to make return for the preceding calendar 
 year on or before March 1, renders corporations liable to additional tax 
 and penalty. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., June 22, 1914 
 To collectors of internal revenue: 
 
 Your attention is called to the following provision quoted from 
 paragraph O, subsection G of section 2, act of October 3, 1913 : 
 
 The tax herein imposed .shall be computed upon its entire net income ac- 
 crued within each preceding calendar year ending December thirty-first ; 
 * * * Provided further, That any corporation, etc., subject to this tax may 
 designate the last day of any month in th'e year as the day of closing of 
 its fiscal year arid shall be entitled to have the tax payable by it computed 
 upon the basis of the net income ascertained as herein provided for the year 
 ending on the day so designated * * * and it shall give notice of the day 
 it has thus designated as the closing of the fiscal year to the collector of the 
 district in which its principal business office is located at any time not less 
 than thirty days prior to the date upon which its annual return shall be filed. 
 
 Except as provided in the act, all corporations are required to 
 make their returns of annual net income on the basis of the 
 calendar year and to file such returns on or before the 1st day of 
 March next following. March 1 is, therefore, the primary due 
 date for the returns of all corporations. This due date can be 
 postponed only in accordance with some legal or authorized 
 action. Unless such action is taken within the prescribed time, 
 or the returns filed on or before March 1, all corporations in 
 existence at the preceding December 31 and failing to take such 
 action, or so file their returns for the period ended December 
 3.1, will be held to be delinquent, and will be subject to 50 per 
 cent additional tax and the penalty of the law. 
 
 The filing of returns at any date other than on or before March 
 1 and on a basis other than the calendar year can be authorized 
 only in cases wherein corporations, not less than 30 days prior 
 to March 1, give notice in writing to the collector of the district 
 in which are located their principal places of business, designat- 
 ing in such notice the last day of some month as the close of their 
 fiscal year. In this case the corporations will make their returns 
 for the year so established, and will file their returns on or before 
 the last day of the 60-day period next following the date desig- 
 nated as the close of the fiscal year. 
 
 For the purpose of the income tax law, a fiscal year, when 
 designated, must be so designated that the return made on this 
 basis will not comprehend a period greater than 12 consecutive 
 months. If the required notice is delayed until it can not be 
 given at least 30 days prior to March 1, or if the date designated 
 as the close of the fiscal year comprehends a period greater than 
 
 104 
 
TREASURY DECISIONS 
 
 12 months from the close of the period for which the last prior 
 return was made, the returns must be made as of the calendar 
 year and must be filed on or before March 1 until such time as a 
 fiscal year for this purpose can be legally established. 
 
 If a corporation which shall have filed, on or before March 1, 
 its return for the preceding period ended December 31, desires 
 to estabish, as a basis for making future returns, a fiscal year 
 ended at some date prior to the next December 31, it may do so 
 by filing, at least 30 days prior to the date when its returns, on a 
 fiscal year basis, will be due, a notice with the collector desig- 
 nating the last day of some month as the close of its fiscal year. 
 It will then, on or before the last day of the 60-day period next 
 following the date so designated, file a return covering the 
 period from January 1 to the date so designated in the same 
 year, and thereafter its returns will be made for each 12-month 
 period next following such date. 
 
 The above rulings will apply to corporations which began busi- 
 ness within the year, as well as to those which were in existence 
 and transacted business throughout the year. 
 
 Any ruling or Treasury decision heretofore issued and in con- 
 flict with this decision is hereby recalled and revoked. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 2005.) 
 
 Instructions and rules for determining what amount is to be allowed as a de- 
 duction for loss in a return of income. Depreciation allowed by law does 
 not include shrinkage in value of stocks, bonds, etc. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., July 8, 1914. 
 To collectors of internal revenue and revenue agents: 
 
 For the purpose of checking up returns and ascertaining the 
 amount of taxable income of individuals and corporations you are 
 given the following instructions and rules for use in determining 
 the amount of deductible loss allowable to individuals and corpo- 
 rations under the fourth deduction (par. B, p. 5), Regulations No. 
 33, and second deduction, for domestic corporations (par. G, p. 
 14), and second deduction, for foreign corporations (par. G, p. 15), 
 Regulations No. 33. 
 
 The loss considered here has in it no element of "depreciation," 
 or "allowance for wear and tear," or "compensation from insurance 
 or otherwise." It is to be such loss as is absolute and complete and 
 which has been actually sustained. 
 
 Depreciation as an allowable deduction in ascertaining annual 
 net income for the income tax is separately provided for and is not 
 to be confused with loss. The depreciation provided to be taken 
 as a deduction in a return of income is the value assigned to the 
 deterioration of physical improvements or assets, such as are sus- 
 
 105 
 
INCOME TAX 
 
 ceptible of having their value lessened through wear and tear, use 
 or obsolescence. 
 
 The depreciation referred to in the income-tax law does not re- 
 late to evidence of a right or interest in property, and hence any 
 shrinkage in the value of bonds, stocks, and like securities due to 
 fluctuations in their market value is not deductible in a return of 
 income as depreciation or loss. 
 
 Losses may be sustained by individuals or corporations on per- 
 sonal or real property. Only those losses are deductible which are 
 sustained during the tax year "in trade" that is, the business which 
 engages the time, attention, and labor of anyone for the purpose of 
 livelihood, profit, or improvement. Loss to be deductible must be 
 an absolute loss, not a speculative or fluctuating valuation of con- 
 tinuing investment, but must be an actual loss, actually sustained 
 and ascertained during the tax year for which the deduction is 
 sought to be made ; it must be incurred in trade and be determined 
 and ascertained upon an actual, a completed, a closed transaction. 
 
 Losses sustained by individuals or corporations from the sale 
 of or dealings in personal or real- property growing out of owner- 
 ship or use of or interest in such property will not be deductible at 
 all unless they are an incident of, connected with, and grow out of 
 the business of the individual or corporation sustaining the loss, and 
 are ascertained, determined, and fixed as absolute in the above 
 sense within the taxable year in which the deduction is sought to 
 be made. When loss under this heading is ascertained to be de- 
 ductible, the entire amount of the loss will be deductible except 
 where the property in connection with which the loss occurred was 
 acquired prior to March 1, 1913, in the case of individuals, and 
 prior to January 1, 1909, in the case of corporations, and then and in 
 such event the loss ascertained will be prorated over the whole time 
 the property was held, and that part of the whole loss apportioned 
 to the taxable period will be taken into account in annual returns 
 of income. In prorating, fractional parts of years will not be con- 
 sidered. 
 
 Loss is the difference between selling price and cost where the 
 selling price is less than cost. 
 
 Cost of property purchased prior to the incidence of the special 
 excise tax (Jan. 1, 1909), or the incidence of the income tax 
 (Mar. 1, 1913), will be the actual price paid for the property, in- 
 cluding the expense incident to the procurement of the property in 
 the first instance and its sale thereafter, together with carrying 
 charges of interest, insurance and taxes actually paid prior to the 
 incidence of tax (special assessments, if any, "actually paid" as 
 "local benefits" in connection with real estate) ; provided that 
 where, up to the incidence of the tax, the expense of carrying prop- 
 erty has exceeded the income from it, the difference between the 
 expense of carrying ?.nd the income from the property shall be 
 added to the purchase price and the sum thus ascertained shall be 
 the cost of the property; and provided further, that in the case of 
 property purchased prior to the incidence of the tax and sale 
 
 106 
 
TREASURY DECISIONS 
 
 thereof subsequent to the incidence of the tax there shall be ex- 
 cluded from consideration in ascertaining cost any items of income, 
 expense, interest, and taxes previously taken into account in pre- 
 paring a return of annual net income. 
 
 The cost of property acquired subsequent to the incidence of 
 the tax will be the actual price paid for it, together with the ex- 
 pense incident to the procurement of the property in the first 
 instance and its sale thereafter and the cost of improvement or 
 development, if any. 
 
 All existing rulings and regulations in conflict herewith are 
 hereby annulled and superseded. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2006.) 
 
 Definition of "foreign corporation" and "fiscal agent" as used in T. D. 1992, 
 and further explanation of method of handling collection _of income from 
 bonds of such foreign corporations and foreign countries having fiscal 
 agents in the United States. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., July 16, 1914. 
 
 To collectors of internal revenue: 
 
 Doubt having arisen as to the comprehensiveness of the term 
 "foreign corporation," and the duties under the income-tax law 
 of "fiscal agents," as provided in T. D. 1992, you are advised that 
 "foreign corporations" as used in said decision was intended to 
 include municipal and private corporations holding charters 
 under laws of countries foreign to the United States, and "fiscal 
 agents" refers to financial agents in the ordinary sense, upon 
 whom the law casts the same duties with reference to with- 
 holding and paying the tax as are imposed upon withholding 
 and paying agents of domestic corporations by appointment. 
 
 Where a foreign government has a fiscal agent in the United 
 States for the purpose of paying the interest on its obligations, 
 such fiscal agent will be charged with the duty of withholding 
 and paying the tax on such interest payments, except to the ex- 
 tent of exemption claimed. 
 
 Where such foreign countries or corporations have an issue of 
 bonds payable wholly within the United States or within or 
 without the United States, at the option of the owner of the 
 bonds, and where the coupons from such bonds are presented for 
 payment to the fiscal agent in the United States of such foreign 
 countries or corporations, or for collection to a bank or collecting 
 agency whether licensed or not, with ownership certificate at- 
 tached, then and in all such cases said coupons shall be treated as 
 domestic items and the aforesaid fiscal agents will be charged 
 with the duties and responsibilities of withholding and paying 
 agents, and will make return on Form 1012, as provided by in- 
 come tax regulations. 
 
 107 
 
INCOME TAX 
 
 Where, however, such coupons are not presented with such 
 ownership certificates attached, they shall be received only by a 
 licensed bank or collecting agency, and when so received shall 
 be considered to be and be treated as foreign items, in accordance 
 with the regulations for the collection of foreign income. 
 
 This ruling is made in explanation and amendment of T. D. 
 1992 and other applicable regulations. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 
 (T. D. 2011.) 
 
 Taxability of commissions on renewal premiums on insurance. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., July 28, 19/4. 
 To collectors of internal revenue: 
 
 Commissions on renewal premiums for insurance are income 
 when received and income for the period in which received. 
 Therefore, commissions on renewal premiums received between 
 March 1 and December 31, 1913, are taxable income for that 
 period and should be included in returns of income for 1913. 
 
 Where commissions on renewal premiums received by indi- 
 viduals between March 1 and December 31, 1913 (including com- 
 missions on renewal premiums on business written prior to 
 March 1, 1913, and payable and paid subsequent to that date) 
 were not included in returns of income of such individuals for 
 1913, they should file amended returns and include in such 
 amended returns the amount of said commissions on renewal 
 premiums. 
 
 Where returns of annual net income were not made by indi- 
 viduals in receipt of commissions on renewal premiums because 
 of insufficient income to require a return of income, and such 
 showing of insufficient income was caused by the exclusion from 
 the return of said commissions on renewal premiums, such indi- 
 viduals should make and file returns of income and include there- 
 in the commissions received by them on renewal premiums within 
 the period from March 1 to December 31, 1913. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2012.) 
 
 Extending exemption certificate No. 1063, as prescribed in T. D. 1998, to non- 
 resident alien individuals. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., July 50, 1914. 
 To collectors of internal revenue: 
 
 Exemption certificate 1063, as provided in T. D. 1998, is hereby 
 extended to and made applicable to the use of persons who are 
 
 108 
 
TREASURY DECISIONS 
 
 non-resident aliens in claiming exemption from income tax on 
 dividends payable in the United States from stock of foreign 
 corporations, 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2013.) 
 
 Nonresident aliens Amendment of article 8 of Regulations 33, providing for 
 the collection of tax on income of nonresident aliens derived from trades 
 or professions in the United States. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., August 12, 1914. 
 To collectors of internal revenue: 
 
 Article 8, Income Tax Regulations 33, is hereby amended by 
 adding thereto the following : 
 
 The person, firm, company, copartnership, corporation, joint-stock company 
 or association, and insurance company in the United States citizen or resi- 
 dent alien in whatever capacity acting, having the control, receipt, disposal, 
 or payment of fixed or determinable annual or periodical gains, profits, and 
 income, of whatever kind, to a nonresident alien, under any contract or other- 
 wise, and which payment shall represent income of a nonresident alien from 
 the exercise of any trade or profession within the United States, shall make 
 return for such nonresident alien on Form 1040 and shall pay any and all tax 
 normal and additional tax chargeable upon the said income of such non- 
 resident alien. 
 
 So that article 8 as amended shall read : 
 
 ART. 8. The income of nonresident aliens subject to the normal tax of 1 
 per cent shall consist of the total gains, profits, and income derived from all 
 property owned and from every business, trade, or profession carried on 
 within the United States (to be designated as gross income), less deductions 
 (1 to 8, inclusive) specifically enumerated in paragraph B of the act (see art. 
 6), in so far as said deductions relate to said gains, profits, etc. 
 
 The specific exemption in paragraph C of the act can not be allowed as a 
 deduction in computing the normal tax of nonresident aliens. 
 
 Nonresident aliens are subject to additional or surtax the same as pre- 
 scribed in the case of citizens of the United States or persons residing in the 
 United States. 
 
 The responsible heads, agents, or representatives of said nonresident aliens 
 who are in charge of the property owned or business carried on shall make 
 full and complete return of said income and shall pay the tax as provided 
 herein. 
 
 The person, firm, company, copartnership, corporation, joint- stock company 
 or association, and insurance company in the United States citizen or resi- 
 dent alien in whatever capacity acting, having the control, receipt, disposal, 
 or payment of fixed or determinable annual or periodical gains, profits, and 
 income, of whatever kind, to a nonresident alien, under any contract or other- 
 wise, and which payment shall represent income of a nonresident alien from 
 the exercise of any trade or profession within the United States, shall make 
 return for such nonresident alien on Form 1040 and shall pay any and all tax 
 normal and additional tax chargeable upon the said income of such non- 
 resident alien. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 109 
 
.Form 1065. Ed . 200,<x-Aug.,i-i4. 
 
 District of .- 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (Paragraph D, Section 2, Act of Congress -approved October 3, 1913, and Article 12, Regulations No. 
 
 PARTNERSHIPS. 
 
 RETURN OF NET INCOME of ....: .' !. 
 
 (Name of partnership.) 
 
 whose principal place of business is located at , .. 
 
 (Street and number.) 
 
 city or town of . . , in the State of 
 
 ( calendar ) 
 for the j > year ended . , 191 . 
 
 1 . GROSS INCOME (see Note A, page 4) $ . 
 
 .2. DEDUCTIONS: 
 
 (a) Total amount of all ordinary and necessary expenses paid 
 within the year for the maintenance and operation of the 
 business and properties of the partnership, exclusive of 
 interest payments (see Note B, page 4): . $ 
 
 (&) Total amount of losses sustained during tb-3 year not com- 
 pensated by insurance or otherwise (eoo Note 1, page 2)._ $ 
 
 (<) Total amount of depreciation for the year (see Note 2, 
 
 page 2)...' '.." $. 
 
 (d) .Total amount of interest paid on indebtedness $. 
 
 (e) Total amount of interest received upon obligations of a State 
 
 or political subdivision thereof, and upon the obligations 
 of the United States or its possessions $ . 
 
 (/) Total taxes paid during the year _ _ $ _ 
 
 TOTAL DEDUCTION'S. - . . $ . 
 
 3. Net income on which the individual members are subject to tax on their distributive 
 
 interest, whether distributed or not., ; $ 
 
 NOTE. The above blank spaces for figures should show the amount of each respective item: If 
 -there is nothing to return under any item, the word "none" must be written in such blank space. 
 
 1 10 
 
2 
 If deductions are claimed on page 1, state here, in detail: , . 
 
 NOTE 1 . If loss, of what the loss consisted, when it was actually sustained, and how it was deter- 
 mined to be a loss; and if bad debts, of what they consisted, when they were created, when and how 
 they were ascertained to be worthless. 
 
 NOTE 2. If depreciation, the character of the property on which depreciation is claimed; if buildings, 
 the character of the buildings, the material of which constructed, when erected, the cost, and the basis 
 on which deduction claimed was made; if property other titan buildings, the character of the property, 
 its cost, when purchased, and the basis on which depreciation was claimed. 
 
4. Members of partnership: 
 
 PosT-Omc* ADDBBM. 
 
 Amount of distributive 
 iotereot ia net incom*. 
 
 5. Persons who are citizens or residents of the United States employed by your firm, either as mem* 
 here of the partnership or in any capacity whatever, to each of whom a salary or compensation in 
 any form whatever was paid to the amount of $3,000 or over for services rendered during the calendar 
 year. For the year 1913 the report should show amounts received of SfySOO or over for services 
 rendered from March 1 to December SI, 1913, inclusive. 
 
 NAME 
 
 POST-OFFICE ADDRESS. 
 
 Amount of salary or 
 compensation. 
 
 It* 
 
County of. .................... ,.., to wit: 
 
 . ..... . .., Member of the firm of .. ...................... 
 
 ,-, a partnership, whose return of annual net income is set 
 
 forth hereto, being duly sworn, deposes and says that the foregoing report and the several items therein 
 act forth are, to his beat knowledge and belief and from such information as he has been able to obtain, 
 true and correct in each and every particular; that the amount of gross income therein set forth is the 
 full amount of gross income, without any deduction whatsoever, received from all sources by the said 
 partnership during the year stated; that the expenses claimed as deductions were actually incurred 
 and paid during the year; that the amount claimed for losses and depreciation are believed to be proper 
 and allowable deductions under the law, and that the net income therein set forth is the full amount 
 of the distributive interest on which the individual members are subject to income tax. 
 
 For ,., ,., Partnership. 
 
 Sworn and subscribed to before me this day of 191 
 
 NOTARIAL SEAL. 
 
 NOTE A. Gross income shall consist of the total of the gross revenues derived from the operation 
 and management of its business and properties, together with all amounts of income from other sources, 
 including dividends received on stock of organizations, and interest received upon obligations of a State 
 or political subdivision thereof, and upon the obligations of the United States or its possessions. 
 
 NOTE B. Amounts expended in making permanent improvements or betterments, etc., or in any 
 way transferred from earnings to capital account, are not proper deductions in ascertaining annual net 
 income. 
 
 NOTE C. This return of net income is desired for immediate use and should be given prompt atten- 
 tion and, when properly filled in and executed, should be forwarded, not later than 30 days from the 
 date of receipt of notice, direct to the Commissioner of Internal Revenue, Washington, D. C. 
 
 NOTE D. The word "year" as herein used means the calendar or fiscal year, as the case may be, 
 and this return is to show the net earnings for the year as of the date on which the books were closed 
 or the net earnings were ascertained. 
 
INCOME TAX 
 
 (T. D. 2015.) 
 
 Compromises Minimum amounts which will be accepted. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., August 13, 1914. 
 To collectors of internal revenue: 
 
 The fact has been developed that a great number of individuals 
 and corporations failed to make returns of annual net income for 
 the income tax, either through ignorance of the requirements of 
 the law or through a misunderstanding of its requirements, and 
 it has been determined by the Treasury Department to accept 
 offers in compromise of the specific penalty for failure to file re- 
 turns within the period prescribed by law in a minimum sum, as 
 follows: $5 from individuals, $10 from corporations which are 
 organized for profit. 
 
 In the cases of all corporations not organized for profit, the 
 specific penalty will not be asserted this year, provided the re- 
 quired return has been or shall be filed before December 31, 1914. 
 The United States district attorney should be requested not to 
 institute proceedings in such cases. 
 
 The foregoing applies only to those cases where there was no 
 intent to evade the law or escape taxation. 
 
 In all cases, however, wherein a return is not made until the 
 liability to make a return is discovered by investigation of col- 
 lectors of internal revenue or revenue agents, the above schedule 
 will not necessarily apply, but each individual case will be de- 
 cided upon its own merits and the amount of the offer in com- 
 promise which may be favorably considered will be determined 
 accordingly. 
 
 ROBERT WILLIAMS, JR., 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2016.) 
 
 Inspection of income-tax returns Executive order Regulations. 
 
 TREASURY DEPARTMENT, 
 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 Washington, D. C., August 18, 
 To internal-revenue officers and others concerned: 
 
 The following Executive order, together with regulations signed 
 by the Secretary and approved by the President, relative to the 
 publicity feature of section 2 of the act of October 3, 1913, impos- 
 ing an income tax, is hereby published for your information. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 EXECUTIVE ORDER. 
 
 Pursuant to the provisions of Section 2 of the Tariff Act of October 3, 
 1913, said section providing for an income tax, and which contains in para- 
 graph G, sub-paragraph (d) the following provision, 
 
 J 14 
 
TREASURY DECISIONS 
 
 When the: assessment shall be made, as provided in this section, the returns, 
 together with any corrections thereof which may have been made by the 
 Commissioner, shall be filed in the office of the Commissioner of Internal 
 Revenue and shall constitute public records and be open to inspection as such : 
 Provided, That any and all such returns shall be open to inspection only upon 
 the order of the President, under rules and regulations to be prescribed by 
 the Secretary of the Treasury and approved by the President : Provided fur- 
 ther, That the proper officers of any State imposing a general income tax 
 may, upon the request of the governor thereof, have access to said returns 
 or to any abstract thereof, showing the name and income of each such cor- 
 poration, joint stock company, association or insurance company, at such 
 times and in such manner as the Secretary of the Treasury may prescribe, 
 
 it is hereby ordered, that all such returns shall be subject to inspection in 
 accordance and upon compliance with rules and regulations prescribed by 
 the Secretary of the Treasury and approved by the President, bearing even 
 
 date herewith. 
 
 WOODROW WILSON 
 THE WHITE HOUSE, July 28, 1914. 
 
 [No. 1999.] 
 
 REGULATIONS GOVERNING THE INSPECTION OF RETURNS OF CORPORATIONS, JOINT- 
 STOCK COMPANIES., ASSOCIATIONS, OR INSURANCE COMPANIES, MADE IN COMPLI- 
 ANCE WITH THE REQUIREMENTS OF SECTION 2 OF THE ACT OF OCTOBER 3, 1913. 
 
 RETURNS OF INDIVIDUALS ARE NOT OPEN TO THE INSPECTION OF ANYONE EXCEPT 
 THE PROPER OFFICERS AND EMPLOYEES OF THE TREASURY DEPARTMENT. 
 
 TREASURY DEPARTMENT, 
 Washington, D. C., July 28, 1914. 
 
 Inspection of returns. 
 
 By section 2 of the act of October 3, 1913, Congress imposed a tax upon the 
 entire net income arising or accruing from all sources to every citizen of the 
 United States, whether residing at home or abroad, and to every person 
 residing in the United States, though not a citizen thereof, and upon the 
 entire net income from all property owned and of every business, trade, or 
 profession carried on in the United States by persons residing elsewhere, arid 
 upon every corporation, joint-stock company or association, and every insur- 
 ance company, with certain exceptions, engaged in business in the United 
 States, and prescribed the method of handling the returns of annual net 
 income filed in compliance with said law, as follows: 
 
 (d) When the assessment shall be made, as provided in this section, the 
 returns, together with any corrections thereof which may have been made by 
 the Commissioner, shall be filed in the office of the Commissioner of Internal 
 Revenue and shall constitute public records and be open to inspection as such : 
 Provided, That any and all such returns shall be open to inspection only 
 upon the order of the President, under rules and regulations to be prescribed 
 by the Secretary of the Treasury and approved by the President: Provided 
 further, That the proper officers of any State imposing a general income tax 
 may, upon the request of the governor thereof, have access to said returns 
 or to an abstract thereof, showing the name and income of each such corpo- 
 ration, joint-stock company or association or insurance company, . at such 
 times and in such manner as the Secretary of the Treasury may prescribe. 
 
 For the purpose of making effective the legislative intent thus expressed, 
 the President has ordered that such returns shall be open to inspection under 
 the following rules and regulations. The word "corporation," when used 
 alone herein, shall be construed to refer to corporations, joint-stock com- 
 panies or associations, and insurance companies. 
 
 1. The return of every individual, and of every corporation, joint-stock 
 company or association, and every insurance company, whether foreign or 
 domestic, shall be open to the inspection of the proper officers and employees 
 ufth.e Treasury Department. Returns of individuals shall not be subject to 
 
 "5 
 
INCOME TAX 
 
 inspection by anyone except the proper officers and employees of the Treasury 
 Department. 
 
 2. Where access to any return of any corporation is desired by an officer 
 or employee of any other department of the Government, an application for 
 permission to inspect such return, setting out the reasons therefor, shall be 
 made in writing, signed by the head of the executive department or other 
 Government establishment in which such officer or employee is employed, and 
 transmitted to the Secretary of the Treasury. If the return of a corporation 
 is desired to be used in any legal proceedings other than those to which the 
 United States is a party, or to be used in any manner by which any informa- 
 tion contained in the return could be made public, the application for per- 
 mission to inspect such return or to furnish a certified copy thereof shall be 
 referred to the Attorney General, and if recommended by him transmitted 
 to the Secretary of the Treasury. 
 
 3. All returns, whether of persons or of corporations, joint-stock companies 
 or associations, or insurance companies, may be furnished, upon approval of 
 the Secretary of the Treasury, for use, either in the original or by certified 
 copies thereof, in any legal proceedings before any United States grand jury 
 or in the trial of any cause to which both the United States and the person 
 or corporation or association rendering the return are parties either as plain- 
 tiff or defendant, and in the prosecution or defense or trial of which action, 
 or proceeding before a grand jury, such return would constitute material 
 evidence, but in any case arising in the collection of the income tax, the 
 Commissioner of Internal Revenue may furnish for use to the proper officer 
 either the original or certified copies of returns without the approval of the 
 Secretary of the Treasury. In all cases where the use of the original return 
 is necessary, it shall be placed in evidence by the Commissioner of Internal 
 Revenue or by some officer of the Bureau of Internal Revenue designated by 
 him for that purpose, and after such original return has been placed in evi- 
 dence it shall be returned to the files in the office of the Commissioner of 
 Internal Revenue at Washington, D. C. 
 
 4. The Secretary of the Treasury, at his discretion, upon application to him 
 made, setting forth what constitutes a proper showing of cause, may permit 
 inspection of the return of any corporation, by any bona fide stockholder in 
 such corporation. The person desiring to inspect such return shall make 
 application, in writing, to the Secretary of the Treasury, setting forth the 
 reasons why he should be permitted to make such inspection, and shall attach 
 to his application a certificate, signed by the President, or other principal 
 officer of such corporation, countersigned by the Secretary, under the corpo- 
 rate seal of the company, that he is a bona fide stockholder in said company. 
 (Where this certificate can not be secured, other evidence will be considered 
 by the Secretary of the Treasury to determine the fact whether or not the 
 applicant is a bona fide stockholder and, therefore, entitled to inspect the 
 return made by such company.) Upon receipt of such application the corpo- 
 ration whose return it is desired to inspect shall be notified of the facts and 
 shall be given opportunity to state whether any legitimate reason exists for 
 refusing permission to inspect its returns of annual net income by the stock- 
 holder applying for permission to make such inspection. The privilege of 
 inspecting the return of any corporation is personal to the stockholders, and 
 the permission granted by the Secretary to a stockholder to make such inspec- 
 tion can not be delegated to any other person. 
 
 5. The returns of the following corporations shall be open to the inspection 
 of any person upon written application to the Secretary of the Treasury, 
 which application shall set forth briefly and succinctly all facts necessary to 
 enable the Secretary to act upon the request : 
 
 (a) The returns of all companies whose stock is listed upon any duly 
 organized and recognized stock exchange within the United States, for the 
 purpose of having its shares dealt in by the public generally. 
 
 (b) All corporations whose stock is advertised in the press or offered to 
 the public by the corporation itself for sale. In case of doubt as to whether 
 any company falls within the classification above, the person desiring to see 
 such return should make application, supported by advertisements, prospec- 
 
 1x6 
 
TREASURY DECISIONS 
 
 tus, or such other evidence as he may deem proper to establish the fact that 
 the stock of such corporation is offered for general public sale. 
 
 Returns can be inspected only in the office of the Commissoner of Internal 
 Revenue, in Washington, D. C. In no case shall any collector, or any other 
 internal revenue officer outside of the Treasury Department in Washington, 
 permit to be inspected any return or furnish any information whatsoever 
 relative to any return or any information secured by him in his official capa- 
 city relating to such return, except in answer to a proper subpcena, in a case 
 to which the United States is a party. 
 
 6. Returns of individuals shall not be open to the inspection of any person 
 other than the proper officers and employees of the Treasury Department or 
 person rendering the same, and are under no conditions to be made public, 
 except where such publicity shall result through the use of such returns in 
 any legal proceedings in which the United States is a party. 
 
 7. Upon request of the governor of a State imposing a general income tax, 
 the proper officer of such State, to be designated by name and official position 
 by the governor of such State in his application to the Secretary of the 
 Treasury, may have access to the returns or to abstracts thereof showing the 
 name and income of each corporation, joint stock company or association, 
 or insurance company, at such times and in such manner as the Secretary of 
 the Treasury may prescribe. Such application shall be made in writing, 
 addressed to the Secretary of the Treasury and shall show (first) that the 
 State whose governor makes the request, imposes a general income tax; (sec- 
 ond) the name and address of each corporation, etc., to which access is 
 desired; (third) why permission to inspect the returns of the corporations, 
 etc., named in the request is desired, and (fourth) what officer or officers are 
 designated to make the desired inspection, giving their names and official des- 
 ignations. Such request must be signed by the governor of the State and 
 sealed with the seal thereof, and shall be transmitted to the Secretary of the 
 Treasury for his consideration and action thereon. 
 
 No provision is made in the law for furnishing a copy of any return to any 
 person or corporation, and no copy of any return will be furnished to any 
 other than the person or corporation making the return, or their duly con- 
 stituted attorney, except as hereinbefore authorized. 
 
 The provisions herein contained shall be effective on and after the 1st day 
 of September, 1914. 
 
 W. G. MCADOO, 
 Secretary of the Treasury. 
 Approved : 
 WOODROW WILSON, 
 
 The White House, July 28, 1914. 
 
 (T. D. 2017.) 
 
 Nontaxability of interest from bonds and dividends on stock of domestic 
 corporations owned by nonresident aliens. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., August 25, 1914. 
 To collectors of internal revenue: 
 
 Interest on bonds of domestic corporations and dividends on 
 stock of domestic corporations owned by nonresident aliens, and 
 whether such bonds and stock be physically located within or 
 without the United States, are not subject to the income tax. 
 
 W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 117 
 
INCOME TAX it 
 
 (T. D. 2022.) 
 
 Waiver until further notice of regulation requiring the filling in on certificates 
 of numbers of bonds. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 3, 1914. 
 
 Notice is hereby given that regulation requiring the filling in on 
 certificates of numbers of bonds or other like obligations of cor- 
 porations, etc., from which interest coupons are detached or upon 
 which registered interest is to be paid which was extended to 
 October 31, 1914, by T. D. 1985, issued May 28, 1914 is hereby 
 waived until further notice. 
 
 ROBT. WILLIAMS, JR. 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2023.) 
 
 Amending article 58, Income Tax Regulations 33, requiring indorsement or 
 stamp on foreign coupons, checks, bills of exchange, etc. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 12, 1914. 
 To collectors of internal revenue: 
 
 Article 58, Income Tax Regulations 33, is hereby amended to 
 read as follows : 
 
 ARTICLE 58. The licensed person, firm, or corporation first receiving such 
 foreign items for collection, or otherwise, shall withhold therefrom the nor- 
 mal tax of 1 per cent, and will be held responsible therefor. If the foreign 
 item is in. the form of a check or bill of exchange, the words "Income tax 
 
 withheld by " (giving name, address, and date) shall be indorsed or 
 
 stamped thereon by such licensee; but if the item is represented by a coupon 
 or coupons from bonds, the licensee shall attach thereto a statement identify- 
 ing the same, and the indorsement or stamp showing the tax withheld shall, be 
 placed on the statement instead of the coupon or coupons. 
 
 Said indorsement or stamp shall be sufficient evidence of tax withheld to 
 relieve subsequent holders or purchasers from the obligations of withholding. 
 
 ROBT. WILLIAMS, JR. 
 Acting Commissioner of Internal Revenue. 
 
 (T. D. 2028.) 
 
 Income tax Five per cent penalty and interest on delayed payments. 
 
 The 5 per cent penalty and interest on delayed payment of assessed income 
 taxes in the case of persons absent in foreign countries held to be due 
 unless payment is forwarded within ten days after notice and demand, 
 Form 17, should have been received in the ordinary course of the mails. 
 T. D. 1659 modified. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 24, 1914. 
 To collectors of internal revenue: 
 
 In the last sentence of paragraph E of section 2 of the act of 
 October 3, 1913, it is provided: 
 
 118 
 
TREASURY DECISIONS 
 
 * * * And to any sum or sums due and unpaid after the thirtieth day of 
 June in any year, and for ten days after notice and demand thereof by the 
 collector there shall be added the sum of 5 per centum on the amount of tax 
 unpaid, and interest at the rate of 1 per centum per month upon said tax from 
 the time the same becomes due, except from the estates of insane, deceased, 
 or insolvent persons. 
 
 By reason of absence in foreign countries or on account of 
 traveling abroad, it is impossible for many individuals to receive 
 notice and demand on Form 17 and make payment of the taxes 
 assessed thereon so the same can be received by the collector 
 within the 10-day period following June 30 or within the 10-day 
 period following the service of the notice. You are requested, 
 therefore, to enter on Form 17, as the date on which such assessed 
 tax becomes due and payable as near as possible, a date 10 days 
 subsequent to the time that said notice should be received in the 
 ordinary course of the mails by the taxpayer, and where it ap- 
 pears that the full amount of tax assessed was placed in the 
 mails within the 10-day period after the receipt of Form 17, or 
 in case notice so sent is not delivered in due time by reason of 
 delay in the mail and satisfactory evidence of that fact is fur- 
 nished the penalty and interest in such cases will not be collected. 
 In the latter cases the envelope inclosing the notice and bearing 
 the postmark of the receiving office should be forwarded to .the 
 collector and by him transmitted to this office with Form 325 
 as evidence of delay in the delivery of notice so sent. 
 
 This ruling applies solely to the collection of income tax from 
 individuals and includes Government officers. T. D. 1659 is 
 modified accordingly. 
 
 W. H. OSBORN, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2029.) 
 
 Corporations desiring to make returns of annual net income on the basis of 
 a fiscal year must, not less than 30 days prior to the first day of March, 
 give notice in writing to the collector, designating in such notice the last 
 day of some month as the close of the fiscal year, in which case the fiscal 
 year return will cover a 12-months period. The return for that portion 
 of the calendar year preceding the beginning of the fiscal year will be 
 filed on or before March next following. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 24, 1914. 
 
 To collectors of internal revenue: 
 
 Reference is made to T. D. 2001, relative to the designation by 
 corporations of a fiscal year other than a calendar year as a basis 
 for making returns of annual net income. 
 
 You are informed that every corporation amenable to the in- 
 come-tax law in existence at the close of a calendar year is 
 required to file a return covering all or any part of the preceding 
 
 119 
 
INCOME TAX 
 
 calendar year during which it may have been in existence on or 
 before March 1, provided such corporation has not established 
 or does not establish a fiscal year. 
 
 In order to establish a fiscal year it is necessary for the corpo- 
 ration to give notice to you in writing designating the last day 
 of some month as the close of its fiscal year. This notice must 
 be filed not less than 30 days prior to March 1 of the year in 
 which the fiscal-year period of 12 months closes. A return for 
 that portion of the calendar year preceding the commencement 
 of the fiscal period of 12* months is required to be filed on or 
 before March 1 of the year next following the calendar year of 
 which it is a part, and the return for the first full fiscal year is 
 required to be filed on or before the last day of the 60-day period 
 following the close of the fiscal year. 
 
 Example: A corporation desiring to establish its fiscal year as 
 ending on June 30, 1915, must file notice not less than thirty (30) 
 days prior to March 1, 1915, on or before January 29, 1915. A 
 return for the period January 1 to June 30, 1914, must then be 
 filed on or before March 1, 1915, and a return for the first fiscal 
 year period (July 1, 1914, to June 30, 1915) must be filed on or 
 before August 29, 1915. 
 
 That portion of the year preceding the beginning of an estab- 
 lished fiscal year is held to be a fractional part of the calendar 
 year, and as the return of a calendar year is not required to be 
 filed until on or before the first day of March next following, 
 there is no provision of law whereby the return covering a frac- 
 tion of a calendar year is required to be filed earlier than "on or 
 before" the next March 1st, though it is preferred that the return 
 for this fraction shall be filed as early as possible after the close 
 of the period. 
 
 The above instructions are supplemental to T. D. 2001, and 
 rulings or decisions heretofore issued in conflict with the fore T 
 going are hereby revoked. 
 
 W. H. OSBORNE, 
 Commissioner of Internal Revenue. 
 
 (T. D. 2030.) 
 
 Exemption certificate provided for use of banks and bankers, either foreign 
 or domestic, claiming exemption from income tax on dividends from 
 stock of foreign corporations owned by nonresident aliens. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., October 13, 1914. 
 
 To collectors of internal revenue: 
 
 The following certificate is hereby provided, which may be 
 executed by responsible banks or bankers, either foreign or do- 
 mestic, for and on behalf of nonresident owners of stock of cor- 
 
 120 
 
TREASURY DECISIONS 
 
 porations of foreign countries, for the purpose of claiming 
 exemption from the income tax on dividends from such stock : 
 
 Form . 
 
 EXEMPTION CERTIFICATE BANKS OR BANKERS, EITHER FOREIGN OR 
 
 DOMESTIC. 
 
 (For the use of responsible banks or bankers, either foreign or domestic, 
 for and on behalf of nonresident owners of stock of corporations of 
 foreign countries.) 
 
 (Give name of foreign corporation.) 
 
 (Full description of stock, stating whether common or preferred, or both.) 
 
 Amount of dividends, $ 
 
 I (we) do solemnly declare that the owners of the stock of for- 
 eign corporations upon which the aforesaid dividends were declared 
 are nonresident aliens as to the United States and are exempt from 
 the income tax imposed on such income by the United States Govern- 
 ment under the law enacted October 3, 1913; that no citizen of the 
 United States, wherever residing, or foreigner residing in the United 
 States, or in any of its possessions, has any interest in said stock; 
 and that all of the information as given in this certificate is true 
 and correct. I (we) hereby agree that if at any time it shall appear 
 that the income or any part thereof represented or covered by this 
 certificate was, or is, subject to the normal tax imposed by the 
 United States, upon presentation of proof of that fact to me (us) 
 by, from, or through the Commissioner of Internal Revenue, Wash- 
 ington, D. C, I (we) will pay and remit to the United States Gov- 
 ernment the amount of tax claimed to be due; and I (we) hereby 
 further agree that whenever in the judgment of the Commissioner 
 of Internal Revenue it shall be necessary in or to the administration 
 of the income-tax law, I (we) will, upon request of said Commis- 
 sioner of Internal Revenue, disclose and furnish to him the names 
 and addresses of the owners and the amount of the stock aforesaid. 
 
 Date , 191 
 
 (Name of bank or banker.) 
 
 By 
 
 (Signature of official authorized to sign.) 
 
 (Official position.) 
 
 (Full post-office address of bank or 
 banker. ) 
 
 (SIGNATURES MUST BE CLEARLY AND LEGIBLY WRITTEN.) 
 
INCOME TAX 
 
 The above certificate shall be in size 8 by Z l /2 inches, and 
 shall be printed to read from left to right along the 8-inch dimen- 
 sion. 
 
 The certificate shall be printed on yellow paper, and such paper 
 shall correspond in weight and texture to white writing paper, 
 21 by 32, about 40 pounds to the ream of 500 sheets. 
 
 The certificate hereby authorized will be printed by the Gov- 
 ernment and furnished without cost. 
 
 - Banks or bankers desiring to furnish their own certificates may 
 do so, but the certificate so printed must conform in size to that 
 prescribed above and be printed in similar type upon the same 
 color, shade, and weight of paper as used by the Government. 
 
 Sample certificates showing size of type and color of paper can 
 be secured from collectors of internal revenue in their several 
 districts or from the Commissioner of Internal Revenue, Wash- 
 ington, D. C. 
 
 W. H. OSBORN, 
 
 Approved: Commissioner of Internal Revenue. 
 
 W. G/McADOO, 
 
 Secretary of the Treasury. 
 
 (T. D. 2048.) 
 
 Income tax. 
 
 Taxable status of dividends paid on the capital stock from the current net 
 earnings or established surplus created from the net earnings of cor- 
 porations, joint-stock companies or associations, and insurance companies 
 taxable upon their net income. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., November 12, 1914. 
 To collectors of internal revenue : 
 
 Dividends from the net earnings or established surplus created 
 from the net earnings of any corporation, joint-stock cdmpany or 
 association, and insurance company are vested in the stockholder on 
 the date on which such dividends are declared, whether distributed 
 or not, regardless of the time when the surplus or undivided profits 
 from which such dividends are declared were earned and entered 
 on the books of the corporation as such. Dividends so declared 
 should be accounted for in full in the returns of income of indi- 
 viduals for the year in which they became due and payable, when- 
 ever the amount of income is sufficient to require the inclusion of 
 dividends, as provided in paragraph D of the income-tax law and 
 T. D. 1945, and should be included in the gross income of corpora- 
 tions, etc., regardless of the amount of income. 
 
 All decisions and regulations which are in conflict herewith are 
 hereby revoked. 
 
 W. H. OSBORN, 
 
 Approved: Commissioner of Internal Revenue. 
 
 W. G. McAixx), 
 
 Secretary of the Treasury. 
 
United States Income Tax Ques 
 tions and Answers 
 
 Question No. 1. 
 
 Q. From whom can I get the prescribed form upon which to 
 make return? 
 
 A. At the office of the Collector of Internal Revenue for your 
 District. 
 
 Question No. 8. 
 
 Q. Must I call on the Collector of Internal Revenue to furnish 
 me with blanks on which to make my income return or will 
 it be safe for me to wait until he or his deputies send me 
 the blanks? 
 
 A. You should call on the Collector and obtain blanks. If you 
 wait until the Collector calls on you you will probably in- 
 cur the penalties provided in the Act. 
 
 Question No. 3. 
 
 Q. What period must my first return cover? 
 A. From March 1st, 1913, to December 31st, 1913. 
 
 Question No. 4. 
 Q. Who must make a return? 
 
 A. Every person of lawful age having an annual net income of 
 $3,000 or over (for the year 1913 those having a net income 
 of $2,500 or over from March 1st, 1913, to December 31st, 
 1913) must make a return to the Collector of Internal Rev- 
 enue for the District in which such person resides or has his 
 principal place of business. If the normal one per cent tax 
 has been deducted at the source on all the income of an 
 individual such individual need not make a return unless 
 his income exceeds $20,000, in which case he would be liable 
 for the additional tax. 
 
(T. D. 1934.) 
 
 Individuals whose net income from March 1 to December 31, 
 1913, both dates inclusive, is $2,500 or more must make returns 
 of annual net income for 1913. 
 
 Section 2, Act of October 3, 1913, provides that on or before 
 the first day of March, 1914, and the first day of March in each 
 year thereafter, a true and accurate return, under oath or affirma- 
 tion, shall be made to the Collector of Internal Revenue by each 
 person of lawful age, who may be subject to the tax imposed by 
 this section, who has a net income of $3,000 or over for the tax- 
 able year. 
 
 It is further provided that for the year ending December 31, 
 1913, the tax shall be computed on the net income accruing from 
 March 1 to December 31, 1913, both dates inclusive, after de- 
 ducting five-sixths only of the specific exemption and deductions 
 allowable for an entire taxable year. 
 
 Since the return of annual net income for the year 1913, as 
 applied to individuals, is for but five-sixths of the calendar year, 
 and as the law provides that return shall be made on the basis 
 of five-sixths of the year, it is held that individuals whose net 
 income is $2,500 or more for the ten months constituting the 
 taxable period of 1913, shall make returns of annual net income, 
 in accordance with the general provisions of the law covering 
 the 1913 taxable period. 
 
 Question No. 5. 
 
 Q. If my annual net income from all sources is less than 
 $3,000 must I make return? 
 
 A. Unless your net income for the ten months' period, March 
 1st to December 31st, 1913, is $2,500 or over (exclusive of 
 dividends and amounts on which the tax has been withheld 
 at the source) no return is required. 
 
 Question No. 6. 
 
 Q. Who can make a return for a minor having a taxable in- 
 come? 
 
 A. The father of the minor should make return, including such 
 income with his own, otherwise the legal guardian or trus- 
 tee should make return for the minor. 
 
 Question No. 7. 
 
 Q. What income must be included in an individual's return? 
 
 4 
 
A. "Gains, profits and income derived from salaries, wages or 
 compensation for personal service of whatever kind and in 
 whatever form paid, or from professions, vocations, busi- 
 nesses, trade, commerce or sales, or dealings in property, 
 whether real or personal, growing out of the ownership or 
 use of or interest in real or personal property; also from 
 interest, rent, dividends, securities, or the transaction of any 
 lawful business carried on for gain or profit, or gains or 
 profit and income derived from any source whatever, in- 
 cluding the income from, but not the value of, property 
 acquired by gift, bequest, devise or descent." 
 
 The statute exempts the proceeds of life insurance policies, 
 salaries of certain public officers, and all interest upon obli- 
 gations of the United States Government or the government 
 of any state, city, county, town or village or political sub- 
 division thereof. Exempted items need not be included in 
 the return. 
 
 (See Form 1040, page 71.) 
 
 Question No. 8. 
 
 Q. If my net income exclusive of dividends on stock of corpora- 
 tions does not exceed $2,500, March 1 to December 31, 1913, 
 must I make a return for the purpose of the normal tax? 
 
 A. Persons having an annual income of $3,000 or more, includ- 
 ing income derived from- dividends or net earnings of cor- 
 porations, etc., but whose total net income is less than 
 $20,000, and whose net income exclusive of the income 
 derived from dividends or net earnings of such corporation, 
 etc., is less than $3,000 for the taxable year ($2,500 for the 
 year 1913) shall not be required to make a return of annual 
 net income. 
 
 Question No. 9. 
 
 Q. If my gross annual income is $3,700, and after the payment 
 of taxes and interest on mortgages aggregating $800 my net 
 income is $2,900, must I make a return? 
 
 A. No, because five-sixths of your net income for 1913 is less 
 than $2,500. 
 
 Question No. 10. 
 
 Q. If the income of a civil war veteran exceeds his exemption 
 is his pension from the United States Government subject 
 to tax? 
 
A. All compensation paid by the United States Government, 
 as salaries, pensions, etc., subject to the exemptions and de- 
 ductions specifically set forth in the statute, are taxable. 
 
 Question No. 11. 
 
 Q. I purchased 100 shares of stdck in December, 1912, at $120 
 per share, and sold the same in September, 1913, at $140 per 
 share. Must I include the profit as income? 
 
 A. The profit constitutes income as it was realized during the 
 taxable period by the sale of the stock. 
 
 Question No. 12. 
 
 Q. I purchased a house in 1908 for $10,000 and sold it in De- 
 cember, 1913, for $13,000. Must I include in my return for 
 the ten months' period of 1913 the total profit made? 
 
 A. Where the profit is made upon the sale of property pur- 
 chased prior to March 1st, 1913, such profit should be appor- 
 tioned according to the number of years the property was 
 held, unless it can be established what profit, if any, accrued 
 subsequent to March 1st, 1913. Where property is pur- 
 chased after March 1st, 1913, and sold subsequently, the 
 profit made would be considered income for the year in 
 which the property is sold, unless an annual estimated in- 
 crease shall have been included in the return for each year, 
 as required by the Treasury Department Regulations. 
 
 Question No. 13. 
 
 Q. My salary is $1,500; my income from bonds about $1,500. 
 I also earn $700 to $800 annually by tutonng, but I have 
 never kept any accurate account of the amount thus earned, 
 as it is an uncertain sum. Must I report that as part of my 
 income, and if so, on what part of my income shall I be 
 taxed? 
 
 A. You are subject to the normal tax of one per cent on your 
 net income in excess of $3,000. The fact that you have 
 never before kept an account will not excuse you from 
 your obligation to make a return to the Collector of Inter- 
 nal Revenue. 
 
 Question No. 14. 
 
 Q. Am I required to find out what is my share of the undivided 
 portion of a corporation's profits and pay the tax thereon, or 
 
 6 
 
do I have to pay only on my salary and dividends actually 
 received? 
 
 A. You are not required to pay a tax on the undivided portion 
 of the corporation's profits unless the Secretary of the Treas- 
 ury shall certify that the accumulated earnings of the cor- 
 poration are unreasonable for the needs of the business, or 
 unless such accumulation is for the fraudulent purpose of 
 evading- the payment of the tax, you need only make a return 
 of your salary and dividends. 
 
 Question No. 15. 
 
 Q. If I have stock in a company is it necessary for me to notify 
 the company that my income is not above $3,000, and must I 
 claim exemption each time a dividend is declared? 
 
 A. The act specifically exempts dividends of a corporation from 
 operation of the normal tax. Where the corporation is sub- 
 ject to the normal tax of one per cent upon its net earnings 
 no notice to the corporation is necessary. 
 
 Question No. 16. 
 
 Q. I own my residence. Must I include in my gross income the 
 fair rental value of the residence? 
 
 A. No. 
 
 Question No. 17. 
 
 Q. My property is mostly vacant lands, bringing no income. 
 The land will sell at an advance of what it cost me years ago. 
 Must I make a return of the increased value of my land? 
 
 A. Unless the increased value of personal property or land is 
 credited on your books and carried as an asset it is not tax- 
 able as income until the property or land is sold, and where 
 the increase in value extends over a number of years only a 
 portion of such profit is income for the year 1913. 
 
 Question No. 18. 
 
 Q. Does an individual have to pay the tax on annual bonuses 
 given to him as a reward for meritorious service by his em- 
 ployer? 
 
 A. The bonuses, being gifts, are not taxable. 
 
Question No. 19. 
 
 Q. Can I lawfully be taxed on interest earned in the last two 
 or three years, or interest accrued prior to March 1st, 1913? 
 
 A. According to the ruling of the Treasury Department you 
 are taxable on all amounts received or accruing to you sub- 
 sequent to March 1st, 1913. 
 
 Accrued means due and payable. 
 
 Accruing means having arrived at an accrued state during the 
 year and not the process of accruing, and an individual who re- 
 ceives the interest payment, whether upon coupon, registered in- 
 terest or demand notes, and the interest falls upon March 1, 1913, 
 or any date thereafter within the year, the income received from 
 such securities shall be returned as income for the taxable year 
 of 1913, because the amount received by the individual became 
 due and payable within the taxable period. 
 
 On the payment of interest on coupons from bonds, notes or 
 mortgages of individuals no tax is to be withheld unless the pay- 
 ment exceeds $3,000, and if the specific exemption is claimed as 
 allowed under paragraph "C" of the Act, only on the amount in 
 excess of the exemption thus claimed. 
 
 Question No. 20. 
 
 Q. When must I pay the tax on the amount of my return which 
 I am required to make on or before March 1st? 
 
 A. The tax will be calculated on income from March 1st to 
 December 31st for the year 1913. In computing the tax for 
 this period the income for the ten months stated will be taken 
 and the deductions shall be five-sixths only of the subsequent 
 deductions and exemptions allowed in Paragraphs B and C 
 of the statute. 
 
 The amount of the tax assessed will be made after March 1st 
 and taxable persons will be notified of the amount of the 
 tax for which they are responsible on or before the first 
 day of June. The tax assessed must be paid on or before the 
 30th day of June. If taxes due and payable on or before 
 June 30th are not paid at that time the Collector will serve 
 a ten-day notice and demand for the same, and if not paid 
 before the expiration of ten days there will be added to the 
 tax 5 per cent of the amount of the taxes unpaid and interest 
 at the rate of 1 per cent per month until paid. 
 
 Question No. 21. 
 
 Q. My income exceeds $30,000 per year, being derived in part 
 from salary, interest and rents, but principally from dividends 
 on bank, railroad and industrial stocks ; must I make a return 
 
 8 
 
of the dividends received, and am I liable' for the additional 
 tax of 1 per cent on the amount in excess of $20,000? 
 
 A. You are required to make a return of dividends received and 
 you are subject to the additional tax of 1 per cent on the 
 amount in excess of $20,000 without any exemption what- 
 ever. The exemptions in Paragraph C apply only to the 
 computation of the normal tax. 
 
 (See Form 1040, page 71.) 
 
 Question No. 22. 
 
 Q. How can an extension of time be obtained to file the return 
 subsequent to March 1st? 
 
 A. In cases of sickness or absence the time for filing- the return 
 may be extended thirty days upon application to the Col- 
 lector of Internal Revenue for the district in which you live, 
 providing such application is made in writing within the 
 period for which the extension is desired. 
 
 Question No. 23. 
 Q. What deductions are allowed an individual? 
 
 A. (1) Necessary expenses actually paid in carrying on any 
 business, not including personal living, or family or 
 partnership expenses. 
 
 (2) Interest on indebtedness paid within the taxable year. 
 
 (3) All taxes, not including assessments for local benefits, 
 unless such assessments for local benefits are assessed 
 against everyone within the political subdivision of the 
 state, county, city or village. 
 
 (4) Losses actually sustained in trade or from fires, storms 
 or shipwreck not compensated for by insurance or oth- 
 erwise. 
 
 (5) Debts due to taxpayer actually ascertained to be worth- 
 less and charged off during the year. 
 
 (6) A reasonable allowance for depreciation. 
 
 (7) Dividends upon the stock of any corporation or asso- 
 ciation taxable upon its net income. (Not deductible 
 in determining additional tax.) 
 
 (8) Amount of income upon which a tax has been deducted 
 or paid at source. 
 
 (9) $3,000 of income for a single person, and in case of 
 husband and wife, when living together, $4,000 from 
 the aggregate income of both husband and wife. 
 
Question No. 24. 
 
 Q. When and how must married persons living together make 
 return ? 
 
 A. Every single person, and every married person not living 
 with husband or wife in the sense below defined, who has a net 
 income exceeding $3,000 per annum, is liable to pay the normal 
 income tax under this law, but in making return for such tax 
 may claim an exemption of $3,000 from their total net income. 
 
 Husband and wife living together are entitled to an exemp- 
 tion of $4,000 only from the aggregate net income of both, which 
 may be deducted in making the return of such aggregate income 
 for taxation. However, when the husband and wife are sepa- 
 rated, and living permanently apart from each other, each shall 
 be entitled to the exemption of $3,000. 
 
 If the husband and wife not living apart have separate es- 
 tates, the income from both may be made on one return, but the 
 amount of income of each, and the full name and address of 
 both, must be shown in such return. 
 
 The husband, as the head and legal representative of the 
 household and general custodian of its income, should make and 
 render the return of the aggregate income of himself and wife, 
 and for the purpose of levying the income tax it is assumed 
 that he can ascertain the total amount of said income. 
 
 If a wife has a separate estate managed by herself as her own 
 separate property, and receives an income of more than $3,000, 
 she may make return of her own income, and if the husband has 
 other net income, making the aggregate of both incomes more 
 than $4,000, the wife's return should be attached to the return 
 of her husband, or his income should be included in her return, 
 in order that a deduction of $4,000 may be made from the ag- 
 gregate of both incomes. The tax in such case, however, will 
 be imposed only upon so much of the aggregate income of both 
 as shall exceed $4,000. 
 
 If either husband or wife separately has an income equal to 
 or in excess of $3,000, a return of annual net income is required 
 under the law, and such return must include the income of both, 
 and in such case the return must be made even though the com- 
 bined income of both be less than $4,000. 
 
 If the aggregate net income of both exceeds $4,000, an annual 
 return of their combined incomes must be made in the manner 
 stated, although neither one separately has an income of $3,000 
 per annum. They are jointly and separately liable for such re- 
 turn and for the payment of the tax. 
 
 The single or married status of the person claiming the spe- 
 cific exemption shall be determined as of the time of claiming 
 such exemption, if such claim be made within the year for which 
 
 10 
 
return is made, otherwise the status at the close of the year. 
 
 These regulations hereby supersede the regulations relative 
 to Paragraph "C" of the Income Tax Law, as prescribed on page 
 4 of Regulations, part 2, issued under date of October 31, 1913. 
 
 Question No. 25. 
 
 Q. Who may claim exemption of $4,000 the husband or the 
 wife? 
 
 A. If husband and wife, when living together, file separate re- 
 turns the $4,000 exemption may be deducted by either one 
 or may be apportioned between them. 
 
 Question No. 26. 
 Q. When must widowers or widows make return? 
 
 A. When the annual net income amounts to $3,000 or over 
 ($2,500 or over for the period from March 1st, 1913, to 
 December 31st, 1913) the exemption allowed in this in- 
 stance from the annual net income is $3,000. (For the ten 
 months' period of 1913, $2,500.) 
 
 Question No. 27. 
 
 Q. Mr. C. is chief clerk in a large office and has an income of 
 $300 per month, or $3,600 annually. Out of this he sup- 
 ports his widowed mother. Is he allowed an exemption of 
 $3,000 or $4,000? 
 
 A. C. being unmarried, is entitled to an exemption of only 
 $3,000. 
 
 Question No. 28. 
 
 Q. If an unmarried person's income or salary is $5,000 per 
 year, but it costs him $2,000 to live, will this not make his 
 net income $3,000, and therefore, not taxable? 
 
 A. An unmarried person's exemption is $3,000. Living ex- 
 penses are not deductible. 
 
 Question No. 29. 
 
 Q. Can a doctor deduct his automobile expenses, including 
 chauffeur and upkeep of an automobile, from his gross in- 
 come? Can a banker or real estate man who uses his auto- 
 
 11 
 
mobile largely in going to and from his business and in 
 looking after his loans and real estate business, deduct his 
 automobile expenses? 
 
 A. The actual upkeep in the conduct of his business or profes- 
 sion is deductible. 
 
 Question No. 30. 
 
 Q. Regarding the Income Tax, what should be included in the 
 "Expense Account" of a physician and surgeon to arrive at 
 his net income? Aside from general running expenses, in- 
 terest on outstanding obligations, bad accounts to be 
 charged off, can he include cost of instruments, medical 
 books and journals he buys and subscribes for, the study 
 of which enables him to perfect himself in his practice? 
 
 A. Yes. 
 
 Question No. 31. 
 
 Q. I, own my residence, which is mortgaged for $5,000. Can 
 I deduct interest on the mortgage, repairs, fire insurance 
 premiums and taxes? 
 
 A. You may deduct interest and taxes paid, but you cannot de- 
 duct cost of repairs or fire insurance premiums. 
 
 Question No. 32. 
 
 Q. A has property valued at $40,000. The property at the end 
 of the year is worth only $39,000. Will the $1,000 deprecia- 
 tion be allowed as a deduction from A.'s gross income? 
 
 A. A reasonable depreciation is deductible. The percentage 
 depends entirely upon the nature of the property and the 
 use to which it is put. In the case of flat buildings three 
 per cent is a reasonable depreciation, while in the case of a 
 factory building wherein heavy machinery is being operated 
 ten per cent might be a reasonable annual depreciation. The 
 depreciation is in direct .ratio to the life of the building. 
 
 Question No. 33. 
 
 Q. I own a building worth $3,000. Repairs for the past year 
 have cost $500. Can I deduct this item as expense? 
 
 A. Under rulings of the Treasury Department the deduction 
 for expense in any one year must not exceed the average 
 annual cost of repairs for five years previous thereto. 
 
 12 
 
Q. If an individual owns stock in a corporation and has bor- 
 rowed the money with which to buy the stock, has he the 
 right to deduct the interest on that borrowed money in mak- 
 ing a return? 
 
 A. Yes. 
 
 Question No. 34. 
 
 Q. My salary is $1,500 a year and I have $1,000 worth of stock, 
 dividend payable at New York; $1,000 bond, interest pay- 
 able at New York, and $1,000 bond, interest payable at Chi- 
 cago the total from all three not being quite $150 a year. 
 Will you please advise me as to a practical method to pur- 
 sue to avoid paying income tax on my investments, as I 
 am well within the $3,000 exemption? 
 
 A. You should fill in and sign Certificate 1000, claiming therein 
 your exemption under Paragraph C of the Statute, and at- 
 tach the same to your coupons when presenting them for 
 payment. 
 
 'Question No. 35. 
 
 Q. Are amounts paid on life insurance premiums deductible 
 under the item of expense? 
 
 A. Where the insurance is carried as a protection to business 
 or for the benefit of business the premiums paid on the life 
 insurance are deductible under the item of expense. Tl;e 
 test would be whether or not such insurance is payable to 
 a corporation or firm of which the insured is a member or 
 whether or not it can be clearly shown that such insurance 
 is carried for the purpose of protecting one's business or as 
 a business venture. 
 
 Question No. 36. 
 
 Q. I purchased 100 shares of stock in April, 1913, at $100 per 
 share, and on December 31st, 1913, the market value of the 
 stock is found to have increased to $150 per share. Must 
 I include the increase in value as income? 
 
 A. No, because no income has accrued or been realized thereon 
 until sold. 
 
 Question No. 37. 
 
 Q. If the profits in sale of real estate are liable to the income 
 tax, how do you get at the profit on a *4 section of land 
 purchased about thirty-five years ago for $1,600 and sold 
 
 13 
 
March 1st, 1913, for $16,000; $6,000 received in cash and 
 a mortgage taken back for $10,000? 
 
 You should include in your return 1/35 of the net income 
 derived from the sale of your land. From the $16,000 re- 
 ceived you may deduct the cost price, taxes, interest and 
 other expenses during the 35 years that you have held the 
 land, and pro-rating the profit from the number of years 
 you have held the property, 1/35 of the net profit is taxable 
 as income for the year 1913. 
 
 Question No. 38. 
 
 Q. I am a bachelor traveling salesman and have no permanent 
 residence. My salary is $2,400 per year and commissions 
 about .$1,000 per year. Must I furnish a certificate claiming 
 exemption and is my employer entitled to deduct a tax of 
 one per cent on the $400 in excess of the exemption allowed 
 me? 
 
 A. Your employer can not require you to furnish a certificate 
 claiming exemption as your fixed annual income does not 
 exceed $2,400 a year. The tax on income which is not 
 definite and fixed is not deductible at the source. You 
 should make your own return and include therein your in- 
 come from all sources. 
 
 (T. D. 1890). 
 
 Income derived from the following professions and vocations 
 come under this head: Farmers, merchants, agents compensated 
 on the commission basis, lawyers, doctors, authors, inventors, 
 and other professional persons whose income is irregular and 
 indefinite. 
 
 Such persons shall make personal return of all their income, 
 provided their total income from all sources exceeds $3,000. 
 For example ; when a lawyer receives a retainer of $5,000 as a 
 special fee, a deduction therefrom shall not be made by the 
 payer, but when a lawyer receives a retainer of $5,000 per annum, 
 and the exemption claimed is $3,000, $2,000 of such income would 
 be taxed and the tax retained at the source, or if his exemption 
 claimed should be $4,000, $1,000 of such income would be taxed 
 and the tax thereon withheld at the source. 
 
 Question No. 39. 
 
 Q. What is the penalty for refusing or neglecting to file a return 
 on or before March 1st, 1913. 
 
 A. The penalty for refusal or failure to file a return is not less 
 than $20 nor more than $1,000. In addition to fine, the tax 
 
 14 
 
which may be subsequently assessed by the Collector must 
 also be paid. 
 
 Question No. 40. 
 What is the penalty for false or fraudulent return? 
 
 A person making a false or fraudulent return shall be guilty 
 of a misdemeanor and shall be fined not exceeding $2,000 
 or imprisonment not exceeding one^ year or both at the dis- 
 cretion of the court with the costs of the prosecution. 
 
 Question No. 41. 
 
 Q. When a person is traveling for a year or two and is not 
 at home to make return of his income, will he be fined if 
 he collects all his bond coupons at the end of, say, three 
 years? 
 
 A. If the coupons are not presented for payment no return 
 need be made until they are paid 
 
 Question No. 42. 
 
 I am the owner of railroad and other corporation bonds 
 which contain a clause agreeing to pay any tax assessed 
 upon them. Do I have to make any report or return to the 
 Collector of Internal Revenue relating to the income from 
 such bonds? 
 
 When presenting the coupons for payment you should sign 
 certificate form No. 1000 and disclaim exemption therein. 
 You must include the proceeds in your return as taxes de- 
 ducted at the source, although the corporation pays the 
 coupons in full, and you may in such return deduct any 
 amount on which the tax has been paid at the source in 
 ascertaining your net income although the tax on the par- 
 ticular amount was paid by the corporation. 
 
 Question No. 43. 
 
 Are Chicago improvement bonds exempt from the income 
 tax? 
 
