Treasury Department : : : ureau of Interna Revenue

U Interna Revenue uetn

Cumuatve uetn 19 2-1
NU RY- UN 19 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
SP CI L TT NTION u ected to the cautonary notce on ths page that pu
shed rungs of the ureau do not have the force and eft e
of Treasury Decsons and that they are appcabe ony to facts presented n the pubshed ca:
Treasury Department : : : : ureau of Interna Revenue
Interna Revenue uetn
Cumuatve uetn 19 2-1
NU RY- UN 19 2
IN T IS ISSU
Introductory Notes I
Contents
Rungs Nos. 13736-13 60
ta Court .of the Unted States The 1-6
Income Ta -
Part I (Interna Revenue Code) 7-1 2
Part U (Revenue ct of 193 and pror Revenue
cts) 1 3-1
state and Gft Ta es 1 -172
mpoyment Ta es 173-206
cse Ta es 207-22
Msceaneous Rungs 227-2s7
Legsaton 2 9-263
Inde 26 -276
The rungs reported n the nterru Revenue uetn are or the nformaton o ta payers and then
showng the tread of offca opnon n the admnstraton of the ureau of Interna Revenue; the rungs other than
Treasury Decsons hare none of the force or effect of Treasury Decsons and do not commt the Department to
any nterpretaton of the aw whch has not been formay approved and promugated by the Secretary of the
Treasury. ach rung embodes the admnstratve appcaton of the aw and Treasury Decsons to the entre
state of facts upon whch a partcuar case rests. It s especay to be noted that the same resut w not neces-
sary be res bed n another case uness a the matera facts are dentca wth those o. the reported case- s t s
not aways feasbe to pubsh a compete statement of the facts underyng each rung, there can be no assurance
that any new case s dentca wth the reported case. s bearng out ths dstncton, t may be observed that the
rungs pubshed rom tme to tme may appear to reverse rungs prevousy pubshed.
Offcers of the ureau of Interna Revenue are especay csutnned aganst reachng a concuson n any case
merey on the bass of smartv to a pubshed rung, and shoud base ther |udgment on the appcaton of a
pertnent provsons of the aw and Treasury Decsons to a the fact sn each case. These rungs shoud be used
as ads n studyng the aw and ts forma) constructon as made -rt the reguatons and Treasury Decsons pre-
vousy ssued. #
n addton to pubshng a Interna Revenue Treasury Decsons, t s the pocy of the ureau of nterna
Revenue to pubsh a rungs and decsons, ncudng opnons of the Chef Counse for the ureau of nterna
Revenue, whch, because they announce a rung or decson upon a nove queston or upon a queston n regard
to whch t ere e sts ne prevousy pubshed rung or decson, or for other reasons, are of such mportance at
to be of genera nterest It s aso the pocy of the ureau to pubsh a rungs or decsons whch revoke,
modfy, amend, or affect n any manner whatever any pubshed rung or decson. In many nstances opnon
of the Chef Counse for the ureau of Interna Revenue are not of genera terest because they announce no
new ratng or new constructon of the revenue aws but smpy appy rungs aready made pubc to certan
utuatons of fact whch arc wthout speca sgnfcance- It s not the pocy of the ureau to pubsh such opnons.
Therefore, the numbers assgned to the pubshed opnons of the Chef Counse for the ureau of Interna
Revenue are not consecutve. Uness otherwse specfcay ndcated, a pubshed rungs and decsons have
receved the consderaton and approve of the Chef Counse for the ureau of Interna Revenue
UNIT D ST T S GO RNM NT PRINTING OFFIC W S INGTON 19 2
Tor aae by Superntendent of Documents C. S. Government Prntng Offce, Washngton 2 , D, C
See back of tte foe prces
LI R RY
UNI RSITY OF C LIFORNI
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
II
The Interna Revenue uetn servce conssts of uetns ssued
every other week and semannua Cumuatve uetns.
The uetns contan the rungs and decsons whch are made
pubc and a Treasury Department decsons (known as Treasury
Decsons) pertanng to Interna Revenue matters. The semannua
Cumuatve uetns contan a rungs and decsons (ncudng
Treasury Decsons) pubshed durng the prevous 6 months.
The compete uetn servce may be obtaned on a subscrpton
bass from the Superntendent of Documents, Government Prntng
Offce, Washngton 2 , D. C, for 3.2 per year; foregn, .60. Snge
copes of the uetn, 1 cents each.
Certan ssues of Cumuatve uetns are out of prnt and are,
therefore, not avaabe. Persons desrng avaabe Cumuatve u-
etns whch are sted beow may obtan them from the Superntendent
of Documents at prces as foows:
Year
Cumuatve uetn
Frst months
Second C montu
1927 . .
I-2 0. 0
II-2 . 0
III-2 .
192
II-1 .30
III-1 . 0
I -1 . 0
I-1 .30
1929 . -
1930
1932
193
I -2 . 0
-2 .
1936
1937
1937- 2 . 0
193 --
193 -1 . 60
1939-1
193 - 2 . 0
1939
Part 1 . 0
Part 2 1. 00
1939- 2 .60
19 0
19 0- 1 . 30
19 0- 2 .60
19 1
19 1- 1 .
19 1- 2 .60
19 2
19 2- 1 . 0
19 2- 2 . 60
19 3
1. 2
19 2
2. 2
1. 0
19 2
19 6
19 6- 1 . 0
19 6- 2 .7
19 7
19 7- 1 . 0
19 7- 2 . 7
I-IS -
19 - 1 .7
19 - 2 L 00
19 9- 1 .7
19 9- 2 - . 7
19 0- 1 .7
19 0- 2 1. 0
19 1
19 1- 1 . 7
19 1- 2 1. 0
19 2
19 2- 1 . 7
ouse, Senate, and conference reports on revenue bs enacted as the ct of October 3,
1013, the ct of October 22, 11)1 , and the Revenue cts of 101: to 103S, ncusve, and on
amendments to such cts.
1 Prnted In one voume.
nqures n regard to these pubcatons and subscrptons shoud
be sent to the Superntendent of Documents, Government Prntng
Offce, Washngton 2 , D. C.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
INTRODUCTORY NOT S
Interna Revenue Cumuatve uetn 19 2-1, n addton to a
decsons of the Treasury Department (caed Treasury Decsons)
pertanng to Interna Revenue matters, contans opnons of the Chef
Couuse For the ureau of Interna Revenue, rungs and decsons
pertanng to ncome, estate, gft, saes, e cess profts, empoyment,
soca securty, and msceaneous ta es, and egsaton affectng the
revenue statutes, as ndcated on the tte page of ths uetn, pub-
shed n uetns 1 to 13, ncusve, for the perod anuary 1 to une
30, 19 2. It aso contans a cumuatve st of announcements
reatng to decsons of The Ta Court of the Unted States, pubshed
n the Interna Revenue uetn Servce from anuary 1 to une 30,
19 2.
Income ta rungs are prnted n two parts. The rungs under the
Interna Revenue Code are prnted as part I, the aw headngs corre-
spondng wth the sectons of the Code, as amended, and the regua-
tons headngs correspondng wth the secton headngs of Reguatons
111 or 103. Rungs under the Revenue ct of 193 and pror revenue
acts are prnted as part II, the aw headngs correspondng wth the
secton headngs of those revenue acts and the reguatons headngs
correspondng wth the artce headngs of the appcabe reguatons.
Rungs under ttes III and I of the Soca Securty ct and
under subchapters and C, chapter 9, of the Interna Revenue Code
n force pror to anuary 1, 19 0, are pubshed under artce headngs
of Reguatons 91 and 90, respectvey; rungs under subchapters
and C, chapter 9, of the Code n force on or after anuary 1, 19 0, are
pubshed under the secton headngs of Reguatons 106 and 107,
respectvey; rungs under the Carrers Ta ng ct of 1937 and under
subchapter , chapter 9, of the Code for perods pror to anuary 1,
19 9, are pubshed under the artce headngs of Reguatons 100, and
rungs under subchapter , chapter 9, of the Code for perods subse-
quent to December 31, 19 , w be pubshed under the secton head-
ngs of Reguatons 11 .
R I TIONS
The foowng abbrevatons are used throughout the uetn.
, , C, etc. The names of ndvduas.
. I. M. Commttee on ppeas and Revew memorandum.
. R. R. Commttee on ppeas and Revew recommendaton.
. T. coho and Tobacco Ta Dvson.
. T. . oard of Ta ppeas.
C. . Cumuatve uetn.
Ct. D. Court decson.
C. T. Ta es on empoyment by carrers.
D. C. Treasury Department crcuar.
m. T. Ta es mposed by chapter 9 of the Interna Revenue Code.
( I)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I
. O. ecutve Order.
. P. C. cess Profts Ta Counc rung or memorandum.
. T. state and gft ta rung.
G. C. M. Genera Counse s, ssstant Genera Counse s, or Chef Counse s
memorandum.
I. R. . Interna Revenue uetn.
I. R. C Interna Revenue Code.
I. T. Income Ta Dvson.
M, N, , Y, Z, etc. The names of corporatons, paces, or busnesses, accordng
to conte t.
Mnt. Mmeograph.
MS. or M. T.- Msceaneous ranch.
O. or L. O. Soctor s aw opnon.
O. D. Offce decson.
Op. . G. Opnon of the ttorney Genera.
P. T. Processng Ta Dvson.
S. T. Saes Ta ranch.
S. Sver Ta .
S. M. Soctor s memorandum.
So. Op. Soctor s opnon.
S. R. Soctor s recommendaton.
S. S. T. Ta es on empoyment by others than carrers.
Tob. Tobacco ranch.
T. . M. dvsory Ta oard memorandum.
T. . R. dvsory Ta oard recommendaton.
T. C The Ta Court of the Unted States.
T. D. Treasury Decson.
and y are used to represent certan numbers, and when used wth the word
doars represent sums of money.
NNOUNC M NT R L TING TO D CISIONS OF T T COURT OF T
UNIT D ST T S
In order that ta payers and the genera pubc may be nformed
whether the Commssoner has acquesced n a decson of The Ta
Court of the Unted States dsaowng a defcency n ta determned
by the Commssoner to be due, announcement w be made n the
Interna Revenue uetn at the earest practcabe date. (No an-
nouncements are made n the uetn wth respect to memorandum
opnons of the Ta Court.) Notce that the Commssoner has ac-
quesced or nonacqucsced n a decson of the Ta Court reates ony
to the ssue or ssues decded adversey to the Government. Decsons
so acquesced n shoud be reed upon by offcers and empoyees of the
ureau of Interna Revenue as precedents n the dsposton of other
cases.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
CUMUL TI CONT NTS
Treasury Decsons-
F7 __
7 ..
70. .
77..
7 ..
79. .
.
63 .
6
7.
91.
2.
693.
9 .
903.
9 M.
90 .
907
90
909
910
911
Court decsons:
17
17 1
17 2
17 3
17
17
Chrf Counse s memoranda:
270 0
27137
Unted 9tatos Ta Court:
9 93
100 0
17760
1 2
1 2 7
19 0
19 7
19 7S
19 1
19 3
19 2-1-13712
19 2-1-1373
11 2-1-137 0
19 2- -137 7
19 2-2-137 0
1932-2-137 9
19 2-3-137 9
19 2- -1377
19 2- -13773
19 2- -13769
19 2- -1370
19 2- -13772
19 2-0-137 3
19 2-0-137 0
19 2-0-137
19 2-7-1379
19 2-7-1379
19 2-7-137
19 2-7-137 9
19.12-9-13 12
19 2-9-13 09
19 2-9-13 10
19 2-9-13 1
19 2-10-13 20
19 2-10-13 21
19 2-10-13 17
19 2-10-13 23
19 2-12-13 3
19 2-12-13 37
19 2-12-13 3
10 2-1:1-13 2
19 2-13-13
19 2-13-13 1
1962-1. )-13 3
19 2-13-13 0
19 2-13-13 7
19 2-13-13 9
19 2-13-rS
19 2-13-13
19 2-13-13 0
1932-1-13739
19 2- -13799
19 2-9-13 07
19 2-9-13 1
19 2-11-13S31
19 2-12-13 3
1962- -13 02
19 2- -13763
19 2-1U-I3S1S
19 2-12-13 32
19 2-11-13 20
19 2-12-13 32
19 2-1-13730
19 2-1-13730
19 2- -13707
19 2- -13707
19 2- -13707
19 2- -13707
19 2- -13707
19 2- -13707
19 2- -13767
19 2- -13707
19 2-3-13707
1962-9-13 00
19 2-1-13730
19 2- -13707
2 9
23
232
1
207
0
17
219
217
6
9
221
239
III
61
20
19
31
2
196
7
126
2
2 2
2 3
9
M
63
2:17
23
167
30
16
173
1
107
1 3
73
2 6
212
16
9
32
26
21
11
1 3
100
3
1.0
3
1
1
I
2
3
1
1
2
2
2
1
Unted States Tu Court-
Contnued
196 7
197 7
19707
197 0
19S37
1993
20202
20 31
20
20970
21106
21W7
21 1 -
21 19
21 0
21 1
211 2
21 3
21
21
21 6 -
21 7..
21 6
21 9 -
21 00
21 01
21 02
21 69
21 6
210 0
21S39
21
2197
22 0 -
220 2
22911
2 (1 3
2 1
2 32)
2 17
2 7.
2 70
2 0
2 1 9
2 19 .
2 21 .
2 2 .
2 2 0.
2 190
.
23.
2 0.
2 3 7.
2 3 .
2 9.
26660.
2 7 1.
26 22.
23s 32.
2 9.
2 912.
269 1.
201. 2.
20727.
27039.
27230.
27233
272 2
1932- -13767
19 2-7-137 7
19 2-3-137
19 2-9-13 06
19 2-1-13730
19 2-3-137
19 2- -13700
1932- -13707
19 2-1-13700
19 2-7-137 7
19 2- -13767
19 2- -13707
19 2-1-13700
19 2-1-13700
19 2- -13700
19 2-1-13760
19 2- -13760
19 2- -13700
19 2- -13700
10 2- -13700
19 2-1-13700
19 2- -13700
19. 2- -13760
19 2- -13700
19 2- -13700
19 2- -13700
19 2- -13700
19 2- -I3700
19 2-1-13700
19 2- -13767
19 2-2-13710
10 2-11-13 26
1 2-0-13 00
19 2-3-1377
19 2-10-13 10
1962-6-1377
19 2- -13707
19 2-9-13 06
19 2- -13797
19 2- -13707
19 2-2-137 6
19 2-2-137 0
19 2-3-137
1962-11-13 26
19 2-13-13 2
1962-11-13 2
19 2-13-13 2
19 2-0-1377
19 2-6-13767
19 2- -13707
19 2- -13707
19 2- -13767
1962- -13767
19 2-6-13767
19 2-6-13767
1962- -13707
19 2- -13707
19 2-3-137
19 2-6-13707
19 2-6-1377
19 2-10-13 16
19 2-12-13 32
19 2-1-13730
19 2-0-1377
19 2-1-13730
19 2-7-137 7
19 2- -13797
19 2 10-1 10
( )
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I
ng
Unted State. Tas Court
Contnued
2730 __,
27
S7W-.
27792.
27 3 .
27910.
2707 .
279 3.
279 .
I7SW.
awoo.
2 M .
2 1
1 )1
2 1
29(111
29(1 1
2 .720 ,
29790
3017.1
3030
323 -1
017 ,
0179 ,
97U2
9793S
101 3
1 22 ..
O cc aecs.ns (I T|:

W
..7.I.
071.
72.
073.
071.
07 .
076.
077.
I,7 .
7 _.
0SO..
0 1..
M ._
0 3._
Rung No.
19 2-10-13 16
19 2-11-13 20
19 2-2-137 6
19 2-3-137
19 2-0-1377
19 2-:-13700
19 2-10-13 10
19 2-11-13 16
19 2-1-13 16
19 2-12-13 32
19 2-11-1.1 26
19 -.-11-13 2C
19 2- -1377
19 2- -13700
19 2- -13707
10 .- -13700
19 2- -13767
19:2-9-13 00
1( 2- -13797
19 2-11-13S26
.9 2-11-13 20
10 2-7-137 7
19.2- -13797
19 2-10-13 16
19 2-13-13 2
19 2-13-13 2
2-6-1377
11 2-0-1377
19 2-10-13 1
10 2-12-13 32
19 2-12-13)-32
19 2-,/-1377
1 2-- 3737
0 2-.-137
1962-2-:7 2
1. 2-.-137 7
19 --1-1 762
19 2---13770
10 2- -1.,771
It -|-13779
9 2-r-137s
19 2 .-137 2
19 2- -13 00
19 2- -13 01
19 2-9-13 11
19 2-11-13 27
19 2-11-13 2
. 2-11-13 29
10 2-12-13W3
Page
1
2
1
2
6
1
:(
3,
a
6
2
2

3,
2
1

-1
3

0
3
2,3
2
1
2

I
3

7
23
1 7
1
M
O
7
13
13

39
0
130
66
09

IS
Rung
Offce decsons (I. T.) Con
0
0S
0 7
Offce decsons (S. T.):
9 1
9 2
9 3
Offce decson M T.):
3
Offce decsons (Too,):
320
321
322
323
321
32
32.1
327
321
32
33....
331
332
333
33
33
336
Deportment Crcuar:
m It. I)
Mmeograp.s:
0727
6737
07 1
0712
071.
07
07.17
6772
0770
I 777
0779
67|7
67
6 )
6 11
LeTsattan
Msceaneous.
Rung No.
19 2-12-13 30
6
10 2-13-13 3
29
19 2-13-13
1 0
19 2- -1 76
21
19 2- -1377
22
190.-6-13776
221
19 2-0-137
209
19 2-1-137 3
2
10 2-2-137 3
2 1
19 2-2-: 7
2 G
19 2- -1370
2
10 2- -13700
2 1
19 2- -13777
2 0
19 2-3-137 0
2 1
|f -7-13796
2 2
19 2-S-13S03
2 7
19 2-S-13S0
2
19 2- 13 0
2 2
19 2-13-13 22
2 7
19 2-10-13 2
2
19 2-10-13 2
2 3
19 2-12-13 39
2 7
19 2-12-13 1
2
19 2-13-13
2 3
19 2-1-13761
39
19 .-1-137 1
23
19 C-3-137
193
19 :-1-1 7
3
19S2--7

19 2-2-137 1

1| .-3-137 0
3d
19 2-7-13792
111
19 2-7-13703
1 1
10 2-7-1.791
71
10 2-7-1 790

19 -3-1379

U-. - 1-13 19
192
19 2-9-1. )
3
1. 2-11-13 30
1 0
19 2-13-13 .00
210
19 2-12-13 0
2 9
1.1 2-13-13-- 6
2 9
19 2-13-13 7
200
19 2-13-1S
262
19 2-13-13. 9
202
19 .-.-13 13
227
Page
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
CONT NTS OF CUMUL TI ULL TINS (I. T.) 1 TO ; S. T. FOR 1920 ND 1921; INT RN L
U NU 1-1.1-2.11-1, n-2. 1U-1, III-2, 1 -1, I -2. -1, -2, I-1. I-2. I1-1, -2, III-1. III-2.
1 -1,1 -2. -, -, I-1, I-2. II-1, D-2, III-1. I1I-2. I -1. I -2, -1, -2. 1937-1. 1937-2.
193 -1. 1936-2. 1S39-1 (P RT 1 ND P RT 2), 1939-2, 19 0-1. 19 0-2, 19 1-1. 19 1-2. 19 2-1. 19 2-2;
NNU L ULL TINS FOR 19 3. 19 . ND 19 : S MI NNU L ULL TINS 19 6-1. 19 6-2.
13 7-L 19 7-2. 19 -1. 19 -2. 19 9-1. 19 -2. 19 0-1. 19 0-2. 19 1-1. 19 1-2. ND 19 2-1
Cumuatve uetn
Rung Noa
Ta :
December 1919 (No. 1)
anuary- une 1920 (No. 2)
uy-December 1920 (No. 3)
anuary- une 1921 (No. )
uy-December 1921 (No. )
Sae Ta :
1920 (S. T. 1-20)
anuary- une 1921
uy-December 1921
Interna Revenue uetn:
anuary- une 1922 (No. 1-1)
uy-December 1922 (No. 1-2) -
anuary- une 1923 (No. 11-1)
uy-December 1923 (No. II-2)
anuary- une 92 (No. I-1)
uv-Decembcr 192 (No. I-2)
anuary- une 192 (No I -1)
uy-December 192 (No. 1 -2)
anuary- une 1926 (No. -)
uy-Decombcr 1920 (No. -2)
anuary- une 1927 (No. I-1)
uy-December 1927 (No. -2)
anuary- une 192 (No. 1I-1)
uy-December 192 (No. II-2)
anuary- une 1929 (No. III-1)
uy-December 1929 (No. 11I-2)
anuary- une 1930 (No. 1 -1)
uy-December 1930 (No. 1 -2)
anuary- une 1931 (No. -) --
uy-December 1931 (No. -2)
anuary- une 1932 (No. I-1)
uy-December 1932 (No. I-2)
anuary- une 1933 (No. II-1)
ny-December 1933 (No. II-2)
anuary- une 193 (No 1I1-1)
uy-December 193 (No. III-2)
anuary- une 193 (No. I -1)
uy-December 193 (No. I -2)
anuery- une 1936 (No. -)
uy-December 1936 (No. -2)
anuary- une 1937 (1937-1)
uy-December 1937 (1937-2)
anuary- une 193 (193 -1)
uy-December 193 (193 -2).... ..........
nnary- une 1939 (1939-1 part 1 and pnrt 2).
uy-December 1939 (1939-2)
onuary- une 19 0 (19 0-1)
uy-December 19 0 (19 0-2)
anuary- une 19 1 (19 1-1)
uy- Decern bor 19 1 (19 1-2)
anuary- une 19 2 (19 2-1)
uy-December 19 2 (19 2-2).
anuary-December 19 3 (12months).
anuary-December 19 (12months).
anuary-December 19 (12months).
anuary- une 19 6 (19 6-1)
uy-December 19 6 (19 6-2)
anuary- une 19 7 (19 7-11
uy-December 19 7 (19 7-2)
anuary- une 19 (19 -1)
uy-December 19 (19 -2)
anuary- une 19 0 (19 9-1)
uy-December 19 9 (19 9-2)
anuary- une 19 0 (19 0-1)
uy-December 19 0 (19 0-2)
anuary- une 19 1 (19 1-1)
uy-December 19 1 (19 1-2)
anuary- une 1962 (19 2-1)
1-6
6 0-1033
103 -136
1369-1710
1711-1996
1-112
113-26
200-3 6
1-3 3
3 -00
606-9 6
9 7-1276
1277-10 1
1612-19 9
10 0-22 1
22.12-2 23
2 2 -2 13
2 1 -3026
3027-3291
3292-3 7
3 -37
37 - 0 2
0 3- 2
2 7
- 0 3
0 - 7
- 12
12 - 33
339- 31
32- 961
002-6262
6263-6 1
6.W2-6 71
6 72-722
722 -7 63
7 6 -7
7 - 1 9
1 0- 9
00- 792
793-911
9119-9 2
9 2 -96
96 -9 96
1) 97-10126
1OI27-1030
1030 -10
10 9-10761
10702-109 3
109 -1113
11139-11302
11303-11 90
11 91-11916
11917-12200
12201-12332
12333-12 0
12166- 12 0
12 1-12721
12722-12 1
12 2-1299
rw 3
13120-13266
13267-133
133 -1 0
13 09-1361
1361 -1373
13730-13 60
(vn)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
T T COURT OF T UNIT D ST T S
CUMUL TI LIST OF NNOUNC M NTS R L TING TO
D CISIONS OF T T COURT OF T UNIT D
ST T S PU LIS D IN T INT RN L R NU
ULL TIN S R IC FROM NU RY 1, 19 2, TO UN
30, 19 2, INCLUSI
19 2-13-13 2
The Commssoner acquesces n the foowng decsons:
Ta payer
baa, merco
rae, as
tas O and Refnng Corporaton.
yer Son, Inc., N. .

. D. Incorporated (formery yrne Door , Incorpo-

rated)
anac, ozo, estate of 1
anac, Mca, e ecutr of estate of ozo anac 1
hmaer, Fred
rmngham Termna Co
ratton et a., Guy G., e ecutors of estate of uus
L yrne -
uter, Wam L
yrne, uus I., estate of
yrne Doors, Inc. (formery . I. yrne, Inc.)
rthur .
Capta Natona ank of Sacramento, The _
Cates, eanor L.
Gates, Lous S.
Centra Cuba Sugar Co.
Chander, Imogene 1
Chesapeake Corporaton of rgna, I he
Cover Farm Stores Corporaton
Farms Cooperatve Dary, Inc
Rver Paper Ms
Docket No.
21 2
21 1
2 76
2176
27936
1 2 7
2 0 3
2 0 3
20976
27233
1 2 6
2 36
1 2 6
19 37
19 6
20262
19 60
19 16
190 7
19607
2 00
3030
2 1
9793
Report
oume Page
1
17
17
16
17
17
17
17
16
17
16
16
16
16
16
16
16
16
17
17
17
3
oard of Ta ppeas.
1 state ta decson. , . ,
cquescence reates ony to the ssue whether the Chrstenson Steamshp Co. was abe for decared
raue e cess-profts ta for 19 .
1 cquescence reates ony to the charge-off wth respect to parta bad debt deductons.
cquescence rotates ony to the ssue whether the transtory provsnns of Cuban aw canceed nterest
pro: to une . 19 0.
- N onacquescenoe pubshed n Cumuatve uetn . 11-1, page 13, undrawn.
(1)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
c UT Sr NO S Contnued
Ta payer
Docket No.
oume Page
Conestoga Transportaton Co.
Crchton, ate .1
de Gugne, eanor 2_
de Trstan, ane 2
Dressen, Martn .
)
Fabres, stansao
Fnkenbercfs Sons, Inc.,
Frst Natona ank of Mddctown, Oho, The,
e ecutor of estate of Mary G. Cordon
Fagg et a., S. Grswod, trustees of Mare . F.
Nugent- ead Trust
G
Gae, se . (formery se . Wmpfhemer)
Gordon, Mary G., estate of
Gramm, Chrstanna ., estate of3
Gramm et a., Theodore ., e ecutors of estate of
Chrstanna . Gramm .

aey, D. G -
aey et u ., D. G
aynes, Raymond
errera Rau
ess Co., enry 2
tchcock, dna C.2
obson, ce C. G.. survvng wfe of rthur L.
obson
obson, rthur L., estate of
obson, ohn L., admnstrator c. t. a. of estate of
rthur L. obson
orrmann et u ., Wam C
unt Foods, Inc.
Internatona edau Co., Inc.
Ivanhoe Foods, Inc..
ergens, ndrew
ohnson, arod R._

entucky Dstrbutng Co., The.

errgan Iron Works, Inc
197 7
0702
10 61
10 7
323
21 6
27230
27702
29700
10 3
27702
27 11
27 11
2 002
2 000
27202
21
101 7
10 62
2 9 1
2 9 1
2 9 1
2 302
20 31
210 G
2 00
30176
21
2 96
19767
oard 01 Ta ppeas.
Nonacquescencc pubshed n Cumuatve uetn 19 0-2, page 10, wthdrawn.
cquescence reates ony to the ssue whether the Chrstenson Steamshp Co. was abe for decared
vaue e cess-profts ta for 19 .
Gft ta dec:son
1 cquescence reates ony to the ssue whether compensaton pad by the ta payer to two of ts offcers
was reasonabe.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3
cquescences Contnued
Ta payer
Lanova Corporaton
Lansng Communty ote Corporaton 1
Lawer, Frank C
Lehman Company of merca, Incorporated, The
Lehman, Robert
LeMond, arbara . (formery arbara rewster
oomngdae)
Lchter et u ., acob
M
MacDonad et u ., D.
Maey, verett G.
Mante, ohn
Meaker Co., Inc., C. G
Mershon et u ., Carro .s.
Moreno, ector
N
Ne, Wam L
Nenhuys, da M., e ecutr of estate of an Wem
Nenhuys
Nenhuys, an Wem, estate of
Nugent- ead Trust, Mare W. F
Oppenhemer, Ruth W
Oregon Pup and Paper Co. .
Oreana, Renato
Orrcgo, Marcos
Perez, Sergo
Phadepha Transportaton Co. .
Peet, Gbert
R
Recne, Caros
Reser, Fay (aso known as Fay Lebcrman Reser).
Reser, acob estate of
Rsopatron, Pabo
Docket No
22 0 2
17760
19
21 39
2 2 6
197 0
2 323
29726
2 2
2797
2 290
26727
21 9
2 1
2 2
2 2
29799
1993
101 3
21 6
21 62
21 63
9 93
22911
21
279
279 3
21 60
Report
oume Pago
17
11
16
17
17
13
17
17
17
17
16
17
16
17
17
17
17
16
7
1
1
1
9
17
1
17
17
1
oard of Ta ppeas.
1 NonacqutesceD.ce pubshed n Cumuatve uetn 19 0-1, pace 7, wthdrawn.
1 cquescence reates ony to the ssue whether the Chrstenson Steamshp Co. was abe for decared
vaue e cess-profts ta for 19 .
1 cquescence reates ony to the ssue whether a partnershp n whch pettoner had an nterest reazed
ordnary ncome on anuary 1, 19 , when restrctons termnated as to stock theretofore receved by the
partnershp for servces rendered.
cquescence reates ony to the Issue whether the ta payer Is entted to surta e emptons for two of
hs chdren camed as dependents.
cquescence as to resut ony.
state ta decson.
Nonacquescence pubshed n Cumuatve uetn 19 3, pace 37, wthdrawn.
Nonacquescence pubshed n Cumuatve uetn 19 -1, page . wthdrawn.
O tta C
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

cqt|tescences Contnued
Ta payer
Docket No
oume Page
Ropers, nrque
Roos et a., Cam, e ecutors of estate of acob Reser.
Rosentha Pau ..
S
Sabne Royaty Corporaton
Saazar Renato
Sat, bert L., estate of
Sat et a., Loyd ergen, e ecutors of estate of bert
L. Sat - -
Schneder, orge
Sommerfed Machne Co. . -
Stewart, Lous -
T
Te sun Suppy Corporaton
Trbune Pubshng Co., The
Turenne, Rodofo

a, Lous -
aseca, Gonzao -
ucetch Uano.. -
v;
Wakeee et u ., Lous
Wengton, erbert G -
Wer et a., Mary Norwood e ecutors of estate of
Robert W. Wer -
Wer, Robert W., estate of
21 0
279 3
2 1
2 1 9
21
27039
27039
21 3
160 0
19 9
201 2
2 2
21 7
21
21 f
21 9
2 11
2730
27 3
27 3
1 Gft ta decson.
state ta decson.
1 cquescence re nte ony to the ss;:es whether amounts pad as compensaton to ofocr: W3re e cess ve
and whether deductons for traveng e | cnses and saes commssons we; e aowabe.
cquescence reate ony to the ssue whether the Chrstenson Steamshp Co. was abe tor decared
vaue e ecs-profts ta tor 16 -1.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
The Commssoner does NOT acquesce n the foowng decsons:
Ta payer

ffeder, arry F._

ffeder, Rhoda L -
c
C. . L. Corporaton.
Capta Natona ank of Sacramento, The 1
Centra Cuba Sugar Co.
Cark, Ruth S
Coke, gnes Pvne
Cod Meta Process Co., The
D
Dryfoos, Nathan I., estate of

Frst Natona ank of Mam, The. e ecutor of estate

of Nathan L Dryfoos
God, Frank.,
Goonsky, Isadore.
II
eer- ndres Investment Co.
unt Foods, Inc.
The.

eberg, ce G. .
eberg, ce G. .
eberg, ce G. ., e ecutr of estate of Robert .
eberg, Sr.
Lehman, Robert a.
Lnde, Rose
Lttman, an L._
Lttman, enne
Lu , Dors L
Docket No.
2
2 7
2 19
202G2
196 7
29011
2 22
22 6
2 G0
2 60
21 07
21 06
2 1
20 31
617
1022
6179
2 2 6
2 17
2
2
2 9
Report
oume I f a e
17
17
17
1(1
If,
17
17
17
17
17
f
10
17
17
3
2
3
17
17
17
17
17
oard of Tat ppeas.
Nonacqu escence reate ony to estoppe wth respect to parta had debt deetons
1 N onacquescence reates ony to the ssue whetht a porton of ta payer s deductons for busness e -
penses for the fsca year ended une M 1 3. shoud be aocated to ts successor corporaton under secton
. 1 R C.
1 Nonacqu escence reates ony to the ssue whether the de|wst o sght draft wth a bank created out
standns ndebtedness whch was evdenced by bs o e change under secton 719 a|(). I. R, C.
cquescence pubshed m Cunratve uetn 19 1-1. page 6. wthdrawn as to the ssue whether the
tota sae prce pad to ta payer for a one-hat nterest n ease rentas was ta abe for 1933 or ony that part
receved In 1 33.
cquescence pubshed n Cumuatve uetn 19 , paec 16. wthdrawn as to the ssue whether ta -
payer was entted to capta gans ratfts and a hodng perod n e cess ot n years n computng ncont- ta
on an amount receved n 103 as a second nstament payment for transfer of a communty nterest n a
contract rght to receve future rentas.
1 Nonaoquesoenco reate ony to the ssue whcthe an annua payment of S .000 to the mother of pet-
r dvorced wfe Is deductbe under secton 23(u) of the Interna Revenue Codo.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
6
Nonacquescences Contnued
T- payer
Docket No.
Report
oume Pase
M
Maey, verett G.L.
Marsha, Chares D., estate of2
Meon Natona ank and Trust Co. et a., e ecutors
of estate of Chares D. Marsha 2
Ms state, Inc
Pacfc Ms
Phadepha Tte Insurance Co
Poo et a., zabeth Sneed, e ecutors of estate of
. T. Sneed, r
Rutherford, aze S.
Seden, sa L
Sneed, r., . T., estate of.
Sommerfcd Machne Co.1.
South Pcm O Co
11
S
W
Wof nveope Co., The.
2 2
19 91
19 91
27 3
20
2 9 2
2799
290 1
2 6
2799
160 0
2197
2 7 1
17
16
16
17
17
17
17
17
17
1
17
17
260
91
91
910
70
106
13
17 13 7
71
13
3
27
71
1 Nonacquescence reates ony to the ssue whether ordnary ncome or capta gan was eazed In the,
qudaton o an nherted nterest In a wne marketng poo.
1 state ta decson.
Nonacquescence reates ony to the ssue wth respect to e cess profts ta ree under secton 721(a) (2) (O)
L R. O.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
INCOM T RULINGS. P RT I
INT RN L R NU COD
C PT R 1. INCOM T
SU C PT R . G N R L PRO ISIONS
P RT II. COMPUT TION OF N T INCOM
S CTION 22(a). GROSS INCOM : G N R L
D FINITION
Secton 29.22(a)-: What ncuded n gross 19 2-1-13737
ncome. L T. 06
( so Secton 1 7, Secton 29.1 7-1.)
INT RN L R NU COD
Where payments are made by a chd-pacng agency to foster par-
ents soey for the purpose of rembursng them for e penses ncurred
n takng care of chdren paced n ther homes, and such payments
are not n e cess of the e penses ncurred, nether the e pendtures
nor the rembursements need be refected n the foster parents Fed-
era ncome ta returns. Chd-pacng agences are not requred to
fe nformaton returns under secton 1 7(a) of the Interna Revenue
Code wth respect to such mantenance payments.
dvce s requested whether payments made by a chd-pacng
agency to foster parents soey for the purpose of rembursng them for
e penses ncurred n takng care of chdren paced n ther homes,
where such payments are not n e cess of the e penses ncurred, are
ncudbe n gross ncome of the foster parents, and whether chd-
pacng agences are requred to fe nformaton returns under secton
1 7(a) of the Interna Revenue Code wth respect to such mantenance
payments.
Informaton submtted to the ureau by the Federa Securty
gency shows that chdren who woud otherwse ack the benefts of
norma famy home fe are paced by chd-pacng agences, both
pubc and prvate, n foster homes of severa types. There s the free
home, n whch the foster parents provde the fu cost of carng for the
chd. There s aso the foster boardng home, n whch the foster
parents receve funds to cover the cost, n whoe or n part, of mantan-
ng the chd. Then there s the type of foster home n whch, n add-
ton to payment of e penses, a servce fee s pad to the foster parents.
There s aso the type of foster home provdng temporary care for
chdren receved from courts or soca agences to whch a reguar
monthy payment, termed a subsdy, s made to keep the home open
at a tmes, an addtona per dem amount beng pad when a chd s
r the home. Fnay, there s the commerca home, the operators of
whch conduct the home as a busness and seek to make a proft out of
(7)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.22(a)- .

the dfference between the amounts receved from the chd-pacng

agency and the e penses ncurred n carng for a chd. The ony type
of foster home heren consdered s the foster boardng home n whch
the foster parents, who are not de |ure guardans but who for humane
reasons desre to provde chdren wth the advantages of home fe,
receve funds to cover the cost, n whoe or n part, of mantanng
chdren n the home. Many of such foster parents cannot afford to
provde for the entre support of a chd. Where a chd s paced n
such a foster boardng home, the agency, ordnary after carefu con-
sderaton of the cost of carng for chdren of varous ages, makes a
specfed payment, usuay at the end of a month, to cover, n whoe or
n part, amounts e pended by the foster parents n provdng food,
sheter, schoo suppes, etc., for the chd durng the precedng month.
mounts pad or ncurred for cothng and medca e penses usuay
are reported to the agency and provded for separatey. Ths s ac-
compshed ether by drect payment to the vendor or physcan, as
the case may be, f the goods or servces were supped on credt, or by
ncreasng the monthy check to the foster parents f they have e -
pended ther own funds. The amounts receved by the foster parents
do not e ceed, and n many cases do not equa, the actua cost of man-
tanng the chd. It s the practce of the chd-pacng agences to set
standards of care for chdren n foster boardng homes. The agences
have staffs of traned personne whch keep the foster homes under con-
tnuous surveance to nsure that adequate provson s made for the
chdren, and any attempt by the foster parents to use for ther own
purposes the funds granted for the beneft of the chdren s qucky
dscovered and the foster parents are reeved of the chdren s care
and custody.
It s hed that where payments are made by a chd-pacng agency
to foster parents soey for the purpose of rembursng them for e -
penses ncurred n takng care of chdren paced n ther homes, and
such payments are not n e cess of the e penses ncurred, nether the
e pendtures nor the rembursements need be refected n the foster
parents Federa ncome ta returns. It s further hed that chd-
pacng agences are not requred to fe nformaton returns under
secton 1 7(a) of the Interna Revenue Code wth respect to such
mantenance payments.
Secton 29.22 (a)-1: What ncuded n gross 19 2- -1379
ncome. Mm. 6779
( so Secton 23(a), Secton 29.23(a)-10.)
Incuson n gross ncome of essor of a Federa ncome ta es
pad by essee to, or for the account of, the essor under a contract
provdng for a stpuated renta pus any Federa ncome ta es
thereon.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, March 12, 19 2.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
eads of ppeate Staff Dstrcts, and Others Concerned:
1. Secton 22(a) of the Interna Revenue Code provdes for the n-
cuson n gross ncome of any gans, profts, and ncome arsng out
of the ownershp or use of or nterest n property, whether rea
or persona. Secton 29.23(a)-10 of Reguatons 111 provdes that
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
9
29.22(a)- .
ta es pad by a tenant to, or for the account of, the andord for
busness property are addtona rent and consttute a deductbe tem
to the tenant and ta abe ncome to the andord.
2. Under a contract provdng for payment to the essor of a stpu-
ated renta and any Federa ncome ta es thereon, the essor s deemed
to have receved as renta ncome not ony the stpuated renta, but
n addton thereto a Federa ncome ta es pad by the essee to, or
for the account of, the essor. The e tent of the abty e stng
between the respectve partes s one whch must be determned under
the genera aw appcabe to contracts of that nature. For Federa
ncome ta purposes, however, the amount to be ncuded n the gross
ncome of the essor by reason of the ta es pad by the essee shoud
be determned by reference to the constructon gven by the partes
to the contract under whch such ta es are pad. The ureau w
not concern tsef wth the mechancs used by the respectve partes n
determnng the e tent of the essee s abty so ong as the essor
ncudes n gross ncome the tota amount of Federa ncome ta es
pad by the essee. Thus, f eases to a parce of rea estate for
an annua renta of 100,000 pus any Federa ncome ta es thereon,
and for the year 19 2 and agree that the tota amount of Federa
ncome ta es to be pad by to, for, or on behaf of for such year
s 6 ,000, then the tota renta for the year 19 2 whch s to be n-
cuded n the gro:s ncome of w be deemed to be 16 ,000.
ohn . Dunap,
Commssoner.
Secton 29.22 (a) -1: What ncuded n gross 19 2-9-13 07
ncome. Ct. D. 17 2
INCOM T INT RN L R NU COD D CISION OF SUPR M COURT
1. Gbosb Income Money Obtaned by torton.
Money e torted from a vctm wth hs consent nduced soey by
harassng demands and threats of voence s ncudbe n the
gross nccme of the recpent under the provsons of secton 22(a)
of the Interna Revenue Code.
2. Decson ffrmed.
Decson of the Unted States Court of ppeas, Thrd Crcut, 1 9
Fed. (2d) 31 (19 1), affrmed.
Supreme Court of the Unted States
ames Rutkn, pettoner, v. Unted States of merca
On wrt of certorar to the Unted States Court of ppeas for the Thrd Crcut
March 2 , 1932
opnon
Mr. ustce urton devered the opnon of the Court.
The prncpa Issue before us s whether money obtaned by e torton s Income
ta abe to the e tortoner under secton 22(a) of the Interna Revenue Code.1
For the reasons hereafter stated we hod that t s.
S C. 22. GROSS INCOM .
(a) Genera Defnton. Gross Income ncudes Rans, proft , and ncome derved
from saares, wages, or compensanon for persona sen ce ct whatever knd
and n whatever form pad, or from professons, vocatons, trades, busnesses, commerce,
or saes, or deangs n property, whether rea or tersonn. growne out of the ownershp
or use of or Interest n such property ; aso from nterest, rent, dvdends, securtes, or
the transacton ot any busnens carred on )or gam or Drot, r,r ;tns or profts and
ncome derved from any source whatever . ( mphass supped.) 3 Stat. 9.
3 Stat. 7 , 26 U. S. C. secton 22a ().
21 1 2 2 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.22(a)- .
10
The pettoner, Rutkn, was Indcted under 26 U. . C. secton 1 (b) for
wfuy attemptng to evade and defeat a arge part of hs ncome and vctory
ta es for 19 3. e was charged wth fng a fase and frauduent return
statng, hs net Income to be 1 ,966.6 , whereas he knew that t was 26 ,622.0 .
That dfference, whch woud ncrease hs ta abty from 6, 3.93 to 222.-
0 .32, was due argey to hs omsson from hs orgna return of 2 0,000
receved by hm n cash from oseph Renfed. The Unted States cams that ths
sum was obtaned by pettoner by e torton and as such was ta abe ncome.
Pettoner contests both the fact that the money was obtaned by e torton
and the concuson of aw that t was ta abe ncome f so obtaned. e
contends aso that he dd not wfuy attempt to evade or defeat the ta .
Pettoner was found guty by a |ury In the Unted States Dstrct Court
for the Dstrct of New ersey, fned 10,000 and sentenced to years n
prson. The court of appeas affrmed, one udge dssentng. 1 9 Fed. (2d) 31.
We granted certorar, 3 2 U. S. 0 , so as to pass upon the aeged confct
between that decson and the decson n Commssoner v. Wco , 327 U. S. 0
Ot. D. 166 , C. . 19 6-1, 6 .
The facts are unusua but there can be no doubt that, under the nstructons
gven the |ury, we must regard ts verdct as refectng ts concuson that the
2 0,000 was obtaned by pettoner by e torton. There was substanta ev-
dence supportng that resut. Renfed s frst assocaton wth pettoner was
n 1929 wth severa others n a booteggng operaton known as the gh seas
venture. It was accompshed through the use of a shp n the sae of whsky
at sea more than 12 mes from shore. Renfed testfed that pettoner con-
trbuted no money to the enterprse but was taken n because Renfed s as-
socates were afrad that otherwse they woud get nterference and troube
from pettoner. s nterest was recognzed to be 6 percent but, when the ven-
ture was qudated n 1933, he aready was overdrawn and no dstrbuton was
made to hm. Wthout Incudng pettoner, the others then organzed rowne
ntners Co., Inc., a New York corporaton, to engage n the quor busness. In
1936 pettoner, wthout makng an nvestment, camed a 6 percent nterest n
rowne ntners. Despte Renfed s dena of pettoner s cam, Renfed pad
hm 00,000 and took from hm an assgnment of any and a of such shares of
capta stock In the sad rowne ntners Co., Inc., that I am entted to. In
19 0 a the rowne ntners stock was sod for 7, 00,000 to a purchaser who
aso assumed ,000,000 of the company s debts. The shares of stock when sod
stood In the names of, and were transferred by, nomnees so as to concea
the dentty of Renfed and the other benefca owners. capta gans ta
upon the profts from these saes was pad by the respectve nomnees. Pet-
1 S C. 1 . P N LTI S.

(b) ttempt To Defeat or vade Ta . any person who w-
fuy attempts In any manner to evade or defeat any ta Imposed by ths chapter or the
payment thereof, sha, n addton to other penates provded by aw. be guty of a feony
an, upon convcton tbereot, be fned not more than 10,000, or mprsoned for not more
than years, or both, together wth the costs of prosecuton. 3 Stat. 62-63, 26 U. S. C
secton 1 (b).
The nstructons ncuded the foowng:
That somebody ed and commtted per|ury s perfecty patent because contradctory
stores have been tod, and you must say where the truth es ; and the probem of deter-
mnng that truth s soey and pecuary yours .
ut then we come to the admtted payment of 2 0,000. Rutkn says that that
12 0.000 was a fna settement of hs cam n ro cne ntners, and f that s so and
the Government does not contend that the capta gans ta was not pad he woud not
Oe obged to report that ncome. ut Renfed says no. that was the resut of e torton,
e got that money out of me by threatenng me and my famy, and he tod the nstances
where those threats were made. There s one pece of corroboraton of that, and that Is
from one of the s or seven peope who were present In otz s cear.
// that money was e torted and teas pad as a resut of threats, then t mas ta abe
ncome and Rutkn teas under the duty of reportng that ta .