 Bonds issued under the authority of State laws for the 
 purposes of street improvement, reclamation or drainage 
 of a district are exempt from deduction or payment of the 
 Federal Income Tax. This ruling reverses the Treasury 
 Decision No. 1910 dated September 4th, 1913, to the effect 
 that the interest on such bonds is taxable. 
 
 15 
 
Muncipal Bonds. 
 
 Such bonds as are an obligation of the municipality are payable 
 both principal and interest out of the general funds of the muni- 
 cipality or out of the funds derived from the general assessment 
 of all property in such municipality. 
 
 The interest on bonds which are issued for special improve- 
 ment and where the principal and interest are both payable out 
 of a special fund derived from assessment against the abutting 
 and benefited property, is, in the opinion of this office, exempt 
 from the tax imposed by the Act cited. 
 
 Question No. 44. 
 
 Q. I conduct a mercantile business. By what method shall 
 I ascertain my gross' annual income ? 
 
 A. To the amount of your inventory of January 1st, 1913 
 add the amount of your sales during the year 1913 and 
 deduct from the total, amount of stock purchased, the result 
 is your gross income for the year. 
 
 To arrive at your taxable income you may make the de- 
 ductions allowed in Paragraph. B of the Act and to such 
 exemption or part thereof as you may be entitled to as pro- 
 vided in Paragraph C. 
 
 Question No. 45. 
 
 Q. Must a foreigner pay an income tax on dividends received 
 from stock of a corporation doing business in the United 
 States? 
 
 A. Payment of the normal tax of one per cent by a corpora- 
 tion on its net earnings exempts its dividends from further 
 taxation unless the aggregate of such dividends paid dur- 
 ing the year to the foreigner shall exceed $20,000, in which 
 case the foreigner is subject to the additional tax. 
 
 Question No. 46. 
 
 Q. Must I include as income a stock dividend of a corporation 
 at the par value of the stock or the market value? 
 
 A. Stock dividends are exempt and are deductible. They 
 should be included at their par value when such stock is 
 finally disposed of, the difference in the sale price and the 
 par value should either be computed as income or loss. 
 
 1 
 
Question No. 47. 
 
 Q. I am in the real estate business and care for a large number 
 of improved properties in Chicago belonging to resident and 
 foreign owners. Suppose the net rental accruing from a 
 certain building is $800 per month. 
 
 A. Where the annual rental paid by a tenant is in excess of 
 $3,000 the tenant is required to deduct the one per cent 
 normal tax on the entire amount unless the owner or his 
 agent serves the tenant with notice to the effect that the 
 rent is exempt, as provided in Paragraphs B, C and D of the 
 Act. 
 
 Question No. 48. 
 
 Q. If I collect rents and interest on mortgages amounting 
 annually to $12,000 which I remit to a non-resident foreigner 
 
 (1) Must I obtain a license? 
 
 (2) Must I pay the normal tax on $12,000? 
 
 A. No license is required for the collection of domestic items 
 within the United States. 
 
 A non-resident foreigner is entitled to the same deduc- 
 tions as citizens of the United States. A foreigner is not 
 entitled to an exemption of $3,000 if single and $4,000 if 
 married. 
 
 For the purpose of claiming such exemption when collect- 
 ing coupons of corporate obligations, the foreigner should 
 execute Certificate Form No. 1.004 ; or if you are the foreign- 
 er's sole agent in this country you may sign the certificate 
 for him claiming such exemption. 
 
 Question No. 49. 
 
 Q. Does the law require that the tax shall be withheld from 
 monthly rental payable to a trust company acting as agent 
 for the landlord? Must the tenant withhold the normal tax 
 of one per cent from the amount of the payments? 
 
 A. When the amount payable during the year is fixed and 
 certain, the normal tax of one per cent should be withheld 
 when the aggregate amount paid exceeds $3,000, unless the 
 landlord or his agent shall claim exemption under Para- 
 graph C of the Income Tax Statute which he may do at 
 any time prior to January 29th of the succeeding year by 
 filing the prescribed Certificate Form No. 1007 with the 
 person withholding the tax. If the deduction is claimed 
 on account of expense or other items allowed under Para- 
 
 17 
 
graph B of the Statute, the landlord or his agent must claim 
 deduction by riling with the tenant Certificate Form No. 
 1008, 
 
 Question No. 50. 
 
 Q. I collect rentals from various properties in Chicago, the 
 aggregate of which exceeds $3,000 per year. Must I deduct 
 one per cent on the excess before remitting to the owner? 
 
 A. No. The one per cent deduction is required to be made only 
 at the source; the source being defined by the Treasury 
 Department as the place where the income originates. 
 
 Question No. 51. 
 Q. What return must guardians, trustees and fiduciaries make? 
 
 A. Guardians, trustees, and others acting in any fiduciary 
 capacity must make an annual return if the annual interest 
 of any beneficiary exceeds $3,000 in which case a list return 
 must also be made containing the name and address of 
 each beneficiary and the amount to which each is entitled. 
 
 ( T. D. 1929. ) 
 
 Collecting Agent's certificate to be substituted for certificate of 
 owners when said owners are fiduciaries, not claiming exemp- 
 tion at the source. 
 
 Subject to the provisions of the Regulations in Treasury De- 
 cision 1903, (page 6) dated November 28, 1913, collecting agents 
 may substitute Form 1019a, properly filled in and numbered, for 
 the certificate of the owner on Form 1019 (page 80). 
 
 When collecting agents substitute their own certificate in 
 lieu of owner's certificate on Form 1019, said substitute certifi- 
 cate shall be Form 1019a. 
 
 Question No. 52. 
 
 Q. Will the executor of an estate have to pay a tax on the in- 
 come of said estate over $13,000? The income is divided 
 among several beneficiaries none of whom receives over 
 $1,000. 
 
 A. Where no one of the beneficiaries receives in excess of 
 $3,000 the tax is not deductible at the source by the execu- 
 tor, notwithstanding the fact that the aggregate amount paid 
 to all the beneficiaries exceeds $3,000. Executor may obtain 
 exemption from deduction of the tax at the source by filing 
 certificate 1015 (see page 68). 
 
 II 
 
Question No. 98. 
 
 Q. As Trustee under a former Will I am paying each year to 
 a beneficiary $10,000. Is this subject to tax? 
 
 A. Money or value of property acquired by gift, bequest, de- 
 vise or descent is exempt from taxation under the Federal 
 Income Tax Law. 
 
 Question No. 54. 
 
 Q. I received during the year a legacy of $5,000 under the Will 
 of my aunt and an annuity of $2,000 from my father's estate. 
 Must I include this amount in my return? 
 
 A. Gifts are not taxable under the statute and you will not have 
 to include the $7,000 therein, but the income from the said 
 $7,000 must be included in your return. Unless the sum 
 of the annuity from your father's estate and your income 
 from other sources exceeds $3,000 vou need make no return. 
 
 Question No. 55. 
 
 Q. The Income Tax Law was enacted October 3rd, 1913 and 
 took effect as of March 1st, 1913. Why is this law not ex 
 post facto? 
 
 A. As the Sixteenth Amendment was ratified by the required 
 majority of the legislatures of the several States on March 
 1st, 1913, the power to tax under this Amendment according 
 to statutory construction dates from the ratifying of the 
 Amendment. The limitations of the taxing power of the 
 Government are limitless. A retroactive law is not neces- 
 sarily ex post facto. An ex post facto law relates to penal- 
 ties for crime. An ex post facto law is one which makes 
 criminal an act committed prior to the enactment of the 
 law or which increases the punishment subsequent to the 
 commission of the crime, or one which requires less or dif- 
 ferent testimony for conviction of an offense than that re- 
 quired at the time of its commission. 
 
 Question No. 56. 
 Q. When must a corporation file a return? 
 
 A. Every corporation, except certain trade, civic and charitable 
 associations must file a return of income, irrespective of the 
 amount. 
 
 19 
 
(T. D. 1933). 
 
 Mutual Telephone Companies and Mutual Insurance Companies. 
 
 You are informed that under the provisions of the act above 
 cited, every corporation, joint stock company, any and every 
 insurance company, no matter how created or organized, is sub- 
 ject to the income tax and will be required to make returns of 
 annual net income, except such as are specifically enumerated 
 in the act as exempt from its provisions. In the list of those so 
 enumerated as exempt do not appear mutual telephone com- 
 panies or similar organizations. 
 
 Since under this act no exemption is provided, either express 
 or implied, for mutual telephone and like companies, and liability 
 is not dependent upon whether or not the corporation is organ- 
 ized for profit, it is held that all corporations not specifically 
 enumerated as exempt will be required to make returns of the 
 net income returned. 
 
 This ruling will comprehend all telephone companies, local 
 insurance companies, and like corporations whether or not they 
 are organized primarily for the mutual benefit of their members. 
 
 Question No. 57. 
 Q. What period must a corporation's return cover? 
 
 A. A corporation's return ordinarily covers the period from 
 March 1st, 1913, to December 31st, .1913, unless the corpora- 
 tion shall thirty days before March 1st, 1914 give notice to 
 the Collector of Internal Revenue that its return shall be 
 made for a fiscal year and designate the termination of such 
 fiscal year. Ordinarily corporate returns must be made on 
 or before March 1st, 1913, but when a fiscal year has been 
 designated the corporation must make its return within 
 sixty days after the day designated as the close of the fiscal 
 year and pay the tax assessed thereon within one hundred 
 and eighty days after the close of such designated fiscal 
 year. 
 
 Question No. 58. 
 
 Q. I am the bookkeeper for a firm that donates quite a sum to 
 its employes as Christmas presents. The proprietor also 
 has an arrangement with several of the employes to pay 
 them a certain perecentage of the profits. Can the pro- 
 prietor enter these amounts thus paid as expenses of the 
 business and thereby pay only the income tax on the net 
 amount actually realized in his business. The proprietor is 
 the sole owner. 
 
 20 
 
A. The gifts which the proprietor makes to the employes at 
 Christmas or other times are not deductible as they are not 
 an expense of the business. The amount which the pro- 
 prietor has agreed and does actually pay to the employes 
 is equivalent to wages. The fact that it is computed on a 
 certain perecentage of the profits does not alter the fact 
 that it is an actual expense of the business and is, therefore, 
 deductible as such. 
 
 Commissions paid to salesman in stock may be deducted 
 as expense if so charged on books at the actual value of 
 such stock. 
 
 Donations made for purposes connected with the opera- 
 tion of the property when limited to charitable institutions, 
 hospitals or educational institutions conducted for the bene- 
 fit of its employees or their dependents shall be a proper 
 deduction for ordinary and necessary expenses. 
 
 Question No. 59. 
 
 Q. If a corporation shows only a profit of $1,000 in all its 
 transactions will it be obliged to pay the one per cent nor- 
 mal tax on such net earnings? 
 
 A. Yes. 
 
 Question No. 60. 
 
 Q. What is the rate on net income of corporations? Must a 
 corporation pay the additional tax if it makes over $20,000? 
 
 A. No. The additional tax does not apply to corporations. 
 
 Question No. 61. 
 
 Q. Has a corporation an exemption of $3,000 or $4,000 the same 
 as an individual? 
 
 A. A corporation is allowed no exemption whatever under the 
 Income Tax Statute. 
 
 Question No. 62. 
 
 Q. I have an income of about $2,500 and own four bonds of 
 $1,500 each. When I present the coupons to the bank for 
 payment, must I make a statement? Where do such Cer- 
 tificates go? Are such Certificates sent to the Revenue 
 Officials or to the corporation who is obligated to pay the 
 coupons ? 
 
 21 
 
When presenting your coupons for payment you must either 
 claim or disclaim exemption by filling in and signing form 
 1000. The bank then fills out form 1000A and attaches it to 
 your coupons and sends it to the corporation or its paying 
 agent, which, in turn, sends Certificate 1000A to the Col- 
 lector of Internal Revenue with its returns. The bank re- 
 tains your original Certificate 1000 and sends it together with 
 its return to the Collector of Internal Revenue for the district 
 in which the bank has its principal place of business. 
 
 Question No. 63. 
 
 Q. An outlying bank makes mortgages and sells them to cus- 
 tomers, the bank collecting trie interest. Some of these 
 loans are made in the form of real estate bonds. Is it neces- 
 sary for the bank or the mortgagor, who is an individual, to 
 withhold the normal tax of one per cent where the annual 
 interest on separate mortgages is less than $3,000? The 
 aggregate amount collected by the bank is approximately 
 $18,000. 
 
 A. No tax is deductible in the above case. The provision for 
 deduction of the tax at the source on amounts less than 
 $3,000 applies only to corporations. In this case the mort- 
 gagor being an individual, the mortgagee is entitled to pay- 
 ment without deduction. The bank is not authorized to with- 
 hold the tax on the aggregate amount of such interest pay- 
 ments as the bank is not "the place where the income 
 originates." 
 
 Question No. 64. 
 
 Q. How must a corporation proceed in the selection of a fiscal 
 year for making this return? When must notice be given to 
 the Collector of Internal Revenue of the termination of such 
 fiscal year? 
 
 (T. D. 1897.) 
 
 A. The Federal income tax law (sec. 2, act of Oct. 3, 1913) 
 authorizes corporations, joint stock companies, etc., under 
 certain conditions to make their returns on the basis of an 
 established "fiscal year," or consecutive 12-months' period, 
 which may be other than the calendar year. 
 
 Pursuant to this provision, the following instructions are 
 .issued for the guidance of collectors and other interested 
 parties : 
 
 22 
 
Any corporation, joint stock company or association, or 
 any insurance company, subject to the tax imposed by this 
 act, may, at its option, have the tax payable by it computed 
 upon the basis of. the net income received (accrued) from 
 all sources during its fiscal year, provided that it shall desig- 
 nate the last day of the month selected as the month in 
 which its fiscal year shall close as the day of the closing of its 
 fiscal year, and shall, not less than thirty days prior to 
 the date upon which its annual return is to be filed, give 
 notice, in writing, to the collector of internal revenue of the 
 day it has thus designated as the closing of such fiscal year. 
 
 In pursuance of this provision, a corporation or like organ- 
 ization subject to this tax may, for example, designate the 
 30th day of September as the day for the closing of its fiscal 
 year, whereupon its return of annual net income shall be 
 filed with the Collector of internal revenue of the district 
 in which its principal place of business is located not later 
 than 60 days after the close of its said proposed fiscal year: 
 that is to say on or before the 29th day of November next 
 succeeding. 
 
 The date of the closing of the fiscal year having been desig- 
 nated, notice thereof must be given to the collector not less 
 than thirty days prior to the last day of such sixty-day 
 period. In the case just instanced, the notice must be given 
 not later than October 31. 
 
 If such designation (Sept. 30, 1913,) had been made and 
 notice given, as hereinbefore indicated, as to the closing 
 of the fiscal year 1913, the corporation would be authorized 
 to make its return and have the tax payable by it computed 
 upon the basis of the net income received (accrued) by it 
 during the period from January 1 to September 30, both 
 dates inclusive. 
 
 In the absence of such designation and notice of the clos- 
 ing of the fiscal year corporations and like organizations 
 subject to this tax will be required to make their returns and 
 have the tax computed upon the basis of the net income for 
 the calendar year. 
 
 Collectors of internal revenue receiving notices of the 
 selection and designation of the "fiscal years," as above in- 
 dicated, will make a record of the same, recording (a) the 
 name of the corporation, or like organization, (b) the date 
 when the notice was given, (c) the day designated for the 
 closing of the fiscal year, and (d) the date when the return 
 under such designation must be filed, which must be, as 
 above stated, not later than the last day of the 60-day period 
 next following the day designated as the close of the fiscal 
 year. 
 
 If it shall appear that for the current year the notice was 
 given within the prescribed time that is, within 30 days of 
 
 23 
 
the last day of the 60-day period the 1913 return may be 
 made as of the fiscal year so established: otherwise it will 
 be m ade on the basis of the calendar year until such time as 
 the designation shall be duly made and notice thereof proper- 
 ly given. 
 
 The designation and notice can not be retroactive: that 
 is to say, if a corporation now designates April 30, 1914, as 
 the date of the closing of its fiscal year and gives notice of 
 such designation, it would not be authorized to make a 
 return for the 4 months ended April 30, 1913, and then for 
 the fbcal.year ended April 30, 1914, nor would it be author- 
 ized to make one return covering the entire 16 months ended 
 April 30, 1914. In the case of such corporation the return 
 for the current year must be made for the calendar year 
 ended December 31, 1913, and then, assuming that designa- 
 tion and notice had been properly made and given, it may 
 make a return for the 4 months ended April 30, 1914, and 
 thereafter the return will be made on the basis of the fiscal 
 year so established. 
 
 In all cases where a fiscal year is not established as above 
 prescribed returns must be made on the basis of the calen- 
 dar year, in which case such returns must be filed on or 
 before the 1st day of March next succeeding such calendar 
 year. 
 
 Such returns, for the period covered, must be true and 
 accurate, definite and complete, and, in as far as consistent 
 with the provisions of the law, must conform to the showing 
 made by the books of the company, and must be verified 
 under oath of affirmation of its president or other principal 
 officers, and its treasurer or assistant treasurer: that is to 
 say, by two different persons acting in the official capacity 
 indicated. 
 
 If it shall appear in any case that returns have been made 
 to the collector on the basis of a fiscal year not designated 
 as above indicated, the corporations making such returns 
 will be advised that such returns can not be accepted, but 
 must be made to cover the business of the calendar year. . . 
 
 Returns made under this act pursuant to these instructions 
 must be made on the new forms prescribed by this depart- 
 ment. 
 
 Question No. 65. 
 
 Q. Is a bank or collection agency which holds for collection 
 notes reporting annual interest on farm mortgages in amount 
 less than $3,000 required to deduct one per cent of the tax 
 from the face of the coupons if the owner does not claim 
 exemption thereon? 
 
 A. Deductions of the tax at the source on bonds, mortgages 
 and trust deeds only applies to the obligations of corpora- 
 
 24 
 
tion. joint-stock companies or associations, unless the 
 amount of such payment is in excess of $3,000. 
 
 Question No. 66. 
 
 Q. If a corporation leases a building for $10,000 per annum 
 and re-lets a portion of said premises to another corporation 
 at $6,000 per annum, is the second corporation bound to 
 deduct one per cent from its rental? 
 
 A. No. The provision requiring deduction of the tax at the 
 source applies only to individuals and not to corporations. 
 
 Question No. 67. 
 
 Q. The bank with which I am connected owns some bonds of 
 corporations which provide that no part of the principal or 
 interest shall be deducted for any tax or taxes imposed 
 thereon by the United States, State, County or Municipality. 
 If these corporations pay the tax, must we return the in- 
 terest and claim deduction thereon under the head of amount 
 on which tax has been deducted at the source? 
 
 A. By disclaiming exemption in your Certificate 1000 when pre- 
 senting the coupons for payment, you can return the amount of such 
 coupons under the head of income on which the tax has been deducted 
 at the source, although the corporation pays the tax and interest in full* 
 
 Question No. 68. 
 
 Q. Are dividends received from the X corporation by the Y 
 corporation holding stock therein, taxable as part of the 
 net earnings of the Y corporation to whom such dividends 
 are paid? 
 
 A. The Y corporation receiving dividends from the X corpora- 
 tion must pay the normal tax of one per cent thereon as part 
 of its net earnings. In case of holding companies this will 
 amount to double taxation. Dividends are exempt from 
 the normal tax only when received by an individual. 
 
 Question No. 69. 
 
 Q. We are incorporated with three stockholders, all officers 
 of the company. One is paid a salary of $3,000 a year, and 
 two $5,000 and $10,000, respectively, on preferred stock. 
 If our business should show a paper profit of $10,000, which 
 is, in book accounts, merchandise, and, say, $1,000 in bank, 
 would this company have to pay a tax on the $10,000, we 
 declaring no dividends? 
 
 25 
 
A. The salaries of the officers when taken in lieu of dividends, 
 are exempt. After your corporation pays the normal tax of 
 one per cent on its net earnings the amounts paid as divi- 
 dends are exempt from further tax unless the amount of such 
 dividends received by a person exceeds $20,000, then it is 
 subject to the additional tax as provided in Subdivision 2 
 of Paragraph A of the Statute. 
 
 Question No. 70. 
 
 Q. Are corporations allowed exemption of that portion of their 
 income derived from bonds of the United States, counties, 
 cities or any political subdivision thereof? 
 
 A. Bonds of the United States or any political subdivision 
 thereof are wholly exempt. 
 
 Question No. 71. 
 
 Q. Are partnerships allowed to deduct the expense of doing 
 business ? 
 
 A. A partnership may claim exemption from deduction of the 
 tax at the source and for that purpose should attach to 
 coupons of corporate obligations when presenting them for 
 payment, certificate form No. 1003. 
 
 (T. D. 1905.) 
 
 Inasmuch as individual members of a partnership are liable for 
 income tax upon their respective interest in the net earnings of 
 said partnership and are required to include said net earnings 
 in their personal returns, the partnership may file with the debtor 
 corporation, or with a withholding agent, a notice, signed in the 
 name of the partnership, by a member thereof, claiming a deduc- 
 tion of a specific amount on account of legitimate expenses (not 
 including the personal or living expenses of the partners) in- 
 curred in conducting the business of said partnership, and, upon 
 receipt of said notice, said withholding agent shall not withhold, 
 and shall not be held liable for, the normal tax on the amount 
 of income equal to the amount of deduction claimed in said 
 notice, but in no event shall the total of the amounts claimed, 
 as provided herein, be in excess of the total amount of the 
 actual legitimate annual expenses incurred by said partnership 
 in the conduct of its business. Application for such deduction 
 shall be made on Form 1011. 
 
 Partnerships are not subject as partnerships to the income 
 tax and are required to make statement of their income and 
 earnings as partnerships only when requested to do so by the 
 Commissioner of Internal Revenue or the collector of internal 
 
 26 
 
revenue for the district in which said partnership has its prin- 
 cipal place of business, and when such a statement is required, 
 as aforesaid, the said statement shall give a complete and cor- 
 rect report of the gross income of the said partnership and also 
 a complete account of the actual legitimate annual expenses of 
 conducting the business of said partnership (not including living 
 and personal expense of the partners) and the net profits and 
 the name and address of each of the members of said partner- 
 ship and their respective interest in the net profits thus re- 
 ported. 
 
 The net annual income of a partnership, when apportioned 
 and paid to the members thereof, shall be returned by each indi- 
 vidual partner receiving same, in his annual return of net income, 
 and the tax shall be paid thereon by said individual partner, as 
 required by law. 
 
 When the annual income of a partnership is not distributed 
 and paid to the members thereof, the respective interest of each 
 member in said profits shall be ascertained, and the individuals 
 entitled thereto shall include the said amount in their annual 
 return as part of their gross income, the same as if said profits 
 had been distributed and paid to them. 
 
 Undivided annual net income of partnerships thus returned 
 by the individual members thereof, upon which the tax shall 
 have been paid, shall not, when said profits are actually dis- 
 tributed and paid to the partners, be again included in their 
 annual return as a part of their gross income. 
 
 Foreign partnerships or firms, all the members of which are 
 both citizens or subjects and residents of a foreign country, 
 which are the owners of bonds and mortgages or deeds of trust 
 or other similar obligations, including equipment trust agree- 
 ments, receivers' certificates, and stocks, of corporations, joint- 
 stock companies or associations and insurance companies, or- 
 ganized or doing business in the United States, may file with the 
 debtor or withholding agent, with their coupons or orders for 
 registered interest, or orders for other income derived from 
 property or investments in the United States, certificate and 
 notice of ownership, setting forth the facts as to non-residence 
 and alienship, and the debtor or withholding agent shall not 
 withhold any part of their said income. 
 
 Where a foreign partnership or firm is composed of both non- 
 resident foreigners and citizens of the United States, or for- 
 eigners resident in the United States or its possessions, the 
 certificate of ownership shall show this fact, and the name and 
 legal address of each member of said partnership, who is a 
 citizen of the United States or who is a foreigner residing in 
 the United States or its possessions shall be given on the said 
 certificate, and no part of said income shall be withheld by the 
 paying agent. 
 
 27 
 
Question No. 72. 
 
 Q. Ten years ago I bought a lot for $500 cash. I paid 2*/2 per 
 cent commission to obtain the money and have ever since 
 paid 6 per cent interest on the loan, also taxes. Three 
 months ago I sold the lot for $1,000. In computing my 
 profit may I deduct 6 per cent interest compounded for the 
 ten years? 
 
 A. Yes. 
 
 Question No. 73. 
 
 Q. If I had paid cash for a lot ten years ago, would I be per- 
 mitted to deduct 6 per cent compounded interest for that 
 period in computing my profit? 
 
 A. Six per cent may be deducted as you are entitled to a rea- 
 sonable earning" on the money invested during the period. 
 The net profit from the sale should be apportioned over the 
 number of years and 1/10 of the amount report as income 
 for the year 1913. 
 
 Question No. 74. 
 
 Q. Will the penalties on the income tax law be enforced 
 against persons who make erroneous return by reason of 
 the fact that they do not properly understand the law? 
 
 A. If a person makes a true statement of what he believes the 
 Government desires, without any intention of evading the 
 law no penalty will be incurred. 
 
 Question No. 75. 
 
 Q. I sold a piece of property under contract (not recorded) 
 seven years ago and deeded the same to the buyer July 1, 
 1913, when he paid the balance due me in cash. My total 
 profit was $400. Must I include this amount in my return 
 for the year 1913? 
 
 A. My personal opinion is that this amount is not taxable as 
 income as it was due and payable under the terms of the 
 contract prior to the enactment of the Federal Income Tax 
 Law, but according to the ruling of the Treasury Depart- 
 ment all profits accruing to a person during- the taxable 
 
 28 
 
period are taxable, and the Internal Revenue Officials have 
 defined "accruing" to mean not the process of accruing, but 
 "having arrived at an accrued state" being due and pay- 
 able within the taxable year, therefore until this question 
 is passed on by a court of competent jurisdiction, you will 
 have to include 1/7 of the $400 profit as income for the year 
 1913. 
 
 Question No. 76. 
 
 Q. Some years ago I bought a certain number of shares of 
 Chicago & Eastern Illinois preferred at 120. About June 
 1st, of this year dividend payments were discontinued and 
 the road went into the hands of a receiver. My stock is 
 deposited with a committee who are trying to save what- 
 ever possible out of the wreck, but is not salable at pres- 
 ent. I am sure to make quite a loss on this stock. Under 
 the most favorable circumstances it certainly could not pay 
 out more than par and the chances are that not that much 
 will be finally realized. In figuring my income tax should 
 I make a deduction from my income for the last ten months 
 of 1913 on account of the loss on this stock, and if so, how 
 should I arrive at the proper amount? Would it be better 
 to wait until the matter is finally closed up and I either sell 
 rny shares or receive other shares in place of them and then 
 figure the actual loss and take it out of the year's income 
 in which the final transaction occurs? 
 
 A. If this stock was worthless or depreciated on March 1, 
 1913. you are not entitled to deduct the purchase price as 
 a loss. The only amount you can deduct as a loss is the 
 difference between the value of the stock on March 1, 
 1913, and the value on December 31, 1913. Of course if 
 you receive other stock at a future time, the value of the 
 stock will be income for the year in which you receive the 
 same. 
 
 Question No. 77. 
 
 Q. If a person buys lots at a tax sale, is the interest or income 
 from said certificate subject to the U. S. Income Tax? 
 
 A. Tax certificates are exempt from taxation in the State of 
 Illinois. As the property is sold because of the failure to 
 pay an obligation due to a state, therefore the certificate 
 and interest accruing thereunder is exempt from taxation 
 by the Federal Government. 
 
 29 
 
Question No. 78. 
 
 Q. I have six tenants in one building whose monthly rents ar 
 $175, $200, $300, $350, $400 and $450 each. Are they re- 
 quired under the law to deduct and withhold hereafter from 
 me each month 1 per cent of these amounts which their 
 leases require them to pay me in full, monthly, in advance, 
 first of each month? If they fail to account to the govern- 
 ment for this 1 per cent, does it not release me, and why 
 should I be required to schedule these rents when the tax 
 is paid by them? 
 
 A. Unless the aggregate amount of money paid to you by a 
 tenant is in excess of $3,000 he has no right to withhold the 
 1 per cent tax at the source. But if the amount paid is in 
 excess of $3,000 you may give any one of them notice of 
 your individual exemption and they will then withhold the 
 tax only on the amount in excess of such exemption. Al- 
 though the tax may be withheld at the source you must in- 
 clude the amount in the report of your net income and de- 
 duct the amount on which the tax has been paid at the 
 source. Take for example: Suppose Charles Smith, a mar- 
 ried man, whose wife lives with him, expends the follow- 
 ing sums during the year : 
 
 Living expenses (not deductible) $10,000 
 
 Interest on personal notes and obligations 3,000 
 
 Interest on mortgages owing by Mr. Smith 2,000 
 
 Taxes on property owned by Mr. Smith ' 1,000 
 
 Suppose one building, worth $5,000, burns down, cov- 
 ered by $3,000 insurance, the loss, which is de- 
 ductible, amounts to 2,000 
 
 Depreciation on properties owned by Mr. Smith. .... 6,000 
 Repairs and maintenance expenses 10,000 
 
 Totals $34,000 
 
 Mr. Charles Smith would ascertain his net income and make 
 his return as follows : 
 
 Gross Income. 
 
 Salary as president and treasurer of the Smith Manu- 
 facturing Company $25,000 
 
 Rents from buildings owned by Charles Smith 20,000 
 
 Dividends from Smith Manufacturing Company... 12.000 
 Interest on Cook county bonds 5,000 
 
 Total gross income $62,000 
 
 30 
 
Deductions from Grosa Income. 
 
 Interest on personal notes and obligations. .$ 3,000 
 Interest on mortgages owing by Mr. Smith. . 2,000 
 Taxes on property owned by Mr. Smith. . . . 1,000 
 
 Loss by fire 2,000 
 
 Depreciation on properties owned by Mr. 
 
 Smith 6,000 
 
 Repairs and maintenance expense 10,000 
 
 Dividends of Smith Manufacturing Com- 
 pany, on which tax of 1 per cent was 
 paid on net earnings of corporation. . . . 12,000 
 Salary of Charles Smith as president and 
 treasurer of Smith Manufacturing Com- 
 pany, on which tax was deducted at 
 
 source 10,000 
 
 Interest on Cook county bond 5,000 
 
 Total $51,000 
 
 Personal exemption of Mr. Smith 4,000 
 
 Total ' $55,000 $55,000 
 
 Total net income of Mr. Smith, on which he 
 
 would pay tax $ 7,000 
 
 Therefore, the normal tax of 1 per cent, $70, is the amount 
 Mr. Smith will have to pay to the collector of internal rev- 
 enue. 
 
 Question No. 79. 
 
 Q. Is money made by horse racing or gambling taxable as 
 income? 
 
 A. In the State of Illinois money made or won by horse rac- 
 ing or gambling is illegal. Where the State Law prohibits 
 certain acts, money earned by such illegal practices is not 
 subject to the Federal Income Tax Law, but in States 
 where horse racing and gambling is a legitimate practice 
 money derived from such source is taxable as Income under 
 the provisions of the Federal Income Tax Statute. 
 
 Question No. 80. 
 
 Q. I have given corporation bonds aggregating $100,000, to a 
 Church. The Trustees of the Church have placed the bonds 
 in Trust with the understanding that the interest on them 
 
 31 
 
shall be paid to me during my life time and upon my death 
 the bonds are to become the property of the Church. As 
 property of a religious institution is exempt under the In- 
 come Tax Law, do I have to pay tax on the earnings of 
 such property paid to me during my life time? 
 
 A. Gifts are not taxable under the Income Tax Law, but the 
 earnings, or income from a gift is taxable, as the interest 
 accruing from the bonds constitutes part of your income it 
 is taxable. 
 
 Question No. 81. 
 Q. Are limited partnerships subject to Income Tax? 
 
 A. Limited partnerships are considered under the same head 
 as corporations and must make the same return and are 
 subject to the same provisions of the law as applied to 
 corporations. 
 
 32 
 
DEDUCTION OF THE TAX AT THE SOURCE 
 
 BY 
 
 BANKING INSTITUTIONS, TRUST COMPANIES AND 
 CORPORATIONS. 
 
 Paragraph E (E-19) of the Income Tax Law imposes an ob- 
 ligation upon Corporations, Banks, Trust Companies and As- 
 sociations to deduct the Normal Tax of 1 per cent and imposes 
 a liability for the payment of such tax to the Government. It 
 is the duty of every Corporation or its paying agent to with- 
 hold 1 per cent of the amount of the interest paid by it on bonds, 
 trust deeds, receiver's certificates, equipment certificates or sim- 
 ilar obligations of corporations, umess the person or corpora- 
 tion presenting the coupon or note for payment files with the 
 corporatios or its paying agent the form of certificate prescribed 
 by the Treasury Department. 
 
 An individual owner presenting a coupon to a corporation or 
 bank either for payment or collection should file with it prop- 
 erly executed certificate Form 1000 (page 65) claiming or dis- 
 claiming exemption therein. 
 
 A non-resident alien or his authorized agent when presenting 
 coupons should attach certificate Form 1004 (page 66). 
 
 A corporation when presenting coupons should execute and 
 attach certificate Form 1001 (page 65). 
 
 A partnership should execute and attach certificate Form 1011 
 (page 67). A member of partnership certificate Form 1003 (page 
 65). 
 
 Executors, Trustees, Conservators, Guardians and others act- 
 ing in a fiduciary capacity for the purpose of claiming exemption 
 should execute certificate Form 1015. .For the purpose of dis- 
 claiming exemption from deduction of the tax at the source, the 
 fiduciary should execute certificate Form 1019. 
 
 Upon receipt of a certificate duly executed the corporation is 
 relieved of the duty of withholding the tax. 
 
 Where a bank takes a coupon for collection it should see that 
 a certificate of proper form is attached. In case a bank received 
 coupons for collection unaccompanied by the required certificate, 
 the bank should execute and attach certificate Form 1002 (page 
 66). 
 
 The foregoing certificates may be signed by the owner or a 
 duly authorized agent. 
 
 SUBSTITUTION CERTIFICATES. 
 
 The Treasury Department has prescribed a form of substi- 
 tution certificates bearing the same form number as the orig- 
 
 33 
 
inal ownership certificates with the letter "a" appended, which 
 are to be executed and attached to coupons by a bank when the 
 coupons are transmitted to the debtor corporation or its paying 
 agent. All substitution certificates should contain the same num- 
 ber as the original ownership certificate. The original certificate 
 should be endorsed with the name of the bank or collecting 
 agent and the date of the substitution certificate together with 
 the following: 
 
 "The duplicate of the within certificate bearing the same num- 
 ber was attached to the coupons within mentioned and deliv- 
 ered to the debtor or its agent by whom said coupons are pay- 
 able." 
 
 The original certificates of ownership must be forwarded to 
 the Commissioner of Internal Revenue at Washington not later 
 than the 20th of each month succeeding the date on which said 
 coupons are received for collection. The bank making the sub- 
 stitution certificates must keep a record by months, showing the 
 serial number, the date and name of the owner or his agent, 
 showing from whom the coupons were received with the ad- 
 dress of such persons or corporation, and the name of the cor- 
 poration whose obligation it is together with the name and se- 
 rial number of the bond issue, the principal amount of the cou- 
 pons, and amount of interest collected. Any bank, banker in 
 the United States, or its collecting agent in a foreign country, 
 may execute substitution certificates. The corporation or paying 
 agent shall deliver all certificates to the Collector of Internal 
 Revenue. A corporation or its paying agent must file a list of 
 the individuals or firm from whom the tax has been withheld, 
 but no list is required of certificates where exemption has been 
 claimed and the amount of the interest or coupon paid, but a 
 debtor corporation must include in its list certificates in which 
 the exemption or deductions claimed is less than the amount 
 of the interest paid by corporations. The corporation or its pay- 
 ing agent must make separate lists for each bond issued. All 
 certificates must be sent by registered mail to the Commissioner 
 of Internal Revenue, accompanied with a list (Form 1012) which 
 the corporation is required to file. 
 
 FOREIGN ITEMS. 
 
 The Regulations require that the tax on foreign items must 
 be withheld by the first bank or trust company in the United 
 States to which such foreign items are given for collection or 
 payment. Every person, bank or trust company accepting cou- 
 pons, checks, and bills of exchange for collection must obtain 
 license for that purpose from the Commissioner of Internal Rev- 
 enue. There is no fee for this license but a bond may be re- 
 quired. 
 
 34 
 
SYLLABUS 
 
 OF 
 
 INCOME TAX LAW 
 
 1. AMOUNT. 
 
 Marginal Refer- 
 ence to Statute. 
 Pages 43-63. 
 
 NORMAL TAX 1 Per Cent. 
 Net income of individuals exceeding $3,000. 
 
 ($2,500 for 10 months March 1 to December 31 of 
 the year 1913.) 
 
 Net income of all taxable corporations, domestic or 
 foreign, accruing during the calendar year January 
 1 to December 31, 1913. 
 
 (Unless a "fiscal" year has been designated.) 
 
 NOTE. Paragraph "S" of the Income Tax Law modifies and repeals the 
 Corporation Excise Law of 1909. 
 
 2. AGAINST WHAT LEVIED. 
 
 ENTIRE TAXABLE NET INCOME OF 
 
 Citizens of the United States residing at home or 
 
 abroad. 
 
 Aliens residing in the United States. 
 Domestic corporations. 
 
 NET INCOME DERIVED FROM BUSINESS TRANS- 
 ACTED OR CAPITAL INVESTED IN THE 
 UNITED STATES BY 
 
 Aliens residing outside of the United States. A-5 
 
 Foreign corporations. G-2 
 
 Exceptions : A non-resident alien need pay no tax on Treasury 
 
 income from bonds, mortgages and similar obliga- Decision 
 tions of corporations. 1887 
 
 A-4 
 
 D-3 
 
 Treasury 
 Decision 
 
 1934 
 
 G-l 
 
 Treasury 
 Decision 
 
 1897 
 
 S-l-2-3 ' 
 Treasury 
 Decision 
 
 1937 
 
 A-2 
 
 A-3 
 G-l 
 
 ADDITIONAL TAX 
 
 (Gross Incomes of Individuals Only.) 
 1% on the amount by which income exceeds $20,000. 
 
 2% on the amount by which income exceeds $50,000, 
 but does not exceed $75,000. 
 
 35 
 
A-9 3% on the amount by which income exceeds $75,000, 
 
 but does not exceed $100,000. 
 
 A-10 4% on the amount by which income exceeds $100,000, 
 
 but do:s not exceed $250,000. 
 
 A-ll 5% on the amount by which income exceeds $250,000, 
 
 but does not exceed $500,000. 
 
 A-12 6% on the amount by which income exceeds $500,000. 
 
 DEDUCTIONS FOR THE NORMAL TAX. 
 
 B-8 1 Necessary expenses actually paid in carrying on business : 
 
 Exception : 
 
 family 
 living or 
 
 expenses are not deductible. 
 
 personal 
 
 B-9 2. All interest paid on indebtedness. 
 
 B-10 3. Taxes : State, County, School and Municipal. 
 
 _ XOTE. National, State, County, School and Municipal Special assess- 
 
 13-10 ments for local benefits such as street paving, sewer drainage, etc., are 
 
 not deductible. 
 
 B-ll 4. Losses actually sustained during the year. 
 
 (a) Incurred in trad? or business. 
 
 (b) From fire, storm or shipwreck, and not compensated 
 
 by insurance or otherwise. 
 
 B-12 5. Debts due and found worthless and charged off. 
 B-13 h. Reasonable allowance for wear and tear of property. 
 
 B-14 NOTE. No deductions for new buildings, permanent improvements, etc., 
 
 which tend to increase the value of property. 
 
 XOTE. The foregoing deductions 1, 2, 3, 4, 5 and 6 only are allowed in 
 calculating net income for the additional tax. 
 
 B-15 7. Dividends received from a corporation, joint-stock com- 
 pany or association which are taxable on their net 
 income at the source. 
 
 B-16 8. Amount of income on which tax is paid or withheld at 
 source : 
 
 Treasury (a) Interest on obligations of the United States, a State, 
 
 Decision County, or a political subdivision of a State, in- 
 
 cluding interest paid on public improvements, 
 reclamation, drainage or special assessment bonds 
 issued for local improvements. 
 
 (b) Salaries of 
 
 1. Present President of the United States. 
 
 2. Judges of the Federal Courts. 
 
 3. Officers and employees of a State or a political 
 
 subdivision of a State, except when such salary 
 is pard by the United States 'Government. 
 
 36 
 
9. Exemptions from the tax : 
 
 (a) $3,000 per annum for a single person. 
 ($2,500 for the year 1913.) 
 
 (b) $4,000 per annum for a married couple living to- 
 
 g ther. 
 
 ($3,333.33 for the year 1913 for a married couple 
 living together.) 
 
 NOTE. Exemptions 7, 8 and 9 are not allowed in calculating the net income 
 for the additional tax. 
 
 C-l 
 
 Treasury 
 Decision 
 
 C-2 
 
 Treasury 
 Decision 
 
 Form 1040 
 
 THE RETURN 
 
 ANNUAL RETURN MUST BE FILED BY 
 
 1. Persons having an annual net income exceeding $3,000. 
 
 2. Trustees, executors, administrators and conservators 
 
 having the receipt, custody or payment of annual net 
 income of another person exceeding $3,000. 
 
 NOTE. Excluding from the computation of such net income dividends re- 
 ceived from corporations and amounts on which the normal tax has been 
 withhe'd at the source. 
 
 ($2,500 for ten months of the year 1913, March 1 to 
 Dec;mb:r 31.) 
 
 3. Corporations total annual net income. 
 (No specific exemption allowed.) 
 
 4. Persons or corporations withholding the tax at the source. 
 
 (a) A separate return for each payee. 
 
 (b) Certificate Form No. 1042, page 94. 
 
 (c) A return by one of two or more joint trustees is 
 
 sufficient. 
 
 D-8 
 
 E-8 
 
 Treasury 
 Decision 
 
 1945 
 
 Treasury 
 Decision 
 
 1934 
 
 G-7 
 D-6 
 
 D-5 
 
 RETURN MUST CONTAIN : 
 
 1. The gross amount of income from all separate sources, 
 and from the total, deducting the aggregate deductions 
 of authorized expenses and allowances. Return to be 
 under oath or affirmation. 
 
 (a) Personal return Forms Nos. 1040, 1041, pages 71-76. 
 
 (b) Corporations' returns, Forms Nos. 1030, 1031, 1032, 
 
 1033, 1034, 1035, pages 80-90. 
 
 WHEN RETURN MUST BE FILED 
 
 1. Individuals: 
 
 (a) On or before March 1. 
 
 2. Corporations : 
 
 (a) On or before March 1, or 
 
 (b) Within 60 days after the close of the designated 
 
 fiscal vear. 
 
 B-l 
 G-l 
 
 D-3 
 G-35 
 
 37 
 
WHERE RETURN MUST BE FILED : 
 
 G-35 1. Individuals: 
 
 (a) Where the person or corporation resides or has his 
 or its principal place of business. 
 
 G-35 2. Foreign corporations and non-residents: 
 
 (a) Where the principal place of business in the United 
 States is located. 
 
 D-5 3. Trustees, etc. : 
 
 (a) Where such trustees reside, or 
 
 (b) Where will or instrument under which he acts is 
 
 recorded. 
 
 WHEN THE TAX MUST BE PAID: 
 
 E-l 1 . Individual : 
 
 (a) Between June 1 and June 30. 
 
 G-60 2. Corporation : 
 
 (a) Between June 1 and June 30, or 
 
 G-61. (b) Where corporation uses "fiscal year," tax must be 
 
 paid within 180 days after the close of such 
 "fiscal year." 
 
 DEDUCTION AND PAYMENT OF TAX AT THE 
 SOURCE. 
 
 DEDUCTION AT THE SOURCE REQUIRES: 
 
 E-8 1. Persons to withhold the normal tax of one per cent on all 
 
 funds payable to another person when the aggregate 
 amount exceeds $3,000, and is fixed and certain. 
 
 E-22 2. Corporations to withhold the normal tax of one per cent 
 on all interest paid by them or their agent on bonds, 
 mortgages, trust deeds or similar obligations of cor- 
 porations regardless of amount. 
 
 E-12 3. The person required to deduct the tax is personally liable 
 for the same. 
 
 A-14 4. The additional tax is not deducted at the source at any 
 time. 
 
 D-10 5. No tax is deducted on dividends of corporations which 
 pay the income tax on their net earnings. 
 
 WHEN THE TAX IS TO BE DEDUCTED AT THE 
 SOURCE: 
 
 E-19 1. Whenever the aggregate amount paid is fixed and certain. 
 
 NOTE. Not including dividends on stock of corporations. 
 
 Treasury 2. The tax of one per cent is deducted "at the place where 
 Decision the income originates." 
 
 38 
 
(a) Interest on bonds, mortgages or deeds of trust of 
 
 corporations, domestic or foreign. 
 
 (b) Interest on foreign bonds. 
 
 (c) Dividends of corporations or insurance companies 
 
 doing business in foreign countries. 
 
 HOW EXEMPTIONS MAY BE CLAIMED AGAINST 
 DEDUCTION OF THE.TAX AT THE SOURCE: 
 
 1. The $3,000 personal exemption. 
 
 To obtain exemption, the payee must file with the 
 person withholding the tax Certificate Form No. 1007, 
 page 67, at any time 30 days before the annual return 
 of the withholding agent is required to be made. 
 
 2. Deductions for expense : 
 
 (a) The payee must file with the withholding agent a 
 true return of his income from all sources and the 
 deduction claimed therein Certificate Form No. 
 1008, page 70. 
 
 3. If the payee is a minor, or insane, or absent from the 
 
 United States, or unable by illness to make such return, 
 the father, conservator or other authorized person may 
 make the return for such person under oath. An ex- 
 tension of 30 days for filing the return may be 
 obtained upon application to the collector, made within 
 the period forsuchextention is desired. 
 
 NOTE. Deduction and payment of the tax at the source applies only to 
 amounts payable to individuals, not to corporations. 
 
 GROSS INCOME. 
 
 GROSS INCOME INCLUDES: 
 
 Salaries 
 Wages 
 
 Gains and profits 
 Compensation for 
 personal service 
 
 
 Professions 
 
 
 Vocations 
 
 
 Businesses 
 
 derived 
 
 Trade 
 Commerce 
 
 or \ 
 
 Sales or 
 
 
 accrued 
 from 
 
 Dealings i 
 or 
 
 Property, 
 Real 
 
 
 Growing out of 
 
 and 
 
 
 Ownership 
 
 Personal. 
 
 
 or use of 
 
 
 2. Income received 
 from or 
 accruing from 
 
 also 
 
 Interest 
 
 Rent 
 
 Dividends 
 
 Securities 
 
 Transactions of any lawful business 
 
 carried on for gain or profit 
 Gains, profits or income accruing 
 
 from- any source whatever. 
 39 
 
 E-18 
 
 E-30 
 
 B-l 
 B-2 
 
 B-3 
 
 B-4 
 
Net income for the purpose of the income tax is the 
 amount of the gross income less the deductions 1, 2, 3, 4, 
 5 and 6. 
 
 NOTE. See deductions for the normal tax. 
 
 GROSS INCOME EXCLUDES: 
 
 B-5 1. Money or value 
 
 of property 
 acquired by 
 
 Gift 
 Bequest 
 Devise 
 Descent 
 
 But the income from thest 
 is taxable. 
 
 2. Proceeds of Life Insurance Policies : 
 
 (a) Paid on death of the insured ; 
 
 (b) Credited to the insured on surrender of contract, as 
 
 1. Endowments. 
 
 2. Annuity contracts. 
 
 CORPORATIONS' INCOME TAX. 
 
 AMOUNT OF TAX: 
 The normal tax of one per cent only. 
 
 ON WHAT THE TAX IS ASSESSED: 
 
 G-l 1. Domestic corporations : 
 
 (a) Entire net income. 
 
 C-2 2. Foreign corporations : 
 
 (a) Net income accruing from business transacted and 
 capital invested in the United States. 
 
 WHAT IS NET INCOME: 
 Gross Income less 
 
 G-8 1. Expenses of maintenance and operation, including rentals. 
 
 G-9 2. All losses not compensated by insurance or otherwise. 
 
 G-9 3. Reasonable wear and tear. 
 G-15 4. Amount of interest paid on its indebtedness. 
 G-l 9 5. Sums paid for taxes. 
 
 WHAT RETURN^MUST CONTAIN: 
 (See Forms 1030 to 1035, inclusive, pages 80-90.) 
 
 1. Total amount of capital stock outstanding. 
 
 2. Total amount of bonded or other indebtedness. 
 
 3. Gross income. 
 
 40 
 
4. Deductions as above specified. 
 
 5. Net income after making these deductions. 
 
 BY WHOM REPORT MUST BE SIGNED: 
 (See Instructions.) 
 
 1. By presid nt, vice-president or other principal officer, and 
 
 2. By treasurer or assistant treasurer. 
 
 3. Return to be under oath or affirmation. 
 
 PENALTIES. 
 
 FOR NEGLECT OR REFUSAL TO MAKE 
 RETURN ON TIME: 
 
 1. Individual: F-l 
 
 (a) Fine not less than $20.00 or over $1,000.00. E-4 
 
 (b) There shall be added to the tax 5% of the amount 
 
 thereof, and 1% per month from tim.2 it became 
 due. 
 
 2. Corporations : 
 
 (a) Fine not exceeding $10,000.00 G-66 
 
 (b) Th-re shall b added to the tax 5% of the amount E-4 
 
 thereof, and 1% per month from time it became 
 due. 
 
 FOR MAKING A FALSE OR FRAUDULENT 
 RETURN : 
 
 1. Individual or officer of a corporation: p_2 
 (a) Fine not exceeding $2,000.00, imprisonment for -^ g 3176 
 
 one year, or both. 
 
 2. Corporation : 
 
 (a) Fine not exceeding $10,000.00. G-66 
 
 FOR FILING "AT SOURCE" A FALSE STATEMENT E-14 
 RESPECTING THE $3,000 ALLOWANCE (OR R. S. 3176 
 
 $4,000 FOR MARRIED COUPLE): 
 (a) Fine of $300.00. 
 
 ALL PERSONS UNDERTAKING AS A MATTER OF E-28 
 BUSINESS, THE COLLECTION OF FOREIGN 
 PAYMENTS OF INTEREST OR DIVIDENDS 
 MUST TAKE OUT A LICENSE UNDER PENALTY 
 OF FINE NOT EXCEEDING $5,000.00, OR ONE 
 YEAR'S IMPRISONMENT, OR BOTH. 
 
 THE DISTRICT COURTS OF THE UNITED STATES K - 
 
 ARE GIVEN JURISDICTION (IN CASES WHERE 
 
 41 
 
PERSONS ARE SUMMONED BY A COLLECTOR 
 TO APPEAR AND TESTIFY REGARDING THEIR 
 RETURNS) TO COMPEL SUCH ATTENDANCE, 
 PRODUCTION- OF ROOKS AND TESTIMONY. 
 
U. S. INCOME TAX STATUTE 
 
 BEING SECTION IT OF THE ACT OF OCTOBER 3, 1913, 
 ENTITLED "AN ACT TO REDUCE TARIFF DUTIES AND 
 TO PROVIDE REVENUE FOR THE GOVERNMENT AND 
 FOR OTHER PURPOSES/' 
 
 A. Subdivision 1. That there shall be levied, assessed, collected Paragraph A 
 and paid annually upon the entire net income arising or accruing A-l 
 from all sources in the preceding calendar year 
 
 to every citizen of the United States, whether residing at home A-2 
 or abroad, 
 
 and to every person residing in the United States, though not a A-3 
 citizen thereof, 
 
 a tax of 1 per centum per annum upon such income, except as A-4 
 hereinafter provided; 
 
 and a like tax shall be assessed, levied, collected, and paid annually A-5 
 upon the entire net income from all property owned and of every 
 business, trade, or profession carried on in the United States by 
 persons residing elsewhere. 
 
 Subdivision 2. In addition to the income tax provided under this A-6 
 section (herein referred to as the normal income tax) there shall 
 be levied, assessed, and collected upon the net income of every 
 individual an additional income tax (herein referred to as the 
 additional tax) of 
 
 1 per centum per annum upon the amount by which the total A-7 
 net income exceeds $20,000 and does not exceed $50,000, and 
 
 2 per centum per annum upon the amount by which the total A-8 
 net income exceeds $50,000 and does not exceed $75,000, 
 
 3 per centum per annum upon the amount by which the total A-9 
 net income exceeds $75,000 and does not exceed $100,000, 
 
 4 per centum per annum upon the amount by which the total A-10 
 net income exceeds $100,000 and does not exceed $250,000, 
 
 5 per centum per annum upon the amount by which the total A-l 1 
 net income exceeds $250,000 and does not exceed $500,000, and 
 
 6 per centum per annum upon the amount by which the total A-l 2 
 net income exceeds $500,000. 
 
 All the provisions of this section relating to individuals who are A-l 3 
 to be chargeable with the normal income tax, so far as they are 
 applicable and are not inconsistent with this subdivision of para- 
 graph A, shall apply to the levy, assessment, and collection of the 
 additional tax imposed under this section. 
 
 Every person subject to this additional tax shall, for the purpose A-l 4 
 of its assessment and collection, make a personal return of his 
 
 43 
 
total net income from all sources, corporate or otherwise, for the 
 preceding calendar year, under rules and regulations to be pre- 
 scribed by the Commissioner of Internal Revenue and approved by 
 the Secretary of the Treasury. 
 
 A-15 For the purpose of this additional tax the taxable income of any 
 individual shall embrace the share to which he would be entitled 
 of the gains and profits, if divided or distributed, whether divided 
 or distributed or not, of all corporations, joint-stock companies, 
 or associations however created or organized, formed or fraudu- 
 lently availed of for the purpose of preventing the imposition of 
 such tax through the medium of permitting such gains and profits 
 to accumulate instead of being divided or distributed ; 
 
 A-16 and the fact that any such corporation, joint-stock company, or 
 association, is a mere holding company, or that the gains and 
 profits are permitted to accumulate beyond the reasonable needs 
 of the business shall be prima facie evidence of a fraudulent pur- 
 pose to escape such tax ; 
 
 A-17 but the fact that the gains and profits are in any case permitted 
 to accumulate and become surplus shall not be construed as evi- 
 dence of a purpose to escape the said tax in such case unless the 
 Secretary of the Treasury shall certify that in his opinion such 
 accumulation is unreasonable for the purposes of the business. 
 
 A-18 When requested by the Commissioner of Internal Revenue, or 
 any district collector of internal revenue, such corporation, joint- 
 stock company, or association shall forward to him a correct' state- 
 ment of such profits and the names of the individuals who would 
 be entitled to the same if distributed. 
 
 Paragraph B B. That, subject only to such exemptions and deductions as are 
 B-l hereinafter allowed, the net income of a taxable person shall include 
 gains, profits, and income derived from 
 
 B-2 salaries, wages, or compensation for personal service of what- 
 
 ever kind and in whatever form paid, 
 
 B-3 or from professions, vocations, business, trade, commerce, 
 
 or sales, or dealings in property, whether real or personal, 
 growing out of the ownership or use of or interest in real or 
 personal property, 
 
 B-4 also from interest, rent, dividends, securities, or the transaction 
 
 of any lawful business carried on for gain or profit. 
 
 B-5 r gains or profits and income derived from any source what- 
 
 ever, including the income from but not the value of property 
 acquired by gift, bequest, devise, or descent: 
 
 Provided, That the proceeds of life insurance polices paid upon the 
 death of the person insured or payments made by or credited. to the 
 insured, on life insurance, endowment, or annuity contracts, upon the 
 return thereof tP the insured at the maturity of the, term mentioned in 
 the conttatt, or upon surrender of contract, shall not tfe- inducted as 
 
 44 
 
That in computing net income for the purpose of the normal tax B-7 
 there shall be allowed as deductions: 
 
 First, the necessary expenses actually paid in carrying on any g.g 
 business, not including personal, living, or family expenses ; 
 
 second, all interest paid within the year by a taxable person 3.9 
 on indebtedness; 
 
 third, all national, State, county, school, and municipal taxes B-10 
 paid within the year, not including those assessed against local 
 benefits ; 
 
 fourth, losses actually sustained during the year, incurred in B-l 1 
 trade or arising from fires, storms, or shipwreck, and not 
 compensated for by insurance or otherwise ; 
 
 fifth, debts due to the taxpayer actually ascertained to be B-l 2 
 worthless and charged off within the year; 
 
 sixth, a reasonable allowance for the exhaustion, wear and B-l 3 
 tear of property arising out of its use or employment in the 
 business, not to exceed, in the case of mines, 5 per centum of 
 the gross value at the mine of the output for the year for which 
 the computation is made, but no deduction shall be made for 
 any amount of expense of restoring property or making good 
 the exhaustion thereof for which an allowance is or has been 
 made: 
 
 Provided, That no deduction shall be allowed for any amount paid out B-l 4 
 for new buildings, permanent improvement, or betterments, made to 
 increase the value of any property or estate ; 
 
 seventh, the amount received as dividends upon the stock or B-l 5 
 from the net earnings of any corporation, joint-stock company, 
 association, or insurance company, which is taxable upon its 
 net income as hereinafter provided ; 
 
 eighth, the amount of income, the tax upon which has been B-l 6 
 paid or withheld for payment at the source of the income, 
 under the provisions of this section. 
 
 Provided, That whenever the tax upon the income of a person is B-l 7 
 required to be withheld and paid at the source as hereinafter required, 
 if such annual income does not exceed the sum of $3,000 or is not 
 fixed or certain, or is indefinite, or irregular as to amount or time 
 of accrual the same shall not be deducted in the personal return of 
 such person. 
 
 The net income from property owned and business carried on in B-l 8 
 the United States by persons residing elsewhere shall be computed 
 upon the basis prescribed in this paragraph and that part of para- 
 graph G of this section relating to the computation of the net 
 income of corporations, joint-stock and insurance companies, 
 organized, created or existing under the laws of foreign countries, 
 in so far as applicable. 
 
 45 
 
B-19 That in computing nt income mnder this section there shall be 
 excluded 
 
 B-20 the interest upon the obligations of a State or any political 
 
 subdivision thereof, and upon the obligations of the United 
 States or its possessions; 
 
 B-21 also the compensation of the present President of the United 
 
 States during the term for which -he has been elected, 
 
 B-22 and of the judges of the supreme and inferior courts of the 
 
 United States now in office, 
 
 B-23 and the compensation of all officers and employees of a State 
 
 or any political subdivision thereof except when such compen- 
 
 Paragraph C C. That there shall be deducted from the amount of the net 
 C-l income of each of said persons, ascertained as provided herein, the 
 sum of $3,000, 
 
 C-2 plus $1,000 additional if the person making the return be a 
 
 married man with a wife living with him, 
 
 C-3 or plus the sum of $1,000 additional if the person making the 
 
 return be a married woman with a husband living with her ; 
 
 C-4 but in no event shall this additional exemption of $1,000 be 
 
 deducted by both a husband and a wife: 
 
 C-5 Provided, That only one deduction of $4,000 shall be made from the 
 
 aggregate income of both husband and wife when living together. 
 
 Paragraph D D. The said tax shall be computed upon the remainder of said 
 )_! net income of each person subject thereto, accruing during each 
 preceding calendar year ending December thirty-first: 
 
 D-2 Provided, However, That for the year ending December thirty-first, 
 
 nineteen hundred and thirteen, said tax shall be computed on the net 
 income accruing from March first to December thirty-first, nineteen 
 hundred and thirteen, both dates inclusive, after deducting five-sixths 
 only of the specific exemptions and deductions herein provided for. 
 
 D-3 On or before the first day of March, nineteen hundred and four- 
 teen, and the first day of March in each year thereafter, a true and 
 accurate return, under oath or affirmation, shall be made by each 
 person of lawful age, except as hereinafter provided, subject to the 
 tax imposed by this section, and having a net income of $3,000 or 
 over for the taxable year, to the collector of internal revenue for 
 the district in which such person resides or has his principal place 
 of business, or, in the case of a person residing in a foreign country, 
 in the place where his principal business is carried on within the 
 United States, in 'such form as the Commissioner of Internal 
 Revenue, with the approval of the Secretary of the Treasury, shall 
 prescribe, setting forth specifically the. gross amount of income from 
 all separate sources and from the total thereof, deducting the aggre- 
 gate items or expenses and allowance herein authorized ; 
 ( 46 
 
guardians, trustees, executors, administrators, agents, receivers, D-4 
 conservators, and all persons, corporations, or associations 
 acting in any fiduciary capacity, shall make and fender a return 
 of the net income of the person for whom they act, subject to 
 this tax, coming into their custody or control and management, 
 and be subject to all the provisions of this section which apply 
 to individuals : 
 
 Provided, That a return made by one of two or more joint guardians, 
 trustees, executors, administrators, agents, receivers, and conservators, 
 or other persons acting in a fiduciary capacity, filed in the district 
 where such person resides, or in. the district where the will or other 
 instrument under which he acts is recorded, under such regulations as 
 the Secretary of the Treasury may prescribe, shall be a sufficient com- 
 pliance with the requirements of this paragraph ; 
 
 and also all persons, firms, companies, copartnerships, corpora- D-6 
 tions, joint-stock companies or associations, and insurance com- 
 panies, except as hereinafter provided, in whatever capacity 
 acting, having the control, receipt, disposal, or payment of 
 fixed or determinable annual or periodical gains, profits, and 
 income of another person subject to tax, shall in behalf of such 
 person deduct and withhold from the payment an amount 
 equivalent to the normal income tax upon the same and make 
 and render a return, as aforesaid, but separate and distinct, of 
 the portion of the income of each person from which the nor- 
 mal tax has been thus withheld, and containing also the name 
 and address of such person, or stating that the name and address 
 or the address, as the case may be, are unknown: 
 
 Provided, That the provision requiring the normal tax of individuals Q.7 
 to be withheld at the source of the income, shall not be construed to 
 require any of s^uch tax to be withheld prior to the first day of Novem- 
 ber, nineteen hundred and thirteen : 
 
 Provided, Further, That in either case above mentioned no return of ).g 
 . income not exceeding $3,000 shall be required : 
 
 Provided, Further, That any persons carrying on business in partner- )_9 
 ship shall be liable for income tax only in their individual capacity, 
 and the share of the profits of a partnership to which any taxable 
 partner would be entitled if the same were divided whether .divided or 
 otherwise, shall be returned for taxation and the tax paid, under the 
 Provisions of this section, and any such firm, when requested by the 
 Commissioner of Internal Revenue, or any district collector, shall for- 
 ward to him a correct statement of such profits and the names of the 
 individuals who would be entitled to the same, if distributed: 
 
 Provided, Further, That persons liable for the normal income tax I). in 
 only, on their own account or in behalf of another, shall not be required 
 to make return of the income derived from dividends on the capital 
 stock or from the net earnings of corporations, joint-stock companies 
 or associations, 'and insurance companies taxable upon their net income 
 as hereinafter provided. 
 
 Any person for whom return has been made and the tax paid, D-ll 
 or to be paid as aforesaid, shall not be required to make a return 
 unless such person has other net income, but only one deduction 
 of $3,000 shall be made in the case of any such person. 
 
D-12 The collector or deputy collector shall require every list to be 
 verified by the oath or affirmation of the party rendering it. If the 
 collector or deputy collector have reason to believe that the amount 
 of any income returned is understated, he shall give due notice to 
 the person making the return to show cause why the amount of the 
 return should not be increased, and upon proof of the amount 
 understated may increase the same accordingly. If dissatisfied with 
 the decision of the collector, such person may submit the case, with 
 all the papers, to the Commissioner of Internal Revenue for his 
 decision, and may furnish sworn testimony of witnesses to prove 
 any relevant facts. 
 
 Paragraph E That all assessments shall be made by the Commissioner of 
 
 g_j Internal Revenue and all persons shall be notified of the amount for 
 
 which they are respectively liable on or before the first day of June 
 
 of each successive year, and said assessments shall be paid on or 
 
 before the thirtieth day of June, 
 
 E-2 except in cases of refusal or neglect to make such return and 
 
 in cases of false or fraudulent returns, in which cases the 
 Commissioner of Internal Revenue shall, upon the discovery 
 thereof, at any time within three years after said return is due, 
 make a return upon information obtained as provided for in 
 
 E-3 this section or by existing law, and the assessment made by 
 
 the Commissioner of Internal Revenue thereon shall be paid 
 by such person or persons immediately upon notification of the 
 amount of such assessment; 
 
 E-4 and to any sum or sums due and unpaid after the thirtieth day of 
 June in any year, and for ten days after notice and demand thereof 
 by the collector, there shall be added the sum of 5 per centum on 
 the amount of tax unpaid, and interest at the rate of 1 per centum 
 per month upon said tax from the time the same became due, 
 
 E-5 except from the estates of insane, deceased, or insolvent persons. 
 