There Is no contenton here that the defendant ddn t know he got the
2 0.000 ; the whoe pont s whether he got t by e torton or whether he got t propery,
f he got t propery the ta was aready pad. ( mphass supped.)
The Unted States concedes that athough, on a strct constructon of the Interna
Revenue Code, It may be that the proceeds of the saes shoud have been reported by the
benefca rather than hy the record owners, ther faure To so report the proceeds does not
provde a satsfactory bass for a charge aganst them of a wfu atten|rt to evade and
defeat the ta n voaton of secton 1 (b).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
11
29.22(a)- .
toner was nether a stockhoder of record nor a benefca owner of any of
the stock of the company at any tme.
In 19 1, n response to pettoner s request, Renfed gave hm about 10,000
to hep buy a tavern. When pettoner used the money for other purposes
Renfed refused to fnance hm further and hs troube wth pettoner began.
In 19 2 pettoner agan camed that he had had an nterest n rowne ntners
Company and that Renfed must gve hm 100,000 to hep hm pay hs debts.
Upon enfed s refusa, pettoner threatened to k hm. From that tme
on, the record presents a urd story of pettoner s unsatsfed demands upon
Renfed for varous sums up to 00,000, pettoner s threatenng use of a guu
and hs repeated statements that he woud k Renfed and Renfed s famy
uness hs demands were met. Fnay, on May 11, 19 3, n New ersey,
Renfed pad pettoner 2 0,000 n cash.
Throughout ths meodrama pettoner asserted that he was entted to the
payments he demanded from Renfed because of pettoner s aeged former
nterest n rowne ntners Company. That nterest never was dentfed by
pettoner. Renfed and others testfed postvey that pettoner never had
any such nterest. Nevertheess, ou May 11, Renfed handed to pettoner
2.|0.000 n cash at the same tme that Renfed pad . 33 ,000 to Zmau and
Stacher representng ther conceded nterest n the proceeds of rowne ntners
stock. Pettoner, wth Zman and Stacher thereupon sgned a genera re-
ease. It dd not state the amounts pad but t dd purport to reease Renfed,
rowne ntners Company and others from a cams the sgners had aganst
them.
Under the |ury s verdct, we accept the fact to be that pettoner had no
bass for hs cam to ths 2 0,000 and that he obtaned t by e torton.
ccordngy, f proceeds of e torton consttute Income tn r.be to the e tortoner,
hs omsson of t from hs ta return was unawfu. The further factua ssue
whether, under a the surroundng crcumstances, pettoner s omsson of the
2 0,000 fn.m hs ta return amounted to a wfu attempt to evade and defeat
the ta s not open to revew here. That ssue s setted by the verdct of the
|ury suppported by substanta evdence. It remans for us to determne the
ega ssue of whether money obtaned by e torton s ta abe to the e tortoner
under secton 22(a).
Under the nstructons to the |ury, e torton here meant that the 2 0,000 was
pad to pettoner n response to hs fase cam thereto, hs harassng demands
therefor and hs repeated threats to k Rented and Uenfed s famy uness
Renfed testfed :
. nd dd you thnk that ther your famy s ves were n danger . I thought
bo. yes.
. Dd you do anythng to protect ther ves . I nad off.
. You thought that woud protect then from a gunnng man . I hoped so.
That s ue was presented to the |ury In conformty wth the vews of ths Court
e pressed n Sncs v. Unted State , 317 U. S. 92, 99 Ct. D. 1 71, C. . 19 3, 103 .
The charge ncuded the foowng :
If that money was e torted and was pad as a resut of threats, then It was ta abe
ncome and utkn was under the duty of reportng that ta . ut as I ndcated to you
before, the mere faure to report It doesn t satsfy the requrements of the aw wth regard
to the voaton of ths statute, there must be somethng ese whch w ndcate the
wfu Intent to defeat and evade the ta . You mny consder other eements that appear
n the evdence, the fact that ths money was pad over n cash ; that no record of any
knd was made of the recept of that money : that the money was spt and 100,000 of
It sent to the sster-n-aw of the defendant to be paced n her vaut or waut as It has
been caed here, and that the other 1 0,000 was paced In the defendant s own vaut.
You may consder these as factors surroundng the whoe transacton.
Rutkn says that he kept no books: kept no books at that tme nor at any other tme:
kept no books when he receved h proft, s ty, seventy, eghty thousand doars a year,
I thnk It was. from the booteggng, and admts that he pad no ta ; kept no books when
he got ths S2 0.000. These are a thngs that you may consder as crcumstances sur-
roundng the whoe procedure. The payment of 2 0,000 was made n the presence of
other peope, these peope beng Zwmnn. as I reca t, and Stacher who were there wth
utkn and the awyers. We, nether the awyers nor any of these peope, It seems to
me, woud be ncned to go out and pubsh It.
There Is no suggeston that pettoner reed, at any tme, upon any defense for hs
omsson of the 2 0,000 from hs ta return other than hs fase cam that It represented
hs benefca nterest n rowne ntners stock and that the stockhodng nomnees had
pad a capta gans ta on that Interest when t was sod In 19 0. When ths cam was
proved to have been fase, and necessary known by pettoner to have been fase, that
proof not onv destroyed pettoner s cam to the money tsef, but t aso demonstrated
the wfuness of hs attempt to e ade or defeat payng any ta on the 200,000.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.22(a)- .
12
the payment were made. Pettoner was unabe to nduce Renfed to beeve
Pettoner s fase and frauduent cams to the money to be true. e nduced
Renfed to consent to pay the money by creatng a fear n Renfed that harm
otherwse woud come to hm and to hs famy. Renfed thereupon devered
hs own money to pettoner. Pettoner s contro over the cash so receved
was such that, n the absence of Renfed s unkey repudaton of the transacton
and demand for the money s return, pettoner coud en|oy ts use as fuy
af though hs tte to t were unassaabe.
n unawfu gan, as we as a awfu one, consttutes ta abe ncome
when ts recpent has such contro over t that, as a practca matter, he
derves ready reazabe economc vaue from t. urnet v. Wes, 2 9 U. S.
670, 67 Ct. D. 6 , C. . II-1, 261 (1933) ; Corss v. owers, 2 1 U. S. 376,
37 Ct. D. 1 , C. . I -1, 2 (1930) . That occurs when cash, as here,
s devered by ts owner to the ta payer n a manner whch aows the recpent
freedom to dspose of t at w, even though t may have been obtaned by
fraud and hs freedom to use t may be assaabe by someone wth a better tte
to t.
Such gans are ta abe n the yeary perod durng whch they are reazed.
Ths statutory pocy s nvoked n the nterest of ordery admnstraton.
C oecton of the revenue cannot be deayed, nor shoud the Treasury be
compeed to decde when a possessor s cams are wthout ega warrant.
Natona Cty ank v. everng, 9 Fed. (2d) 93, 96 Ct. D. 13 6, C. . 1939-1
Part 1), 211 . There s no adequate reason why assaabe unawfu gans
shoud be treated dfferenty n ths respect from assaabe awfu gans.
Certany there s no reason for treatng them more enenty. Unted States
v. Suvan, 27 U. S. 2 9, 263 T. D. 02 , C. . I-2,177 (1927) .
There has re:n a wdespread and setted admnstratve and |udca recognton
of the ta abty of unawfu gans of many knds under secton 22(a). The
appcaton of ths secton to unawfu gans s obvous front ts egsatve hs-
tory. Secton II of the Income Ta ct of 1913 provded that the net ncome
of a ta abe person sha ncude gans, profts, and ncome from
the transacton any awfu busness carred on for gar or proft,
or gans or profts and ncome derved from any source whatever .
( mphass supped.) 3 Stat. 167. In 1916 ths was.amended by omttng the
one word awfu wth the obvous ntent thereafter to ta unawfu as we
as awfu gans, profts or ncome derved from any source whatever.
There s tte doubt now that where unawfu gans are secured by the fraud
of the ta payer they are ta abe.10 In the nstant case t s not questoned
that the 2 0,000 woud have been ta abe to pettoner f he had obtaned t by
frauduenty nducng Uenfed to beeve pettoner s fase cams to be true.
That beng so, t woud be an e traordnary resut to hod here that pettoner s
to be ta free because hs fraud was so transparent that t dd not msead hs
vctm and hs vctm pad hm the money because of fear nstead of fraud.
We do not reach n ths case the factua stuaton nvoved n Commssoner v.
Wco-r, - C. S. 0 . We mt that case to ts facts. There embezzed funds
were hed not to consttute ta abe ncome to the embezzer under secton 22(a).
The ssue here s whether money e torted from a vctm wth hs consent nduced
In the New ersey statute. In effect tn 19 3. e torton was defned as foows:
ny person wto. wth ntent to e tort from any person any money or other thng of
vaue sha drecty or ndrecty threaten to k or to do any body n|ury
to any man. woman or chd uness a sum of money be pad, sha be guty of a hgh
msdemeanor and punshed by Imprsonment at hard abor for a te m of not e ceedng 30
years, or by a tne not e ceedng ,000, or both. N. . S. . 2 : 127- .
See aso, the Federa statute, now n effect, reatng to e torton affectng nterstate
commerce: The term e tortoD menus the obtanng of property from another, wth hs
consent, Induced by wrongfu use ot actua or threatened force, voence, or fear, or under
coor ot offca rght 00 Stat. 20. 1 U. S. C. secton 20e-(c).
ohnson v. Unted States, 31 U. S. 1 9 Ct. D. 1 76. C. I . 10 3. 10 2 (money pad
To a potca eader as protecton aganst poce Interference wth gambng) : Unted
States v. Suvan, 27 U. S. 2 9 (Ict traffc n quor I : umvhreys v. Commssoner,
12 Fed. (2d I 3 0 (protecton payments to racketeer and ransom pad to kdnapper);
Chadek v. Unted Satts, 77 Fed. (2d.) 961 (graft : Unted Sates v. Commerford, 6 Fed.
(2d I 2 (brbes : Pattcson v. nderson. 20 Fed. Supp. 799 (unawfu nsurance poces :
Pett v. Commssoner, 10 T. C. 12 3 (back market gans): Droge v. Commssoner, 3
. T. . 29 (otteres) : Rchard v. Commssoner, 1 . T. . 316 (ega prze fght
pctures) : c cnna v. Commssoner, 1 . T. . 326 (race track bookmakng).
For further dscusson see dssent In Commssoner v. Wco , 327 U. S. 0 . 10- 11.
For e ampe, see kers v. Scofed, 167 Fed. (2d) 71 . There the ta payer swnded a
weathy wdow out of substanta funds wth whch he was to conduct frauduenty repre-
sented treasure unts. e was requred to pay ta es on those funds.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
13
29.22(a)-2.
soey by harassng demands and threats of voence Is ncuded n the
defnton of gross ncome under secton 22(a). We thnk the power of Congress
to ta these receptf as ncome under the s teenth amendment s unqueston-
abe. The broad anguage of secton 22(a) supports the decaratons of ths
Court that Congress n enactng that secton e ercsed ts fu power to ta In-
come. We therefore concude that secton 22(a) reaches these recepts.
We have consdered the other contentons of ettoner but fnd them wthout
mert suffcent to ustfy a reversa or remand of the case.
The |udgment of the court of appeas accordngy s
ffrmed.
Dssentng opnon by Mr. ustce ack, wth whom Mr. ustce Reed, Mr.
ustce Frankfurter, and Mr. ustce Dougas concur.
Secton 29.22(a) -1: What ncuded n gross ncome.
INT RN L R NU COD
Famy partnershps n whch capta s a matera ncome-produc-
ng factor. (See Mm. 6767, page 111.)
Secton 29.22(a)-2: Compensaton for persona 19 2-6-13779
servces. I. T. 07
INT RN L R NU COD
Where a covered empoyer provdes for payment of nonoccu-
patona dsabty benefts to hs empoyees pursuant to a pan
approved, under subdvson of secton 211 of artce 9 (known as
the dsabty benefts aw) of the New York workmen s compensaton
aw, as a pan In e stence on the effectve date of the artce
( pr 13, 19 9), and such pan does not requre contrbutons from
hs empoyees toward the cost of provdng the benefts, no ta abe
ncome woud be receved by the empoyees.
Lmtaton on appcaton of I. T. 010 (C. . 19 0-1,30).
dvce s requested whether empoyees are n recept of ta abe
ncome where, pursuant to artce 9 (known as the dsabty benefts
aw) of the New York workmen s compensaton aw, ther empoyer
provdes nonoccupatona dsabty benefts for them pursuant to
a pan approved under subdvson of secton 211 as a pan n e st-
ence on the effectve date ( pr 13,19 9) of such aw, and such pan
does not requre contrbutons from the empoyees toward the cost
of provdng such benefts.
Under secton 209 of artce 9 of the New York workmen s com-
pensaton aw (set forth n I. T. 010, C. . 19 0-1, 30), every covered
empoyer s gven the rght to requre contrbutons from hs em-
poyees toward the cost of provdng nonoccupatona dsabty
benefts for them. owever, subdvson of secton 211 of the New
York aw provdes for an e cepton n the case of an approved pan
m everng v. ruun, 300 U. S. (11. 6 Ct. n. 1 0. C. . 10 0-1, 112) : everng v.
Cfford, 300 U. S. 331, 33 Ct. D. 1 . C. . 19 0-1, 10 ) : everng v. Mdand Ins. Co.,
300 U. S. 216. 233 Ct. D. 1200. C. . 1037-1. 17 ; Unted Staes v. Safety Car eatng
Co., 297 U. S. , 03 Ct. D. 1073, C. . -1, 29 (1936) : Dougas v. Wtcuts, 206
U. S. 1, 9 Ct. D. 10 1, C. . 1 -2. 2 0 (193 )): evcrng v. Stockhom nskda
ank, 293 U. S. . 9 Ct. D. R 7. C. . 1II-2. 209 (193 ) : owers v. erbaugh- mpre
Co., 271 U. . 170, 17 T. I). 3 1, C. . -, 199 (192G) ; Ircn v. Cavt, 20 U. S. 161,
166 T. D. 3710, C. . I -. 123 (192 ) : sner v. Macomer, 2 2 U. S. 1 9, 203 T. D.
3010, C. . 3. 2 (1920) . The scope of secton 22( ) In some Instances Is mted by
specfc provsons, e. r., secton 22 I 9) (ncome from dschnrce of Indebtedness), secton
22(b) (1 ) (compensaton of members of rmed Forces), but no such provsons appy here.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I 29.22(a)-2.
1
provdng such benefts f the pan was n e stence on the effectve
date of the aw and does not requre contrbutons from the empoyees.
Secton 211 of artce 9 of the New York workmen s compensaton
aw makes provson for the payment of nonoccupatona dsabty
benefts by means of an nsurance contract wth a prvate company,
payment of premums to the State fund, or by a sef-nsurance ar-
rangement. Subdvson of secton 211 provdes as foows:
. by a pan In e stence on the effectve date of ths artce. If on the
effectve date of ths artce the empoyees of a covered empoyer or any cass
or casses of such empoyees are entted to receve dsabty benefts under
a pan or agreement whch remans n effect on uy frst, nneteen hundred
ffty, the empoyer, sub|ect to the requrements of ths secton, sha be reeved
of responsbty for makng provson for beneft payments requred under ths
artce unt the earest date, determned by the charman for the purposes of
ths artce, upon whch the empoyer sha have the rght to dscontnue the
provsons thereof or to dscontnue hs contrbutons towards the cost. ny
such pan or agreement may be e tended, wth or wthout modfcaton, by
agreement or coectve barganng between an empoyer or empoyers or asso-
caton of empoyers and an assocaton of empoyees, In whch event the perod
for whch the empoyer s reeved of such responsbty sha ncude such
perod of e tenson. ny other pan or agreement n e stence on the effectve
date of ths artce whch the empoyer may, by hs soe act, termnate at any
tme, or wth respect to whch he s not obgated to contnue for any perod
to make contrbutons, may be accepted by the charman as satsfyng the
obgaton to provde for the payment of benefts under ths artce f such pan
or agreement provdes benefts at east as favorabe as the dsabty benefts
provded by ths artce. The charman may requre that the empoyer sha
enter nto an agreement n wrtng wth the charman that he w pay the
assessments set forth n sectons two hundred fourteen and two hundred twenty-
eght and that unt the e praton of nnety days after he sha have fed
wrtten notce wth the charman of hs eecton to termnate such pan or
agreement or to dscontnue makng necessary contrbutons to ts cost, he w
contnue to provde for the payment of the dsabty benefts under such pan
or agreement or w provde for the payment of benefts deemed by the charman
to be at east as favorabe as the benefts provded under ths artce wth no
greater contrbutons from the empoyees than those requred under secton
two hundred nne.
Durng any perod n whch any pan or agreement or e tenson thereof
authorzed under ths subdvson provdes for payment of benefts under ths
artce, the responsbty of the empoyer and the obgatons and benefts of the
empoyees sha be as provded n sad pan or agreement rather than as provded
under ths artce, other than the benefts provded n secton two hundred seven,
and provded the empoyer or carrer has agreed to pay the assessments descrbed
n sectons two hundred fourteen and two hundred twenty-eght
ny such pan or agreement may be e tended wth or wthout modfcaton,
provded the benefts under such pan or agreement, as e tended or modfed,
sha be found by the charman to be at east as favorabe as the benefts provded
by ths artce.
The foregong provsons of the New York aw make t cear that
the obgatons and benefts of the empoyees sha be determned by
the terms of a pree stng pan, rather than by the aw. Thus, f a
quafed pan was n e stence on the effectve date of the aw, and
the pan requred no contrbutons from the empoyees toward the cost
of provdng nonoccupatona dsabty benefts, the empoyer woud
have no rght to demand such contrbutons from hs empoyees. In
such a case, the empoyer woud not be renqushng any rght to
requre contrbutons from hs empoyees, and thus coud not be con-
sdered as assumng any abty for them whch woud resut n
ta abe ncome to them. In a other cases, the New York aw con-
tempates that empoyers may demand contrbutons from ther
empoyees toward the cost of provdng dsabty benefts.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
29.22(b)( )- .
ccordngy, t s hed that where a covered empoyer provdes
for payment of nonoccupatona dsabty benefts to hs empoyees
pursuant to a pan approved, under subdvson of secton 211 of
artce 9 (known as the dsabty benefts aw) of the New York
workmen s compensaton aw, as a pan n e stence on the effectve
date of the artce ( pr 13, 19 9), and such pan does not requre
contrbutons from hs empoyees toward the cost of provdng the
benefts, no ta abe ncome woud be receved by the empoyees.
I. T. 010 (C. . 19 0-1, 30) s hereby mted n ts appcaton to the
e tent ndcated heren.
Snce the e tent of the appcaton of I. T. 010, supra, was not cear
to many affected New York empoyers and empoyees, that rung, as
mted by the nstant rung, w be apped prospectvey so as to
requre wthhodng of ncome ta at the source on wages ony as to
payro perods begnnng on or after anuary 1, 19 2.
S CTION 22(b)-GROSS INCOM : CLUSIONS
FROM GROSS INCOM
Secton 29.22(b) ( )-: Interest upon State 19 2-2-137 7
obgatons. T. D. 7
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 10 1
mendng secton 29.22(b) ( )-1 of Reguatons 111, reatng to
Interest upon State obgatons.
Treasury Department,
Offce of the Commssoner of Interna Revenue,
Washngton 26, D. C.
To Coectors of Interna Revenue and Others Concerned:
Paragraph 1. Secton 29.22(b) ( )- of Reguatons 111 26 CFR
29.22(b) ( )- s amended by strkng the thrd sentence thereof
whch reads as foows: Speca ta bs ssued for speca benefts
to property, f such ta bs are egay coectbe ony from owners
of the property benefted, are not the obgatons of a State, Terrtory,
or potca subdvson.
Par. 2. ecause the amendment made by ths Treasury Decson
w operate to reeve ta payers from a mtaton appcabe under
e stng reguatons, t s found that t s unnecessary to ssue ths
Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une 11,
19 6, or sub|ect to the effectve date mtaton of secton (c) of such
ct.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32, 67;
26 U. S. C. 62, 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved December 2 , 19 1.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster anuary 2, 19 2, : 3 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.23(a)- .
16
S CTION 22(d). GROSS INCOM : IN NTORI S-
L CTI M T OD
Secton 29.22(d)-: Inventores under eec- 19 2-12-13 33
tve method. I. T. 0
INT RN L R NU COD
Prce ndces for anuary 19 2. pubshed by the ureau of Labor
Statstcs on March 11. 19 2. for use by department stores empoyng
the reta nventory and eectve nventory methods.
The foowng prce ndces for anuary 19 2, pubshed by the
ureau of Labor Statstcs on March 11, 19 2, for use by department
stores empoyng the reta nventory and eectve nventory methods,
are accepted by the ureau of Interna Revenue pursuant to Treasury
Decson 60 (C. . 19 -1,16), approved March ,19 , and Mmeo-
graph 62 (C. . 19 -1. 21), dated March 9, 19 , for approprate
appcaton to nventores for ta abe years of 12 months ended on
December 31, 19 1, and anuary 31, 19 2.
ureau of Labor Statstcs, department store nventory prce ndces, by
department groups
I anuary .0 1 100
Fercen.
change
from an-
uary 19
to anu-
ary 19 r
Group
anuary
anuary
19 2
1. Pece poods, domestcs, and draperes
216.
21 .0
179. 1
17 .2
197. 1
20 .2
19 .0
170.
1S7.9
166.2
2.;
213.7
-L
177.3
I . Lades outerwear and grs wear
1 0.2
a
207.
:
20 .
Z
- .9
- .
192.
162.
1 9. U
170.
Z6
Tota Oroupf I, II, and 111
1 9. U
191.7
1 9.6
192.0
1 9.
191.1
L6
-LI
store ota, . .
.1
S CTION 23(a). D DUCTIONS FROM GROSS
INCOM : P NS S
Secton 29.23(a)-1: usness e penses. 19 2- -13799
Ct. D. 17 1
INCOM T INT RN L R NU COD D CISION OF SUPR M COURT
1. Coss Income Deductons Ordnary and Necessary usness
IC pensek Payments Made uy Optcans to Ioctohs Prescrb-
ng Y 0I. S .
Under the otf-estnbshed practce n the optca Industry n the
ocates where pettoners, optcans, dd busness, payments of one-
thrd of the reta saes prces receved were made monthy by them
to doctors who prescrbed the eyegasses whch pettoners sod.
ed: Such payments are deductbe by them as ordnary and nec-
essary e penses of carryng on busness, under the provsons of
secton 23 (.a) (1) ( ) of the Interna Revenue Code.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
17
29.23(a)- .
2. Decson Reversed.
Decson of the Unted States Court of ppeas for the Fourth
Crcut, 1 Fed. (2d) 209 (19 1), affrmng 1 T. C. 1066 (19 0),
reversed.
Supreme Court of the Unted States
Thomas . Ly and een W. Ly, pettoners, v. Commssoner
of Interna Revenue
On wrt of certorar to the Unted States Conrt of ppeas for tbe Fourth Crcut
March 10, 19 2
opnon
Mr. ustce urton devered the opnon of the Court.
Pettoners, Thomas . Ly and een W. Ly, hs wfe, we e encaged n
the optca busness n North Carona and rgna n 19 3 and 1 . Pursuant
to agreements refectng an estabshed and wdespread practce n that ndustry
n those ocates, they pad to the respectve doctors, who prescrbed the eye-
gasses whch they sod, one-thrd of the reta saes prce receved for the gasses.
The queston here s whether such payments were deductbe by pettoners as
ordnary and necessary busness e penses under secton 23(a)(1)( ) of the
Interna Revenue Code.1 For the reasons hereafter stated we hod that they
were.
Pettoners owned and operated as partners the Cty Optca Company wth
offces n Wmngton, Fayetteve and Greensboro, North Carona, and Rch-
mond, rgna. Pettoner een W. Ly aso owned and operated the Duke
Optca Company n Fayetteve.
Snce ong before 1922 when Thomas . Ly estabshed hs busness n
Wmngton, eye doctors, n that ocaty and to a substanta e tent throughout
comparabe communtes n North Carona, rgna and esewhere n the
Unted States, not ony e amned ther patents eyes and prescrbed gasses,
but aso sod them gasses. The doctors bought the frames and enses at
whoesae, prepared and ftted the gasses to the patents and sod the gasses
at a proft.
Ly and other optcans offered to f the prescrptons for the doctors and
to suppy and ft the frames to the patents. To compensate the doctors for
tber oss of proft on the saes, the optcans generay pad the doctors one-
thrd of the reta prce of the gasses. Whe nformaton as to ths arrangement
was not vounteered to the patents, t was freey dscosed on nqury. The
doctors made t a practce to ask ther patents to brng n ther new gasses
for verfcaton of the prescrptons and to enabe the doctors to see that the
frames were propery ftted. Wthout further charge, they made whatever
ree amnatons and modfcatons were needed.
For ncome ta purposes, pettoners treated ther payments to the doctors
as ordnary and necessary e penses of carryng on busness and deducted them
from ther gross ncomes. The doctors, n turn, ncuded them n ther ta abe
gross ncomes. owever, n 19 3 and 19 , the respondent Commssoner of
Interna Revenue dsaowed these deductons n pettoners returns and thereby
ncreased pettoners ta abe ncome as foows:
Cty Optca Duke Optca
Company Company
10 2 _ - 7,063.
19 3 _ 61,001.9 6, 6 . 7
19 GO, 021. 6 , 79 . 3
The Ta Court sustaned the Commssoner on the ground that the payments
to the doctors were contrary to pubc pocy. One |udge dssented. 1 T. C.
1006. The resutng ta defcences totaed 12 ,107.7 . The court of appeas
1 SF.C. 23. D DUCTIONS F OM GROSS INCOM .
In computng net ncome there sha be aowed as deductons :
(a) penses.
(1) TR D OR CSI SS P NS S.
( ) In genera. the ordnary and necessary e penses pad or Incurred durng
the ta abe year In carryng on any trade or busness 3 Stat. 12, 6 Stat.
1 , 26 U. S. C. secton 23(a) (1) ( ).
1 The year 19 2 was Invoved n the cacuaton of the ta for 19 3 because of secton 6 of
the Current Ta Payment ct of 10 3, 7 Stat. 1 -1 9.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.23(a)- .
1
affrmed. 1 Fed. (2d) 269. We granted certorar, 3 2 D. S. 0 , to resove
the dsputed queston of statutory constructon and to pass upon the appcaton
to these facts of the prncpes announced n Te te Ms Corp. v. Commssoner,
31 U. S. 326 Ct . 1 32, C. . 19 1-2, 200 , and Commssoner v. ennger,
320 U. S. 67 Ct. D. 1 96, C. . 19 , .
The facts are not n dspute. The payments to the doctors were made by
pettoners monthy n the reguar course of ther busness. Under the ong-
estabshed practce n the optca ndustry n the ocates where pettoners
dd busness, these payments, n 19 3 and 10 , were norma, usua and customary
n sze and character. The transactons from whch they arose were of common
or frequent occurrence n the type of busness nvoved. They refected a naton-
wde practce. Consequenty, they were ordnary n the generay accepted
meanng of that word. See Deputy v. duPont, 30 U. S. , 9 Ct. D. 1 3 .
C. . 19 0-1, 11 ; Wech v. everng, 290 U. S. I, 11 Ct. D. 77 , C. .
II-2, 112 (1933) .
The payments kewse were necessary n the generay accepted meanng of
that word. It was through makng such payments that pettoners had been
abe to estabsh ther busness. Dscontnuance of the payments woud have
meant, n 19 3 or 19 , ether the resumpton of the sae of gasses by the doctors
or the doctors reference of ther patents to competng optcans who shared
profts wth them. Severa doctors testfed that they had recommended pet-
toners and pettoners compettor, the mercan Optca Company, smu-
taneousy. oth were sharng profts wth the doctors on substantay the
same bass. If ether had stopped makng the payments whe the other con-
tnued them, there s no reason to doubt that the doctors thereafter woud have
omtted ther recommendaton of the nonpayng optcan. In 19 3 and 19
the contnuance of these payments was as essenta to pettoners as were ther
other busness e penses. s has been sad of ega e penses under somewhat
comparabe crcumstances, To say that ths course of conduct and the e penses
whch t nvoved were e traordnary or unnecessary woud be to gnore the
ways of conduct and the forms of speech prevang n the busness word.
Commssoner v. ennger, 320 U. S. 67, 72.
There s no statement n the ct, or n ts accompanyng reguatons, prohb-
tng the deducton of ordnary and necessary busness e penses on the ground
that they voate or frustrate pubc pocy.
The Ta Court n the nstant case made no fndng of fact that the payments
to the doctors were not ordnary and necessary busness e penses. It sustaned
the Commssoner s dsaowance of ther deductbty because t hed that,
as a matter of aw, the contracts under whch the payments were made voated
pubc pocy.
We do not have before us the ssue that woud be presented by e pendtures
whch themseves voated a Federa or State aw or were ncdenta to such
voatons. In such a case t coud be argued that the outawed e pendtures,
The mercan Optca Company, wth more than 2 0 outets dstrbuted over 7 States,
foowed ths practce, both n competton wth pettoners and esewhere. See aso, Sne,
Some Prncpes of Medca thcs pped to the Practce of Opthamoogy, 117 . M. . .
97- 09 (19 1) ; What Do You ray for yegasses Fortune Magazne, Oct. 19 0. p. 103.
Wthout ths e pense, there woud have been no busness. Wthout the
busness, there woud have been no ncome. Wthout the ncome, there woud have been no
ta . To say that ths e pense s not ordnary and necessary s to say that that whch
Cvcs fe s not ordnary and necessary. ennger v. Commssoner, 133 Fed. (2d) 67,
070
We concude that the payments under the contracts between the two optca busnesses,
composed of pettoners, and the ocusts arc not deductbe as ordnary and necessary
e penses because the contracts under whch these payments were made voated pubc
pocy. ( mphass supped.) 1 T. C. at 10 6.
Deductons to cover penates for unawfu conduct were dsaowed In Commssoner v.
Longhorn Portand Cement Co., 1 Fed. (2d) 276 Ct. D. 166 , C. . 19 6-1, 31. (pen-
ates for voaton of State anttrust aws) ; and Great northern R. Co. v. Commssoner,
0 Fed. (2d) 372 (penates aganst raroad for voatng Federa statutes or reguatons).
Cf. Rossman Corp. v. Commssoner, 17 Fed. (2d) 711. 713-71 (where an overcharge
under the mergency Prce Contro ct was aowed to be deducted because It dd not frus-
trate any sharpy defned poces of the ct). s to deductbty of ega fees Incdent
to the defense of a ta payer aganst charges of Iega conduct, see Commssoner v. enn-
ger, 20 (I. S. 67. s c. 133 Fed. (2d) 67: ornhawer v. Unted States, 270 U. S. 1
T. D. 222. C. II-2. 207 (102 )1 : Commssoner v. Longhorn Cement Co.. supra ;
ertens. I|w of Federa Income Ta aton, 3 1 3 9; and see generay, Note, arv. L.
ev. 2- 00.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
19
29.23(a)- .
by vrtue of ther Iegaty, were not ordnary and necessary busness e penses
wthn the meanng of secton 23(a) (1) ( ).1
In Te te Ms Corp. v. Commssoner, 31 U. S. 320, ths Court accepted an n-
terpretaton of that secton by a Treasury reguaton whch dsaowed the deduc-
ton of certan e pendtures for obbyng purposes. In dong so, the Court
referred to the fact that some types of obbyng e pendtures had ong been con-
demned by t, and that the nterpretatve reguaton had tsef been n effect
many years wth congressona acquescence. The nstant case does not come
wthn that precedent.
In Commssoner v. ennger, 320 U. S. 07, ths Court was asked to go
further and to dsaow certan attorneys fees and other ega e penses. They
were reasonabe n amount and had been awfuy ncurred by a censed dentst
(1) n resstng the ssuance by the Postmaster Genera of a fraud order whch
woud have destroyed the dentst s busness and (2) In connecton wth subsequent
proceedngs on |udca revew of the same controversy. Whe the servces
resuted n an n|uncton whch stayed the order durng the tme that the ta abe
ncome In queston was receved, the fna resut of the tgaton was unsuccessfu
for the ta payer. Nevertheess, the e pendtures were permtted to be deducted
as ordnary and necessary e penses of the ta payer s busness. The opnon
n that case revews the poston of the ureau of Interna Revenue, the oard
of Ta ppeas and the Federa courts. Id., at 73- 7 . It refers to the nar-
rowng of the generay accepted meanng of the anguage used n secton 23(a)
n order that ta deducton consequences mght not frustrate sharpy defned
Natona or State poces proscrbng partcuar types of conduct. ( mphass
supped.) Id., at 73. It concudes that the anguage of secton 23(a) con-
tans no e press reference to the awfu or unawfu character of the busness
e penses whch are decared to be deductbe. If the respondent s
tgaton e penses are to be dened deducton, t must be because aowance of
the deducton woud frustrate the sharpy defned poces of 39 U. S. C. sectons
2 9 and 732 whch authorze the Postmaster Genera to ssue fraud orders.
Id., at 7 . Nether that decson nor the rue suggested by t requres dsa-
owance of pettoners e pendtures as deductons In the nstant case.
ssumng for the sake of argument that, under some crcumstances, busness
e pendtures whch are ordnary and necessary n the generay accepted
meanngs of those words may not be deductbe as ordnary and necessary
e penses under secton 23(a) (1) ( ) when they frustrate sharpy defned
Natona or State poces proscrbng partcuar types of conduct, supra,
nevertheess the e pendtures now before us do not fa n that cass. The
poces frustrated must be Natona or State poces evdenced by some govern-
menta decaraton of them. In 19 3 and 19 there were no such decared
pnbc poces proscrbng the payments whch were made hy pettoners to the
doctors.
Customs and the actons of organzed professona organzatons have an ap-
proprate pace n determnng n a factua sense what are ordnary and neces-
sary e penses at a gven tme and pace. For e ampe, they materay affect
compettve standards whch determne whether certan e pendtures are n
fact ordnary and necessary. vdence of them s admssbe on that ssue.
They do not, however, n themseves consttute the sharpy defned Natona
or State poces the frustraton of whch may, as a matter of aw, precude
the deductbty of an e pense under secton 23(a) (1) ( ).
We voce no approva of the busness ethcs or pubc pocy nvoved In the
payments now before us. We recognze the provnce of egsatures to transate
progressve standards of professona conduct nto aw and we note that egs-
The Government cas attenton to ts prosecuton of certnn other optcans n other
Stated, In 19 0. for voatons of the Sherman nttrust ct due to prce-f ng agreements
made wth ocusts n the course of nterstate commerce. The consent decrees In those
cases end tte support to the Government s contenton that the payments made by pet-
toners In 10 3 and 19 n North Carona and rgna were not deductbe. In fact, the
rectas n those decrees tend to confrm the e stence of a ong-estabshed, wdespread,
undsturbed practce of the knd descrbed. Unted States . ausch d Lomb Optca Co.,
Cv cton No. 6C 1332 ; Unted States v. mercan Optca Co., Cv cton No. CC
1333: Unted States v. ouse of Ysan egard-Spero, Inc., Cv cton No. C, C07 ;
and Unted States v. Uhcmann Optca Co. of Inos, Cv cton No. C COS (a n
U. S. D. C. N. D. 111.).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.23(a)-1 .
20
aton has been passed n recent years In North Carona and other States out-
awng the practce here consdered. We recognze aso the organzed
actvtes of the medca professon n deang wth the sub|ect. resutng
aboton of the practce w refect tsef n the ta returns of the partes
wthout the retroactve hardshp companed of here.
The udgment of the court of appeas s reversed and the cause s remanded
wth drectons to remand to the Ta Court wth nstructons to set asde ts
udgment nsofar as t s nconsstent wth ths opnon.
It s so ordered.
Mr. ustce Dougas took no part n the consderaton or decson of ths case.
Secton 29.23(a)-: usness e penses.
INT RN L R NU COD
mount pad to a corporaton by an offcer or drector under secton
16(b) of the Securtes change ct of 193 . (See I. T. 069,
page 2 .)
Secton 29.23(a)-1: usness e penses.
INT RN L R NU COD
Cost of 1-year baseba payer s contract wth renewa opton.
(See.T. 07 ,page 39.)
Secton 29.23(a)-10: Rentas.
INT RN L R NU COD
Federa ncome ta es of essor pad by essee. (See Mm. 6779,
page .) _
Secton 29.23(a)-1 : Nontrade or nonbusness
e penses.
INT RN L U COD
Lega e penses ncurred n contestng Federa gft ta defcency.
(See Ct. D. 17 3, page 32.)
Remngton s Wash. Rev. Stat.. 19 9 Supp., secton 101 -1 ; Deerng s Ca. usness
and Professons Code. 19 1. sectons 6 0, 0 2: N. C. Laws 19 1, c. 10 9. sectons 21, 23.
The present trend may ead to the compete aboton of the practce. If so. Its atoton
w have been accompshed argey by the drect acton of those quafed to pass udgment
on ts ustfcaton. Ths graduay ncreasng opposton to the practce bears wtness to
the wdespread e stence of the practce In such recent tmes as 19 3 and 19 . See
Resouton of Secton on Opthamoogy of the mercan Medca ssocaton adopted In
une, 192 . but not then presented to the . M. . ouse of Deegates, quoted n 117
. M. . . 9S (19 1) ; ddress of Charman bert C. Sne. M. D.t beore te Secton on
Ophthamoogy. 117 . M. . . 97- 99 (19 1) ; Prncpes of Medca thcs of the mer-
can Medca ssocaton (19 3 and 19 9) ; edtoras n 131 . M. . . 112 (19 0) : 136
. M. . . 176-177 (19 ).
The payments made to the doctors n the Instant case, and dsaowed as deductons hv
the courts beow, amounted to between 6 pertent and 72 percent o pettoners tacte
busness Income. Ther ncome thus ta eu had been transferred ony a|o to the doctors
and they had pad ther ncome ta on t.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
21 29.23(b)-.
S CTION 23(b). D DUCTIONS FROM GROSS
INCOM : INT R ST
Secton 29.23 (b)-: Interest. 19 2-12-13 3
( so Secton 3, Secton 29. 3-2.) Ct. D. 17
INCOM T INT RN L R NU COD D CISION OF COURT
1. Gross Income Deductons ccrued Interest I edempton of
Coupons on Mortgage onos.
Ta payer corporaton was formed on anuary 1, 19 0, as the cu-
mnaton of reorganzaton proceedngs nvovng 0 corporatons,
and, n accordance wth the reorganzaton pan, n anuary 19 0,
ssued mortgage bonds dated anuary 1, 1939, and bearng nterest
from that date. The nterest coupons for 1939 and 19 0 were re-
deemed by the corporaton n 11/ 0, as requred by the reorganzaton
pan. The corporaton computes ts ta abty on the accrua
bass, and n ts ncome ta return for 19 0 camed deducton for the
1930 and 10 0 coupons as nterest accrued n 19 0. ed: The
amount aocated as 1939 nterest was propery deductbe from 19 0
ncome as nterest accrued n 19 0. ffrmed n Unted States Su-
preme Court per curam decson (19 9), 33 U. 3. 3.
2. Decson ffrmed.
Decson of The Ta Court of the Unted States, 9 T. C. 101
(19 ), affrmed.
Unted States Court of ppeas fob the Thrd Crcut
Commssoner of Interna Revenue, pettoner, v. Phadepha Transportaton
Company, respondent
On petton for revew of the decson of The Ta Court of the Unted States
March 21, 19 9