 E-6 All persons, firms copartnerships, companies, corporations, joint- 
 stock companies or associations, and insurance companies, in what- 
 ever capacity acting, including : 
 
 E-7 lessees or mortgagors of real or personal property, trustees 
 
 acting in any trust capacity, executors, administrators, agents, 
 receivers, conservators, employers, and all officers and employees 
 of the United States 
 
 E-8 having the control, receipt, custody, disposal, or payment of interest, 
 rent, salaries, wages, premiums, annuities, compensations, remunera- 
 tion, emoluments, or other fixed or determinable armual gains, 
 profits, and income of another person, exceeding $3,000 for any 
 taxable year, 
 
 E-9 other than dividends on capital stock, or from the net earnings 
 
 of corporations and joint-stock companies or associations sub- 
 ject to like tax, 
 
 48 
 
who are required to make and render a return' in behalf of another, E-10 
 as provided herein, to the collector of his, her, or its district, 
 
 are hereby authorized and required to deduct and withhold from -11 
 such annual gains, profits, and income such sum as will be sufficient 
 to pay the normal tax imposed thereon by this section, and shall 
 pay to the officer of the United States Government authorized to 
 receive the same ; 
 
 and they are each hereby made personally liable for such tax. E-12 
 
 In all cases where the income tax of a person is withheld and E-13 
 deducted and paid or to be paid at the source, as aforesaid, such 
 person shall not receive the benefit of the deduction and exemption 
 allowed in paragrh C of this section except by an application 
 for refund of tHe tax unless he shall, not less than thirty 
 days prior to the day on which the return of his income is due, file 
 with the person who is required to withhold and pay tax for him, a 
 signed notice in writing claiming the benefit of such exemption and 
 thereupon no tax shall be withheld upon the amount of such 
 exemption : 
 
 Provided, That if any person for the purpose of obtaining any -14 
 allowance or reduction by virtue of a claim for such exemption, either 
 for himself or for any other person, knowingly makes any false state- 
 ment or false or fraudulent representation, he shall be liable to a pen- 
 alty of $300; 
 
 nor shall any person under the foregoing conditions be allowed the E-15 
 benefit of any deduction provided for in subsection B ( Page 45 ) of 
 this section unless he shall, not less than thirty days prior to the day 
 on which the return of his income is due, 
 
 either file with the person who is required to withhold and pay tax E-16 
 for him a true and correct return of his annual gains, profits, and 
 income from all other sources, and also the deductions asked for, 
 and the showing thus made shall then become a part of the return 
 to be made in his behalf by the person required to withhold and 
 pay the tax, 
 
 or likewise make application for deductions to the collector of the E-17 
 district in which return is made or to be made for him : 
 
 Provided, Further, That if such person is a minor or an insane per- -18 
 son, or is absent from the United States, or is unable owing to serious 
 illness to make the return and application above provided for, the re- 
 turn and application may be made for him or her by the person required 
 to withhold and pay the tax, he making oath under the penalties of 
 this Act that he has sufficient knowledge of the affairs and property of 
 his beneficiary to enable him to make a full and complete return for 
 him or her, and that the return and application made by him are full 
 and complete : 
 
 Provided, Further, That the amount of the normal tax hereinbefore -19 
 imposed shall be deducted and withheld from fixed and determinable 
 annual gains, profits, and income derived from interest upon bonds and 
 mortgages, or deeds or trust or other similar obligations of corpora- 
 tions, joint-stock companies or associations and insurance companies, 
 whether payable annually or at shorter or longer periods, although such 
 
 49 
 
interest does not amount to $3,000, subject to the provisions of this 
 section requiring the tax to be withheld at the source and deducted 
 from annual income and paid to the Government; 
 
 E-20 and likewise -the amount of such tax shall be deducted and withheld 
 
 from coupons, checks, or bills of exchange for or in payment of interest 
 upon bonds of foreign countries and upon foreign mortgages or like 
 obligations (not payable in the United States), 
 
 E-21 and also from coupons, checks, or bills of exchange for or in payment 
 
 of any dividends upon the st6ck or interest upon the obligations of for- 
 eign corporations, associations, and insurance companies engaged in 
 business in foreign countries ; 
 
 E-22 and the tax in each case shall be withheld and deducted for and in 
 
 behalf of any person subject to the tax hereinbefore imposed, although 
 such interest, dividends, or other compensation does not exceed $3,000, 
 
 E-23 by any banker or person who shall sell or otherwise realize coupons, 
 
 checks, or bills of exchange drawn or made in payment of 'any such 
 interest or dividends (not payable in the United States), 
 
 E-24 and any person who shall obtain payment (not in the United States), 
 
 in behalf of another of such dividends and interest by means of coupons, 
 checks, or bills of exchange, 
 
 E-25 and also any dealer in such coupons who shall purchase the same for 
 
 any such dividends or interest (not payable in the United States), 
 otherwise than from a banker or another dealer in such coupons; 
 but in each case the benefit of the exemption and the deduction allow- 
 able under this section may be had by complying with the foregoing 
 provisions of this paragraph. 
 
 E-26 All persons, firms, or corporations undertaking as a matter of 
 business or for profit the collection of foreign payments of such 
 interest or dividends by means of coupons, checks, or bills of 
 exchange shall obtain a license from the Commissioner of Internal 
 Revenue, and shall be subject to such regulations enabling the 
 Government to ascertain and verify the due withholding and pay- 
 ment of the income tax required to be withheld and paid as the 
 Commissioner of Internal Revenue, with the approval of the Secre- 
 tary of the Treasury, shall prescribe; 
 
 E-27 and any person who shall knowingly undertake to collect such pay- 
 ments as aforesaid without having obtained a license therefor, or 
 without complying with such regulations, shall be deemed guilty of 
 a misdemeanor and for each offense be fined in a sum not exceeding 
 $5,000, or imprisoned for a term not exceeding one year, or both, 
 in the discretion of the court. 
 
 E-28 Nothing in this section shall be construed to release a taxable 
 person from liability for income tax, nor shall any contract entered 
 into after this Act takes effect be valid in regard to any Federal 
 income tax imposed upon a person liable to such payment. 
 
 E-29 The tax herein imposed upon annual gains, profits, and income 
 not falling under the foregoing and not returned and paid by virtue 
 of the foregoing shall be assessed by personal return under rules 
 and regulations to be prescribed by the Commissioner of Internal 
 Revenue and approved by the Secretary of the Treasury. 
 
 E-30 The provisions of this section relating to the deduction and pay- 
 
 50 
 
ment of the tax at the source of income shall only apply to the 
 normal tax hereinbefore imposed upon individuals. 
 
 F. That if any person, corporation, joint-stock company, asso- Paragraph F 
 ciation, or insurance company liable to make thi return or pay the F-l 
 
 tax aforesaid shall refuse or neglect to make a return at the time or 
 times hereinbefore specified in each year, such person shall be liable 
 to a penalty of not less than $20 nor more than $1,000. 
 
 Any person or any officer of any corporation required by law to F-2 
 make, render, sign, or verify any return who makes any false or 
 fraudulent return or statement with intent to defeat or evade the 
 assessment required by this section to be made shall be guilty of a 
 misdemeanor, and shall be fined not exceeding $2,000 or be im- 
 prisoned not exceeding one year, or both, at 'the discretion of the 
 court, with the costs of prosecution. 
 
 G. (a) That the normal tax hereinbefore imposed upon indi- Paragraph G 
 viduals likewise shall be levied, assessed, and paid annually upon the Q.j 
 entire net 'income arising or accruing from all sources during the 
 preceding calendar year to every corporation, joint-stock company or 
 association, and every insurance company, organized in the United 
 
 States, no matter how created or organized, not including partner- 
 ships ; 
 
 but if organized, authorized, or existing under the laws of any Q_2 
 foreign country, then upon the amount of net income accruing from 
 business transacted and capital invested within the Uinted States 
 during such year : 
 
 Provided, However, That nothing in this section shall apply to labor, (1-3 
 agricultural, or horticultural organizations, or to mutual savings banks 
 not having a capital stock represented by shares, or to fraternal bene- 
 ficiary societies, orders, or associations operating under the lodge sys- 
 tem or for the exclusive benefit of the members of a fraternity itself 
 operating under the lodge system, and providing for the payment of 
 life, sick, accident, and other benefits to the members of such societies, 
 orders, or associations and dependents of such members, nor to do- 
 mestic building and loan associations, nor to cemetery companies, organ- 
 ized and operated exclusively for the mutual benefit of their members, 
 nor to any corporation or association organized and operated exclusively 
 for religious, charitable, scientific or educational purposes, no part of 
 the net income of which inures to the benefit of any private stockholder 
 or individual, nor to business leagues, nor to chambers of commerce or 
 boards of trade, not organized for profit, or no part of the net income 
 of which inures to the benefit of the private stockholder or individual; 
 nor to any civic league or organization not organized for profit, but 
 operated exclusively for the promotion of social welfare : 
 
 Provided, Further, That there shall not be taxed under this section G-4 
 any income derived from any public utility or from the exercise of 
 any essential governmental function accruing to any State, Territory, 
 or the District of Columbia, or any political subdivision of a State, 
 Territory, or the District of Columbia, nor any income accruing to the 
 government of the Philippine Islands or Porto Rico, or of any political 
 subdivision of the Philippine Islands or Porto Rico: 
 
 51 
 
G-5 Provided, That whenever any State, Territory, or the District of 
 
 Columbia, or any political subdivision of a State or Territory, has, 
 prior to the passage of this Act, entered in good faith into a contract 
 with any person or corporation, the object and purpose of which is to 
 acquire, construct, operate or maintain a public utility, no tax shall be 
 levied under the provisions of this Act upon the income derived from 
 the operation of such public utility, so far as the payment thereof will 
 impose a loss or burden upon such State, Territory, or the District of 
 Columbia, or a political subdivision of a State or Territory ; 
 
 G-6 but this provision is not intended to confer upon such person or corpo- 
 
 ration any financial gain or exemption or to relieve such person or 
 corporation from the payment of a tax as provided for in this section 
 upon the part or portion of the said income to which such person or 
 corporation shall be entitled under such contract. 
 
 G-7 (b) Such net income shall be ascertained by deducting from the 
 gross amount of the income of such corporation, joint-stock com- 
 pany or association, or insurance company, received within the year 
 from all sources. 
 
 G-8 (first) all the ordinary and necessary expenses paid within the 
 
 year in the maintenance and operation of its business and prop- 
 erties, including rentals or other payments required to be made 
 as a condition to the continued use or possession of property; 
 
 G-9 (second) all losses actually sustained within the year and not 
 
 compensated by insurance or otherwise, including a reasonable 
 allowance for depreciation by use, wear and tear of property, 
 if any ; 
 
 G-10 and in the case of mines a reasonable allowance for depletion 
 
 of ores and all other natural deposits, not to exceed 5 per centum 
 of the gross value at the mine of the output for the year for 
 which the computation is made ; 
 
 G-ll and in case of insurance companies the net addition, if any, 
 
 required by law to be made within the year to reserve funds 
 and the sums other than dividends paid within the year on 
 policy and annuity contracts : 
 
 G-12 Provided, That mutual fire insurance companies, requiring their mem- 
 
 bers to make pjemium deposits to provide for losses and expenses shall 
 not return as income any portion of the premium deposits returned 
 to their policyholders, but shall return as taxable income all income 
 received by them from all other sources plus such portions of the pre- 
 mium deposits as are retained by the companies for purposes other than 
 the payment of losses and expenses and reinsurance reserves : 
 
 G-13 Provided, Further, That mutual marine insurance companies shall 
 
 include in their return of gross income gross premiums collected and 
 received by them less amounts paid for reinsurance, but shall be entitled 
 to include in deductions from gross income amounts repaid to policy- 
 holders on account of premiums previously paid by them and interest 
 paid upon such amounts between the ascertainment thereof and the 
 payment thereof, 
 
 G-14 And life insurance companies shall not include as income in any 
 
 year such portion of any actual premium received from any individual 
 policyholder as shall have been paid back or credited to such individual 
 policy holder, or treated as an abatement of premium of such indi- 
 vidual policyholder, within such year ; 
 
 52 
 
(third) the amount of interest accrued and paid within the year G-15 
 on its indebtedness to an amount of such indebtedness not 
 exceeding one-half cff the sum of its interest bearing indebted- 
 ness and its paid-up capital stock outstanding at the close of 
 the year, or if no capital stock, the amount of interest paid 
 within the year on an amount of its indebtedness not exceeding 
 the amount of capital employed in the business at the close 
 of the year : 
 
 Provided, That in case of indebtedness wholly secured by collateral Q-16 
 the subject of sale in ordinary business of such corporation, joint-stock 
 company, or association, the total interest secured and paid by such 
 company, corporation, or association within the year on any such in- 
 debtedness may be deducted as a part of its expense of doing business : 
 
 Provided, Further, That in the case of bonds or other indebtedness, G-17 
 which have been issued with a guaranty that the 'interest payable 
 thereon shall be free from taxation, no deduction for the payment 
 of the tax herein imposed shall be allowed, 
 
 and in the case of a bank, banking association, loan or trust company, G*18 
 interest paid within the year on deposits or on moneys received for 
 investment and secured by interest-bearing certificates of indebtedness 
 issued by such a bank, banking association, loan or trust company; 
 
 (fourth) all sums paid by it within the year for taxes imposed G-19 
 under the authority of the United States or of any State or 
 Territory thereof, or imposed by the Government of any for- 
 eign country : 
 
 Provided, That in the case of a corporation, joint-stock company, Q.9Q 
 or a'ssociation, or insurance company, organized, authorized, or exist- 
 ing under the laws of any foreign country, such net income shall be 
 ascertained by deducting from the gross amount of its income accrued 
 within the year from business transacted and capital invested within 
 the United States, 
 
 (first) all the ordinary and necessary expenses actually paid within O_21 
 the year out of earnings in the maintenance and operation of its busi- 
 ness and property within the United States, including rentals or other 
 payments required to be made as a conditipn to the continued use or 
 possession of property; 
 
 (second) all losses actually sustained within the year in business con- Q_22 
 ducted by it within the United States and not compensated by insurance 
 or otherwise, including a reasonable allowance for depreciation by use, 
 wear and tear of property, if any, and in the case of mines a reasonable 
 allowance for depletion of ores and all other natural deposits, not to 
 exceed 5 per centum of the gross value at the mine of the output for 
 the year for which the computation is made; 
 
 and in case of insurance companies the net addition, if any, required Q.23 
 by law to be made within the year to reserve funds and the sums other 
 than dividends paid within the year on policy and annuity contracts: 
 
 Provided, Further, That mutual fire insurance companies requiring Q_24 
 their members to make premium deposits to provide for losses and 
 expenses shall not return as income any portion of the premium de- 
 posits returned to their policyholders, but shall return as taxable in- 
 come all income received by them from all other sources plus such 
 portions of the premium deposits as are retained by the companies for 
 purposes other than the payment of losses and expenses and reinsur- 
 ance reserves : 
 
 53 
 
G-25 Provided, Further, That mutual marine insurance companies shall 
 
 include in their return of gross income gross premiums collected and re- 
 ceived by them less amounts paid for reinsurance, but shall be entitled 
 to include in deductions from gross income amounts repaid to policy- 
 holders on account of premiums previously paid by them* and interest 
 paid upon such amounts between the ascertainment thereof and the pay- 
 ment thereof 
 
 G-26 and life insurance companies shall not include as income in any year 
 
 such portion of any actual premium received from any individual policy- 
 holder as shall have been paid back or credited to such individual policy- 
 holder, or treated as an abatement of premium of such individual policy- 
 holder, within such year; 
 
 G-27 (third) the amount of interest accrued and paid within the year on its 
 
 indebtedness to an amount of such indebtedness not exceeding the pro- 
 portion of one-half of the sum of its interest bearing indebtedness and 
 its paid-up capital stock outstanding at the close of the year, or if no 
 capital stock, the capital employed in the business at the close of the 
 year which the gross amount of its income for the year from business 
 transacted and capital invested within the United States bears to the 
 gross amount of its income derived from all sources within and with- 
 out the United States: 
 
 G-28 Provided, That in the case of bonds or other indebtedness which 
 
 have been issued with a guaranty that the interest payable thereon shall 
 be free from .taxation, no deduction for the payment of the tax herein 
 imposed shall be allowed; 
 
 G-29 (fourth) all sums paid by it within the year for taxes imposed under 
 
 the authority of the United States or of any State or Territory thereof 
 or the District of Columbia. 
 
 G-30 In the case of assessment insurance companies, whether domestic 
 or foreign, the actual deposit of sums with State or Territorial 
 officers, pursuant to law, as additions to guarantee or reserve funds 
 shall be treated as being payments required by law to reserve funds. 
 
 G-31 (c) The tax herein imposed shall be computed upon its entire 
 net income accrued within each preceding calendar year ending 
 December thirty-first : 
 
 r r>2 Provided, However, That for the year ending December thirty-first, 
 
 nineteen hundred and thirteen, said tax shall be imposed upon its entire 
 net income accrued within that portion of said year from March first 
 to December thirty-first, both dates inclusive, to be ascertained by 
 taking five-sixths of its entire net income for said calendar year : 
 
 G-33 Provided, Further, That any corporation, joint-stock company or 
 
 association, or insurance company subject to this tax may designate 
 the last day of any month in the year as the day of the closing of 
 its fiscal year and shall be entitled to have the tax payable by it com- 
 puted upon the basis of the net income ascertained as herein provided 
 for the year ending on the day so designated in the year preceding 
 th date of assessment instead of upon the basis of the net income for 
 the calendar year preceding the date of assessment; 
 
 G-34 and it shall give notice of the day it has thus designated as the closing 
 
 of its fiscal year to the collector of the district in which its principal 
 business office is located at any time not less than thirty days prior 
 to the date upon which its annual return shall be filed. 
 
 G-35 All corporations, joint-stock companies or associations, and insur- 
 ance companies subject to the tax herein imposed, computing taxes 
 
 54 
 
upon the income of the calendar year, shall, on or before the first 
 day of March, nineteen hundred and . fourteen, and the first day of 
 March in each year thereafter, and all corporations, joint-stock 
 companies or associations, and insurance companies, computing 
 taxes upon the income of a fiscal year which it may designate in the 
 manner hereinbefore provided, shall render a like return within 
 sixty days after the close of its said fiscal year, and within sixty 
 days after the close of its fiscal year in each year thereafter, or in 
 the case of a corporation, joint-stock company or association, 
 or insurance company, organized or existing under the laws 
 of a foreign country, in the place where its principal business is 
 located within the United States, in such form as the Commissioner 
 .of Internal Revenue, with the approval of the Secretary of the 
 Treasury, shall prescribe, shall render a true and accurate return 
 under oath or affirmation of its president, vice president, or other 
 principal officer, and its treasurer or assistant treasurer/ to the 
 collector of internal revenue for the district in which it has its 
 principal place of business, setting forth 
 
 (first) the total amount of its paid-up capital stock outstanding, G-36 
 or if no capital stock, its capital employed in business, at the 
 close of the year; 
 
 (second) the total amount of its bonded and other indebtedness G-37 
 at the close of the year ; 
 
 (third) the gross amount of its income, received during such G-38 
 year from all sources, 
 
 and if organized under the laws of a foreign country the gross G-39 
 amount of its income received within the year from business 
 transacted and capital invested within the United States ; 
 
 (fourth) the total amount of all its ordinary and necessary G-40 
 expenses paid out of earnings in the maintenance and operation 
 of the business and properties of such corporation, joint-stock 
 company or association, or insurance company within the year, 
 stating separately all rentals or other payments required to be 
 made as a condition to the continued use or possession of 
 property, 
 
 and if organized under the laws of a foreign country the amount .41 
 so paid in the maintenance and operation of its business within 
 the United States; 
 
 (fifth) the total amount of all losses actually sustained during .42 
 the year and not compensated by insurance or otherwise, stating 
 separately any amounts allowed for depreciation of property, 
 and in case of insurance companies the net addition, if any 
 required by law to be made within the year to reserve funds 
 and the sums other than dividends paid within the year on 
 v policy and annuity contracts : 
 
 55 
 
G-43 an d i n case of insurance companies the net addition, if any, required 
 
 by law to be made within the year to reserve funds and the sums other 
 than dividends paid within the year on policy and annuity contracts : 
 
 G-44 Provided, Further, That mutual fire insurance companies requiring 
 
 their members to make premium deposits to provide for losses and 
 expenses shall not return as income any portion of the premium de- 
 posits returned to their policyholders, but shall return as taxable in- 
 come all income received by them from all other sources plus such por- 
 tions of the premium deposits as are retained by the companies for 
 purposes other than the payment of losses' and expenses and reinsur- 
 ance reserves: 
 
 G-45 Provided, Further, That mutual marine insurance companies shall 
 
 include in their return of gross income gross premiums collected and 
 received by them less amounts paid for reinsurance, but shall be en- 
 titled to include in deductions from gross income amounts repaid to 
 policyholders on account of premiums previously paid by them, and 
 interest paid upon such amounts between the ascertainment thereof and 
 the payment thereof 
 
 G-46 anc ^ ^ e msuranc e companies shall not include as income in any year 
 
 such portion of any actual premium received from any individual 
 policyholder as shall have been paid back or credited to such indi- 
 vidual policyholder, or treated as an abatement of premium of such 
 individual policyholder, within such year ; 
 
 G-47 an d in case of a corporation, joint-stock company or association, or 
 
 insurance company, organized under the laws of a foreign country, all 
 losses actually sustained by it during the year in business conducted 
 by it within the United States, not compensated by insurance or other- 
 wise, stating separately any amounts allowed for depreciation of 
 property, 
 
 G-48 and in case of insurance companies the net addition, if any, required 
 
 by law to be made within the year to reserve funds and the sums other 
 than dividends paid within the year on policy and annuity contracts : 
 
 G-49 Provided, Further, That mutual fire insurance companies requiring 
 
 their members to make premium deposits to provide for losses and 
 expenses shall not return as income any portion of the premium de- 
 posits returned to their policyholders, but shall return as taxable income 
 all income received by them from all other sources plus such portions 
 of the premium deposits as are retained by the companies for purposes 
 other than the payment of losses and expenses and reinsurance reserves : 
 
 G-50 Provided, Further, That mutual marine insurance companies shall 
 
 include in their return of gross income gross premiums, collected- and re- 
 ceived by them less amounts paid for reinsurance, but shall be entitled 
 to include in deductions from gross income amounts repaid to policy- 
 holders on account of premiums previously paid by them and interest 
 paid upon such amounts between the ascertainment thereof and the 
 payment thereof 
 
 u-51 and life insurance companies shall not include as income in any year 
 
 such portion of any actual premium received from any individual policy- 
 
 holder as shall have been paid back or credited to such individual policy- 
 holder, or treated as an abatement of premium of such individual 
 policyholder, within such year; 
 
 G-52 (sixth) the amount of interest, accrued and paid within the 
 
 year on its bonded or other indebtedness not exceeding one- 
 half of the sum of its interest bearing indebtedness and its 
 paid-up capital stock, outstanding at the close of the year, 
 
 G-53 or if no capital stock, the amount of interest paid within the 
 
 year on an amount of indebtedness not exceeding the amount 
 of capital employed in the business at the close of the year, , 
 
 56 
 
and in the case of a bank, banking association, or trust com- G-54 
 pany, stating separately all interest paid by it within the year on 
 deposits ; 
 
 or in case of a corporation, joint-stock company or association, G-55 
 or insurance company, organized under the laws of a foreign 
 country, interest so paid on its bonded or other indebtedness 
 to an amount of such bonded or other indebtedness not exceed- 
 ing the proportion of its paid-up capital stock outstanding at 
 the close of the year, 
 
 or if no capital stock, the amount of capital employed in the G-56 
 business at the close of the year, which the gross amount of its 
 income for the year from business transacted and capital 
 invested within the United States bears to the gross amount of 
 its income derived from all sources within and without the 
 United States; 
 
 (seventh) the amount paid by it within the year for taxes G-57 
 imposed under the authority of the United Stktes and separately 
 the amount so paid by it for taxes imposed by the Government v 
 of any foreign country; 
 
 (eighth) the net income of such corporation, joint-stock com- G-58 
 pany or association, or insurance company, after making the 
 deductions in this subsection authorized. 
 
 All such returns shall as received be transmitted forthwith by G-59 
 the collector to the Commissioner of Internal Revenue. 
 
 All assessments shall be made and the several corporations, joint- G-60 
 stock companies or associations, and insurance companies shall be 
 notified of the amount for which they are respectively liable on or 
 before the first day of June of each successive year, and said assess- 
 ment shall be paid on or before the thirtieth day of June : 
 
 Provided, That every corporation, joint-stock company or association, G-61 
 and insurance company, computing taxes upon the income of the fiscal 
 year which it may designate in the manner hereinbefore provided, shall 
 pay the taxes due under its assessment within one hundred and twenty 
 days after the date upon which it is required to file its list or return 
 of income for assessment; 
 
 except in cases of refusal or neglect to make such return, and in cases G-62 
 of false or fraudulent returns, in which cases the Commissioner of 
 Internal Revenue shall, upon the discovery thereof, at any time within 
 three years after said return is due, make a return upon information 
 obtained as provided for in this section or by existing law, and the 
 assessment made by the Commissioner of Internal Revenue thereon 
 shall be paid by such corporation, joint-stock company or association, 
 or insurance company immediately upon notification of the amount of 
 such assessment; 
 
 and to any sum or sums due and unpaid after the thirtieth day of G-63 
 June in any year, or after one hundred and twenty days from the date 
 on which the return of income is required to be made by the taxpayer, 
 and after ten days' notice and demand thereof by the collector, there 
 shall be added the sum of 5 per centum on the amount of tax unpaid 
 and interest at the rate of 1 per centum per month upon said tax from 
 the time the same becomes due. 
 
 57 
 
G-64 (d) When the assessment shall be made, as provided in this 
 section, the returns, together with any corrections thereof which 
 may have been made by the commissioner, shall be filed in the office 
 of the Commissioner of Internal Revenue and shall constitute public 
 records and be open to inspection as such : 
 
 Q_gg Provided, That any and all such returns shall be open to inspection 
 
 only upon the order of the President, under rules and regulations to 
 be prescribed by the Secretary of the Treasury and approved by the 
 President : 
 
 G-66 Provided, Further, That the proper officers of any State imposing a 
 
 general income tax may, upon the request of the governor thereof, have 
 access to said returns or to an abstract thereof, showing the name and 
 income of each such corporation, joint-stock company, association or 
 insurance company, at such times and in such manner as the Secretary 
 of the Treasury may prescribe. 
 
 G-67 If an Y f tne corporations, joint-stock companies or associations, 
 or insurance companies aforesaid, shall refuse or neglect to make a 
 return at the time or times hereinbefore specified in each year, or 
 shall render a false or fraudulent return, such corporation, joint- 
 stock company or association, or insurance company shall be liable 
 to a penalty of not exceeding $10,000. 
 
 Paragraph H H - That the wor< ^ "State" or "United States" when used in this 
 ij * section shall be construed to include any Territory, Alaska, the 
 District of Columbia, Porto Rico, and the Philippine Islands, when 
 such construction is necessary to carry out its provisions. 
 
 Paragraph I 1. That sections thirty-one hundred and sixty-seven, thirty-one 
 
 I_l hundred and seventy-two, thirty-one hundred and seventy-three, and 
 
 thirty-one hundred and seventy-six of the Revised Statutes of the 
 
 United States as amended are hereby amended so as to read as 
 
 follows : 
 
 R. S. Sec. "Sec. 3167. It shall be unlawful for any collector, deputy col- 
 3167 lector, agent, clerk, or other officer or employee of the United States 
 to divulge or to make known in any manner whatever not provided 
 by law to any person the operations, style of work, or apparatus of 
 any manufacturer or producer visited by him in the discharge of his 
 official duties, or the amount of source of income, profits, losses, 
 expenditures, or any particular thereof, set forth or disclosed in 
 any income return by any person or corporation, or to permit any 
 income return or copy thereof or any book containing any abstract 
 or particulars thereof to be seen or examined by any person except 
 as provided by law ; 
 
 and it shall be unlawful for any person to print or publish in any 
 manner whatever not provided by law any income return or any 
 part thereof or the amount or source of income, profits, losses, or 
 expenditures appearing in any income return; 
 
 and any offense against the foregoing provision shall be a misde- 
 meanor and be punished by a fine not exceeding $1,000 or by 
 imprisonment not exceeding one year, or both, at the discretion of 
 the court; 
 
 58 
 
and if the offender be an officer or employee of the United States 
 he shall be dismissed from office and be incapable thereafter of 
 holding any office under the Government. 
 
 (Sec. 3172. Every collector shall, from time to time, cause his R. S. Sec. 
 deputies to proceed through every part of his district and inquire 3172 
 after and concerning all persons therein who are liable to pay any 
 internal-revenue tax, and all persons owning or having the care and 
 management of any objects liable to pay any tax, and to make a list 
 of such persons and enumerate said objects. 
 
 (Sec. 3173. It shall be the duty of any person, partnership, firm, R. S. Sec. 
 association, or corporation, made liable to any duty, special tax, 3173 
 or other tax imposed by law, when not otherwise provided for, in 
 case of a special tax, on or before the thirty-first day of July in 
 each year, in case of income tax on or before the first day of March 
 in each year, and in other cases before the day on which the taxes 
 accrue, to make a list or return, verified by oath or affirmation, to 
 the collector or a deputy collector of the district where located, of 
 'the articles or objects, including the amount of annual income 
 charged with a duty or tax, the quantity of goods, wares, and mer- 
 chandise made or sold and charged with a tax, the several rates and 
 aggregate amount, according to the forms and regulations to be 
 prescribed by the Commissioner of Internal Revenue, with the 
 approval of the Secretary of the Treasury, for which such person, 
 partnership, firm, association, or corporation is liable : 
 
 Provided, That if any person liable to pay any duty or tax, or own- 
 ing, possessing, or having the care or management of property, goods, 
 wares and merchandise, articles or objects liable to pay any duty, tax, 
 or license, shall fail to make and exhibit a list or return required by 
 law, but shall consent to disclose the particulars of any and all the 
 property, goods, wares, and merchandise, articles, and objects liable to 
 pay any duty or tax, or any business or occupation liable to pay any 
 tax as aforesaid, then, and in that case, it shall be the duty of the 
 collector or deputy collector to make such list or return, which, being 
 distinctly read, consented to, and signed and verified by oath or affirma- 
 tion by the person so owning, possessing, or having the care and man- 
 agement as aforesaid, may be received as the list of such person: 
 
 Provided, Further, That in case no annual list or return has been 
 rendered by such person to the collector or deputy collector as required 
 by law, and the person shall be absent from his or her residence or 
 place of business at the time the collector or a deputy collector shall 
 call for the annual list or return, it shall be the duty of such collector 
 or deputy collector to leave at such place of residence or business, with 
 some one of suitable age and discretion, if such be present, otherwise 
 to deposit in the nearest post office, a note or memorandum addressed 
 to such person, requiring him or her to render to such collector or 
 deputy collector the list or return required by law within ten days from 
 the date of such note or memorandum, verified by oath or affirmation. 
 
 And if any person, on being notified or required as aforesaid, shall 
 refuse or neglect to render such list or return within the time 
 required as aforesaid, or whenever any person who is required to 
 deliver a monthly or other return of objects subject to tax fails to 
 do so at the time required, or delivers any return which, in the 
 opinion of the collector, is false or fraudulent, or contains any 
 undervaluation or understatement, it shall be lawful for the collector 
 
 59 
 
to summon such person, or any other person having possession, 
 custody, or care of books of account containing entries relating to 
 the business of such person, or any other person he may deem 
 proper, to appear before him and produce such books, at a time and 
 place named in the summons, and to give testimony or answer 
 interrogatories, under oath, respecting any objects liable to tax or 
 the returns thereof. 
 
 The collector may summon any person residing or found within the 
 State in which his district lies; and when the_ person intended to be 
 summoned does not reside and cannot be found within such State, 
 he may enter any collection district where such person may be found 
 and there make the examination herein authorized. And to this end 
 he may there exercise all the authority which he might lawfully 
 exercise in the district for which he was commissioned. 
 
 R. S. Sec. "Sec. 3176. When any person, corporation, company, or associa- 
 3176 tion refuses or neglects to render any return or list required by law, 
 or renders a false or fraudulent return or list, the collector or any 
 deputy collector shall make, according to the best information which 
 he can obtain, including that derived from the evidence elicited by 
 the examination of the collector, and on his own view and informa- 
 tion, such list or return, according to the form prescribed, of the 
 income, property, and objects liable to tax owned or possessed or 
 under the care or management of such person or corporation, com- 
 pany or association, and the Commissioner of Internal Revenue shall 
 assess all taxes not paid by stamps, including the amount, if any, due 
 for special tax, income or other tax, 
 
 and in case of any return of a false or fraudulent list or valua- 
 tion intentionally he shall add 100 per centum to such tax; 
 and in case of a refusal or neglect, except in cases of sickness 
 or absence, to make a list or return, or to verify the same as 
 aforesaid, he shall add 50 per centum to such tax 
 
 In case of neglect occasioned by sickness or absence as afore- 
 said, the collector may allow such further time for making and 
 delivering such list or return as he may deem necessary, not exceed- 
 ing thirty days. 
 
 The amount so added to the tax shall be collected at the same 
 time and in the same manner as the tax unless the neglect or falsity 
 is discovered after the tax has been paid, in which case the amount 
 so added shall be collected in the same manner as the tax ; 
 
 and the list or return so made and subscribed by such collector or 
 deputy collector shall be held prima facie good and sufficient for all* 
 legal purposes." 
 
 Paragraph J J. That it shall be the duty of every collector of internal revenue, 
 j_j to whom any payment of any taxes other than the tax represented 
 by an adhesive stamp or other engraved stamp is made under the 
 provisions of this section, to give to the person making such payment 
 a full written or printed receipt, expressing the amount paid and 
 the particular account for which such payment was made; 
 
 60 
 
 
and whenever such payment is made such collector shall, if required, J-2 
 give a separate receipt for each tax paid by any debtor, on account 
 of -payments made to or to be made by him to separate credits in such 
 form that such debtor can conveniently produce the same separately 
 to his several creditors in satisfaction of their respective demands to 
 the amounts specified in such receipts ; 
 
 and such receipts shall be sufficient evidence in favor of such J-3 
 debtor to justify him in withholding the amount therein expressed 
 from his next payment to his creditor ; 
 
 but such creditor may, upon giving to his debtor a full written J_4 
 receipt, acknowledging the payment to him of whatever sum may be 
 actually paid, and accepting the amount of tax paid as aforesaid, 
 (specifying the same) as a further satisfaction of the debt to that 
 amount, require the surrender to him of such collector's receipt. 
 
 K. That jurisdiction is hereby conferred upon the district courts Paragraph K 
 of the United States for the district within which any person sum- j_i 
 moned under this section to appear to testify or to produce books 
 shall reside, to compel such attendance, production of books, and 
 testimony by appropriate process. 
 
 L. That all administrative, special, and general provisions of Paragraph L 
 law, including the laws in relation to the assessment, remission, 
 collection, and refund of internal-revenue taxes not heretofore spe- 
 cifically repealed and not inconsistent with the provisions of this 
 section, are hereby extended and made applicable to all the pro- 
 visions of this section and to the tax herein imposed. 
 
 M. That the provisions of this section shall extend to Porto Rico Paragraph M 
 and the Philippine Islands: M-l 
 
 Provided, That the administration of the law and the collection of M 2 
 the taxes imposed in Porto Rico and the Philippine Islands shall be _ 
 by the .appropriate internal-revenue officers of those governments, and 
 all revenues collected in Porto Rico and the Philippine Islands there- 
 under shall accrue intact to the general governments, thereof, respect- 
 ively : 
 
 And Provided, Further, That the jurisdiction in this section, con- JVI-3 
 ferred upon the district courts of the United States shall, so far as the 
 Philippine Islands are concerned, be vested in the courts of the first 
 instance of said islands: 
 
 And Provided, Further, That nothing in this section shall be held to M-4 
 exclude from the computation of the net income the compensation paid 
 any official by the governments of the District of Columbia, Porto Rico 
 and the Philippine Islands or the political subdivisions thereof. 
 
 N. That for the purpose of carrying into effect the provisions of Paragraph N 
 Section 11 of this Act, and to pay the expenses of assessing and col- ?J i 
 lecting the income tax therein imposed, and to pay such sums as the 
 Commissioner of Internal Revenue, with the approval of the Secre- 
 tary of the Treasury, may deem necessary, for information, detection, 
 and bringing to trial and punishment persons guilty of violating 
 the provisions of this section, or conniving at the same, in cases 
 
 61 
 
where such expenses are not otherwise provided for by law, there 
 is hereby appropriated out of any money in the Treasury not other- 
 wise appropriated for the fiscal year ending June thirtieth, nineteen 
 hundred and fourteen, the sum of $800,000 and the Commissioner 
 of Internal Revenue, with the approval of the Secretary of the 
 Treasury, is authorized to appoint and pay from this appropriation 
 all necessary officers, agents, inspectors, deputy collectors, clerks, 
 messengers and janitors, and to rent such quarters, purchase such 
 supplies, equipment, mechanical devices, and other articles as may 
 be necessary for employment or use in the District of Columbia or 
 any collection district in the United States, or any of the Territories 
 thereof : 
 
 N-2 Provided, That no agent paid from this appropriation shall receive 
 
 compensation at a rate higher than that now received by traveling 
 agents on accounts in the Internal Revenue Service, and no inspector, 
 shall receive a compensation higher than $5 a day and $3 additional in 
 lieu of subsistence, and no deputy collector, clerk, messenger, or other 
 employee shall be paid at a rate of compensation higher than the rate 
 now being paid for the same or similar work in the Internal Revenue 
 Service. 
 
 N-3 In the office of the Commissioner of Internal Revenue at Wash- 
 ington, District of Columbia there shall be appointed by the Com- 
 missioner of Internal Revenue, with the approval of the Secretary 
 of the Treasury one additional deputy commissioner, at a salary of 
 $4,000 per annum ; 
 
 N-4 two heads of divisions, whose compensation shall not exceed $2,500 
 per annum; 
 
 N-5 and such other clerks, messengers, and employees, and to rent such 
 quarters and to purchase such supplies as may be necessary: 
 
 N-6 Provided, That for a period of two years from and after the passage 
 
 of this Act the force of agents, deputy collectors, inspectors, and other 
 employees not including the clerical force below the grade of chief of 
 division employed in the Bureau of Internal Revenue in the city of 
 Washington, District of Columbia, authorized by this section of this 
 Act, shall be appointed by the Commissioner of Internal Revenue, 
 with the approval of the Secretary of the Treasury, under such rules 
 and regulations as may be fixed by the Secretary of the Treasury to 
 insure faithful and competent service, and with such compensation as 
 the Commissioner of Internal Revenue may fix, with the approval of 
 the Secretary of the Treasury, within the limitations herein prescribed : 
 
 N-7 Provided, Further, That the force authorized to carry out the pro- 
 
 visions of Section 11 of this Act, when not employed as herein pro- 
 vided, shall be employed on general internal-revenue work. 
 
 SECTION IV. 
 (Matter omitted relates to tariff only.) 
 
 Paragraph S S. * * * Provided, Further, That all excise taxes upon cor- 
 
 S-1 porations imposed by section thirty-eight, that have accrued or have 
 
 been imposed for the year ending December thirty-first, nineteen 
 
 hundred and twelve, shall be returned, assessed, and collected in the 
 
 62 
 
same manner, and under the same provisions, liens, and penalities 
 as if section thirty-eight continued in full force and effect : 
 
 And Provided, Further, That a special excise tax with respect to the S-2 
 carrying on or doing of business, equivalent to 1 per centum upon their 
 entire net income shall be levied, assessed, and collected upon corpora- 
 tions, joint-stock companies, or associations, and insurance companies, 
 of the character described in section thirty-eight of the Act of August 
 fifth, nineteen hundred and nine, for the period from January first to 
 February twenty-ninth, nineteen hundred and thirteen, both dates in- 
 clusive, which said tax shall be computed upon one-sixth of the entire 
 net income of said corporations, joint-stock companies or associations, 
 and insurance companies, for said year, said net income to be ascer- 
 tained in accordance with the provisions of subsection G of section 
 two of this Act: 
 
 Provided, Further, That the provisions of said section thirty-eight of S-3 
 the Act of August fifth, nineteen hundred and nine, relative to the col- 
 lection of the tax therein imposed, shall remain in force for the col- 
 lection of the excise tax herein provided, but for the year nineteen 
 hundred and thirteen it shall not be necessary to make more than one 
 return and assessment for all the taxes imposed herein upon said cor- 
 porations, joint-stock companies or associations, and insurance com- 
 panies, either by way of income or excise, which return or assessment 
 shall be made at the times and in the manner provided in this Act; 
 
 but the repeal of existing laws or modifications thereof embraced in S-4 
 this Act shall not affect any act done, or any right accruing or accrued, 
 or any suit or proceeding had or commenced in any civil case before 
 the said repeal or modification; 
 
 but all rights and liabilities under said laws shall continue and may S-5 
 be enforced in the same manner as if said repeal or modifications had 
 not been made. 
 
 Any offenses committed and all penalties or forfeitures or lia- S-6 
 bilities incurred prior to the passage of this Act under any statute 
 embraced in or changed, modified, or repealed by this Act may be 
 prosecuted or punished in the same manner and with the same effect 
 as if this Act had not been passed. 
 
 No Acts of limitation now in force, whether applicable to civil S-7 
 causes and proceedings or to the prosecution of offenses or for the 
 recovery of penalties or forfeitures embraced in or modified, changed, 
 or repealed by this Act, shall be affected thereby so far as they 
 affect any suits, proceedings, or prosecutions, whether civil or 
 criminal, for causes arising or acts done or committed prior to the 
 passage of this Act, which may be commenced and prosecuted within 
 the same time and with the same effect as if this Act had not been 
 passed. 
 
 T. If any clause, sentence, paragraph, or part of this Act shall Paragraph? 
 for any reason be adjudged by any court of competent jurisdiction T_l 
 to be invalid, such judgment shall not affect, impair or invalidate the 
 remainder of said Act, but shall be confined to its operation to the 
 clause, sentence, paragraph, or part thereof directly involved in the 
 controversy in which such judgment shall have been rendered. 
 
 U. That unless otherwise herein specially provided, this Act shall Paragraph U 
 take effect on the day following its passage. U-l 
 
 Approved, 9:10 p. m., October 3, 1913. 
 
 63 
 
United States 
 
 Treasury Department 
 
 Forms 
 
 FOR CLAIMING 
 
 Exemptions and Deductions 
 
 Annual and Monthly Return 
 
 on Income of Persons 
 
 and Corporations 
 
FOBM OF CERTIFICATE TO BE PRESENTED WITH COUPONS OR INTEREST ORDERS STATING' WHETHER OR 
 NOT EXEMPTION IS CLAIMED UNDEK PARAGRAPH C, SECTION 2, OF THE FEDERAL INCOME TAX LAW. 
 
 r do solemnly declare that I, _ 
 
 -a citizen or resident of the United States, and residing at 
 
 (Give full a*lrra.) 
 
 am the owner of $ bonds of the denomination of $ each^ 
 
 Nos - - - - - - 
 
 of the .... -- 
 
 (Give name ol debtor.) 
 
 known as bonds, from which were detached 
 
 (Describe the particular feme at bond*.) 
 
 the accompanying interest coupons, due , 191...., amounting to 
 
 $ , or upon which there matured , 191 ,"$ 
 
 of registered interest. 
 
 1 { do not f now claim with respect to the income represented by said interest, the benefit 
 
 of a deduction of $-_ allowed under paragraph O, Section II, of the Federal 
 
 Income Tax Law, the total exemption to which I am entitled thereunder beVng $ _ _ 
 
 Date, , 191 . Name, 
 
 FORM OF CERTIFIfcSTE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 The Owner's Certificate, of which the following Certificate Id the counterpart, and bean the same number aa this Certificate, will be lent by the collecting agent 
 direct to the OommiMioner of Internal Revenue, at Waihlngton, u prescribed by regulation.. 
 
 No... 
 
 I (we), , do solemnly declare that the owner of $ 
 
 (Name of collecting agent. ) 
 
 bonds of the .: _ , from which were detached the 
 
 (Description of i*rae.) (Name of debtor organization.) 
 
 accompanying interest coupons due .\ 191 , amounting to $.^ , has filed with me (us) 
 
 a duly executed certificate tilled up in accordance with Treasury Regulations of October 25, 1913, Form No , 
 
 which certificate has been indorsed by me (us) as follows: 
 
 "Owner's Certificate No: ,191 ," and in 
 
 (Name of collecting agency. (Date.) 
 
 which the said owner ^J not } claim, with respect to the income represented by said interest, the benefit of a deduction of 
 
 $ , allowed under Paragraph C, Section II, of the Federal Income Tax Law, the total exemption to which 
 
 said owner now claims to be entitled thereunder being $ __,__ ., and I (we) do hereby promise and pledge 
 
 { ourse'lves } to f rwart ' 'he above-described certificate executed by the owners as stated and dated , 191 , 
 
 to the Commissioner of Internal Revenue, at Washington, D. C., not later than the 20th day of next month, in accordance with 
 Treasury Regulations. 
 
 Signature of Collecting 'Agent : . 
 
 Date , 191 Address: 
 
 CERTIFICATE TO BE FURNISHED BY ORGANIZATIONS NOT SUBJECT TO TAX ON INTEREST AT SOURCE. 
 I, , the of the _, 
 
 (Oive name.) (Olve official position.) (Name of organization.) 
 
 a of , located at . , do solemnly 
 
 (Character of organization.) (State.) (Host-office address.) 
 
 declare that said Is the owner of 9 
 
 bonds of the denomination 011?*..'. .".I. each, Nos. ^ 
 
 of tlie __ . . known as 
 
 (Dive name of debtor.) (Describe particular Issue of bonds.) 
 
 bonds, from which were detached the accompanying 
 
 coupons, due , 191 , amounting to 9 , or upon which 
 
 there matured , 191...., 9 of registered Interest, and that 
 
 under the provisions of the Income-tax law of October 3, 1913, said interest Is exempt from 
 the payment of taxes collectible at the source, which exemption is hereby claimed. 
 
 Date , 191 Name 
 
 (Official position.) 
 
 Address Of.. 
 
 (Post office.) (Name of organization.) 
 
 FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (When owner la a domestic organization not subject to taxes on Income at source. ) ' 
 
 (The owner's certificate, of which the following certificate ia the counterpart, and bears the same number aa this certificate, will be sent by the 
 collf rllni agent direct to the Commissioner of Internal Revenue, at Washington, aa prescribed by regulations.) 
 
 No _ 
 
 I (we) do solemnly declare that the owner of $ _. bonds of 
 
 (Name of collecting agent.) 
 
 the -- , from which were detached the accompanying interest coupons due , 191.., 
 
 (Name of debtor organization.) (Maturity.) 
 
 amounting to $ , has filed with me (us) a duly executed certificate filled up in' accordance with Treasury Regula- 
 tions of October 25, 1913, Form No. 1001, which certificate has been indorsed by me (us) as lollows: "Owner's certificate 
 
 No , _.L , ...; ,. , 191..." and that under the 
 
 (Name of collecting agency.) (Date.) _ 
 
 provisions of the income-tax law of October 3, 1913, said interest is exempt from the payment of taxes colle6tit>le at the source, 
 which exemption is hereby claimed, and I (we) do hereby promise and pledge { {J^llves } * f rwar d l ^ e above-described cer- 
 tificate executed by the owners as stated and dated , 191.., to the Commissioner of Internal Revenue, 
 
 at Washington, D. C., not later than the 20th day of next month, in accordance writ/ Treasury Regulations. 
 
 Signature of collecting agent, 
 
 Date, , 191.. Address, 
 
 65 
 
1003. 
 
 ill 
 
 Ill 
 
 FORM Of CERTIFICATE TO BE PRESENTED WITH COUPONS OR INTEREST ORDERS WHEN NOT 
 ACCOMPANIED BT CERTIFICATE OF OWNERS. 
 
 I .'., the - of the -. , 
 
 "(Nanie) ~" (Official position.) (Bank or collecting agency.) 
 
 O f , do solemnly declare that said _ _ 
 
 (Address V (Collecting agency.) 
 
 has (or have) purchased or accepted for collection the accompanying coupons or interest orders 
 
 amounting to $ , and which represent Interest matured on 9 of bonds of the 
 
 __ f and that _ received said coupons or 
 
 (NameoTdebtoV.) (Collecting agency.) 
 
 orders for registered interest from '. , of. , 
 
 (Name of party from whom received.) (Address of said party.) 
 
 and that no certificate of ownership accompanied said coupons or interest orders, and 
 
 _ _, hereby acknowledges responsibility of withholding therefrom the 
 
 1 iScome*ttof i per cent, in accordance with the regulations of the Treasury Department. 
 
 norma 
 
 Form 
 
 H 
 III 
 
 3' 
 
 I 
 
 Form 
 1003 a 
 
 HI 
 
 M- 
 ili 
 If 
 
 Name 
 
 (Collecting agency.) 
 
 By __ _ ___ 
 
 (Signature of officer Uuly authorized to sign, and his official posttkm.) 
 
 AddresS ----------- ......... - --------- 
 
 FORM OF CERTIFICATE TO BE FILLED OUT AND SIGNED BT MEMBERS OF PARTNERSHIPS. 
 
 , a member of the firm or partnership of 
 
 .., of. , and residing at.... 
 
 (Give full address.) 
 
 bonds 
 
 do solemnly declare that the said partnership is the owner of f bonds Of the 
 
 denomination of 9 each, Nos. .. . 
 
 of the . 
 
 known as ------------------------------ bonds, from which were detached the accompanying 
 
 Interest coupons, due_ .................... , 191..., amounting to 9 ________________________ , or upon which there 
 
 matured __________________________ , 191..., 9 ..................... of registered Interest, and that the name and 
 
 __ names of the individual members thereof, and 
 
 sr 
 
 address of said .firm or partnership, and the 
 
 thelf places of residence, are as follows : Addrew: 
 
 (Name of partner signing.) (Of frm of.) 
 
 Date ........................ ....... 191.... Address ...... ........... . 
 
 Form FORM OF CERTIFICATE TO BE PRESENTED WITH COUPONS OR INTEREST ORDERS DETACHED FROM 
 BONDS OR OTHER OBLIGATIONS OWNED BT THOSE WHO ARE BOTH CITIZENS, OR SUBJECTS, AND 
 RESIDENTS OF FOREIGN COUNTRIES. 
 
 I do solemnly declare that I am not a citizen or resident of the United States of America, 
 
 but a subject (or citizen) of , and that I am the owner of 9... _ 
 
 bonds of the denominations of 9 ,. _ each, Nos 
 
 to" 
 
 of the ._ known as 
 
 (Oivenajne odebtOT 
 
 _ bonds 
 
 (Describe the particular issue of bonds.) 
 
 from which were detached the accompanying coupons, due_ , 191 , 
 
 amounting to 9 , or upon which there matured ., 191_.j, 
 
 9 i , of registered Interest, and that being a nonresident foreigner, I am exempt 
 
 from the Income tax Imposed on such Interest by the United States Government- under the 
 law enacted October 3, 1913, and that no citizen of the United States, wherever residing, or 
 foreigner residing In the United States, or any of Its possessions, has any Interest In said 
 bonds, coupon*, or Interest. 
 
 Signature of owner of bonds 
 
 (Giro full name.) 
 
 Date . 191 Address 
 
 (Olve fall r^sT-oflWaddre.*.) 
 
 FORM OF CERTIFICATR TO B8 ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENTS CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (When Bam owners arc ftrma or copartnerships In the TTnltefl States.) 
 
 wUcfa the foUowfnf certificate IB the counterpart, and 
 agent direct to the Commissioner of Internal Revenue, at Washington, an prescribed 
 
 (The owner's certificate, of wUcfa the foUowfnf certificate IB the counterpart, and bears the same number as this certificate, wffl be neat bjr the e 
 
 by refutations.) 
 
 No 
 
 I (we) ..... ..... do solemnly declare that the owner off.. ......... ____ , bonds of 
 
 (Sain, of collecting agt.) 
 
 the ___ . ___ , from which were detached the accompanying interest coupons 
 
 (Nam. of debtor orgaaUUon.) 
 
 da" ____________________ . 191 amounting to $ __________ , has filed with me (us) a duly executed certificate filled up in 
 
 (Maturity.) 
 
 accordance with Treasury Regulations of October 25, 1913, Form So. 1003, which certificate has been indorsed by me (us) 88 
 follows: "Owner's certificate No ..... ____________________ ............ _______ .......... , ---------------------- , 191 ," 
 
 (Same of collecting ag.ncy. ) (Date.) 
 
 and that the name and address of the firm or partnership, and the names of the individual members thereof, and their places 
 of residence were recorded on said original certificate, and I (we) do hereby promise and pledge { {JJ^i^g } to forward the 
 above-described certificate executed by the owners aa stated and dated __________________ ..... ._, Ifll , to the Commissioner of 
 
 Internal Revenue, at Washington, D. C., not later than the 20th day of nert month, in accordance with Treasury BegulatioM. 
 
 Signature of collecting agent, . 
 Date, ............................ -. _______ ,191 Address, ___________ ........ _... 
 
 66 
 
FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (The owner' certificate, of which the foUowtaj certificate la Ihe counterpart, and bean the same number as this certlflcte. will be nerU bj Ux> e 
 
 t direct to the Commissioner of Internal Reve 
 
 : Washington, as prescribed by regulations.) 
 
 I ( we ) dp solemnly declare that the owner of $. 
 
 bonds of the .... .................................... , .......... . from which were detached the accompanying interest 
 
 ...... (N~ame"of debtor organization. ) 
 
 coupons due -> 191, amounting to $ ................ , has filed with me (us) a duly executed 
 
 (Matorltj.) 
 
 certificate filled up in accordance with Treasury Regulations of October 25, 1913, Form No. 10M, which certificate has been 
 indorsed by me (us) as follows: "Owner's certificate No ................. , .................................................................. ... 
 
 (Name of collecting agency.) 
 
 ___ ............................. __ ....... , 191...," and that the owner in said certificate declares that, being a nonresident foreigner, 
 
 said interest is exempt from the income tax imposed on such interest by the United States Government under the law enacted 
 October 3, 1913, and that no citizen of the United States, wherever residing, or foreigner residing in the United States, or 
 
 of its possessions, has any interest in said bonds, coupons, or interest; and I (we) do hereby promise and pledge 
 
 to forward the above-described certificate executed by the owners as stated and dated .............................. : ......... , 191..., 
 
 to the Commissioner of Internal Revenue, at Washington, D. C., not later than the 20th day of next month, in accordance with 
 Treasury Regulations. 
 
 Signature of collecting agent .......... . .............................................................. 
 
 Date,.... 
 
 Address, 
 
 FORM OF CERTIFICATE TO BE FILED BT PERSONS, FIRMS, OR ORGANIZATIONS REQUIRED TO 
 WITHHOLD AND PAY SAID TAX OTHER THAN THE DEBTOR AT THE SOURCE. 
 
 To _ i Collector of Internal Revenue, 
 
 (N.iue of collector of internal refenue.) 
 
 ((Jivevddren and designate district.) 
 
 I _ t _ of the 
 
 '(KameO "" (bfncia"ftitie,"if au"yV)~ 
 
 (Person, flrm, or organisation.) (Capacity In whith acting. ) 
 
 of .................................................... _______ ......................... , do solemnly declare that I (we) received 
 
 e*.) 
 
 - ....... $ ............... - ...... , same being Income derived 
 
 , belonging to 
 
 (Give name of penon to whom income 
 
 and that. the tax thereon, amounting to 9- 
 
 (Addre..) 
 
 to which said person. Is subject, has been withheld at the source of said Income by 
 
 (Name of penon withholding.) 
 
 Date, , 191 
 
 (Signed) 
 
 Address .. 
 
 FORM FOE CLAIMING EXEMPTION AT THE SOURCE AS PROVIDED IN PARAGRAPH C, SECTION 2, OF 
 THE FEDERAL INCOME-TAX LAW OF OCTOBER 3, 1913. 
 
 e of withholding agent.) 
 
 I;hereby serve you with notice that I 
 
 single married and living with my wife husband, and now claim the benefit of the exemption 
 
 of f ...., as allowed In paragraphs C and D of section 2 of the Federal Income-tax 
 
 lw of October 3, 1913 (my total exemption under said paragraphs being *.... ). 
 
 Signed: 
 
 Date:. , 191 
 
 FORM OF CERTIFICATE TO BE FILED WITH WITHHOLDING AGENTS BY PARTNERSHIPS 
 CLAIMING DEDUCTIONS. 
 
 I, , a member of the firm or partnership of 
 
 of conducting the business of , and residing 
 
 (Give character of business conducted by partnership.) 
 
 at , _ , do solemnly declare that the said 'partnership is the owner of 
 
 (Give full address.) 
 
 $ bonds of the denomination of f ., each, Nos of the 
 
 (Give name of debtor.) 
 
 known as bonds, from Which were detached the 
 
 (Describe tho particular issue of bonds.), 
 
 accompanying interest coupons due , 19 , amounting to $ , or upon -which there matured 
 
 , 191 , $ of registered interest, or is the owner of 
 
 i-hich there accrued , 191 , $_ of income. 
 
 (Property or inr. 
 
 We hereby claim a deduction of $ allowed on account of the actual expenses incurred in conducting said busi- 
 ness, under regulations made in pursuance of section 2, act of October 3, 1913, and do solemnly declare that neither the part- 
 nership nor its individual members has claimed deductions in excess of its total actual legitimate annual expenses of conducting 
 the business of said partnership, and that no portion of the living or personal expenses of the partners is included in the 
 deductions claimed. 
 
 Date, 
 
 .... 191 
 
 i of signing partner: 
 
 For. 
 
 sis Addr 
 
 (Name of partnership.) 
 
 67 
 
Form FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 lOlla AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (When owners^re firms or copartnerships in Ihe Uniled States claiming deduction for lai on account of operating eipensos incurred.) 
 (The owner's certificate, of which the following certificate la the counterpart, and bears the same number as this certificate, will be sent by the collecting 
 lit direct to the Commissioner of Internal Revenue, at Washington, as prescribed by regulations.) 
 
 NO 
 
 I (we) -.. - do s'olemnly declare that the owner of $ 
 
 1 1 bonds of the - - from which were detached the accompanying interest coupons 
 
 in 7 I due.... ,191 , amounting to I has filed with me (us) a duly executed certificate filled up 
 
 I * i (Maturity.) 
 
 ! S i in accordance with Treasury Regulations of November 28, 1913, Form No. 1011, which certificate has been indorsed by me (us) 
 as follows: "Owner's certificate No , _, ...,191 ," 
 
 (Name of collecting agency.) (Date.) 
 
 and the partnership did in said certificate claim a deduction of $ allowed on account of the actual expenses incurred 
 
 (f r. 5 in conducting said business, under regulations made in pursuanceof eection 2, act of Octobers, 1913, and did solemnly declare that 
 S neither the partnership nor its individual members has claimed deductions in excess of its total actual legitimate annual expenses 
 ! 3 of conducting the business of said partnership, and that no portion of the living or personal ex]>enses of the partners is included in 
 the- deductions claimed; and I (we) do hereby promise and pledge {jJurelves/ to ' orwarc ' tne above-described certificate 
 
 executed by the owners as stated and dated _, 191 , to the Commissioner of Internal Revenue, at Washington, 
 
 D. C., not later than the 20th day of next month, in accordance with Treasury Regulations. 
 
 Signature of collecting agent, -. 
 
 Dtte, , 191 Address, 
 
 Form FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 1014*. AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (Wnon owners are arms or copartnerships of foreign countries and claim Immunity from Income tax.) 
 
 (The owner's certificate, of which the following certificate is the counterpart, and bears the same number as this certificate, will be sent by the 
 tettn* agent direct to the Commissioner of Internal Revenue, at Washington, as prescribed by regulations.) 
 
 !J No 
 
 I (we) , do solemnly declare that the owner of $ bonds of 
 
 (Name of collecting agent.) 
 
 the _ , from which were detached the accompanying interest coupons 
 
 (Name of dsbtor organiwtion ) 
 
 : el due , 191 , amounting to $ , has fHed with me (us) a duly executed certificate filled up 
 
 in accordance with Treasury Regulations of November 28, 1913, Form No. 1014, which certificate has been indorsed by me (us) 
 - ,, .. as follows: "Owner's certificate No , , ,191 ," 
 
 (Name of collecting agency.) (Date.) 
 
 | ^ g and that said certificates declare that said owners are a copartnership and that all the members of the firm or partnership, except 
 ' B 5 partners whose names are recorded thereon, are nonresident foreigners and as such are exempt from the income tax imposed on 
 such income by the United States Government under the law enacted October 3, 1913, and that no citizen of the United States, 
 wherever residing, or foreigner residing in the United States or any of its possessions, except those named al>ove, has any interest 
 in said bonds, coupons, or interest; and I (we) do hereby promise and P'edg 6 { "ujle'lves } * f rwar d the above-described certifi- 
 cate executed by the owners as stated and dated , 191 , to the Commissioner of Internal Revenue, at 
 
 Washington, D. C., not later than the 20th day of next month, in accordance with Treasury Regulations. 
 
 Signature of collecting agent: 
 
 Date, , 191 ' Address: _ 
 
 Form FORM OF CERTIFICATE TO BE FILED WITH DEBTOR OR WITHHOLDING AGENTS BY FIDUCIARIES. 
 
 1015. 
 
 (The following form of certificate should be filed with the debtor, or Ms paying agents, at the time of Ihe payment to the fiduciary, or his representative, 
 of all coupons. Interest orders, rents, and all other kinds of Income whatsoever upon which Ihe tax or Income is required to be withheld at the source.) 
 
 I (we) do solemnly declare that I (we), 
 
 am (are) the duly authorized .'... for the beneficiaries of the estate or trust of 
 
 (Indicate In what capacity acting.) 
 
 , which estate or trust is entitled to the income from $ 
 
 g K (Describe the Mtate or trout. ) 
 
 bonds of the denominations of f each, Nos. 
 
 In 
 
 SM I of the , kr 
 
 i <J 1 _ bonds, from which were detached 
 
 (Describe the particular iue of bondi.) 
 
 the accompanying coupons, due , 191 , amounting to $ , or upon which there has 
 
 matured , 191 , $ of registered interest, or which estate or trust is entitled to other 
 
 ! 3 income from property or investments upon which there accrued , 191 , $ of income. 
 
 Acting for and in the capacity as stated herein, I (we) hereby assume the duty and responsibility, imposed upon withhold- 
 ing agents under the law, of withholding and paying the income tax due, for which 1 (we) may be liable, and acting in said 
 fiduciary capacity as stated herein, I (we) do hereby claim exemption from having the normal tax withheld from said income. 
 
 I. Date, , 191 Address,... 
 
 Form FORM QF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (Wnen owners are fiduciaries.) 
 
 (The owner's certificate, of which the following certificate Is Ihe counterpart, and bean the nine number as this certificate, win be sent by the 
 collecting agent direct lo the Commissioner of Internal Revenue, at Washington, as prescribed by regulations.) 
 
 M 
 
 No _.. 
 
 H W I (we) .... _, do solemnly declare that the owner of f _ bonds of 
 
 fc (Name of collecting agent.) 
 
 S 2 the .. from which were detached the accompanying interest coupons due .-. , 
 
 g g A (Name of deotor organization.) (Maturity.) 
 
 S 7 ^ 191 , amounting to $ , has filed with me (us) a duly executed certificate filled up in accordance with Treasury 
 
 ^ 5 Regulations of November 28, 1913, Form No. 1015, which certificate has been indorsed by me (us) as follows: "Owner's certifi- 
 
 fc h* cate No , 1 , I9l ," that said certificate is 
 
 I* P | executed bya fiduciary, and that the'fiduciary, acti'ng'for and in the capacity as stated therein, has assumed the duty and reepon- 
 
 g o sibility imposed \ipon withholding agents under the law. of withholding and paying the income tax due, for which he (it) may 
 
 B * j be liable, and that acting in said fiduciary capacity as stated therein, he ( it) did claim exemption from having the normal tax with- 
 
 < 3 a held from said income; and I (we) do hereby promise and pledge myself (ourselves) to forward the above-described certificate 
 
 g 5 executed by the owners as stated and dated , I9l , to the Commissioner of Internal Revenue, at 
 
 H w Washington, D. C., not later than the 20th day of next month, in accordance with Treasury Regulations. 
 
 R Signature of collecting agent, 
 
 7 Date, i., I9l Address, ~,~. 
 
I, 
 
 U 
 
 C. 
 
 111 
 
 PKS 
 
 & 
 
 \ 
 
 Form 
 lOlGo. 
 
 j| 
 
 r" S 
 
 S3*. 
 
 CERTIFICATE TO BE FURNISHED BY FOREIGN ORGANIZATIONS NOT SUBJECT TO TAX ON INTEREST OR 
 OTHER INCOME AT SOURCE. 
 
 1, _ ...., the . of the , 
 
 (Give name.) (Give official ponition.) (Name of organization.) 
 
 a of , located at , do 
 
 (Character of organization.) (Country.) (Pot-offlce address.) 
 
 solemnly declare that said is a foreign organization, not engaged in busir 
 
 (Give i 
 
 in the United States, and is the owner of $ 
 
 (61".. mm. ol d 
 
 $ of registered interest, or is the owner of 
 
 
 bonds, from which were detached the accompanying coupons, 
 
 due 191.., amounting to $ , or upon which there matured ., 191.., 
 
 upon which there 
 
 accrued ., 191.., $ of income, and that under the provisions of the income-tax law of 
 
 October 3, 1913, said organization being a foreign organization, said interest or income ia exempt from the payment of taxes 
 collectible at the source, which exemption is hereby claimed. 
 
 Date - m - Name -TriK=.-sa=5 
 
 Arlrlrroa Of 
 
 ,'K;roBSo " 7""" 
 
 FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (Owners Ix-lng foreign organization, not subject to the Income tar, at the source.) 
 
 (The < 
 
 No 
 
 I ('e) _ .do solemnly declare that the owner of $ ..... bonds of 
 
 (Name of collecting agent.) 
 
 the ..... , from which were detached the accompanying interest coupons 
 
 due , 191 , amounting to $ ., has filed with me (us) a duly executed certificate 
 
 filled up in accordance with Treasury Regulations of November 28, 1913, Form No. 1016, which certificate has been indorsed by 
 me (us) as follows: "Owner's certificate No , ..., .., 191 ," 
 
 (Name of collecting agency.) (Date.) 
 
 and that under the provisions of the income-tax law of October 3, 1913, the said organization in said certificate declares that 
 it is a foreign organization, and that the said interest or income is exempt from the payment of taxes collectible at the source, 
 which exemption it claims, and I (we) do hereby promise and 'pledge { {JtJrwYves } to forward the above-described certificate 
 
 executed by the owners as stated and dated ,..., 191 , to the Commissioner of Internal Revenue, at 
 
 Washington, D. C., not later than the 201 h day of next month, in accordance with Treasury Regulations. 
 
 Signature of collecting agent, 
 
 Date , 191 Address, .... 
 
 Form 
 1018. 
 
 CERTIFICATE TO BE FURMSHED BY FOREIGN ORGANIZATIONS ENGAGED IN BUSINESS IN 
 THE UNITED STATES. 
 
 TRKASVHY DKPA15TMKNT, 
 INTERNAL REVENUE-INCOM E TAX 
 
 2 7:}-ll fvl. 60,000 F. C., I'"*-.- Kl-13. 
 
 (Character of orpaoi7tit!on.) (Country.) 
 
 solemnly declare that said 
 
 (Post-office addn*a.) 
 
 (Give name of organization.) 
 
 the United States, and is the owner of $ bonds of the denomination of $ each, Nos 
 
 of the 
 
 
 (Give name of del 
 
 bon 
 
 0,.) 
 
 tie, from which were detached the accompanying coupons, 
 upon which there matured , 191.., 
 
 (Describe particular issue of bonds.) 
 
 
 was accrued , 191.., $ of i 
 
 (Property or investment*.) 
 
 ncome. 
 
 a is subject to the normal tax of 1 per centum pr annum upon the amount 
 >tes, for which tax 'it will make its return in due conrw, bnt It hereby claim. 
 
 Coder the prorisions of the Income-tax law of October 3. 1913, the said organizatlo 
 of net income accruing from business transacted and capital invested vrithln the United 3t 
 exemption from having the said normal tax of 1 per centum of said income withheld at th 
 
 Date , 191 Name 
 
 Address Of 
 
 (OfflcWpodtion.) 
 
 (Post office.) 
 
 (Name of organization.) 
 
 Form 
 1018a. 
 
 Hi 
 
 FORM OF CERTIFICATE TO BE ATTACHED TO INTEREST COUPONS IN CASES WHERE THE COLLECTING 
 AGENT'S CERTIFICATE IS SUBSTITUTED FOR THE CERTIFICATE OF THE OWNERS. 
 
 (Owners t>elng foreign organizations engaged In ^business In the United states and subject to tax.) 
 
 collecting agent direct loThe'Commi'ssione'r o'f InternaT'ke'venue. at WaTbLVo^as "prescribed by rteulatio. ' " 
 
 No. .... 
 
 I (we) do solemnly declare that the owner of $ bonds of 
 
 (Name of collecting agent.) 
 
 the , from which were detached the accompanying interest coupons 
 
 due , , 191 , amounting to 5 , has filed with me (us) a duly executed certificate 
 
 (Maturity.) 
 
 filled up in accordance with Treasury Regulations of December 5, 1913, Form No. 1018, which certificate has been indorsed by 
 me (us) as follows: "Owner's certificate No , , , 191 ," 
 
 (Name of collecting agency.) (Date.) 
 
 and that under the regulations made in pursuance of section 2, act of October 3, 1913, said organization is subject to the normal 
 tax of. 1 per centum per annum upon the amount of net income accruing from business transacted and capital invested within the 
 United States, and did therein claim exemption from having the said tax withheld at the source from said income, and I (we) 
 do hereby promise and pledge | J^elves} to ' orwar d tne above-described certificate, executed by the owners as stated, and dated 
 
 _ 191 , to the Commissioner of Internal Revenue at Washington, D. C., not later than the 20tb 
 
 day of next month, in accordance with Treasury Regulations. 
 
 Signature of collecting agent, 
 
 Date, .... , 191 Address, .... 
 
Konn of Certificate to be Filed with Debtor or Withholding Agents by Fiduciaries when Not Claiming Any Exemption, as 
 an Alternative to the Filing of Form No. 1015 in Which Exemption is Claimed. 
 
 (The foDowIn* form of certificate may be filed with the debtor, or It. paying af enU. at the time of the payment to the (IdoHary. or hi* rapreacnlMfre 
 of all coupons. Interest orders, renta. and all other kind* of laconic whatsoever upon which the tax on income l required to be withheld at the Morce u an 
 
 I (we) do solemnly declare that I (we), 
 
 am (are) the duly authorized 
 
 (Indicate In what capacity acting.) 
 
 _ ........................ , which estate or trust is entitled to the income from f _____ ........ _____ 
 
 bonds of the denominations of $ ____________________ each, New ......... _ 
 
 ,.._... , known as 
 
 ,, - - bonds, from which were detached 
 
 the accompanying coupons, due , 191..., amounting to $ , or upon which there has 
 
 matured , 191..., $ of registered interest, or which estate or trnst ia entitled to other 
 
 income from property or investments upon which there accrued , 191. _., { of income. 
 
 Acting for and in the capacity herein stated, I hereby declare that I (we) do not now claim any exemption from having 
 the normal tax of 1 per cent withheld from eaid income by the debtor at the source. 
 
 Address, 
 
 (Capacity ID wbich acting.) 
 
 Form lOOS-aVLlBO.OOO-r. 0., NOT S-l: 
 
 UNITED STATES INTERNAL REVENUE 
 
 FORM OF RETURN FOR MAKING APPLICATION FOR DEDUCTIONS, 
 
 To 
 
 I hereby solemnly declare that the following is a true and correct return of my gains, jjrofits, and 
 income from all othf sources for the calendar year ended December 31, 191 (for the year 1913 the period 
 to be covered is only for ten months, from March 1 to December 31), and a true and correct return of 
 deductions asked for under paragraph B of section 2 of the act of October 3, 1913, and I hereby claim 
 deductions as shown below. 
 
 Amount of gains, profits, interest, rents, royalties, profits from copartnerships, and 
 
 income 
 
 from all 
 
 ,other sc 
 
 urces 
 
 $ 
 
 
 
 
 
 
 
 DEDUCTIONS 
 
 1 The amount of necessary expenses actually paid in carryinf on business, except 
 business expenses of partnerships, and not including personal, living, or 
 family expenses 
 
 $ 
 
 
 
 
 
 2. All interest paid within the year on personal indebtedness of taxpayer 
 
 
 
 
 
 
 3. All national, State, county, school, and municipal taxes paid within the year 
 (not including those assessed against local benefits) 
 
 
 
 
 
 
 4. Losses actually sustained during the year incurred in trade or arising from fires, 
 
 
 
 
 
 
 5. Debts due which nave been actually ascertained io be worthless and charged 
 off within the yeai 
 
 
 
 
 
 
 6. Amount representing a reasonable allowance for the exhaustion, wear, and tear 
 of property arising out of its use or employment in the business, not to exceed 
 in the case of mines 5 per cent of the gross value of the output for the year for 
 which the computation is made, but not including the expense of restoring 
 property or making good the exhaustion thereof, for which an allowance is or 
 
 
 
 
 
 
 7. The amount received as dividends upon the stock or from the net earnings of 
 any corporation, joint-stock company, association, or insurance company 
 which is taxable upon its net income 
 
 
 
 
 
 
 8. The amount of income, the tax upon which has been paid or withheld for pay- 
 
 
 
 
 
 
 
 
 
 
 
 
 Total deductions 
 
 
 
 
 
 $ 
 
 
 
 
 
 
 
 Date: 
 
 (Signed) 
 Address . 
 
 NOTE. Honey or other things of value, disposed of by gift, donation, or endowment, shall not be deducted or be made the basis. 
 far deduction from the income of persons or corporations in their tax returns tinder the income-tax law. c S-TOT 
 
 70 
 
II If FUifJHI If CClilCTQg. 
 
 INCOME TAX. 
 
 TO IE Fttiu ii it nrcnuL KIHK KIIUB. 
 /"//* /to. 
 
 THE RENAL.TV 
 
 FOR FAILURE TO HAVE THIS RETURN IN 
 THE HANDS OF THE COLLECTOR OF 
 
 INTERNAL REVENUE ON OR KFORC Pogt 
 
 MARCH I IS S20 JO $1,000. 
 
 - ( IMCTHUCTION* OH. PAO 4.) 
 
 UNITED STATES INTERNAL REVENUE 
 
 i; * 
 ftf _- 
 
 Ling 
 
 RETURN OF ANNUAL NET INCOME OF INDIVIDUALS. 
 
 (A. prOTldod by Act of CoDgWM. .pproyrf October 3. W13.) 
 
 RETURN OF NET INCOME RECEIVED OR ACCRUED DURING THE YEAR ENDED DECEMBER 31, 191. 
 
 (FOR THE' YEAR II3. FROM MARCH I. TO DECEMBER SI J - 
 
 Filed by (or for) 1 of , 
 
 (Full .mm. of (QdKldul.) (BUM .(Hi Xo ) 
 
 it Hie City, Town, or Post Office of ,..........:. "State of 
 
 (fill In pag. 1 .nd 3 btoi ouAlng entrlt. b.low.) 
 
 1. GBoes INCOME (see page 2, line 12) -^ $. 
 
 2. GENERAL DEDUCTIONS (see page 3, line 7) - _$_. 
 
 t 
 
 Deductions and exemptions allowed in computing income subject to the normal tax of I per cent. 
 
 4. Dirtdenda and net earnings received or accrued, of corpora- 
 tions, etc., subject to like tax. (See page 2, line 11) t- 
 
 6. Amount of income on which the normal tax has been deducted 
 
 and withheld at the source. (See page 2, line 9, column A.) 
 
 6 Specific exemption of $3,000 or $4,000, as the case may be. 
 
 (See Instructions 3 and 19) 
 
 Total deductions and exemptions. (Ttems 4, 5, and 6) .1 . 
 
 T. TAXABLB iMOOHBon which the norinai tax of 1 per cent ia to be calculated. (See Instruction 3). _$. 
 . When the net Income shown above on line 3 exceeds $20,000, the additional tax thereon must be calculated as per schedule belowi 
 
 IHOOME. TAX. 
 
 1 per cent on amount over $20,000 and not exceeding $50,000 $ _ f. 
 
 2 " " 50,000 " " 75,000. 
 
 3 " " 75,000 " " 100,000. 
 
 4 " " 100,000 " '- 250,000. 
 
 5 " " 250,000 
 C * 600,000. 
 
 Total additional or super tax $. 
 
 Total normal tax (1 per cent of amount entered on line 7) $ .. . 
 
 Total tax liability $. 
 
 71 
 
This statement must show 
 from all sources during the year specified on page 1. 
 
 GROSS INCOME. 
 
 the. proper tpaces the -entire amount of gains, profits, and income received ly or accrued to the indi, 
 
 DESCRIPTION OF INCOME. 
 
 A. 
 
 Amount of income on wlikli lax bun t*<:u 
 dedocted and withheld at tbe Kmrve. 
 
 Amoiuit of income on which tax hai nor 
 benuiedacted >nd withheld at thc~soorv. 
 
 1. Total amount derivedfrom salaries, wages, or compensation for 
 personal service of whatever kind and in whatever form paid- 
 
 2. Total amount derived from professions, vocations, businesses, 
 trade, commeroe,or sales or dealings m property, whether real 
 or personal, growing out of the ownership or use of or interest 
 
 $ 
 
 
 
 
 | 
 
 
 
 
 
 
 
 
 
 
 
 
 3. Total amount derived from rents and from interest on notes, 
 mortgages, and securities (other than reported on lines 5 
 
 
 
 
 
 
 
 
 
 4. Total amount of gains and profits derived from partnership 
 business, w hether the same be divided and distributed or not. 
 
 6. Total amount of fixed and determinate annual gains, profits,, 
 and income derived from interest npon bonds and mort- 
 gages or deeds of trust, or other similar obligations of 
 corporations, joint-stock companies or associations, and 
 insurance companies, whether payable annually or at shorter 
 
 
 
 
 
 
 
 
 
 _.._ 
 
 
 
 
 
 
 
 
 6. Total amount of income derived from coupons, checks, or bills 
 of exchange for or in payment of interest upon bonds issued 
 in foreign countries and lipon foreign mortg<i/jes or like obliga- 
 tions (not payable in the United States), and also from cou- 
 pons, checks,' or bills of exchange for or in payment of any 
 dividends upon the stock or interest upon the obligations of 
 foreign corporations, associations, and insurance companies 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 8. Total amount of income derived from any source whatever, 
 irot specified or entered elsewhere on this page. 
 
 
 
 
 
 
 
 
 9. TOTALS., 
 
 $ 
 
 
 
 
 $. 
 
 
 
 
 NOTE.-Enl.-r total of Column A on line 5 of first p.go. 
 
 10. AGGREGATE TOTALS OF COLUMNS A AND B - 
 
 $ 
 
 
 
 
 11. Total amount of income derived from dividends on the stock or from the net earnings of corpo- 
 rations, joint-stock companies, associations, or insurance companies subject t6 like tax 
 
 $ 
 
 
 
 
 (To be enter.-.! on line i of first page.) 
 
 1-. TOTAL "Gross Income" (to be entered on line 1 of first page) 
 
 
 1 
 
 
 
 
 
 
 
 
 
 72 
 
GENERAL. DEDUCTIONS. 
 
 1. The amount of necessary expenses actually paid in carrying on business, but not including 
 
 business expenses of partnership?, and not including personal, living, or family expenses $- 
 
 2. All interest paid within the year on personal indebtedness of taxpayer... 
 
 3. All national, State, county, school, and municipal taxes paid within the year (not including thow 
 
 assessed against local benefits) 
 
 4. Losses actually sustained during the' year incurred in trade or arising from firee, storms, or 
 
 shipwreck, and not eonipeneated for by insurance or otherwise . .. 
 
 8. Debts duo which have been actually ascertained to be worthless and which have been charged 
 
 off within the year 
 
 9. Amount representing a reasonable allowance for the exhaustion, wear, and tear of property 
 
 arising out of its use or employment in the business, not to exceed, in the case of mines, 
 5 per cent of the gross value at the mine of the output for the year for which the computation 
 is made, but no deduction shall be made for any amount of expense of restoring property 
 or making good the exhaustion thereof, for which an allowance is or has been made .' 
 
 7. Total "GENEBAL DEDUCTIONS" (to be entered on line 2 of first page) ... 
 
 AFFIDAVIT TO BE EXECUTED BY INDIVIDUAL MAKING HIS OWN RETURN. 
 
 I solemnly swear (or affirm) that the foregoing return, to the best of my knowledge and belief, contains a true and complete 
 statement of all gains, profits, and income received by or accrued to me during the year for which the return is made, and that I am 
 entitled to all the deductions and exemptions entered or claimed therein, under the Federal Income-tax Law of October 3, 1913. 
 
 Sworn to and subscribed before me this .^.. 
 
 day of , 191 
 
 AFFIDAVIT TO BE EXECUTED BY DULY AUTHORIZED AGENT MAKING RETURN FOR INDIVIDUAL, 
 
 I solemnly, swear (or affirm) that I have sufficient knowledge of the affairs and property of 
 
 'to enable me to make a full and complete return thereof, and that the foregoing return, to the best of my knowledge and belief, contains 
 a true and complete statement of all gains, profits, and income received by or accrued to said individual during the year for which .the 
 return is made, and that the said individual is entitled, under the Federal Income-tax Law of October 3, 1913, to all the deductions 
 and exemptions entered or claimed therein. 
 
 Sworn to and subscribed before me this J _ . 
 
 day of ;.., 191 
 
 ADDRESS 
 
 IN FULL. 
 
 (Official" cp*cit7.) k "" 
 
 '2-7387 [SEE INSTRUCTIONS ON BACK OF THIS PAGE.) 
 
 73 
 
INSTRUCTIONS FOR 1040 
 Annual Return by Individuals (1040) 
 
 1. This return shall be made by every citizen of the United States, 
 whether residing at home or abroad, and by every person residing in the 
 United States, though not a citizen thereof, having a net income of $3,000 
 or over for the taxable year, and also by every nonresident alien deriving in- 
 come from property owned and business, trade, or profession carried on in 
 the United States by him. 
 
 2. When an individual by reason of minority, sickness or other disability, 
 or absence from the United States, is unable to make his own return, it may 
 be made for him by his duly authorised representative. 
 
 3. The normal tax of 1 per cent shall be assessed on the total net income 
 less the specific exemption of $3,000 or $4,000 as the case may be. (For the 
 year 1913, the specific exemption allowable is $2,500 or $3,333.33, as the case 
 may be.) If, however, the normal tax has been deducted and withheld on 
 any part of the income at the source, or if any part of the income is re- 
 ceived as dividends upon the stock or from the net earnings of any corpora- 
 tion, etc., which is taxable upon its net income, such income shall be deducted 
 from the individual's total net income for the purpose of calculating the 
 amount of income on which the individual is liable for the normal tax of 1 
 per cent by virtue of this return. (See page 1, line 7.) 
 
 4. The additional or super tax shall be calculated as stated on page 1. 
 
 5. This return shall be filed with the Collector of Internal Revenue for 
 the district in which the individual resides if he has no other place of business, 
 otherwise in the district in which he has his principal place of business; or in 
 case the person resides in a foreign country, then with the collector for the 
 district in which his principal business is carried on in the United States. 
 
 6. This return must be filed on or before the first day of March succeed- 
 ing the close of the calendar year for which return is made. 
 
 7. The penalty for failure to file the return within the lime specified by 
 law is $20 to $1,000. In case of refusal or neglect to render the return within 
 the required time (except in cases of sickness or absence), 50 per cent shall be 
 added to amount of tax assessed. In case of false or fraudulent return, 100 
 per cent shall be added to such tax, and any person required by law to make, 
 render, sign, or verify any return who makes any false or fraudulent return 
 or statement with intent to defeat or evade the assessment required by this 
 section to be made shall be guilty of a misdemeanor, and shall be fined not 
 exceeding $2,000 or be imprisoned not exceeding one year, or both, at the 
 discretion of the court, with the costs of prosecution. 
 
 8. When the return is not filed within the required time by reason of sick- 
 ness or absence of the individual, an extension of time, not exceeding 30 
 days from March 1, within which to file such return, may be granted by the 
 collector, provided an application therefor is made by the individual within 
 the period for which such extension is desired. 
 
 9. This return properly filled out must be made under oath or affirmation. 
 Affidavits may be made before any officer authorised by law to administer 
 oaths. If before a justice of the peace or magistrate, not using a seal, a 
 certificate of the clerk of the court as to the authority of such officer to ad- 
 minister oaths should be attached to the return. 
 
 10. Expense for medical attendance, store accounts, family supplies, 
 wages of domestic servants, cost of board, room, or house rent for family 
 or personal use, are not expenses that can be deducted from gross income. 
 In case an individual owns his own residence he can not deduct the esti- 
 mated value of his rent, neither shall he be required to include such esti- 
 mated rental of his home as income. 
 
 11. The farmer, in computing the net income from his farm for his 
 annual return, shall include all moneys received for produce and animals 
 sold, and for the wool and hides of animals slaughtered, provided such wool 
 and hides are sold, and he shall deduct therefrom the sums actually paid 
 as purchase money for the animals sold or slaughtered during the year. 
 
 74 
 
Instructions for 1040 continued 
 
 When animals were raised by the owner and are sold or slaughtered he 
 shall not deduct their value as expenses or loss. He may deduct the amount 
 of money actually paid as expense for producing any farm products, live 
 stock, etc. In deducting expenses for repairs on farm property the amount 
 deducted must not exceed the amount actually expended for such repairs 
 during the year for which the return is made. (See page 3, item 6.) The 
 cost of replacing tools or machinery is a deductible expense to the extent 
 that the cost of the new articles does not exceed the value of the old. 
 
 12. In calculating losses, only such losses as shall have been actually 
 sustained and the amount of which has been definitely ascertained during 
 the year covered by the return can be deducted. 
 
 13. Persons receiving fees or emoluments for professional or other 
 services, as in the case of physicians or lawyers, should include all actual 
 receipts for services .rendered in the year for which return is made, together 
 with all unpaid accounts, charges for services, or contingent income due for 
 that year, if good and collectible. 
 
 14. Debts which were contracted during the year for which return is 
 made, but found in said year to be worthless, may be deducted from gross 
 income for said year, but such debts can not be regarded as worthless until 
 after legal proceedings to recover the same have proved fruitless, or it 
 clearly appears that the debtor is insolvent. If debts contracted prior to the 
 year for which return is made were included as income in return for year 
 in which said debts were contracted, and such debts shall subsequently 
 prove to be worthless, they may be deducted under the head of losses in the 
 return for the year in which such debts were charged off as worthless. 
 
 15. Amounts due or accrued to the individual members of a partnership 
 from the net earnings of the partnership, whether apportioned and dis- 
 tributed or not, shall be included in the annual return of the individual. 
 
 16. United States pensions shall be included as income. 
 
 17. Estimated advance in value of real estate is not required to be- 
 reported as income, unless the increased value is taken up on the books of 
 the individual as an increase of assets. 
 
 18. Costs of suits and other legal proceedings arising from ordinary 
 business may be treated as an expense of such business, and may be deducted 
 from gross income for the year in which such costs were paid. 
 
 19. An unmarried individual or a married individual not living with 
 wife or husband shall be allowed an exemption of $3,000. When husband 
 and wife live together they shall be allowed jointly a total exemption of 
 only $4,000 on their aggregate income. They may make a joint return, both 
 subscribing thereto, or if they have separate incomes, they may make sepa- 
 rate returns; but in no case shall they jointly claim more than $4,000 exemp- 
 tion on their aggregate income. 
 
 20. In computing net income there shall be excluded the compensation 
 of all officers and employees of a State or any political subdivision thereof,, 
 except when such compensation is paid by the United States Government. 
 
 75 
 
10 BE RUEUM BY COLLECTOR. 
 
 (List No 
 
 District of 
 
 Date received 
 
 Form 1041. 
 
 INCOME TAX. 
 
 T8 M RUED BY BIEfflAl HYEIfllE BUffJU. 
 
 File Ho 
 
 Assessment List ~ 
 
 THE HANDS or im COLLECTOR or 
 
 INTERNAL REVENUE ON OR BEFORE Page Littt 
 
 MARCH I IS $20 TO $1,000. 
 
 (SEE INSTRUCTIONS ON PACK 4.) 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF. ANNUAL INCOME BY FIDUCIARIES. 
 
 (Ai prorldsd by Act of Congnat approved October 3, 1913.) 
 
 RETURN OF INCOME RECEIVED OR ACCRUED DURING THE YEAR ENDED DECEMBER 31. 19!.... 
 
 (FOR THE YEAR 1913. FROM MARCH I, TO DECEMBER 31.) 
 
 Filed by 
 
 ., acting in the capacity of, 
 
 (State whethor trnatee, executor, etc.) 
 
 , for the beneficiaries of the estate or trust of- 
 
 (Fill In pag<M 2 and 3 before I 
 
 5 entriw on this page.) 
 
 1. Gfiosa INCOME (ace page 2, 11] 
 
 2, TOTAL Drotjonous (see page 
 
 3. Amount of income paid or pi 
 been deducted and withfif 
 
 10 11) 
 
 $ 
 
 
 3, line 9) 
 
 $ 
 
 
 lyabto to beneficiaries on which the normal tax of 1 per cent; has 
 Id as listed below ^ 
 
 $ 
 
 
 KamMoftHioeaciartM. 
 
 Addreow. 
 
 Amonnt of Income 
 
 Amount of exemp- 
 tion claimed. 
 
 At 
 
 nount of Income on 
 which fiduciary la 
 liable for tax. 
 
 "^^ held. 
 
 
 
 *.. 
 
 $ 
 
 j 
 
 $ ' 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - - 
 
 
 
 
 o 8-73M TOTALS 
 
 
 
 
 
 
 
 
 
 
 
 
 H 
 
 $ 
 
 $ 
 
 $... 
 
 
 76 
 
GROSS INCOME. 
 
 Thi;: statement must show in the proper spaces the entire amount of gains, profits, and income coming Mo the custody or control and 
 management of the fiduciary, for the benefit of the beneficiaries of the trust or estate, during the year specified on page 1. 
 
 DESCRIPTION OF INCOME. 
 
 A. 
 
 B. 
 
 deducted and withheld at the wurco. 
 
 been deducted and withheld at the source. 
 
 1. Total amount derived from salaries, wages, or compensation for 
 personal service of whatever kind and in whatever form paid. 
 
 2. Total amount derived from professions, vocations, businesses, 
 'trade, commerce, or salesor dealings in property, whether real 
 or personal, growing out of theownership or use of or interest 
 
 $ 
 
 
 
 
 $ 
 
 
 
 
 
 
 
 
 
 
 
 
 3. Total amount derived from rents and from interest ,on notes, 
 mortgages, and securities (other than reported on lines 5 
 
 
 
 
 
 
 
 
 
 4. Total amount of gains and profits derived from partnership 
 business, whether the same be divided and distributed ornot- 
 
 5. Total amount of fixed and determinable annual gains, profits, 
 and income derived from interest upon bonds and mort- 
 gages or deeds of trust, or other similar obligations of 
 corporations, joint-stock companies or associations, and 
 insurance co.mpanies, whether payable annually or at shorter 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 6. Total amount of income derived from coupons, checks, or bills 
 of exchange for or in payment of interest upon bonds issued 
 in foreign countriet and upon foreign mortgaget or like obliga- 
 tions (not payable in the United States), and also from cou- 
 pons, checks, or bills of exchange for or in payment of any 
 dividends upon the stock or interest upon the obligations of 
 foreign corporations, associations, and insurance companies 
 
 
 
 
 
 
 
 
 7. Total amount of income derived from any source whatever, 
 not specified or entered elsewhere on this page 
 
 
 
 
 
 
 
 
 
 $ 
 
 
 
 
 
 
 
 
 NOTE. Enter total of Column A on line 8 of Ih 
 
 9. AOOHEOATB TOTALS OF COLUMNS A AMI 
 
 10. Total amount of income derived from dividends on the stock o 
 rations, joint-stock companies, associations, or insurance com 
 (To be entered on line 7 of third p.e.) 
 
 11. AGGREGATE TOTAL of "Gross Income" (to be entered on line 1 
 
 c I T374 
 
 rd 'page. 
 
 ).B 
 
 f 
 
 
 
 
 from the 
 paniea su 
 
 of first p 
 
 net earnings of corpo- 
 )ject to like tax 
 
 $ 
 
 
 
 
 $ 
 
 
 
 
 
 
 
 
 
 77 
 
DEDUCTIONS. 
 
 1. The amount of necessary expenses ^tually paid in carrying on business, but not including 
 
 business expenses of partnerships, and not including personal, living, or family expenses....... $.. 
 
 2. All interest paid within the year on personal indebtedness of taxpayer 
 
 3. All United States, State, county, school, and municipal taxes paid within the year (not including 
 
 those assessed against local benefits) 
 
 4. Losses actually sustained during the year incurred in trade or arising from fires, storms, or 
 
 shipwreck, and not compensated for Dy insurance or otherwise -, - 
 
 5. Debts due which have beeji actually ascertained to be worthless and which have been charged 
 
 off within the year ... - 
 
 6. Amount representing a reasonable allowance for the exhaustion, wear, and tear of property 
 
 arising out of its use or employment in the business, not to exceed, in the case of mines, 
 5 per cent of the gross value at the mine of the output for the year for which the computation 
 is made, but no deduction- shall be made for any amount of expense of restoring property 
 or making good the exhaustion thereof, for which an allowance is or baa been made 
 
 7. Total amount of income derived from dividends on the stock or from the net earnings of corpo- 
 
 rations, joint-stock companies, associations, or insurance companies subject to like tax (same 
 as entry on line 10, page 2) . 
 
 8. Amount of income on which the normal tax of 1 per cent has been deducted and withheld at 
 
 the source (see page 2, line 8, column A) 
 
 fl. TOTAL DEDUCTIONS (to be entered on line 2 of first page) . 
 
 AFFIDAVIT TO BE EXECUTED WHERE FIDUCIARY IS AN INDIVIDUAL: 
 I solemnly-swear (or affirm) that I am the . for the beneficiaries of the estate or 
 
 (State whether trustee, executor, etc.) 
 
 trust of _ _ -~ ; that the foregoing return, to the best of niy 
 
 knowledge and belief, contains a true and complete statement of all gains, profits, and income coming into my custody or control and 
 management during the year for which the return is made; that sain beneficiaries are entitled, under the Federal Income-tax Law of 
 October 3, 1913, to all the deductions entered or claimed therein; that all certificates claiming personal exemption, presented by the 
 beneficiaries, are herewith inclosed; and there is contained therein a true and complete list of the names and addresses of all bene- 
 ficiaries .to whom any part of .the amount stated oh line 3 of the first page thereof has been paid or is payable. 
 
 Sworn to and subscribed before me this _ - 
 
 (Signature of fiduciary.) 
 / 
 
 day of ..,; , 191 
 
 NO 
 
 AFFIDAVIT TO BE EXECUTED WHERE FIDUCIARY IS AN ORGANIZATION. 
 
 I solemnly swear (or affirm) thafl am the of the 
 
 (State official portion.) (State name o fiduciary organisation.) 
 
 of which organization is the duly authorized or appointed 
 
 < Addre. in-luU.) (State whether trurtee, executor, ett.) 
 
 for the beneficiaries of the estate or trust of , ; that I am 
 
 duly authorized to act for said fiduciary; that the foregoing return, to the best of my knowledge and belief, contains a true and complete 
 statement of all gains, profits, and income coming into the custody or control and management of said organization in its fiduciary 
 capacity as stated during the -year for which the return is made; that sai8 beneficiaries are entitled under the Federal Income-tax Law 
 of Octobers, 1913. to all the deductions entered or claimed therein; that all certificates claiming personal exemption, presented by 
 the beneficiaries, are herewith inclosed? and there is contained therein a true and complete list of the names and addresses of all 
 beneficiaries to whom any part of the amount stated on line 3 of the first page thereof has been paid or is payable. 
 
 Sworn-to and subscribed before me this 
 
 (Signature of officer reprwenting fiduciary.) 
 
 day of ..., m 
 
 ADDRESS 
 -1 IN FULL 
 
 SEAL OF 
 OFFICER 
 
 FFIDAVIT. , . - a_74 
 
 78 
 
INSTRUCTIONS FOR 1041 
 Annual Return By Fiduciaries (1041) 
 
 1. Fiduciaries shall, when the annual interest of any beneficiary in 
 income accruing and payable through said fiduciary is in excess of $3,000, 
 make and render a return on this form of such income of the person or 
 persons for whom they act, to the Collector of Internal Revenue of the 
 district in which the fiduciary resides. The return shall be made as pro- 
 vided herein, whether the income is distributed or not. See Treasury De- 
 cision 1906. 
 
 2. The list return required from fiduciaries by regulations provided in 
 Treasury Decision 1906, issued November 28, 1913, shall be made on page 1 
 of this return, giving thereon the name of each beneficiary of the trust or 
 estate, the amount of income paid or accrued to each beneficiary, the amount 
 of exemption claimed by each beneficiary, if any, the amount of income on 
 which fiduciary is liable for tax, and the amount of income withheld for tax. 
 
 3. Where several individuals act jointly in a fiduciary capacity, when 
 this return is required it may be made and executed by one of two or more. 
 When the fiduciary is an organization it shall be signed and executed by 
 the President, Secretary, or Treasurer of said organization. 
 
 4. This return shall be filed with the Collector of Internal Revenue for 
 the district in which the fiduciary resides if he has no other place of busi- 
 ness, otherwise in the district in which he has his principal place of business. 
 
 5. This return must be filed on or before the first day of March succeed- 
 ing the close of the calendar year for which return is made. 
 
 6. The penalty for failure to file the return within the time specified by 
 law is $20 to $1,000. In case of refusal or neglect to render the return 
 within the required time (except in case of sickness or absence) 50 per 
 cent shall be added to amount of tax assessed. In case of false or fraud- 
 ulent return 100 per cent shall be added to such tax and a fine not exceed- 
 ing $2,000 or imprisonment not exceeding one year or both may be im- 
 posed. 
 
 7. When the return is not filed within the required time by reason of 
 sickness or absence of the fiduciary, an extension of time not exceeding 
 30 days from March 1, within which to file such return may be granted by 
 the Collector, provided an application therefor is made by the fiduciary 
 within the period for which such extension is desired. 
 
 8. This return properly filled out must be made under oath or affirma- 
 tion. Affidavits may be made before any officer authorized by law to admin- 
 ister oaths. If before a justice of the peace or magistrate, not using a 
 seal, a certificate of the clerk of the court as to the authority of such officer 
 to administer oaths should be attached to the return. 
 
 The following instructions, so far as applicable, are to be considered 
 by the fiduciary in determining the amount of income coming into his 
 custody or control and management which should be reported in this 
 return on page 2, and the deductions which should be reported on page 3. 
 
 9. Expense for medical attendance, store accounts, family supplies, wages 
 of domestic servants, cost of board, room, or house rent for family or per- 
 sonal use, are not expenses that can be deducted from gross income. In 
 case an individual owns his own residence he can not deduct the estimated 
 value of his rent, neither shall he be required to include such estimated 
 rental of his home as income. 
 
 10. The farmer, in computing the net income from his farm for his an- 
 nual return, shall include all moneys received for produce and animals sold, 
 and for the wool and hides of animals slaughtered, provided such wool and 
 hides are sold, and he shall deduct therefrom the sums actually paid as pur- 
 chase money for the animals sold or slaughtered during the year. 
 
 When animals are raised by the owner and are sold or slaughtered, he 
 shall not deduct their value as expenses or loss. He may deduct the amount 
 of money actually paid as expense for producing any farm products, live 
 stock, etc. In deducting expenses for repairs on farm property the amount 
 
 79 
 
Instructions 1041 cont'd. 
 
 deducted must not exceed the amount actually expended for such repairs 
 during the year for which the return is made. (See page 3, item 6.) The 
 cost of replacing tools or machinery is a deductible expense to the extent 
 that the cost of the new articles does not exceed the value of the old. 
 
 11. In calculating losses, only such losses as shall have been actually sus- 
 tained and the amount of which has been definitely ascertained during the 
 year covered by the return can be deducted. 
 
 12. Persons receiving fees or emoluments for professional or other serv- 
 ices, as in the case of physicians or lawyers, should include all actual receipts 
 for services rendered in the year for which the return is made, together with 
 all unpaid accounts, charges for services, or contingent income due for that 
 year, if good and collectible. 
 
 13. Debts which were contracted during the year for which return is 
 made, but found in said year to be worthless, may be deducted from gross 
 income for said year, but such debts can not be regarded as worthless until 
 after legal proceedings to cover the same have proved fruitless, or it clearly 
 appears that the debtor is insolvent. If debts due to the taxpayer and con- 
 tracted prior to the year for which return is made were included as income 
 in return for year in which said debts were contracted, and such debts shall 
 subsequently prove to be worthless, they may be deducted under the head of 
 losses in the return for the year in which such debts were charged off as 
 worthless. 
 
 14. Amounts due or accrued to the individual members of a partnership 
 from the net earnings of the partnership, whether apportioned and distributed 
 or not, shall be included in the annual return of the individual. 
 
 15. United States pensions shall be included as income. 
 
 16. Estimated advance in value of real estate is not required to be re- 
 ported as income, unless the increased value is taken up on the books of the 
 individual as an increase of assets. 
 
 17. Costs of suits and other legal proceedings arising from ordinary 
 business may be treated as an expense of such business, and may be de- 
 ducted from gross income for the year in which such costs were paid. 
 
 18. An unmarried individual or a married individual not living with 
 wife or husband shall be allowed an exemption of $3,000. When husband 
 and wife live together they shall be allowed jointly a total exemption of 
 only $4,000 on their aggregate income. 
 
 19. In computing net income there should be excluded the compensation 
 of all officers and employees of a State or any political subdivision thereof, 
 except when such compensation is paid by the Unted States Government. 
 
TO BP FILLER tN B r COLLECTORS: - - ' TO BE FILLED IN IV INTERNAL REVENUE BUREAU. 
 
 .LMHo Cla THE PKNAL.TV 
 
 "" rOR FAILURE TO HAVE THIS RETURN IN THE HANDS Of THE JugccMrf List 101 
 
 , COLLECTOR Of INTERNAL REVENUE ON OR Kf ORE MARCH I 
 
 MinaM 191 , >! 
 
 UNITED STATES INTERNAL REVENUE/ 
 RETURN OF ANNUAL NET INCOME. 
 
 (Section 2, Act of Congress approved October 3, 1913. ) 
 
 INSURANCE COMPANIES. 
 
 RETURN OF NET INCOME Received during the calendar (fiscal) year ended _.. W1 
 
 the principal place of business of which is located at 
 
 (Street and No.) 
 
 City or Town of ... in the State of- 
 
 (The "year" as hereinafter nsed means the calendar year or Sac*! year as the cage may be. ) 
 
 1. Total amount of paid-up capital stock outstanding, or, if no capital stock the capital employed in 
 business, at close of the year above stated. (See Note 8 on reverse of this form) $ 
 
 2. Total amount of bonded and other indebtedness outstanding at close of year. (See Note 9) .. 
 
 3. GROSS INCOME (see Note A, and instructions, paragraphs 10, 18, 21, 22, 23, 25, and 36) 
 
 DEDUCTIONS. 
 
 4. (a) Total amount of all the ordinary and necessary expenses of mainte- 
 
 nance and operation of the business and properties of the corporation 
 
 EXCLUSIVE OF INTEREST PAYMENTS. (See Note B) $ 
 
 (6) All rentals or other payments required to be made as a condition to 
 : the continued use or possession of the property. (See Note 12 on 
 reverse of this form) |u___^ 
 
 5. (a) Total amount of losses sustained during the year not compensated by 
 
 insurance or otherwise $ 
 
 (6) Total amount of depreciation for the year. (See Note 13) I. 
 
 (o) Total amount (other than dividends) paid within the year on policy 
 
 and annuity contracts $ 
 
 ((Z) Total amount of net addition required by law to be made within the 
 
 year to reserve fund. (See ,Note 28) .... 
 
 (e) Amounts of premiums repaid' to policy holders and interest paid 
 
 thereon (applicable only to Mutual Marine Insurance companies)... $ 
 
 6. (a) Total amount of interest accrued and paid within the year on an 
 
 amount of bonded or other indebtedness not exceed ing one-half of ttie sum of its interest, 
 bearing indebtedness and its paid-up capital stock outstanding at the close of the year-*. fL-. 
 (6) Total amount of interest received upon obligations of a State or political 
 subdivision thereof and upon the obligations of the United States or 
 its possessions ^ $ 
 
 7. (a) Total taxes paid during the year imposed under authority of the 
 
 United States or any State or Territory thereof. (See Note 20) t... 
 
 (6) Foreign taxes paic . 
 
 TOTAL DEDUCTIONS - , t.. 
 
 8. Net income on which tax at 1 per centum is calculated ........................................... $. ____ ........... : ....... .., ____ ...... 
 
 STATE OF ..................... _ .................. _____ ......... , County of _ ............ _ ..................... _______________ , TO WIT: 
 
 . ......................... . ................................. _ ............. , President, and ...................................................... _ ............ _ ...... , Treasurer of 
 
 the .................... ________ .......................... _,. ____ ...... a corporation, whose return of annual net income is set forth above, being severally 
 
 duly sworn, each for himself, deposes and says that the foregoing report and the several items therein set forth are, to his best 
 knowledge and belief and from such information as he has been able to obtain, true and correct in each and every particular; that 
 the amount of gross income therein set forth is the full amount, of gross income, including interest upon obligations of a State or 
 any political subdivision thereof, and upon the obligations of the United States or its possessions, without any deduction whatso- 
 ever, received from all sources by the said corporation during the year stated, and that the net income therein set forth is the full 
 femount upon which the tax at 1 per centum is to be calculated and assessed under the terms of the Federal Income Tax Law of 
 October 3, 1913. 
 
 SWORN AND SUBSCRIBED to befo 
 
 day of ______ ............ _ .................. , 191 President. 
 
 (Official capacity 
 
 of insurance companies shall consist of the total of the gross revenues derived from the operation and ma 
 
 the gross 
 
 ng divide 
 
 Mutual marine insurance companies may exclude from the gross premiums collected the "amounts paid for reinsurance," including the remainder 
 income 
 
 Mutual fire insurance companies may omit from gross income " any portion of the premium depoeita returned to their policy holdew." 
 Life " 
 
 . 
 
 mpanies may also omit from their gross income "such portion of any actual premium received from any individual po'icyholder aa shall have 
 
 been pai'l back or f redited to such policyholder, or treated as an abatement of premium of puch individual policynolder -within toe year." The "amount thna omitted 
 shall include only such dividends or premiums returned or applied a& represent a portion of the actual premium received from any "individual policyholder. 
 
 ' Nora B. The deductions authorized shall include all expense items under the various heads acknowledged^ liabilities by the corporation making the return 
 and entored upon its books during the year. 
 
 Amounts of iucome expends! in paying dividends on stock, preferred or common, or in making permanent improvements or bettormaotg, etc., or in any way 
 transferred to capita! account are not proper deductions in ascertaining annual net income. Interest r. uid ou mort#ago indebtedness on real estate occupied or osed 
 by a corporation maybe deducted unrior Item 4 if th* ir.!;-:oa \ paid us rental or franchise charge, payment of which w required to b rtai'e as a condition to the 
 contour,' '1 use aud poaseesiou of the prupcuy. The amount so paid and included in Item 4 should best&ted separately utider Iteiii 4(6). (See Note 12 on reverie of 
 this iorii.) t-1M> 
 
 81 
 
INSTRUCTIONS FOR 1030 
 Annual Return by Insurance Companies (1030) 
 
 SPECIAL NOTICE. This form, properly filled out and executed, 
 must be in the hands of the Collector of Internal Revenue for the district 
 in which is located the principal business office of the corporation making 
 the return, on or before March 1, in case the return is based on the 
 calendar year, or within 60 days after the expiration of the fiscal year in 
 case the return is made on that basis. 
 
 For failure to comply with this provision of the law, the amount of 
 the assessment is increased 50 per cent and liability to a specific penalty 
 not exceeding $10,000 is incurred. 
 
 1. Return of annual net income of corporations should be made on forms 
 prescribed by the Treasury Department and should be filed with the Collector 
 of Internal Revenue of the district in which such corporations have their 
 principal places of business. 
 
 2. Before transmitting such returns to the collectors they must be verified 
 by two officers of the corporation; that is, by two individuals, each holding a 
 different official title, namely: the President, Vice President, or other prin- 
 cipal officer and its Treasurer or Assistant Treasurer, or Chief Financial 
 Officer. 
 
 3. The affidavit of verification must be made before a Notary Public or 
 some other officer qualified to administer oaths, and the seal of the attesting 
 officer, if such officer is required by law to have a seal, must be impressed 
 on the return in the space reserved for that purpose. 
 
 4. Under the provisions of the law, the return must be true and accurate 
 in every respect and must disclose all the income arising, accruing, or re- 
 ceived from all sources during the year for which the return is made. 
 
 5. If the return is based upon the business transacted during the calen- 
 dar year, it should be filed with the collector on or before the first day of 
 March next succeeding such calendar year. If it is made on the basis of 
 business transacted during a fiscal year, or consecutive twelve months period 
 other than the calendar year, duly designated in accordance with the law 
 and the regulations, the return must be filed with the collector on or before 
 the last day of the 6o-day period next following the date designated as the 
 close of the fiscal year. 
 
 6. In case of sickness or absence of an officer required to verify the 
 return, the collector of the district is authorized to extend the time for 
 filing such return not exceeding thirty days from the date when such re- 
 turn is otherwise due. Application for such extension must be made prior 
 to the date when the return is due. 
 
 7. The principal place of business as used in the act and in these regu- 
 lations is held to mean the place or office in which the books of account 
 and other data to be used in preparing the return of annual net income 
 are ordinarily kept. 
 
 8. Item No. 1 of the schedule on the reverse side of this form should 
 not include unissued or treasury stock, but only such stock as has actually 
 been issued and for which payment has been received, or in case no stock 
 is issued, there should be reported under this item the amount of capital 
 actually employed in the business and property of the corporation. 
 
 In cases wherein the capital stock is issued payable in installments or upon 
 assessment, only so much of the capital as has been actually paid in upon 
 such installments or assessments should be reported under this item. 
 
 9. Item N'o. 2 should include all interest-bearing indebtedness for the 
 payment of which the corporation or its property is bound. In case of 
 banking corporations and like financials institutions, deposits should not be 
 reported as indebtedness under this head. 
 
 10. Item No. 3 of the return form (gross income) should include all 
 income derived from the operations and management of the business and 
 properties, together with all actual increases in value by appraisement, ad- 
 justment, or otherwise in the value of the assets which have been taken up 
 
 82 
 
Instructions for 1030 cont'd. 
 
 on the books as income or credited to profit and loss during the year. In 
 the case of a corporation organized, authorized, or existing under the laws 
 of any foreign country, the gross income to be returned is the gross amount 
 of its income for the year, resulting from business transacted and capital 
 invested within the United States. 
 
 11. Item No. 4 (a) should include the total amount of all ordinary and 
 necessary expenses paid out of earnings in the operation of the business 
 and properties of the corporation, etc., exclusive of interest and other pay- 
 ments to be listed under their respective heads on the return forms. 
 
 12. Item No. 4(fr) should include all rentals or other payments required 
 to be made as a condition to the continued use or possession of the property; 
 that is to say, in cases where interest on a mortgage on property occupied 
 or used by the corporation is paid as a condition to its possession and use, 
 thus becoming in the nature of a rental charge, such interest charge may 
 be included in the deduction under this item. Mortgage indebtedness, as- 
 sumed or unassumed, on property to which the corporation has taken or is 
 taking title, or in which it has an equity, or in the acquirement of which the 
 mortgage was considered a part of the purchase price, is held to be a debt 
 of the corporation, and interest paid on such indebtedness will be deductible 
 only under Item 6 of the return, and, together with other interest charges, 
 must not exceed the limit fixed by the law for such interest deductions. 
 
 13. The amount claimed under Item No. 5(fc) for depreciation should 
 be such an amount as measures the loss which the corporation actually 
 sustains during the year in the value of buildings, machinery, and such other 
 property as is subject to depreciation on account of wear and tear, exhaus- 
 tion, or obsolescence. The amount taken credit for on this account in order 
 to be allowable should be so entered on the books as to constitute and show 
 as a liability against the assets of the corporation. The amount claimed 
 under this item should not cover losses in the value of stocks and bonds. 
 The change in the value of stocks and bonds is properly taken up in the 
 inventories or annual adjustment in the value of such securities and the 
 income or losses indicated by this adjustment! may be accounted for ac- 
 cordingly. 
 
 14. Where depreciation of physical property is made good by renewals, 
 replacements, repairs, etc., and the expense of such renewals, replacements, 
 repairs, etc., is charged to the general expense account, no deduction for de- 
 preciation can be 'made in the return of annual net income. Where a depre- 
 ciation reserve is set up, all renewals and replacements must be charged to 
 such reserve and the addition to this reserve each year must be a fair 
 measure of the loss which the corporation sustains by reason of the de- 
 preciation of its property. 
 
 15. The amount of interest deductible is the amount of interest accrued 
 and paid within the year on its bonded or other indebtedness not exceeding 
 one-half of the sum of its interest-bearing indebtedness and its paid-up 
 capital stock outstanding at the close of the year, or if no capital stock, the 
 amount of interest paid within the year on an amount of indebtedness not 
 exceeding the amount of capital employed in the business at the close of 
 the year; or in case of a corporation, joint stock company', or association, 
 or insurance company organized under the laws of a foreign country, 
 interest so paid on its bonded or other indebtedness to an amount of such 
 bonded or other indebtedness not exceeding the proportion of its paid-up 
 capital stock outstanding at the close of the year, or if no capital stock, 
 the amount of capital employed in the business at the close of the year, which 
 the c/ross amount of its income for the year from business transacted and 
 capital invested within the United States bears to the gross amount of its 
 income derived from all sources within and without the United States. 
 
 All interest deductions must be claimed under Item 6 on the return form. 
 
 16. Dividends declared or paid are not deductible from gross income. 
 
 17. Dividends received upon the stock- of other corporations must be 
 included in gross income and, under the provisions of the law, are not 
 
 83 
 
Instructions for 1030 cont'd. 
 
 deductible therefrom in the ascertainment of the net income on which the 
 tax is computed. 
 
 18. Interest received upon the obligations of a State or any political 
 subdivision thereof and upon the obligations of the United States or its 
 possessions should be included in gross income, as well as all other interest 
 due and accrued during the period for which return is made. 
 
 19. Accrued interest is considered to be interest due and payable, except 
 in the cases of banking or other similar institutions which close their 
 accounts on the basis of the interest earned. In all cases the accrued in- 
 terest shall be reported on the basis on which the books are closed. 
 
 20. Taxes for which credit may be taken in the return are such tax*es, 
 actually paid within the year, as are imposed by authority of the United 
 States or of any State or Territory thereof, or by the government of any 
 foreign country, not including taxes paid by a corporation, pursuant to 
 guaranty, on its bonds or the income therefrom and not including those 
 taxes assessed against local benefits. A reserve for taxes as such is not 
 deductible, but only taxes actually paid. 
 
 21. Reinsurance (except, as provided by Note 23) and return premiums 
 should not be included in either gross income or deductions ; as "net written 
 premiums," agreeing with report to States, should be shown. 
 
 22. Mutual fire insurance companies which require their members to 
 make premium deposits to provide for losses and expenses need not return 
 as income any portion of the premium deposits returned to their policy- 
 holders. 
 
 23. Mutual marinjs insurance companies shall include in their return of 
 gross income the gross premiums collected and received by them, less re- 
 insurance. (See Note 21). 
 
 24. Mutual marine insurance companies are entitled to deduct from gross 
 income amounts repaid to policyholders on account of premiums previously 
 paid by them and interest paid upon such amounts between the ascertain- 
 ment thereof and the payment thereof. 
 
 25. Life insurance companies need not include as income in any year 
 such portion of any actual premium received from any individual policy- 
 holder as shall have been paid back or credited to such individual policy- 
 holder, or treated as an abatement of premium of such individual policyholder 
 within such year. 
 
 26. Mutual fire insurance companies must return as income such portions 
 of premium deposits are are retained by the companies for purposes other 
 than the payment of losses and expenses and reinsurance reserves. 
 
 27. The deduction allowed under the act of August 5, 1909, of amounts 
 received as dividends upon stock of other corporations subject to the tax 
 therein imposed is not allowed under the act of October 3, 1913. 
 
 28. In the case of assessment insurance companies, whether domestic or 
 foreign, the actual deposits of sums with the State or Territorial officers 
 pursuant to law, as additions to guarantee or reserve funds shall be treated 
 as being payments required by law to reserve funds. 
 
 84 
 
TO ?E FILLED IN- BY COLLECTORS. Form 1031. TO BE FILLED IN BY INTERNAL REVE 
 
 THE PMftLTV 1r failure to hove thle Return 
 
 Us, NO MUSS In the h.nde ef the Collector ~> lnt.rn.1 
 
 Revenue en er before March .. .. 
 
 District Of di, after the cloae of the. fiscal yea 
 
 aura not exceeding SIO.OOO. 
 Bait received Wl-\ 
 
 (Soe I 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (S.ction 3, Act of Coujrw .pprov.d Ottob.r ^ 1913.) 
 
 BANKS AND OTHER FINANCIAL INSTITUTIONS. 
 
 RETURN OF NET INCOME received during the year ended , 191 
 
 a corporation, the' principal place of business of which is located af _______________________ .................... _____________ 
 
 City or Town of '. ............................................... ________ ......... r.... , in the State of _______ , ____________________________ 
 
 (The " year'-' as hereinafter used means the calendar year or fiscal year as the case may be.) 
 
 1. Total amount of paid-up capital stock outstanding at close of the year, or if no capital stock, the 
 
 capital employed in the business at the close of the year .................................... $_ 
 
 3. Total amount of bonded and other indebtedness outstanding at close of year. 
 
 3. GB099 INCOME (see Note A, and instructions, paragraphs 10, \1, 18, wad 1) 
 
 DEDUCTIONS. 
 
 4. (a) Total amount of all the ordinary and necessary expenses paid within 
 
 the year in the maintenance and operation of the business and prop- 
 erties of the corporation KXOUISIVB 01- IXTEBBST PAYMENTS. (See 
 NoteB) ....... .. ............................... : ............ .... 
 
 (6) All rentals or other payment* required to be made ae a -condition to 
 the continued use or possession of the property. (See paragraph 19 
 on reverse of this form) ....................................... ... 
 
 5. (a) Total' amount of losses sustained during the. year not compensated by 
 
 insurance or otherwise ......... ..... ....... , ........ . ............. 
 
 (6) Total amount of depreciation for the, year. . ......................... $ ______ 
 
 . (a) Total amount of interest, exclusive of interest on deposits, accrued and 
 paid within the year on an amount of bonded or other indebtedness not exceeding one- 
 half of the ram of its interest-bearing indebtedness and its paid-up capital Block out- 
 standing at the close of the year; or if no capital stock, the amount of interest paid 
 within the year on an amount of its indebtedness not exceeding the amount of capital 
 employed ia the busineM at the clone of the year ........... _ ...................... -- 
 
 (6) Total amount of interest paid within the year on deposits ............ 
 
 (o) Total amount of interest received upon obligations of a State or political 
 subdivision thereof, and upon the obligations, of the United States 
 or its possessions .............. ,., ....... .......7* ............ ...... $... 
 
 7. (a) Total taxes paid during the year imposed under authority of the 
 
 United States or any State or Territory -thereof..,. ........... - ..... *_ 
 
 (Z>) JToreign taxes paid ........... .......... _., ....... .. ..... . ....... . 
 
 TOTAL DEDUCTIONS .................. .................... -. 
 
 8. Net income on which tax at 1 perca-iumis calculated ....................... 
 
 f , TO WIT! 
 
 _ __., , President, and - Treasurer, of 
 
 the '. , ^a corporation, whose return of annual net income is set forth above, being 
 
 severally duly sworn, each tor himself, deposes and says' that the foregoing report and- the several item* .therein set forth are, to 
 his best knowledge and belief and from such information as he has been able to obtain, true and correct in each and every partic- 
 ular; that the amount of gross income therein set forth is the full amount of gross income, without any deduction whatsoever, 
 received from all sources by the said corporation during the year stated, and that the net income therein get forth is the full amount 
 upon jrhich the tax at 1 per centum is to be calculated and assessed. 
 
 SWOBN AND SUBSCRIBED to before me this _ 
 
 day of , 191 President. 
 
 Treasurer. 
 
 mcome shall consist of the total revenues derived from the operation and , . . _ 
 
 " her subject to this ta: or not, and interest received 
 > its possessions, at shown by entries ucon its books 
 during the year for which the return is made. 
 
 Nora B. The deductions authorized shall include all expense items under the various heads acknowledged as liabilities by the corporation making the return 
 and entered upon its booka during the yea*,, Amountsof income expended in paying dividends on stock, preferred or common, or rn inakiii permanent improvements 
 or betterments, etc.. or io any way transferred to) capital account, should not be deducted in ascertaining annual net income. Interest paid on mortgage indebtadne;} 
 on real estate occuliied or used by a corporation may be deducted under Item 4, if the interest is paid as a rental or franchise charge, payment ol which it 
 required to be made as a condition to the continued use and possession of the property. The amount so paid and included in Item 4 should be stated sepautaly 
 radar Item 4 (t). (See potagrtpli 12 on reverse of this fonn.) 2-Ktt .'_ 
 
 85 
 
TO BE FILLED IN BY COLLECTORS. Form 1O32. TO BE FILLED IN BY INTERNAL REVENUE BUREAU 
 
 ................... th hand* of tho Collector of Internal Revonuo ... .... 
 
 on or bofor. March I, or within 6O d.ym after Assessment List 
 ............... District of .............................. th close of the fiscal yoar. Is sum not ex- 
 
 ceeding SIO.OOO. 
 
 Date received ................ _ ................ , 191 <s ..... tr.oti... .. .t.r .11.0 Page .................. .... Line 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (Section 2, Act of Cengrm .pprovod Ociob>r 3, 1913. ) 
 
 PUBLIC SERVICE: CORPORATIONS. 
 
 RETURN OF NET INCOME received during the " ar year ended _ ... 191 
 
 (Mime of colpontlon, Joint Mock COB1J* 
 
 the principal place of business of which is located at 
 
 City or Town of - _ - -~~~ , in the State of... 
 
 (The "year" as hereinafter need means the calendar year or fiscal year as the case may be.) 
 
 tock, the 
 
 1. .Total amount of paid-up capital stock outstanding at close of the year, or if no capital s 
 
 capital employed in the business at the close of the year 
 
 2. Total amount of bonded and other indebtedness outstanding at close of year 
 
 3. GE088 INCOME (see Note A, and instructions, paragraphs 10, 17, 18, and 19).. $... 
 
 DEDUCTIONS. 
 
 4. (a) Total amount of altthe ordinary and necessary expenses paid within the 
 
 year in the maintenance and operation of the business and properties 
 
 of the corporation, EXCLUSIVE OP INTEREST PAYMENTS. (See Note B). t_ 
 
 (6) All rentals or other payments required to be made as a condition to 
 the continued use or possession of the property. (See paragraph 12 
 on reverse of this form) $ _ 
 
 5. (a) Total amount of losses sustained during the year not compensated by 
 
 insurance or otherwise $ _ 
 
 (6) Total amount of depreciation for the year. (See paragraphs 13 and 14). t 
 
 6. (a) Total amount of interest accrued and paid within the year on an 
 
 mount of bonded or other indebtedness not exceeding one-half of the ram of its 
 interest-bearing indebtedness and its paid-up capital stock outstanding at the close of the 
 year, or if no capital stock, the amount of interest paid within the year on an amount 
 of its indebtedness not exceeding the amount of capital employed in the business at the 
 
 close of the year I- 
 
 (6) Total amount of interest received upon obligations of a State or 
 political subdivision thereof, and upon the obligations of the United 
 States or its possessions ^. 
 
 7. (a) Total taxes paid during the year, imposed under authority of the 
 
 United States or any State or Territory thereof t , _ 
 
 (&) Foreign taxes paid * 
 
 TOTAL DEDUCTIONS , *. 
 
 8. Net income on which tax at 1 per centum is calculated . $.. 
 
 STATE OP ._ , County of. , TO WIT: 
 
 ,_,_._,.. :., President, and _ _ , Treasurer, of 
 
 the ., a corporation, whose return of annual net income is set forth above, being severally 
 
 duly sworn, each for himself, deposes and says that the foregoing report and the several items therein sot forth are, to his best 
 knowledge and. belief and from such information as he has teen able to obtain, true aud correct in each and every particular; that 
 the amount of gross income therein set forth is the full amount of gross income, without any deduction whatsoever, received from 
 all sources by the said corporation during the year stated, aud that the net income therein set forth is the full amount upon which 
 the tax at 1 per centum is to be calculated and assessed. 
 
 SWORN AND SUBSCRIBED to before me this _ 
 
 day of , 191 'President 
 
 NOTE /L. Gross income shall consist of the total ravenues derived from the operation and management of its business and properties, together with all amounts 
 of income from other sources, including dividends received on stock of other organizations, whether subject to this tax or not, and interest received upon obligation* 
 of a State or political subdivision thereof, and upon the obligations of the United States or its possessions, as shown by entries upon its books during the year for 
 which return is made. 
 
 pense items under the various heads acknowledged as liabilities by the corporation making the return 
 .. of? income expended in. paying dividends on stock, preferred or common, or in making permanent improvements 
 
 or betterments, etc., or in any way transferred to cr.pital account, should not be deducted in ascertaining annual net income. Interest paid on mortgage indebtedness 
 on real estate occupied or used by a -corporation may be deducted under Item 4, if the inttrest ia paid as rental or franchise charge, payment of which in required 
 to be made as a condition to the continued use and possession of the property. The amount RO paid and included in Item 4 should be stated separately under Item 4 (&). 
 (See parsjrsph 12 on reverse of this form.) c 6-iwo 
 
 86 
 
TO BE FILLED IN BY COLLECTORS. Korm 1CW3. TO BE FILLED IN BY INTERNAL REVENUE BUREAU. 
 
 i :../ u. /> THE PEHftLTY for fallur. t. ha*. tbl- Return 
 
 -~-~- ! th b..d. of th. C.ll.otor of lat.rn.l A ,, gsmmt IS,, 101 
 
 . ... , . on or bofor. M.rok I. .r within a*""*'""- '" 
 
 ''" J day* aft.r th. ! cf th. fi.o.l r..r, U 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (Section 2, Act of Congress approved October 3, 1913.J 
 
 MANUFACTURING CORPORATIONS. 
 
 RETURN OF NET INCOME received during to. year ended ..................................................... , 191 
 
 by ..................................... ._ ....... : ............... . ..... .,.'. ........................ : ............... . ............................... ...... ......................... 
 
 (SMofcorjxUOT, Joint 
 
 the principal place of business of -which is located at ............. : 
 
 City or Town of. ......................... .-... .......... :. ............ . .................... , in the State of ............ ; 
 
 (The "year" as hereinafter used means the calendar year or fiscal year aa tho case may be.) 
 
 1. Total amount of paid-up capital stock outstanding at close of the year, or if no capital stock, the 
 
 capital employed in the business at the close of the year ........... .'.... ..,! ................. ... $. 
 
 2. Total amount of bonded and other indebtedness outstanding at close of year.., ...... . ...... -.. $.^ 
 
 3. QBOSS INCOME (see Note A, and instructions, paragraphs 10, 17, 18, 19, 22, and 83). 
 
 DEDUCTION'S. 
 
 4. (a) Total amount of all the ordinary and necessary expenses paid within 
 
 the year in the maintenance and operation of the Dusiness and prop- 
 erties of the corporation EXCLUSIVE OP INTEREST PAYMENTS, (see 
 
 Note B and paragraph 23) ^...... $. 
 