OPINION
y Goodrch, Crcut udge: The Phadepha Transportaton Co., the ta -
payer here, was formed on anuary 1, 19 0 as the cumnaton of reorganzaton
proceedngs nvovng t corporatons concerned n Phadepha s pubc trans-
portaton system. In accordance wth the reorganzaton pan, the ta payer
ssned, n anuary, 19 0, mortgage bonds dated anuary 1, 1939 and bearng
nterest from that date. The nterest coupons for 1939 and 19 0 were redeemed
by the ta payer n 19 0, as requred by the reorganzaton pan.
The ta payer computes ts ta abty on an accrua bass. In ts ncome ta
return for 19 0, t camed a deducton for the 1939 and 19 0 coupons as nter-
est accrued n 19 0.
These basc facts rase the cruca queston, the answer to whch w dspose
of the case. Was the nterest aocated as 1939 nterest propery deducted from
the ta payer s 19 0 ncome as nterest accrued n 19 0 The Ta Court hed
that t was. In ths appea, the Commssoner seeks reversa on three prncpa
grounds. e argues, frst, that the amount deducted was not nterest. It was
not nterest, he says, because nterest s compensaton for the use of money,
and the ta payer hed no money, borrowed or otherwse, n 1939. The Com-
mssoner ooks for support on ths pont to the statutory anguage whch refers
to nterest accrued on ndebtedness. o concudes that wthout ndebtedness
n 1939, there coud have been no nterest. nd there was no ndebtedness In
1939, he says, because the ta payer had no corporate e stence then.
Tne appcabe secton of the Interna Revenue Code, secton 23(b), provdes:
S C. 23. D DUCTIONS FROM GROSS INCOM .
In computng net Income there sha be aowed as deductons:
(b) Interest. Interest pnd or accrued wthn the ta abe year on Indebtedness
. 26 U. S. C. . secton 23(b).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 29.23(b)- .
22
The Commssoner s second pont s that the ta payer took over the obgaton
to pay 1939 Interest as a part of the cost of the assets acqured In the reorgan-
zaton. We dscuss ths pont beow. nd fnay the Commssoner argues that
even f the amount n queston be treated as nterest, a deducton of nterest for
more than the current year may not be made from that year s ncome.
The pont ast stated s easy answered. No provson of the Interna Revenue
Code prohbts such a deducton. Secton 3 of the Code, 26 U. S. C. . secton 3,
provdes that the abtes of one year cannot be used tc reduce the Income of
a subsequent year. It s upon ths provson that the Commssoner rees. ut
the ssue s whether the tem n queston here s a abty of the year 19 0. If
t accrued n 19 0, It s deductbe n 19 0 and n no other year, whether or not t
s based on transactons aocated for other purposes to other perods. One
decson specfcay supports the deducton of 2 years nterest n one year In a
proper case,1 and three other decsons, ncudng one from ths court, support the
proposton In prncpe.
We turn, then, to the Commssoner s frst two arguments. We thnk that the
fog surroundng the no debt-no nterest contenton s best ceared by a smpy
hypothetca ustraton. corporaton Is formed n 19 0. It s brand new and
wthout corporate forebears. It ssues In 19 0 a seres of 20-year coupon bonds.
For reasons best known to the management, t s decded to date the bonds as of
anuary 1, 1939 to mature anuary 1, 19 9, and to redeem the frst two nterest
coupons n 19 0. The corporaton pays ts ta es on an accrua bass. Can there
be any doubt that the nterest accrued on the two coupons In 19 0 and was
propery deductbe n that year We thnk that n the hypothetca case the
stuaton s the same as f the 19 0 nterest coupons were ust doube the ater
ones n amount. There was ndebtedness n 19 0, nterest accrued on that n-
debtedness n 19 0, and we thnk t Is chargeabe for ta purposes, as we as
bookkeepng purposes, for that year.
We thnk the present case s smar to the hypothetca one In a respects
e cept that the ta payer was the product of a reorganzaton and came nto e st-
ence wth the obgaton to pay f ed and varabe nterest on the bonds t was to
ssue to the sharehoders of Its corporate predecessors. These added factors
do not, n our |udgment, ater the resut. The ta payer, as a new corporaton,
created ts own new Indebtedness. It dd not assume e stng abtes on
whch nterest had aready accrued aganst predecessor companes. If It had,
there woud be mert n the Commssoner s pont that the obgaton was part
of the cost of the assets acqured by the ta payer.
ut that s not the fact. No obgaton was owed by the predecessor com-
panes to ther sharehoders e cept Insofar as assets mght have remaned for
dstrbuton to them when corporate affars were wound up. Moreover, nether
the present ta payer nor any of ts predecessors was n a poston to take advan-
tage of a 1939 deducton for the nterest payments n queston. s our brethren
n the Nnth Crcut sad In Commssoner v. Coumba Rver Paper Ms, 126
Fed. (2d) 1009, 1010 (C. C. . 9, 19 2) : The arrangement was a ogca one
under the crcumstances, It Is not suggested that there was any
purpose of ta avodance . We concude, therefore, as we dd n
Pressed Stee Car Co. v. Commssoner. 1 2 Fed. (2d) 2 0 (C. C. . 3, 19 6), that
the Ta Court correcty decded that the amount n dspute represented accrued
Interest wthn the meanng of secton 23(b) of the Interna Revenue Code.
The decson of the Ta Court w be affrmed.
Oregon Pup f Paper Co. v. Commssoner. 7 T 722 (19 2), petton for revew
dsmssed (C. C. . 0. November 2, 19 3).
Commssoner v. Pressed Stee Car Co.. Inc., 1 2 Fed. (2d) 2 0 (C. C. . 3. 19 ) :
rnst ern Co. . Commssoner, 1 T. C. 2 9 (19 2) : Coumba Rver Paper Ms v. Com-
mssoner, 3 T 10 (19 0). aff d 126 Fed. (2d) 2009 (C. C. . 9. 19 2). It Is true that
our decson was made at a tme when the Dobson ease bnders prevented the udca eye
from rovng over the record. We thnk the resut was rght though perforce compeed.
Cases n whch the Indebtedness was that of the ta payer s vendor or predecessor, and
was taken over by the ta payer wth the obgaton to pay nterest aready accrued, have
been propery treated as capta transactons. Commssoner v. reer, 1 1 Fed. (2d) 267,
272 (C. C. . 3, 19 ) ; Rodney v. Commssoner, 1 Fed. (2d) 692 (C. C. . 2, 19 ) ;
Pratt-Maory Co. v. Unted Mates, 12 Fed. Supp. 1020. 1023 (Ct. CI. 1936). Cases ke
Loyd v. Commssoner, 1 Fed. (2d) 6 3 (C. C. . 3, 19 6), In whch the proceeds of the
sae of unmatured Interest coupons by a bankng syndcate whch was not the obgor were
hed Impropery decared as a deducton for payment of Interest, are ceary wthout
appcaton to the present case.
the authortes on ths pont have reached the same resut, wth one e cepton. Com-
mssoner v. Pressed Stee Car Co., Inc., 1 2 Fed. (2d) 2 0 (C. C. . 3. 19 ) ; rnst ern
Co. v. Commssoner. 1 T. C. 2 9 (19 2) ; Coumba Rver Paper Ms v. Commssoner, 3
T 10 (19 0). aff d 126 Fed. 2d) 1009 (C. C. . 9. 19 2) : Oreaon Pup Paper Co. v.
Commssoner. 7 T 722 (19 2). petton for revew dsmssed (C. C. . ). November 2.
1013). Contra: Commssoner . Drovers ourna Pubshng Co., 130 Fed. (2d) 276
(C. C. 7, 1U 3).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
23
29.23(bb)-.
S CTION 23 (bb). D DUCTIONS FROM GROSS
INCOM : CIRCUL TION P NDITUR S
Secton 29.23(bb)-: Crcuaton e pendtures. 19 2-1-1373
( soSecton 113(b),Secton 29.113(b) (1)-1.) T. D. 73
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 10 1
Reguatons 111 amended to conform to secton 20 of the Revenue
ct of 19 0, reatng to crcuaton e pendtures of newspapers,
magaznes, and other perodcas.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On September 1 , 19 1, notce of proposed rue makng to conform
Reguatons 111 26 CFR, part 29 to secton 20 of the Revenue ct
of 19 0 (Pubc Law 1 , 1st Cong.), approved September 23, 19 0,
was pubshed n the Federa Regster (16 F. R. 9 0). No comments
or suggestons were receved wth respect to such notce durng the
30 days foowng such pubcaton. The foowng amendments are
hereby adopted:
Paragraph 1. There s nserted mmedatey foowng secton
29.23 (aa)- 26 CFR 29.23(aa)- the foowng:
S C. 20 . CIRCUL TION P NDITUR S R NU CT OP
10 0, PPRO D S PT M R 23, 19 0 .
(a) Deducton From Gboss Income. Secton 23 s hereby amended by
addng at the end thereof the foowng new subsecton :
(bb) Crcuaton pendtures. Notwthstandng secton 2 (a),
a e pendtures (other than e pendtures for the purchase of and or
deprecabe property or for the acquston of crcuaton through the
purchase of any part of the busness of another pubsher of a newspaper,
magazne, or other perodca) to estabsh, mantan, or ncrease the
crcuaton of a newspaper, magazne, or other perodca; e cept that
the deducton sha not be aowed wth respect to the porton of such
e pendtures as, under reguatons prescrbed by the Secretary, s charge-
abe to capta account f the ta payer eects, n accordance wth such
reguatons, to treat ruch porton as so chargeabe. Such eecton, f
made, must be for the tota amount of such porton of the e pendtures
whch s so chargeabe to capta account, and sha be bndng for a
subsequent ta abe years uness, upon appcaton by the ta payer, the
Secretary permts a revocaton of such eecton sub|ect to such condtons
as he deems necessary.

(c) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December 31,
19 , e cept that n the case of any ta abe year begnnng pror to
anuary 1, 19 0
(1) the amendments sha not be appcabe wth respect to
e pendtures for whch a deducton was not aowed the ta payer
for such year, f aowance of credt or refund wth respect to such
year s barred on the date of the enactment of ths ct by reason of
any aw or rue of aw; and
(2) the eecton provded n secton 23(bb) of the Interna
Revenue Code sha not (despte the ast sentence of such secton)
be appcabe wth respect to any e pendture for whch a deducton
was camed by the ta payer under hs atest treatment, pror to the
date of the enactment of ths ct, of such e pendture n connecton
wth hs ta abty for such ta abe year.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
g 29.23(bb)-.
2
Sec. 29.23(bb)-1. Crcuaton pendtures. (a) In genera. (1) owance
of deducton. ffectve ony wth respect to ta abe years begnnng after
December 31, 19 (see, however, paragraph (b) of ths secton), secton 23(bb)
provdes for the deducton from gross Income (notwthstandng the provsons
of secton 2 (a) and the reguatons thereunder, reatng to tems not deductbe
from gross ncome) of a e pendtures to estabsh, mantan, or ncrease the
crcuaton of a newspaper, magazne, or other perodca sub|ect to the two
foowng rues. The deducton s not aowabe wth respect to e pendtures
for the purchase of and or deprecabe property or for the acquston of crcua-
ton through the purchase of any part of the busness of another pubsher of a
newspaper, magazne, or other perodca. The deducton s aowabe ony to the
pubsher makng the crcuaton e pendtures.
(2) ecton to captaze. ta payer entted to the deducton for crcua-
ton e pendtures provded n secton 23uh) may. n eu of takng such deduc-
ton, eect to charge to capta account the porton of such crcuaton e pend-
tures whch under approved standard methods of accountng s propery
chargeabe to capta account. s a genera rue, e pendtures normay made
from year to year n an effort to mantan crcuaton are not propery charge-
abe to capta account; however, e pendtures made n an effort to estabsh
or to ncrease crcuaton are propery chargeabe to capta ccount. For e -
ampe, f a newspaper normay empoys fve persons to obtan renewas of
subscrptons by teephone, the e pendtures n connecton therewth woud
not be propery chargeabe to capta account. owever, f such newspaper, n
a speca effort to ncrease ts crcuaton, hres for a mted perod 20 addtona
empoyees to obtan new subscrptons by means of teephone cas to the genera
pubc, the e pendtures n connecton therewth woud be propery chargeabe
to capta account. If an eecton s made by the ta payer to treat any porton
of hs crcuaton e pendtures as chargeabe to capta account, such eecton
must be for the tota amount of a such e pendtures whch are propery so
chargeabe; n such case, no deducton w be aowed for any such e pend-
tures whch are propery chargeabe to capta account. If such ecton s made
wth respect to a partcuar ta abe year, the ta payer must contnue for sub-
sequent ta abe years to charge to capta account a crcuaton e pendtures
whch are propery so chargeabe, uness the Commssoner, on appcaton n
wrtng made to hm by the ta payer, permts a revocaton of such eecton
wth respect to any subsequent ta abe year, sub|ect to such condtons as the
Commssoner deems necessary. The eecton referred to n ths paragraph
sha be made by a statement attached to the ta payer s return for the frst
ta abe year to whch such eecton s appcabe, or, n case the return for
the frst ta abe year to whch such eecton s appcabe s fed pror to anuary
1. 10 2, by a statement n wrtng to that effect fed wth the Commssoner of
Interna Revenue, Washngton 2 . D C, on or before anuary 1. 19 2.
(b) Lmtaton on retroactve appcaton of tacton S(bb). () Secton
20 (c) of the Revenue ct of 19 0 provdes certan mtatons on the retro-
actve appcaton of the provsons of secton 23(bb) of the Code n the case
of ta abe years begnnng after December 31, 19 , and before anuary 1, 19 0.
Such mtatons are as foows: () Secton 23(b) s not appcabe wth re-
spect to crcuaton e pendtures for whch a deducton was not aowed the
ta payer for any such year, f aowance of a credt or refund wth respect to
such year was barred on September 23. 19 0, b.v reason of any aw or rue of
aw; and () the eecton provded n secton 23(bb) w not (despte the
ast sentence thereof) be permtted wth respect to any crcuaton e pendture
for whch a deducton was camed by the ta payer under hs atest treatment
(pror to September 23, 19 0) of such e pendture n connecton wth hs ta
abty for such year.
(2) The frst mtaton prevents the deducton under secton 2. (bb) of
e pendtures whch have been captazed for any ta abe year begnnng after
December 31, 19 , and before anuary 1, 19 0, f the aowance of credt or
refund for such year attrbutabe to such deducton was barred on September
23. 19 0. owever, f the aowance of a credt or refund for such ta abe year
was not barred on September 23. 19 0, such e pendtures may not be captazed
uness the ta payer so eects. In the absence of such eecton, the ta payer
may, wthn the appcabe perod of mtatons. De a cam for refund of any
overpayment resutng from the deducton of such e pendtures n eu of ther
prevous captazaton.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2
1 29.23(bb)-.
(3) The second mtaton prevents a ta payer who camed a deducton
from gross Income for crcuaton e pendtures for any ta abe year begnnng
after December 31, 19 , and before anuary 1, 19 0, from subsequenty eectng
under secton 23(bb) to captaze such e pendtures for such year n eu of
the deducton. Whether a deducton s to be consdered camed by such ta -
payer, for the purpose of the second mtaton, depends on hs atest treatment
(for e ampe, n a return, cam for refund, or petton or amended petton to
The Ta Court of the Unted States), pror to September 23, 19 0, of such
e pendtures n connecton wth hs ta abty for such year.
Par. 2. There s nserted mmedatey precedng secton 29.113(b)
(1)-1 26 CFR 29.113(b) (1)-1 the foowng:
S C. 20 . CIRCUL TION P NDITUR S R NU CT OF
19 0, PPRO D S PT M R 23, 19 0 .

(b) Technca mendment. Secton 113(b)(1)( ) s hereby
amended by nsertng after carryng charges the foowng: , or for
e pendtures descrbed n secton 23(bb), .
(c) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December 31,
19 , e cept that n the case of any ta abe year begnnng pror to
anuary 1, 19 0
(1) the amendments sha not be appcabe wth respect to
e pendtures for whch a deducton was not aowed the ta payer
for such year, f aowance of credt or refund wth respect to such
year s barred on the date of the enactment of ths ct by reason of
any aw or rue of aw ; and
(2) the eecton provded n secton 23(bb) of the Interna
Revenue Code sha not (despte the ast sentence of such secton)
be appcabe wth respect to any e pendture for whch a deducton
was camed by the ta payer under hs atest treatment, pror to the
date of the enactment of ths ct, of such e pendture n connecton
wth hs ta abty for such ta abe year.
Par. 3. Secton 29.113(b) (1)-1 26 CFR 29.113(b) (1)-1 s
amended by nsertng mmedatey foowng the fourth paragraph
(whch paragraph begns wth the words Capta e pendtures and
carryng charges ) the foowng new paragraph:
For ta abe years begnnng after December 31, 19 , e pendtures to es-
tabsh, mantan, or ncrease the crcuaton of a newspaper, magazne, or
other perodca, descrbed n secton 23 (bb), are chargeabe to capta account
ony n accordance wth and n the manner provded n secton 29.23(bb)-.
(Ths Treasury Decson s ssued under the authorty contaned
n sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32,
67; 26 U. S. C. 62, 3791) and secton 23(bb) of the Interna Revenue
Code (6 Stat. 1219; 26 U. S. C. 23(bb).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved December 7,19 1.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster December 12,19 1, : 2 a. m.)
21 1 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.23(c)- .
26
S CTION 23(c). D DUCTIONS FROM GROSS
INCOM : T S G N R LLY
Secton 29.23 (c)-: Ta es. 19 2-11-13 31
Ct D.17
INCOM T INT RN L R NU COD D CISION OP CODRT
1. Gross Income Deductons Reta Saes Ta Okahoma
Cgarette Ta .
Unt an e stng doubt s resoved by the State courts as to
whether the Okahoma ta on cgarettes s a saes ta as dstn-
gushed from an e cse ta or an e acton of some other knd,
the amount of such ta pad by a consumer-purchaser s not deduct-
be from gross ncome under the provsons of secton 23(c) (3)
of the Interna Revenue Code. There was no proof n ths case that
the ta payer, as a consumer, purchased any of the cgarettes
nvoved from a whoesaer, |obber, or retaer who had pad for
and aff ed the cgarette ta stamps to the cgarette packages.
2. Decson Reversed.
Decson of The Ta Court of (he Unted States, 1 T. C. 609
(19 0), reversed and cause remanded.
Unted States Court of ppeas for the Tenth Crcut
Commssoner of Interna Revenue, pettoner,, v. Ward I. and
gnes . Thompson, respondents
On petton to revew the decson of The Ta Court of the Unted States
efore Phps, Chef udge, and ratton and Pckett, Crcut udges
December 31,19 1
OPINION
ratton, Crcut udge: Ward . Thompson and gnes . Thompson are
husband and wfe, and they resde n Okahoma. In ther |ont ncome ta
return for the year 19 7 they camed certan deductons from gross ncome,
one deducton beng for ta pad on cgarettes. The Commssoner of Inter-
na Revenue dsaowed certan camed deductons, ncudng the one for ta
pad on cgarettes. On redetermnaton, the Ta Court sustaned the ta payer
n respect to that deducton, 1 T. C. 609; and the Commssoner sought revew.
Deductons from gross ncome are aowed as a matter of egsatve grace.
ta payer camng a deducton must brng hmsef ceary wthn the terms of a
statute authorzng t. nd the burden rests upon the ta payer to pont to a
statute authorzng the deducton and brng hmsef ceary wthn ts provsons;
otherwse, the deducton s to be dsaowed. New Coona Ice Co. v. evernn,
292 U. S. 3 Ct. D. 1, C. . III-1, 19 (193 ) ; Whte v. Unted States, 30
C. S. 2 1 Ct. D. 1372, C. . 193S-2, 23 ; Deputy v. du Pont, 30 U. S. S Ct. D.
1 3 , C. . 19 0-1, 11 .
The Ta Court reed upon secton 23(c) (3) of the Interna Revenue Code, 26
U. S. C. secton 23(c)(3), as authorzng the deducton n queston. nd the
Ta Court ponted to Treasury Reguatons 111, secton 29.23(c)--(6). The
statute provdes n presenty pertnent part that n the case of a ta mposed
by a State upon persons engaged n seng tangbe persona property at reta,
whch s measured by the gross sae prce or the gross recepts from the sae
or whch s a stated sum per unt of such property sod, f the amount of such
ta s separatey stated, then to the e tent that the amount so stated s pad by
the purchaser to such person such amount sha be aowed as a deducton n
computng the net ncome of the purchaser as f such amount consttuted
a ta mposed upon and pad by such purchaser. The statute permts the pur-
chaser of tangbe persona property from a retaer to deduct the amount of
the ta mposed by State aw upon the retaer, f the ta s separatey stated and
s pad by the purchaser. One prerequste of the deducton under the statute
s that the State ta be mposed upon the retaer. nother s that the ta be
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
27
29.23(c)- .
separatey stated. nd the thrd s that the purchaser pay the ta . If the
purchaser pays the fu amount of the ta , the deducton s to be taken accord-
ngy. If he pays ony part of the ta , he s authorzed to deduct the amount
pad. That s the pan scope of the statute and t s not to be enarged by
admnstratve reguaton or |udca nterpretaton.
Turnng to the aw of Okahoma, chapter 16, tte 6 , Okahoma Statutes 19 1,
s entted Cgarette Stamp Ta . Secton 6, as amended (O. S. Supp. 19 3),
defnes the terms whoesaer, |obber, retaer, and consumer. Secton
6c provdes that n eu of any and a forms of ta upon the sae, Rft, or
consumpton of cgarettes wthn the State, there s eved a stamp e cse ta at
rates theren specfed; that the ta sha be pad ony once on any cgarettes
sod or receved for consumpton n the State; that t sha be pad by the person
makng the frst sae or frst recevng the cgarettes for consumpton wthn
the State; that payment of the ta sha be evdenced by stamps whch sha
be furnshed by and purchased from the Ta Commsson; that the stamps
sha be securey aff ed to the end of the package In whch the cgarettes are sod
or from whch consumed; and that the stamps sha denote the amount of the
ta pad. Secton 6c, as amended (O. S. Supp. 19 3), reates to permts,
fees, dspays, and other requrements of manufacturers, whoesaers, ware-
housemen, |obbers, dstrbutors, and retaers. nd secton 6d, as amended
(0. S. Supp. 19 3) provdes that every whoesaer, |obber, or warehouseman
dong busness wthn the State and requred to secure a cense or permt as
provded under the precedng secton sha wthn 72 hours, e cudng Sundays
and hodays, from the tme cgarettes come nto hs possesson, and before
makng any sae or dstrbuton thereof for consumpton, cause the same to
have aff ed thereto the stamp or stamps as requred by the ct; that every
retaer recevng cgarettes from a manufacturer, whoesaer, |obber, ware-
houseman, or dstrbutor not requred to secure a permt as provded n the
precedng secton, or to aff stamps as requred under the precedng paragraph,
sha wthn 72 hours, e cudng Sundays and hodays, from the tme such
cgarettes come nto hs possesson, and before makng any sae or dstrbuton
thereof for consumpton, aff stamps upon the cgarette packages n the proper
denomnaton and amount, as requred by secton 6a; that t sha be unaw-
fu for any person to se or consume cgarettes on whch the ta has not been
pad, and whch are not contaned n packages to whch are securey aff ed
the stamps evdencng payment of the ta mposed by the ct: and that every
person voatng the provsons of the secton sha be guty of a msdemeanor
and punshed as theren specfed. The ct does not speak of the e acton
as a saes ta . Secton 6a mposes the ta , and t e pressy denomnates
the ta a stamp e cse ta . nd the requrement that stamps be aff ed to
cgarettes manufactured or receved for sae s not dependent upon the actua
sae of such cgarettes. The manufacturer, whoesaer, warehouseman, |obber,
or dstrbutor n certan nstances, and the retaer n other Instances, s re-
qured to aff the stamps to cgarettes wthn a specfed tme after manufac-
turng or recevng them for sae wthout regard to whether they are actuay
sod ater. Under the statutory scheme, securng the stamps from tbe Tu
Commsson and aff ng them to cgarettes wthn the specfed tme s requred
even though the cgarettes are not actuay sod. Payment or abty for the
ta and sae of the cgarettes are not necessary concurrent ncdents or events.
ewed In the ght of these consderatons, and n the awenee of a |udca
determnaton by the courts of Okahoma, t s not cear that the e acton s a
saes ta as dstngushed from an e cse mposed upon the prvege of en-
gagng n the occupaton of a manufacturer, whoesaer, warehouseman, obber,
dstrbutor, or retaer of cgarettes. Unt the courts of Okahoma sha have
determned the e act nature of the ta , It s at east open to queston. nd a
deducton from gross ncome cannot be aowed under secton 23(c)(3) of the
Interna Revenue Code uness It s cear that under the aw of Okahoma the
ta on cgarettes s a saes ta as dstngushed from an e cse ta or an e acton
of some other knd. Cf. cvcrng v. Ftch, 309 U. S. 1 9 Ct. D. 1 39, C. .
19 0-1, 16 .
Moreover, there was no proof In ths case that the ta payer, as a consumer,
purchased any of the cgarettes nvoved from a whoesaer or |obber who had
pad for and aff ed the cgarette ta stamps to the cgarette packages, nor was
there proof that the ta payer, as a consumer, purchased the cgarettes from a
retaer who had pad for and aff ed the stamps to the packages. ence there
was no proof that the ta sought to be deducted was mposed upon a retaer.
The decson of the Ta Court s reversed and the cause s remanded.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.23(e)-.
2
S CTION 23(e). D DUCTIONS FROM GROSS INCOM :
LOSS S Y INDI IDU LS
The amount pad to a corporaton by an offcer or drector thereof
pursuant to the requrements of secton 10(b) of the Securtes
change ct of 103 ( Stat. 1, 90), reatng to the purchase
and sae of the corporaton s securtes, s not aowabe as a deduc-
ton for Federa ncome ta purposes, and such amount may not be
added to the bass of securtes retaned by hm. The capta gan
reazed by an offcer or drector of a corporaton n a transacton
covered by secton 10(b) of the Securtes change ct of 193 Is
ncudbe n hs gross ncome.
dvce s requested wth respect to the treatment, for Federa ncome
ta purposes, of the amount pad to a corporaton by an offcer or
drector thereof pursuant to the requrements of secton G(b) of the
Securtes change ct of 193 ( Stat. 1, 96), reatng to the
purchase and sae of the corporaton s securtes.
Secton 16(b) of the Securtes change ct of 193 , supra, pro-
vdes n part as foows:
(b) For the purpose of preventng the unfar use of nformaton whch may
have been obtaned by such benefca owner, drector, or offcer by reason of
hs reatonshp to the ssuer, any proft reazed by hm from any purchase and
sae, or any sae and purchase, of any equty securty of such ssuer (other than
an e empted securty) wthn any perod of ess than s months, uness such
securty was acqured n good fath n connecton wth a debt prevousy con-
tracted, sha nure to and be recoverabe by the ssuer, rrespectve of any
ntenton on the part of such benefca owner, drector, or offcer n enterng
nto such transacton of hodng the securty purchased or of not repurchasng
the securty sod for a perod e ceedng s months. Sut to recover such proft
may be nsttuted at aw or n equty n any court of competent |ursdcton by
the ssuer, or by the owner of any securty of the ssuer n the name and n
behaf of the ssuer f the ssuer sha fa or refuse to brng such sut wthn
s ty days after request or sha fa dgenty to prosecute the same thereafter;
but no such sut sha be brought more than two years after the date such proft
was reazed.
In the nstant case, the ta payer purchased three bocks of common
stock of the corporaton n whch he was an offcer and drector. The
frst bock was purchased n ugust 19 9 at a cost of 9a; doars, the
second bock was purchased n September 19 9 at a cost of 0a; doars,
and the thrd bock was purchased n November 19 9 at a cost of 3a;
doars. In anuary 19 0 the ta payer sod one bock of such stock for
a; doars. In compance wth an order of the Securtes and -
change Commsson ssued under secton 16(b) of the Securtes -
change ct of 193 , supra, he pad to the corporaton 9a; doars,
representng the greatest proft he coud have reazed wthn any pe-
rod of ess than 6 months, . e., the dfference between a; doars,
the amount receved upon the sae of stock n anuary 19 0, and 9a:
doars, the cost of the stock purchased n ugust 19 9, despte the
fact that he st retans the certfcate representng the bock of stock
purchased n ugust 19 9.
Secton 29.23 (e)-: Losses by ndvduas.
( so Secton 23(a), Secton 29.23(a)-;
Secton 113(b), Secton 29.113(b) (1)-1;
Secton 117, Secton 29.117-1.)
19 2-2-137
I. T. 069
INT RN L R NU COD
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29
29.23(e)- .
The obgaton mposed on an offcer or drector to pay over to the
corporaton the ma mum proft resutng from any purchase and sae
of securtes wthn the purvew of secton 16(b) of the Securtes -
change ct of 193 , supra, s n the nature of a penaty, and the aow-
ance of a deducton for the amount of such a payment woud frustrate
the pubc pocy e pressed n the statute. Ths poston s n accord
wth the decson n Wam F. Davs, r., v. Commssoner (17 T. C.,
9) whch hods that the sancton thus mposed s n the nature of
a penaty and that the deducton of the amount of such penaty shoud
not be aowed snce t woud mtgate the deterrent effect of the statute
and subvert a sharpy defned pubc pocy.
In the nstant case, the stock actuay sod by the ta payer, not
havng been hed by a deaer n securtes prmary for sae to cus-
tomers n the ordnary course of hs trade or busness, was a capta
asset wthn the meanng of secton 117(a) of the Interna Revenue
Code. Therefore, the gan reazed from the sae of such stock, meas-
ured by the dfference between the seng prce and the cost of the
stock actuay sod, consttutes capta gan whch s ncudbe n the
ta payer s gross ncome.
Secton 113(b) of the Interna Revenue Code provdes that the ad-
|usted bass for determnng the gan or oss from the sae or other
dsposton of property, whenever acqured, sha be the bass deter-
mned under secton 113(a) of the Code, ad|usted to the e tent pro-
vded by secton 113(b) of the Code. There s no provson of the
Code under whch a ta payer woud be permtted to ad|ust the bass
of stock retaned by hm for the amount of any payments requred
under secton 16(b) of the Securtes change ct of 193 , supra.
In vew of the foregong, t s hed that the amount pad to a corpo-
raton by an offcer or drector thereof pursuant to the requrements of
secton 16(b) of the Securtes change ct of 193 , supra, s not
aowabe as a deducton for Federa ncome ta purposes, and that
such amount may not be added to the bass of securtes retaned by
hm. The capta gan reazed by an offcer or drector of a corpo-
raton n a transacton covered by secton 16(b) of the Securtes -
change ct of 193 s ncudbe n hs gross ncome.
Secton 29.23(e)-: Losses by ndvduas. 19 2-13-13 3
I. T. 0 6
INT RN L R NU COD
Deductbty for Federa ncome ta purposes of osses sustaned
by ndvduas due to war condtons e stng after the termnaton
of Word War II.
dvce s requested as to the deductbty, for Federa ncome ta
purposes, of osses sustaned by ndvduas due to war condtons
e stng after the termnaton of Word War II.
In the nstant case, the ta payer, a Unted States ctzen empoyed
by the Federa Government, was statoned at Seou, orea, on une 27,
19 0, when that cty was nvaded by the North oreans. ecause of
mpendng danger, the ta payer was ordered to, and dd, abandon
hs post and a hs persona property.
Secton 23(e) of the Interna Revenue Code provdes n part that
n computng net ncome there sha be aowed as deductons:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I 29.23(m)-16.
30
(e) Losses by Indvduas. In the case of an ndvdua, osses sustaned
durng the ta abe year and not compensated for by nsurance or otherwse
( ) f ncurred n trade or busness; or
(2) f ncurred n any transacton entered nto for proft, though not
connected wth the trade or busness; or
(3) of property not connected wth the trade or busness, f the oss
arses from fres, storms, shpwreck, or other casuaty, or from theft
Losses sustaned by ndvduas due to war condtons e stng after
the termnaton of Word War II are not deductbe as war osses
under secton 127 of the Interna Revenue Code. Such osses, how-
ever, may be deductbe under secton 23(e) of the Code. In I. T.
3 19 (C. . 19 1-2, 96) t s hed that a oss due to the destruc-
ton of persona property as a resut of bombardment s deductbe
as a casuaty oss under secton 23(e)(3) of the Code. Other
osses are aso deductbe under secton 23(e)(3), f sustaned as
a resut of destructon due to actve mtary operatons, or from
ootng or theft. On the other hand, osses sustaned through con-
fscaton and sezure of property under authorty of the aws of a
foregn country (whether or not an enemy country) are not casuaty
osses, and such osses are not deductbe uness ncurred n trade or
busness or n a transacton entered nto for proft, n whch event
they woud be deductbe under secton 23(e) (1) or (2) of the Code.
(See Unted States v. S. S. Whte Denta Manufacturng Co. of
Pennsyvana, 27 U. S. 39 , T. D. 069, C. . I-2, 19 (1927) ;
Commssoner v. acob F. rovm, Fed. (2d) 63, certorar dened,
2 6 U. S. 6; ector Feeande, ecutor, v. Commssoner, 12 . T. .
132 ; and ppeas of mt Stern and ues Stern, . T. . 9,
acquescence, C. . III-1, 3 (1929).)
In determnng the amount of the deductbe oss, consderaton must
be gven to any savage vaue and to any nsurance or other compensa-
ton receved. (See secton 29.23(e)- of Reguatons 111.)
S CTION 23(m). D DUCTIONS FROM GROSS
INCOM : D PL TION
Secton 29.23(m)-16: Charges to capta 19 2-3-137 6
and to e pense n case of o and gas wes. Mm. 67
Treatment under secton 29.23(m)-16(6) of Reguatons 111 of
certan deveopment costs of o and gas wes.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, anuary 7,19 2.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
eads of Fed Dvsons, ppeate Staff, and Others Concerned:
1. The ureau has gven e haustve consderaton to the cassfca-
ton of certan e pendtures made n connecton wth the competon
of an o or gas we and the preparatons necessary for the producton
of o or gas therefrom, wth reference to the opton provded n secton
29.23(m)-16(b) of Reguatons 111.
2. Secton 29.23(m)-16( ) of Reguatons 111 states that wthn
the opton are e pendtures made by an operator for wages, fue,
repars, haung, suppes, etc., ncdent to and necessary for the dr-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
31
29.2 -1.
ng of wes and the preparaton of wes for the producton of o
or gas. Such anguage e cudes e pendtures ncurred n nstang
producton factes. The tems thus e cuded consst of e pendtures
reatng to the nstaaton of such equpment as pumpng equpment,
fow nes, separators, storage tanks, treatng equpment, sat water
dsposa equpment, etc. qupment of a character whch s ordnary
consdered as havng a savage vaue, whether t conssts of producton
factes or equpment necessary for the competon of a we, ncud-
ng cost of casng n a we (even though cemented n the we to such
an e tent that t has no net savage vaue) s a deprecabe tem, the
cost of whch may be recovered ony through the deprecaton aow-
ance. producng we s competed when the casng, ncudng the
Chrstmas tree, has been nstaed.
3. fter carefu consderaton, t has been concuded that the costs
of nstaaton of the tems sted beow are not sub|ect to the opton
provded for n secton 29.23(m)-16(6) of Reguatons 111:
1. O we pumps (upon nta competon of the we), ncud-
ng the necessary housng structures.
2. O we pumps (after the we has fowed for a tme), ncud-
ng the necessary housng structures.
3. O we separators, ncudng the necessary housng
structures.
. Ppenes from the we head to o storage tanks on the pro-
ducng ease.
. O storage tanks on the producng ease.
6. Sat water dsposa equpment, ncudng any necessary
ppenes.
7. Ppenes from the mouth of a gas we to the frst pont of
contro, such as a common carrer ppene, natura gasone pant,
or carbon back pant.
. Recycng equpment, ncudng any necessary ppenes.
9. Ppenes from o storage tanks on the producng easehod
to a common carrer ppene.
ohn . Dunap,
Commssoner.
S CTION 2 . IT MS NOT D DUCTI L
Secton 29.2 -1: Persona and famy e penses. 19 2-7-137
T. D. 9
TITL 26 INT RN L R NU . C PT R I. SU C PT R . P RT 29.
INCOM T ; T L RS GINNING FT R D C M R 31, 19 1
Secton 29.2 -1 of Reguatons 111 amended. Deducton aow-
abe for attorneys fees pad for producton or coecton of amony
Incudbe n gross ncome under secton 22 (k).
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 111 26 CFR, part 29 to the de-
cson of The Ta Court of the Unted States n arbara . LeMond,
13 T. C. 670, such reguatons are amended as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.2 -1.
32
Secton 29.2 -1 26 CFR 29.2 -1 s amended by strkng out the
s th sentence and nsertng n eu thereof the foowng:
mounts pad as damages for breach of promse to marry and attorneys fees
and other costs of sut to recover such damages are not deductbe. Generay,
attorneys fees pad n a sut for dvorce or separate mantenance are not de-
ductbe. owever, the part of an attorney s fee pad n a dvorce or separate
mantenance proceedng whch s propery attrbutabe to the producton or co-
ecton of amounts ncudbe n gross ncome under secton 22(k) s deductbe
under secton 23(a) (2).
ecause ths Treasury Decson removes a restrcton by permttng
attorneys fees to be deducted n computng net ncome n certan
nstances when such fees are pad for the producton or coecton of
ta abe ncome, t s found that t s unnecessary to ssue such Treasury
Decson wth notce and pubc procedure thereon under secton (a)
of the dmnstratve Procedure ct, approved une 11, 19 6, or
sub|ect to the effectve date mtaton of secton (c) of sad ct.
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 62 of the Interna Revenue Code ( 3 Stat. 32, 26
U. S. C.62).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved March 11,19 2.
Thomas . Lynch.
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster March 1 , 19 2, : 0 a. m.)
Secton 29.2 -1: Persona and famy e penses. 19 2-9-13 1
( so Secton 23(a), Secton 29.23(a)-1 .) Ct. D. 17 3
INCOM T INT RN L R NU COD D CISION OF SUPR M COURT
1. Gboss Income Deductons Persona penses Lega -
penses Pad for Contestng Gft Ta Defcency.
Lega e penses ncurred by pettoner n contestng a gft ta def-
cency wth regard to gfts of stock whch he had made to hs three
chdren were nondeductbe persona e penses not connected wth
the producton or coecton of Income, despte pettoner s conten-
tons that the gfts of stock n the cosey hed famy corporaton
were part of a genera pan to produce ncome for hmsef and that
the stock transfers and reated attorney s fee were mere ncdents
of hs management, conservaton, or mantenance of property hed
for the producton of ncome.
2. Decson ffrmed.
Decson of the Unted States Court of ppeas, Ffth Crcut, 1
Fed. (2d) 96 (19 1), affrmed.
Supreme Court of the Unted States
oseph T. Lykes, pettoner, v. Unted States of merca
On wrt of certorar to the Unted States Court of ppeas for the Ffth Crcut
March 2 , 19 2
OPINION
Mr. ustce urton devered the opnon of the Court.
The queston here s whether, for Federa Income ta purposes, an Indvdua
ta payer was entted to deduct, from hs gross Income, an attorney s fee pad
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
33
29.2 -1-
for contestng the amount of hs Federa gft ta . For the reasons hereafter
Mated we hod that he was not.
In 19 0, oseph T. Lykes, pettoner heren, gave to hs wfe and to each of hs
three chdren, respectvey, 2 0 shares of common stock n Lykes rothers, Inc.,
a cosey hed famy corporaton. In hs Federa gft ta return he vaued
the shares at 120 each and, on that bass, pad a ta of 13,032.7 . In 19 , the
Commssoner of Interna Revenue revaued the shares at 91 . 0 each and
notfed pettoner of a gft ta defcency of 1 ,276. 0. Through hs attorney,
pettoner sought a redetermnaton of the defcency, forestaed an assessment,
and. n 19 6. pad 1 ,612.7 n settement of the defcency pursuant to a fndng
of the Ta Court based on stpuated facts. In 19 , pettoner had pad hs
attorney 7,263, 3 for ega servces n the gft ta controversy but, n hs
Federa ncom ta return, had not deducted that e pendture from hs ta abe
ncome. In 19 6, he camed a ta refund on the ground that the attorney s fee
shoud have been deducted under secton 23(a)(2) of the Interna Revenue
Ode. s cam was dened by the Commssoner and pettoner sued for a
refund. On stpuated and uncontroverted facts the dstrct court hed, as a
matter of aw, that the payment shoud have been deducted and entered |udgment
f r pettoner. Fed. Supp. 37. The court of appeas reversed. 1 Fed.
(2d) 96 . ecause of the Important statutory ssue nvoved and pettoner s
rbm that ths case s dstngushabe from Cobb v. Commssoner, 173 Fed. (2d)
711. we eranted certorar. 3 2 T S. 10.
I. Deductons from an ndvdua s ta abe ncome are mted to those aowed
by secton 23. Ther e tent depends upon the egsatve pocy e pressed
In the far and natura meanng of that secton.
Secton 2 adds that n computng net Income no deducton sha In any
cape be aowed n respect of (1) Persona, vng, or famy e penses .
3 Stat. 16. 6 Stat. 26, 26 U. S. C. secton 2 (1). Insofar as gfts to members
of a donor s famy are n the nature of persona or famy e penses, the
donor s e pendtures for accountng, ega or other servces ncurred In mnkng
those gfts are of a ke nature. The nondeductbty of such e pendtures,
therefore, s Indcated both by the absence of any affrmatve aowance of
ther deductbty under secton 23 and by the e press dena of the deductbty
of n persona or famy e penses under secton 2 .
If the e pendture In the Instant case had been made before 19 2, t s
cear that It woud not have been deductbe. t that tme secton 23 permtted
an Indvdua to deduct ordnary and necessary e penses pad or ncurred
(nrne the ta abe year n carryng on any trade or busness .
mphass supped.) 3 Stat. 12, 26 D. S. C. (19 0 ed.) secton 23(a)(1).
It made no menton of nontrade or nonbusness e penses. ccordngy, In
|gn v. Commssoner, 312 U. S. 212 Ct. D. 1 6, C. . 19 1-1, 339 , when
ths Court hed that e penses Incurred by an ndvdua ta payer n ookng
P C. 23. D DPCTIONS FROM GROSS INCOM .
In computng net Income there sha be aowed as deductons:
(a) F. rNS s.

12) Nowtrap or non-bcsnkss k pensfs. In the case of an Indvdua, a the
ordnary and necessary e penses pad or Incurred durng the ta abe year for the produc-
ton or coecton of ncome, or for the manaqcment, conservaton, or mantenance of prop-
erty hed for the producton of ncome. ( mphass supped.) 63 Stat. 12, 6 Stat. 19.
26 r S. C. secton 23(a)(2).
To construe the aw as rvng to the Commssoner the power to assess a ta payer wth
defcency ta greaty In e cess of what he owes and to hod that such aw denes to the
ta payer the rght to contest such assessment, e cept at hs own persona e pense. ust
Im t |ustce under the aw The statute In queston gves the Commssoner no such
power Fed. Supp. S37. 39.
The ta Is eved, coected, and pad for each ta abe year npon the net Income of
wry Indvdua . 3 Stat. . 26 U. S. C. secton 11. Net Income means the
cross Income computed under secton 22, ess the deductons aowed by secton 23. 63
Stat. 9. 26 D. S. C. secton 21.
There have been e pressons by ths Court pacng a restrctve nterpretaton upon
aowabe deductons by vrtue of the now famar rue that an Income ta deducton s a
matter of egsatve grace and that the burden of ceary showng the rght to the
enmed deducton s on the ta payer. Interstate Transt Lnes v. Commssoner, 319
. S. 690. 93 Ct D. 1 6, C. . 19 3, 1016 : Deputy v. rtu Pont, 0 D. S. . 93
Ct. D. 1 3 . C. . 19 0-1, 11 ; New Coona Ice Co. v. everng, 292 U. S. 3 . 0
(Ct. D. 1, C. . III-1. 19 (193 ) . Such an nterpretaton s not necessary here
nd Is not reed upon In ths case. See Grswod. n rgument aganst the Doctrne that
Ted actons Shoud e Narrowy Construed as a Matter of Legsatve Grace, 6 arv. L.
If... Inn
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.2 -1.)
3
after hs own Income-producng securtes were not e penses ncurred
n carryng on any trade or busness, t aso hed that they were not deductbe.
To change that resut, Congress, n 10 2, added the present secton 23(a) (2).
That provson, as demonstrated n ts egsatve hstory, permts the deducton
of some, but not a, of the nontrade and nonbusness e penses of an ndvdua
ta payer. It specfes those pad or ncurred (1) for the producton or
coecton of Income or (2) for the management, conservaton, or mantenance
of property hed for the producton of Income. See . R. Rept No. 2333,
77th Cong., 2d sess. Congress mght have gone further. owever, nether
the decson that occasoned the amendment, the Commttee Reports on t, nor
the anguage adopted n t Indcate that Congress sought to make such a
change of pocy as woud authorze wdespread deductbty of persona,
vng or famy e pendtures n the face of secton 2 (1). ngham s Trust v.
Commssoner. 32 U. S. 36 , 37 Ct. D. 16 3, C. . 19 , 103 ; McDonad v.
Commssoner, 323 . S. 7, 61-63 Ct. D. 1617, C. . 19 , 9 .
Inasmuch as the ordnary and necessary character of the ega e penses
ncurred n the nstant case s not questoned, ther deductbty turns whoy
upon the nature of the actvtes to whch they reate. The frst ssue, therefore,
s whether pettoner s gfts, and the ega e penses reated to (hem, were made
for the producton or coecton of ncome wthn the meanng of secton 23(a)
(2). Generay a gft s the antthess of such producton or coecton because t
reduces the donor s resources whether ncome producng or not. owever,
pettoner suggests that athough he stated n hs gft ta return that the pur-
pose of hs gfts was to e press hs ove for the donees, yet the gfts were part
of a genera pan to produce ncome for hmsef. In support of ths, he ponts
out that the gfts conssted of 1,000 shares of stock n a cosey hed famy
corporaton of whch he s the presdent and n whch he retaned persona
ownershp of about 2,000 ke shares, and that one of the donees, hs son, s now
actvey dentfed wth the corporaton and s one of ts drectors. The dstrct
nd see Unted State v. Pyne, 313 D. S. 127 Ct. D. 1 09. C. . 19 1-1, 3 2 (attorney s
fees and other e penses of e ecutors n carng for securtes and nvestments not deduct-
be) ; Cty ank Co. v. everng, 1 U. S. 121 fct. D. 1 11, C. . 19 1-1, (smar
e penses of testamentary trustee not deductbe) ; Fat Wart v. Commssoner, 29 T . S-. 112
Ct. D. 963, C. . I -1, 292 (193 ) (attorney s fee for tgaton to recover Income for
a ward not deductbe).
See note 1. supra.
One party to the Inadequacy of the statute and party to court decsons,
nontrade or nonbusness e penses are not deductbe, athough nontrade or nonbusness
Income Is fuy sub|ect to ta . The b corrects ths Inequty by aowng a of the
ordnary and necessary e penses pad or Incurred for the producton or coecton of
ncome or for the management, conservaton er mantenance ot property hed for the produc-
ton of Income. Thus, whether or not the e pense Is In connecton wth the ta payer s trade
or busness, f t s e pended In the pursut of Income or In connecton wth property hed
for the producton of ncome, t 1 aowabe.

The e penses, however, of carryng on a transacton whch does not con-
sttute a trade or busness of the ta payer and Is not carred on for the producton of
Income or for the management, conservaton, or mantenance of property, out whch s
carred on prmary as a sport, bobby, or recreaton are not aowabe as nontrade or
nonbusness e penses.
penses, to be deductbe under secton 23(a)(2). must be ordnary and necessary,
whch rue presupposes that they must be reasonabe n amount and must bear a reasonabe
and pro mate reaton to the producton or coecton of Income, or to the management,
conservaton, or mantenance of property hed for that purpose.
deducton under ths secton s sub|ect, e cept for the requrement of beng Incurred
In connecton wth a trade or busness, to a the restrctons and mtatons tbat appy
n the case of the deducton under secton 23(a)(1)( ) of an e pense pad or ncurred
In carryng on any trade or busness. Id., at 6, 7 . To the same effect, see S. Rept.
No. 1C31, 77th Cong. 2d sess. at 7- .
3 For cases resutng n the nondeductbty of ega e penses, see (e. g., Croker v.
Iurnct, 62 Fed. (2d) 991 (C. . D. C. Cr., en bane) (defendng sut to have ta payer s
husband decared Incompetent and to set asde hs transfer of property to ta payer) ;
Dckey v. Commssoner, 1 . T. . 129 (defense aganst sut for macous prosecuton) ;
oyce v. Commssoner, . T. . 393 (defense of vadty of postnupta agreement) ;
Oransky v. Commssoner, 1 . T. . 1239 (defense and settement of acton for death due
to neggence of ta payer s mnor son usng ta payer s automobe). See ornhauser v.
Unted States, 276 . S. 1 T. D. 222, C. . I-2, 267 (192S) . tor an e ampe of
ega e penses hed deductbe as busness e pendtures rather than persona ones.
The record shows that the corporaton was organzed n 1910 by pettoner s eder
brothers and was orgnay engaged n the catte, ranchng and meat packng busness.
Later It engaged In e tensve steamshp and stevedorng operatons through a subsdary.
Whe It was a arge enterprse wth numerous stockhoders besdes pettoner, hs wfe
and chdren, the stock never bad been on the open market. It was hed by sons, nephews
and sons-n-aw of the Lykes brothers. It was the practce of the brothers to foster In
ths way a contnuty of famy ownershp and management. t the tme of pettoner s
gft of 1.000 shares of common stock, there were outstandng about 2 ,000 shares of that
cass of stock.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3
29.2 -1.
conrt dd not fnd that these facts, or anythng ese n the record, provded an
adequate bass for recassfyng pettoner s stock transfers and hs payment of
a reated ega fee as e pendtures for the producton of ncome, rather than
as gfts accompaned by an ordnary and necessary attorney s fee for contestng
the amount of a Federa gft ta treatng the stock transfers as gfts. The
court of appeas, on revew of the entre record, e pressy hed that the transfers
were gfts and that the attorney s fee was not pro matey reated to the pro-
ducton of ncome. That court then apped to the attorney s fee the nterpre-
taton of secton 23(a) (2) approved n Cobb v. Commssoner, st-pra. We agree
to the appcabty of that nterpretaton whch dsaows the fee as a deducton
from ta abe ncome.
Smary, there s no substanta factua bass here for treatng the stock
transfers and the reated attorney s fee as mere ncdents of pettoner s man-
agement, conservaton, or mantenance of property hed for the producton
of ncome. ven assumng that pettoner s 3,000 shares In Lykes rothers,
Inc., dd consttute property orgnay hed by hm for the producton of
ncome, there s no fndng, and no adequate bass for a fndng, that hs donaton
of one-thrd of that stock actuay was not the gft he represented t to be. Pet-
toner does not cam that the gft Itsef Is deductbe and, If It, as the prncpa
Item In the transacton s not deductbe, we fnd no adequate bass In ths record
for hodng the reated attorney s fee deductbe.
II. Lega e penses do not become deductbe merey because they are pad
for servces whch reeve a ta payer of abty. That argument woud carry
us too far. It woud mean that the e pense of defendng amost any cam
woud be deductbe by a ta payer on the ground that such defense was made
to hep hm keep cear of ens whatever Income-producng property he mght
have. For e ampe, t suggests that the e pense of defendng an acton based
upon persona n|ures caused by a ta payer s neggence whe drvng an
automobe for peasure shoud be deductbe. Secton 23(a)(2) never has
been so Interpreted by us. It has been apped to e penses on the bass of
ther Immedate purposes rather than upnn the bass of the remote contrbutons
they mght make to the conservaton of a ta payer s Income-producng assets
by reducng hs genera abtes. See McDonad v. Commssoner, supra, at
62-63.
Whe the threatened defcency assessment of neary 1 0,000 added urgency to
pettoner s resstance of t, nether ts sze nor ts urgency determned ts
character. It reated to the ta payabe on pettoner s gfts, as gfts, and It
was nay setted on an agreed revauaton of the securtes consttutng those
gfts. The e pense of contestng the amount of the defcency was thus at a
tmes attrbutabe to the gfts, as such, and accordngy was not deductbe.
If, as suggested, the reatve sze of each cam, n proporton to the ncome-
producng resources of a defendant, were to be a touchstone of the deductbty
of the e pense of resstng the cam, substanta uncertanty and nequty woud
Inhere n the rue. For e ampe, the e pense of defendng a persona In|ury
sut for neggence, or a sut for aenaton of affectons, camng 1,000 damages,
probaby woud not be a deductbe e pense for any defendant. On the other
hand, f the same pantff on the same facts asked for ,000, 10,000 or 100,000
damages, and the defendant hed som ncome-producng property, that defend-
ant mght be permtted to deduct from hs ta abe Income the same e pense for
precsey the same servces as those upon whch hs ess we-to-do neghbor
woud have to pay a ta n the other case. It s not a ground for defense that
the cam, f ustfed, w consume Income-producng property of the defendant.
We fnd no such dstncton made or mped In the Revenue ct.
III. Whe the Treasury reguatons, In 19 , dd not refer to the Issue now
before us. they were consstent wth the poston we have taken. Furthermore,
snce 19 6. T. D. 13 C. . 19 6-1, 61 , 26 CFR secton 29.23(a)-1 (k). has
unequvocay stated that ega e penses Incurred by an Indvdua n the deter-
mnaton of gft ta abty are not deductbe. That nterpretaton 0f secton
23(a) (2) appears n the foowng anguage:
The srae here If dstngushabe from that n ngham s Trust v. Commssoner,
supra. In that case the ega e penses were Incurred party In contestng an ncome ta
defcency assessed aganst the ta payng trust and party In wndng up the trust after ts
e praton. of those e penses were Integra Dar s of the mnnneomont r rmsrrvaton
of the trust property for the producton ot ncome and, as such, deductbe under secton
23(a) (21.
Treas. eg. 111. secton 29.23(a)-1 (o).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.3 -2.
36
penses pad or Incurred by an ndvdua n determnng or contestng
any abty asserted aganst hm do not become deductbe by
reason of the fact that property hed by hm for the producton of Income
may be requred to be used or sod for the purpose of satsfyng such a-
bty. Thus, e penses pad or ncurred by an ndvdua n the determna-
ton of gft ta abty, e cept to the e tent that such e penses are aocabe
to nterest on a refund of gft ta es, are not deductbe, even though property
hed by hm for the producton of ncome must be sod to satsfy an assess-
ment for such ta abty or even though, In the event of a ca rn for refund,
the amount receved w be hed by hm for the producton of ncoma.
( mphass supped.)
Such a reguaton s entted to substanta weght. See Commssoner v.
South Te as Co., 333 D. S. 96, 01 Ct. D. 1697, C. . 19 -1, 2 ; Morrssey v.
Commssoner, 296 U. S. 3 , 3 ICt D. 106 , C. . -1, 26 (1936) ; Fawcus
Machne Co. v. Unted States, 2 2 U. S. 37 ,37 et D. 27 , C. . -, 2 (1931) .
Snce the pubcaton of that Treasury Decson, Congress has made many
amendments to the Interna Revenue Code wthout revsng ths admnstratve
nterpretaton of secton 23(a)(2). See Revenue ct of 19 , c. 16 , 62 Stat
110; Revenue ct of 19 0, c. 99 , 6 Stat. 906; Revenue ct of 19 1, c 21, 6
Stat. 2; ggns v. Commssoner, supra, at 216; Morrssey v. Commssoner,
supra, at 3 .
The udgment of the court of appeas accordngy Is
ffrmed.
Mr. ustce ack dssents.
Dssentng opnon by Mr. ustce acksor, wth whom Mr. ustce
Fbankfubteb |ons.
P RT III. CR DITS G INST T
S CTION 3 . C DIT FOR T WIT LD ON W G S
Secton 29.3 -2: Credt for speca refunds 19 2-13-13
of empoyee soca securty ta . T. D. 903
TITL 26 INT RN L R NU C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS NDING FT R D C M R 31, 19 1
Reguatons 111 amended pursuant to authorty contaned n
secton 322(a) ( ) of the Interna Revenue Code, as added by secton
206 (b) (1) and (c) of the Soca Securty ct mendments of 19 0
C. . 19 0-2, 217, 237 .
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On February 2 ,19 2, notce of proposed rue makng wth respect
to reguatons under secton 322(a) ( ) of the Interna Revenue Code,
as added by secton 206 (b) (1) and (c) of the Soca Securty ct
mendments of 19 0 C. . 19 0-2, 217, 237 , approved ugust 2 ,
19 0, was pubshed n the Federa Regster (17 F. R. 176 ). No
ob|ecton to the rues proposed havng been receved, the amendments
of Reguatons 111 26 CFR, part 29 set forth beow are hereby
adopted.
Paragraph 1. There s nserted mmedatey after secton 29.3 -1,
as added by Treasury Decson 32 C. . 19 , 1 2 , approved
anuary ,19 26 CFR 29.3 -1 , the foowng:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
37
29.3 -2.
Sec 29 -2. Credt for Speca Refunds of mpoyee Soca Securty
Ta . (a) In genera. In the case of an empoyee recevng wages from more
than one empoyer durng the caendar year, amounts may be deducted and
wthhed as empoyee soca securty ta under secton 1 00 wth respect to more
than 3,600 wages (for e ampe, on , 00 f the empoyee s pad 2, 00 by one
empoyer and 2,000 by another). Secton 1 01(d) permts, under certan
condtons, a so-caed speca refund of the amount of such empoyee soca
securty ta deducted and wthhed wth respect to wages n e cess of 3,600
by reason of the empoyee workng for more than one empoyer durng the
caendar year.
n empoyee who s entted to a speca refund of empoyee ta wth respect
to wages receved durng a caendar year commencng after December 31, 19 0,
and who s aso requred to fe an ncome ta return for such caendar year
(or for hs ast ta abe year begnnng n such caendar year) may obtan the
benefts of such speca refund ony by camng credt for such speca refund
n the same manner as f such speca refund were an amount deducted and
wthhod as ncome ta at the source under subchapter D of chapter 9. The
credt wth respect to a speca refund s not aowabe uness the return, amended
return, or cam for refund, on whch the speca refund s camed. Is fed
wthn 2 years after the caendar year n whch payment s made of the wages
wth respect to whch the spca refund of ta Is camed. See secton 1 01(d)
(31 and ( ) and secton 0 . 02(c) of Reguatons 12 pertanng to ta under
the Federa Insurance Contrbutons ct. For speca provsons for camng
speca refunds n the case of empoyees not requred to fe Income ta returns,
see secton 0 . 02(c) (3) of Reguatons 12 .
The amount of the speca refund aowed as a credt sha be consdered as
an amount deducted and wthhed as ncome ta at the source under subchapter
D of charter 9. If the amount of such speca refund when added to amounts
deducted and wthhed as Income ta under subchapter D of chapter 1 e ceeds
the ta es Imposed by such chapter, the amount of the e cess consttutes an over-
payment of ncome ta under chapter 1, and nterest on such overpayment s
aowed to the e tent provded under secton 3771 of the Code upon an over-
payment of ncome ta resutng from a credt for ncome ta wthhed at
source. Sne secton 322(a) (2) and ( ).
(6) Federa and State empoyee . The provsons of ths secton sha appy
to the amount of a speca refund (under secton 1 01(d) ( )( )) aowabe
to an empoyee of a Federa agency or a whoy owned Instrumentaty of the
Unted States, and to the amount of a speca refund (under secton
1 01 (d) ( ) (R)) aowabe to nn empoyee of any State or potca sub-
dvson thereof (or any nstrumentaty of any one or more of the foregong).
Par. 2. There s nserted mmedatey precedng secton 29.322-1
26 CFR 29.322-1 the foowng:
S CTION 206 (b) (1) ND (c) OF T SOCI L S CURITY CT
M NDM NTS OF 19 0 PPRO D UGUST 2 , 19 0

(b (1) Secton 322(a) of the Interna Revenue Code Is amended
by addng at the end thereof the foowng new paragraph:
( ) Credt fob speca refunds of empoyee soca securty
ta . The Commssoner s authorzed to prescrbe, wth the ap-
prova of the Secretary, reguatons provdng for the credtng
aganst the ta mposed by ths chapter for any ta abe year of the
amount determned by the ta payer or the Commssoner to be aow-
abe under secton 1 01(d) as a speca refund of ta mposed on
wages receved durng the caendar year n whch such ta abe
year begns. If more than one ta abe year begns n such caendar
year, such amount sha not be aowed under ths secton as a credt
aganst the ta for any ta abe year other than the ast ta abe year
so begnnng. The amount aowed as a credt under such regua-
tons sha, for the purposes of ths chapter, be consdered an amount
deducted and wthhed at the source as ta under subchapter D of
chapter 9.