 (6) All rentals or other payments required to be made as a condition to 
 the continued use or possession of the property (see paragraph 12 
 on reverse of this form) '.. t 
 
 6. (a) Total amount of losses sustained during the year not compensated by 
 
 insurance or otherwise ; $ 
 
 (6) Total amount of depreciation for the year (see paragraphs 13 and 14) . $ 
 
 6. (a) Total amount of interest accrued and paid within the year on an 
 
 amount of bonded or other indebtedness not exceeding one-half of the sum of its 
 interest-bearing indebtedness and ito paid-up capital stock outstanding at the close of 
 the year; or if no capital stock, the amount of interest paid within the year on an 
 amount of its indebtedness not exceeding the amount of capital employed in the 
 
 business at the close of the year .?. $ 
 
 (6) Total amount of interest received upon the obligations of a State or 
 political subdivision thereof, and npon the obligations of the United ... 
 States or its possessions . $_ 
 
 7. (a) Total taxes paid duringtbe year, imposed tinder authority of. the United 
 
 States or any State or Territory thereof ; ; IL. :.... 
 
 (6) Foreign taxes paid . .. , . $ 
 
 ToiAil DEDUCTIONS 
 
 8. Net income on which tax at 1 per centum is calculated. . 
 
 . Nora. The above blank spaces for figures should show the amount of each respective item. If there is nothing -to return as to any item, the word "none" 
 must be written in such blank spaces. ____^_______ 
 
 STATE OF . , County of ,._ . , TO WIT: 
 
 , =.:..., President, and __ . , Treasurer, of 
 
 the ... _ ;...., a corporation, whose return of annual net. income is set forth above, being severally 
 
 duly sworn, each for himself, deposes and says that the foregoing report and the several items therein set forth are, to his best 
 knowledge and belief and from such information as he has been able to obtain, true and correct in each and every particular; that 
 the amount of gross income therein set forth is the full amount of gross income, without any deduction whatsoever, received from 
 all sources by tho said corporation during the year stated, and that the net income therein set forth is the fall amount npon 
 /Which the tax at 1 per centum is to be calculated and assessed. 
 
 SWORN AND SUBSCRIBED to before me this _ 
 
 , 191 President. 
 
 AQUAVIT. - - Treasurer. 
 
 (OOctal ttpeft7.) 
 
 NOTE A. Gross income in the case of a manufacturing corporation shall include the total receipts from all manufactured goods sold during the year, increa! 
 or decreased accordingly u then is gain or loss ascertained through an accounting or inventory of the finished and unfinished product, raw material, etc., on ha 
 at the close the year. To Jhe income thus ascertained there shoufd be added theincome received from any and all other sources, including dividends received 
 stock of other organization* whether subject to this tax or not, and interest received on the obligations of a State or political subdivision thereof, and int 
 
 on the obligations cf the United States or its possessions, the aggregate to be the gross i 
 
 NOTS B. The deductions authorized shall include all expense items under the various heads acknowledged as liabilities by the corporation making the returg 
 and entered on its books during the year. " Total amount of all ordinary and necessary expenses," etc., shall include expenditures for material, labor, salaries,; 
 wages, fuel, and other expenses incident to the cosKf the finished product. Amounts ofinoom* apendtd tn paying diwdtnb on rtoci, preferred or common, or in 
 making permanent improvements or betterments, etc., or in any way transferred to property account, lAouU not bt. fo&wted in atcataining At net intxmt upon which 
 the tax u computed. Interest paid ss rental or in lim of rental is deductible under Item 4 (i) (Seo paragraph 12 on the reverse of this form.) 01-7351 
 
 87 
 
TO BE FILLED IN BY COLLECTORS. Form 1O34. TO BE FILLED IN BY INTERNAL REVENUE BUREAU. 
 
 list H, ' Clast T 
 
 . -. 
 
 .- .......... uismct oj ..... ------- , ----------------- -aj , , ft . r th . clos . of th . .., for< ,, 
 
 ....... - ............... * ..... s-sssa^' 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (Section 2, Act of Congress approved October 3, 1913. ) 
 
 MERCANTILE CORPORATIONS. 
 
 (Corporations whoso principal business is baying and selling.) 
 
 RETURN OF NET INCOME received during the. \ff ttr \ year ended ....... _____ ...... ______________ , .............. , 
 
 757 
 
 . oint .tockc.op, r ,,.il<,nO 
 
 'ihe principal place* of business of which is located at .................... _.!.!_... 
 
 
 
 City or Town of . .-. , in the State of _ 
 
 (The "year" as hereinafter used means the calendar year or fiscal year as the case may be.) 
 
 1. Total amount of paid-up capital stock outstanding at close of the year, or if no capital stock, the 
 
 capital employed in the business at the close of the year '. _, $.. 
 
 S. Total amount of bonded and other indebtedness, outstanding at close of year |_ 
 
 . 3. GEOSS INCOME .(see Note A, and instructions, paragraphs 10, 17, 18, 19, and 21)..- ._.. $L_ 
 
 DEDMCTIONS. 
 
 , 4. (a) Total amount of all the ordinary and necessary expenses paid within 
 the year in the maintenance and operation of the business and 
 properties of the corporation EXCLUSIVE or INTEREST PAYMENTS 
 
 tseeNoteB).... . _ 
 
 (b) All rentals or other payments required to be made as a condition to* 
 the continued use or_ possession of the property (see paragraph 12 
 on reverse of this form) _ $. _. 
 
 6. (a) Total amount of losses sustained during the year not compensated by 
 
 insurance or otherwise................ _____ ........... ..... . ....... - $_.. 
 
 (6) Total amount of depreciation for the year 
 
 ount of interest accrued and pai 
 
 of bonded and other indebtedness not exceeding one-half of the snm of its 
 -bearing indebtedness and its paid-up capital Block outstanding at the close of 
 r; or if no capital stock, the amount of interest paid within the year on an 
 
 6. (a) Total amount of interest accrued and paid within the year on an 
 amount of bonded and other indebtedness not exceeding one-half of the sum of its 
 Interest-bean 
 
 mo&c^toaUiJ^&*tM^&atc^3riql&mt*fal*1* 
 business at the close of the year .77:...'. .HI *- 
 
 (6) Total amount of interest received upon obligations of a State or ' 
 political subdivision thereof and upon the obligations of the United 
 States or its possessions . IL. 
 
 . 7. .(a) Total taxes paid duringthe year, imposed under authority of the United 
 
 .States or any State or Territory thereof . ..:. *. 
 
 (Z>) Foreign taxes paid ;., , ,..., . 
 
 TOTAL DEDUCTIONS..^ 
 
 8.' Net income on which tax at 1 per centum is calculated. , . 
 
 Note. The above blank spaces for figures should show the amount of each respective Item. If there Is nothing to return as to any item, the word "none" 
 must be written in such blank .JpaceL 
 
 STATE OP Cowntyof f TO WIT: 
 
 , . , President, and . .Treasurer, of 
 
 the : . ,, a corporation, whose return of annual net income is set forth aboVe, being severally 
 
 duly sworn, each for himself, deposes and says that the foregoing report and the several items therein set forth are, to his best 
 knowledge and belief and from such information as he has been able to obtain, true and correct in each and every particular; that 
 'the amount of gross income therein set forth is the full amount of gross income, without any deduction whatsoever, received from 
 all sources by the said corporation during the year stated, and that the net income therein set forth is the full amount upon 
 which the tax at 1 per centum is to be calculated and assessed 
 
 SWOKM ASD SUBSCEIBKD to before me this , ,_ > 
 
 day of . .., 191 President. 
 
 consist of the total amount 
 
 NOTTS A. The gross amount of income received during the year from all sources shall, in the case of a mercantile corporation, 
 
 ascertained through inventory, or its equivalent, which shows, the difference between the price received for goods sold and the cost of goods purchased during the 
 year, with an addition of a charge to the account of the sum of the inventory at beginning of the year and a credit to the account of the sum of the inventory at the 
 end of the year. To this amount should be added all items of income received during the year from other sources, including dividends received on stock of other 
 corporations, joint-stock companies, and associations, whether subject to this tax or not and intc 
 thereof, and' upon the obligations of the United States Of its possessions. In determining this at 
 lasses, which items shall be taken account of under the proper heading above as a deduction. 
 
 NCTB B. The deductions authorized shall include all 'expense items under the various heads acknowledged as liabilities by the corporation making the return 
 and entered on its books during the year. Amounts of income expended in paying dividend! on stock, preferred or common, or in making permanent improvements 
 or betterments, etc., or in any way transferred to capital account, should not be deducted in ascertaining annual net income. Interest paid on mortgage indebtedness 
 on real estate occupied or used by a corporation may be deducted in Item 4, if the interest is paid as a rental or franchise charge, payment of which is required 
 to be made as a condition to the continued use and possession of the property: The amount so paid and included in Itn 4 should, Wever, be separately stated 
 under Item 4 (6). (See paragraph .12 on re verw of this :Snn.) - 
 
TO BE FILLED IN BY COLLECTORS. Form. IO35. TO BE FILLED IN BY INTERNAL REVENUE BUREAU. 
 
 li,tHa Class *~ THE PEMLTV for f.llure to he this Return In 
 
 th. hentfaof the Coll.otor of Int.rn.l Revenue .,_, ;, w in, 
 
 en or before March I. or within 6O deys after Assessment LIST , IVI 
 
 District of the clo. of the fiscal year. Is a sum net * 
 
 eoedlnc SIO.OCO. 
 
 Date received , 191 s.. ia.tr.oti... . th.r .id..) Page Line 
 
 UNITED STATES INTERNAL REVENUE. 
 
 RETURN OF ANNUAL NET INCOME. 
 
 (S.ction 2, Act of Cong rex >pprcvd Ootob.r 3, 1913.) 
 
 MISCEILLANEIOUS CORPORATIONS. 
 
 RETURN OF NET INCOME received during the \^"f" r \ year ended 
 
 the principal place of business of which is located at : 
 
 City or Town of _ 'in the Stale of _ 
 
 (The "year" as hereinafter used means the calendar year or fiscal year ae the case may be.) 
 
 1. Total amount of paid-up capital stock outstanding at close of the year, or if no capital stock, the 
 
 capital employed in the business at the close of the year.... _;... $. 
 
 2. Total amoun.t of bonded and other indebtedness outstanding at close of year $... 
 
 3. GROSS INCOME (see Note A,, and instructions, paragraphs 10, 17, 18, and 19).... 
 
 DEDUCTIONS. 
 
 4. (o) Total amount of all the ordinary and necessary expenses paid within the 
 
 year in the maintenance and operation of the business and properties 
 of the corporation, EXCLUSIVE OF INTEREST PAYMENTS. (See Note B.) .... 
 (6) All rentals or other payments required to be made as a condition to 
 the continued use or possession of the property. (See paragraph 12 
 on reverse of this form) $._ 
 
 6. (a) Total amount of losses sustained during the year not compensated by 
 
 insurance or otherwise $. 
 
 (6) Total amount of depreciation for the year. -(See paragraphs 13 and 14). _ 
 
 6. (o) Total amount of interest accrued and paid within the year on an 
 amount of bonded or other indebtedness not exceeding one-half of the earn of it* 
 interest-bearing indebtedness and its paid-up capital stock outstanding at the close of the 
 year, or if no capital stock, the amount of interest paid within the year on an amount 
 of its indebtedness not exceeding the amount of capital employed in the business at the 
 
 close of the year $ . 
 
 (6) Total amount of interest received upon obligations of a State or 
 political subdivision thereof, and upon the obligations of the United 
 States or its possessions $ _ 
 
 7 (o) Total taxes paid during the year imposed under authority of the 
 
 United States or any State or Territory thereof $ 
 
 (6) Foreign taxes paid .. _ $ , 
 
 TOTAL DEDUCTIONS ... .. *. 
 
 8. Net income on which tax at 1 per centum is calculated 
 
 - Nora. The above blank spaces for figures should show the amount of each respective item. If there is nothing to return a to any item, the word "none "must 
 B% written m such blank spaces. 
 
 STATE OP ................... ------ _ .......... ______________ , County of ______________________________________________ , TO WIT r 
 
 ..................... _________________________________ ........ _________ , President, and ________________ _________________________ , Treasurer, of 
 
 the -------- ........ _ ................................. _______ , a corporation, whos& return of annual net income is set forth above, being severally 
 
 duly sworn, each for himself, deposes and says that the foregoing report and the several items therein set forth are, to his best 
 knowledge and belief and from such information as he has been able to obtain, true and correct in each and every particular; that 
 the amount of gross income therein set forth is the full amount of gross income, without any deduction whatsoever, received from 
 
 net income therein set fprth is the full amount upon which 
 
 e amount o gross income therein set forth is the full amount of gros 
 all sources by the said corporation during the year stated, and that the 
 the tax at 1 per centum is to be calculated and assessed. 
 
 SWOBN AND SUBSCRIBED to before me this 
 day of --------------------------- , 191 
 
 (Official capacity.) 
 
 Nor* A. Gross income shall consist of the total of the gross revenues derived from the operation and management of its business and properties, together with all 
 amounts of income from other sources, including dividends received on stock of other organizations, whether subject to this tax or not, and interest received upon 
 obligations of a State or political subdivision, thereof, and upon the obligations of the United States or its poeaeseioiis, a* ihovn by entries upon its hooks during the 
 year for which the return it toad*. 
 
 , -Mora B. The deductions authorized 'shall include all expense items under the various heads acknowledged al liabilities by the corporation making the return 
 and entered on its books during the year. Amounts of income expended in paying dividend! on <oci, preferred or common, or in making permanent improvements 
 or betterment!, etc., or in any way transferred to capital account, are not proper deductions in ascertaining annvat net income. Interest paid on mortgage indebtedness 
 on real eUta occupied of used by a corporation may be deducted in Item 4, il the interest is paid, as a rental or franchise charas, pavmentf which is re 
 to ^e mads as a condition, to the continued u and possession of the property. The amount so paid tod included ia JtomTiLould be ,Uted separately 
 Item,4(). (See paragraph 12 on riyerse of .this form.) 
 
INSTRUCTIONS FOR 1031 TO 1035 (INCLUSIVE) 
 ANNUAL RETURN 
 
 Banks and Other Financial Institutions (1031), 
 Public Service Corporations (1032) 
 Manufacturing Corporations (1033) 
 Mercantile Corporations (1034) 
 Miscellaneous Corporations (1035) 
 
 SPECIAL NOTICE. This form, properly filled out and executed, 
 must be in the hands of the Collector of Internal Revenue for the district 
 in which is located the principal business office of the corporation making 
 the return, on or before March 1, in case the return is based on the 
 calendar year, or within 60 days after the expiration of the fiscal year 
 in case the return is made on that basis. 
 
 For failure to comply with this provision of the law, the amount 
 of the assessment is increased 50 per cent and liability to a specific 
 penalty not exceeding $10,000 is incurred. 
 
 1. This return of annual net income should be filed with the Collector 
 .of Internal Revenue of the district in which the corporation has its principal 
 place of business. 
 
 2. The principal place of business as used in the act and in these regula- 
 tions is held to mean the place in which the books of account and other data 
 to be used in preparing the return of annual net income are ordinarily kept. 
 
 3. Returns must be verified by two officers of the corporation; that is, 
 by two individuals, namely, the president, vice-president, or other principal 
 officer, and treasurer or assistant treasurer, or chief financial officer. 
 
 4. The affidavit of verification must be made before a notary public or 
 some other officer qualified to administer oaths, and the seal of the attesting 
 officer, if such officer is required by law to have a seal, must be impressed 
 on the return in the space reserved for that purpose. 
 
 5. The return must be true and accurate in every respect and must dis- 
 close all the income arising, accruing, or received from all sources during 
 the year for which the return is made. 
 
 6. If the return is based upon the calendar year it should be filed with 
 the collector on or before the first day of March next succeeding such cal- 
 endar year. If it is made on the basis of business transacted during a fiscal 
 year, duly designated in accordance with the law and the regulations, the 
 return must be filed with the collector on or before the last day of the 
 6o-day period next following the date designated as the close of the fiscal 
 year. 
 
 7. In case of sickness or absence of an officer required to verify the 
 return, the collector of the district is authorized to extend the time for 
 filing such return not exceeding 30 days from the date when such return is 
 otherwise due. Application for such extension should be made prior to the 
 date when the return is due, or within the thirty-day period for which such 
 extension is desired and can be granted. 
 
 8. Item No. 1 of the schedule on the obverse of this form should not 
 include unissued or treasury stock, but only such stock as has actually, been 
 issued and for which payment has been received; or, in case no stock is 
 issued, there should be reported under this item the amount of capital 
 actually employed in the business and property of the corporation. In cases 
 wherein the capital stock is issued payable in installments or upon assess- 
 ment, only so much of the capital as has been actually paid in upon such 
 installments or assessments should be reported under this item. 
 
 9. Item No. 2 should include all interest-bearing indebtedness for the 
 payment of which the corporation or its property is bound. In case of 
 banking corporations and like financial institutions, deposits "should not be 
 reported as indebtedness under this head. 
 
 90 
 
Instructions for 1031-1035 cont'd. 
 
 10. Item No. 3 of the return form (gross income) should include all 
 income derived from the operations and management of the business and 
 properties, together with all actual increases in value by appraisement, adjust- 
 ment, or otherwise in the value of the assets 'which have been taken up on 
 the books as income or credited to profit and loss during the year. In the 
 case of a corporation organized, authorized, or existing under the laws of 
 any foreign country, the gross income to be returned is the gross amount 
 of its income for the year resulting from business transacted and capital 
 invested within the United States. 
 
 11. Item No. 4 (a) should include the total amount of all ordinary and 
 necessary expenses paid out of earnings in the maintenance and operation 
 of the business and properties of the corporation, etc., exclusive of interest 
 and other payments to be listed under their respective heads on the return 
 forms. 
 
 12. Item No. 4 (fc) should include all rentals or other payments required 
 to be made as a condition to the continued use or possession of the property. 
 In cases where interest on a mortgage on property occupied or used by the 
 corporation is paid as a condition to its possession and use, thus becoming in 
 the nature of a rental charge, such interest charge may be included in the 
 deduction under this item. Mortgage indebtedness, assumed or unassumed, 
 on property to which the corporation has taken or is taking title, or in which 
 it has an equity, or in the acquirement of which the mortgage was considered 
 a part of the purchase price, is held to be a debt of the corporation and 
 interest paid on such indebtedness will be deductible only under Item 6 of 
 the return. 
 
 13. The amount claimed under Item No. 5 (6) for depreciation should 
 be such an amount as measures the loss which the corporation actually sus- 
 tains during the year in the value of buildings, machinery, and such other 
 property as is subject to depreciation on account of wear and tear, exhaus- 
 tion, or obsolescence. The amount taken credit for on this account in order 
 to be allowable should be so entered on the books as to constitute a liability 
 against the assets of the corporation. Th'e amount claimed under this item 
 should not cover losses in the value of stocks and bonds. Decrease in the 
 book value of securities owned, so far as such decrease represents a decline 
 in the actual value of such securities, should be deducted under Item 5 (a) 
 of the return. 
 
 14. Where depreciation of physical property is made good by renewals, 
 replacements, repairs, etc., and the expense of such renewals, replacements, 
 repairs, etc., is charged to the general expense account, no deduction for 
 depreciation can be made in the return of annual net income. When a de- 
 preciation reserve is set up, all renewals and 'replacements must be charged 
 to such reserve and the addition to this reserve each year must be a fair 
 measure of the loss which the corporation sustains by reason of the depre- 
 ciation of its property. 
 
 15. The amount of interest deductible is the amount of interest accrued 
 and paid within the year on bonded or other indebtedness not exceeding 
 one-half of the sum of inter-bearing indebtedness and the paid-up capital 
 stock outstanding at the close of the year, or if no capital stock, the amount 
 of interest paid within the year on an amount of indebtedness not exceeding 
 the amount of capital employed in the business at the close of the year ; or 
 in case of a corporation, joint stock company or association, or insurance 
 company organized under the laws of a foreign country, interest so paid 
 on its bonded or other indebtedness to an amount of such bonded or other 
 indebtedness not exceeding- the proportion of its paid-up capital stock out- 
 standing at the close of the year, or if no capital stock, the amount of 
 capital employed in the business at the close of the year, which the gross 
 amount of its income for the year from business transacted and capital 
 invested within the United States bears to the gross amount of its income 
 derived from all sources within and without the United States. All interest 
 deductions must be claimed under Item 6 on the return form. 
 
 16. Dividends declared or paid 'are not deductible from gross income. 
 
 91 
 
Instructions for 1031-1035 cont'd. 
 
 17. Dividends received upon the stock of other corporations must be in- 
 cluded in gross income and are not deductible therefrom in the ascertainment 
 of the net income on which the tax is computed. 
 
 18. Interest received upon the obligations of a State or any political sub- 
 division thereof, and upon the obligations of the United States or its posses- 
 sions, should be included in gross income, as well as all other interest due 
 and accrued during the period for which return is made. 
 
 19. Accrued interest is considered to be interest due and payable, except 
 in the cases of banking or other similar institutions which close their accounts 
 on the basis of the interest earned. In all cases the accrued interest shall be 
 reported on the basis on which the books are closed. 
 
 20. Taxes deductible in the return are such taxes, actually paid within 
 the year, as are imposed by authority of the United States or of any State or 
 Territory thereof, or by the government of any foreign country, not includ- 
 ing taxes paid by a corporation, pursuant to guaranty, on its bonds or the in- 
 come therefrom and not including those taxes assessed against local benefits. 
 A reserve for taxes, as such, is not deductible. 
 
 21. The gross income of mercantile corporations should be ascertained in 
 the following manner : From the sum of the total sales during the year plus 
 the sum of the inventory at the end of the year, deduct the sum of the in- 
 ventory at the beginning of the year plus the cost of the goods and materials 
 purchased during the year; to this difference add the income received from 
 any other source and the result will be the gross income to be reported under 
 Item No. 3 of the return. 
 
 ""22. Gross income in the case of a manufacturing corporation shall include 
 the total receipts from the sale of all manufactured goods sold during the 
 year plus any increase in tire inventoried value ascertained through an ac- 
 counting of the finished and unfinished product, raw material, etc., on hand at 
 the close of the year. 
 
 23. To the income thus ascertained there should be added the income aris- 
 ing, accruing,, or received from any and all other sources, the aggregate thus 
 ascertained to be the gross income to be returned under Item No. 3 of the 
 return form. Since the gross income thus ascertained represents the total 
 receipts as well as the inventoried value of finished and unfinished products, 
 raw material, etc., the corporation will include in its deduction under Item 
 No. 4 all expenditures for material, labor, fuel, and other items going to make 
 up the cost of the goods sold or inventoried at the end of the year. 
 
 92 
 
UNITED STATES INTERNAL REVENUE. 
 
 MONTHLY LIST RETURN OF AMOUNT OF NORMAL INCOME TAX WITHHELD AT THE SOURCE. 
 
 Filed by .._. 
 
 To be made in duplicate to the Collector of Internal Revenue for the District in which the withholding agent is located, on or before, the 
 20th day of each month, showing the names and addresses of persona who have received payments of interest upon bonds and mortgages, or deeds 
 of trust, or other similar obligations of corporations, joint-stock companies or associations, and insurance companies, on which the normal tax 
 of 1 per cent has been deducted and withheld during the preceding month. 
 
 , the duly 
 
 authorized withholding agent of 
 
 , located at . 
 
 , do solemnly swear (or affirm) that the following ia a true and complete return of all 
 
 coupon and interest payments as above described, made by said organization and from which the normal tax of 1 per cent was deducted and 
 
 withheld, at the time of payment, or for which it is liable as withholding agent, during the month of . , 191 
 
 on the __.._....-... Bonds (or other similar obligations) of the _...._.-_ i ~ 5 _j , 
 
 and there are herewith inclosed all certificates of ownership which were presented with said coupons or orders for registered interest covering 
 
 .- 
 
 
 
 
 
 
 turn 
 
 ADDBIS3 ID JTU. 
 
 
 
 SF 
 
 *-^Mr 
 
 *BK- 
 
 
 
 ~- 
 
 $ 
 
 $ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 = - 
 
 ..................... 
 
 
 
 
 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $ 
 
 
 $ 
 
 $ 
 
 Amount of tax remitted herewith (if 
 
 my) to Collector 
 
 
 
 
 $ 
 
 To 
 (MtaMr. 
 District of 
 
 Sworn to and subscribed before me 
 day of , 19 
 
 his Signed 
 
 
 
 
 (553 
 
 
 
 ss 
 
 I. .hit. Mtaf.) 
 
 
 
 
 tevenue with who 
 
 n the list Is fi 
 
 ed, the amount of t 
 
 ai withheld 
 
 daring the month for which the list ia made. 
 
 Not* B. All substitute certificates of collating agents, authorize.! by regulations, that are received by debtors or withholding agents will be considered the same as certificates 
 of owners, and In entering game in making Monthly List Returns, debtors or withholding agents will enter the nairie, address, afld the number of the substitute, certificate of the 
 
 93 
 
UNITED STATES INTERNAL REVENUE. 
 
 ANNUAL LIST RETURN OF AMOUNT OF NORMAL INCOME TAX WITHHELD AT THE SOURCE 
 
 ON SAURIES. WAGES, RENT, INTEREST, 08 OTHEE FIXED AND DETERH1NABLE ANNUAL CAINS, PROFITS, AND INCOKE EXCEEDING J3.000 FOR THE TAXABLE YEAR. 
 
 Filed by.... 
 
 \ capital slock or net earnings of corporations, joint- 
 d from interest upon bonds or mortgages, or deeds of trusts, or other similar 
 , or from interest upon bonds, mortgages, or dividends of foreign corporations. 
 
 .., for the year 191 
 
 To be made in duplicate to the Collector of Internal Revenue for the District in which the debtor or his duly appointed withholding agent, 
 as the case may be, is located, on or before the first day of March, showing the names and addresses of persons who have received salaries, 
 wages, rent, etc., as above described, in excess of 3,000, on which the normal tax of 1 per cent has beau deducted and withheld during < 'tfhe 
 preceding calendar year 
 
 I (we), _ ___ __ , of 
 
 the iur'ni/uu f -iii "iii;- -- .located at , 
 
 do solemnly swear (or affirm) that the following is a true and complete return of all salaries, wages, rent, and other fixed and determinate 
 annual gains, profits, and income in excess of $3,000 as above described, which were paid (or were payable) to each of the persons listed herein, 
 and on which the normal tax of 1 par cent was deducted and withheld during the year stated, and there are herewith inclosed all certificates 
 claiming exemptions and deductions with respect to said income. 
 
 uan 
 
 ADDKBU IN FULL. 
 
 KggST 
 
 _**. 
 
 IE? 
 
 ""."til?*" 
 
 *"iJ" 
 
 
 
 
 $ 
 
 $ 
 
 $ 
 
 $ 
 
 
 Totals for calendar 'year , 
 
 Amount of tax remitted herewith (if any) to Collector. 
 
 Bistrict of. 
 
 3 worn to and subscribed before me this 
 
 NOTE A. Withholding agent* may, if they o deeire, pay a 
 during the yew for which the lilt ia made. ' 
 
 the time thii liat in tied, to the Collector of Internal Revenue with whom the list if filed, t 
 
 94 
 
UNITED STATES INTERNAL REVENUE. 
 
 MONTHLY LIST RETURN OF AMOUNT OF NORMAL INCOME TAX WITHHELD ON FOREIGN INCOME 
 
 BY LICENSED BANKS OR COLLECTING AGENCIES 
 
 Filed by 
 
 _ License JVo 
 
 To be made ia duplicate to the Collector of Internal Revenue for the District in which the licensee is located, on or twfor^the 20th day of each 
 month, showing the names aud addresses of persons who have received payments from coupons, checks, or bills of exchange representing interest 
 upon bonds issued in.foreign countries and upon foreign mortgages or like obligations (not payable in. the United States), or dividends upon the 
 stock or interest upon the obligations of foreign corporations, associations, or insurance companies engaged in business in foreign countries, on 
 which the normal tax of 1 per cent has been deducted and withheld during the preceding month. 
 
 I (we), . , of .^ .. .. .... 
 
 the of the above-named bank.or collecting agency located at __ 
 
 do solemnly swear (or affirm) that the following is a true and complete return of all payments as above described, made by said bank or collecting 
 agency, and from which the normal tax of 1 per cent was deducted and withheld at the time of payment, or for' which it is liable as withholding 
 
 agent, during the month of _ _ _.,. 191 , and there are herewith inclosed all certificates claiming exemption which were 
 
 presented with said coupons, checks, etc. 
 
 Totals for month .... $ 
 
 at of tax remitted herewith (if any) to Collector ,,.. 
 
 District of 
 
 Sworn to and subscribed before me this 
 , day of _ , 191 
 
 Signed: 
 
 , 
 a made. 
 
 if they BO desire par at the t 
 
 i list is Bled, to the Collector of Internal Revenue with whom the I 
 
 NOT. A. Withholding agenta m 
 during the month (or which the list ia u 
 
 Nor* B. All substitute certificates of collecting agents, authorized by regulations, that are received by debtors or withholding agent! 
 
 \r 
 
 collecting agent in lieu of the name and addrers of the owner of the bonds. 
 
 Nor O. -Enter "Int ou Bonds," "Int. on Mort;?.," " Dividends" etc., as the case may be. 
 
 ! filed, the amount of tax withheld 
 
 'ill be considered the aamo as 
 
 95 
 
Form 1O44. 
 
 UNITED STATES INTERNAL REVENUE. 
 
 MONTHLY LIST RETURN OF AMOUNT OF NORMAL INCOME TAX WITHHELD BY FIRST BANK OR COLLECTING AGENCY 
 
 RECEIVING COUPONS AND INTEREST. ORDERS NOT ACCOMPANIED BY CERTIFICATES OF OWNERS. 
 Filed by _ 
 
 To be made in duplicate to the Collector of Internal Revenue for the District in which the collecting agency is located, on or before the 20th 
 day of each month, showing the names and addresses of persona who have received payments of interest upon bonds and mortgages, or deeds of trust, 
 or other similar obligations of corporations, joint-stock companies or associations, and insurance companies, on which the normal tax of 1 per cent 
 has been deducted and withheld during the preceding month, the coupon and interest orders for said payments having been presented without 
 certificates of owners. 
 
 I (we) , , of ^ . ... |t 
 
 the ........ ^ of ..._...... , located fit _.. 
 
 do solemnly swear (or affirm) that the following is a true and complete return of all coupon and interest orders purchased or accepted for collection 
 
 as above described during the month of , 191 , and the said bank or collecting agency, having acknowledged 
 
 its responsibility of withholding therefrom the normal tax of 1 per cent, has deducted and withheld the tax as listed below, in accordance with the 
 regulations of the Treasury Department. 
 
 MAUE. 
 
 -,^ 
 
 VSE.'tfSl" 
 
 AMiywrof T*r 
 
 Totals for month 
 
 - - 
 
 $ 
 
 $ ,... 
 $ 
 
 $..:. 
 
 Amount of tax remitted herewith (if a 
 
 
 
 
 To Sworn to and subscribed before me this Signed: 
 
 Collector. 
 
 District of 'lay of _..., 101 
 
 NOTK A< withholding agnto may, if they K rtetire, pay ' th tim tw ltat " filc<1 ' lo the Collector of Internal Revenue with whom the list a filed, the amount of tax withheld 
 during the month for which the li<tia made. J-TJTJ 
 
 96 
 
PREFACE. 
 
 The accompanying regulations embrace the various ad- 
 ministrative features of the law (sec. 2, act of Oct. 3, 
 1913) imposing a tax on incomes. They contain instruc- 
 tions relative to the preparation of returns, etc., and are 
 designed to assist both the taxpayer and the officers charged 
 with its enforcement in complying with the requirements 
 of this law. 
 
 Liberal construction of the law has been given that those 
 charged with withholding the tax at the source may not 
 do so unnecessarily. Withholding agents may forward evi- 
 dences of non-liability to payment, when such evidences are 
 received by them,- to collector for the district in lieu of the 
 tax. This will relieve them of the necessity of withholding 
 such tax. 
 
 The regulations are arranged according to general sub- 
 jects, as follows: 
 
 Part 1. Individual income returns and collections. 
 
 Part 2. Collections at the source. 
 
 A. Bonds, mortgages, deeds of trust, etc. 
 
 B. Bonds, mortgages, deeds of trust, etc., by first 
 
 bank or collection agency where certificates 
 of owners are not filed. 
 
 C. Bonds, mortgages, dividends, etc., of foreign 
 
 corporations. 
 
 D. Salaries, wages, rent, etc. 
 
 E. Fiduciaries. 
 
 Part 3. Relative to corporations, joint-stock companies 
 or associations, and insurance companies. 
 
 Part 4. Assessment and collection. 
 
 All forms of certificates herein provided shall be 8 inches 
 wide and 3^ inches from top to bottom, and printed on 
 paper of substantial weight and texture. 
 
 97 
 
REGULATIONS. 
 
 Regulations concerning the tax imposed by Section 2, Act of 
 October 3, 1913, on net income of individuals, Corporations, 
 Joint-stock Companies, Associations, and Insurance Com- 
 panies. 
 
 TREASURY DEPARTMENT, 
 OFFICE OF COMMISSIONER OF INTERNAL REVENUE, 
 
 Washington, D. C., January 5, 1914. 
 
 PART 1. 
 INDIVIDUAL INCOME RETURNS AND COLLECTIONS. 
 
 ARTICLE 1. Section 2 of the above-named act imposes a Persons taxable. 
 tax of 1 per centum (designated as the normal tax) on net 
 incomes arising or accruing from ALL SOURCES during the 
 preceding calendar year to 
 
 (a) Every citizen of the United States, whether residing 
 at home or abroad; and 
 
 (b) Every person residing in the United States, though 
 not a citizen thereof; and 
 
 (c) From all property owned and from every business, 
 trade, or profession carried on in the United States, by a 
 person residing elsewhere. 
 
 ART. 2. Said section also imposes an additional tax on Additional r 
 all net incomes of individuals exceeding $20,000, as follows : super ** 
 
 1 per cent on incomes exceeding $20,000 and not exceed- 
 ing $50,000. 
 
 2 per cent on incomes exceeding $50,000 and not exceed- 
 ing $75,000. 
 
 3 per cent on incomes exceeding $75,000 and not exceed- 
 ing $100,000. 
 
 4 per cent on incomes exceeding $100,000 and not exceed- 
 ing $250,000. 
 
 5 per cent on incomes exceeding $250,000 and not exceed- 
 ing $500,000. 
 
 6 per cent on incomes exceeding $500,000. 
 
 ART. 3. The NET INCOME shall consist of the total gains, Net 
 profits, and income derived from all sources (designated as d 
 
 99 
 
gross income) less deductions numbered first to sixth, 
 inclusive, specifically enumerated in paragraph B of the 
 act. (See article 6.) 
 
 com- ^- n computing the taxable income for the purposes of the 
 puted. normal tax there shall be deducted from the net income as 
 
 above ascertained: 
 
 (a) The amount included in the gross income received 
 as dividends upon the stock or from the net earnings of any 
 corporation, joint-stock company, association, or insurance 
 company which is taxable upon its net income ; 
 
 (b) The amount of income the tax upon which has been 
 paid or withheld for payment at the source ; and 
 
 (c) The specific exemption of $3,000 or $4,000, as the 
 case may be, except in the case of nonresident aliens. 
 
 wSt It inSSdes' ART. 4. GROSS INCOME includes all gains, profits, and in- 
 come derived from 
 
 (a) Salaries, wages, or compensation for personal ser- 
 vice of whatever kind and in whatever form paid. 
 
 (b) Professions, vocations, business (including income 
 from copartnerships), trade, commerce, or sales or dealings 
 in property, growing out of the ownership or use of or 
 interest in, real or personal property. 
 
 (c) Interest, rent, dividends, securities, or transaction of 
 any lawful business carried on for gain or profit. (See art. 
 67 as to interest on deposits and certificates of deposit.) 
 
 (d) Gains or profits and income derived from any source 
 whatever, including the income from, but not the value of, 
 property acquired by gift, bequest, devise or descent. 
 
 The foregoing is held to include all income, gains, and 
 profits arising or accruing from all sources whatever in the 
 calendar year for which the return is made, except as here- 
 inafter specifically stated. 
 
 fcom c taxatfoiiu pt ^ RT> ^' ^ e following items should not be included as 
 gross income: * 
 
 (a) Value of property acquired by gift, bequest, devise, 
 or descent during the year. 
 
 (b) Proceeds of life insurance policies paid upon the 
 death of the person insured to beneficiaries, or payments 
 made by or credited to the insured, on life insurance, en- 
 dowment, or annuity contracts, upon the return thereof to 
 the insured at the maturity of the term mentioned in the 
 contract, but this shall not be construed to mean that interest 
 
 100 
 
payments to beneficiaries from insurance companies shall 
 not be included as income. 
 
 (c) Income derived from interest upon the obligations of 
 a State or any political subdivision thereof and upon the 
 'obligations of the United States or its possessions. 
 
 (d) The compensation of the President of the United 
 States in office at the time of the passage of the act of 
 October 3, 1913, during the term for which he was elected, 
 and the judges of the Supreme and inferior courts of the 
 United States in office at the time of the passage of the act 
 of October 3, 1913; 
 
 (e) The compensation of all officers and employees of a 
 State or any political subdivision thereof, including public- 
 school teachers, etc. When such State officers or employees 
 are compensated by the United States, they must include 
 such income as taxable. 
 
 ART. 6. Deductions and exemptions allowed in computing 
 taxable income for the purpose of the normal tax. 
 
 Under paragraph B the following items are to be deducted , Deductions ai- 
 
 f lowed under par- 
 
 from the GROSS INCOME: agraph B. 
 
 1. The amount of necessary expenses actually paid for 
 carrying on business, but not including business expenses 
 of partnerships and not including personal, living, or family 
 expenses. 
 
 2. All interest paid within the year on personal indebted- 
 ness of the taxpayer incurred in the conduct of business. 
 
 3. All National, State, county, school, and municipal taxes 
 paid within the year (not including those assessed against 
 local benefits). 
 
 4. Losses actually sustained during the year incurred in 
 trade or arising from fires, storms, or shipwreck and not 
 compensated for by insurance or otherwise. 
 
 5. Debts due to the taxpayer which have been actually 
 ascertained to be worthless and charged off within the year. 
 
 6. Amount representing a reasonable allowance for the 
 exhaustion, wear, and tear of property arising out of its use 
 or employment in the business, not to exceed, in the case 
 of mines, 5 per cent of the gross value at the mine of the 
 output for the year for which the computation, is made, 
 but not including the expense of restoring property or mak- 
 ing good the exhaustion \thereof, for which an allowance is 
 or has been made, nor for any amount paid for new build- 
 ings, permanent improvements, or betterments, made to 
 increase the value of any property or estate. 
 
 101 
 
"Gross value The term "gross value at the mine" as used in paragraphs B and G of. 
 at the mine" de- section 2 of the act of October 3, 1913 ? prescribing a limit to the amount 
 fined. which may be deducted in the return of individuals and corporations as de- 
 
 preciation in the case of mines, is held to mean the bona fide market value of 
 ore, coal, crude oil, and gas at the mine or well, where such value is estab- 
 lished by actual sales at the mine or well ; and in case the market value of 
 the product of the mine or well is established at some other place than 
 at the mine or well, or on the basis of the bullion or metallic value of the 
 ore, then the gross value at the mine is held to be the value of the ore, 
 coal, oil, or gas sold, or of the metal produced, less transportation, reduc- 
 tion, and smelting charges. 
 
 7. The amount included in gross income received as 
 dividends upon the stock, or upon the net earnings, of any 
 corporation, joint-stock company, association, or insurance 
 company which is taxable upon its net income. 
 
 8. The amount of income, the normal tax upon which has 
 been paid or withheld for payment at the source of income. 
 
 Gifts or dona- None of the above items of deduction shall include money 
 
 tlons made dur- , . ,. , ,. j r n T^J ^- 
 
 ing the year not or other items of value disposed of by gift, donation, or 
 to be deducted. en d ow ment. 
 
 agraphc. 
 
 Under paragraph C the personal exemption of $3,000 or 
 $4,000, as the case may be, is to be deducted from the net 
 income except in the cases of nonresident aliens. (Ser 
 arts. 7, 9, and 10.) 
 
 on T the C SS P ndw ART - ^' The act provides that the said normal tax shal 
 7 i9u except for be computed on the remainder of said net income accruing 
 during each preceding calendar year, and that for the year 
 ended December 31, 1913, said tax shall be computed on 
 the net income accruing from March 1 to December 31, 
 both dates inclusive, after deducting five-sixths only of the 
 specific exemptions and deductions authorized. A specific 
 exemption, therefore, of $2,500 or $3,333.33, as the case 
 may be, will be allowed for the year 1913. 
 
 , . 
 
 subject to 
 
 ormai tax. 
 
 the 
 
 income of noH- ART. 8. The income of nonresident aliens subject to the- 
 res , ident . alie P s normal tax of 1 per cent shall consist of the total gains, 
 
 ~ , . 1 1 < 
 
 pronts, and income derived trom all property owned, and 
 from every business, trade, or profession carried on and 
 capital invested within the United States (to be designated 
 as gross income), less deductions (1 to 8, inclusive) spe- 
 cifically enumerated in paragraph B of the act (see art. 6), 
 in so far as said deductions relate to said gains, profits, etc. 
 
 Exemption un- 
 not P aiBweS in 
 abre p inc n o g me8 ax of 
 
 nonre s i d e n t 
 
 Nonresident 
 
 to c additiona? e or 
 surtax. 
 
 The specific exemption in paragraph C of the act can not 
 be allowed as a deduction in computing the normal tax of 
 nonresident aliens. 
 
 Nonresident aliens are subject to additional or surtax 
 the same as prescribed in the case of citizens of the United! 
 States or persons residing in the United States. 
 
 102 
 
The responsible heads, agents, or representatives of said 
 nonresident aliens who are in charge of the property owned 
 or business carried on or capital invested shall make full 
 .and complete returns of said income and shall pay the tax 
 .as provided herein. 
 
 ART. 9. Under paragraph C, every single person and 
 every married person not living with husband or wife in single person or 
 the sense below defined, who has a net income exceeding 
 $3,000 per annum, is liable to pay the normal tax under this 
 law, but in making return for such tax such person may 
 claim an exemption of $3,000 from his or her total net 
 income. 
 
 ART. 10. Husband and wife living together are entitled to . specific exemp-* 
 
 ,. c a** r\f\r\ 1 f i tion allowed with 
 
 an exemption of $4,000 only from the aggregate net income respect to aggre- 
 
 of both, which may be deducted in making the return of f a u te s 
 
 such income for taxation. However, when the husband and wife. 
 wife are separated and living permanently apart from each 
 other each shall be entitled to an exemption of $3,000. 
 
 If the husband and wife not living apart have separate ^ ea 
 
 estates, the income from both may be made on one return, ?ate estates S ?ne 
 
 but the amount of income of each, and the full name and J^ Swing 
 
 address of both, must be shown in such return. income of each. 
 
 The husband, as the head and legal representative of the 
 household and general custodian of its income, should make 
 and render the return of the aggregate income of himself 
 and wife, and for the purpose of levying the income tax it 
 is assumed that he can ascertain the total amount of said 
 income. 
 
 If a wife has a separate estate managed by herself as of ^^^^ 
 her own separate property and receives an income of $3,000 tate^fo^be S- 
 or over, she may make return of her own income, and if bamf's return "or 
 the husband has other net income, making the aggregate c u m s e b , a n d b '| |j' 
 of both incomes more than $4,000, the wife's return should chSed!? wife's 
 be attached to the return of her husband, or his income return - 
 should be included in her return, in order that a deduction 
 of $4,000 may be made from the aggregate of both incomes. 
 The tax in such case, however, will be imposed only upon 
 so much of the aggregate income of both as shall exceed 
 $4,000. 
 
 If either husband or wife separately has an income equal Return re- 
 to or in excess of $3,000, a return of annual net income hushed V^ife 
 is required under the law, and such return must include the ha * *" income 
 
 r 1 1 * 1 . of $3,000 or over. 
 
 income 01 both, and in such -case the return must be made 
 
 103 
 
even though the combined income of both be less than 
 $4,000. 
 
 rn re- if the aggregate net income of both exceeds $4,000, an 
 gate 6 income g "f annual return of their combined incomes must be made in 
 fefa^^ess^of tne manner stated, although neither one separately- may 
 $4,000, alth ^eh have an income of $3,000 per annum. They are jointly and 
 S?*?co*m.e a 3 separately liable for such return and for the payment of 
 
 $3,000 or over. the tax 
 
 When statuses The single or married status of the person claiming the 
 
 mined 6 " specific exemption shall be determined as of the time of 
 
 claiming such exemption if such claim be made within the 
 
 year for which return is made, otherwise the status at the 
 
 close of the year. 
 
 i n t r e tn r e j s h i t ART. 11. His or her prorata share of the net profits de- 
 p^ofit pa how rs re- rived from a partnership business, 'whether or not divided 
 p rted - and paid out shall be included in the personal return of 
 
 each partner. 
 
 Partnerships as ART. 12. Partnerships, as such, are not subject to the 
 
 such, not liable . . i j A 1 
 
 to tax, but state- income tax, and are only required to make return when 
 be rC ~ requested to do so by the Commissioner of Internal Revenue 
 or the collector of internal revenue for the district in which 
 said partnership has its principal place of business ; and 
 when a return is required it shall give a complete and correct 
 statement of the gross income of the said partnership and 
 also a complete statement of the actual expenses of con- 
 ducting the business of said partnership, and the net profits 
 and the name and address of each member of said partner- 
 ship, and their respective interest in the net profit thus 
 reported. 
 
 ro > fit r s n t er b h in p ^ RT ' ^' ^ e net annua l P r fi ts of a partnership when 
 eluded in returns divided and paid to the members thereof shall be included 
 ^y each individual partner receiving same in his annual 
 return of net income, and the tax shall be paid thereon as 
 required by law. When the annual profits of a partnership 
 are not distributed and paid to the members thereof the 
 respective interest of each member in said profits shall 
 be ascertained, and the individuals entitled thereto shall 
 include the said amount in their annual return as a part 
 of their gross income, the same as if said profits had been 
 distributed and paid to them. 
 
 individual ART. 14. Undivided annual net profits of partnerships thus 
 
 partnership pro i- returned by the individual members thereof, and tax paid 
 
 thereon, shall not, when said profits are actually distributed 
 
 and paid to such members, be again included in their annual 
 
 return as a part of their gross income. 
 
 104 
 
Partnerships owning interest coupons or registered in- Partnerships as 
 
 t , P . f . . such, may file 
 
 terest orders may claim deduction for legitimate expenses certificate claim- 
 incurred in business by filing the proper certificate with the ing c 
 withholding agent. (See article 47.) 
 
 RETURNS. 
 
 ART. 15. Each person of lawful age whose net income is ^^Sai^etS 
 $3,000 or over shall, on or before the 1st day of March, come of $3,000 
 1914, and on or before the 1st day of March each year STade." 
 thereafter, file an accurate return of income under oath or 
 affirmation, except as herein provided. (See article 8.) 
 
 If the person making the return of income has his place Where filed. 
 of business in the collection district in which he resides, 
 the return shall be filed with the collector of that district. 
 If his principal place of business is elsewhere, the return 
 shall be filed in the district in which that business is located. 
 
 In the case of an individual residing in a foreign country 
 return shall be made to the collector of internal revenue for 
 the district where his principal business is carried on within 
 the United States. 
 
 ART. 16. The required return will be made on Form 1040 Form of return - 
 in accordance with the instructions printed thereon, and 
 will specifically set forth 
 
 1. All income received from each specific source and the 
 total thereof. 
 
 2. All the separate items of deduction claimed under para- 
 graph B of this law. 
 
 3. The amount of specific exemption claimed under para- 
 graph C. 
 
 4. All amounts of income upon which tax has been with- 
 held at source by withholding agent or agents. 
 
 ART. 17. When by reason of minority, insanity, absence, . Wh , en r . etu n 
 
 . , , M-J 1 1- -j i 11 1 W1 U be made by 
 
 sickness, or other disability, the individual is unable to make guardian or duly 
 his own return, the same shall be made by his guardian or authorized a g ent - 
 duly authorized agent. 
 
 In the case of the death of a person whose net .income Executor 
 
 r i r i 1 i 1 i 1- i rso s\r\r\ or administrator 
 
 for the part of the year during which he lived .was $3,000 to make return 
 or over, return of net income shall be made by the executor ln case of death - 
 or administrator of the estate of the deceased, and in com- 
 puting the taxable income of such estate there shall be 
 allowed the specific exemption provided by law. 
 
 ART. 18. When the required return has not been made by Notice of faii- 
 
 j. f -11- ure to file return 
 
 a person acting as guardian, agent of a nonresident alien, to be served on 
 or by one acting in any other capacity in which the law f g u e nt. rdian r 
 
 105 
 
makes it a duty for him to represent the individual, notice 
 of failure to make such return will be served upon such 
 guardian or agent. 
 
 , E 7 1 id ? mc , e m *y The person upon whom such notice is served may, how- 
 be meet showing * if rt 1 1 ,1 11 
 
 oniiabiiity to ever, when the facts warrant, file evidence with the collector 
 showing that the individual for whom he acts did not receive 
 an income subject to tax during the year, or that the said 
 guardian or agent had filed the return with some other 
 collector. 
 
 f "er- ART. 19. Any individual whose net income is less than 
 onsfor whom $20,000, for whom full return has been made by others as 
 been ret m"d s e ha by withholding agents, shall not be required to make a return. 
 
 others. 
 
 Returns to be ART. 20. If any person liable to pay an income tax for 
 
 i p ec e to a r re in certafn himself or others shall fail to make and deliver the return 
 
 cases - required by law, but shall consent to disclose the particulars 
 
 of any business or occupation liable to pay such tax, it 
 
 shall be the duty of the collector or deputy collector to 
 
 make such list or return, which being distinctly read and 
 
 consented to, signed, and verified by oath or affirmation by 
 
 the person liable to make such return, the same may be 
 
 received as the list or return of such person. 
 
 Refusal or ART. 21. In case any person liable to make return shall 
 *' e neglect or refuse to make or render a list or return, or shall 
 render a wilfully false or fraudulent return, it shall be the 
 duty of the collector, after due notice has been given, to 
 make such list, according to the best information he can 
 obtain by the examination of such person, or any other 
 evidence.* 
 
 Penalty for When duly certified by the collector, the said list thus 
 r^ur^orfor Prepared shall be the return of said person and the tax so 
 making false re- ascertained to be due, together with the 50 per cent or 100 
 per cent penalty incurred, shall be assessed and collected. 
 
 Returns to be ART. 22. The annual return must be verified by oath or 
 an ^ rrnat i n * tne Person making the same. Collectors are 
 directed by law to require every return to be so verified by 
 the person rendering it. The affidavit may be made before 
 the collector for the district or before any officer authorized 
 by law to administer oaths. 
 
 *For method of procedure in such cases, see sects. 3173 and 3176, Rev. 
 Stat., and also Form 1045, the form of notice to be given in such cases. 
 
 106 
 
ART. 23. When the return is not filed within the required ti ^ e xt ^ si gj n e r ! 
 time by reason of sickness or absence of the individual, an turn may be 
 extension of time, not exceeding 30 days from March 1, gra 
 within which to file such return may be granted by the 
 collector, provided a written application therefor is made 
 by the individual within the period for which such extension 
 is desired. 
 
 ART. 24. The annual returns will be forwarded by col- 
 lectors by registered mail to the Commissioner of Internal Commissioner of 
 Revenue with the list for the month in which the returns nue ern by r 
 are filed. Collectors must provide that said returns and all tured mail - 
 forms relating thereto are securely sealed in envelopes or 
 packages before forwarding the same. 
 
 ' ART. 25. All assessments shall be made by the Commis- mot tf c atfo en qf |: 
 sioner of Internal Revenue, and all persons shall be notified *hn to be paid' 
 of the amount for which they are respectively liable on or 
 before the 1st day of June of each successive year, and said 
 assessments shall be paid on or before the 30th day of June, 
 except in cases of refusal or neglect to make such return 
 and in cases of false or fraudulent returns, in which cases 
 the Commissioner of Internal Revenue shall, upon the dis- 
 covery thereof, at any time within three years after said 
 return is due, make a return upon information obtained, as 
 provided by the law, and the assessment made by the Com- 
 missioner of Internal Revenue thereon shall be paid by such 
 person or persons immediately upon notification of the 
 amount of such assessment. 
 
 To any sum or sums due and unpaid after the 30th day of Penalty f o r 
 June in any year, and for 10 days after notice and demand tax. ure 
 thereof by the collector, there shall be added the sum of 5 
 per cent on the amount of tax unpaid, and interest at the 
 rate of 1 per cent per month upon said tax from the time 
 the same became due, except from the estates of insane, 
 deceased, or insolvent persons. 
 
 ART. 26. If any person, corporation, joint-stock company, f a iTu7 e al t'o 5 
 association, or insurance company liable to make returns returns, 
 or pay tax shall refuse or neglect to make returns at the 
 time or times specified in each year, such person shall be 
 liable to a penalty of not less than $20 nor more than $1,000. 
 
 Any person or any officer of any corporation required by m 5SJ alti f al se oi 
 
 law to make, render, sign, or^verify any return who makes fraudulent re- 
 
 any false or fraudulent return or statement with intent to * 
 
 107 
 
defeat or evade the assesment required by law to be made 
 shall be guilty of a misdemeanor, and shall be fined not 
 exceeding $2,000 or be imprisoned not exceeding one year, 
 or both, at the discretion of the court, with the costs of 
 prosecution. 
 
 ART. 27. Nothing in the law or these regulations shall 
 be construed to release a taxable person from liability for 
 income tax, nor shall any contract entered into after the 
 act of October 3, 1913, took effect be valid in regard to any 
 Federal income tax imposed upon a person liable to such 
 payment. 
 
 ART. 28. For regulations relative to the claiming of ex- 
 emptions and deductions on income, the tax on which is to 
 be deducted and withheld at the source, see article 33. 
 
 108 
 
PART 2. 
 
 COLLECTIONS AT THE SOURCE. 
 
 Collections at 
 source applic 
 
 ART. 29. The deductions and payment of the tax at the only to the nor- 
 
 . , . 11 ma * tax imposed 
 
 source of income applies only to the normal tax imposed upon individu- 
 
 upon individuals and shall not be construed to require any ^' S ource ect nat 
 
 of such tax to be withheld prior to the 1st day of Novem- SP erat 1 ive 1Q t J? til 
 
 1PM ~ J Nov. 1, 1913. 
 
 her, 1913. 
 
 Persons, firms, 
 etc., required to 
 withhold tax at 
 the source. 
 
 ART. 30. Paragraph E of section 2 of the act provides 
 that- 
 All persons, firms, copartnerships, companies, corporations, 
 joint-stock companies or associations, and insurance companies, 
 in whatever capacity acting, including lessees or mortgagors, 
 of real or personal property, trustees acting in any trust capa- 
 city, executors, administrators, agents, receivers, conservators, 
 employers, and all officers and employees of the United States 
 having the control, receipt, custody, disposal, or payment of 
 interest, rent, salaries, wages, premiums, annuities, compen- 
 sation, remuneration, emoluments, or other fixed or determin- 
 able annual gains, profits, and income of another person, ex- 
 ceeding $3,000 for any taxable year, other than dividends on 
 capital stock, or from the net earnings of corporations and 
 joint-stock companies or associations subject to like tax, who 
 are required to make and render a return in behalf of another, 
 as provided herein, to the collector of his, her, or its district, 
 are hereby authorized and required to deduct and withhold 
 from such annual gains, profits, and income such sum as will 
 be sufficient to pay the normal tax imposed thereon by this 
 section, and shall pay to the officer of the United States 
 Government authorized to receive the same; and they are each 
 hereby made personally liable for such tax. 
 
 ART. 31. All persons, firms, etc., mentioned in the above- Withhold i n t 
 quoted paragraph are referred to in these regulations as 
 "debtors" or "withholding agents," and the word "source" 
 is to apply to the place where the income originated and is 
 payable. 
 
 ART. 32. The INCOME from which the normal tax of 1 income as to 
 
 . . i i -1111- -11 which tax is to 
 
 per cent is to be WITHHELD by withholding agents includes be withheld. 
 all items of income exceeding in the aggregate $3,000 and 
 payable to any one person during the year, except: 
 
 (a) Dividends on capital stock or from the net earnings 
 of corporations and joint-stock companies or associations 
 and insurance companies subject to like tax. 
 
 109 
 
(b) Income of an individual which is not fixed or cer- 
 tain and not payable at stated periods, or is indefinite or 
 irregular as to amount or time of accrual, shall not be 
 withheld at the source, but shall be listed in the annual 
 return of the individual, and the tax shall be paid thereon, 
 by him. 
 
 Incomes derived from the following professions and voca- 
 tions come under this head: Agents compensated on the 
 commission basis, lawyers, doctors, authors, inventors, and 
 other professional persons whose income is irregular and 
 indefinite. 
 
 Such persons shall make personal return of all their in- 
 come, provided their total net income from all sources is 
 and pe an*nuai ' re- $3,000 or over. For example i When a lawyer receives a 
 tainers. retainer of $5,000 as a special fee, a deduction therefrom 
 
 shall not be made by the payer ; but when a lawyer receives 
 a retainer of $5,000 per annum, and the exemption claimed 
 is $3,000, $2,000 of such income would be taxed and the 
 tax retained at the source ; or if his exemption claimed 
 should be $4,000, $1,000 of such income would be taxed and 
 the tax thereon withheld at the source. 
 
 (c) Items listed in article 5, which are wholly exempt 
 from tax. 
 
 Exemptions ART. 33, (a) In all cases where the income tax of a 
 c de cert!fi2te p to person is withheld and deducted and paid or to be paid at 
 be filed with the source, such person shall not receive the benefit of the 
 
 withholding,,.. , ,, ,. i/-^/ 
 
 agent. deduction and exemption allowed in paragraph C (see arts. 
 
 9 and 10) except by an application to the collector for 
 
 refund of the tax unless, he shall, not less than 50 days prior 
 
 to the day on which the return of his income is due, file with 
 
 the person who is required to withhold and pay tax for 
 
 him, a certificate claiming the benefit of such exemption. 
 
 Penalty for and thereupon no tax shall be withheld upon the amount of 
 
 rjp'rfsentatioms sucn exemption. If any person for the purpose of obtaining 
 
 to obtain exemp- ail y allowance or reduction by virtue of a claim for such 
 
 exemption, either for himself or for any other person, 
 
 knowingly makes any false statement or false or fraudulent 
 
 representation, he shall be liable to a penalty of $300. 
 
 Deductions un- (b) Nor shall any person under the foregoing conditions 
 
 e For a m ag i r oo8 to he allowed the benefit of any deduction provided for in 
 
 i e i fhold/ng subsection B ( see art - 6, 1 to 6) unless he shall, not less 
 
 agent or col- than 30 days prior to the day on which the return of his 
 
 income is due, either file with the person who is required 
 
 110 
 
to withhold and pay tax for him a true and correct return 
 (on Form 1008) of his annual gains, profits, and income 
 from all other sources, and also the deductions asked for, 
 and the showing thus made shall then become a part of 
 the return to be made in his behalf by the person required 
 to withhold and pay the tax and the debtor or withholding 
 agent will only withhold the tax on the payments made in 
 excess of the deductions claimed on said form. Or such 
 person may likewise make application for deductions to the 
 collector of the district in which return is made or to be 
 made for him. 
 
 If such person is a minor or an insane person, or is Certificate filed 
 absent from the United States, or is unable owing to serious nor? eh a r lf 
 illness to make the return and application above provided P ersons - 
 for, the return and application may be made for him or her 
 by the person required to withhold and pay the tax, he 
 making oath on certificate (Form 1009) under the penalties 
 of this act that he has sufficient knowledge of the affairs 
 and property of his beneficiary to enable him to make a full 
 and complete return for him or her, and that the return and 
 application made by him are full and complete. 
 
 (c) When, however, claims for exemption and deductions Claims for re- 
 as above described are not filed within the prescribed time, 
 the tax collected in excess can be remitted only on presen- 
 tation of a claim for refund under the provisions of section 
 3220, Revised Statutes, said claims to be made either by 
 the withholding agent against whom the assessment was 
 made, or by the person on account of whom such taxes were 
 withheld. 
 
 Claims for abatement of taxes erroneously assessed, or claims for 
 which are excessive in amount, may, prior to collection abatement - 
 thereof, be filed under the provisions of said section 3220, 
 Revised Statutes, either -by the withholding agent against 
 whom the assesment was made, or by the persons on account 
 of whom such taxes were withheld. 
 
 In the monthly list returns as now prescribed a space is Taxes with- 
 
 provided to show the amount of taxes which the withhold- Awarded tocoi- 
 
 ing agent may remit to the collector when such returns 1 ? ctor " ntil n - 
 
 /-i 1 -r>i -,1 1 ij- MI i e tices of assess- 
 
 are filed. The withholding agents will not, however, for- ment have been 
 
 ward to the collector amounts withheld by him until notices received - 
 of assessment are received from the collector. 
 
 Claims for exemption and deductions may be filed with 
 the withholding agent and claims for deductions may be 
 
 111 
 
filed with the collector, not later than jo days prior to 
 March I. 
 
 withholding In cases where claims for deductions are filed with the 
 statement collector within the time prescribed, the collector will imme- 
 
 of deductions diately furnish the withholding agent (whose name and 
 
 claimed through J ^ *= ^^r>\ 1 
 
 collector of dis- address must be shown on Form 1008) with a statement of 
 the amount of deductions claimed, and said withholding 
 agent shall not withhold and pay the normal tax to the 
 extent of the deductions claimed as per said list. 
 
 Withholding agents should not file their annual returns 
 until after the expiration of the time allowed persons to 
 file claims for exemptions and deductions and if claims for 
 deductions are filed with the collector in the required time, 
 yet not in sufficient time to have the adjustment made by 
 the withholding agent, the collector will make the adjust- 
 ment on the withholding agent's return and in reporting 
 such withholding agent for assessment will make allowance 
 for the amount of such deductions claimed. Notice of such 
 adjustment, however, must be furnished the- withholding 
 agent. 
 
 to T t>e w lid he to ART. 34. The normal tax of 1 per cent shall be deducted 
 
 collector of dis and withheld at- the source, and payment made to the 
 
 collector of internal revenue as provided in the law, by the 
 
 debtor, or his, her, or its duly appointed agent authorized 
 
 to make such deduction and payment. 
 
 Tax withheld N O other person, firm, or organization, in whatever 
 
 by one agent not . .. > 1 j 1 r 
 
 to be again with- capacity acting, having the receipt, custody, or disposal 01 
 agent by an ther any income, as herein provided, shall be required to again 
 deduct and withhold the normal tax of 1 per cent thereon, 
 provided that any such person, firm, or organization other 
 than the debtor who has withheld said tax, shall file with 
 the collector of internal revenue for his, her, or its district, 
 a certificate (Form 1006) showing from whom and in what 
 amount the tax has been so withheld. 
 
 Returns to be ART. 35. Withholding agents who are required to make 
 iTcto? of internal monthly returns will, on or before the 20th day of each 
 revenue. month, file with the collector for their respective districts 
 
 such returns for the preceding month, accompanied by all 
 certificates relating thereto, and there shall also accompany 
 said returns all certificates claiming exemptions and deduc- 
 tions which are not required to be listed thereon; and on 
 or before the 1st day of March in each year said withholding 
 agents shall likewise file their annual returns for the pre- 
 ceding calendar year. Annual returns (Forms 1041 and 
 
 112 
 
1042) must be accompanied by all certificates claiming 
 exemptions and deductions relating thereto. 
 
 ART. 36. For regulations as to assessment and collection 
 of taxes from withholding agents, see article 25 and "Assess- 
 ments and collections," Part 4. 
 
 A. 
 
 Income derived from interest upon bonds and mortgages or 
 deeds of trust or other similar obligations of corporations, 
 etc. 
 
 on income 
 in- 
 
 ART. 37. Under the law a tax of 1 per cent, designated . T . ax ,n inc 
 
 1 11 1 1 1 1 a i 55 derived irom n- 
 
 as the normal tax, shall be deducted at the source, terest on bonds, 
 beginning November 1, 1913, from all income accruing and ducted*. 
 payabla to any person subject to such tax which may be 
 derived from interest upon bonds and mortgages, or deeds 
 of trust, or other similar obligations, including equipment 
 trust agreements and receivers' certificates of corporations, 
 joint-stock companies or associations, and insurance com- 
 panies, although such interest does not amount to $3,000. 
 
 Income derived from the interest upon the obligations ^ stVte^n 
 of a State, county, city, or any other political subdivision Government ot>- 
 thereof , and upon the obligations of the United States or its 
 possessions, is not subject to the income tax, and certificates 
 of ownership in connection with coupons or registered inter- 
 est orders for such interest will not be required. 
 