G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29. 1-1. 3
(c) the amendment made by subsecton (b) (1) of ths
secton sha be appcabe ony wth respect to ta abe years begnnng
after December 31,19 0, and ony wth respect to speca refunds n the
case of wages pad after December 31, 19 0.
(Ths Treasury Decson s ssued under authorty contaned n
secton 322(a) ( ) of the Interna Revenue Code, as added by secton
206 (b) (1) and (c) of the Soca Securty ct mendments of 19 0
(6 Stat. 3 ).)
ohn . Dun ap,
Commssoner of Interna Revenue.
pproved May 27, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 2, 19 2, : 1 a. m.)
P RT I . CCOUNTING P RIODS ND M T ODS OF CCOUNTING
S CTION 1 G N R L RUL
Secton 29. 1-1: Computaton of net ncome. 19 2-9-13 0
( so Secton 112(a), Secton 29.112(a)-1; Mm. 67 9
Secton 117, Secton 29.117-1.)
Modfcaton of Mmeograph 02 3 (C. . 10 -1, ) reatng to
futures tradng and the Federa ncome ta .
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, pr 2,19 2.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
eads of ppeate Staff Dstrcts, and Others Concerned:
1. Mmeograph 62 3 (C. . 19 -1, ) s modfed by changng the
number of paragraph thereof to 6 and by substtutng a new para-
graph to read as foows:
. Under authorty contaned n secton 3791(b) of the Interna Revenue Code,
the provsons of ths mmeograph w be apped wthout retroactve effect
wth respect to those commodtes futures trades (that s, the purchase and the
correspondng sae or the sae and correspondng purchase) made pror to
March , 19 , the date of ssuance of ths mmeograph, where at the tme the
trader nstructed hs broker to make the purchase or sae, he smutaneousy
specfcay drected the broker to treat each such purchase or sae as a ong
purchase or short sae or as cosng out a ong or short poston (uness by
reason of the facts of the case such drecton woud not be needed to secure the
desred treatment; for e ampe, where a purchase was made through one broker
and the correspondng sae made through another) and the broker acted n
conformty wth such drecton and made approprate entres on hs books to
refect the necessary changes n the trader s account.
ohn . Dcnap,
Commssoner.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
39
29. 3-1
S CTION 2. P RIOD IN W IC IT MS OF
GROSS INCOM INCLUD D
Secton 29. 2-6: Nonnterest-bearng obga- 19 2- -13761
tons ssued at a dscount. D. C.
( mendment 1)
eguatons Governng Optons Open to Owners of Maturng Unted States
Savno onds of Seres
19 2. Frst mendment to Department Crcuar No. 0. Fsca Servce. ureau of the
Pubc Debt
Treasury Department,
Offce of the Secretary,
Washngton, anuary 9. 19 2.
To Owners of Unted States Savngs onds of Seres and Others
Concerned:
Pursuant to the Second Lberty ond ct, as amended, Subpart
of Department Crcuar No. C. , 19 1-2, 32 , dated March
26, 19 1, s hereby amended and revsed to read as foows:
SU P RT . FURT R INT R ST FT R M TURITY
Seo. 329.3. Owners of onds of Seres , whch mature on and after May 1,
19 1, have the opton of retanng the matured bonds for a further 10-year
perod and earnng nterest upon the maturty vaues thereof, payabe at the
rate of 2 percent smpe nterest per annum, f redeemed durng the frst 7 6
years, as provded In the tabe of redempton vaues at the end of these regua-
tons, and payabe at a hgher rate thereafter so that the aggregate return for
the 10-year e tenson perod w be about 2.9 percent compounded semannuay.
no acton s requred,of owners desrng to take advantage of the e tenson.
Merey by contnung to bod thus bonds after maturty owners w earn
further nterest n accordance wth the schedue set forth n the tabe
at the end of these reguatons.1
Sec. 329. . Interest hereunder accrues at the end of the frst haf-year perod
foowng maturty and each successve haf-year perod thereafter. If the
bonds are redeemed before the end of the frst haf-year perod foowng
maturty, the owner s entted to payment ony at the face vaue thereof.
ohn W. Snyder,
Secretary of the Treasury.
S CTION 3. P RIOD FOR W IC D DUCTIONS
ND CR DITS T N
Secton 29. 3-1: Pad or ncurred and pad 19 2- -13 00
or accrued. L T. 07
( so Secton 29. 3-2; Secton 23(a), Secton
29.23 (a)-1.)
INT RN L R NU COD
The cost of a 1-year unform professona baseba payer s con-
tract, wth the standard optona renewa cause, purchased after
The frst aentence of secton 329.3 of Subpart as orgnay Issued stated that Interest
upon the maturty vaues of the bonds woud accrue at the rate of 2 percent smpe
Interest per annum for the frst 7 M years, whereas the ast sentence of that secton makes
It cear that the rate of accrua a governed by the schedue set forth In the tabe at the
end of the reguatons. ctuay the schedue provdes for the accrua of Interest at a
rate hgher than 2 percent for the 7- to 7 -year perod foUowng maturty, athough
och rate Is coectbe durng (but not before) the 7Mv to -year perod (whch In the
schedue Is desgnated as the 17 - to 1 -year perod after Issue date). The purpose of ths
amendment Is to render cear ths attractve feature of the e tended maturty vaue of
onds of Seres .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29. 3-2.
0
the end of the payng season to whch the contract reated, const-
tutes a busness e pense for the ta abe year n whch pad or
ncurred, dependng on the method of accountng used by the
purchaser.
I. T. 2993 (C. . -2, 1 6 (1936)) revoked
I. T. 2993 (C. . -2,1 6 (1936)) hods that where a baseba cuh
purchased from another cub a 1-year unform payer s contract,
wth the standard optona renewa cause, after the end of the payng
season to whch the contract reated, and the purchaser engaged the
payer s servces for 2 years, the cost of the contract shoud be amor-
tzed by the purchaser over the fe of the new contract.
Upon reconsderaton, t s hed that the cost of a 1-year unform
professona baseba payer s contract, wth the standard optona
renewa cause, purchased after the end of the payng season to whch
the contract reated, consttutes a busness e pense for the ta abe year
n whch pad or ncurred, dependng on the method of accountng
used by the purchaser. (See Commssoner v. Pttsburgh thetc Co.,
72 Fed. (2d) 3, Commssoner v. Chcago Natona League a Cub,
7 Fed. (2d) 1010, and everng v. ansas Cty mercan ssoca-
ton aseba Co., 7 Fed. (2d) 600; see aso sectons 29. 3-1 and
29. 3-2 of Reguatons 111, and the frst rue estabshed n I. T. 2932,
C. . I -2, 61 (193 ).) ccordngy, I. T. 2993, supra, s hereby
revoked.
Secton 29. 3-2: When charges deductbe. 19 2- -13 01
I. T. 079
INT RN L R NU COD
I
Treatment by empoyers of deductons, for Federa ncome and
e cess profts ta purposes, of payments to empoyees pursuant to
retroactve wage ncreases and saary ad|ustments awarded by the
Saary Stabzaton oard under the provsons of the Defense
Producton ct of 19 0 ( 6 Stat. 79 ) and ecutve Order 10161
(1 F. R. 610 ), both as amended.
dvce s requested reatve to the treatment by empoyers of deduc-
tons, for Federa ncome and e cess profts ta purposes, of payments
to empoyees pursuant to retroactve wage ncreases and saary ad-
|ustments awarded by the Saary Stabzaton oard under the
provsons of the Defense Producton ct of 19 0 (6 Stat. 79 ) and
ecutve Order 10161 (1 F. R. 610 ), both as amended.
I. T. 3716 (C. . 19 ,1 0) hods that n a case n whch an empoyer
was ready and wng to pay retroactve wage ncreases requrng
the approva of the Natona War Labor oard, the amounts of
such ncreased wages awarded by the oard are deductbe for the
year n whch the empoyer fed an appcaton for such approva
wth the oard, to the e tent that such payments reate to servces
rendered n the year of the appcaton or years pror thereto. I. T.
3716 aso hods mat n a case n whch the empoyer contests the wage
ncreases or aowances and retroactve pay ncreases are ordered by
the Natona War Labor oard, the deducton therefor s aowabe
ony for the year n whch the controversy s setted. I. T. 3716
states that ths prncpe s equay appcabe to wage and saary ad-
|ustments under Pubc Law 729 ( 6 Stat. 76 ), approved October
2, 19 2, as amended, whch ad|ustments are sub|ect to the approva
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
29. 2-1.
of the Natona War Labor oard, the Commssoner of Interna
Revenue, or the War Food dmnstrator.
The prncpes set forth n I. T. 3716, svpra, are appcabe to retro-
actve wage ncreases and saary ad|ustments awarded by the Saary
Stabzaton oard under the provsons of the Defense Producton
ct of 19 0 ( 6 Stat. 79 ) and ecutve Order 10161 (1 F. . 610 ),
both as amended.
Secton 29. 3-2: When charges deductbe.
INT RN L R NU COD
Cost of 1-year baseba payer s contract wth renewa opton. (See
IT. 07 , page 39.)
Secton 29. 3-2: When charges deductbe.
INT RN L R NU COD
Interest on predated bonds ssued n connecton wth reorganzaton.
(See a. D. 17 , page 21.)
P RT . R TURNS ND P YM NT OF T
S CTION 2. CORPOR TION R TURNS
Secton 29. 2-1: Corporaton returns. 19 2- -13 02
G. C. M. 270 0
INT RN L NU COD
corporaton was organzed under the aws of a certan State, ts
corporate fe beng f ed n the charter at 30 years. The e pra-
ton of the 30-year perod was not dscovered unt a short tme
thereafter, at whch tme a new corporaton was organzed under
the aws of the same State, wth the same name and capta struc-
ture. The assets of the od corporaton were then conveyed to the
new corporaton n e change for the capta stock of the atter, the
stock certfcates beng ssued to the stockhoders of the od corpora-
ton n the same rato and amount as ther stockhoders n that
corporaton. ed, for Federa ncome ta purposes, the two corpo-
ratons shoud be treated as separate and dstnct ta abe enttes
whch are requred to fe separate Federa ncome ta returns.
S. M. 9 7 (C. . -2,120 (1026)) modfed.
n opnon s requested whether separate and dstnct corporate
enttes are to be recognzed, for Federa ncome ta purposes, under
the crcumstances herenafter stated.
In the nstant case, a corporaton had been organzed under the
aws of a certan State, ts corporate fe beng f ed n the charter at 30
years. The e praton of the 30-year perod was not dscovered
unt a short tme thereafter, at whch tme a new corporaton was
organzed under the aws of the same State, wth the same name and
capta structure. The assets of the od corporaton were then con-
veyed to the new corporaton n e change for the capta stock of the
atter, the stock certfcates beng ssued to the stockhoders of the
21 1 2 62
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 29. 3-2.
2
od corporaton n the same rato and amount as ther stockhodngs
n that corporaton.
S. M. 9 7 (C. . -2,120 (1926)) hods n part and n effect that
where, by reason of the e praton of the charter of a corporaton, t
became necessary to organze a new corporaton under the aws of
the same State wth the same corporate powers and the same stock-
hodngs as those n the od corporaton, the new corporaton s, for
ta ng purposes, a contnuaton of the corporate entty of the od
corporaton, and that ony one ncome ta return s requred. It s
beeved, however, that such concusons shoud no onger be foowed
n vew of the prncpes set forth n New Coona Ice Co., Inc., v.
Ieverng (292 U. S. 3 ; Ct. D. 1, C. . III-1,19 (193 )).
In the New Coona Ice Co. case, a corporaton, pursuant to a re-
organzaton agreement, transferred ts assets, abtes, and bus-
ness on pr 13,1922, to a new corporaton organzed under the aws
of the same State, after whch transfer the new corporaton had sub-
stantay the same stock, stockhodngs, corporate powers, and bus-
ness as the od corporaton. Durng 1921 and the part of 1922 pre-
cedng the transfer, the od corporaton had sustaned statutory net
osses whch the new corporaton, attemptng to treat tsef as a con-
tnuaton of the od corporate entty, camed as a deducton from ts
ncome reazed durng 1922 and 1923. The Court hed that the two
corporatons were separate and dstnct corporate enttes, basng ts
opnon on the fact that there was a vountary and contractua trans-
fer, not by operaton of aw, of assets and busness from one corpora-
ton to the other.
In Weber Four Ms Co. v. Commssoner ( 2 Fed. (2d) 76 ),
a case not nvovng a reorganzaton, a corporaton was created upon
the e praton of the charter of ts predecessor corporaton, and a
of the assets and the busness of the od corporaton were transferred
to the new corporaton. The new corporaton, organzed under the
aws of the same State, had precsey the same capta structure as
that of the od corporaton. The court foowed the prncpes and
concusons n the New Coona Ice Co. case and hed that the two
corporatons were separate ta abe enttes.
In vew of the foregong, t s the opnon of ths offce that, for
Federa ncome ta purposes, the two corporatons n the nstant case
shoud be treated as separate and dstnct ta abe enttes whch are
requred to fe separate Federa ncome ta returns. ccordngy,
S. M. 9 7 , supra, s hereby modfed.
Mason . Lemng,
ctng Chef Counse, ureau of Interna Revenue.
S CTION 3. TIM ND PL C FO FILING TURNS
Secton 29. 3-2: tensons of tme for fng 19 2-7-137 9
returns. T. D. 90
TITL 26 INT RN L R NU . C PT R I, SU C PT R . P RT 2 .
INCOM T ; T L Y RS GINNING FT R D C M R SI. 19 1
Tme e tended for fng ncome and e cess profts ta returns of
members of a croup of affated corporatons for ta abe years end-
ng after March 31. 19 1, and before pr 1, 19 2.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3
1 29. 3-2.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Pursuant to the authorty contaned n secton 3(a)(2) of the
Interna Revenue Code, the tme for fng the return for a ta abe
year endng after March 31, 19 1, and before pr 1, 19 2, by a
corporaton havng the prvege of makng a consodated return for
such ta abe year under secton 1 1 of the Code s hereby e tended
to and ncudng uy 1 , 19 2.
Inasmuch as ths Treasury Decson cannot effectuate ts purpose
uness t s promugated pror to March 1 , 19 2, t s found that t s
mpractcabe to ssue ths Treasury Decson wth notce of pubc
procedure thereon under secton (a) of the dmnstratve Pro-
cedure ct, approved une 11, 19 6, or sub|ect to the effectve date
mtaton of secton (c) of that ct.
(Ths Treasury Decson s ssued under the authorty contaned
n sectons 3(a) (2), 62. and 3791 of the Interna Revenue Code ( 3
Stat. 2 ,32, 67; 26 U. S. C. 3(a) (2), 62,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved March 12, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster March 12, 19 2, 10: 3 a. m.)
Secton 29. 3-2: tensons of tme for fng 19 2-1-137
returns. Mm. 67 1
( so Secton 6, Secton 29. 6-2.)
Tme e tended for fng ncome and e cess profts ta returns of
corporate ta payers for ta abe years ended after March 31, 19 1,
and before December 1, 19 1.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, December 21, 19 1.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
and Others Concerned:
L Secton 12 of the Revenue ct of 19 1 provdes n effect that,
for ta abe years whch ended after March 31,19 1, but before October
1, 19 1, corporate ta payers sub|ect to the ncome and e cess profts
ta sha, after the date of enactment (October 20, 19 1) of the
Revenue ct of 19 1 and on or before anuary 1 , 19 2, make and
fe returns for such ta abe years wth respect to the ta mposed by
chapter 1 of the Interna Revenue Code, as amended by the Revenue
ct of 19 1. Under the provsons of secton 12 of the Revenue ct
of 19 1, such return, so made and fed, sha consttute the return
for such ta abe year for a purposes of the Interna Revenue Code,
and any return for any of the specfed ta abe years that may have
been fed on or before October 20, 19 1, sha not be consdered a
return for such year for any purposes of the Interna Revenue Code.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29. 3-2.1

Corporate ta payers havng ta abe years endng October 31, 19 1,
and November 30, 19 1, are requred, under the provsons of secton
3(a)(1) of the Interna Revenue Code, to fe ncome and e cess
profts ta returns on or before anuary 1 , 19 2, and February 1 ,
19 2, respectvey.
2. In vew of the probems confrontng corporate ta payers as the
resut of the enactment of the Revenue ct of 19 1 on October 20,
19 1, a genera e tenson of tme s hereby granted to a corporate
ta payers to and ncudng March 1 , 19 2, for the fng of ncome
and e cess profts ta returns and the payment of any ta due for
ta abe years endng after March 31, 19 1, and before December 1,
19 1. Ths e tenson of tme s granted under the authorty of sec-
tons 3(a) (2) and 6(c)(1) of the Interna Revenue Code.
3. For the purpose of the computaton of nterest wth respect to
the payment of any ta due on ncome and e cess profts ta returns
fed pursuant to the e tenson granted under paragraph 2, such e -
tenson sha be deemed to have Deen granted for such perod ony as
may be necessary to make and fe the requred return. ccordngy,
nterest on the dfference between the amount of ta shown to be due on
the return so made and fed and the amount aready pad w be
computed at the rate of 6 percent ony from the orgna due date of
such return to the date of payment. ny corporate ta payer desr-
ng to avod the accumuaton of nterest charges on the amount of
ncome and e cess profts ta es due on returns to be fed under the
e tenson granted may make an advance payment to the coector of
nterna revenue for the dstrct n whch such return w be fed,
ceary dentfyng such payment n order to ad the coector of n-
terna revenue n the proper appcaton of such payment and n com-
putng nterest on deferred payments.
. Correspondence regardng ths mmeograph shoud refer to ts
number and the symbos C: Co.
ohn . Dunap,
Commssoner.
Secton 29. 3-2: tensons of tme for fng 19 2-1-137
returns. Mm. 67 2
tensons of tme for fng ncome ta returns
Treasury Department,
Offce or Commssoner of Interna Revenue,
Washngton 2 , D. C, December 26,19 1.
Coectors of Interna Revenue and Others Concerned:
1. Under the provsons of secton 29. 3-2, Reguatons 111, author-
ty for grantng e tensons of tme for fng ncome ta returns has
been deegated to coectors of nterna revenue. eretofore t has
been the pocy to mt the grantng of e tensons n the frst nstance
to a perod of 30 days. owever, n unusua cases where the cr-
cumstances warrant the acton, coectors are authorzed to grant ad-
dtona tme for fng returns up to the ma mum of 6 months.
2. ereafter t w be the pocy for coectors n grantng e ten-
sons of tme for fng ndvdua and corporaton ncome ta returns,
whenever necessary, to grant the e tenson for a perod of 90 days n
the frst nstance. In grantng such e tensons, coectors sha urge
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e

29. 3-2.
upon the ta payer the mportance of fng the returns wthn the
90-fkv perod so as to avod the necessty of actng upon requests for
addtona tme, e cept where absoutey necessary.
3. In grantng e tensons of tme for fng returns, the usua con-
dtons as set forth n Mmeograph 61 7 C. . 19 7-2, 6 , dated
uy 1, 19 7, w be observed wth respect to (1) fng requests, (2)
mertorous reasons for the request, and (3) n the case of corpora-
tons, tentatve returns and the payment of nstaments of ta es as
due. In a cases t w be necessary, under secton 29 of the In-
terna Revenue Code, to assert nterest at the rate of 6 percent per
annum on the unpad amount of ta or nstament thereof from the
due date unt the e praton of the perod of the e tenson.
. Correspondence reatng to the contents of ths mmeograph
shoud refer to ts number and to the symbos C: Co.
ohn . Ddnap,
Commssoner.
Secton 29. 3-2: tensons of tme for fng 19 2-7-13790
returns. Mm. 6777
( so Secton 6, Secton 29. 6-2.)
tenson of tme for fng ncome and e cess profts ta returns
of corporate ta payers for ta abe years endng after March 31,
19 1, and before December 1, 19 1.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, March 10,19 2.
Coectors of Interna Revenue and Others Concerned:
1. Mmeograph 67 1 (page 3, ths uetn), dated December 21,
19 1, granted (paragraph 2) a genera e tenson of tme to a corpo-
rate ta payers to and ncudng March 1 ,19 2, for the fng of ncome
and e cess profts ta returns and the payment of any ta due for
ta abe years endng after March 31, 19 1, and before December 1,
19 1. That e tenson of tme was granted under the authorty of
sectons 3(a) (2) and 6(c) (1) of the Interna Revenue Code.
2. Many nqures have been receved as to the mf. mum e tenson
of tme beyond March 1 ,19 2, whch coectors w be authorzed to
grant to such corporate ta payers.
3. The genera e tenson of tme whch has been granted by Mm-
eograph 67 1 s to be ncuded as a porton of the ma mum tme pro-
vded n sectons 3(a)(2) and 6(c)(1) of the Code, and any
addtona e tenson sha be mted to the date set forth beow:
praton date of
Ta abe year ma mum e tenson
ndng after March 31, 19 1,
but before October 1, 19 1 uy 1 , 19 2.
ndng October 31, 19 1 uy 1 , 19 2.
ndng November 30, 19 1 ugust 1 , 19 2.
. The requrements of e stng reguatons and nstructons wth
respect to grantng e tensons must be observed.
. Correspondence regardng ths mmeograph shoud refer to ts
number ana the symbos C: Co.
Fred S. Martn,
ssstant Commssoner.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 .
6
S CTION . PU LICITY OF R TURNS
19 2-2-137 9
T. D. 77
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT .
INSP CTION OF R TURNS
Inspecton of Income, e cess-profts, decared vaue e cess-profts,
capta stock, estate, and gft ta returns by Senate Commttee on
rmed Servces.
Treasury Department,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Sec. .309. Inspecton of Returns by Senate Commttee on
rmed Servces. (a) Pursuant to the provsons of sectons (a),
0 , 603, 729(a), and 120 of the Interna Revenue Code ( 3 Stat. 29,
111, 171; Stat. 9 9,100 ; Stat. 722; 26 U. S. C. (a), 0 , 603,
729(a), and 120 ), and of the ecutve order ssued thereunder, any
ncome, e cess-profts, decared vaue e cess-profts, capta stock,
estate, or gft ta return for any perod to and ncudng 19 0 sha
be open to nspecton by the Senate Commttee on rmed Servces or
any duy authorzed subcommttee thereof, for the purpose of e ercs-
ng a contnuous watchfuness through a contnuous study of a po-
ces, programs, actvtes, operatons, factes, requrements, and
practces of the Department of Defense, the armed servces, and other
agences e ercsng functons reatng to them, and the admnstraton
thereof.
The nspecton of returns heren authorzed may be made by the
commttee or a duy authorzed subcommttee thereof, actng drecty
as a commttee or as a subcommttee, or by or through such e amners
or agents as the commttee or subcommttee may desgnate or appont
n ts wrtten request herenafter mentoned. Upon wrtten request
by the charman of the commttee or of the authorzed subcommttee
to the Secretary of the Treasury, gvng the names and addresses of
the ta payers whose returns t s necessary to nspect and the ta abe
perods covered by the returns, the Secretary and any offcer or em-
poyee of the Treasury Department sha furnsh such commttee or
subcommttee wth any data reatng to or contaned n any such re-
turn, or sha make such return avaabe for nspecton by the com-
mttee or subcommttee or by such e amners or agents as the com-
mttee or subcommttee may desgnate or appont, n the offce of the
Commssoner of Interna Revenue. ny nformaton thus obtaned
by the commttee or subcommttee thereof sha be hed confdenta:
Provded, however, That any porton or portons thereof reevant or
pertnent to the purpose of the nvestgaton may be submtted by the
commttee to the Unted States Senate.
(b) ecause of the mmedate need of the sad Senate Commttee on
rmed Servces to nspect the ta returns heren mentoned, t s found
that t s mpractcabe and contrary to the pubc nterest to ssue ths
Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une 11,
19 6, or sub|ect to the effectve date mtaton of secton (c) of sad
ct.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
7 .
(c) Ths Treasury Decson sha be effectve upon ts fng for pub-
caton n the Federa Regster.
ohn W. Snyder,
Secretary of the Treasury.
pproved December 29,19 1.
arry S. Truman,
The Whte ouse.
(Ted wth the Dvson ef the Federa Regster December 29,19 1,11: 36 a. m.)
INSP CTION OP INCOM , C SS PROFITS, D CL R D LU C SS-PROFITS,
C PIT L STOC , ST T , ND GIFT T R TURNS Y T S N T COM-
MITT ON RM D S R IC S
y vrtue of the authorty vested n me by sectons (a), 0 , 603,
729(a), and 120 of the Interna Revenue Code ( 3 Stat. 29, 111, 171;
Stat. 9 9, 100 ; Stat. 722; 26 U.S. C. (a), 0 , 603, 729(a),
and 120 ), t s hereby ordered that any ncome, e cess-profts, decared
vaue e cess-profts, capta stock, estate, or gft ta return for any
perod to and ncudng 19 0 sha be open to nspecton by the Senate
Commttee on rmed Servces or any duy authorzed subcommttee
thereof for the purpose of e ercsng a contnuous watchfuness
through a contnuous study of a poces, programs, actvtes, opera-
tons, factes, requrements, and practces of the Department of
Defense, the armed servces, and other agences e ercsng functons
reatng to them, and the admnstraton thereof, sub|ect to the cond-
tons stated n the Treasury Decson reatng to the nspecton of such
returns by that commttee, approved by me ths date.
Ths ecutve order sha be effectve upon ts fng for pubca-
ton n the Federa Regster.
arry S. Truman.
The Whte ouse,
December 29, 19 1.
( . O. 10316)
(Fed wth the Dvson of the Federa Regster December 29, 19 1,11:36 a. m.)
19 2-3-137 9
T.D. 7
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT .
INSP CTION OF R TURNS
Inspecton of ncome, e cess-profts, decared vaue e cess-profts,
capta stock, estate, and gft ta returns by Senate Commttee on
Rues and dmnstraton.
Treasury Department,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Sec. .310. Inspecton of Returns by Senate Commttee on
Rues and dmnstraton. (a) Pursuant to the provsons of sec-
tons (a), 0 , 603, 729(a), and 120 of the Interna Revenue Code
( 3 Stat. 29, 111, 171; Stat. 9 9, 100 ; Stat. 722; 26 U. S. C.
(a), 0 , 603, 729(a), and 120 ), and of the ecutve order ssued
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e