 ART. 38. The term "debtor," as hereinafter used, shall to apply to ail 
 apply to all corporations, joint-stock companies or associa- etcj anYtVd'uiy 
 tions, and insurance companies; and such "debtor" may hoFdlng e and^pay-. 
 appoint a withholding and paying agents to act for it in ing agents, 
 matters pertaining to the collection of this tax, upon filing 
 with the collector of internal revenue for the district a 
 proper notice of the appointment of such agent or agents. 
 Where such withholding agent is so authorized by the 
 debtor corporation, he may file with the collector of his 
 district the required returns and accompanying certificates 
 (arts. 50 and 51), in which case the assessment of the tax 
 withheld by him will be made in that district. Unless such 
 authority is given, such reports, etc., will be furnished by 
 the debtor corporation to the collector of its district (i. e., 
 the district in which its principal financial or business office 
 is located), where, in such case, assessment will be made. 
 
 113 
 
duSed a ndwit ART - 39 ' For , the P ur pose of collecting the tax on all 
 held by debtor coupons and registered interest originating or payable in 
 the United States, the source shall be the debtor (or its 
 withholding and paying agent in the United States), who 
 Banks and m- shall deduct the tax when same is to be withheld, and no 
 iruerelft^uponf other bank, trust company, banking firm, or individual 
 for collection. taking coupons or interest orders for collection, or other- 
 wise, shall withhold the tax thereon, where such coupons 
 Certificates of or orders for registered interest are accompanied by certifi- 
 company^nterest cates * ownership signed by the owners of the bonds upon 
 coupons for col- which the interest matured. These certificates shall be 
 made on the prescribed forms and shall be made out by 
 each owner of bonds for the coupons or interest orders for 
 each separate issue of bonds or obligations of each debtor. 
 (See arts. 43 and 46.) 
 
 ti{kate s s, itu w e h c |n ART. 40. Responsible banks, bankers, and collecting agents 
 permitted. receiving coupons for collection w r ith the aforesaid certifi- 
 
 cates of ownership attached, may present the coupons with 
 the attached certificates to the debtor or withholding agent 
 for collection, or such certificates may be detached and 
 forwarded direct to the Commissioner of Internal Revenue, 
 provided such bank, banker, or collecting agent shall substi- 
 Record to be tute for such certificates its own certificate, and shall keep a 
 
 kept by collect- t 1 r 1 1 
 
 intr agent. complete record of each transaction, showing 
 
 1. Serial number of item received. 
 
 2. Date received. 
 
 3. Name and address of person from whom received. 
 
 4. Name of debtor corporation. 
 
 5. Class of bonds from which coupons were cut. 
 
 6. Face amount of coupons. 
 
 7. Exemptions from tax claimed by owner under para- 
 graph C. 
 
 Privilege of For the purpose of identification, such substitute certifi- 
 cates should be numbered consecutively, and corresponding 
 
 ed 
 countries 
 
 -ries foreign numbers given the original certificates of ownership. 
 
 The permission here granted will extend to responsible 
 banks, bankers, and collecting agents in foreign countries, 
 through whom collection of such interest coupons is made. 
 
 114 
 
The various substitute certificates hereby authorized will 
 correspond with the form numbers of the ownership certi- 
 ficates detached by the collecting agent, except that the 
 substitute certificates' form numbers will be followed by the 
 letter "a." 
 
 ART. 41. A debtor whose bonds may be registered, both 
 
 , ill r -i be deducted be- 
 
 as to principal or interest, shall deduct the normal tax ot 1 fore payment of 
 per cent from the accruing interest on all bonds before mterest - 
 sending out checks for said interest to registered owners 
 or before paying such interest upon interest orders signed 
 by the registered holders of said bonds unless there shall 
 be filed with said debtor or its fiscal agent (not later than 
 30 days prior to March 1), through whom said interest is 
 customarily paid, the proper certificates claiming exemption 
 from liability for said tax as herein provided, executed 
 
 
 By a citizen or resident of the United States, the bona 
 fide owner of the registered obligations, who may claim tax, by whom 
 exemption under paragraph C, section 2, of the income 
 tax law, or 
 
 By corporations, joint- stock companies, associations, or 
 insurance companies organized in the United States, or 
 organizations, associations, fraternities, etc., which are 
 either taxable or exempt from taxation, as provided in 
 paragraph G, subdivision (a), of the act, or 
 
 By a bona fide resident and citizen of a foreign country, 
 claiming exemption as such. 
 
 ART. 42. If the owners of the bonds are individuals who ownership es to 
 are citizens or residents of the United States, the aforesaid |?, e d cif ^ m j u nt n d S f 
 certificates shall accompany the coupons, or, with respect to interest due. 
 the interest on registered bonds, shall be filed with payer 
 of said interest, and such certificates shall describe the bonds 
 and show the amount of coupons attached or the amount of 
 interest due such owners on registered bonds and the name 
 and address of the owners, and if registered in names other 
 than the owners such names with addresses shall also be 
 given. Such certificates shall also show whether the claim- 
 ants do or do not then claim exemption from taxation at e mpt! u n'd ?r 
 the source, under paragraph C, articles 9 and 10 ($3,000, paragraph c. 
 and under certain conditions $4,000), as to the income 
 represented by such coupons or interest. The certificates 
 will be prepared on Form 1000 and must show the amount, 
 if any, of exemption claimed, the total amount of exemption 
 to which the claimant is entitled and must be signed by the 
 
 115 
 
claimants, who shall use their ordinary business signatures. 
 The certificates shall also show the postoffice and street 
 address of the claimants, the internal-revenue district, and 
 the date when signed. 
 
 Certificates ART. 43. Duly authorized agents may sign such certificates 
 by^duiy author- for the persons for whom they act, and withholding agents, 
 ired agents, etc. ban^ or others, with whom such certificates are filed, if 
 satisfied as to the identity and responsibility of the persons 
 so signing, shall stamp or write on the face of each such 
 certificate "Satisfied as to identity and responsibility of 
 agent," giving name and address of person thus certifying. 
 Certificates to Certificates so verified may be accepted by all other persons, 
 withholding fi rms > or organizations to whom presented, without question 
 agents. as to authority of such agent. If the person, firm, or organ- 
 
 ization first receiving such certificate is not satisfied as to 
 the agent's identity and responsibility, then, in that event, 
 the agent shall furnish evidence of his authority to so act, 
 which will be retained by the person, firm, or organization 
 receiving it, and the certificate of ownership shall be in- 
 dorsed as above provided. 
 
 Tax to be de- ART. 44. Whenever interest coupons, accompanied by a 
 payment* e of fn' certificate of an individual who is a citizen or resident of 
 terest - the United States, are presented to a debtor or its with- 
 
 holding agent for 'payment, or whenever interest is payable 
 to such individual on a bond registered as to both principal 
 and interest, the debtor or its withholding agents shall 
 deduct and withhold the amount of the normal tax, except 
 to the extent that exemption is claimed in the certificate of 
 ownership (Form 1000). 
 
 Where the interest to be paid is registered, the same form 
 of certificate shall be used where exemptions are claimed, 
 and it shall be filed with the debtor at least five days before 
 the due date of such interest. 
 
 est Ta payTbie nte to ART> ^' If tne owners of tne bonds are corporations, 
 certain corpora- joint- stock .companies, associations, or insurance companies 
 fo n be deducted! organized in the United States, no matter how created or 
 organized, or organizations, associations, fraternities, etc., 
 which are either taxable or exempt from taxation as pro- 
 vided in paragraph G, subdivision (a) of the act, the debtor 
 is not required to withhold or deduct the tax upon income 
 derived from interest on such bonds, provided coupons or 
 orders for interest from such bonds shall be accompanied 
 by a certificate of the owners thereof certifying to such 
 ownership, which certificates shall be filed with the debtor 
 when such coupons or interest orders are presented for 
 payment. 
 
 Such certificate will be made on Form 1001, and must be 
 signed in the name of the organization (stating its place of 
 
 116 
 
business) by the president, secretary, or some other prin- 
 cipal officer of the said corporation or organization duly claiming 
 authorized to sign same, and must be properly dated. 
 
 ART. 46. Coupons, or orders for registered interest, pay- 
 able in the United States, representing the interest on bonds aliens, 
 owned by nonresident aliens, must be accompanied by the 
 prescribed certificate (Form 1004), but this certificate may 
 be signed either by the owner or, in behalf of the owner, 
 by a reputable bank or bankers or other responsible collect- 
 ing agency, certifying to the ownership of the bonds and 
 giving the name and address of the bona fide nonresident 
 and alien owners, and when such certificate is thus attached 
 the normal tax of 1 per cent on such coupons or interest 
 orders need not be withheld at the source by the debtor or 
 collecting agency. Unless such proof of foreign ownership 
 is furnished, the normal tax of 1 per cent, should be deducted. 
 
 Foreign organizations engaged in business within the 
 United States are subject to the normal tax of 1 per cent 
 per annum upon the amount of net income accruing from 
 business transacted and capital invested within the United 
 States; but said organizations shall be exempt from having 
 any part of their income withheld by a debtor or with- 
 holding agent, and claim for such exemption will be made 
 on Form 1018. 
 
 ART. 47. Inasmuch as individual members of a partner- Certificate* 
 ship are liable for income tax upon their respective interest s h?p, showfn^fn- 
 in the net earnings of such partnership, the partnership may J, e a r 1 es i n of partner- 
 file with the withholding agent a notice signed in the name ship profits, etc. 
 of the partnership, by a member thereof, claiming a deduc- 
 tion of a specific amount on account of the legitimate 
 expense incurred in conducting the business of said part- 
 nership; and upon receipt of said notice said withholding 
 agent shall not withhold, and shall not be held liable for, 
 the normal tax on the amount of income equal to the amount 
 of deduction claimed in said notice ; but in no event shall 
 the total of the amounts claimed, as provided herein, be in 
 excess of the total amount of the actual legitimate annual 
 expenses incurred by said partnership in the conduct of its 
 business. Application for such deduction shall be made on 
 Form 1011. 
 
 117 
 
Foreign part- ART. 48. Foreign partnerships or firms, all the members 
 
 nerships, certifi- . , & f , . . , 
 
 cate of owner- of which are both citizens, or subjects, and residents of a 
 ship may be filed f ore ig n coun try, which are the owners of bonds and mort- 
 gages or deeds of trust or other similar obligations, includ- 
 ing equipment trust agreements, receivers' certificates, and 
 stocks of corporations, joint-stock companies or associations 
 and insurance companies, organized or doing business in the 
 United States, may file with the debtor or withholding agent, 
 with their coupons or orders for registered interest, or 
 orders for other income derived from property or invest- 
 ments in the United States, a certificate and notice of 
 ownership (Form 1016) setting forth the above facts; and 
 the debtor or withholding agent shall not withhold any part 
 of said income. 
 
 Foreign part- ART. 49. Where a. foreign partnership or firm is composed 
 posed 1 o'f no C n?esi- of both nonresident foreigners and citizens of the United 
 and 1 citiiS ne of States, or foreigners residing in the United States or its 
 United States, possessions, the certificate of ownership shall show this 
 fact, and the name arid legal address of each member of 
 said partnership who is a citizen of the United States, or 
 who is a foreigner residing in the United States or its pos- 
 sessions, shall be given on the back of said certificate, and 
 no part of said income shall be withheld. The said certifi- 
 cate and notice of ownership in either case above provided 
 shall be on Form 1014. 
 
 list ART. 50. Withholding agents are required to file in dupli- 
 cate a monthly list return (Form 1012) giving a list of all 
 coupon or interest payments made on which the normal tax 
 of 1 per cent was deducted and withheld from interest pay- 
 ments made upon bonds or other similar obligations, and 
 shall show the name and address in full of the owners of 
 the bonds, amount of the income, amount of exemption 
 claimed, amount of income on which withholding agent is 
 liable for tax, and the amount of tax withheld. 
 
 Forms 1012a, 1012b, and 1012c are to be used where 
 Form 1012 does not afford sufficient space in which to enter 
 all items. 
 
 i s ts 
 
 Form 1012d, when necessary to be used, shall be made 
 may be used. j n duplicate and shall be a summary of the monthly list 
 return, Form 1012, as made in detail by the withholding 
 agent, and the said summary and lists thereto attached 
 
 118 
 
when properly filled in and the summary signed and sworn 
 to shall constitute the complete monthly list return of the 
 withholding agent making same as fully as if each list 
 attached to the summary was signed and sworn to separately. 
 
 An annual list return (Form 1013) in duplicate is also 
 required to be made by debtors or withholding agents of the 
 normal tax of 1 per cent withheld from interest payments 
 made upon bonds or other similar obligations, and it shall 
 be filed on or before March 1 of each calendar year. 
 
 ART. 51. The monthly list return in the form as required Monthly list 
 herein shall constitute a part of the annual list return to pa rt of the an- 
 be made by debtors or withholding agents, and the debtor nual l 
 or withholding agent will not be required, in making an 
 annual list return of the tax withheld from income derived 
 from interest upon bonds and mortgages or deeds of trust, 
 or other similar obligations of corporations, joint-stock com- 
 panies, or associations and insurance companies, to 
 again make an itemized list of the amount of tax with- 
 held from each person, but will give in the annual list 
 return the totals of the monthly list return for each month 
 of the year for which annual list return is made. 
 
 All substitute certificates of collecting agents, authorized 
 by regulations, that are received by debtors or withholding 
 agents will be considered the same as certificates of owners, 
 and in entering same in making monthly list returns debtors 
 or withholding agents will enter the name and address of 
 the collecting agent and the number of the substitute cer- 
 tificate issued in lieu of the original certificate containing the 
 name and address of the owner of the bonds. Until the 
 further ruling on this subject by this department no list 
 return is required to be made of certificates of ownership 
 accompanying coupons or registered interest orders filed 
 with a debtor or withholding agent when the owners of the 
 bonds are not subject to having the normal tax withheld at 
 the source, but all such certificates of ownership shall be Certificates to 
 forwarded by the debtor or withholding agent to the col- collector! 1 ' 
 lector of internal revenue for the district, on or before the 
 20th day of the month succeeding that in which said certi- 
 ficates of ownership were received. 
 
 119 
 
B. 
 
 Income derived from interest upon bonds, mortgages, etc., 
 paid by first bank or collecting agency when certificates of 
 owners are not filed. 
 
 ^interest cou- ART. 52. Where the coupons or interest orders are not 
 IpmpaniS accompanied by certificates as heretofore prescribed, the 
 by certificate. fa$t b^k^ trust company, banking firm, or individual, or 
 collecting agency receiving the coupons or interest orders 
 for collection, or otherwise, shall deduct and withhold the 
 tax and shall attach to such coupons or interest orders its 
 own certificate (Form 1002), giving the name and address 
 of the owner of, or the person presenting such coupons or 
 interest orders if the owner is not known, with a description 
 of the coupons or interest orders ; also setting forth the fact 
 that they are withholding the tax upon them ; whereupon 
 the debtor shall not again withhold the tax on said coupons 
 or interest orders, but in lieu thereof shall deliver to the 
 Collector of Internal Revenue the certificate of such bank, 
 trust company, etc., which is withholding such tax money. 
 
 soS en presenfing Any corporation, collecting agency, or person first receiv- 
 jnterest coupons ing from the owner any interest coupons or orders for the 
 ished. e '" collection of registered interest should require the persons 
 
 tendering such coupons or orders for registered interest to 
 
 satisfactorily establish their identity. 
 
 Monthly and ART. 53. Withholding agents receiving coupons or inter- 
 hst re ~ est orders not accompanied by certificates of owners are 
 required to file monthly and annual list returns in duplicate. 
 The required monthly list return (Form 1044) shall give 
 a list of all coupon or interest payments made on which 
 the normal tax of 1 per cent was deducted and withheld 
 and shall show the name and address in full of the owner 
 of, or the person presenting such coupons or interest orders, 
 if the owner is not known, amount of the income subject to 
 tax and the amount of tax withheld. 
 
 An annual list return (Form 1044a) is also required to be 
 made by such withholding agents, showing the amount of 
 tax withheld during the preceding year on income of this 
 character. This return must be filed on or before the 1st 
 day of March of each calendar year. 
 
 The monthly list returns in the form as required herein 
 shall constitute a part of the annual list return to be made, 
 and the withholding agent will not be required, in making 
 
 120 
 
an annual list return of the tax thus withheld, to again make 
 an itemized list of the amount of tax withheld from each 
 person, but will give in the annual list return the totals of 
 the monthly list returns for the year for which annual list 
 return is made. 
 
 c. 
 
 Income derived from coupons, checks or bills of exchange on 
 foreign bonds, mortgages, dividends, etc. 
 
 ART. 54. All persons, firms, or corporations undertaking . CcflUcitoa^of 
 
 for accommodation or profit (this includes handling either bTffs s ' of e ex- 
 by way of purchase or collection) the collection of coupons, chan s e ' etc - 
 checks, bills of exchange, etc., for or in payment of interest 
 upon bonds issued in foreign countries, and upon foreign 
 mortgages or like obligations, and for any dividends upon 
 stock or interest upon obligations of foreign corporations, 
 associations, or insurance companies engaged in business in License to be 
 foreign countries, are required by law to obtain a license commissioner 5 
 from the Commissioner of Internal Revenue. n ue ernal Reve " 
 
 ART. 55. Applications for such license (Form 1017) will . Application for 
 be made to the collector for the district in which such busi- nSe^to %n e ^ e 
 ness is to be carried on. Upon the acceptance of such tor of dis t"ct. 
 application the collector will issue to the applicant without 
 cost a license (Form 1010) which will continue in force 
 until revoked or canceled. Blank forms of such license, 
 bearing the fac simile signature of the Commissioner of 
 Internal Revenue, will be furnished collectors on requisition, 
 who will in all cases countersign the same before issuing it 
 to applicant. Failure to obtain a license or to comply with 
 regulations is punishable by a fine not exceeding $5,000 or Penalty for 
 
 ' . ,. J 1 ^1 f failure to obtain 
 
 imprisonment not exceeding one year, or both, in the dis- license, 
 cretion of the court. 
 
 ART. 56. Where the collector is not sufficiently informed 
 as to the entire responsibility of the applicant, or where in 
 any case he deems it advisable, the Commissioner of Internal tncases. 
 Revenue may upon the recommendation of the collector 
 require of the applicant a bond, in duplicate, with satisfac- 
 tory sureties, in a penal sum at least equal to the estimated 
 amount of tax to be withheld by such applicant during any 
 one year. A form of bond to be given in such cases will be 
 furnished collectors on application for the same. Where 
 licenses are issued without bond, the collector will each year 
 inquire into and satisfy himself of the financial responsi- 
 bility of the licensee. 
 
 121 
 
License to be ART. 57. When any person, firm or corporation shall 
 
 o b t a i n e d for r 
 
 branch offices. have branch orhces and desire to collect ioreign interest or 
 dividend income through said branch offices, the application 
 for license or licenses shall be made by the person, firm, or 
 corporation through its principal office for its branch office 
 or offices. Application for licenses in such cases shall be 
 Ap lication for ma de to the collector of internal revenue for the district in 
 license to be cer- which the home office is located. The names and addresses 
 o? ed distriS ect ?n of the branch offices shall be furnished to the collector in the 
 offices h are"*"!? a PP^ ca tio n of the said principal, and if the requirements of 
 cated. the foregoing regulations have been complied with to the 
 
 satisfaction of the collector, he shall certify this fact to the 
 collector of internal revenue for the district in which the 
 branch office is located, and the collector to whom this certi- 
 fication is made shall issue to such branch office a license, as 
 in the case provided in article 55. 
 
 Normal tax on ART. 58. The licensed person, firm, or corporation first 
 
 'to te be st Withheld receiving any such foreign items for collection or otherwise, 
 
 shall withhold therefrom the normal tax of 1 per cent, and 
 
 will be held responsible therefor. Such licensee shall indorse 
 
 statement as or stamp on each such coupon, check, or bill of exchange, 
 
 to 4 be il?do?s e ed wnen practicable, the words "Income tax withheld by" (giv- 
 
 or appended to ing his or their name, address, and date), which shall be 
 
 coupons, d :ks, su ffi c j ent evidence to relieve subsequent holders or pur- 
 
 chasers from the duty of also withholding the income tax. 
 
 ^ ^ e s ^ ze or nat ure of such coupons, checks, etc., makes 
 of district with it impracticable to make said indorsement thereon, a state- 
 ducted, t etc es ' *" rnent identifying the item on which tax is withheld and bear- 
 ing said indorsement may be attached thereto with the same 
 effect as if the indorsement was made directly thereon. 
 
 ART. 59. Such licensee shall obtain the names and ad- 
 dresses of the persons from whom such items are received 
 and shall prepare a list of same in duplicate (on Form 1043) 
 and file it with the collector of internal revenue for his dis- 
 trict not later than the 20j:h day of the month next succeed- 
 ing the month in which such items were paid. The list shall 
 be dated, and shall contain the names and addresses of the 
 taxable persons, the character and amount of income, amount 
 of exemption claimed, amount of income on which withhold- 
 ing agent is liable for tax, and the amount of tax withheld. 
 In addition to the monthly lists the licensee will, on or be- 
 fore the 1st day of March in each year, file with the col- 
 
 122 
 
lector in duplicate a return (Form 1043a), showing the 
 amount of income paid and the amount of tax withheld by 
 him during the preceding year and such other information 
 as the form prescribes. 
 
 The monthly list return in the form as required herein 
 shall constitute a part of the annual list return to be made 
 by the licensee as withholding agent, and he will not be re- 
 quired, in making an annual list return of the tax withheld 
 from income described in article 54, to again make an item- 
 ized list of the amount of tax withheld from each person, 
 but will give in the annual list return the totals of the 
 monthly list return for each month of the year for which 
 annual list return is made. 
 
 ART. 60. In the event such coupons, checks, or bills of Claims for ex- 
 
 . , . , x , - 11 -L emption under 
 
 exchange above mentioned are presented tor collection by an paragraph c may 
 
 individual claiming the benefit of the exemptions allowable filed- 
 
 under paragraph C (arts. 9 and 10), such individual shall 
 
 be permitted to avail himself of the exemption claimed, 
 
 upon signing on the form heretofore prescribed for coupons 
 
 payable in the United States, and no tax shall be deducted 
 
 for the amount of the exemption so claimed; or if such 
 
 items are presented by corporations, joint-stock companies, ex?m a P T a from 
 
 or associations and insurance companies, organized in the JJSd" 8 a? x "th h e 
 
 United States, the form of certificate heretofore prescribed source. 
 
 for such organizations shall be used, and in such instances 
 
 no tax shall be deducted. 
 
 ART. 61. In both instances the licensee first receiving Certificates of 
 such items shall retain such certificates for delivery with fofvrded, with 
 the lists aforesaid, and with respect to said coupons, checks, t n s thl t o coiiec" 
 or bills of exchange, said licensee shall attach thereto (iden- tor. 
 tifying the items) or indorse or stamp thereon the words 
 "In-come tax exemption claimed through" (giving name and 
 address of licensee), which shall be sufficient evidence to 
 relieve subsequent holders or purchasers from the duty of 
 also withholding the tax thereon. 
 
 The provisions for collection of the tax on foreign obli- Licensee to 
 
 gations herein set forth includes the interest upon all foreign 
 bonds, even though the coupons may, at the option of the 
 holder, be payable in the United States as well as in some 
 foreign country. 
 
 keep records. 
 
 ART. 62. All persons licensed shall keep their records in. 
 such manner as to show from whom every such item has 
 been received, and such records shall be open at all times to 
 the inspection of internal-revenue officers. 
 
 123 
 
D. 
 
 Income derived from wages, rent, interest, or other fixed and 
 determinable gains, profits, and income. 
 
 Wages, sal- ART. 63. The above title includes all income derived from 
 anes, rents, etc. sa l a ries, wages, rents, royalties, interest, taxable annuities, 
 emoluments, or other fixed and determinable annual gains, 
 profits, and income of another person. ("Income derived 
 from interest upon bonds and mortgages, or deeds of trust, 
 or other similar obligations of corporations, etc.," and "In- 
 come derived from coupons, checks, or bills of exchange on 
 foreign bonds, mortgages, dividends, etc.," which have been 
 covered by regulations under such titles, are not to be in- 
 cluded here.) 
 
 withholding ART. 64. Copartnerships, companies, corporations, joint- 
 smd nt a t0 tax d * Ct stoc ^ companies or associations, insurance companies, in 
 whatever capacity acting, including lessees, mortgagors of 
 real or personal property, trustees acting in any trust ca- 
 pacity, executors, administrators, agents, receivers, con- 
 servators, employers and all officers and employees of the 
 United States, hereinafter referred to as "debtors" or with- 
 holding agents, having the control, receipt, custody, disposal, 
 or payment of income as described in article 63, shall de- 
 duct and withhold from such annual gains, profit, and 
 income, when the same shall have reached an aggregate 
 amount in excess of $3,000, such sum as will be sufficient to 
 pay the normal tax of 1 per cent imposed by law, and shall 
 pay the taxes so withheld to the collector of internal revenue 
 for the district in which the said withholding agent resides 
 or has his, her, or its principal place of business. 
 
 withheld on per? A RT : 65 ' A withholding agent who pays monthly, or 
 odicai payments periodically during the year, interest, rents, salaries, wages, 
 Jregate^I.ooo^" etc., shall not withhold the said tax until such time as the in- 
 terest, rents, salaries, wages, etc., shall have reach an aggre- 
 gate amount in excess of $3,000. When such amount has 
 been reached, such agent shall withhold the tax on the 
 whole $3,000, and any excess thereof, unless the person to 
 whom the income is due files a notice claiming exemption 
 
 Exemption un- , i /~> / 1 i -><>/ \\ i i 
 
 der paragraph c under paragraph C (as provided in art. 33(a)), m which 
 
 .nay be claimed. case ^ withholding agent shall withhold only the tax on the 
 
 income in excess of said exemption of $3,000 or $4,000 (as 
 
 the case may be), and the tax so withheld shall be paid as 
 
 required by law. 
 
 124 
 
ART. 66. In case the person to whom the income is due . Deductions un- 
 
 , i ''* - 1 der paragraph 
 
 is entitled to any deductions under paragraph B, he may B may be 
 
 avail himself of such deductions by filing with the with- 
 
 holding agent Form 1 008, as provided in article 33 (b), in 
 
 which case the withholding agent will only withhold the tax 
 
 on such income in excess of the deductions claimed on said 
 
 form. 
 
 Tax not to be 
 A ^->7 T-> 1 1 i withheldby 
 
 ART. o/. Banks, bankers, trust companies, and other banks .on inter- 
 banking institutions receiving deposits of .money, are not ld 
 
 required to withhold at the source the normal income tax 
 of 1 'per cent on interest paid, or accrued, or accruing to 
 depositors, whether on open accounts or on certificates of 
 deposit; but all such interest, whether paid or accrued and 
 unpaid, must be included in the annual income return of the 
 person entitled to receive such interest, whether on open 
 account or on the certificate of deposit. 
 
 n e s given 
 
 ART. 68. When a note shall have been given in payment Tax to be with- 
 of interest, rents, or other income accruing after March 1, 
 1913, the maker of the note, as the "debtor" and as the 
 "source" where the income originates, is required, in paying 
 such note, to withhold the normal tax of 1 per cent on the 
 entire amount of the note, if in excess of $3,000, unless 
 claim for exemption or deductions under article 33 (a) or 
 33 (b) is filed, in which case the said tax shall be withheld 
 only on the amount of said note in excess of the exemption 
 or deductions so claimed. 
 
 If any person who has purchased or discounted any such Purchasers of 
 notes omitted, in acquiring them from previous holder, to 
 make a deduction or allowance for said tax, he can look for ot 
 relief only to the person from whom the notes were ob- 
 tained, as the "debtor," the maker of said notes, is required 
 to deduct, withhold, and pay to the collector of internal rev- 
 enue the amount of the normal tax of 1 per cent which may 
 be due thereon. 
 
 
 been 
 
 ART. 69. Withholding agents shall make an annual list Annual l 
 return (Form 1042), in duplicate, to the collector of in- oidin b 
 ternal revenue for the district in which the withholding 
 agent resides or has his principal place of business on or 
 before the 1st day of March in each year, showing the 
 names and addresses of persons who have received incomes 
 in excess of $3,000, on which the normal tax of 1 per cent 
 has been deducted and withheld during the preceding year. 
 This return must be accompanied by all forms presented 
 claiming exemptions and deductions. 
 
 125 
 
 st re- 
 a ems th " 
 
E. 
 
 Fiduciaries. 
 
 ART. 70. Guardians, trustees, executors, administrators, 
 agents, to deduct agents, receivers, conservators, and all persons, corpora- 
 tions, or associations acting in any fiduciary capacity here- 
 inafter referred to as fiduciary agents, who hold in trust 
 an estate of another person or persons, shall be designated 
 duct?on e to d be ^ e "source" for the purpose of collecting the income tax, 
 filed with other and by filing notice with other debtors or withholding agents 
 agents. " g said fiduciary shall be exempt from having any income, due 
 to them as such, withheld for any income tax by any other 
 debtor or withholding agent. Other debtors or withholding 
 agents upon receipt of such notice shall not withhold any 
 part of such income from said fiduciary and will not in 
 such case be held liable for normal .tax of 1 per cent due 
 thereon. The form of notice to be filed with the debtor or 
 withholding agent by fiduciary will be on Form 1015. Where 
 such exemption is not claimed, notice thereof on Form 1019 
 should be filed with the withholding agent. 
 
 Annual return ART. 71. Fiduciaries shall, on or before March 1 of each 
 
 to be made to 111 ' r . . 
 
 the collector of year, make and render a return of the income coming into 
 the district. their custody or control and management from each trust 
 or estate when the annual interest of any beneficiary in 
 said trust or estate is in excess of $3,000. This return 
 (Form 1041) must be filed with the collector for the dis- 
 trict in which the fiduciary resides or has his principal place 
 of business, and shall contain an itemized statement of the 
 gross income and deductions claimed. 
 
 Notice of failure to file return as required shall be served 
 upon the fiduciary. (See art. 18.) 
 
 The entries on the first page of Form 1041 in column 
 headed "Amount of income paid or accrued to beneficiaries" 
 should not include their respective shares of income de- 
 rived from dividends on the stock or from the net earnings 
 of corporations, joint-stock companies, etc., subject to like 
 tax or the income on which the normal tax of 1 per cent 
 has been deducted and withheld at the source by the debtor 
 or the prior withholding agent, as these two items of income 
 are treated as deductions in determining the amount of in- 
 come subject to tax for which the fiduciary as withholding 
 agent has to account. 
 
 126 
 
When the share of any beneficiary, therefore, in the 
 amount stated on line 3 of the first page of said return is in 
 excess of $3,000, return must be made. 
 
 ART. 72. As each such fiduciary acts solely in behalf of , R eturn , to |n- 
 
 , , ~ . . ... . J . * . , . elude only in- 
 
 the beneficiaries of the trust, the annual return required in come accruing 
 such cases has reference only to the income accruing and otheT^seih^ 
 payable through said fiduciary, and not to the income of the thorized by 
 
 i J r i j r rr 1 1 beneficiary. 
 
 beneficiary derived from other sources. If, Jiowever, such 
 fiduciary is legally authorized to act for such beneficiary as 
 agent or attorney in fact, he may in such case also make for 
 the beneficiary the personal annual return (Form 1040) re- 
 quired by law. 
 
 ART. 73. The annual return of the fiduciary shall con- Annual return 
 tain a list of the name and full address of each beneficiary *9 i nclu ^ e . . list 
 
 ... ,. . , . ,-i * beneficiaries, 
 
 and the share of said income to which each may be en- showing tax 
 titled. There must also be entered opposite the name of Sch hel< 
 each beneficiary the amount of exemption, if any, claimed 
 by him, the amount of income on which the fiduciary is 
 liable for tax, and the amount of tax withheld, and the said 
 return shall be signed and sworn to by the fiduciary, if an 
 individual, making same, and his full address must be 
 stated. If the fiduciary is an organization, the return shall 
 be signed and sworn to by the president, secretary, or treas- 
 urer of said organization. 
 
 Return to be 
 
 ART. 74. Fiduciaries having control of any portion of an 
 
 i . i ,1 1 1- M 1 eurn o e 
 
 annual income accruing during the year, but not distributed made of undis- 
 
 or paid to the beneficiaries during the year, shall, in render- Jj^J^ 
 
 ing their annual return (Form 1041), give the name and the year 
 
 address of each of said beneficiaries having a distributive 
 
 interest in said income, and shall furnish all information 
 
 called for in such returns. The fiduciary shall in all such 
 
 cases withhold and pay to the collector, as provided by law, 
 
 the normal tax of 1 per cent upon the distributive interest 
 
 of each of said beneficiaries when in excess of $3,000, the 
 
 same as if said income was actually distributed and paid. 
 
 Exemption under paragraph C, however, may be claimed by 
 
 the beneficiary or his legal representative bv filing his claim income. Para- 
 
 r i -.1 ,1 r j graph C. 
 
 for exemption with the fiduciary agent. 
 
 Claim for ex- 
 i b u " 
 
 .ART. 75. When the normal tax on undivided annual net Tax 
 
 withheld 
 
 income has been so withheld, such tax shall not be again on ""divided in- 
 
 .,,.,.,, ..... . , fc> . come not to be 
 
 withheld when such portion of the income is actually dis- again withheld 
 
 tributed and paid to said beneficiary. lisSbmed" 16 
 
 127 
 
PART 3. 
 
 RELATING TO THE INCOME TAX IMPOSED BY SECTIONS 2 AND 
 4 OF THE ACT OF OCTOBER 3, 1913, ON CORPORATIONS, JOINT- 
 STOCK COMPANIES OR ASSOCIATIONS, AND INSURANCE 
 COMPANIES. 
 
 Organiza- ART. 76. Under the provisions of sections 2 and 4 of 
 
 tions subject to . _ ., _ ... . 
 
 tax. the act of October 3, 1913, every corporation, joint-stock 
 
 company or association, and every insurance company or- 
 ganized in the United States, no matter how created or or- 
 One per cent ganized, except those specficially exempted, shall be subject 
 to pay annually an income tax of 1 per centum per annum 
 upon the entire net income arising or accruing from all 
 sources during the preceding calendar or fiscal year, as the 
 case may be. Certain exceptions as to taxability will be 
 noted specifically hereinafter. 
 
 on entire net in- 
 come. 
 
 Foreign cor- ART. 77. A similar tax shall be levied, assessed against, 
 
 porations subject . , . . & . 
 
 to the tax. and paid annually by corporations, joint-stock companies or 
 associations, and insurance companies organized, authorized, 
 or existing under the laws of any foreign country upon the 
 amount of net income accruing from business transacted and 
 capital invested within the United States during such year. 
 
 defined P rations ^ RT> ^' "Corporation" or "corporations," as used in 
 these regulations, shall be construed to include all cor- 
 porations, joint-stock companies or associations, and all in- 
 surance companies coming within the terms of the law, and 
 such organizations will hereinafter be referred to as "cor- 
 porations." 
 
 Associations, ART. 79. It is immaterial how such corporations are 
 trusts, etc., 1 sub- created or organized. The terms "joint-stock companies" 
 ject to tax. or "associations" shall include associates, real estate trusts, 
 or by whatever name known, which carry on or do business 
 in an organized capacity, whether organized under and pur- 
 suant to State laws, trust agreements, declarations of trusts, 
 or otherwise, the net income of which, if any, is distributed, 
 or distributable, among the members or share owners on 
 the basis of the capital stock which each holds, or, where 
 there is no capital stock, on the basis of the proportionate 
 share of capital which each has invested in the business or 
 property of the organization, all of which joint-stock com- 
 panies or associations shall, in their organized capacity, be 
 subject to the tax imposed by this act. 
 
 Corporations ART. 80. Every corporation not specifically enumerated 
 returns? *' aake as exempt shall make the return of annual net income re- 
 
 128 
 
quired by law whether or not it may have any income liable 
 to tax, or whether or not it shall be subordinate to or con- 
 trolled by another corporation. Mutual telephone com- h Mutuai teie- 
 panies, mutual insurance companies, and like organizations, t*aT e insurance 
 although local in character, and whose income consists large- not exempt. 
 ly from assessments, dues, and fees paid by members, do 
 not come within the class of corporations specifically enu- 
 merated as exempt. Their status under the law is not depend- 
 ent upon whether they are or are not organized for profit. 
 Not coming within the statutory exemption, all organizations 
 of this character will be required to make returns of annual 
 net income, and pay any income tax thereby shown to be due. 
 For this purpose the surplus of receipts of the year over 
 expenses will constitute the net income upon which the 
 tax will be assessed. 
 
 A railroad or other corporation which has leased its 
 properties in consideration of a rental equivalent to a cer- 
 tain rate of dividends on its outstanding capital stock and 
 the interest on the bonded indebtedness, and such rental is 
 paid by the lessee directly to the stock and bond holders, 
 should, nevertheless, make a return of annual net income 
 showing the rental so paid as having been received by the 
 corporation. 
 
 ART. 81. A railroad company operating leased or pur- .interest deduc- 
 chased lines shall include all receipts derived therefrom, mfons y operat- 
 and, if bonded indebtedness of such lines has been assumed, ^chased line? 
 such operating company may deduct the interest paid there- 
 on to an amount not exceeding one-half of the sum of its 
 interest-bearing indebtedness and its paid-up capital stock 
 outstanding at the close of the year. 
 
 ART. 82. Corporations operating leased lines should not Lessee corpo- 
 
 1 j ^i - i i r xi i ,1 rations not to 
 
 include the capital stock of the lessor corporations in their include capital 
 own statement of capital stock outstanding at the close of e d^s% 
 the year. The indebtedness of such lessor corporations corporations, 
 should not be included in the statement of the indebtedness 
 of the lessee unless the lessee has assumed the same. Each 
 leased or subsidiary company will make its own separate re- , 
 turn, accounting for therein all income which it may have 
 received by way of dividends, rentals, interest, or from any 
 other source. 
 
 ART. 83. A foreign corporation having several branch 
 
 offices in the United States should designate one of such branch offices 
 
 branches as its principal office and should also designate Ye^S?at? at 
 
 the proper officers to make the required return. cipaf office. 
 
 129 
 
ART. 84. A corporation organized during the year should 
 to e makr render B. sworn return on the prescribed form, covering that 
 portion of the year (calendar or fiscal) during which it 
 was engaged in business or had an income accruing to it. 
 
 Corporations ART. 85. Corporations going into liquidation during any 
 datio g n. mt tax period may, at the time of such liquidation, prepare a 
 
 "final return" covering the income received or accrued to 
 them during the fractional part of the year during which 
 they were engaged in business, and immediately file the 
 same with the collector of the district in which the corpora- 
 tions have their principal places of business. 
 
 Limited part- ART. 86. Limited partnerships are held to be corpora- 
 tions within the meaning of this act and these regulations, 
 and in their organized capacity are subject to the income 
 tax as corporations. 
 
 Corporations ART. 87. The act specifically enumerates and exempts 
 tax. empt r m from its provisions and requirements labor, agricultural, or 
 horticultural organizations, mutual savings banks not having 
 a capital stock represented by shares, fraternal beneficiary 
 societies, orders, or associations operating under the lodge 
 system, or for the exclusive benefit of the members of a 
 fraternity itself operating under the lodge system, and pro- 
 viding for the payment of life, sick, accident, and other 
 benefits to the members of such societies, orders, or asso- 
 ciations, and dependents of such members, domestic build- 
 ing and loan associations, cemetery companies organized and 
 operated exclusively for the mutual benefit of their mem- 
 bers, any and all corporations or associations organized and 
 operated exclusively for religious, charitable, scientific, or 
 educational purposes, no part of whose net income inures 
 to the benefit of any private stockholder or individual, busi- 
 ness leagues, chambers of commerce, or boards of trade not 
 organized for profit, no part of the net income of which 
 inures to the benefit of the private stockholder or individual, 
 and civic leagues or similar organizations not organized for 
 profit, but operated exclusively for the promotion of social 
 welfare. 
 
 Domes tic Domestic building and loan associations are among those 
 
 loan associations enumerated as exempt from the requirements of the law. 
 
 defined. Mutual- A domestic building and loan association is held to be one 
 
 organized under and pursuant to the laws of the United 
 
 States, or of a State or Territory thereof, or under the laws 
 
 applicable to Alaska or the District of Columbia. Mutuality 
 
 130 
 
in operation and in the distribution of profits and benefits is 
 essential to exemption. Therefore, in order to come within 
 the exempted class such associations must not only be 
 "Domestic," as defined, but they must be organized and 
 operated exclusively for the mutual benefit of the members ; 
 that is, all the profits and benefits provided for in the arti- 
 cles of association and by-laws must be ratably distributed 
 among all members regardless of the kind of stock held, 
 according to the amount of money they have on deposit. An 
 association issuing different classes of stock upon which 
 different rates of interest or dividends are guaranteed or 
 paid, does not come within the exempted class. 
 
 ART. 88. All corporations and all beneficiary societies 
 enumerated above shall by affidavit, or otherwise, at the their right to 
 request of the collector or Commissioner of Internal Reve- exem P tlon - 
 nue, establish their right to the exemption provided, in 
 which case it will not be sufficient to merely declare that they 
 are exempt, but they must show the character and purpose 
 of the organization, the manner of distributing the net in- 
 come, if any, or that none of the net income inures to the 
 benefit of any private stockholder or individual. In the 
 absence of such a showing, such organizations may, at any 
 time, be required to make returns of annual net income or 
 disclose their books of account to a revenue officer for exam- 
 ination in order that the status of the company may be de- 
 termined. 
 3577 Regulations 22P 2-14 Jolley ELEVEN 
 
 ART. 89. A society or association "operating under the Society or asso- 
 
 , , ,, . J . , -1 ciation subject 
 
 lodge system is considered to be one organized under a to exemption de- 
 charter, with properly appointed or elected officers, with fined ' 
 an adopted ritual or ceremonial, holding meetings at stated 
 intervals, and supported by fees, dues, or assessments. 
 
 ART. 90. Cemetery companies organized and operated cemetery com- 
 exclusively for the mutual benefit of their members are ^^uSai^ene- 
 exempt. The provisions of the law clearly indicate that fit of their mem- 
 companies which operate cemeteries for profit are liable to 
 the tax. The status of cemetery associations under the law 
 will, therefore, depend upon the character and purpose of 
 the organization and what disposition is made of the income. 
 
 ART. 91. Any corporation, concerning whose status under Corporations 
 
 the law there is any doubt, or which does not clearly come h 7xemp a tion 15- 
 
 within one or another of the classes of those specifically in , doubt m u s * 
 
 1 , 1 1 /-I / , 1 , ' r 1 make return. 
 
 enumerated as exempt, should file a return (in blank if de- 
 
sired) and attach thereto a statement setting out fully the 
 nature and purpose of the organization, the source of its 
 income, and what disposition is made of it, and particularly 
 of any surplus. 
 
 Coop erative ART. 92. Cooperative dairies not issuing stock and allow- 
 
 dairies not issu- . !- i < -n r i i 
 
 ing stock and ing patrons dividends based on butter fat in milk furnished 
 dWS eTdT are not liable. In such case the "dividends" are the pur- 
 exempt. chase price of the raw material furnished. 
 
 ART - 93. The income derived from any public utility or 
 ides is not tax- from the exercise of any essential governmental function, 
 which income accrues to any State, Territory, the District 
 of Columbia, or any political subdivision of a State, 
 Territory, or the District of Columbia, and any in- 
 come accruing to the government of the Philip- 
 pine Islands, or to Porto Rico, shall not be subject to 
 the tax imposed by this act. In cases wherein any State, 
 Territory, or the District of Columbia, or any political sub- 
 division of a State, or Territory, shall have, prior to the pas- 
 sage of this act, contracted in good faith with any person 
 or corporation to acquire, construct, operate, or maintain a 
 public utility, no income tax pursuant to this act shall be 
 levied upon the income derived from the operation of such 
 public utility, so far as the assessment and payment of such 
 tax will impose a loss or burden upon such State, Territory, 
 Persons or cor- District of Columbia, or political subdivision. But the per- 
 
 porations not , i 1 r i ri 
 
 exempt. son or corporation is not relieved irom the payment ot the 
 
 tax upon that portion of the income accruing to him, or it, 
 under such contract. 
 
 ART - 94. Ordinary copartnerships are not, as such, sub- 
 corporations. ject to the tax imposed by this act, but the individual mem- 
 bers of any such partnership are liable for income tax only 
 in their individual capacity on their respective shares of the 
 earnings of such partnership, whether such earnings be dis- 
 tributed or not. 
 
 ART - 95 - Ful1 amount of stock, as represented by the par 
 capital stock. value of the shares issued, is to be regarded as the paid-up 
 capital stock, except when such stock is assessable on ac- 
 count of deferred payments, or payable in installments, in 
 which case the amount actually paid on such shares will 
 constitute the actual paid-up capital stock of the corpora- 
 tion. 
 
 hoS r< d SS inc ined! ART - 96. The following definitions and rules are given 
 for determining the gross income of various classes of cor- 
 porations : 
 
 132 
 
Gross income of banks and other financial institutions t G ? oss ' lncom * 
 
 r . , .. of banks and 
 
 consists of the total revenue derived from the operation of other financial 
 the business, including income, gains, or profits from all mstltutlons - 
 other sources, as shown by the entries on the books of ac- 
 count, within the calendar or fiscal year for which the re- 
 turn is made. 
 
 ART. 97. Gross income of insurance companies consists 
 of the total revenue derived from the operation of the busi- 
 ness, including income, gains, or profits from all other 
 sources, as shown by the entries on the books of account 
 within the calendar or fiscal year for which the return is 
 made, except as modified by the express exemptions of the 
 articles which apply to mutual fire, mutual marine, and life 
 insurance companies. 
 
 Gross income 
 
 a n 
 
 ART. 98. Mutual fire insurance companies, which' re- Gross income 
 
 quire their members to make premium deposits to provide i 
 for losses and expenses, shall not return as gross income any P anies - 
 portion of the premium deposits returned to their policy- 
 holders, but shall return as taxable income all income re- 
 ceived by them from all other sources plus such portions of 
 the premium deposits as are retained by the companies for 
 purposes other than the payment of losses and expenses and 
 reinsurance reserves. 
 
 of mutual fire 
 insurance com- 
 
 ART. 99. Mutual marine insurance companies may in- . Mutual 
 elude in their deductions from gross income amounts repaid 
 to policyholders on account of premiums previously paid 
 by them and interest paid upon such amounts between the 
 ascertainment thereof and the payment thereof, such 
 amounts and interest having been included in gross income. 
 
 ART. 100. Life insurance companies are authorized to 
 omit from gross income such portion of any actual premium ibi, when 
 received from any individual policyholder as shall have been 
 paid back or credited to the policyholder or treated as an 
 abatement of his premium. In so far as "deferred divi- 
 dends" payable at a stated period represent "a portion of any 
 actual premium received," such deferred dividends may be 
 included in the amounts to be omitted from gross income 
 for the year in which they were actually paid back, credited 
 to the policyholder or applied as an abatement of premium. 
 In the case of dividends credited or apportioned annually 
 to the policyholder, only the aggregate amount so actually 
 credited or apportioned during the premium-paying period, 
 and not any accretions thereto, can be excluded from gross 
 
 133 
 
income. In the case of whole-life or five-year distribution 
 policies, deferred dividends may be excluded from gross in- 
 come to the extent that they are paid back, or credited to> 
 the insured, or used as an abatement of his annual pre- 
 miums. 
 
 Gross 
 
 c 
 
 elude what. 
 
 ART. 101. Gross income of insurance companies, as de- 
 - fined above, will include net premium income as reported 
 to t j ie State insurance departments, except the foregoing 
 items specifically exempted in the act, and, in the case of 
 life insurance companies, surrender values applied in any 
 manner, consideration for supplementary contracts involving 
 and not involving life contingencies, and all other income, 
 gains, or profit as shown by the books of account. 
 
 Consideration 
 
 for supplemen- 
 
 tary contracts, 
 
 ART. 102. Applied surrender values and consideration for 
 
 , ....... . . 
 
 supplementary contracts not involving lite contingencies in- 
 cluded in income will, of course, be deducted as payments 
 under policy contracts, but for convenience in verifying the 
 returns, these items should appear in the return in both 
 gross income and deductions. 
 
 company 
 
 ^3. ^ insurance companies should include and 
 attach to their returns a supplementary statement showing, 
 for life companies, the aggregate of items "of such portion 
 of any actual premium received from any individual policy- 
 holder as shall have been paid back or credited to such in- 
 dividual policyholder, or treated as an abatement of pre- 
 mium of such individual policyholder within such year;" 
 in the case of mutual fire insurance companies a statement 
 showing "any portion of the premium deposits returned to 
 their policyholders ;" and in the case of mutual marine com- 
 panies "amounts repaid to policyholders on account of pre- 
 miums previously paid by them, and interest paid upon such 
 amounts between the ascertainment thereof and the pay- 
 ment thereof," which are, or may be, omitted from gross in- 
 come. (For authorized deductions, on account of losses, 
 etc., see Arts. 113 and 147.) 
 
 Gross income 
 
 of manuiactur- 
 
 ing companies, 
 
 ART. 104. Gross income of manufacturing 1 companies 
 
 , . 
 
 shall consist of the total sales of manufactured goods dur- 
 ing the year covered by the return, increased or decreased 
 by the gain or loss as shown by the inventories of finished 
 and unfinished products, raw material, etc., at the beginning 
 and end of the year. To this amount should be added the 
 income, gains, or profits from all other sources as shown by 
 the books of account. 
 
 134 
 
ART. 105. Gross income of mercantile companies shall .Gross income 
 
 - 11 , , ,. , - . * . ofmerca ntile 
 
 include the total merchandise sales during the year, in- corporations, 
 creased or decreased by the gain or loss as shown by the 
 inventories of merchandise at the beginning and end of the 
 year for which the return is made; to this amount should 
 be added the income, gains, or profits derived from all other 
 sources as shown by the books of account. 
 
 ART. 106. Gross income of miscellaneous corporations 
 consists of the total revenue derived from the operation 
 and management of the business and property of the cor- 
 poration making the return, together with all amounts of 
 income, including the income, gains, or profits from all other 
 sources as shown by the books of account. 
 
 Gross income 
 " 16 
 
 ART. 107. It will be noted from these definitions that the Definition of 
 gross income embraces not only the operating revenues, but gr l 
 also income, gains, or profits from all other sources, such 
 as rentals, royalties, interest, and dividends from stock 
 owned in other corporations, and appreciation in values of 
 assets, if taken upon on the books of account as gain; also 
 profits made from the sale of assets, investments, etc. 
 
 ART. 108. For the purpose of determining the income re- , income derived 
 
 , r i from sale of cap- 
 
 sultmg from the sale of capital assets and the amount to be itai assets, 
 accounted for as income under this act, there shall be in- 
 cluded any and all profit resulting from such sale and which 
 may be apportioned to the period during which the cor- 
 poration tax law (sec. 38, act of Aug. 5, 1909) was in force 
 and effect, which was not returned as income during that 
 period. 
 
 ART. 109. In ascertaining net income derived from the A s c e rtaining 
 sale of capital assets, if such assets were acquired subse- "he sale? cap? 
 quent to January 1, 1909, the difference between the selling tal ass ets. 
 price and the buying price shall constitute an item to be 
 added to or subtracted from gross income according to 
 whether the selling price was greater or less than the buying 
 price. If the capital assets were acquired prior to January 
 1, 1909, the amount of profit or loss representing the differ- 
 ence between the selling and buying price is to be prorated 
 to determine the proportion of the gain or loss arising sub- 
 sequent to January 1, 1909, and the proportionate part be- 
 longing to the years subsequent to January 1, 1909, shall be 
 added to or deducted from the gross income for the year in 
 which the sale was made. 
 
 135 
 
'from ^he ART - ^^' For the P ur P ose of determining the profit or 
 sale of such loss arising from the sale of such assets, there shall be 
 added to the price actually realized from the sale any 
 amount which has heretofore been set aside and deducted 
 from gross income by way of depreciation since January l r 
 1909, which has not been paid out in making good such de- 
 preciation on the property sold. 
 
 book a vafue s o? ART - H 1 - In the case of changes in book values of capi- 
 assets. tal assets resulting from a reappraisal of property, the con- 
 
 sequent gains or losses shall be computed for the return in 
 the manner prescribed above in the case of the sale of capital 
 assets. 
 
 ^ n cases wherein there is an annual adjustment of book 
 va ^ ues ^ securities, real estate and like assets, and the in- 
 creases and decreases in values, thus indicated, are taken 
 up on the books and reflected in the profit and loss account, 
 such readjusted values will be taken into account in making 
 the return of annual net income and no prorating will be re- 
 quired. If such adjustment had been made annually prior 
 to March 1, 1913, the book value of the assets at that date 
 will be taken as the basis for determining gain or loss re- 
 sulting from subsequent sale, maturity, or adjustment. The 
 adjustment referred to will comprehend assets which have 
 increased in value as well as those which have decreased. 
 
 rattons re are r en- ART. 112. Where a corporation is engaged in carrying 
 f*fn d onl n cia?sof on more t ^ ian ne c ^ ass of business, gross income derived 
 bulriness! c from the different classes of business shall be ascertained ac- 
 
 cording to the definitions above, and which are applicable 
 thereto. 
 
 how aJceSSnSdl ART. H3. The net income shall be ascertained by de- 
 ducting from the gross amount of the income of such cor- 
 poration received within the year from all sources : 
 
 Firs t- A1 1 the ordinary and necessary expenses paid 
 within the year in the maintenance and operation of its 
 business and properties, including rentals or other payments 
 required to be made as a condition to the continued use or 
 possession of property. 
 
 t s h| ta year d Second. All losses actually sustained within the year 
 and not compensated by insurance or otherwise, including 
 a reasonable allowance for depreciation by use, wear and 
 tear of property, if any, and in the case of mines, a rea- 
 Depreciation. sonable allowance for depletion of ores and all natural de- 
 posits, not to exceed 5 per centum of the gross value at the 
 mine of the output for the year for which the computation 
 
 136 
 
is made ; and in the case of insurance companies, the net ad- 
 dition, if any, required by law to be made within the year 
 to reserve funds, and the sums other than dividends paid 
 within the year on policy and annuity contracts, except as 
 provided in the cases of mutual fire, mutual marine, and 
 life insurance companies. 
 
 Third. The amount of interest accrued and paid within 
 the year on its indebtedness to an amount of such indebted- 
 ness not exceeding one-half of the sum of its interest- 
 bearing indebtedness and its paid-up capital stock out- 
 standing at the close of tfce year, or if no capital stock, on 
 the amount of its indebtedness not exceeding the amount of 
 capital employed in the business at the close of the year: 
 Provided, That in case of indebtedness wholly secured by 
 collateral the subject of sale in ordinary business of such 
 corporation, joint-stock company, or association, the total 
 interest secured and paid by such company, corporation, or 
 association within the year on any such indebtedness may 
 be deducted as a part of its expense of doing business: 
 Provided further, That in the case of bonds or other in- 
 debtedness, which have been issued with a guaranty that 
 the interest payable thereon shall be free from taxation, no 
 deduction for the payment of the tax herein imposed shall 
 be allowed; and in the case of a bank, banking association, 
 loan, or trust company, interest paid within the year on 
 deposits or on moneys received for investment and secured 
 by interest-bearing certificates of indebtedness issued by 
 such bank, banking association, loan, or trust company. 
 
 Interest 
 accrued and paid 
 within the year. 
 
 Interest on in- 
 debtedness se- 
 cured by collat- 
 eral. 
 
 Tax paid on 
 guaranteed 
 bonds not de- 
 ductible. 
 
 Fourth. All sums paid within the year for taxes imposed Taxes paid 
 under the authority of the United States, or any State or " 
 Territory thereof, or imposed by the government of any 
 foreign country. 
 
 ART. 114. Expenses of operation and maintenance shall General ex- 
 include all expenditures for material, labor, fuel, and other P enses - 
 items entering into the cost of the goods sold or inventoried 
 at the end of the year, and all other expenses incurred in 
 the operation of the business except such as are required by 
 the act to be segregated in the return. 
 
 ART. 115. The cost of erecting permanent buildings on 
 ground leased by a company is a proper deduction as a 
 rental charge, provided such buildings are left on the ground 
 at the expiration of the lease as a part of the rental payment. 
 In such case the cost will be prorated according to the num- 
 ber of years constituting the term of the lease and the an- 
 nual deduction will be made accordingly. 
 
 137 
 
 Cost of build- 
 ings on leased 
 grounds. 
 
Expense, for- ART. 116. General expenses, such as coal, ship stores, 
 
 eign steamship ..... ... r . 1111 i 
 
 companies. etc., of foreign steamship companies, shall be prorated as 
 
 provided in the act for interest deductions in the case of 
 foreign corporations. 
 
 n si aid A RT - 117. Commissions allowed salesmen, paid in stock, 
 in s tok n may be deducted as expense if so charged on books at the 
 actual value of such stock. 
 
 betterments. 
 
 Additions and ART. 118. Amounts expended in additions and better- 
 ments which constitute an increase in capital investment are 
 not a proper deduction. 
 
 Compensation ART. 119. Amounts paid as compensation or additional 
 
 based on stock- . . . 
 
 holding not de- compensation to officers or employees, which amounts are 
 based upon the stockholdings of such officers or employees, 
 are held to be dividends, and although paid in lieu of sal- 
 aries or wages, are not allowable deductions from gross in- 
 come, for the reason that dividends are not deductible. 
 
 ons if or 8 ' ratal- ART. 120. Amounts paid for pensions to retired em- 
 des^not deduct- ployees, or to their families, or others dependent upon them, 
 or on account of injuries received by employees, are proper 
 deductions as "ordinary and necessary expenses"; gifts or 
 gratuities to employees in the service of a corporation are 
 not properly deductible in ascertaining net income. 
 
 which n are 1 <?e- ART. 121. Donations made for purposes connected with 
 ductibie. ' the operation of the property when limited to charitable in- 
 
 stitutions, hospitals, or educational institutions, conducted 
 for the benefit of its employees, or their dependents, shall 
 be a proper deduction for ordinary and necessary expenses. 
 
 for ART. 122. Funds set aside by a corporation for insuring 
 its own property are not a proper deduction, but any loss 
 actually sustained and charged to such fund may be de- 
 ducted. 
 
 ^Materials and ART. 123. In ascertaining expenses proper to be included 
 in the deductions to be made under the item of "Expenses," 
 corporations carrying materials and supplies on hand for 
 use should include in such expenses the charges for ma- 
 terials and supplies only to the amount that the same are 
 actually disbursed and used in operation and maintenance 
 during the year for which the return is made. 
 
 138 
 
ART. 124. The deduction for losses must be losses ac- Losses sus- 
 
 ,, , , . , , tamed during 
 
 tually sustained during the year and not compensated .by the year, 
 insurance or otherwise. It must be based upon the differ- 
 ence between the cost value and salvage value of property 
 or assets, including in the latter value such amount, if any, 
 as has, in the current or previous years, been set aside and 
 deducted from gross income by way of depreciation, as 
 elsewhere defined, and has not been paid out in making good 
 such depreciation. 
 
 ART. 125. Bad debts, if so charged off the company's ch a r g d ed d ff. bts 
 books, during the year, are proper deductions. But such 
 debts, if subsequently collected, must be treated as income. 
 
 ART. 126. Reserves to take care of anticipated or prob- . ? ese . es n t 
 
 111 1 j . c deductible. 
 
 able losses are not a proper deduction from gross income. 
 
 ART. 127. Loss due to voluntary removal of buildings, r L* v d & ^ e * 
 etc., incident to improvements is either a proper charge to buildings, 
 the cost of new additions or to depreciation already pro- 
 vided, as the facts may indicate, but in no case is it a proper 
 deduction in determining net income, except as it may be re- 
 flected in the reasonable amount allowable as a deduction for 
 depreciation of the new building. Any loss claimed because 
 of the voluntary removal of a building is presumed to have 
 been covered by previous depreciation charges; otherwise 
 the amount of such loss will constitute a part of the cost of 
 the new building. 
 
 ART. 128. All losses claimed arising from sale of capital s jf ss ^ s 
 assets should be 'arrived at in the manner prescribed in arti- assets, 
 cle 109, defining gains arising from sale of capital assets. 
 
 ART. 129. The deduction for depreciation should be the D^p reciation 
 estimated amount of the loss, accrued during the year to 
 which the return relates, in the value of the property in 
 respect of which such deduction is claimed, that arises from 
 exhaustion, wear and tear, or obsolescence out of the uses 
 to which the property is put, and which loss has not been 
 made good by payments for ordinary maintenance and re- 
 pairs deducted under the heading of expenses of mainte- Depreciation, 
 nance and operation. This estimate should be formed upon how d 
 the assumed life of the property, its cost, and its use. Ex- 
 penses paid in any one year in making good exhaustion, 
 wear and tear, or obsolescence in respect of which any de- 
 duction for depreciation is claimed must not be included in 
 the deduction for expense of maintenance and operation of 
 
 139 
 
the property, but must be made out of accumulated allow- 
 ances, deducted for depreciation in current and previous 
 years. 
 
 de?uctFbie, da how ART - 13 - The depreciation allowance, to be deductible, 
 treated. must be, as nearly as possible, the measure of the loss due 
 
 to wear and tear, exhaustion, and obsolescence, and should 
 be so entered on the books as to constitute a liability against 
 the assets of the company, and must be reflected in the an- 
 nual balance sheet of the company. The annual allowance 
 deductible on this account should be such an amount as that 
 the aggregate of the annual allowances deducted during the 
 life of the property, with respect to which it is claimed, will 
 not, when the property is worn out, exhausted, or obsolete, 
 exceed its original cost. 
 
 P a?r n s? idellt * 1 re " ART - 131 - Incidental repairs which neither add to the 
 value of the property nor appreciably prolong its life, but 
 keep it in an operating condition, may be deducted as ex- 
 penses. 
 
 Depreciation ART. 132. Depreciation set up on the books and deducted 
 from gross income cannot be used for any purpose other 
 than making good the loss sustained by reason of the wear 
 and tear, exhaustion, or obsolescence of the property with 
 respect to which it was claimed. If it develops that an 
 amount has been reserved or deducted in excess of the loss 
 by depreciation, the excess shall be restored to income and 
 so accounted for. 
 
 Diversion of ART. 133. If any portion of the depreciation set up is 
 depredate re- Diverted to any purpose other than making good the loss 
 sustained by reason of depreciation, the income account for 
 the year in which such diversion takes place must be cor- 
 respondingly increased. 
 
 Shrinkage in ART. 134. Depreciation in book values of capital assets 
 shall be treated in the return in the manner prescribed in 
 the case of loss from the sale of capital assets (art. 109), 
 but amounts arbitrarily charged off will not be allowed as 
 deductions except so far as they represent an actual shrink- 
 age in values which may be determined to have taken place 
 during the year for which the return is made. 
 
 ART. 135. Where a corporation holds bonds which were 
 purchased at a rate above par and said corporation shall pro- 
 portionately reduce the value of those bonds on its books 
 each year so that the book value shall be the redemption 
 value of the bonds when such bonds become due and payable, 
 the return of annual net income of the corporation holding 
 
 140 
 
such bonds may show the depreciation on account of amor- 
 tization of such bonds. The requirement is, however, that 
 the amount carried to the amortization account each year 
 shall be equitably proportioned with respect to the difference 
 between the purchase price and the maturing value and the 
 number of years to elapse until the bonds become due and 
 payable. With respect to bond issues where such bonds are 
 disposed of for a price less than par and are redeemable at 
 par, it is also held that because of the fact that such bonds 
 must be redeemed at their face value, the loss sustained by 
 reason of their sale for less than their face value may be 
 prorated by the issuing corporation in accordance with the 
 life of the bond. 
 
 Am o r tizatioH 
 of bonds. 
 
 Loss to be pro- 
 rated. 
 
 ART. 136. "Good will" represents the value attached to 
 a business over and above the value of the physical prop- 
 erty, and is such an entirely intangible asset that no claim 
 for depreciation in connection therewith can be allowed. 
 
 Good will. 
 
 ART. 137. An allowance for depreciation of patents will 
 be made on the following basis : 
 
 D e p reciatioa 
 on patents. 
 
 The deduction claimed for exhaustion of the capital 
 assets as represented by patents to be made in the return of 
 annual net income of a corporation for any given year shall 
 be one-seventeenth of the actual cost of such patents reduced 
 to a cash basis. Where the patent has been secured from 
 the Government by a corporation itself, its cost would be 
 represented by the various Government fees, cost of draw- 
 ings, experimental models, attorneys' fees, etc. Where the 
 patent has been purchased by the corporation for a cash con- 
 sideration, the amount would represent the cost. Where the 
 corporation has purchased a patent and made payment there- 
 for in stocks or other securities, the actual cash value of such 
 stocks or other securites at the time of the purchase will 
 represent the cost of the patent to the corporation. 
 
 H o w deter- 
 mined. 
 
 ART. 138. With respect to the depreciation of patents, Deduction 
 one-seventeenth of the cost is allowable as a proper deduc- S n ceof 
 tion each year until the cost of the patent has been returned 
 to the corporation. Where the value of a patent has dis- 
 appeared through obsolescence or any other cause and the 
 fact has been established that the patent is valueless, the un- 
 returned cash investment remaining in the patent may be 
 claimed as a total loss and be deducted from gross income in 
 
 141 
 
the return of annual net income for the year during which 
 the facts as to obsolescence or loss shall be established, 
 such unreturned cash value to be fixed in accordance with 
 the proportion that the number of years which the patent 
 still has to run bears to the full patent period of 17 years. 
 
 D e p reciation 
 of timber land. 
 
 ART. 139. Corporations owning tracts of timber lands 
 and removing therefrom and selling, or otherwise disposing 
 of the timber will be permitted to deduct from their gross in- 
 come on account of depreciation or depletion an amount rep- 
 resenting the original cost of such timber, plus any carrying 
 charges that may have been capitalized or not deducted from 
 income. The purpose of the depreciation or depletion de- 
 duction is to secure to the corporation, when the timber has 
 been exhausted, an aggregate amount which, plus the salvage 
 value of the land, will equal the capital actually invested in 
 such timber and land. 
 
 Deductions to 
 cease, when. 
 
 ART. 140. When an amount sufficient to return this capi- 
 tal has been secured through annual depreciation deduc- 
 tions no further deduction on this account shall be allowed. 
 For the purpose of increasing the deduction on this account 
 no arbitrary increase in values shall be made, unless such 
 increase in value shall be returned as income for the year 
 in which the increase in value was taken up on the books. 
 
 D e p reciation 
 of natural depos- 
 its. 
 
 ART. 141. The depreciation of "coal, iron, oil, gas and all 
 other natural deposits must be based upon the actual cost of 
 the properties containing such deposits. In no case shall 
 the annual deduction on this account exceed 5 per cent of 
 the gross value at the mine (well, etc.) of the output for the 
 year for which the computation is made. 
 
 Definition of 
 'gross value" at 
 the mine. 
 
 ART. 142. The term "gross value at the mine," as used in 
 paragraphs B and G of section 2 of the act of October 3, 
 1913, prescribing a limit to the amount which may be de- 
 ducted in the return of individuals and corporations as de- 
 preciation in the case of mines, is held to mean the market 
 value of ore, coal, crude oil, and gas at the mine or well, 
 where such value is established by actual sales at the mine or 
 well ; and in case the market value of the product of the mine 
 or well is established at some place other than at the mine 
 or well, or on the basis of the bullion or metallic value of 
 the ore, then the gross value at the mine is held to be the 
 value of the ore, coal, oil, or gas sold, or of the metal pro- 
 duced, less transportation, reduction, and smelting charges. 
 
 142 
 
If the rate of 5 per cent per annum shall return to the t i ^ at t of ^re- 
 corporation its capital investment prior to the exhaustion duced, when, 
 of the deposits, the rate on which the annual deduction for 
 depletion of deposits is based must be lowered in accordance 
 with the estimated number of years it will take to exhaust 
 the estimated reserves. 
 
 In case the reserves shall be in excess of the estimates, no Deduction to 
 further deduction on account of depletion shall be made cease> when - 
 where the capital investment has been returned to the cor- 
 poration. 
 
 ART. 143. In addition to the deduction to measure the Depreciation 
 loss due to depletion, the corporation will be allowed the of plant ' etc< 
 usual depreciation of its machinery, equipment, etc., such 
 depreciation to be determined on the basis of the cost and 
 estimated life of the property with respect to which the 
 depreciation is claimed. 
 
 ART. 144. Corporations leasing oil or gas territory shall Corporations 
 base their depletion deduction upon the cost of the lease, and g e a a s s . ing 
 not upon the estimated value, in place, of the oil or gas. 
 
 ART. 145. Corporations operating mines (including oil Corporations 
 or gas wells) upon a royalty basis only can not claim depre- P eratm g mines, 
 ciation because of the exhaustion of the deposits. 
 
 ART. 146. Unearned increment will not be considered 
 in fixing the value on which depreciation shall be based. 
 
 Unearned in- 
 crement. 
 
 ART. 147. (a) Under item 5 (a) of the return form, the , Deduction of 
 
 , , j'j_.f 11 i 11 losses, deprecia- 
 
 msurance company may take credit for all losses actually tion, payments 
 sustained during the year and not compensated by insurance ? r " ct sby y insur- 
 er otherwise, including losses resulting from the sale or ance companies, 
 maturity of securities or other assets, as well as decreases by 
 adjustment of book values of securities, in so far as such 
 decreases represent actual declines in values which have 
 taken place during the year for which the return is made ; 
 also losses from agency balances, or other accounts, charged 
 off as worthless ; losses by defalcation ; premium notes 
 voided by lapse, when such notes shall have been included 
 in gross income. This item will not, however, include pay- 
 ments on policy contracts. 
 
 (>) In this item may be deducted actual losses sustained Losses by 
 within the year by reason of the depreciation of property, value n of a ^op" 
 which shall have been so entered on the books of the com- ert y- 
 pany as to constitute a liability against its assets. An arbi- 
 trary depreciation deduction claimed in the return, but not 
 evidenced by book entry, can not be allowed. 
 
 143 
 
tracts 1 paid 7 c n " ( c ) In this * tem cred ^ wil1 J 36 taken for a11 death, dis- 
 ability, or other policy claims, including fire, accident, and 
 liability losses, matured endowments, annuities, payments 
 on installment policies, surrender values, and all claims 
 actually paid under the terms of policy contracts. Salvage 
 need not be included in gross income if deducted in ascer- 
 taining the net amount paid for losses under policy con- 
 Losses in- tracts. Reserves covering liabilities for losses incurred, 
 pai r d e not a dedtIS- reported, resisted, adjusted or unadjusted but not paid, 
 ible - can not be deducted from gross income under this or any 
 
 other item of the return. 
 
 , 
 
 W The reserve funds of insurance companies to be 
 by law, how de- considered in computing the deductible net addition to re- 
 serve funds are held to include only the reinsurance reserve 
 and the reserve for supplementary contracts required by law 
 in the case of life insurance companies, the unearned pre- 
 mium reserves required by law in the case of fire, marine, 
 accident liability, and other insurance companies, and only 
 such other reserves as are specifically required by the 
 statutes of a State within which the company making the 
 return is doing business. The reserves used in computing 
 the net addition must not include the reserve on any policies 
 the premiums on which have not been accounted for in 
 gross income. For the purpose of this deduction, the net 
 addition is the excess of the reserve at the end of the year 
 over that at the beginning of the year and may be based 
 upon the highest authorized reserve required by any State in 
 which the company making the return does business. 
 
 ^ n ^ e case ^ assessmen t insurance companies, the actual 
 deposits of sums with the State or Territorial officers pur- 
 suant to law, as additions to guaranty or reserve funds, 
 shall be treated as payments required by law to reserve 
 funds. 
 
 Mutual marine insurance companies will deduct under 
 item 5 (<?) amounts repaid to policyholders on account of 
 premiums previously paid by them and interest paid upon 
 such amounts between the ascertainment thereof and the 
 payment thereof. 
 
 ART * 148 ' The amount * interest accrued and paid 
 nterest de- within the year by a corporation on an amount of bonded 
 
 
 or other indebtedness not in excess of one-half of the sum 
 of the interest-bearing indebtedness and the paid-up capital 
 
 144 
 
stock outstanding at the close of the year, or, if no capital 
 stock, on the amount of interest-bearing indebtedness not 
 exceeding the amount of capital employed in the business 
 at the close of the year, constitutes an allowable deduction ; 
 that is, the maximum principal, upon which interest for the 
 purpose of this deduction, can be computed must not exceed, 
 in the one case, one-half of the sum of the interest-bearing 
 indebtedness and the capital stock outstanding at the close 
 of the year, or, in the other case, must not exceed the 
 amount of capital employed in the business at the close of 
 the year. The interest to be deductible must have been 
 computed on the proper principal at the contract rate and 
 must have been actually paid within the year. 
 
 Interest paid pursuant to contract on an indebtedness interest paid 
 secured by mortgage or real estate occupied and used by f^ 6111 * 1 deduct ' 
 a corporation, in which real estate the corporation has no 
 equity or to which it is not taking title is an allowable deduc- 
 tion from gross income as a rental charge, payment of 
 which is required to be made as a condition to the con- 
 tinued use and possession of the property. If, however, the interest on 
 corporation has an equity in or is purchasing for its own mortgage on real 
 
 J , . , estate in which 
 
 use the real estate upon which such mortgage is a prior corporation has 
 lien, the indebtedness will be held to be indebtedness of gSte."** de ~ 
 the corporation within the meaning of the law and the 
 interest paid on such mortgage will be deductible only to 
 the extent that it, with interest on other obligations of the 
 corporation, is within the limit fixed by the act. 
 
 ART. 149. In the case of banks and banking associations, Banks and 
 loan or trust companies, interest paid within the year on {fojj* associ a- 
 deposits, or on moneys received for investment and secured 
 by interest-bearing certificates of indebtedness issued by 
 such bank, banking association, loan or trust company, may 
 be allowably deducted from the gross income of such cor- 
 porations. 
 
 ART. 150. Interest paid on indebtedness, wholly secured interest paid 
 by collateral the subject of sale in ordinary business of such n indebtedness, 
 corporations, is also deductible to the full amount of such 
 interest paid. This contemplates that the entire interest 
 received on the collateral securing such indebtedness shall 
 be included in the gross income returned. 
 
 ART. 151. Interest on bonded or other indebtedness Different rates 
 bearing different rates of interest may be deducted from of interest, 
 gross income during the year, provided the aggregate 
 
 <%> 
 
 145 
 
amount of such indebtedness on which the interest is paid 
 does not exceed the limit prescribed by law, and in case the 
 indebtedness is in excess of the amount on which interest 
 may be legally deducted the indebtedness bearing the highest 
 rate may be first considered in computing the interest de- 
 duction and the balance, if any, will be computed upon 
 the indebtedness bearing the next lower rate actually paid, 
 and so on until interest on the maximum principal allowed 
 has been computed. 
 
 Taxes deduct- ART. 152. All sums paid within the year for taxes im- 
 posed under the authority of the United States or of any 
 State or Territory thereof, or imposed by the government 
 of any foreign country, are deductible from gross income. 
 
 Taxes not de- 
 ductibie. 
 
 ART. 153. Taxes paid for local benefits are not deduct- 
 Taxes paid by a corporation pursuant to a contract 
 guaranteeing that the interest payable on its bonds or other 
 indebtedness shall be free from taxation are not deductible. 
 
 Tax on capital ART. 154. Banks paying taxes assessed against their 
 stock of bank*, stockholders because of their ownership of the shares of 
 stock issued by such banks can not deduct the amount of 
 taxes so paid in making their return for the income tax 
 imposed by this act unless specially authorized to do so 
 by the laws of the State in which they do business. The 
 shares of stock are the property of the stockholders, and 
 such holders are primarily liable for the tax. 
 
 import duties.' ART. 155. Import duties or taxes are not deductible 
 under the item of taxes paid during the year, but should be 
 included in arriving at the cost of goods under item No. 4 
 (expenses). 
 
 Reserves for 
 
 ART. 156. Reserves for taxes can not be allowed, as the 
 law specifically provides that only such sums as are paid 
 within the year for taxes shall be deducted. 
 
 Foreign corpo- ART. 157. Foreign corporations shall be subject to the 
 toTax 8 subject normal tax of 1 per cent computed upon the net income 
 received by or accruing to such corporations from busi- 
 ness transacted and capital invested in this country. For 
 the purpose of the tax the net income of such foreign 
 organizations shall be ascertained by deducting from the 
 gross income arising, received, or accruing from business 
 done and capital invested in this country the deductions 
 enumerated in the act, which deductions shall be limited 
 
 Deductions to expenditures or charges actually incurred in the main- 
 con fined to ex- , *? , , . J 
 
 ncnses of busi- tenance and operation 01 the business transacted and capi- 
 r e mted n stites he tal invested in the United States or, as to certain charges, 
 
 146 
 
such proportion of the aggregate charges as the gross in- 
 come from business done and capital invested in the United 
 States bears to the aggregate income within and without 
 the United States. In other words, the deductions from 
 the gross income of a foreign corporation doing business in 
 this country should, as nearly as possible, represent the 
 actual expenses and authorized charges incident to the busi- 
 ness done and capital invested in this country and must not 
 comprehend, either directly or indirectly, any expenditures 
 or charges incurred in the transaction of business or the 
 investment of capital without the United States. 
 
 ART. 158. It is immaterial whether the deductions except HOW deduc- 
 for taxes and losses are evidenced by actual disbursements *^| nc |5 a11 be 
 in cash, or whether evidenced in such other way as to be 
 properly acknowledged by the corporate officers and so 
 entered on the books of the corporation as to constitute a 
 liability against the assets of the corporation making the 
 return. Deductions for taxes, however, should be the aggre- 
 gate of the amounts actually paid, as shown on the cash 
 book of the corporation. Deductions for losses should be 
 confined to losses actually sustained and charged off dur- 
 ing the year and not compensated by insurance or other- 
 wise. Except as the same may be modified by the pro- 
 visions of the act, limiting certain deductions and author- 
 izing others, the net income as returned for the purpose of 
 the tax should be the same as that shown by the books 
 or the annual balance sheet. 
 
 ART. 159. The tax imposed upon the income of cor- . Tax on net 
 porations, whether domestic or foreign, shall be computed StSSs for r fhe 
 upon the net income, ascertained in the manner hereinbefore year 1913 - 
 indicated, except that for the year ending December 31, 
 1913, the income tax will be imposed upon the net income 
 accrued from March 1 to December 31, both dates inclu- 
 sive, and such amount of net income is ascertained by tak- 
 ing five-sixths of the entire net income for said calendar 
 year. 
 
 ART. 160. The special excise tax on corporations pro- Special excise 
 vided for in the act of August 5, 1909, is reaffirmed and Jf x ns on cor P ra ' 
 made operative and effective as to the period from January 
 1 to February 28, 1913, both dates inclusive, which said 
 tax shall be computed upon one-sixth of the entire net 
 income of said corporations for said year, and the net 
 income shall be ascertained in accordance with the pro- 
 visions of the income-tax law. 
 
 147 
 
Return and p or the year 1913 it shall be necessary to make but one 
 
 assessment. t <f , ., J , . , 
 
 return and assessment for all taxes imposed in the income- 
 tax law upon corporations, either by way of income or 
 excise, which return and assessment shall be made at the 
 times and in the mariner provided in section 2 of the act 
 of October 3, 1913. 
 
 NO specific ex- Under the present law, no specific exemption is allow - 
 
 abie'aTa deduc- a ^ e > as was tne case un der the corporation-tax law; hence 
 
 tion. the assessment will be based upon the entire net income 
 
 of the corporation arising or accruing to it from all sources 
 
 during the entire year for which the return is made. 
 
 inventories. ART. 161. In order that certain classes of corporations 
 
 may arrive at their correct income, it is necessary that an 
 inventory, or its equivalent, of materials, supplies, and mer- 
 chandise on hand for use or sale at the close of each calen- 
 dar year shall be made in order to determine the gross 
 income or to determine the expense of operation. 
 
 Physical in- A physical inventory is at all times preferred, but where 
 ltory * a physical inventory is impossible, and an equivalent inven- 
 
 tory is equally accurate, the latter will be acceptable. 
 
 An equivalent inventory is an inventory of materials, 
 supplies, and merchandise on hand taken from the books 
 of the corporation. 
 
 Corporations, ART. 162. For the purpose of this tax, corporations are 
 classes of. divided into five classes, as follows : 
 
 Class A. Class A. Financial and commercial, including banks, 
 
 banking associations, trust companies, guaranty and surety 
 companies, title insurance companies, building associations 
 (if for profit), and insurance companies not specifically ex- 
 empt. 
 
 class B. Class B. Public service, such as railroad, steamboat, ferry- 
 
 boat, and stage-line companies; street-railway companies; 
 pipe-line, gas-light, and electric-light companies; express 
 companies, telegraph and telephone companies. 
 
 class c. Class C. Industrial and manufacturing, such as mining, 
 
 oil and gas producing companies, lumber and coke com- 
 panies; rolling mills; foundry and machine shops; saw- 
 mills; flour, woolen, cotton, and other mills; manufac- 
 turers of cars, automobiles, elevators, agricultural imple- 
 ments, etc. ; manufacturers or refiners of sugar, molasses, 
 
 148 
 
sirups, or other products ; ice and refrigerating companies ; 
 slaughterhouse, tannery, packing, or canning companies; 
 printing and publishing companies, etc. 
 
 Class D. Mercantile, including all dealers (not otherwise 
 classed as producers or manufacturers) in coal, lumber, 
 grain, produce, and all goods, wares, and merchandise. 
 
 Class D. 
 
 Class E. Miscellaneous, such as architects, contractors, 
 hotel, theater, or other companies or associations not other- 
 wise classified. 
 
 Class E. 
 
 ART. 163. Under the authority conferred by this act, Form of return, 
 forms of return have been prescribed, in which the various 
 items specified in the law are to be stated. Blank forms of 
 this return will be forwarded to collectors and should be 
 furnished to every corporation, not expressly exempted, on 
 or before January 1 of each year, in the case of corporations 
 making their returns for the calendar year, or on or before 
 the first day of the next fiscal year in the case of corpora- 
 tions making returns for their fiscal year. Failure on the 
 part of any corporation, joint-stock company, association, 
 or insurance company liable to this tax to receive a pre- 
 scribed blank form will not excuse it from making the re- 
 turn required by law, or relieve it from any penalties for 
 failure to make the return in the prescribed time. Corpora- 
 tions not supplied with the proper forms for making the re- 
 turn should make application therefor to the collector of in- 
 ternal revenue in whose district is located its principal place 
 of business in ample time to have its return prepared, verified, 
 and filed with the collector on or before the last due date as 
 hereinafter defined. Failure in this respect subjects it not 
 only to 50 per cent additional tax, but to the specific penalty 
 imposed for delinquency. Each corporation should carefully 
 prepare its return so as to fully and clearly set forth the data 
 therein called for. Imperfect or incorrect returns will not 
 be accepted as meeting the requirements of the law. 
 
 ART. 164. To any sum or sums due and unpaid after the penalties i 
 date for payment stated in the notice and demand issued by P sed b y act - 
 the collector there shall be added the sum of 5 per cent of 
 the amount so unpaid, and interest at the rate of 1 per cent 
 per month. To the amount assessable on the basis of the 
 net income there shall be added 50 per cent in case of refusal 
 or neglect of a corporation to make a return or 100 per cent 
 
 149 
 
in case of a false or fraudulent return. For refusal or 
 neglect to make a return within the prescribed time, or for a 
 false or fraudulent return, the corporation so offending shall 
 be liable to a specific penalty not exceeding $10,000. Any 
 person divulging unlawfully any information whatever" dis- 
 closed by a return shall be punished by a fine not exceeding 
 $1,000, or by imprisonment not exceeding one year, or both. 
 
 Any person or any officer of any corporation required by 
 law to make, render, sign, or verify any return, who makes 
 Fraudulent re- any f alse or fraudulent return or statement with intent to- 
 defeat or evade the assessment required by section 2, act of 
 October 3, 1913, shall be guilty of a misdemeanor and shall 
 be fined not exceeding $2,000 or be imprisoned not exceeding 
 one year, or both, at the discretion of the court, wth the costs 
 of prosecution. 
 
 Fiscal year; ART. 165. The Federal income-tax law authorizes cor- 
 how established, porations, joint-stock companies, etc., under certain condi- 
 tions to make their returns on the basis of an established 
 "fiscal year" or consecutive 12-months period, which may be 
 other than the calendar year. 
 
 Pursuant to this provision the following instructions are 
 issued for the guidance of collectors and other interested 
 parties : 
 
 M'av designate Any corporation, joint-stock company, or association, or 
 of y fiscaf y ei? s lSI an Y insurance company subject to the tax imposed by this 
 must give at act may, at its option, have the tax payable by it computed 
 
 least 30 days' . /V. . J it 
 
 notice to coiiec- upon the basis of the net income arising or accruing from all 
 so r des f ignated day sources during its fiscal year, provided that it shall designate 
 the last day of the month selected at the month in which its 
 fiscal year shall close at the day of the closing of its fiscal 
 year, and shall, not less than 30 days prior to the date upon 
 which its annual return is to be filed give notice, in writ- 
 ing, to the collector of internal revenue of the district in 
 which its principal place of business is located, of the day 
 it has thus designated as the closing of such fiscal year. 
 
 niustratiom of ART. 166. In pursuance of this provision, a corporation 
 year. or jj^e organization subject to this tax may, for example, 
 
 designate the 30th day of September as the day for the clos- 
 ing of its fiscal year, whereupon its return of annual net in- 
 come shall be filed with the collector of internal revenue of 
 the district in which its principal place of business is located 
 not later than 60 days after the close of its said proposed 
 
 ISO 
 
fiscal year; that is to say, on or before the 29th day of 
 November next succeeding. 
 
 The date of the closing of the fiscal year having been des- 
 ignated, notice thereof must be given to the collector not 
 less than 30 days prior to the last day of such 60-day period. 
 In the case just instanced the notice must be given not 
 later than October 29. 
 
 If such designation (September 30, 1913) had been made 
 and notice given, as hereinbefore indicated, as to the closing 
 of the fiscal year 1913, the corporation would be authorized 
 to make its return and have the tax payable by it computed 
 upon the basis of the net income arising or accruing to it 
 during the period from January 1 to September 30, 1913, 
 both dates inclusive. 
 
 ART. 167. Collectors of internal revenue receiving notices Collectors 
 of the selection and designation of the "fiscal years," as ????/ of *the 
 above indicated, will make record of the same, recording, f e ' n a 
 (a) the name of the corporation or like organization, (b) year." 
 the date when notice was given, (c) the day designated for 
 the closing of the fiscal year, and (d) the date when the re- 
 turn under such designation must be filed, which must be, 
 as above stated, not later than the last day of the 60-day 
 period next following the day designated as the close of the 
 fiscal year. 
 
 ART. 168. If it shall appear that for the year 1913 the Uuiess notice 
 
 . . . ,. r ' ., , . ? . , . ... was given within 
 
 notice was given within the prescribed time that is, within prescribed time, 
 30 days of the last day of the 60-day period the 1913 re- $$ n ^ ern y e a r 
 turn may be made as of the fiscal year so established ; other- 
 wise it will be made on the basis of the calendar year until 
 such time as the designation shall be duly made and notice 
 thereof properly given. 
 
 ART. 169. The designation and notice can not be retro- Designation 
 
 .... .y . , . A -1 anc * notice can 
 
 active ;. that is to say, if a corporation now designates April not be retroac- 
 30, 1914, as the date of the closing of its fiscal year and gives tive ' 
 notice of such designation, it would not be authorized .to 
 make a return for the four months ended April 30, 1913, and 
 then for the fiscal year ended April 30, 1914, nor would it 
 be authorized to make one return covering the entire 16 
 months ended April. 30, 1914. In the case of such corpora- 
 tion the return for the year must be made for the calendar 
 year ended December 31, 1913, and then, assuming that 
 designation and notice had been properly made and given, 
 it may make a return for the four months ended April 30, 
 1914, and thereafter the return will be made on the basis of 
 the fiscal year so established. 
 
 151 
 
Where fiscal ART. 170. In all cases where a fiscal year is not estab- 
 
 year is not prop- . -11 11 t t " 
 
 eriy established, lushed as above prescribed returns must be made on the basis 
 made ns fo U caien- of the calendar year, in which case such returns must be 
 dar year. n i e d on or before the 1st day of March next succeeding 
 
 such calendar year. Such returns in either case provided 
 must be verified under oath or affirmation of its president or 
 other principal officer, and its treasurer or assistant treas- 
 urer; that is to say, by two different persons acting in the 
 official capacity indicated. 
 
 Returns made ART. 171. If it shall appear in any case that returns have 
 
 year a S?t8o de- been made to the collector on the basis of a fiscal year not 
 
 be^acce ted nOt designated as above indicated, the corporations making" such 
 
 returns will be advised that such returns can not be accepted, 
 
 but must be made to cover the business of the calendar year. 
 
 Returns for ART. 172. Returns made under this act and pursuant to 
 made "if* new these instructions must be made on the new forms pre- 
 forms - scribed by this department. 
 
 The forms heretofore in use, under the special excise tax 
 law, can not be used for making returns for either the fiscal 
 or calendar year 1913. 
 
 Extension not ART. 173. An extension of time within which a return 
 <iays. ex( may be filed can in no case exceed 30 days from the date on 
 
 which the return is due and can be granted only upon writ- 
 ten application to the collector, and in case of sickness or 
 absence of an officer whose signature to the return is re- 
 quired, such application to be made prior to the expiration of 
 the period for which the extension is desired. 
 
 Returns prop- ART. 174. If a return is made and placed in the United 
 eriy maUed^m s ta f- es mails, properly addressed, and postage paid, in ample 
 
 e 
 
 sub' e e C ct 0r to "en* ^ me ' * n ^ ue course f mails, to reach the office of the col- 
 aity^und^r ^Sr- lector or deputy collector on or before the last due date, no 
 ons - penalty will be held to attach should the return not be 
 actually received by such officer until subsequent to that date. 
 
 Last due date ART. 175. "Last due date," as hereinbefore used, is con- 
 strued to mean the last day upon which a return is- required 
 to be filed in accordance with the provisions of the law, or 
 the last day of .the period not exceeding 30 clays covered by 
 an extension of time granted by the collector. 
 
 faiS^oS d sSn d d a ay ART< 176> When tne due date as above defined falls on 
 or legal holiday. Sunday or on a legal holiday, the last due date will be held 
 
 152 
 
to be the day next following such Sunday or legal holiday 
 and the return should be made to the collector not later 
 than such following day, or, if placed in the mails, it should 
 be posted in ample time to reach the collector's office, under 
 ordinary handling of the mails, on or before the date on 
 which the return is thus made due in the office of the col- 
 lector. 
 
 ART. 177. All assessments against corporations, etc., mak- Assessment 
 ing returns for the calendar year are required to be made ?ax es payment f 
 and the several corporations, joint-stock companies, etc., 
 notified of the amount for which they are liable on or be- 
 fore the 1st of June of each successive year, and said assess- For ca i endar 
 ments shall be paid on or before the 30th day of June of y ear - 
 such year. In the case of corporations making returns for Notice of as- 
 the fiscal year, the assessments shall be made and notice sessment. 
 given on or before the expiration of 90 days from the date 
 when the returns were required to be filed, and the taxes 
 assessed against such corporations, etc., shall be paid within 
 120 days after the date upon which the returns were re- 
 quired to be filed. In case of refusal or neglect by a cor- 
 poration, etc., to make a return, and in case of false or 
 fraudulent return, the commissioner, upon the discovery 
 thereof within three years after such returns are due, shall 
 make a return upon information obtained in the manner pro- 
 vided in the act, and the assessment made on the basis of 
 such return shall be paid immediately upon notice and de- 
 mand given by the collector. 
 
 Upon failure to pay the tax when due and for 10 days Failure to pay 
 after notice and demand, a penalty of 5 per cent of the tax when due - 
 amount of the tax unpaid and interest at the rate of 1 per 
 cent per month until .paid shall be added to the amount of 
 such tax. 
 
 ART. 178. When the assessments shall have been made, Returns are 
 
 the returns shall be filed in the office of the commissioner and r t e o cor ^ : 
 
 shall constitute public records, subject to inspection upon spectkm 
 the order of the President, under rules and regulations pre- President. 
 scribed by the Secretary of the Treasury and approved by 
 the President. Copies of returns on file in the Commis- 
 sioner's office are not permitted to be sent to any person, 
 except to the corporation itself or to its duly authorized 
 attorney. 
 
 ART. 179. Upon request of the governor of a State which information to 
 
 imposes a general income tax, the proper officers of such States y hich * m - 
 
 -_ A * /- 1 1 pose i n c o m c 
 
 State may have access to the returns filed by corporations taxes. 
 
 153 
 
doing business in such States, or to an abstract thereof 
 showing the name and income of such corporations, etc., at 
 such times and in such manner as the Secretary may pre- 
 scribe. In no case are the original returns to be removed 
 from the office of the commissioner, except upon order and 
 by directon of the Secretary of the Treasury or the Presi- 
 dent. 
 
 Certified copies ART. 180. At the request of the Attorney General, or by 
 direction of the Secretary of the Treasury, certified copies 
 of returns may be made and delivered to the United States 
 district attorneys for their use as evidence in the prosecu- 
 tion or defense of suits in which the collection or legality 
 of the tax assessed on the basis of such returns is involved, 
 or in any suit to which the United States Government and 
 the corporation, etc., making the return are parties and in 
 which suit such certified copies would constitute material 
 evidence. 
 
 Penalty for ART. 181. The disclosure by any collector, deputy col- 
 
 giving informa- 1 rv- i r 1 
 
 tion in regard lector, agent, clerk, or other officer or employee of the 
 to returns. United States to any person of any information whatever 
 
 contained in or set forth by any return of annual net in- 
 come made pursuant to this act is, by the act, made a mis- 
 demeanor, and is punishable by a fine not exceeding $1,000, 
 or by imprisonment not exceeding one year, or both, at the 
 discretion of the court, and if the offender is an officer or 
 employee of the United States he shall be dismissed and be 
 incapable thereafter of holding any office under the United 
 States Government. 
 
 Bookkeeping. ART. 182. No particular system of bookkeeping or ac- 
 counting will be required by the .department. However, the 
 business transacted by corporations must be so recorded 
 that each and every item set forth in the return of annual 
 net income may be readily verified by an examination of the 
 books of account. 
 
 Books of ac- ART. 183. The books of .a corporation are assumed to 
 e. gmc e reflect the facts as to its earnings, income, etc. Hence they 
 will be taken as the best guide in determining the net income 
 upon which trie tax imposed by this act is calculated. Ex- 
 cept as the same may be modified by the provisions of the 
 law, wherein certain deductions are limited, the net income 
 disclosed by the books and verified by the annual balance 
 sheet, or the annual report to stockholders, should be the 
 same as that returned for taxation. 
 
 Omitted taxes ART. 184. In cases wherein corporations have neglected 
 
 may be assessed. r j , j i 
 
 or refused to make returns, and in cases wherein returns 
 154 
 
made are found, upon investigation or otherwise, to be 
 false or fraudulent, the commissioner may, upon discovery 
 thereof, at any time within three years after said return is 
 due, make return upon the information obtained in the man- 
 ner provided in the act, and the tax so discovered to be due, 
 together with the additional tax prescribed, shall be assessed, 
 and the amount thereof shall be paid immediately upon no-, 
 tice and demand. 
 
 ART. 185. Corporations coming within the terms of this corporations 
 law are subject to the normal tax only; that is, a tax com- 5JjJ/ e * Xi to n r 
 puted at a level rate of 1 per cent of their entire net income 
 regardless of the amount of such net income. 
 
 ART. 186. For the purpose of verifying any return, made 
 pursuant to this act, the Commissioner of Internal Revenue 
 may, by any duly authorized revenue agent or deputy col- 
 lector, cause the books of such corporation to be examined, 
 and if such examination discloses that the corporation is 
 liable to tax in addition to that previously assessed, or asses- 
 sable, the same shall be assessed and shall be payable im- 
 mediately upon notice and demand. For the purpose of 
 such examination, the books of corporations shall be open 
 to the examining officer, or shall be produced for this pur- 
 pose upon summons issued by any properly authorized 
 officer. 
 
 Examination 
 of books. 
 
 155 
 
Taxes due to ART. 187. All income taxes found to be due will be re- 
 
 be reported on 
 
 assessment lists, ported by collectors on their assessment lists, Form 23-A 
 in the case of corporations, and on Form 23-B in the case of 
 individuals and withholding agents. 
 
 a? P ha- ART - 188. The names of corporations subject to tax will 
 beticai order. fo Q listed on Form 23-A, according to their designated class, 
 and in alphabetical order as to each class. Names of indi- 
 viduals subject to tax will be listed on Form 23-B, alpha- 
 betically, without reference to class or rate of tax. Follow- 
 Names of with- ing such names there will be listed, alphabetically, the names 
 how to be listed! of all withholding or licensed collecting agents, and the 
 aggregate amount of tax withheld by each, as shown by the 
 annual returns rendered by them. An assessment against 
 each person, firm or company, from whose income the tax 
 has been so withheld, will be unnecessary in such cases. 
 
 Assessment ART. 189. To avoid, as far as possible, the assessment of 
 
 against with- 
 
 to ld i>? delfrr * taxes as to which claims for exemption or deduction may 
 until annual re- be filed under article 33, collectors will delay reporting for 
 
 ports a r e re* . . 
 
 assessment taxes remaining in the hands of withholding 
 agents, until the annual reports of such agents, which must 
 be filed not later than March 1 in each year, are received. 
 
 <o R b e e tu a 9 <ie When ART - 19 - Returns of withholding agents (including those 
 of licensed collecting agents) as to interest payments shall 
 be made monthly and returns containing summaries of said 
 monthly returns shall be made annually. (See Part 2, A, 
 B, and C.) Returns of individuals (see Part 1), corpora- 
 tions (see Part 3), and withholding agents, withholding tax 
 on wages, salaries, rents, etc. (see Part 2, D), and fiduciaries 
 acting as withholding agents (see Part 2, E) shall be made 
 annually. All monthly returns are required to be made on 
 or before the 20th day of each month for the preceding 
 inonth. All annual returns are required to be made on or 
 before the 1st day of March in each year, except in the 
 
 156 
 
case of corporations which have given due notice of the 
 termination of their fiscal year, in which cases the pre- 
 scribed return is to be filed within 60 days after the termina- 
 tion of such fiscal year. 
 
 ART. 191. Corporations which are subject to the special Corporations 
 excise tax on income received during the months of January "fj^ff^ear 
 and February, 1913, may, under the provisions of section 19 13 income sub- 
 4, paragraph S, of the act of October 3, 1913, include such 
 income, as also the income taxable under said act, in one re- 
 turn for the year 1913. In each such case one assessment 
 only will be made. 
 
 ART. 192. All returns of income, whether of individuals Returns of in- 
 or corporations, should be forwarded with the assessment ^led^Jitli f as- 
 list rendered. Where in any case the collector has reason sessment lists. 
 to believe that any return rendered is false or fraudulent, False or fraud- 
 he will prepare and retain in his office a copy of such return, ulent returns - 
 and will note on the original and under the head of "Re- 
 marks" of his assessment list the words "Investigation 
 pending." He will in all such cases make his investigation 
 in the manner prescribed in section 3173, Revised Statutes, 
 and paragraph D of said act of October 3, 1913 ; and he will 
 report the results of his investigation to the Commissioner 
 of Internal Revenue, referring to the list, folo, and line on 
 which the assessment was reported. 
 
 ART. 193. Monthly and annual returns of withholding certain returns 
 agents (including those of licensed agents) as to interest ^enTs^to^e^S 
 payments and the annual returns of withholding agents dup?ic S ate 
 withholding tax on wages, salaries, etc., will be made in 
 duplicate, one copy of which will be retained by the col- 
 lector in his office and one copy transmitted to the Commis- 
 sioner of Internal Revenue. Annual returns of withhold- 
 ing agents (including those of licensed agents) as to in- 
 terest payments, and returns of withholding agents as to 
 wages, salaries, etc., and of fiduciaries will be forwarded 
 by the collector with his list, Form 23-B, on which the tax 
 withheld is reported for assessment. 
 
 ART. 194. All certificates of exemption or deductions, filed c e r t ificates 
 by or on behalf of persons subject to tax, will be forwarded S^onwded as 
 by the collector as soon as received ; and all such certifi- soon as received. 
 cates, reports, and returns, before being transmitted to the 
 commissioner, will have stamped thereon the name and 
 number of the district; will be arranged (unfolded) in alpha- 
 betical order and, in the case of corporations, according to 
 the designated class to which they belong. Care should be 
 taken to have all such papers, when so arranged, carefully 
 
 157 
 
secured by cord or other fastening, so as to insure their re- 
 ceipt in like order. This is especially necessary in view of the 
 large number of like papers which will be forwarded from 
 the various districts. 
 
 Reports and 
 returns to be at 
 once examined 
 by collectors. 
 
 Assessment' 
 lists to be pre- 
 pared and for- 
 warded without 
 delay. 
 
 ART. 195. In order that assessment lists may be promptly 
 prepared and forwarded, collectors will see that all reports 
 and returns to be listed are examined as received, and that 
 no delay occurs in this branch of the work. Special dili- 
 gence in this matter is necessary, as sufficient time must be 
 given for the reexamination of such returns in the com- 
 missioner's office before assessment is made. The forward- 
 ing of assessment lists, however, should in no case be de- 
 layed, beyond the time allowed, on account of unexamined 
 returns, as such returns can be examined and reported on 
 a subsequent list. As the law limits the time in which these 
 assessments are to be made and notice of assessment given, 
 collectors will assign to this work all available force in their 
 respective offices. 
 
 to be ART. 196. Where the required returns are not filed with- 
 
 sent to dehn- ,. ., , . -,1 i- -j 
 
 quents. in the prescribed time, either by individuals or corporations, 
 
 notice on Form 1045, should in each case be sent to the 
 delinquent. (For authorized extension of time, see articles 
 23 and 173.) 
 
 f **' ART> ^ - When assessment has been made, collectors 
 will, on receipt of their returned lists, at once issue pre- 
 liminary notices of assessment (Form 647), and where in 
 any case the tax assessed is not paid on or before the 30th 
 day of June, or in case of corporations designating their 
 own fiscal year, within 120 days following the date on 
 which the return should have been filed, notice and demand 
 Demand for (Form 17) should be at once issued, and* unless the tax in 
 5 int'er'est. 13 '' such case is paid within 10 days after the service of such 
 notice, general demand for tax, penalty, and interest (Form 
 21) should at once be issued. Immediate notice and demand 
 (Form 17) will, however, be served in case of failure to 
 file the required return within the statutory period. 
 
 on return of list. 
 
 ?o be" ART - 19 . 8 ' Pending assessment on returns forwarded to 
 sent immediately the commissioner, collectors will have prepared the neces- 
 
 r\** -A+-* f\( I,'*-*- . 
 
 sary notices of assessment, with properly addressed en- 
 velopes, to be used immediately on return of their assess- 
 ment lists. 
 
 158 
 
ART. 199. Statements of payment, abatement, and out- 
 
 1-11 - 11 -11 1 11 abatements, and 
 
 standing balances of such assessed taxes will be rendered outstanding bai- 
 monthly by collectors on special Form 325. Such state- z 
 ments will be prepared in the same manner as required in 
 the case of assessments on. the regular Form 23, except that 
 in Statement III the outstanding balances on the various 
 lists will be reported in aggregate only. Items constituting outstand- 
 such balances, however, will be carded by collectors, but ' b n e g carded" b? 
 only as to such as were assessed during the month for collectors, 
 which the return is rendered, thus avoiding detailed state- 
 ments each month of outstanding balances previously re- 
 ported. A separate card (Form 1020) will be used for each 
 such item; and all cards so prepared each month should be 
 arranged alphabetically, and so forwarded by the collector 
 with his report on special Form 325. 
 
 ' W. H. OSBORN, 
 
 Commissioner of Internal Revenue. 
 Approved : 
 
 W. G. McADOO, 
 
 Secretary of the Treasury. 
 
 159 
 
INDEX 
 
 NOTE. Regulations are indexed by article number. Statute is indexed by 
 marginal reference. 
 
 ABATEMENT: Article. 
 
 Claim for, of tax, may be filed when, by whom 33c 
 
 ABSENCE: 
 
 From United States, who may make claim for deductions (Form 1008) 
 
 for 33b 
 
 Nonresident alien subject to, computed same as for citizens of United 
 ADDITIONAL TAX: 
 
 States 8 
 
 Regulations for 2 
 
 ADDITIONS AND BETTERMENTS: 
 
 Constituting increase in capital investment not deductible expense of 
 
 corporation 118 
 
 ADJUSTMENT: 
 
 Assessment of tax withheld, withholding agent to be notified 33c 
 
 ADMINISTRATOR: 
 
 Is fiduciary when 70 
 
 Make return of income deceased person, when and what 17 
 
 AFFIDAVIT: 
 
 Verifying return of income, before whom made 22 
 
 AGENT: 
 
 Authorized, may sign for principal, certificate of ownership of bond. ... 43 
 Compensated on commission basis, income of, not subject to withhold- 
 ing at source 32 
 
 Return made by, when 17 
 
 Signing for principal, certificate of ownership of bonds, to furnish 
 
 evidence of authority to act, when 43 
 
 AGRICULTURAL ORGANIZATIONS : m 
 
 Exempt from tax 51 
 
 ALIENS* 
 
 Nonresident 
 
 Duly authorized agent of, to make return for and pay tax, when. . 8 
 
 Income of, what to be included in return of 8 
 
 Net income of, defined.' 8 
 
 Normal tax on entire net income of 8 
 
 Not allowed exemption under paragraph C 8 
 
 Not entitled to exemption under paragraph C 3 
 
 Subject to additional tax 8 
 
 Taxable on entire net income in United States 1 
 
 Tax on coupons or registered interest payable in United States to 
 
 be withheld unless certificate of exemption (Form 1004) filed . . 46 
 Resident 
 
 Certificate of ownership of bond, when and how to be used, and 
 
 to specify what 42 
 
 Income of, from coupon or registered interest, tax on to be de- 
 ducted and withheld exempt to extent exemption claimed .... 44 
 Taxable on net income less exemption and deductions 1 
 
 161 
 
INDEX. 
 AMENDMENTS: Article. 
 
 Sections 3167, 3172, 3173, 3176, Rev. Stat. pp 58-59 
 
 AMORTIZATION: 
 
 Depreciation for, corporation allowed, when, how 135 
 
 ANNUAL RETURN: 
 
 Form 1013, to show what, and to be filed on or before Mar. 1 each year 50 
 Of coupons or interest orders not accompanied by certificate of owner- 
 ship (form of), what to show when filed, totals only of monthly re- 
 turn 53 
 
 Of licensee for collection of foreign items (form of) what to show, with 
 
 whom filed, when 59 
 
 ANNUITY: 
 
 Money paid for (returned) not to be included in gross income 5 
 
 Taxable, how treated 63 
 
 ANSWER: 
 
 Of guardian, etc., to notice for failure to make return, may show what 18 
 APPEAL : 
 
 Decision of collector 
 
 All papers of, to Commissioner of Internal Revenue; dissatisfied 
 
 may submit case; furnish sworn testimony to prove facts 48 
 
 APPLICATION: 
 
 For license 
 
 For collection foreign items 55 
 
 To collect foreign items to be made through principal office to col- 
 lector of district in which located principal office 57 
 
 APPLIED SURRENDER VALUES AND CONSIDERATION: 
 For supplementary contracts 
 
 To be both added and deducted in return life insurance company 102 
 ARRANGEMENT AND PACKING: 
 
 Certificates, reports, returns, for forwarding by collector 194 
 
 ASSESSMENT: 
 
 Insurance company, reserve of , definition 147d 
 
 Of tax to be made by Commissioner of Internal Revenue 25 
 
 Against income withheld at source, where to be made 38 
 
 Against withholding agent 36 
 
 Form and notice of 197 
 
 List rendered, collector to forward 192 
 
 Amount of, when persons shall be notified pp 48-9 
 
 Basis of calendar year or fiscal year, time to be made '. . 177 
 
 Failure to pay, extra tax on p 48 
 
 Limitation on time of making p 48 
 
 Made by Commissioner of Internal Revenue p 47 
 
 Of tax against withholding agent, deferred until agent makes return. . 189 
 
 Penalty and interest for non-payment of, exceptions P 48 
 
 Persons notified of amount of . % ' p 48 
 
 When to be paid p 48 
 
 ASSETS, CAPITAL: 
 Corporation 
 
 Change in book value by annual Adjustment on books, that value 
 
 to be used in making annual returns, net income Ill 
 
 Change in- book value by reappraisal, gain or loss, how computed . Ill 
 
 Profit or loss on sale of, how determined 110 
 
 Loss from sale of, how ascertained 128 
 
 Sale of corporation, net income from, how determined 109 
 
 Sale of by corporation, income from, how determined. . . / 108 
 
 Shrinkage in book value of corporation, 'how treated 134 
 
 162 
 
INDEX. 
 
 ASSOCIATION : 
 
 Charitable, exemption, when p . 51 
 
 Making false return, penalty for p . 51 
 
 Mutual,, domestic building, etc p.. 51 
 
 Neglecting to make return, penalty for . . .p . 51 
 
 Net income of, preceding calendar year, normal tax on p . 51 
 
 Operating under "Lodge system, " Defined 89 
 
 Refusing to make return, penalty for p . 51 
 
 Religious, exemption p. 51 
 
 Return of, when available p . 58 
 
 Scientific, exemption, when p. 51 
 
 Taxes to be assessed by Commissioner of Internal Revenue, when, 
 
 section 3176 p. 60 
 
 To make list or return of taxes, how, when, section 3173 pp . 59-60 
 
 AUTHORS: 
 
 Earnings of, indefinite or irregular, not subject to withholding at source. . . 32 
 
 B. 
 
 BAD DEBTS: 
 
 Corporation, deductible, when 125 
 
 Collected, are income : 125 
 
 BALANCES: 
 
 Outstanding tax, how treated 199 
 
 BANKS: 
 
 Allowing interest on deposits, not to withhold tax from 67 
 
 Deductible status of taxes assessed against stockholder, paid by 154 
 
 Interest paid on deposits allowable deduction 149 
 
 Taking coupons for collection, originated or payable in the United States, 
 duty of 39 
 
 MUTUAL SAVINGS: 
 
 Having capital stock represented by shares, exempt from tax p. 51 
 
 BENEFICIARIES: 
 
 Exemption from tax may be claimed by, from fiduciaries 74 
 
 Interest received by, from insurance companies on insurance contract, 
 part of gross income 5 
 
 BEQUEST: . 
 
 Of property 
 
 Income from part of gross income ; . . . . 4 
 
 Value of, not income 4 
 
 BOARDS OF TRADE: 
 
 Exempt, when p . 51 
 
 BOND: 
 
 May be required of licensee for collection of foreign items 56 
 
 BONDS, ETC: 
 
 Of corporations, etc. 
 
 Income from, subject to withholding at source, regardless of amount 37 
 Interest of foreign, subject to deduction and withholding, when p. 50 
 
 BOND AND MORTGAGES: 
 
 Interest on, subject to deduction, when .p. 50 
 
 BOOKKEEPING: 
 
 Requisites of, for verifying return 182 
 
 BOOKS: 
 
 Of corporation subject to examination, by whom, for what, result 186 
 
 ids 
 
INDEX. 
 BOOK VALUE: 
 
 Capital assets Article 
 
 Change in, by reappraisal, gain or loss, how computed Ill 
 
 Shrinkage in, how treated 134 
 
 BUILDING: 
 
 Removal of, corporation, not deductible loss, why 127 
 
 BUILDING AND LOAN ASSOCIATION: 
 
 Domestic, defined; what necessary to exempt from tax 87 
 
 BUSINESS: 
 
 Lawful, carried on for gain or profit ; income from part of gross income. . . 4 
 
 C. 
 CALENDAR YEAR: 
 
 To govern when notice of corporation fiscal year not given in time 168 
 
 CAPITAL ASSETS: 
 
 Book value of corporation, shrinkage in, how treated 134 
 
 Corporation 
 
 Change in value of, by annual adjustment on books, that value used 
 
 in making return annual net income Ill 
 
 Change in book value by reappraisal ; gain or loss, how computed. . . Ill 
 
 Loss from sale of, how ascertained 128 
 
 Profit or loss on sale of, how determined 110 
 
 Net income from sale of, how determined 109 
 
 Sale of, by corporation, income from, how determined 108 
 
 CAPITAL INVESTMENT: 
 
 Corporation, increased by additions and betterments, not deductible 
 
 expense 118 
 
 CEMETERY COMPANY: 
 
 Taxable status depends on what 90 
 
 CERTIFICATE: 
 
 Accompanying foreign items, disposition of, by licensee 61 
 
 Claiming deductions account partnership expense, what and how 47 
 
 Claiming exemption and deductions to accompany annual return of with- 
 holding agents 69 
 
 Claiming exemption 
 
 As nonresident alien must be filed or tax withheld from payment 
 
 payment coupon or registered interest 46 
 
 From tax on registered interest to be filed at least five days before 
 
 due date of interest 44 
 
 Of withholding, by foreign organization, Form 1018 46 
 
 For nonresident alien, may be executed by whom 46 
 
 Exemption or deduction, disposition of 194 
 
 Form of, for foreign partnership composed of nonresident aliens, resident 
 
 aliens, and citizens of United States 49 
 
 Of deposit, interest on, part of gross income 4 
 
 Of ownership accompanying coupons or registered orders, duty of col 
 
 lecting agency 39 
 
 Of ownership 
 
 By corporations organized in United States claiming exemption 
 
 of, by form of, and how executed 45 
 
 Disposition of, by collecting agent 40 
 
 Of persons not subject to having tax withheld, disposition of, by 
 
 debtors and withholding agent 51 
 
 Not accompanying coupons or interest orders, tax to be withheld by 
 first collecting agent, disposition of certificate 62 
 
 164 
 
INDEX. 
 CERTIFICATE Continued. 
 
 Of ownership Continued. 
 
 Of bonds Arcicle 
 
 By citizen or resident of United States, when and how to be 
 
 used and to specify what 42 
 
 By corporations organized in United States and certain ex- 
 empt, must be filed to prevent withholding 45 
 
 May be signed by authorized agents 43 
 
 Of corporal ons, etc., organized or do^ng business in United 
 
 States, form of, for foreign partnership 48 
 
 Signed by agent, when verified by first withholding agent, etc., 
 
 good in other hands 43 
 
 Who to make and for what 39 
 
 Size and paper for p 97 
 
 Substitute by collecting agent, how to be treated by debtors or with- 
 holding agent 51 
 
 That of collecting agent substituted when 40 
 
 CERTIFICATES, REPORTS, RETURNS: 
 
 Arrangement and packing of, for forwarding by collector 194 
 
 CHAMBERS OF COMMERCE: 
 
 Exempt, when p 51 
 
 CHANGE IN BOOK VALUE: 
 
 Capital assets, corporation, reappraisal, gain or loss, how computed ... Ill 
 CITIZEN: 
 
 Income of, from coupon or registered interest, cax to be withheld on 
 
 except to extent exemption claimed 44 
 
 Of United States, certificate of ownership of bond, when and how to 
 
 be used and to specify what 42 
 
 Taxable on net income less exemption and deductions 1 
 
 Civic LEAGUES: 
 
 Exempt, .when p 51 
 
 Organizations 
 
 Exempt, when p 51 
 
 CLAIM : 
 
 For exemption 
 
 By whom, for what, who to file 41 
 
 Paragraph C, in connection with foreign item, allowed to person 
 
 entitled to ' 60 
 
 Penalty for false p 48 
 
 What must show and how executed 42 
 
 When, and when to be filed p 48 
 
 Insurance company, amount actually paid under policy contract, con- 
 stitute deduccion 147c 
 
 COLLECTING AGENCY: 
 
 First receiving coupons or interest orders not accompanied by certifi- 
 cates of ownership should withhold tax and attach its certificate, 
 
 Form 1002, that tax withheld 52 
 
 Agent 
 
 In foreign countries to have privilege of substituting certificates for 
 
 original ownership 40 
 
 Record to be kept by, what 40 
 
 Should require person presenting coupon or interest orders to es- 
 tablish identity '. 52 
 
 165 
 
INDEX. 
 COLLECTION : 
 
 Of tax from withholding agent 36 
 
 COLLECTOR: 
 
 Advanced preparation notice of assessment by, particulars 198 
 
 Arrangement and packing certificates, reports, returns 194 
 
 Authority of, in any district, section 3173 p. 59 
 
 Claim for deductions may be filed with, when 33c 
 
 Dispatch of business in offices of 195 
 
 Duty of 
 
 As to returns withholding agents 193 
 
 If persons refuse or neglect to render return p!59 
 
 In absence from home or place of business p . 59 
 
 In case of refusal or neglect of liable individual to make return. ... 21 
 
 In case of undervaluation or understatemenc p .59 
 
 In forwarding 
 
 Annual individual return to commissioner 21 
 
 Return and assessment list and investigation of return 192 
 
 In making returns for persons failing to do so p. 59 
 
 Upon receiving notice of fiscal year of corporation 167 
 
 Failure' to find person at home, duty of, section 3173 p .59 
 
 Sickness or absence, may extend time for making returns, section 317G.p.60 
 
 Legality of returns made by, section 3176 p. 60 
 
 Make return for individual, when 57 
 
 May enter any collection district to examine witnesses, when, section 
 
 3173 p. GO 
 
 Method of handling and accounting for outstanding tax balances 199 
 
 Must require returns to be verified by oath or affirmation 22 
 
 Not satisfied with responsibility, applicant for license to collect foreign 
 
 items, may require bond 56 
 
 Of what district, Form 1008 to be filed 33b 
 
 Order of arrangement, names in list made by 188 
 
 Shall make report of false or fraudulent returns, how, section 3176 p. 60 
 
 Shall require deputies to ascertain persons liable to tax, section 3172. .p. 59 
 
 Tax statement rendered monthly, particulars of 199 
 
 Tax withheld to be paid to 34 
 
 To adjust in assessment in case of withholding, when 33c 
 
 To furnish withholding agent with statement of claim for deductions 
 
 filed with collector 33c 
 
 To obtain testimony, may summon whom, section 3173 p. 59 
 
 To report tax due, how, forms for 187 
 
 To send notice of what, form of and time to serve 197 
 
 To send notice to delinquent and file return 196 
 
 To which, application of principal office made for license for branch 
 
 office, to serve collector in district of branch with what 57 
 
 When claim for deductions, paragraph B, to be filed with 33b 
 
 COMMISSIONER OF INTERNAL REVENUE. 
 
 Annual return of individual to be forwarded to, how 24 
 
 Assessments -made by P-48 
 
 Facsimile of signature on licenses for collecting foreign items furnished 
 
 collectors 55 
 
 Shall add 50 per cent or 100 per cent to tax, when p -60 
 
 Shall assess taxes, when, section 3176 p. 60 
 
 To impose additional tax,' when p .48 
 
 166 
 
INDEX. 
 
 COMMISSIONER OF INTERNAL REVENUE Continued Article 
 
 Bo issue licenses for collection of foreign items through collectors 54 
 
 To make assessment of taxes; give notice of, when; duty of in case neglect 
 
 or refusal to make return or false or fraudulent return 25 
 
 COMMISSIONS: 
 
 Paid to salesmen in stock of corporation, deductible expense, when 117 
 
 COMPANY: 
 
 Foreign, normal tax on business transacted in United States p 51 
 
 Joint-stock, etc., withholding normal tax on behalf of others p 48 
 
 Mutual cemetery, exempt when p 51 
 
 Taxes to be assessed by commissioner, when, section 3176 p 60 
 
 COMPENSATION: 
 
 For personal service, part of gross income 4 
 
 Officers and employees of State or political subdivision of, not to be in- 
 cluded in gross income. 5 
 
 Paid to employees of corporation on basis of stockholdings not deducti- 
 ble, why 119 
 
 Present President and judges of court exempt from tax, what 5 
 
 Public-school teachers of State or political subdivision of, not part of 
 
 gross income , 5 
 
 CONSIDERATION FOR SUPPLEMENTARY CONTRACTS AND APPLIED SURRENDER 
 VALUES: 
 
 To be both added and deducted in return life insurance companies 102 
 
 CONSTRUCTION OF LAW: 
 
 As to withholding at source, liberal 97 
 
 CONTRACT: 
 
 Affecting liability of a taxable person as such, to be invalid 27 
 
 COPIES OF RETURNS: 
 
 How obtained, for what purpose 178, 180 
 
 CORPORATION: 
 
 Additions and betterments constituting increase in capital investment 
 
 not deductible '. 118 
 
 All organized in United States subject to tax (certain exceptions) 76 
 
 Amount allowed for depreciation of property p 55 
 
 Amounts paid employees 
 
 As compensation on basis of stockholdings not deductible, why 119 
 
 For pension or on account of injuries, deductible expense 120 
 
 Assessment 
 
 Insurance company, reserve, definition 147d 
 
 To be paid when p 57 
 
 Bad debts deductible, when 125 
 
 Banks, etc. 
 
 Interest paid on deposits, etc., allowable deduction 149 
 
 Paying taxes assessed against their stockholders, deductible status of 154 
 
 Books of, subject to examination, by whom, for what, result 186 
 
 CEMETERY, taxable status depends on what 90 
 
 Certificates of ownership by claiming exemption, form of and how execu- 
 ted 45 
 
 Change in book value of capital acsets by annual adjustment on books, 
 
 that value to be carried into return Ill 
 
 Change in book value of capital assets by reappraisal, gain or loss, how 
 
 computed Ill 
 
 CHARITABLE, exempt, when p 51 
 
 167 
 
INDEX. 
 CORPORATION Continued. Article. 
 
 Classes, enumeration of 162 
 
 Collector to furnish blanks for return of 163 
 
 Collecting foreign income, to have license p 50 
 
 Commissions to salesmen paid in stock, deductible expense when 117 
 
 Complete return to be made by or will not be accepted 163 
 
 Contract with by State, etc., prior to passage income-tax act, income 
 
 from accruing to individual, subject to tax 93 
 
 Contract with by State, etc., prior to passage income-tax act, income 
 
 from accruing to State, etc.,, exempt from tax when 93 
 
 Cost of buildings on leased ground, deductible as rent, when 115 
 
 DAIRIES, cooperative, not subject to tax, what 92 
 
 Deductible loss defined 124 
 
 Deduction account interest on indebtedness limited to what; when 81 
 
 Deduction 
 
 Account materials and supplies on hand, what 123 
 
 For depletion of mines regulation and rate of, limit of 142 
 
 For depreciation of natural deposits, basis and limit of 141 
 
 For depreciation on timberlands, limit of, excess of, is income 137 
 
 For depreciation on patent, what, how determined 140 
 
 For interest paid at different rates, rule of application 151 
 
 For obsolescence of patents, what, how determined 138 
 
 Defined 78 
 
 Depreciation timberland from removal of timber, amount, how deter- 
 mined 139 
 
 Depreciation 
 
 Deductible, amount, how treated 130 
 
 Defined 129 
 
 For amortization allowed, when, how 135 
 
 How determined 129 
 
 Reserve, use of, disposition excess of 132 
 
 Division of depreciation of reserve, correction 133 
 
 Donation for charitable purposes, deductible when 121 
 
 Duties not deductible as tax but item of cost 155 
 
 Educational, exempt, when p 51 
 
 Engaged in more than one class of business, gross income ascertained in 
 
 accordance with applicable definitions of such income 112 
 
 Every, not specifically exempt, required to make return of income 80 
 
 Evidence requisite for allowance of deductions 158 
 
 Excise and income tax for 1913 in one return 191 
 
 Excise tax on, for what period, how computed 160 
 
 Exempt from tax, what are 87 
 
 Expense of operation and maintenance to be shown in return p 55 
 
 Includes what 114 
 
 Failure to receive blanks will not excuse from making returns, or from 
 
 penalties for such failure 163 
 
 Firms, etc,, withholding normal tax on behalf of others p 9 
 
 Fiscal year of, how established, what to do 165 
 
 Illustration of and what to do 166 
 
 FOREIGN, normal tax on business in United States p 51 
 
 Coupons, checks, bills of exchange, etc., normal tax deducted from, 
 
 when. . . .- -P 50 
 
 Dividends on stocks of, normal tax deducted when p 50 
 
 168 
 
INDEX 
 CORPORATION Continued. 
 
 FOREIGN Continued. Article. 
 
 Having more than one branch office in the United States to desin- 
 
 nate principal office and person to make return 83 
 
 Interest on indebtedness to be deducted, what p 57 
 
 To give amount of bonded and other indebtedness p 56 
 
 To set forth paid-up capital stock p 57 
 
 Form of return prescribed for 163 
 
 General expense foreign steamship companies, how treated 116 
 
 Gifts or gratuities to employees not deductible 120 
 
 Good will, depreciation not allowed in connection with 136 
 
 Gross income 
 
 Difinition of 96 
 
 General definition 107 
 
 Gross value at the mines, definition of 142 
 
 In addition to deduction for depletion of mines, etc., deduction for de- 
 preciation of plant, what, basis of 143 
 
 Income 
 
 Excepted during the year 15 
 
 From sale of capital assets, how determined 108 
 
 How ascertained p 52 
 
 Losses from p 52 
 
 INSURANCE COMPANY 
 
 "Deductible net addition to reserve," definition; what basis of com- 
 putation of; whan not to be included in 147d 
 
 Deduction, claims actually paid under policy contract 147c 
 
 Depreciation loss by shrinkage in property value, what and when 
 
 deductible 147b 
 
 Gross income of, definition of 97, 101 
 
 Losses, deductions for, what 147a 
 
 Reserve to meet losses, how treated 147c 
 
 Salvage, how to be treated in return of 147c 
 
 Interest paid 
 
 As rental, how treated 148 
 
 By, on mortgage on property in whach corporation has equity or is 
 
 purchasing 148 
 
 Deduction, what, when 148 
 
 On debts secured by collateral subject to sale, deductible, when, why 150 
 
 On deposits, etc., deductible, when 113 
 
 Inventory, purpose and use of; kinds of 161 
 
 Leased, to make its own return 82 
 
 Leasing oil or gas territory, deductions for depletion, basis of 144 
 
 Lessee, property of, assuming indebtedness of lessor, return by lessee, 
 
 what 81 
 
 Lessee, not to include capital stock or debts of lessor in return, except . . 82 
 
 LIFE INSURANCE COMPANY 
 
 Applied surrender values and consideration for supplementary 
 
 contracts both added and deducted in return 102 
 
 Deductions from gross income, what 100 
 
 Gross income, definition of 101 
 
 Supplementary statement attached to return of, showing what . . . 103 
 
 Liquidation of, make final return of whac; filed when and where 85 
 
 "Lodge system," defined 89 
 
 169 
 
INDEX. 
 CORPORATION Continued. 
 
 Loss Article. 
 Actual, sustained p 52 
 
 Sustained during year p 55 
 
 From removal of buildings, not deductible, why 127 
 
 From sale of capital assets, how ascertained 128 
 
 Securities below par, how treated 135 
 
 Making false return, penalty for p 51 
 
 May designate day to pay tax p 57 
 
 Manufacturing company, gross income, definition 104 
 
 Mercantile company, gross income, definition 105 
 
 Miscellaneous, gross income, definition 106 
 
 Mutual companies making return, definition^ net income 80 
 
 Mutual fire insurance company 
 
 Gross income, definition 98 
 
 Supplementary statement attached to return, showing, what 103 
 
 Mutual marine insurance company 
 
 Deductions from gross income, whai 99 
 
 Supplementary statement attached to return of, showing what. ... 103 
 
 Will deduce, what 147d 
 
 Neglecting to make return, penalty for p 51 
 
 Net income 
 
 Annual, normal tax on p 51 
 
 Engaged in more than one class business, how ascertained 113 
 
 For 1913, how ascertained 159 
 
 Preceding calendar year, normal tax on / p 51 
 
 Of, should be what 158 
 
 Of, which is distributable to owners thereof; subject to tax 79 
 
 From all sources p 52 
 
 From sale of capital assets, how determined 109 
 
 To be shown on return p 57 
 
 No specific exemption from tax 160 
 
 Notice 
 
 Given of assessments made p 57 
 
 Of fiscal year, not retroactive 169 
 
 Not receiving blank for making return, should make application for, to 
 
 whom, when 163 
 
 Not to include taxes paid in foreign countries in income; see seventh 
 
 deduction . .p 57 
 
 Officers of, making false return, penalty p 51 
 
 Only on return and assessment for 1913 160 
 
 On what taxed; what, and amount of p 51 
 
 Operacing mines, oil or gas wells, on royalty basis, not allowed, deduction 
 
 for depletion of deposits 145 
 
 Operations of, etc., unlawful to divulge. Section 3167 p 58 
 
 Organized- 
 During the year, to make return of what 84 
 
 Elsewhere than in United Stales, subject to tax on what 77 
 
 In United States and certain exempt, interest on bonds payable to, 
 
 tax not to be withheld if certificate of ownership filed 45 
 
 Paid-up capital stock, definition of 95 
 
 Partnership 
 
 Limited, is, and subject to corporation tax 86 
 
 Ordinary, not subject to tax as 94 
 
 170 
 
INDEX. 
 