thereunder, any ncome, e cess-profts, decared vaue e cess-profts,
capta stock, estate, or gft ta return for any perod to and ncudng
19 0 sha, durng the ghty-second Congress, be open to nspecton
by the Senate Commttee on ues and dmnstraton or any duy
authorzed subcommttee thereof n connecton wth ts studes of
matters reatng to the eecton of Members of Congress, corrupt prac-
tces, contested eectons, credentas and quafcatons, and Federa
eectons generay.
The nspecton of returns heren authorzed may be made by the
commttee or a duy authorzed subcommttee thereof, actng drecty
as a commttee or as a subcommttee, or by or through such e amners
or agents as the commttee or subcommttee may desgnate or appont
n ts wrtten request herenafter mentoned. Upon wrtten request
by the charman of the commttee or of the authorzed subcommttee
to the Secretary of the Treasury, gvng the names and addresses of
the ta payers whose returns t s necessary to nspect and the ta abe
perods covered by the returns, the Secretary and any offcer or
empoyee of the Treasury Department sha furnsh such commttee
or subcommttee wth any data reatng to or contaned n any such
return, or sha make such return avaabe for nspecton by the com-
mttee or subcommttee or by such e amners or agents as the com-
mttee or subcommttee may desgnate or appont, n the offce of the
Commssoner of Interna Revenue. ny nformaton thus obtaned
by the commttee or subcommttee thereof sha be hed confdenta:
Provded, however, That any porton or portons thereof reevant
or pertnent to the purpose of the nvestgaton may be submtted by
the commttee to the Unted States Senate.
(b) ecause of the mmedate need of the sad Senate Commttee
on Rues and dmnstraton to nspect the ta returns heren men-
toned, t s found that t s mpractcabe and contrary to the pubc
nterest to ssue ths Treasury Decson wth notce and pubc proce-
dure thereon under secton (a) of the dmnstratve Procedure ct,
approved une 11, 19 G, or sub|ect to the effectve date mtaton of
secton (c) of sad ct.
(c) Ths Treasury Decson sha be effectve upon ts fng for
pubcaton n the Federa Regster.
ohn W. Sntder,
Secretary of the Treasury.
pproved anuary 2 , 19 2.
arry S. Truman,
The Whte ouse.
(Fed wth the Dvson of the Federa Regster anuary 2 , 19 2, : 9 p. m.)
INSP CTION OF INCOM . C SS-PROFITS. D CL R D LU C SS-PROFITS,
C PIT L STOC . ST T , ND GIFT T R TURNS Y T S N T COM-
MITT ON RUL S ND DMINISTR TION
y vrtue of the authorty vested n me by sectons (a), 0 , 603,
729(a), and 120 of the Interna Revenue Code ( 3 Stat. 29, 111, 171;
Stat. 9 9, 100 ; Stat. 722; 26 U. S. C. (a), 0 , 603, 729(a),
and 120 ), t s hereby ordered that any ncome, e cess-profts, decared
vaue e cess profts, capta stock, estate, or gft ta return for any
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
9
.
perod to and ncudng 19 0 sha, durng the ghty-second Congress,
be open to nspecton by the Senate Commttee on Rues and dmn-
straton or any duy authorzed subcommttee thereof n connecton
wth ts studes of matters reatng to the eecton of Members of
Congress, corrupt practces, contested eectons, credentas and qua-
fcatons, and Federa eectons generay, sub|ect to the condtons
stated n the Treasury Decson reatng to the nspecton of such
returns by that commttee, approved by me ths date.
Ths ecutve order sha be effectve upon ts fng for pubcaton
n the Federa Regster.
arry S. Truman.
The Whte ouse,
anuary 19 2.
( . O. 10321)
(Fed wth the Dvson of the Federa Regster anuary 2 , 19 2, : 9 p. m.)
19 2- -1376
T. D. 2
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT .
INSP CTION OF R TURNS
Inspecton of Income, e cess-profts, decared vaue e cess-profts,
capta stock, estate, and gft ta returns by the Senate Commttee
on pendtures n the ecutve Departments.
Treasury Department,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Sec. .307a. Inspecton of Returns by Senate Commttee on
pendtures n the ecutve Departments Durng Second
Sesson, ghty-second Congress. (a) Pursuant to the provsons
of sectons (a), 0 , 603, 729(a), and 120 of the Interna Revenue
Code ( 3 Stat. 29, 111, 171; Stat. 9 9,100 ; Stat, 722; 26 U. S. C.
(a), 0 , 603, 729(a), and 120 ), and of the ecutve order ssued
thereunder, any ncome, e cess-profts, decared vaue e cess-profts,
capta stock, estate, or gft ta return for the years 19 to 19 0,
ncusve, sha, durng the second sesson of the ghty-second
Congress, be open to nspecton by the Senate Commttee on pend-
tures n the ecutve Departments or the duy authorzed subcom-
mttee thereof, n connecton wth ts studes of the operaton of
Government actvtes at a eves wth a vew to determnng ts
economy and effcency.
The nspecton of returns heren authorzed may be made by the
commttee or such duy authorzed subcommttee thereof, actng
drecty as a commttee or as a subcommttee, or by or through such
e amners or agents as the commttee or the subcommttee may desg-
nate or appont n ts wrtten request herenafter mentoned. Upon
wrtten request by the charman of the commttee or of the authorzed
subcommttee to the Secretary of the Treasury, gvng the names and
addresses of the ta payers whose returns t s necessary to nspect
and the ta abe perods covered by the returns, the Secretary and
any offcer or empoyee of the Treasury Department sha furnsh
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
.
60
such commttee or subcommttee wth any data reatng to or con-
taned n any such return, or sha make such return avaabe for
nspecton by the commttee or the subcommttee or by such e amners
or agents as the commttee or the subcommttee may desgnate or
appont, n the offce of the Commssoner of Interna Revenue. ny
nformaton thus obtaned by the commttee or the subcommttee
thereof sha be hed confdenta: Provded, however, That any por-
ton or portons thereof reevant or pertnent to the purpose of the
nvestgaton may be submtted by the commttee to the Unted States
Senate.
(b) ecause of the mmedate need of the sad commttee to nspect
the ta returns heren mentoned, t s found that t s mpractcabe
and contrary to the pubc nterest to ssue ths Treasury Decson
wth notce and pubc procedure thereon under secton (a) of the
dmnstratve Procedure ct, approved une 11, 19 6, or sub|ect
to the effectve date mtaton of secton (c) of that ct.
(c) Ths Treasury Decson sha be effectve upon ts fng for
pubcaton n the Federa Regster.
ohn W. Snyder,
Secretary of the Treasury.
pproved February 11,19 2.
arry S. Truman,
The Whte ome.
(Fed wth the Dvson of the Federa Regster February 11,19 2, 2: 39 p. m.)
INSP CTION OF INCOM , C SS-PROFITS, D CL R D LU C SS-PROFITS,
C PIT L STOC , ST T , ND GIFT T R TURNS Y T S N T COM-
MITT ON P NDITUR S IN T CUTI D P RTM NTS
y vrtue of the authorty vested n me by sectons (a), 0 , 603,
729(a), and 120 of the Interna Revenue Code ( 3 Stat. 29, 111, 171;
Stat. 9 9, 100 ; Stat. 722; 26 U. S. C. (a), 0 , 603, 729(a),
and 120 ), t s hereby ordered that any ncome, e cess-profts, de-
cared vaue e cess-profts, capta stock, estate, or gft ta return for
the years 19 to 19 0, ncusve, sha, durng the second sesson of the
ghty-second Congress, be open to nspecton by the Senate Com-
mttee on pendtures n the ecutve Departments r the duy
authorzed subcommttee thereof n connecton wth ts studes of the
operaton of Government actvtes at a eves wth a vew to deter-
mnng ts economy and effcency, sub|ect to the condtons stated n
the Treasury Decson reatng to the nspecton of such returns by
that commttee, approved by me ths date.
Ths ecutve order sha be effectve upon ts fng for pubcaton
n the Federa Regster.
arry S. Truman.
The Whte ouse,
February 11,19 2.
( . 0.10320)
(Fed wth the Dvson of the Federa Regster February 11,19 2, 2: 39 p. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
.
19 2-6-137
T. D. 6
TITL 26 INT N L R NU . C PT R I, SU C PT R . P RT .
INSP CTION OF R TURNS
Inspecton of Income ta returns by the Senate Commttee on
Interor and Insuar ffars.
Treasury Department,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Sec. .311. Inspecton of Returns by Senate Commttee on
Interor and Insuar ffars. (a) Pursuant to the provsons of
secton (a) of the Interna Revenue Code ( 3 Stat. 29, Stat. 100 ,
Stat. 722; 26 U. S. C. (a)), and of the ecutve order ssued
thereunder, any ncome ta return for the years 19 6 to 19 0, ncu-
sve, sha, durng the ghty-second Congress, be open to nspecton
by the Senate Commttee on Interor and Insuar ffars or any duy
authorzed subcommttee thereof n connecton wth ts studes of
reatons of the Unted States wth the Indans and the Indan trbes
and measures reatng to the care, educaton, and management of In-
dans, ncudng the care and aotment of Indan ands and genera
and speca measures reatng to cams whch are pad out of Indan
funds.
The nspecton of returns heren authorzed may be made by the
commttee or a duy authorzed subcommttee thereof, actng drecty
as a commttee or as a subcommttee, or by or through such e am-
ners or agents as the commttee or subcommttee may desgnate or
appont n ts wrtten request herenafter mentoned. Upon wrtten
request by the charman of the commttee or of the authorzed sub-
commttee to the Secretary of the Treasury, gvng the names and
addresses of the ta payers whose returns t s necessary to nspect and
the ta abe perods covered by the returns, the Secretary and any off-
cer or empoyee of the Treasury Department sha furnsh such com-
mttee or subcommttee wth any data reatng to or contaned n any
such return, or sha make such return avaabe for nspecton by the
commttee or subcommttee or by such e amners or agents as the
commttee or subcommttee may desgnate or appont, n the offce of
the Commssoner of Interna Revenue. ny nformaton thus ob-
taned by the commttee or subcommttee sha be hed confdenta:
Provded, however, That any porton or portons thereof reevant or
pertnent to the purpose of the nvestgaton may be submtted by the
commttee to the Unted States Senate.
(b) ecause of the mmedate need of the sad Senate Commttee
on Interor and Insuar ffars to nspect the ta returns heren men-
toned, t s found that t s mpractcabe and contrary to the pubc
nterest to ssue ths Treasury Decson wth notce and pubc proce-
dure tweon under secton (a) of the dmnstratve Procedure ct,
approved une 11, 19 6, or sub|ect to the effectve date mtaton of
secton (c) of sad ct,
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
.
2
(c) Ths Treasury Decson sha be effectve upon ts rng for
pubcaton n the Federa Regster.
ohn W. Snyder,
Secretary of the Treasury.
pproved March ,19 2.
arry S. Truman,
The Whte ouse.
(Fed wth the Dvson of the Federa Regster March , 10 2, 1: 6 p. m.)
INSP CTION OF INCOM T R TURNS Y T S N T COMMITT ON
INT RIOR ND INSUL R FF IRS
y vrtue of the authorty vested n me by secton (a) of the
Interna Revenue Code ( 3 Stat. 29, Stat. 100 , Stat. 722; 26
U. S. C. (a)), t s hereby ordered that any ncome ta return for
the years 19 6 to 19 0, ncusve, sha, durng the ghty-second Con-
gress, be open to nspecton by the Senate Commttee on Interor and
Insuar ffars or any duy authorzed subcommttee thereof n con-
necton wth ts studes of reatons of the Unted States wth the
Indans and the Indan trbes and measures reatng to the care, edu-
caton, and management of Indans, ncudng the care and aotment
of Indan ands and genera and speca measures reatng to cams
whch are pad out of Indan funds, sub|ect to the condtons stated
n the Treasury Decson reatng to the nspecton of such returns by
that commttee, approved by me ths date.
Ths ecutve order sha be effectve upon ts fng for pubcaton
n the Federa Regster.
arry S. Truman.
The Whte ouse,
March , 19 2.
( . O. 10331)
(Fed wth the Dvson of the Federa Regster March , 19 2, 1: 6 p. m.)
19 2-9-13 1
T. D. 9
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 6 .
INSP CTION OF R TURNS
Inspecton of certan ta returns by the Commttee on the
udcary, ouse of Representatves.
Treasury Department,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Sec. .312. Inspecton of Returns by Commttee on the
udcary, ouse of Representatves. (a) Pursuant to the prov-
sons of sectons (a), 0 , 603, 729(a), and 120 of the Interna
Revenue Code ( 3 Stat. 29, 111, 171; Stat. 9 9, 100 , Stat. 722;
26 U. S. C. (a), 0 , 603, 729(a), and 120 ), and of the ecutve
order ssued thereunder, any ncome, e cess-profts, decared vaue
e cess-profts, capta stock, estate, or gft ta return for any perod
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3
.
to and ncudng 19 1, sha, durng the ghty-second Congress, be
open to nspecton by the Commttee on the udcary, ouse of Rep-
resentatves, or any duy authorzed subcommttee thereof n connec-
ton wth ts nqury wth reference to the admnstraton of the
Department of ustce and the offce of the ttorney Genera of the
Unted States.
The nspecton of returns heren authorzed may be made by the
commttee or a duy authorzed subcommttee thereof, actng drecty
as a commttee or as a subcommttee, or by or through such e amners
or agents as the commttee or subcommttee may desgnate or appont
n ts wrtten request herenafter mentoned. Upon wrtten request
by the charman of the commttee or of the authorzed subcommttee
to the Secretary of the Treasury, gvng the names and addresses of
the ta payers whose returns t s necessary to nspect and the ta abe
perods covered by the returns, and statng the specfc aegatons
and compants wth respect to each ta payer whose return s sought
and the nature of the credbe evdence upon whch such aegatons
and compants are based, the Secretary and any offcer or empoyee
of the Treasury Department sha furnsh such commttee or subcom-
mttee wth any data reatng to or contaned n any such return, or
sha make such return avaabe for nspecton by the commttee or
subcommttee or by such e amners or agents as the commttee or sub-
commttee may desgnate or appont, n the offce of the Commssoner
of Interna Revenue. ny nformaton thus obtaned by the com-
mttee or subcommttee sha be hed confdenta: Provded, however,
That any porton or portons thereof reevant or pertnent to the
purpose of the nvestgaton may be submtted by the commttee to
the ouse of Representatves.
(b) ecause of the mmedate need of the sad Commttee on the
udcary to nspect the ta returns heren mentoned, t s found that
t s mpractcabe and contrary to the pubc nterest to ssue ths
Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une 11,
19 6, or sub|ect to the effectve date mtaton of secton (c) of
sad ct.
(c) Ths Treasury Decson sha be effectve upon ts fng for
pubcaton n the Federa Regster.
ohn S. Graham,
ctng Secretary of the Treasury.
pproved pr 12,19 2.
arbt S. Truman,
The Whte ome.
(Fed wth the Dvson of the Federa Regster pr 1 , 19 2, 11:39 a. m.)
INSP CTION OF T R TURNS Y COMMITT ON T UDICI RY, OUS
OF R PR S NT TI S
y vrtue of the authorty vested n me by sectons (a), 0 , 603,
729(a), and 120 of the Interna Revenue Code ( 3 Stat. 29, 111, 171:
Stat. 9 9,100 ; Stat 722; 26 U. S. C. (a), 0 ,603,729(a), and
120 ), t s hereby ordered that any ncome, e cess-profts, decared
vaue e cess-profts, capta stock, estate, or gft ta return for any
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e

perod to and ncudng 19 1, sha, durng the ghty-second Con-
gress, be open to nspecton by the Commttee on the udcary,
ouse of Representatves, or any duy authorzed subcommttee
thereof, n connecton wth the nqury authorzed by resouton of
sad commttee adopted anuary 29,19 2, wth reference to the admn-
straton of the Department of ustce and the offce of the ttorney
Genera of the Unted States, when the charman of such commttee
or subcommttee submts a wrtten statement of the specfc aega-
tons and compants wth respect to each ta payer whose return
s sought, and the nature of the credbe evdence upon whch such
aegatons and compants are based, sub|ect to the condtons stated
n the Treasury Decson reatng to the nspecton of such returns
by that commttee, approved by me ths date.
Ths ecutve order sha be effectve upon ts fng for pubca-
ton n the Federa Regster.
arry S. Truman.
The Whte ouse,
pr 12,19 2.
( . O. 103 3)
(Fed wth the Dvson of the Federa Regster pr 1 , 19 2, 11:39 a. m.)
Secton 29. (b)-: Inspecton of returns. 19 2-2-137 1
Mm. 67 7
Charges appcabe to the furnshng of copes of returns and other
documents.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, anuary , 19 2.
Offcers and mpoyees, ureau of Interna Revenue, and Others
Concerned:
1. The foowng revsed charges are estabshed for copes of returns
or other documents furnshed to appcants authorzed to receve
them pursuant to e stng aws and reguatons whch do not specf-
cay set forth the charges to be made for such servce:
a. cept as set forth beow, a charge of 0 cents per page w be
made for each copy of a return or other document.
b. For each copy of Form W-2 or of other returns and documents
of substantay the same sze, a charge of 0 cents each w be made,
even though copes of both sdes of the return or document are
furnshed.
c. For each copy of a page substantay arger than the sze used n
the argest ncome ta returns, the basc rate of 0 cents per page w
be ncreased proportonatey (n mutpes of 2 cents) to such amount
as may appear reasonabe under the crcumstances.
d. charge of 0 cents w be made for each certfcaton.
e. No charges w be made for copes of returns or other documents
furnshed for offca use by the offcers of any branch o the Federa
Government.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e

.
2. Copes of returns or other documents w be maed prompty to
appcants, accompaned by statements of account n the form attached
when charges are to be made. The statement of account shoud be
prepared n trpcate (quadrupcate n the case of appcatons by
State governments), the orgna and one copy beng forwarded to the
appcant (orgna and two copes n the case of State governments)
and the remanng copy beng retaned pendng recept of payment.
When payment s receved, the date and amount thereof w be noted
on the retaned copy of the statement of account, and f the payment
s by cash, an approprate recept w be ssued.
3. The statements of account w be prepared by the offce compyng
wth the request for copes of returns or other documents. remt-
tances receved by fed offces other than offces of coectors of nterna
revenue w be forwarded to the approprate coector of nterna
revenue together wth the retaned copy of the statement of account,
for depost as msceaneous recepts. Remttances receved by dv-
sons or offces of the ureau n Washngton compyng wth requests
for copes of returns or other documents w be forwarded to the
dmnstratve Servces ranch of the Income Ta Dvson, for
depost as msceaneous recepts.
. Ths mmeograph w be effectve wth respect to a copes of
returns or other documents furnshed on or after February 1,19 2, and
supersedes Mmeograph 3 12 (C. . I-1, 100 (1927)), dated Feb-
ruary , 1927. other nstructons n confct wth the provsons
of ths mmeograph are aso superseded to the e tent of the confct.
ohn . Dun.ap,
Commssoner.
ttachment hbt .
I IT
(To be prepared on offce etterhead)
(Insert date)
(Name and
address of nppcant)
(Sautaton)
The amount shown beow Is due, pursuant to e stng aws and reguatons,
for the copes of returns of other documents encosed herewth:
copes of returns or other documents 0. 0 per
page
copes of other returns or documents
certfcatons 0. 0
Tota amount due
Remttance shoud he made payabe to the coector o nterna revenue
(Treasurer of the Unted States, n the case of statements ssued by offces of
the ureau n Washngton) and forwarded, together wth a copy of ths state-
ment, to ths offce. Stamps are not accepted n payment.
ery truy yours,
(Tte of offcer)
ncosure:
1 ct py of ths etter.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 29.107-2.
oG
S CTION 6. P YM NT OF T
Secton 29. 6-2: tenson of tme for payment
of the ta or nstament thereof.
INT RN L R NU COD
Corporate ta payers for ta abe years ended after March 31,19 1,
and before December 1, 19 1. (See Mm. 67 1, page 3.)
Secton 29. 6-2: tenson of tme for payment
of the ta or nstament thereof.
INT RN L R NU COD
Corporate ta payers for ta abe years ended after March 31, 19 1,
and before December 1, 19 1. (See Mm. 6777, page .)
SU C PT R C SUPPL M NT L PRO ISIONS
SUPPL M NT . R T S OF T
S CTION 107. COMP NS TION FOR S R IC S R N-
D R D FOR P RIOD OF T IRTY-SI MONT S OR
MOR ND C P Y
Secton 29.107-2: rtstc work or nventon. 19 2- -13769
( so Secton 117, Sectons 29.117-1, 29.117-6, T. D. 1
29.117-7, and 29.117-10.)
TITL 26 INT RN L R NU . C PT R I. SU C PT R . P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31. 19 1
Reguatons 111 amended to conform to sectons 210 and 211
of the Revenue ct of 19 0, reatng to defnton of capta assets
and to certan short saes of capta assets.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On September 20, 19 1, notce of proposed rue makng, regardng
sectons 210 and 211 of the Revenue ct of 19 0, approved Sep-
tember 23, 19 0, was pubshed n the Federa Regster (16 F. R.
9 70). fter consderaton of a such reevant matter as was pre-
sented by nterested persons regardng the rues proposed, the amend-
ments set forth beow are hereby adopted. Such amendments are
necessary n order to conform Reguatons 111 26 CFR. part 29 to
sectons 210 and 211 of the Revenue ct of 19 0.
Paragraph 1. Secton 29.107-2, as amended by Treasury Decson
C. . 19 , , approved une 1 , 19 26 CFR 29.107-2 ,
s further amended by addng at the end of the frst paragraph thereof
the foowng new sentence:
In the onse of ta abe years begnnng nffpr September 23. 19 0, for the purpose
o determnng the ta whch woud be attrbutabe to gan on the sae or
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
7
29.107-2.
e change of an artstc work had such gan been receved rataby n any pror
ta abe year, such gan sha be treated as gan from the sae or e change of
property whch s not a capta asset.
Par. 2. There s nserted mmedatey precedng secton 29.117-1
26 CFR 29.117-1 the foowng:
S C. 210. C PIT L G INS ND LOSS S R NU CT OF 19 0,
PPRO D S PT M R 23, 19 0 .
(a) Defnton of Capta ssets. Secton 117(a)(1) (reatng to
the defnton of capta assets) s hereby amended to read as foows:
(1) Capta assets. The term capta assets means property
hed by the ta payer (whether or not connected wth hs trade or
busness), but does not ncude
( ) stock n trade of the ta payer or other property of a
knd whch woud propery, be ncuded n the nventory of the
ta payer f on hand at the cose of the ta abe year, or property
hed by the ta payer prmary for sae to customers n the
ordnary course of hs trade or busness;
( ) property, used In hs trade or busness, of a character
whch s sub|ect to the aowance for deprecaton provded n
secton 23(1), or rea property used n hs trade or busness;
(C) a copyrght; a terary, musca, or artstc compos-
ton ; or smar property; hed by
() a ta payer whose persona efforts created snch
property, or
() a ta payer n whose hands the bass of such prop-
erty s determned, for the purpose of determnng gan
from a sae or e change, n whoe or n part by reference to
the bass of such property n the hands of the person whose
persona efforts created such property; or
(D) an obgaton of the Unted States or any of ts posses-
sons, or of a State or Terrtory, or any potca subdvson
thereof, or of the Dstrct of Coumba, ssued on or after
March 1, 19 1, on a dscount bass and payabe wthout nterest
at a f ed maturty date not e ceedng one year from the date
of ssue.
(b) mendment of Secton 117(|). The frst sentence of secton
7( ) (1) s hereby amended by nsertng before the perod at the end
thereof the foowng: , or (C) a copyrght, a terary, musca, or
artstc composton, or smar property, hed by a ta payer descrbed
n subsecton (a) (1) (C) .
(c) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after the date of the
enactment of ths ct.
Par. 3. Secton 29.117-1. as amended by Treasury Decson 2
C. . 19 , 10, 29 , approved December 29, 19 26 CFR 29.117-1 ,
s further amended by addng at the end of the second paragraph
thereof the foowng new paragraph:
Wth respect to ta abe years begnnng after September 23,19 0, a copyrght,
a terary, musca, or artstc composton, and smar property are e cuded
from the term capta assets f hed by a ta payer whose persona efforts
created such property, or fed by a ta payer n whose hands the bass of such
property s determned, for the purpose of determnng gan from a sae or
e change, n whoe or n part by reference to the bass of such property n the
hands of the person whose persona efforts created such property. s to the
appcaton of secton 117(|) to the sae or e change of such property hed by
such a ta payer, see secton 29.117-7. The phrase smar property ncudes,
for e ampe, such property as a theatrca producton a rado program, a news-
paper cartoon strp, or any other property egbe for copyrght protecton
(whether under statute or common aw), but does not ncude a patent or an
Inventon, or a desgn whch may be protected ony under the patent aw and
not under the copyrght aw.
21 1 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
20.107-2.