 CORPORATION Continued. Article. 
 
 Payments on account of tax from covenant in bonds, not deductible in ^ 
 
 ascertaining net income. 113 
 
 Penalty for 
 Failure to 
 
 Make return p. 20, Art. 163 
 
 Pay tax by j une 30 p . 57 
 
 Refusal to make return p . 51 
 
 Profit or loss on sale, capital assets, how determined 110 
 
 Public utility, governmental function, income accruing through, to State, 
 
 exempt from tax 93 
 
 Railroad whose income paid by its lessee direct to stock holders must 
 
 make return of income 80 
 
 Religious, exempt p . 51 
 
 Repairs may be deducted, what. 131 
 
 Reserve for 
 
 Insurance of own property not deductible 122 
 
 Losses, not deductible .' 126 
 
 Taxes, not deductible 156 
 
 Return 
 
 For 1913 must be on new form and not on excise form heretofore 
 
 used ; 172 
 
 To be made, when 190 
 
 When available p . 58 
 
 When State officers may have access to p . 58 
 
 When to be made. Section 3173 p . 59 
 
 Shrinkage in value, capital assets, how treated 134 
 
 Special excise tax, how computed p . 63 
 
 Status for taxation purposes to be established, how 88 
 
 Subject to tax 
 
 Classes enumerated p . 51 
 
 Normal only, but not entire net income 185 
 
 Special ecxise, under act August 5, 1909 p. 63 
 
 Taxable status in doubt, must make return and attach thereto statement 
 
 showing what 91 
 
 Tax- 
 Computed on nee income of 159 
 
 Deduct amount paid for . . . p . 57 
 
 Paid by- 
 Constitute deduction, when 152 
 
 When not deductible 153 
 
 To be assessed by Commissioner of Internal Revenue, when. Sec- 
 tion 3176 p. 60 
 
 To give notice, day designated for return p .54 
 
 Make list or return, how, when. Secion 3173 p. 59 
 
 Unearned increment, not value for depreciation purposes 146 
 
 United States, filing certificates of ownership, exempt from withholding 
 
 of foreign items 60 
 
 When to make return : p. 54 
 
 COST: 
 
 Of buildings on leased ground, deductible as rent of corporation, when. 115 
 
 171 
 
INDEX. 
 
 D. 
 DAIRIES: Article. 
 
 Cooperative, not subject to tax, what 92 
 
 DEBTOR: 
 
 Annual 
 
 List return by, when and what 50 
 
 Return by, to show totals only of monthly list return 51 
 
 Definition of 38 
 
 How to treat substitute certificate of collecting agent and certificate of 
 
 owner not subject to having tax withheld 51 
 
 Interes. on bonds due, corporations organized in United States and 
 
 certain exempt, not to withhold tax if certificate filed ,45 
 
 Maker of note given in payment of interest held responsible for tax on. 68 
 
 May appoint withholding and paying agent to act for it 38 
 
 Note given in payment of income, maker of note is 68 
 
 Not to withhold agams, nonreside. alien or foreign organization doing 
 
 business in Unked Scales, when 46 
 
 Not to withhold when receiving certificate of collecting agenc that tax 
 
 withheld by same, disposition of certificate 52 
 
 Return of withholding by, where to be filed 38 
 
 In United States (or its wkhholding^agent) charged with duty of with- 
 holding from coupons or registered interest 39 
 
 In United States, duty of, before payment of registered interest 41 
 
 When source for withholding purposes 31 
 
 "DEDUCTIBLE NET ADDITION TO RESERVE"; 
 
 Insurance company; definition; what basis of computation of; what 
 
 not to be included in 147d 
 
 DEDUCTION: 
 
 Account partnership expense, account of and form for claiming 47 
 
 Additions and betterments constituting increase in capital investment, 
 
 not 118 
 
 Allowance for in computing, what, when p 45 
 
 Amount of, to ascertain net income p 45 
 
 At suorce, applies to normal tax only p 51 
 
 Bad debts of corporation, when 125 
 
 Basis, for depletion leased oil or gas territory 144 
 
 Claims for 
 
 Filed with collector, withholding agent to be furnished statement of. 33 c 
 
 May be filed with withholding agenc, when 33 c 
 
 Not allowed unless made, when p 49 
 
 Commission to salesmen paid in stock of corporation is, when 117 
 
 Compensation, officers and employees of State, etc., except, when; 
 
 judges Federal courts now in office; present President for present term, p 46 
 Compensation paid employees of corporation based on stockholding, 
 
 not, why 119 
 
 Corporation 
 
 Account interest paid on debt, limited to what, when. . 81 
 
 Material and supplies on hand, what 123 
 
 Depreciation, amount, how treated ' 130 
 
 Donation for charitable purposes, when 121 
 
 Evidence requisite for allowance of 158 
 
 For interest paid at different rates, rule of application 151 
 
 Gifts or gratuities to employees, not 120 
 
 Pensions and damages for injuries to employees, are 120 
 
 172 
 
INDEX. 
 DEDUCTION Continued. 
 
 Corporation Continued. 
 
 Reserve Article. 
 
 For insurance its own property, not 122 
 
 To meet losses insurance companies, not 147c 
 
 Status of tax for, to bank, assessed against stockholder, paid by bank 154 
 
 And exemptions in certain cases p 49 
 
 Debts due taxpayer, ascertained worthless and charged off in year p 45 
 
 Depletion of mines, regulation of rate of, limit of 142 
 
 Depreciation 
 
 Defined 129 
 
 For amortization, allowed when, how 135 
 
 How determined 129 
 
 Loss by shrinkage in property value, insurance company, what and 
 
 when 147d 
 
 Reserve, how, disposition excess of. ". 132 
 
 Of good will not allowable 136 
 
 Of natural deposits, basis and limit of 141 
 
 Of plant (in addition to deduction for depletion of mine), what, and 
 
 basis of 143 
 
 On patent, what, how determined 137 
 
 Unearned increment, not value for purpose of 146 
 
 Timberland - 
 
 Limit of, excess of, is income 140 
 
 Removal of timber, amount, how determined 139 
 
 Dividends on stock, what, when p 46 
 
 Exemption under paragraph C, not allowed nonresident alien. . .p 46, art. 8 
 
 False statement in regard to, penalty p 49 
 
 From gross income 
 
 Mutual marine insurance companies, what 99 
 
 Of nonresident alien, what 8 
 
 To ascertain net income, for normal tax, paragraph B, what 6 
 
 From net income to ascertain taxable, exemption, paragraph C 6 
 
 From premiums, etc., by whom made, when P 49 
 
 For ascertaining net income, what 3 
 
 For fire, storm, shipwreck p 45 
 
 Foreign corporation, to ascertain net income 157 
 
 For expense of business, partnership may claim, >when and how 14 
 
 For restoring property, etc., none p 45 
 
 Increase value of property, none p 45 
 
 Insurance company 
 
 Claims actually paid under policy contract, are 147c 
 
 Losses, what 147a 
 
 Interest on obligations, State or political subdivision of, and of United 
 
 States or possession ' p 46 
 
 Interest paid by 
 
 Bank, etc., on deposits, etc., is 149 
 
 Corporation 
 
 As rental, not allowable 148 
 
 Is, what, when 148 
 
 On indebtedness secured by collateral subject to sale, when, why 150 
 On mortgage on property in which corporation has equity, is 
 and amount of 148 
 
 178 
 
INDEX. 
 DEDUCTION Continued. Article. 
 
 Joint-stock company p . 45 
 
 Life insurance company 
 
 From gross income, applied surrendered values and consideration 
 
 for supplementary contracts 102 
 
 From gross income, what ' 100 
 
 Loss 
 
 During year p . 5 
 
 Which corporation may make, defined 124 
 
 From removal of building not deductible, why 127 
 
 From sale 
 
 Capital assets, how ascertained 128 
 
 Corporation securities below par, how treated 135 
 
 May be claimed account tax on note given in payment of income 68 
 
 Only, claim for, may be filed wich collector, when 33c 
 
 Mutual marine insurance company, what 147d 
 
 Not compensated by insurance or otherwise p. 45 
 
 Notice to be filed for p . 10 
 
 Obsolescence of patents, whac, how decermined 138 
 
 Paid for new buildings, none p . 45 
 
 Paragraph B 
 
 For normal tax only, 7 and 8 included for purpose of additional tax . 44 
 
 May be claimed in case of fixed, deterrriinable annual income 66 
 
 Not claimed of withholding agent in time, only remedy, applica- 
 tion for refund 33c 
 
 When claim for (Form '. at or 
 
 collector 33b 
 
 Permanent improvements or betterments, none p. 45 
 
 Property owned, business carried on in Unite;] -rson residing 
 
 elsewhere, what p. 45 
 
 Repairs, when 131 
 
 Reserve for losses, not 126 
 
 Single person, amount allowed p . 45 
 
 Tax withheld, when p . 45 
 
 Taxss paid by corporation 
 
 Are, when 152 
 
 When not 153 
 
 To ascertain net income corporation ei : s of 
 
 business 113 
 
 DEEHS OF TRUST, ETC.: 
 
 Corporation, income from, subject to withholding at source regardless of 
 
 amount, when p . 10, art . 37 
 
 DELINQUENT: 
 
 Tax becomes, if not paid by June 30 25 
 
 DEPLETION: 
 
 Deduction for, mines, oil or gas wells operated on royalty basis, not 
 
 allowed operating corporation 145 
 
 Leased oil or gas territory, basis for deduction for 144 
 
 Of mines, etc., regulation of rate of deduction for, limit of 142 
 
 DEPOSIT: 
 
 Certificate of, in ceres t on, part of gross income 4 
 
 Interest on, not subject to withholding; must be included in personal 
 
 return whether paid or not 67 
 
 Interest on, part of gross income 4 
 
 174 
 
INDEX. 
 DEPRECIATION : Article. 
 
 Corporation, defined 129 
 
 Deductible, amount how treated 130 
 
 Deduction for 
 
 Of natural deposits, basis and, limit of 141 
 
 Of plant (in addition to deduction for depletion of mine), what, and 
 
 basis of 143 
 
 On patent, what, how determined : 137 
 
 Diversion reserve for, correction 133 
 
 For amortization, allowed when, how 135 
 
 Gross value at the mine, defined 6 
 
 How established in case of mines 6 
 
 Loss by shrinkage in property value, insurance company, what, and 
 
 when deductible 147b 
 
 Of good will not allowable deduction 136 
 
 Timber-land 
 
 From removal timber, amount, how determined 139 
 
 Deduction for, limit of, excess of is income 140 
 
 Unearned increment, not value for basis of deduction for 146 
 
 DEPRECIATION RESERVE: 
 
 Use of, disposition excess of 132 
 
 DEPUTY COLLECTOR: 
 
 Ascertain persons liable to tax and enumerate objects, section 3172. . . .p 60 
 
 Legality of returns made by, section 3176 p 60 
 
 To make report, false or fraudulent return, how, section 3176 p 60 
 
 DESCENT: 
 
 Of property 
 
 Income from, part of gross income 4 
 
 Value of, not income 4 
 
 DEVISE OF PROPERTY: 
 
 Income, part of gross income; value of, not income 4 
 
 DISPATCH OF BUSINESS: 
 
 In collector's office .' 195 
 
 DISTRICT OF COLUMBIA: 
 
 Exemptions, proviso p 51 
 
 DIVERSION: 
 
 Depreciation reserve, correction 133 
 
 DIVIDENDS: 
 
 Compensation paid employees of corporation based on stockholding 
 
 are, when 119 
 
 Cooperative dairies, is purchase price of raw material . . ' 92 
 
 Of corporations subject to tax not subject to withholding p 49, art 32 
 
 Deducted from net income, when 3 
 
 Part of gross income 4 
 
 Stock foreign corporations, subject to withholding when p 50 
 
 Stock subject to tax individual owning, how treated p 48 
 
 DOCTORS: 
 
 Fees of, indefinite or irregular not subject to withholding 32 
 
 DONATIONS: 
 
 By corporation for charitable purpose, deductible when 121 
 
 DOMESTIC BUILDING AND LOAN ASSOCIATION: 
 
 Definition, what necessary to exempt from tax 87 
 
 DUE DATE: 
 
 Return on Sunday or legal holiday, effect of .176 
 
 DUTIES: 
 
 Not tax and not deductible but are item of cost 155 
 
 175 
 
INDEX. 
 
 E. 
 EDUCATIONAL CORPORATIONS: Article. 
 
 Exempt when p 51 
 
 EMPLOYEES: 
 
 State or political subdivisions, compensation of officers and employees 
 
 paid by, not part of gross income 5 
 
 vState officers or employees, compensation paid by United States a part 
 
 of gross income 5 
 
 ENDOWMENT: 
 
 Money paid for; returned not to be included in gross income 5 
 
 EVIDENCE: 
 
 Furnished by agent of authority to sign ownership certificate to be re- 
 tained by verifying agent 43 
 
 Guardian, etc., served with notice for failure to make return, may fur- 
 nish, what 18 
 
 Of nonliability to payment of tax, filed with withholding agent, may be 
 
 forwarded to collector in lieu of tax p 57 
 
 Requisite for allowance of deduction by corporation 158 
 
 EXCISE AND INCOME: 
 
 Tax, corporation, 1913 In one return 191 
 
 EXCISE TAX: 
 
 Corporation ., for what period, how computed 160 
 
 EXECUTOR: 
 
 Is fiduciary when 70 
 
 Make return of income of deceased within taxable year, when and what. 17 
 EXEMPT: 
 
 From tax 
 
 Corporations, what 87 
 
 Co-operative dairies, what 92 
 
 Income from public utility 93 
 
 EXEMPTION: 
 
 Allowed in computing taxable income of deceased person, when 17 
 
 Amount allowed married person p 46 
 
 Beneficiary may claim from fiduciary 74 
 
 Boards of trade, when p 51 
 
 And deductions i . .p 11 
 
 Cemetery Company, depends on what 90 
 
 Certificate claiming by corporation organized in United States form 
 
 of and how executed 45 
 
 Certificate claiming, what must show and how executed 42 
 
 Chambers of commerce, when p 51 
 
 Charitable associations, when p 51 
 
 Civic leagues or organizations, classes of, when p 51 
 
 Claimed by fiduciary, forms 1015 or 1019 70 
 
 Claimed for 
 
 By whom, with whom and when to be filed p. 49, Art. 41 
 
 How to be filed p 49 
 
 May be filed with withholding agent when 33c 
 
 Under paragraph C 
 
 Allowed to person permicted to claim 60 
 
 Failure to claim, effect of 65 
 
 Corporation claiming 
 
 To establish rights to, how gg 
 
 Whose taxable status in doubt, must make return and attach state- 
 ment showing what 91 
 
 Districts of Columbia, provisions p 51 
 
 176 
 
INDEX. 
 EXEMPTION Continued. Article. 
 
 Domestic building and loan associations .p 51 
 
 Educational corporation, when p 51 
 
 False claim or statement as to, penalty for 33a 
 
 Fraternal societies p 51 
 
 Husband and wife 
 
 Living together, citizen or resident alien, add incomes for purpose 
 
 of, amount of 1 10 
 
 Separated and living permanently apart, citizen or resident alien, 
 
 each entitled to $3,000 10 
 
 Individual 
 
 Deduction of from net income to ascertain taxable 3 
 
 Amount of for 1913 7 
 
 Single, or married but not living with husband or wife, may claim 
 
 $3,000 each 9, 10 
 
 May be claimed, note given in payment of income 68 
 
 Mutual Cemetery Companies p 51 
 
 None for corporations 160 
 
 Paragraph C 
 
 Not allowed nonresident alien 8 
 
 Not claimed of withholding agent in time, only remedy application 
 
 for refund 33c 
 
 To be filed with withholding agent when 33 
 
 Philippine Islands p 51 
 
 Porto Rico p 51 
 
 Public utility p 51 
 
 Religious associations and corporations p 51 
 
 Scientific associations when p -51 
 
 Status of person claiming determined as of time of claim 10 
 
 To be deducted from net income to ascertain taxable under paragraph C 6 
 EXPENSE: 
 
 Deductible, pension or amounts paid employees account injuries are . . . 120 
 
 General, foreign steamship companies, how treated 116 
 
 Of operation and maintenance corporate business, what includes 114 
 
 Partnership may claim deduction for, when and how 14 
 
 EXTENSION: 
 
 Time for filing return, when, what, how 23 
 
 To make return, not exceed what, how and to whom made 173 
 
 FALSE RETURNS: 
 
 Additional tax imposed p 48 
 
 Or fraudulent, penalty p 60 
 
 FIDUCIARY: 
 
 Annual return by, what to show and how executed 73 
 
 Definition of 70 
 
 Filing notice with other withholding agent (Form 101), nothing to be 
 
 withheld 70 
 
 Having withheld and paid tax on undistributed annual net income not 
 
 to again withhold when distribution made 75 
 
 Income of beneficiary not distributed during the year; what to be shown 
 
 in return; tax to be withheld and paid when 74 
 
 May be appointed agent or attorney for the purpose of making personal 
 
 return of income (Form 1040) for beneficiary 72 
 
 Optional claim (Form 1015 or 1019) 70 
 
 liigulations as to 70-75 
 
 Iff 
 
INDEX. 
 FIDUCIARY Continued. Article. 
 
 Return by must be made when 71 
 
 Return by to include only matter within scope of authority 72 
 
 Return of not to include income on which tax paid 71 
 
 Return, when to be made 190 
 
 To make annual return (Form 1041) to collector of District when, to show 
 
 what 71 
 
 FIRM: 
 
 To make return, how, when, section 3173 p 59 
 
 Collecting foreign items, license required p 11 
 
 FISCAL YEAR: 
 
 Corporation 
 
 Duty of collector upon receiving notice of 167 
 
 How established, what to be done 165 
 
 Illustration of and what to do 166 
 
 Making return on basis of but not so designating, return not accepted 
 
 and must be made for calendar year 171 
 
 Notice of not retroactive 169 
 
 Notice to collector not given in prescribed time, calendar year to 
 
 govern 168 
 
 Not properly established, return to be made for what calendar year and 
 
 filed when ' 170 
 
 FOREIGN: 
 
 Corporation 
 
 Doing business in United States 
 
 Provision for p 55 
 
 Return by p 57 
 
 Particulars of p 56 
 
 Where filed p 55 
 
 Subject to tax on what 77 
 
 Tax on net income; net income defined; deduction^ to ascertain. . . 157 
 Items 
 
 Too small for notation on. statement of facts may be attached to. 58 
 
 License required for collection of, when and from whom 54 
 
 Provisions for collection of tax on apply wherever said items pay- 
 able, if paid in United States 61 
 
 Income paid in United States, provisions for collection of tax on 54-62 
 
 Organization doing business in United States subject to tax but exempt 
 
 from withholding upon filing certificate claiming (Form 1018) 46 
 
 Partnership owning bonds of corporations organized or doing business 
 
 within United States, not subject to withholding on interest of, when . . 48 
 Payments of dividends, etc., provisions as to collection, license, penalty .p 50 
 
 Steamship company, general expense of, how treated 116 
 
 FRAUDULENT RETURN: 
 
 Additional tax imposed; time limit for paying after notice p 48 
 
 G. 
 GAINS: 
 
 For taxable purposes arising or accruing within calendar year, part of 
 gross income, what 4 
 
 GAS OR OIL TERRITORY LEASED: 
 
 Corporation, basis of deduction for depletion of 144 
 
 GAS OR OIL WELLS AND MINES: 
 
 Operated on royalty basis, deduction for depletion of deposits not allowed 
 operating corporation 145 
 
INDEX. 
 
 GIFT: Article. 
 
 Of property, income from part of gross income; value not income 4 
 
 To employees of corporation not deductible 120 
 
 GOVERNMENTAL FUNCTION : 
 
 Income accruing to State from exercise of, exempt 93 
 
 GOOD WILL: 
 
 Corporation, depreciation of, not allowable deduction 136 
 
 GRATUITIES: 
 
 To employees of corporation not deductible 120 
 
 GROSS INCOME: 
 Corporation 
 
 Definition of 96 
 
 Engaged in more than one class business, ascertained in accordance 
 
 with applicable definition each class 112 
 
 General definition of gross income- v 107 
 
 Manufacturing company, definition of 104 
 
 Mercantile company, definition of 105 
 
 Miscellaneous corporation, definition of 106 
 
 All sources to be specified p 47 
 
 Definitions 3,4 
 
 Deductions from 
 
 By mutual marine insurance companies, what 99 
 
 To ascertain net income for normal tax, paragraph B 6 
 
 Insurance company, definition of 101 
 
 Life insurance company 
 
 Definition 101 
 
 To include applied surrender values and consideration for supple- 
 mentary contracts 102 
 
 Of nonresident alien, what constitutes 8 
 
 What to be excluded in computing - 5 
 
 GROSS VALUE AT THE MINE: 
 
 Defined 6 
 
 Corporation, definition 142 
 
 GUARDIAN: 
 
 Is fiduciary, when 70 
 
 Return made by, when, regulation : .p 47, 17 
 
 H. 
 HOLIDAY: 
 
 Due date of return falling on, effect of 176 
 
 HORTICULTURAL ORGANIZATIONS: 
 
 Exempt p 51 
 
 HUSBAND: 
 
 Assumed to have sufficient knowledge of income of wife to make return 
 
 for ..., 10 
 
 Having net income other than wife's income from separate estate so that 
 aggregate income both more than $4,000, wife return attached to hus- 
 band or his income included in her return for purpose of $4,000 exemp- 
 tion 10 
 
 Should make return of income for self and wife 10 
 
 HUSBAND AND WIFE: 
 
 Combined net income of, exceeds $4,000, return of must be made 10 
 
 Both jointly and separately liable for return and payment of tax 10 
 
 179 
 
INDEX. 
 
 HUSBAND AND WIFE Continued. ( Article. 
 
 Not living apart, having separate estates, income of both may be made 
 on one return, but return must show income of each separately stated 
 
 with name and address of both 10 
 
 Living together, citizen or resident alien, entitled to $4,000 exemption 
 
 from their aggregate net income 10 
 
 Separated and living permanently apart, citizen or resident alien, each 
 
 entitled to $3,000 exemption from net income 10 
 
 HUSBAND OR WIFE: 
 
 Either having net income of $3,000, return required, and must include 
 
 incomes of both 10 
 
 IDENTITY: 
 
 Persons persenting coupons or interest orders should be required to 
 
 establish . . 52 
 
 INCOME: 
 
 Additional tax on, referred to as additional tax p 43 
 
 Amount from which withholding to be had 32 
 
 Banks, interest paid on deposits by, to be deducted p 57 
 
 Bonds or other indebtedness p 54 
 
 But not value of property, acquired by gift, bequest, devise or descent . . .p 44 
 Compensation of officers and employees of State or political subdivision 
 
 of, paid by United States, part of gross income 5 
 
 Corporation 
 
 Allowance for depreciation by wear and tear p 52 
 
 Amount allowed for 
 
 Depreciation p 52 
 
 Taxes p 53 
 
 Bad debts collected are .' 125 
 
 How ascertained p 52 
 
 From sale of capital assets, how determined p 52 
 
 Interest paid deductible 108 
 
 Losses sustained during the year p 54 
 
 May designate fiscal year p 52 
 
 Ordinary expenses of operation deductible 
 
 Penalty for failure to p 51 
 
 Make return of 
 
 Pay tax on after June 30 p 51 
 
 To give notice of fiscal year adopted p 55 
 
 Deductions from gross, mutual marine insurance company, what p 99 
 
 Derived from all sources p. 51, Art. 14 
 
 Fixed determinable annual 
 
 From what derived ^ 63 
 
 Normal tax on bonds, etc., when deducted . .p 49 
 
 Withholding from, when 64 
 
 Foreign corporation doing business in the United States, return of, 
 
 particulars pp. 51-53-55 
 
 Foreign, paid in United States, provisions for collection of tax on. . . .54-62 
 
 For taxable purposes is income for calendar year 4 
 
 For 1913, how computed p 54 
 
 From all sources part of gross income 4 
 
 From bonds, mortgages, deeds of trust, and similar obligations of corpora- 
 tions, etc., subject to withholding at source regardless of amount. ... 37 
 
 From capital invested in the United States p 55 
 
 From certain professions not subject to withholding at source 32 
 
 180 
 
INDEX. 
 
 INCOME Continued. Article 
 
 From^public utility or governmental function accruing to State, etc., 
 
 exempt from tax 93 
 
 From what, obligations not subject to tax and certificate of ownership 
 
 not required 37 
 
 Gross, denned 3,4 
 
 Corporation 
 
 Engaged in more than one class of business, ascertained in 
 
 accordance with applicable definition for each class 112 
 
 Definition of 96 
 
 General definition 107 
 
 Insurance company, definition of gross income 97, 101 
 
 Life insurance company, to include applied surrender values and 
 
 consideration for supplementary contracts 102 
 
 Manufacturing company, definition 104 
 
 Mercantile corporation, definition 105 
 
 Miscellaneous corporation, definition 106 
 
 Mutual fire insurance company, definition 108 
 
 What to be included in computing 5 
 
 Husband and wife, what 10 
 
 Individual, not subject to withholding when 32 
 
 Insurance company, to be separately stated p 56 
 
 Insurance reserve, how treated p 55 
 
 Interest 
 
 Accruing during year p 55 
 
 On deposits p 54 
 
 On obligations of State, etc p 5 
 
 Joint stock companies, how ascertained and stated pp 53-55-56 
 
 Life insurance companies, -what included, deductions. . . pp 53-56, art. 100 
 
 Mutual fire insurance companies pp 53-55-56 
 
 What taxable 98 
 
 Mutual marine insurance companies pp 55-56 
 
 Net- 
 Defined 3 
 
 Of corporation engaged in more than one class of business, how 
 
 ascertained 113 
 
 Deductions allowed for ascertaining p 44 
 
 Shall include what pp 43-44-51-53-54-55-56 
 
 Not subject to withholding at source, to be covered in personal 
 
 return 32 
 
 Note given in payment of; maker of note is debtor and source; 
 
 required to withhold, except, when . . . . 68 
 
 Of corporations, verified how 183 
 
 Returns of, filed, are public records; inspection of, who may and for 
 
 what purpose p 58 
 
 Penalty for divulging information on or exhibiting returns, section 
 
 3167 ' p 58 
 
 Tax paid at source, deducted in ascertaining taxable 3 
 
 On, from coupon or registered interest to be deducted and withheld, 
 
 except to extent exemption claimed 44 
 
 Taxable 
 
 Defined 3 
 
 Persons subject to 1 
 
 For normal tax, what, how ascertained p 43, Art. 7 
 
 181 
 
INDEX. 
 INCOME Continued. Articile 
 
 Subject to additional tax p 43 
 
 What not liable to withholding at source 32 
 
 Withheld, what, when, by whom p 48 
 
 INDIVIDUAL: 
 
 Who may claim exemption paragraph C 9, 10 
 
 Duty of, collection interest coupons originating in United States 39 
 
 Husband and wife living together, citizen or resident alien, exemption 
 
 $4,000 10 
 
 Income accruing to, from contract with State, etc., prior to passage of 
 act of construction, operation, or maintenance, public utility, taxable 93 
 
 Income less than $20,000 required to make return, except when 19 
 
 Income of, liable to withholding at source on and after November 1, 1913 29 
 
 Liable for income tax on share of net earnings of partnership 47 
 
 Married and not living with husband or wife, amount exemption 9 
 
 Normal tax, what " 1 
 
 Partnership profits included in return of and tax paid, not reported as 
 
 income again 14 
 
 Residing in foreign country, where to file return ' 15 
 
 Return 
 
 For calendar year 4 
 
 Required of guardian, etc., notice of failure to make, served when . . 18 
 
 When to be made 190 
 
 Share of earnings, partnership, property of, subject to tax chargeable to 
 
 individual *;" ^4 
 
 Share of partnership profits to be included in personal return 13 
 
 Single, allowable exemption for 9 
 
 Status for claiming exemption, determined as of time of claim 10 
 
 INFORMATION: 
 
 From returns to officers of State, when, what, how 179 
 
 INSANE: 
 
 Who make claim for deductions for 33b 
 
 INSPECTION: 
 
 Of returns, how 178 
 
 INSURANCE COMPANY: 
 
 "Deductible net addition to reserve"; definition; what basis of com- 
 putation of; what not to be included in 147d 
 
 Deduction, claims actually paid under policy contract 147c 
 
 Depreciation loss by shrinkage in property value, what and when 
 
 deductible 147b 
 
 Gross income, definition 97, 101 
 
 Income to be stated separately p 56 
 
 Losses 
 
 Actually sustained pp 53 -56 
 
 Deduction for what 147a 
 
 Making false return, penalty p 51 
 
 Mutual marine, deduct what 147d 
 
 Neglecting to make return, penalty p 51 
 
 Net addition to reserve p 56 
 
 Net income, source, time of accrual, return of . . . . .pp 12, 14, 20 
 
 Notice of assessments to p 59 
 
 Penalty for failure to pay tax p 60 
 
 Refusing to make return, penalty p 51 
 
 182 
 
INDEX. 
 
 INSURANCE COMPANY Continued. Article. 
 
 Reserve 
 
 Definition '. '. 147d 
 
 Fund, how treated ' p 54 
 
 To meet losses, how treated . . 147c 
 
 Returns of, when available p 58 
 
 Salvage, how treated in return of 147c 
 
 Special excise tax, how computed, time, what p 62 
 
 To make return of others, when p 48 
 
 INSURANCE: 
 Life- 
 Paid to beneficiaries not to be included in gross income, when .... 5 
 Payment credited to insurance not to be included in gross income, 
 
 when 5 
 
 Received by insured not to be included in gross income, when .... 5 
 INTEREST: 
 
 Coupon or registered, originating or payable in the United States, who to 
 
 withhold 39 
 
 From what obligation not subject to tax and certificates of ownership not 
 
 required 37 
 
 How treated 63 
 
 On deposits 
 
 Part of gross income 4 
 
 Subject ot withholding ; must be included in personal return whether 
 
 paid or not 67 
 
 On obligations of State or political subdivision of, United States or pos- 
 sessions, not part of gross income 5 
 
 Paid as rental by corporations, how treated 148 
 
 Paid by bank, etc., on deposits, etc., allowable deduction 149 
 
 Paid by corporation 
 
 Deduction of what, when 148 
 
 On indebtedness secured by collateral subject to sale, deductible 
 
 when, why 150 
 
 At different rates, rule for application of deduction of 151 
 
 On mortgage on property in which corporation has equity or is pur- 
 chasing, how treated 148 
 
 Part of gross income 4 
 
 Payment of, to beneficiaries by insurance companies, part of gross income 5 
 Registered, certificate claiming exemption to be filed at least five days 
 
 before due-date of interest 44 
 
 Registered, duty of debtor before payment of 41 
 
 INVENTORS: 
 
 Earnings of, indefinite or irregular not subject to withholding 32 
 
 INVENTORY: 
 
 Corporation, purpose and use of, kinds of 161 
 
 JOINT STOCK COMPANY: 
 
 Assessment against, payable pp 44-57 
 
 Deductions allowable to 9 
 
 Income 
 
 How ascertained p 52 
 
 To be separately stated p 55 
 
 Losses actually sustained p 55 
 
 Neglecting to make return, penalty p 51 
 
 2478514 -8 
 
INDEX. 
 JOINT STOCK COMPANY Continued. Article. 
 
 Net income from all sources p 52 
 
 Net income taxable for preceding calendar year p 48 
 
 Notice to be given of assessments p 57 
 
 Penalty for failure 
 
 To make return p 57 
 
 To pay tax p 57 
 
 Return 
 
 False, penalty for ' p 48 
 
 For others made by p 48 
 
 Net income to be shown on p 57 
 
 Refusing to make, penalty p 48 
 
 When available p 58 
 
 When to make p 55 
 
 Special excise tax and how computed p 62 
 
 JUDGES: 
 
 United States courts, salaries exempt, what 5 
 
 JURISDICTION: 
 
 Of courts p 61 
 
 L. 
 LABOR ORGANIZATIONS: 
 
 Exempt p 51 
 
 LAST DUE DATE: 
 
 Defined 175 
 
 LAWS: 
 
 Relating to assessment, remission, collection, refunding p 60 
 
 LAWYERS: 
 
 Fees, indefinite or irregular, not subject to withholding 32 
 
 LESSEES OR MORTGAGORS: 
 
 Make return for others, when p 48 
 
 LIABILITY: 
 
 To tax of a taxable person not to be released 27 
 
 LICENSE: 
 
 Bond may be required on form furnished 56 
 
 Failure to obtain, penalty for 55 
 
 For branch, to be made through principal office 57 
 
 Form of application for, to be made to collector of district 55 
 
 Form of; to be issued by collector, good until revoked 55 
 
 Required for collection of interest or other foreign items, when, by 
 
 whom, where obtained p. 50, art. 54 
 
 LICENSEE: 
 
 First, receiving foreign item for collection to withhold and be responsible 
 
 for tax and to note fact of withholding on such item, effect of 58 
 
 For collection of foreign items 
 
 Disposition of certificates accompanying, by , 61 
 
 To keep record showing what 62 
 
 To report to collector (Form 1043), what, when 59 
 
 LIFE INSURANCE: 
 
 Proceeds of policies, when to be excluded from gross income. . ..p. 44, Art. 5 
 
 LIFE INSURANCE COMPANY: 
 
 Applied surrender values and consideration for supplementary con- 
 tracts both to be added and deducted in return 102 
 
 Deductions from gross income, what p. 57, Art. 100 
 
 Gross income, definition pp. 52-57, Art. 101 
 
 Supplementary statements attached to return of, showing what 103 
 
 184 
 
INDEX. 
 LIMITATION, STATUTE OF: Article. 
 
 For income tax purposes, thee years 177 
 
 LODGE SYSTEM: 
 
 Corporation operating under, defined 89 
 
 Loss: 
 
 Corporation- 
 
 Deductible, defined 124 
 
 From sale capital assets, how ascertained 128 
 
 From sale securities below par, how treated 135 
 
 Insurance company, deduction for, what 147a 
 
 Removal of building not deductible, why 127 
 
 Reserve for, not deductible 126 
 
 M. 
 MAKER: 
 
 Of note given in payment of interest held responsible for normal tax. . 68 
 MANUFACTURING COMPANY : 
 
 Gross income, definition 104 
 
 MANUFACTURERS : 
 
 Returns of, accessible how, penalty, sec. 3167 p 22 
 
 MARINE INSURANCE COMPANY: 
 
 Deductions by p 55 
 
 MATERIALS AND SUPPLIES ON HAND: 
 
 Deduction by corporation on account of, what 123 
 
 MERCANTILE CORPORATION: 
 
 Gross income, definition 105 
 
 MINE: 
 
 Gross value at 
 
 Defined 6 
 
 Corporation, definition 142 
 
 Depreciation p 52 
 
 Operated on royalty basis, corporation, deduction for depletion of de- 
 posits not allowed operating corporation 145 
 
 MINOR: 
 
 Who make claim for deductions for 33b 
 
 MISCELLANEOUS CORPORATION: 
 
 Gross income, definition 106 
 
 MONTHLY LIST RETURN: 
 
 Form of, what to contain, to be filed in duplicate 50 
 
 Of coupon or registered interest orders received with ownership certifi- 
 cates, form of and what to show 53 
 
 Of licensee for collection of foreign item, form of, what to show, with 
 
 whom filed, when 59 
 
 Summary of, when to be filed and what to show 50 
 
 Totals only to be carried into annual return 51 
 
 MORTGAGES: 
 
 Interest on, when subject to withholding p 50 
 
 Not payable in United States, when subject to withholding.. r p 50 
 
 Paid by corporation which has equity, how treated 148 
 
 Of corporation, income from, subject to withholding, regardless of 
 
 amount 37 
 
 MUTUAL COMPANIES: 
 
 To make return of income; definition of net income 80 
 
 185 
 
INDEX. 
 
 MUT.UAL FIRE INSURANCE COMPANY: Article 
 
 Gross income of, definition 98 
 
 Premium deposits returned, what p 55 
 
 Return of pp 53-55-56 
 
 Supplementary statement attached to return of, showing wfrat 103 
 
 Taxable income, what 98 
 
 MUTUAL MARINE INSURANCE COMPANY: 
 
 Deductions, what p 19, Arts 99, 147d 
 
 Gross income pp 53- 56 
 
 Supplementary statement attached to return of, showing what.. . . 103 
 
 . N. 
 NAMES. 
 
 Arrangement of, in list by collector 188 
 
 NATCJRAL DEPOSITS: 
 
 Deduction for depreciation of, basis and limit of 141 
 
 NET INCOME: 
 
 Defined 3 
 
 Corporation 
 
 Engaged in more than one class of business, how ascertained 113 
 
 For 1913, how ascertained 159 
 
 From sale of capital assets, how determined 109 
 
 Should be what 158, 183 
 
 Foreign corporation, defined 157 
 
 Mutual companies, defined 80 
 
 NORMAL TAX 1 
 
 NOTE: 
 
 Gjven in payment of income; maker is debtor or source and must with- 
 | hold on entire amount of note if in excess of $3,000, except allow- 
 ance exemption or deduction claimed 68 
 
 Given in payment of interest; failure of purchaser to make allowance 
 
 or deduction for tax, only remedy is against vendor, how 68 
 
 NOTICE: 
 
 Answer of guardian, etc., may show what 18 
 
 Assessment, advance preparation of, by collector 198 
 
 Claiming deduction account partnership expense, by whom filed, what 
 
 and how x 47 
 
 Collector to give withholding agent, when tax withheld is ad juste : in 
 
 assessment 33c 
 
 Form 1015 filed by fiduciary with other withholding agent, nothing 
 
 withheld 70 
 
 Of assessment; failure to pay tax; make return; form of; time 197 
 
 Of claim for exemption by foreign partnership, when, what, how 48 
 
 Of failure fiduciary to file return, served 71 
 
 Of failure to make return, when to be served on guardian, etc 18 
 
 To delinquent, failure to file return in time 196 
 
 To taxpayer, of amount for which liable as on or before June 1 25 
 
 O. 
 OATH OB AFFIRMATION: 
 
 Required in verifying returns 22 
 
 OBLIGATIONS: 
 
 Interest on, of State or political subdivision; United States or posses- 
 sions not paxt of gross income 5 
 
INDEX. 
 
 OBLIGATIONS OF CORPORATIONS, ETC.: Article. 
 
 Similar to bonds, mortgages, and deeds of trust, income from, subject to 
 
 withholding, regardless of amount 37 
 
 OBSOLESCENCE: 
 
 Of patents, deduction for, what, how determined 138 
 
 OFFICERS: 
 
 Of State or political subdivision of, compensation 
 
 Of not part of gross income 5 
 
 Paid by United States is part of gross income. 5 
 
 Regulations designed for enforcing compliance with law p 61 
 
 Of the United States making returns for others 9 
 
 OlL OR GAS TERRITORY LEASED: 
 
 Basis of deduction for depletion of 7 . 144 
 
 OlL OR GAS WELLS AND MINES: 
 
 Operated on royalty basis, deduction for depletion of deposits not allowed 
 
 operating corporation 145 
 
 OMITTED TAX: 
 
 May be assessed and with penalty, when 184 
 
 ORGANIZATIONS: 
 
 Civic, exemptions p 51 
 
 P. 
 PAID-UP CAPITAL STOCK: 
 
 Definition of 95 
 
 PARTNERSHIP: 
 
 As such not subject to tax and not required to make return except on 
 
 request Commissioner or Secretary 12 
 
 Foreign 
 
 Composed of nonresident aliens, resident aliens, and citizens of 
 United States, either or both, requisites of ownership certificate 49 
 
 for 
 
 Owning bonds, etc., of corporations, etc., organized or doing business 
 in the United States not subject to withholding on interest of 
 
 provided exemption claimed (Form 1016) 48 
 
 Individual share of profits of, to be included in personal return 11 
 
 Limited, is corporation and subject to corporation tax 86 
 
 Liable only in individual capacity p 48 
 
 May claim deduction for expense of business, when and how 14 
 
 Members of, liable in individual capacity for tax on their respective 
 
 shares of earnings of, whether distributed or not p 44, Art 94 
 
 Profits of 
 
 Once returned and tax paid, not again reported as income 14 
 
 To be included by individuals entitled to, in their personal return. 13 
 
 Return of, when to be made, section 3173 p 59 
 
 Shall forward correct statement of profits and names p 49 
 
 Share of profit to partners ' p 49 
 
 To file with withholding agent notice claiming deduction for expense of, 
 
 what and how 47 
 
 To make list or return, how and when, section 3173 p 59 Art 23 
 
 When required to make return must make complete and correct 12 
 
 PATENTS: 
 
 Deduction for 
 
 Depreciation, what, and how determined 137 
 
 Obsolescence, what, how determined 138 
 
 187 
 
INDEX. 
 PAYMENT: Article. 
 
 To officer authorized to receive p 48 
 
 PENALTY : 
 
 And interest for nonpayment when due and for 10 days after notice.whenp 48 
 Delinquent tax 
 
 Amount of, and how determined, not assessed against estates, in- 
 sane, deceased, or insolvent persons 25 
 
 PENALTY: 
 
 For divulging 
 
 Information on return, what 181 
 
 Unlawfully, information on return, fine or imprisonment, or both, 
 
 with costs 164 
 
 Failure to make return in prescribed time or for false or fraudulent, fine 
 
 or imprisonment, or both P 58, Art, 164 
 
 Failure to pay tax, 5 per cent tax plus 1 per cent per month 164 
 
 False claim or statement to secure exemption p 49, Art. 33a 
 
 False or fraudulent return with intent to evade or defeat tax, what. ... 26 
 
 Falss or fraudulent return 100 per cent to tax p 60, Art. 164 
 
 False statement in regard to deduction p 49, Art. 33b 
 
 Making false return p. 51 
 
 Neglect or refusal to make return p51, Art. 164 
 
 Person or officer of corporation required to make return, making false or 
 
 fraudulent, with intent to defeat or evade assessment 164 
 
 Refusal or neglect tomake return, liable person, corporation, etc. p 12, Art. 26 
 Refusal to make or for false return, to be assessed and collected, what. . 21 
 Return made and properly mailed in time but not received in time, none 174 
 PENSIONS: 
 
 Or payments on account of injuries to employees of corporations, de- 
 ductible expense -. 120 
 
 PERSON: 
 
 Whose income is not subject to withholding at source, make personal 
 
 return 32 
 
 PERSONS, FIRMS, ETC.: 
 
 Collecting foreign items, license required p 50 
 
 Whatever capacity acting, withholding agent, when, what p 48 
 
 Withholding none prior to November 1, 1913 p 48 
 
 PHILIPPINE ISLANDS: 
 
 Exemptions p 51, Arts. 25, 26 
 
 PLANT: 
 
 Corporation, deduction for depreciation (in addition to the deduction for 
 
 depletion of mine), what and basis of 143 
 
 POLITICAL SUBDIVISION OF STATE: 
 
 Interest on obligations of, not part of gross income 5 
 
 Officers and employees of, compensation not part of gross income 5 
 
 PORTO Rico: 
 
 Exemptions and provisions p 51, Arts. 25, 26 
 
 POSSESSIONS: 
 
 Of United States, interest on obligations of, not part of gross income . . 5 
 PREMIUMS: 
 
 Deduction from, by whom, when p 48 
 
 PRESIDENT OF THE UNITED STATES: 
 
 Salary of, exempt, what 5 
 
 188 
 
INDEX. 
 
 PROCEDURE: Article. 
 
 In case of refusal or neglect, liable individual to make return on or for 
 false return made Note to Art. 21 
 
 PROFFESSIONAL : 
 
 Persons whose income indefinite or irregular, not subject to withholding. 32 
 
 PROFIT OR LOSS: 
 
 Corporation, on sale of capital assets, how determined 110 
 
 PROFITS: 
 
 For taxable purposes of those arising or accruing within calendar year. . . 4 
 
 From any source part of gross income 4 
 
 Partnership once return and tax paid, not reported as income 14 
 
 Partnership, individual entitled to include in his personal return 13 
 
 Share of, in partnership to be included in return of individual 11 
 
 PROPERTY: 
 
 Received by gift, bequest, devise, descent, income from but not value, 
 part of gross income f 4 
 
 PUBLIC RECORDS: 
 
 Returns are, inspection of or copies, how 178 
 
 PUBLIC UTILITY: 
 
 Income from accruing to State, etc., exempt from tax 93 
 
 PURCHASER: 
 
 Of note given in payment of interest, failure to make allowance or deduc- 
 tion of tax in purchase or discount only remedy is against vendor. 68 
 
 R. 
 RATE: 
 
 Deduction for depletion 'Of mines, etc., regulation and limit of 142 
 
 RECEIPTS: 
 
 Separate to be issued, when 25 
 
 RECORD : 
 
 To be kept by- 
 Collecting agent, what 40 
 
 Licensee for collection of foreign items, what to show 62 
 
 REFUND: 
 
 Failure to make claim for exemption or deductions with withholding 
 
 agent in time; only remedy is by application for 33c 
 
 REGISTERED INTEREST: 
 
 Certificate claiming exemption from tax on, to be filed at least five days 
 
 Lbefore due date of interest 44 
 
 REGUATIONS: 
 
 Designed to assist taxpayer and officer in complying with the law p 61 
 
 Subjects covered and arrangement of p 61 
 
 REMOVAL OF BUILDINGS: 
 
 Not deductible loss, corporation, why 127 
 
 RENT: 
 
 Corporation, cost of buildings on leased ground deductible, when 115 
 
 How treated 63 
 
 Interest paid by corporation as, how treated 148 
 
 Part of gross income 4 
 
 REPAIRS: 
 
 Deduction, when 131 
 
INDEX. 
 RESERVE: Article. 
 
 Assessment insurance company, definition 147d 
 
 For depreciation 
 
 Diversion of, correction 133 
 
 Use of, disposition of excess of 132 
 
 For insurance of corporate property not deductible 122 
 
 For losses not deductible 126 
 
 For taxes of corporation not deductible 156 
 
 Insurance company, deductible net addition to, definition; what basis 
 
 computation; what not to be included in 147d 
 
 To meet loss, insurance company, how treated 147c 
 
 RESIDENT ALIENS: 
 
 Certificates of ownership of bonds, when and how to be used and to 
 
 specify what ' 42 
 
 Income of, from coupon or registered interest, subject to withholding 
 
 except to extent of exemption claimed 44 
 
 RETURNS: 
 
 Administrators to make for heirs, when 9 
 
 Agents to make for others 9 
 
 Annual individual and monthly list to be forwarded to Commissioner, 
 
 how 24 
 
 Annual list (Form 1013), to show what, and to be filed on or before 50 
 
 March 1 
 
 Annual, of coupon or registered interest orders not accompanied by 
 certificates of ownership; form of, and what to show; to be filed when; 
 
 to show totals only on monthly return 53 
 
 Annual, of debtors or withholding agents to show totals only on month- 
 ly list 51 
 
 Annual, fiduciary to collector of district when; show what 71 
 
 Annual, of withholding agent, form for. to be accompanied by 'what, 
 
 when to be filed 35 
 
 Annual, of withholding agent (Form 1042), what to show and when to be 
 
 filed 69 
 
 Approval of Secretary 7 
 
 Blanks for, furnished corporations by collector 163 
 
 By persons of lawful age 7 
 
 Certified copies of, when, why, delivered to whom 180 
 
 Conservators to make for others 9 
 
 Corporation 
 
 Every, not specifically exempt, to make 80 
 
 Fiduciaries, withholding agents, when to be made 190 
 
 Going into liquidation to make final; filed when and where 85 
 
 Not receiving blank for, should make application for, to whom, 
 
 when 136 
 
 One only for 1913 160 
 
 Organized during year, to make 84 
 
 To make complete or nor accepted 163 
 
 When income paid by lessee direct to stockholders, must neverthe- 
 less make . . . 80 
 
 Copy of, unlawful to exhibit, section 3167 P 58 
 
 Divulging 
 
 Information from, penalty 181 
 
 Unlawfully, information on, penalty 164 
 
 Due date on Sunday or legal holiday, effect of 176 
 
 Duplicate, when, of whom required, disposition of }. . 193 
 
 190 
 
INDEX. 
 RETURNS Continued. 
 
 Duty of collector Article 
 
 On failure to find person at home, section 3173 p 60 
 
 In forwarding and investigation of 192 
 
 Employees to make for others p 49 
 
 Evidence by which to verify, what 183 
 
 Executors to make for others p 48 
 
 Extension of time 
 
 For filing, when, what, how 23 
 
 To make, not to exceed what, how, to whom made 173 
 
 Failure of corporation to receive blank for, not excused from making 
 
 return or penalties for failure 163 
 
 Failure 
 
 Of fiduciary to file, notice of, served 71 
 
 To make by guardian, agent, or other person acting in trust cap- 
 acity, notice to, served on 18 
 
 To make in prescribed time, of a false or fraudulent, penalty 164 
 
 To make- 
 Notice of, form and time to serve 197 
 
 Legal provisions as to p 23 
 
 False or fraudulent 
 
 Penalty p 51, Art 164 
 
 Duty of collector in matter of .....; 192 
 
 With intent to defeat or evade tax, penalty 26 
 
 Fiduciary 
 
 Having income not distributed; what to be shown; tax to be with- 
 held and paid when 24 
 
 Must be made when 71 
 
 Not to include income on which tax paid 71 
 
 To include only matter within scope of authority 72 
 
 What to show, and how executed 73 
 
 For 1913, must be on new form and not on excise form heretofore used 172 
 Foreign corporation having more than one branch office in United 
 
 States to designated principal office and person to make return 83 
 
 Form of for corporation prescribed 163 
 
 For persons incapacitated, by whom made p 49 
 
 For persons absent from United States, by whom made p 49 
 
 Fraudulent 
 
 Duty of collector p 60 
 
 Extra tax because of p 49 
 
 Time limitation for paying after notice 1 .p 49 
 
 _ Husband and wife, net income both exceeds $4,000, of combined in- 
 come, required 10 
 
 Husband and wife not living apart, separate income from separate es- 
 tate may be made on one; separately stated and with names and ad- 
 dresses of both 10 
 
 Husband should made for himself and wife 10 
 
 Husband or wife, either having net income $3,000 or over, required, 
 
 and must include income of both 10 
 
 Individual 
 
 To be made when 190 
 
 For calendar year . . : 4 
 
 Made by collector when 20 
 
INDEX. 
 RETURNS Continued. 
 
 Individual Continued. Article 
 
 Not required to make, when made by other for him, when 19 
 
 To include share of partnership profits in 13 
 
 Information or copies from, to officiers of State, when, what, how; ori^ 
 
 inal not removed except 1 79 
 
 Last due date defined 175 
 
 Leased corporations make their own 82 
 
 Legality of, made by collector of deputy, sec. 3176 p 60 
 
 Lessee corporation assuming debts of lessor to include in lessee return 
 
 all receipts of lessor 81 
 
 Lessee corporation not to include in its own statement of capital stock, 
 
 that of lessor; nor in its own statement of indebtedness, that of lessor 
 
 except when said indebtedness is assumed by lessee 82 
 
 Life insurance company 
 
 Applied surrender values and consideration for supplementary con- 
 tracts both added and deducted 102 
 
 Supplementary statement attached to return of, showing what. . . . 103 
 Made and properly mailed in time, no penalty if not received in time 174 
 
 Made by guardian or authorized agent, when 17 
 
 Made on basis of fiscal year but not so designated, not accepted, and 
 
 must be made for calendar year 171 
 
 Made to collector p 49 
 
 Monthly, by withholding agent, when to be filed; with whom, what to 
 
 accompany 35 
 
 Monthly list and annual, by licensee for collection of foreign items, 
 
 what, to whom, when 59 
 
 Monthly list, form of, what to contain, to be filed in duplicate 50 
 
 Monthly list of coupon or interest orders not accompanied by certifi- 
 cates of ownership, form of, and what to show 53 
 
 Must be made, when, section 3173 p 59 
 
 Mutual companies to make; definition net income '. 80 
 
 Mutual fire insurance companies, supplementary statement attached 
 
 to, showing what 103 
 
 Mutual marine insurance companies, supplementary statement attached 
 
 to, showing what 103 
 
 Neglect or refusal of liable person, corporation, etc., to make, penalty.. 26 
 
 Neglect or refusal to make, 50 per cent additional tax 164 
 
 Neglect to make, penalty p 51 
 
 Nonresident alien, agent or representative to make for, when, what to 
 
 be included in 8 
 
 Not required, income not exceeding $3,000 p 47 
 
 Not filed in time, notice sent to delinquent 196 
 
 Officers and employees of the United States, having control salaries, 
 
 rents, etc., to make when p 49 
 
 Of income 
 
 When required, where filed 15 
 
 Persons deceased within taxable year, made by executor or adminis- 
 trator 17 
 
 On basis of calendar year or fiscal year, time of assessment and payment 
 
 of tax 177 
 
 One deduction only of exemption p 47 
 
 One to cover both special excise and income tax for 1913 for corporation.? 62 
 Open to inspection, when p 68 
 
 192 
 
INDEX. 
 
 RETURNS Cont'nued. Article. 
 Partnership profits included by individual and tax paid, not again re- 
 ported as income 14 
 
 Partnership, requisite of . . . 12 
 
 Penalty 
 
 Against corporation for failure to make 163 
 
 For failure to make at time specified p 57 
 
 For refusal to make p 51 
 
 Personal, Form 1040; fiduciary may be appointed agent or attorney to 
 
 make for beneficiary 72 
 
 Personal not required when 8 
 
 Person or officer of corporation required to make, making false or frau- 
 dulent with intent to defeat or evade; penalty 164 
 
 Person residing in foreign country, provision for 7 
 
 Public record-, inspection or copies, how p. 58 Art. 178 
 
 Receivers to make for others 9 
 
 Refusal or neg'ect of liable individual, duty of collector p. 60 Art. 21 
 
 Refusal to make, extra tax p 9 
 
 Requisite of bookkeeping for verifying 182 
 
 State officer may have access to p 58 
 
 To be filed, when p 46 
 
 To be made on Form 1040 for individuals 16 
 
 To be made to collector pp. 46-47 
 
 To include 
 
 Personal income not subject to withholding 32 
 
 Share of profits in partnership whether divided or not 11 
 
 To be verified, how, before whom pp. 46-59 
 
 Trustees to make for others p 47 
 
 Understatement of income, cause to be shown why amount not in- 
 creased p 48 
 
 Undervaluation or understatement p 59 
 
 Unlawful to exhibit or divulge information from, section 3167 p 58 
 
 Wife having income of $3,000 from separate estate managed by herself 
 
 may make her own , 10 
 
 What must be shown on 16 
 
 When to be made; where filed, section 3173 p 59 
 
 Withholding agent, what disposition of; should not be filed until expira- 
 tion of time allowed for filing claims for exemption or deductions 33c 
 
 REVISED STATUTES: 
 
 Amended sections of, providing duties and penalties, sections 3167 
 
 3172, 3173 PP 58-59-60 
 
 ROYALTIES: 
 
 How treated 63 
 
 ROYALTY BASIS: 
 
 Mines, oil or gas wells, operated on, deduction for depletion of deposits 
 
 not allowed operating corporation 145 
 
 S. 
 SALARIES: 
 
 How treated 4, 63 
 
 J3ALE OF CAPITAL ASSETS.* 
 
 Corporation 
 
 Income from, how determined 108, 109 
 
 Loss from, how ascertained 128 
 
 Profit or loss on. . 110 
 
 193 
 
INDEX. 
 
 SALESMEN: Article. 
 Commission to, paid in stock, deductible expense when 117 
 
 SALVAGE : 
 
 How treated in return of insurance company 147c 
 
 SCIENTIFIC ASSOCIATION: 
 
 Exemptions p 5 1 
 
 SECURITIES: 
 
 Income from; sale of, below par; 'loss 4,135 
 
 SHRINKAGE : 
 
 In book value capital assets, how treated 134 
 
 In property value insurance company, depreciation loss by, what and 
 when deductible 147b 
 
 SIZE: 
 
 Foreign items too small for notation on, statement may be attached to . . 58 
 
 SOCIETY : 
 
 Operating under the "lodge system," defined; exemptions p 51 Art 89 
 
 SOURCE : 
 
 Defined 31 
 
 Example of where and where not withholding at 32 
 
 Fiduciary is, when 70 
 
 Note given in payment of income, maker of note is 68 
 
 Persons, firms etc., acting as, designated "debtors" or "withholding 
 
 agents" 31 
 
 Tax withheld at, to be paid to collector 34 
 
 Withholding at, applies only to normal tax imposed on individuals .... 29 
 Who required to act as; liable for tax withheld 30 
 
 SPECIAL TAX: 
 
 See sections 3173, 3176 pp 59-60 
 
 STATE : 
 
 Information from return when, how 179 
 
 Officers and employees, paid by United States; compensation part of 
 
 gross income 5 
 
 Political subdivision of, compensation of officers and employees not 
 part of gross income; interest on obligations of, not part of gross income 5 
 
 STATE OR UNITED STATES: 
 
 Construction; exemptions, distinction as to, for certain income from ' 
 State, etc p pp 51- 58 
 
 STATUS: 
 
 For claiming exemption by individuals 10 
 
 STATUTE OF LIMITATION: 
 
 For income-tax purposes, three years 177 
 
 STOCK: 
 
 Paid-up capital, definition 95 
 
 SUBSTITUTE CERTIFICATES 40 
 
 SUMMARY OF MONTHLY LIST RETURN 50 
 
 SUMMONS, SECTION 3173 p 59 
 
 SUNDAY OR LEGAL HOLIDAY 176 
 
 SUPPLEMENTARY STATEMENT ATTACHED TO RETURN 103 
 
 SUPPLIES ON HAND 123 
 
 T 
 
 TAX: 
 
 Additional, on individuals only, rates and classes 2 
 
 Amounts added as penalty, section 3176 P 60 
 
 Assessment and collection 25 
 
 From withholding agent 36 
 
 194 
 
INDEX 
 TAX Continu . 
 
 Assessment Article. 
 
 Against income withheld at source. ... 38 
 
 Of, against withholding agent deferred. 189 
 
 Claim for abatement of 33c 
 
 Co-operative dairies exempt 92 
 
 Corporation .*>i 
 
 Exempt 87 
 
 On entire net income 185 
 
 Organized in United States, all (with certain exceptions) subject to 76 
 
 Delinquent if not paid by June 30 25 
 
 Deputy collectors, duties, section 3172 p 59 
 
 Domestic building and loan association, what necessary to exempt .... 87 
 
 "Duties" are not but item of cost 155 
 
 Evidence of nonliability, received by withholding agent, disposition of . .p 61 
 
 Evidence of payment of, by corporation for deduction purposes 158 
 
 Excise on corporation Arts. 160, 191 
 
 Extra p 48 
 
 Failure to pay 164, 177, 197 
 
 Fixed determinate annual income, subject to withholding 65, 66 
 
 Fraternal societie , exempt , p 51 
 
 Individual 
 
 Net income over $3,000 annually, liable to p. 45, Art. 9 
 
 Income from public utility taxable when 93 
 
 Income of corporations organized elsewhere than in the United States 
 
 liability 79 
 
 Normal 
 
 Computation of. Art. 1, 7 
 
 Deductions in connection with, pp. 10-12, Art. 41 
 
 Agricultural, horticultural, an 1 1 abor organizations certain mutual 
 
 savings banks, exempt p 51 
 
 N-t to b^ withheld against partnership profits 47 
 
 Not to be withheld on bank deposits 67 
 
 Omitted, procedure upon discovery o" 184 
 
 Once withheld, subsequent withhold in agent, exempt on filing certifi- 
 cate (Form 1006) 34 
 
 On excess of income over exemption 10 
 
 Paid by corporation, when not deductible 153 
 
 Partnership limited is corporation and subject to corporation tax 86 
 
 Penalty on delinquent 2c 
 
 On income 
 
 From bonds, etc. corporations, etc 37 
 
 Paid by note 68 
 
 On interest on bonds owned by corporations organized in United States . 45 
 
 On net income for foreign corporation; definition; deduction 157 
 
 On net income of corporation 
 
 Computation of 159 
 
 Distributable to owners 79 
 
 Receipts to be given by coll ctor p 61 
 
 Returns of, to be made, section 3173 p 59 
 
 Special excise 62 
 
 Taxable person not to be relieved from liability 27 
 
 To be i aid 177 
 
 195 
 
INDEX. 
 TAX Continued. Ar;icle. 
 
 To be withheld ' 44, 64 
 
 Withheld 
 
 At source, to b > paid to 30 
 
 By first licensee, fact of withholding noted 58 
 
 Collector to adjust in assessment a a'nst wi hholding agent 33c 
 
 From what 64, 75 
 
 To be paid to collector 33c, 34 
 
 TAXABLE INCOME: 
 
 Definition; liability 3, 7 
 
 TAX DUE 187 
 
 TAXES: 
 
 Paid by corporation constitute deduction 152 
 
 Reserve for, by corporation not deductible 156 
 
 TAXPAYER: 
 
 Regulations designed to assist p 27 
 
 TAX STATEMENTS 199 
 
 TAX YEAH 1913 7 
 
 TRUSTEE : 
 
 As fiduciary 70 
 
 Duties of p 9 
 
 TEACHER: 
 
 Public school 5 
 
 TlMBERLAND : 
 
 Deduction for deprec ation 
 
 Account removal of tinier 159 
 
 Limit of, excess of, is income 140 
 
 TIME: 
 
 Extension of, for making and filing return 23, 173 
 
 U. 
 
 UNEARNED INCREMENT: 
 
 Not value for depreciation purposes 146 
 
 ''UNITED STATES" OR ''STATE": 
 
 Con traction p 21 
 
 Interest upon obligations of 5 
 
 V. 
 VALUE : 
 
 Book, capital assets, shrinkage in 134 
 
 Gross at the mine, definition 6,142 
 
 Of property, acquired by gift, etc 4, 5 
 
 Shrinkage in property, deductible 147b 
 
 Unearned increment, not as basis of deduction for depreciation 146 
 
 W. 
 
 WAGES 4, 63 
 
 WIPE: 
 
 Having income of $3,000 from separate estate managed by herself may 
 
 make return of her own income 10 
 
 WIFE AND HUSBAND: 
 
 Combined net income of exceeds $4,000, return required, both jointly 
 
 and separately liable for return and tax 10 
 
 WIFE OR HUSBAND: 
 
 Either having income $3,000 or over, return required and must include 
 incomes of both. . 10 
 
 196 
 
INDEX. 
 WITHHOLDING: Article. 
 
 At source 30 
 
 Example of where and where not 32 
 
 On and after November 1, 1913 29 
 
 By first liscensee; notation by; responsibility of 58 
 
 From what ~ 64 
 
 WITHHOLDING AGENT: 
 Annual return by 
 
 By, when, to show what 50, 51 
 
 Of (Form 1042), when to be filed, to be accompanied by what .. 35, 69 
 
 Not to be filed until , 33c 
 
 Assessment of tax against, deferred until 189 
 
 Claim for exemption and deductions filed with Par B and C p 49 Arts 33ac 
 
 Definition of, as source 31 
 
 Disposition of returns of 193 
 
 Duty in matter of certificates of ownership .' p 49 Art 43 
 
 Duty of, in matter of claims for deduction (par B) 33c 
 
 Duty of, in case of foreign partnership 48 
 
 Evidence of nonliability to tax filed with, disposition of p 61 
 
 How to treat substitute certificate of collecting agent and certificates of 
 
 owners not subject to having tax withheld. 51 
 
 May file claim for abatement of tax '. . 33c 
 
 Monthly return by, when to be made, with whom filed, to be accom- 
 panied by what 35 
 
 Notice filed with, claim for deduction, account partnership expense. ... 47 
 Not to withhold against nonresident alien or foreign organization doing 
 
 business in United States, when 46 
 
 Return of, when to be made 190 
 
 Relieved from necessity of withholding, when p 61 
 
 To file monthly list return, form of, and what to contain 50 
 
 To forward to collector tax withheld, when 33c 
 
 To furnish statement of claim for deductions filed with collector 33c 
 
 To pay to collector tax withheld v 64 
 
 To withhold from, what, amount of 32, 65 
 
 When claim for deductions, paragraph B, to be filed with, duty of. . .33b, 66 
 When so authorized, may file return of withholding in district of his 
 
 location 38 
 
 Who to be, in cases cited .* 64 
 
 WITHHOLDING AND, PAYING AGENT: 
 
 Of debtor in United States, charged with duty of withholding, when. . . 39 
 WITNESSES: 
 
 Jurisdiction for compelling attendance p 60 
 
 Y. 
 YEAR: 
 
 For taxable purposes for individual, is calendar year 4 
 
 (See fiscal year for corporation.) 
 
 197 
 
232 10 
 
 
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