Par. . Secton 29.117-6 26 CFR 29.117-6 s amended as foows:
( ) y changng the tte thereof to read Gans and Losses From
Short Saes; n Genera.
( ) y addng at the end thereof the foowng new paragraph:
s to certan short saes of capta assets made after September 23, 19 0, to
whch secton 117(1) appes, see secton 29.117-10.
Par. . Secton 29.117-7, as amended by Treasury Decson 39
C. . 19 , 27 , approved uy 27, 19 26 CFR 29.117-7 , s
further amended as foows:
( ) y addng after ordnary course of trade or busness, n the
frst sentence of the frst paragraph thereof the foowng:
or, wth respect to ta abe years begnnng after September 23, 19 0, s not a
copyrght, a terary, musca, or artstc composton, or smar property, hed
by a ta payer descrbed n secton 117(a) (1) (C),
( ) y addng after ordnary course of hs trade or busness, n
the frst sentence of the fourth paragraph thereof the foowng:
or, wth respect to ta abe years begnnng after September 23, 19 0, whch s a
copyrght, a terary, musca, or artstc composton, or smar property, hed
by a ta payer descrbed n secton 117(a) (1) (O),
Par. 6. There s nserted mmedatey after secton 29.117-9, as
added by Treasury Decson 1 C. . 19 1-2, 63 , approved ugust
10, 19 1 26 CFR 29.117-9 , the foowng:
S C. 211. S ORT -S L S OF C PIT L SS TS R NU CT
OF 19 0, PPRO D S PT M R 23, 19 0 .
(a) Treatment of Short Saes. Secton 117 (reatng to capta
gans and osses) s hereby amended by addng at the end thereof the
foowng new subsecton:
(1) Short Saes, tc. In the case of a short sae of property made
by the ta payer after the date of the enactment of the Revenue ct
of 19 0:
(1) Short-tebm gans and hodng perods. If substantay
dentca property has been hed by the ta payer on the date of such
short sae for not more than 6 months (determned wthout regard
to the effect, under subparagraph ( ) of ths paragraph, of such
short sae on the hodng perod), or f substantay dentca prop-
erty s acqured by the ta payer after such short sae and on or
before the date of the cosng thereof
( ) any gan upon the cosng of such short sae sha be
consdered as a gan upon the sae or e change of a capta
asset hed for not more than 6 months (notwthstandng the
perod of tme any property used to cose such short sae has
been hed) ; and
( ) the hodng perod of such substantay Identca
property sha be consdered to begn (notwthstandng the
provsons of subsecton (h)) on the date of the cosng of the
short sae, or on the date of a sae, gft, or other dsposton of
such property, whchever date occurs frst. Ths subparagraph
sha appy to such substantay dentca property n the order
of the dates of the acquston of such property, but ony to so
much of such property as does not e ceed the quantty sod
short.
For the purposes of ths paragraph, the acquston of an opton to
se property at a f ed prce sha be consdered as a short sae,
and the e ercse or faure to e ercse such opton sha be
consdered as a cosng of such short sae.
(2) Long-term osses. If substantay Identca property has
been hed by the ta payer on the date of such short sae for more
than months, any oss upon the cosng of such short sae sha be
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
9
29.107-2.
consdered as a oss upon the sae or e change of a capta asset
hed for more than 6 months (notwthstandng the perod of tme
any property used to cose such short sae has been hed, and not-
wthstandng the provsons of subsecton (g) (2)).
(3) Rues fob appcaton of subsecton.
( ) The provsons of paragraph (1)( ) or (2) sha not
appy to the gan or oss, respectvey, on any quantty of prop-
erty used to cose such short sae whch s n e cess of the
quantty of the substantay dentca property referred to In
the appcabe paragraph.
( ) For the purposes of ths subsecton
() the term property ncudes ony stocks and secur-
tes (ncudng stocks and securtes deat wth on a when
ssued bass), and commodty futures, whch are capta
assets n the hands of the ta payer;
() n the case of futures transactons n any com-
modty on or sub|ect to the rues of a board of trade or
commodty e change, a commodty future requrng devery
n one caendar month sha not be consdered as property
substantay dentca to another commodty future re-
qurng devery n a dfferent caendar month; and
() n the case of a short sae of property by an nd-
vdua, the term ta payer , n the appcaton of ths para-
graph and paragraphs (1) and (2), sha be read as
ta payer or hs spouse ; but an ndvdua who s egay
separated from the ta payer under a decree of dvorce or
of separate mantenance sha not be consdered as the
spouse of the ta payer.
(C) Where the ta payer enters nto two commodty futures
transactons on the same day, one requrng devery by hm
n one market and the other requrng devery to hm of the
same (or substantay dentca) commodty n the same
caendar month n a dfferent market, and the ta payer sub-
sequenty coses both such transactons on the same day, ths
subsecton sha have no appcaton to so much of the com-
modty nvoved n ether such transacton as does not e ceed
n quantty the commodty nvoved n the other.
(b) ffectve Date. The amendment made by ths secton sha be
appcabe ony wth respect to ta abe years begnnng after the date
of the enactment of ths ct
Sec. 29.117-10. Gans and Losses From Certan Short Saes of Capta
ssets. (a) Genera. Secton 117(1) provdes rues as to the ta consequences
of certan short saes of property f, at the tme of the short sae or on or before
the date of the cosng of the short sae, the ta payer hods property sub-
stantay dentca to that sod short. The term property s defned n secton
117(1) to ncude ony stocks and securtes (ncudng stocks and securtes deat
wth on a when ssued bass) and commodty futures, whch are capta assets
n the hands of the ta payer. The secton appes to short saes of such prop-
erty made after September 23, 19 0, but ony wth respect to gans and osses
reazed n ta abe years begnnng after September 23, 19 0. Certan restrc-
tons on the appcaton of the secton to commodty futures are provded n
secton 117(1) (3) and subsecton (c) (2) of ths secton.
(b) Treatment of short saes. The frst two rues, whch are set forth n
secton 117(1) (1), are appcabe whenever property substantay dentca to
that sod short has been hed by the ta payer on the date of the short sae for
not more than 6 months (determned wthout regard to rue (2), beow, reatng
to the hodng perod) or s acqured by hm after the short sae and on or
before the date of the cosng thereof. These rues are:
Rue (1). ny gan upon the cosng of such short sae sha be consdered
as a gan upon the sae or e change of a capta asset hed for not more than 6
months (notwthstandng the perod of tme any property used to cose such
short sae has been hed) ; and
Rue (2). The hodng perod of such substantay dentca property sha
be consdered to be. n (notwthstandng the provsons of secton 117(h)) on
the date of the cosng of such short sae or on the date of a sae, gft, ur other
dsposton of such property, whchever date occurs frst.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 29.107-2.
60
For the purpose of rue (1) and rue (2), the acquston of an opton to
se property at a f ed prce sha be consdered a short sae, and the e ercse
or faure to e ercse such opton sha be consdered as a cosng of such short
sae.
The thrd rue, whch s set forth n secton 117(1) (2), s appcabe whenever
property substantay dentca to that sod short has been hed by the ta payer
on the date of the short sae for more than 6 months. Ths rue s:
Rue (3). ny oss upon the cosng of such short sae sha be consdered as
a oss upon the sae or e change of a capta asset hed for more than 6 months,
notwthstandng the perod of tme any property used to cose such short sae
has been hed. For the purpose of rue (3), the acquston of an opton to se
property at a f ed prce s not consdered a short sae, and the e ercse or
faure to e ercse such opton s not consdered as a cosng of a short sae.
Rues (1) and (3) do not appy to the gan or oss attrbutabe to so much of
the property sod short as e ceeds n quantty the substantay dentca prop-
erty referred to n sectons 117(1) (1) and 117(1) (2), respectvey. Rue (2)
appes to the substantay dentca property referred to n secton 117(1) (1)
In the order of the dates of the acquston of such property, but ony to so much
or such property as does not e ceed the quantty sod short. If property sub-
stantay dentca to that sod short .has been hed by the ta payer on the
date of the short sae for not more than 6 mouths, or s acqured by hm after
the short sae and on or before the date of the cosng thereof, and f property
substantay dentca to that sod short has been hed by the ta payer on the
date of the short sae for more than ( months, a three rues are appcabe.
The foowng e ampes ustrate the appcaton of these rues to short waes
of stock n the case of a ta payer who makes hs return on the bass of the
caendar year:
ampe (1). buys 100 shares of stock at 10 per share on February 1,
19 1, ses short 100 shares of stock at 10 per share on uy 1, 19 1, and
coses the short sae on ugust 2, 19 1, by deverng the 100 shares of stock
purchased on February 1, 19 1, to the ender of the stock used to effect the
short sae. Snce 100 shares of stock had -been hed by on the date of
the short sae for not more than 6 mouths, the gan of 600 reazed upon the
cosng of the short sae s, by appcaton of rue (1), a short-term capta
gan.
ampe (2). buys 100 shares of stock at 10 per share on February 1,
19 1, ses short 100 shares of stock at 16 per share on uy 1, 19 1, coses
the short sae on ugust 1, 1901, wth 100 shares of stock purchased on that
date at 1 per share, and on ugust 2, 19 1, ses at 1 per share the 101
shares of stock purchased on February 1, 19 1. The 200 oss sustaned
upon the cosng of the short sae s a short-term capta oss to whch secton
117(1) has no appcaton. y appcaton of rue (2), however, the hodng
perod of the 100 shares of stock purchased on February 1, 19 1, and sod
on ugust 2, 19 1, s consdered to begn on ugust 1, 19 1, the date of the
cosng of the short sae. The 00 gan reazed upon the sae of such stock
s, therefore, a short-term capta gan.
ampe (3). buys 100 shares of stock at 10 per share on February 1,
19 1, ses short 100 shares of stock at 16 per share on September 1, 19 1,
ses on October 1, 19 1, at 1S per share the 100 shares of stock purchased
on February 1, 19 1, and coses the short sae on October 1, 19 1, wth 100
shares of stock purchased on that date at 1S per share. The 00 gan
reazed upon the sae of the 100 shares of stock purchased on February 1,
19 1, s a ong-term capta gan to whch secton 117(1) has no appcaton.
Snce had hed 100 shares of stock on the date of the short sae fur more
than 6 months, the 200 oss sustaned upon the cosng of the short sae s,
by appcaton of rue (3), a ong-term capta oss.
amne 1. ). ses short 100 shares of stock at 16 per share on February
1, 19 1. e buys 2 0 shares of stock on March 1, 19 1, at 10 per share and
hods the atter stock unt September 2, 19 1 (more than 6 months), at whch
tme, 100 of the 2 0 shares of stuck are devered to cose the short sae
made on February 1, 19 1. Snce substantay dentca property was acqured
by after the short sae and before t was cosed, the 000 gan reazed on
te cosng of the short sae s, by appcaton of rue (1), a short-term capta
gan. The hodng perod of the remanng 1 0 shares of stock s not
affected by secton 117(1), snce ths amount of the substantay dentca
property e ceeds the quantty of be property sod short.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
61
29.107-2.
ampe ( ). buys 100 shares of stock at 10 per share on February
1, 19 1, buys an addtona 100 shares of stock at 20 per share on uy
1, 19 1, ses short 100 shares of stock at 30 per share on September 1,
19 1. and coses the short sae on February 1, 19 2, by deverng the 100 shares
of stock purchased on February-1, 19 1, to the ender of the stock used to
effect the short sae. Snce 100 shares of stock had been hed by on the date
of the short sae for not more than 6 months, the gan of 2,000 reazed upon
the cosng of the short sae s, by appcaton of rue (1), a short-term capta
gan; and the hodng perod o ,the 100 shares of- stock purchased on uy 1,
1901, s consdered, by appcaton of rue (2), to begn on February 1, 19 2,
the date of the cosng of the short sae. If, however, the 100 shares of stock
purchased on uy 1, 19 1, had-been used by to cose the short sae, then,
snce 100 shares of stock had- been hed by on the date of the short sae
for not more than 6 months,, the gan of 1,000 reazed upon the cosng of the
short sae woud be, by appcaton of rue (1), a short-term capta gan, but
the hodng perod of tte 100 shares of stock purchased on February 1, 19 1,
woud not be affected by secton 117(1). If, on the other hand, purchased
an addtona 100 shares of stock at 0 per share on February 1, 19 2, and
used such shares to cose the short, sae at that tme, then, snce 100 shares of
stock bad been hed by - on the date of the short sae for more than 6
months, the oss of 1,000 sustaned upon the cosng of the short sae woud be,
by appcaton of rue (3), a ong-term capta oss, and, snce 100 shares of
stock had been hed by on the date, of the short sae for not more than 6
months, the hodng perod of the 100 shares of stock purchased on uy 1,19 1,
woud be consdered, by appcaton-of rue (2), to begn on-February 1, 19 2,
but the hodng perod of tne 100 shares of stock purchased on February 1,
19 1, woud not be affected by secton 117(1).
ampe (6). buys 100-shares of preferred stock at 10 per share on
February 1, 19 1. On uy 1, 19 1, he enters nto a contract to se 100 shares
of Y common stock at 16 pet share when, as, and f Issued pursuant to a
partcuar proposed pan of reorganzaton. On ugust 2, 19 1, he receves
100 shares of Y common stock n e change for the 100 shares of preferred
stock purchased on February 1, 19 1, and devers such common shares n per-
formance of hs uy 1, 19 1, contract. ssume that the e change of the pre-
ferred-stock for the Y common stock s a ta -free e change pursuant to secton
112(b) (3), and that on the bass of a of the facts and crcumstances e stng
en uy 1, 19 1, the when ssued Y common stock s substantay dentca
to the preferred stock. Snce 100 shares of substantay dentca property
bad been hed by for not more, than 6 months on the date of enterng nto
the uy 1, 19 1, contract of sae, the gan of 600 reazed upon the cosng of
the contract of sae s, by appcaton of rue (1), a short-term qapta.gan.
(c) Other rue for the appcaton of secton 117(1). (1) Substantay
dentca property. The term substantay dentca property s to be ap-
ped accordng to the. facts and crcumstances n each case. In genera, as ap-
ped to stocks or securtes, the term has the same meanng as the term sub-
stantay, dentca stock er securtes used n secton 11 , reatng to wash
saes of stock or securtes. For certan restrctons on the term as apped
to commodty futures see paragraph (2) herenafter. Ordnary, stocks or
securtes of one corporaton are not consdered substantay dentca to stocks
or securtes of another corporaton. In certan stuatons they may be substan-
tay, dentca; for e ampe;, n the case of a reorganzaton the facts and cr-
cumstances may be such that the stocks and securtes of predecessor and
successor corporatons are substantay dentca property. Smary, .bonds
or preferred stock of a corporaton are not ordnary consdered substantay
dentca to the common stock of the same corporaton. owever, Uncertan
stuatons, as, for e ampe, where the preferred stock or bonds are convertbe
nto common stock of the same corporaton, the reatve vaues , prce changes,
and other crcumstances may. be such as to make such bonds or preferred stock
and. the common stock substantay dentca property. Smary, dependng
on the facts and crcumstances, the term may appy to the stocks and securtes
to be receved n a corporate reorganzaton or recaptazaton, traded n on
a when ssued bass; as compared wth the stocks or securtes to be e changed
n such reorganzaton or recaptazaton.
(2) Commodty futures. s provded n secton 117(1) (3) ( ) (), In the
case of futures transactons n any commodty on or sub|ect to the rues of a
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 29.107-2.
62
board of trade or commodty e change, a commodty future requrng devery
n one caendar month sha not be consdered as property substantay den-
tca to another commodty future requrng devery n a dfferent caendar
month. For e ampe, commodty futures n May wheat and uy wheat are not
consdered, for the purpose of secton 117(1), substantay Identca property.
Smary, futures n dfferent commodtes whch are not generay through
custom of the trade used as hedges for each other (such as corn and wheat,
for e ampe) are not consdered substantay dentca property. If commodty
futures are otherwse substantay dentca property the mere fact that they
were procured through dfferent brokers w not remove them from the scope
of the term substantay Identca property . Commodty futures procured on
dfferent markets may come wthn the term substantay dentca property
dependng upon the facts and crcumstances n the case, wth the hstorca
smarty n the prce movements n the two markets as the prmary factor to
be consdered.
Snce secton 117(1) appes ony to saes or e changes of capta assets, bona
fde hedgng transactons n commodty futures entened nto by four mers,
producers of coth, operators of gran eevators, etc., for the purpose of thpr
busness, and whch do not gve rse to capta gan or oss, are not wthn the
scope of secton 117(1).
Secton 117(1) (3) (C), reatng to so-caed arbtrage transactons In com-
modty futures, provdes that where a ta payer enters nto two commodty
futures transactons on the same day, one requrng devery by hm n one
market and the other requrng devery to hm of the same (or substantay
dentca) commodty n the same caendar month n a dfferent market, and
the ta payer subsequenty coses both such transactons on the same day,
secton 117(1) sha have no appcaton to so much of the commodty nvoved
n ether such transacton as does not e ceed n quantty the commodty n-
voved n the other.
The foowng e ampe ndcates the appcaton of secton 117(1) to a com-
modty futures transacton:
ampe. , who makes hs return on the bass of the caendar year, on
February 1, 19 1, enters nto a contract through broker to purchase 10,000
bushes of December wheat on the Chcago market at 2 per bushe. On uy
1, 19 1, he enters nto a contract through broker Y to se 10,000 bushes of
December wheat on the Chcago market at 2.2 per bushe. On ugust 2,
19 1, he coses both transactons at 2. 0 per bushe. The 2, 00 oss sustaned
on the cosng of the short sae s a short-term capta oss to whch secton
117(1) has no appcaton. y appcaton of rue (2) In subsecton (b) of
ths secton, however, the hodng perod of the futures contract entered nto
on February 1, 10 1, s consdered to begn on ugust 2, 19 1, the date of the
cosng of the short sae. The ,000 gan reazed upon the cosng of such
contract s, therefore, a short-term capta gan.
(3) usband and wfe. Secton 117(1) (3) ( ) () provdes that, n the
case of a short sae of property by an ndvdua, the term ta payer sha be
read as ta payer or hs spouse . Thus, f the spouse of a ta payer hods or
acqures property substantay dentca to that sod short by the ta payer,
and the other condtons of ths secton are met, then the rues set forth heren
are appcabe to the same e tent as f the ta payer hed or acqured the
substantay dentca property. For ths purpose, an ndvdua who s egay
separated from the ta payer under a decree of dvorce or of separate man-
tenance sha not be consdered as the spouse of the ta payer.
(Ths Treasury Decson s ssued under authorty contaned n
pectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32, 67; 26
U.S.C.62,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved February 11, 19 2.
T|oma . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster February 13,19 2, : 3 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G3
29.111-1
SUPPL M NT . COMPUT TION OF N T INCOM
S CTION 111. D T RMIN TION OF MOUNT OF, ND
R COGNITION OF, G IN OR LOSS
Secton 29.111-1: Computaton of gan or oss. 19 2-12-13 3
( so Secton 11 , Sectons 29.11 - and T. D. 99
29.11 -6.)
TITL 26 INT RN L R NU . C PT R I, SU C PT R . P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 19 1
Reguatons 111 amended Dstrbutons by corporatons out of
ncrease n vaue of property accrued pror to March 1,1913.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned.
On February 7, 19 2, notce of proposed rue makng wth respect
to dstrbutons by a corporaton out of ncrease n vaue of property
accrued before March 1, 19132 was pubshed n the Federa Regster
(17 F. R. 11 9). No ob|ecton to the proposed rues havng been
receved, Reguatons 111 26 CFR, part 29 are hereby amended as
foows:
Paragraph 1. Secton 29.111-1 26 CFR 29.111-1 s amended as
foows:
( ) y strkng therefrom the frst sentence of the second para-
graph and nsertng n eu thereof the foowng:
ven though property s not sod or otherwse dsposed of, gan s reazed f
the sum of a the amounts receved whch are requred by secton 113(b) to be
apped aganst the bass of the property e ceeds such bass. cept as otherwse
provded n secton 11 (b) wth respect to dstrbutons out of ncrease n vaue
of property accrued pror to March 1,1913, such gan s ncudbe n gross ncome
under secton 22(a) as gans or profts and ncome derved from any source
whatever . See secton 29.11 - .
( ) y nsertng before the perod at the end of the thrd sentence
of the e ampe, the foowng: other than a dstrbuton out of n-
crease of vaue of property, accrued pror to March 1, 1913.
Par. 2. Secton 29.11 - 26 CFR 29.11 - s amended as foows:
( ) y strkng from the frst sentence thereof the parenthetca
e presson readng (see secton 29.111-1) .
( ) y nsertng mmedatey after the second sentence thereof
the foowng:
( dstrbuton out of Increase n vaue of property accrued pror to March 1,1913,
sha b apped aganst and reduce the ad|usted bass of the stock provded n
secton 113(b), but the fact that such dstrbuton s n e cess of such bass does
not render such e cess sub|ect to ta .)
Par. 3. Secton 29.11 -6 26 CFR 29.11 -6 s amended by strkng
therefrom (See secton 29.111-1) and nsertng n eu thereof (See
sectons 29.111-1 and 29.11 ) .
The amendments to sectons 29.111-1, 29.11 - , and 29.11 -6 of
Reguatons 111, coverng ta abe years begnnng after December 31,
set forth n ths Treasury Decson, are hereby made appcabe to
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.112(b) (7)-3.
6
ta abe years begnnng after December 31, 1933, and before anuary
1,19 2 (such years beng covered by Reguatons 6,9 ,101, and 103).
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 62, 3791 ( 3 Stat. 32, 67 ; 26 U. S. C. 62, 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved May 13,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster May 1 , 19 2, 9 : 0 a. m.)
S CTION 112(a). R COGNITION OF G IN OR
LOSS: G N R L RUL
Secton 29.112(a)-: Saes or e changes.
INT RN L R NU COD
Modfcaton of Mmeograph 62 3 (C. . 19 -1, ) reatng to
futures tradng. (See Mm. 67 9, page 3 .)
S CTION 112(b). R COGNITION OF G IN OR LOSS:
C NG S SOL LY IN IND
Secton 29.112(b) (7)-3: Makng and fng of 19 2-10-13 23
wrtten eectons. T. D. 9
TITL 26-INT RN L R NU C PT R I, SU C PT R . P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 19 1
Secton 29.112(b) (7)-3 of Reguatons 111, reatng to mnkng and
fng of wrtten eectons toy sharehoders to be governed by secton
112(b) (7) of the Interna Revenue Code, amended.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Reguatons 111 26 CFR, part 29 are amended as foows:
Paragraph 1. Secton 29.112(b) (7)-3, as added by Treasury Dec-
son 3 6 C. . 19 , 220, 22 . approved pr 19, 19 26 CFR
29.112(b) (7)-3 , s amended by nsertng mmedatey after the second
sentence thereof the foowng:
n eecton sha be consdered as tmey fed f t Is paced n the ma on or
before mdnght of the thrteth day after the adopton of the pan of qudaton,
as shown by the post mark on the enveope contanng the wrtten eecton or
as shown by other avaabe evdence of the mang date.
Par. 2. ecause the amendment made by ths Treasury Decson
merey berazes the provsons of e stng reguatons reatng to the
fng of certan eectons, t s found that t s unnecessary to ssue ths
Treasury Decson wth notce and pubc procedure thereon under sec-
ton (a) of the dmnstratve Procedure ct, approved une 11,
19 6, or sub|ect to the effectve date mtaton of secton (c) of such
ct.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
6
IS 29.112(g)-3.
(Ths Treasury Decson s ssued under the authorty centaned
n sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32,
67 ; 26 U. S. C. 62,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved pr 2 ,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 20,19 2, : a. m.)
S CTION 112(g). R COGNITION OF G IN OR LOSS:
D FINITION OF R ORG NIZ TION
Secton 29.112(g)-3: changes soey of stock or 19 2-11-13 27
securtes, or property, soey for stock or secu- I. T. 0 1
rtes, n pursuance of pan of reorganzaton.
INT RN L R NU COD ND PRIOR R NU L WS
n e change of bonds for the same prncpa amount of new
bonds of the same corporaton pursuant to a pan of reorganzaton
consttutes a recaptazaton and hence a reorganzaton, wthn
the meanng of secton 112(g) of the Code, and no gan or oss
s recogazed upon the transacton.
I. T. 203 (C. . III-, (192 )) and I. T. 277 (C. . III-1,
79 (103 )) revoked.
Reconsderaton has been gven to I. T. 203 (C. . III-, (102 ))
and I. T. 277 (C. . III-1,79- (193 )) n the ght of the decsons n
gmund Neustadt Trust et a. v. Commssoner ( 3 . T. . ,
acquescence, C. . 19 1-1,2, affrmed, 131 Fed. (2d) 2 ), The Mutua
Fre, Marne de Inand Insurance Co. v. Commssoner (12 T. C. 10 7,
acquescence, C. . 19 1-2, 3) and Unon Pacfc Raroad Co. et a. v.
Commssoner (1 T. C. 01, acquescence, C. . 19 1-2, ).
The poston was taken n I. T. 203 , supra, that an e change ef
od bonds for a new ssue of bonds consttuted a refnancng trans-
acton and not a nonta abe recaptazaton for gan or oss purposes.
In I. T. 277 , supra, t was hed that gan from an e change of Seres
debentures for Seres debentures of the same corporaton
must be recognzed.
Secton 112(b)(3) of the Interna Revenue Code provdes that
no gan or oss sha be recognzed f stock or securtes n a cor-
poraton a party to a reorganzaton are, n pursuance of the pan
of reorganzaton, e changed soey for stock or securtes n suc
corporaton or n another corporaton a party to tne reorganzaton.
Secton 112(g) (1) ( ) of the Code defnes the term reorganzaton
as ncudng a recaptazaton.
In vew of the decsons n-the Neustadt, the Mutua Fre, Marne
Inand Insurance, and the Unon Pacfc Raroad cases, cted above,
t s now the poston of the ureau that an e change of bonds for
the same prncpa amount of new bonds of the same corporaton
ursuant to a pan of reorganzaton consttutes a recaptazaton and
enee a reorganzaton, wthn the meanng of secton 112(g) of the
Code, and that no gan or oss s recognzed upon the transacton.
ccordngy, L T. 203 , supra, and I. T. 277 , supra, are hereby
revoked.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:
3
9

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.11 -1.
66
S CTION 113(b). D UST D SIS FOR D T RMINING
G IN OR LOSS: D UST D SIS
Secton 29.113(b) (1)-1: d|usted bass: Genera rue.
Securtes retaned where an amount has been pad to a corporaton
by an offcer or drector under secton 16(b) of the Securtes change
ct of 193 . (See I. T. 069, page 2 .)
S CTION 11 . SIS FOR D PR CI TION
ND D PL TION
Where the estabshment and operaton of a treatment pant
wthn 0 mes of bentonte deposts are not prevented, at east n
part, by physca factors, such transportaton from the pont of
e tracton of the mnera to the treatment pant as s n e cess of
0 mes may not be consdered as a part of mnng wthn the
meanng of secton 11 (b)( )( ) of the Interna Revenue Code.
ny ncrease n vaue of the mnera attrbutabe to transportaton
whch s not n e cess of 0 mes s ncudbe n gross ncome from
the property for the purpose of computng depeton.
dvce s requested whether the transportaton of bentonte from
deposts to a treatment pant whch s more than 0 mes away
may be treated as a part of mnng under the provsons of secton
11 (b)( )( ) of the Interna Revenue Code for the purpose of
computng depeton.
Secton 11 (b)( )( ) of the Interna Revenue Code provdes n
part that the aowance for depeton under secton 23 (m) of the Code
n the case of bentonte sha De 1 per centum of the gross ncome
from the property durng the ta abe year. Secton 11 (b) ( ) ( )
of the Code provdes n part as foows:
( ) Defnton of Gross Income From Property. s used n ths
paragraph the term gross Income from the property means the gross
ncome from mnng. The term mnng , as used heren, sha be con-
sdered to ncude not merey the e tracton of the ores or mneras from
the ground but aso the ordnary treatment processes normay apped
by mne owners or operators n order to obtan the commercay market-
abe mnera product or products, and so much of the transportaton of
ores or mneras (whether or not by common carrer) from the pont of
e tracton from the ground to the pants or ms n whch the ordnary
treatment processes are apped thereto as s not n e cess of 0 mes
uness the Secretary fnds that the physca and other requrements are
such that the ore or mnera must be transported a greater dstance to
such pants or ms.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 76, page 23.)
Secton 29.11 -1: ass for aowance of depre
caton and depeton.
INT RN L R NU COD
19 2- -13770
I. T. 073
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
67
29.11 -1.
The provsons of secton 11 (b) ( )( ) of the Interna Revenue
Code, supra, reatng to the ncuson of transportaton n the term
mnng, were added to that secton by secton 207 of the Revenue ct
of 19 0. The report of the Senate Fnance Commttee (Senate Report
No. 237 , 1st Cong., 2d sess., C. . 19 0-2, 3, 22) contans the fo-
owng anguage wth respect to the above-quoted secton of the Cede:
The Code secton here Invoved was added n the 19 3 Revenue ct
so that the aw woud ceary have the same meanng as that ntended by the
depeton provsons n the 1932 ct and contemporary Treasury reguatons
Interpretatve thereof. Those reguatons specfed that the gross ncome com-
putaton for depeton purposes was to be before transportaton from the pace
where the ast of the processes sted beow was apped. Tesran, water suppy,
or other factors, sometmes permt the appcaton of ordnary treatment proc-
esses drecty on the mnng property. t other tmes the pants to appy such
processes to obtan the commercay marketabe mnera products are normay
ocated some dstance from the mouth or openng of the mne, but are at the
nearest practcabe pont at whch such processes can be effcenty performed.
The transportaton to these pants and the ordnary treatment processes apped
are ncuded as a part of mnng n determnng gross ncome for percentage
depeton purposes.
Ths rue, ntended to be apped n accordance wth norma standards, ceary
woud not e tend to transportaton to dstant ponts far beyond the ocatons
where mne operators woud normay, ocate such pants. ut the rue woud
be appcabe when the ocaton of the pant or m s at a pont not substan-
tay more dstant from the pont of e tracton than s reasonaby necessary
for effcent and economca operaton.
In the Conference Report ( ouse of Representatves Report No. 312 ,
1st Cong., 2d sess., C. . 19 0-2, 0, ) t s stated:
The ouse recedes wth an amendment whch mts the transporta-
ton permtted by. the Senate amendment te be ncuded as gross ncome from
mnng to so much of such transportaton as does not e ceed 0 mes uness the
Secretary fnds condtons to be; such that the mnera must be transported to
a greater dstance to the pant or m n whch the ordnary treatment processes
are apped.
The statute as utmatey enacted s consstent wth the foregong
porton of the report of the conferees.
In vew of the specfc wordng of the statute, t s cear that f
estabshment and operaton of a treatment pant are not prevented,
at east n part, by physca factors; a fndng may not be made that
the mnera must be transported for processng n e cess of 0 mes
from the pont of e tracton. In other words-, such a fndng may
not be made soey upon the bass of what may be cassfed broady
as economc consderatons.
In the nstant case, an nvestgaton by a representatve of the
ureau reveas that constructon and operaton of a treatment pant
wthn 0 mes of the bentonte deposts are not prevented by terran,
ack of water, ack of power, ack of fue, or any other physca
requrement. ccordngy, t s hed that such transportaton of
the bentonte from the pont of e tracton to the treatment pant as s
n e cess of- 0 mes may not be consdered as a part of mnng
wthn the meanng of secton 11 (b) ( ) ( ) of the Interna Revenue
Code. owever, any ncrease n the vaue of the mnera attrbutabe
to transportaton whch s not n e cess of 0 mes s ncudbe n
gross ncome from the property for the purpose of computng
depeton.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.11 -3
6
S CTION 11 . DISTRI UTIONS Y CORPOR TIONS
Method of apportonng the ncome and e cess profts ta of an
affated group of corporatons fng consodated Federa ncome
and e cess profts ta returns for ta abe years endng after une 30.
19 0, n determnng the earnngs and profts of each member of
such group.
dvce s requested as to the method of apportonng the ncome and
e cess profts ta of an affated group of corporatons fng conso-
dated Federa ncome and e cess profts ta returns for ta abe years
endng after une 30,19 0, n determnng the earnngs and profts of
each member of such group.
The e cess profts ta for ta abe years endng after une 30, 19 0,
as n the case of norma ta and surta , s mposed as a part of the
ncome ta on corporatons under chapter 1 of the Interna Revenue
Code, whereas for ta abe years begnnng after December 31, 1939,
and before anuary 1, 19 6, the e cess profts ta was mposed as a
separate ta under subchapter of chapter 2 of the Code. In ths
regard, secton 0.0(b) of Reguatons 130 states that the norma ta .
surta , and e cess profts ta on corporatons are reported on the
corporaton ncome ta return, and are treated as one ta for a
purposes, ncudng assessment, coecton, payment, perod of mta-
tons, and the consodated return prvege.
Notwthstandng the fact that the e cess profts ta for ta abe years
endng after une 30, 19 0, s mposed as a part of the ncome ta
under chapter 1 (subchapter D) of the Interna Revenue Code, sep-
arate cacuatons apportonng the ncome ta and the e cess profts
ta of an affated group of corporatons are deemed necessary n
computng the earnngs and profts of each member of the affated
group because of (1) ad|ustments to the consodated norma-ta net
ncome requred n determnng the consodated e cess profts net
ncome and (2) aowance of a consodated e cess profts credt n
computng the consodated ad|usted e cess profts net ncome.
ccordngy, t s hed that n determnng the earnngs and profts
of each member of an affated group of corporatons ng conso-
dated Federa ncome and e cess profts ta returns for ta abe years
endng after une 30,19 0, the consodated norma ta and surta m-
nosed under subchapter of chapter 1 of the Interna Revenue Code
snoud be apportoned among the members of the group n accordance
wth the rato of that porton of the consodated norma-ta net
ncome attrbutabe to each member of the affated group to the con-
sodated norma-ta net ncome, eavng out of consderaton any mem-
ber of the group havng no net ncome. The consodated e cess profts
ta mposed under subchapter D of chapter 1 of the Code shoud be ap-
portoned among the members of the group n accordance wth the rato
of that porton of the consodated ad|usted e cess profts net ncome
attrbutabe to each member of the affated group to the consodated
ad|usted e cess profts net ncome, eavng out of consderaton any
member of the group havng no net ncome. The ta es thus deter-
Secton 29.11 -3: arnngs or profts.
( so Secton 1 1, Secton 29.1 1-1.)
19 2-12-13 36
I. T. 0
INT RN L R NU COD
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
69
29.116-2.
mned shoud be (a) ncreased or decreased, as the case may be, by
the amount of any secton 2 ad|ustment attrbutabe to each com-
pany, and (b) decreased by the amount of the consodated credt for
foregn ta es attrbutabe to each company. In the event that the
ncome ta es pad to a foregn country or Unted States possesson
are n e cess of the amounts aowed as credts, the e cess shoud be
taken nto consderaton n arrvng at the earnngs and profts. (For
smar method under pror aw, see I. T. 3637, C. . 19 , 2 , and
I. T. 3692, C. . 19 , 261.)
Secton 29.11 - : Dstrbutons other than a
dvdend.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 99, page 63.)
Secton 29.11 -6: Dstrbutons from depeton
or deprecaton reserves.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 99, page 63.)
S CTION 116. CLUSIONS FROM GROSS INCOM
Secton 29.116-2: Income of foregn govern- 19 2-11-13 2
ments, nternatona organzatons, and I. T. 0 2
ther empoyees.
INT RN L R NU COD
raway system whch s owned and operated by n foregn gov-
ernment, and s so cosey ntegrated wth the e ecutve arm of
such government as to be a part thereof, s e empt, under secton
116(c) of the Interna Revenue Code, from Unted States ncome
ta on ncome from sources wthn the Unted States. Compensaton
receved by the raway system s empoyees who are not ctzens
of the Unted States s e empt from Unted States ncome ta under
secton 116(h) of the.Code, provded proper certfcaton s made as
requred by secton 116(h) (2) of the Code.
dvce s requested whether the ncome, from sources wthn the
Unted States, of a raway system whch s owned and operated by
a foregn government s e empt from ta as ncome of the foregn
government wthn the meanng of secton 116(c) of the Interna
Revenue Code, and whether compensaton receved by ts empoyees
s e empt from Unted States ncome ta under secton 116(h) of
the Code.
The raway system (sometmes herenafter referred to as Raways)
s not a corporaton, t has no shares or sharehoders, and no prvate
nterests are nvoved. Raways s under the supervson of a drector
genera who s apponted by the presdent of the foregn government
whch owns t. The drector genera must submt an annua budget
for Raways to the presdent for approva. Settement of a but
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.116-2.
70
mnor cams aganst t, ncreases n fares, and the aboton of raway
statons are a sub|ect to presdenta approva.
The revenue of Raways s derved prmary from passenger and
freght traffc and s used for ts own e penses. Raways s not sub-
|ect to ta es, natona or oca. mounts derved from saes ta es co-
ected by t on fares, freght, and servces rendered are added to the
servce rates coected by t and are retaned for ts beneft. If Ra-
ways shoud requre fnanca assstance from the government for ts
operatons for any year, the drector genera so ndcates before uy
1 of the precedng year so that the presdent may f the amount to be
aocated for such purpose n the proposed natona budget. In
severa nstances, the government has enacted speca egsaton
appropratng addtona funds for the use of Raways.
Raways s authorzed to ssue bonds n mted amounts, secured
by ts own resources, sub|ect to the approva of the presdent. The
ma|or borrowng, however, s accompshed by oans guaranteed by the
government. The saares of the drector genera and of vrtuay
a of the empoyees of Raways are f ed by Taw. Detas of empoy-
ment, such as perodc saary ncreases and empoyment of persons
reated by bood or marrage, are reguated by aw. mpoyees of
Raways who work n the Unted States are gven offca government
passports of the type ssued ony to ndvduas regarded as govern-
ment empoyees or offcas. The vsas whch the Unted States
Government grants to such empoyees cassfy them as government
offcas.
Secton 116 of the Interna Revenue Code provdes that specfed
tems, ncudng the foowng, sha not be ncuded n gross ncome
and sha be e empt from ta :
(c) Income of Foregn Governments and of Internatona Organzatons.
The ncome of foregn governments receved from nvestments n the
Unted States n stocks, bonds, or other domestc securtes, owned by such for-
egn governments or from nterest on deposts n banks n the Unted
States of moneys beongng to such foregn governments or from any
other source wthn the Unted States.
.
(h) Compensaton of mpoyees of Foregn Governments or of th Com-
monweath of the Phppnes.
(1) Rue for e cuson. Wages, fees, or saary of any empoyee of a
foregn government (ncudng a consuar or other offcer, or a non-
dpomatc representatve), receved as compensaton for offca servces
to such government
( ) If uch empoyee s not a ctzen of the Unted States and
( ) If, n the case of an empoyee of a foregn government
te servces are of a character smar to those performed by empoyees
of the Government of the Unted States n foregn countres
and
(C) If, n the case of an empoyee of a foregn government
the foregn government grants an equvaent e empton to
empoyees of the Government of the Unted States performng smar
servces n such foregn country
(2) Certfcate -by Secretary of State. The Secretary of State sha
certfy to the Secretary of the Treasury the names of the foregn countres
whch grant an equvaent e empton to the empoyees of the Government
of the Unted States, performng servces In such foregn countres, and the
character of the servces performed by empoyees of the Government of the
Unted States n foregn countres.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
71
29.117-7.
The raway system n the nstant case s so cosey ntegrated wth
the e ecutve arm of the foregn government as to be a part thereof.
(See Lous a v. Commssoner, 1 T. C. 03, acquescence, page ),
ths uetn. ut cf. L T. 37 9, C. . 19 6-1,100, n whch t s hed
that a corporaton whoy owned by a foregn government s an entty
separate and dstnct from such government.)
ccordngy, t s hed that ncome receved by the raway system
from sources wthn the Unted States s e empt from Unted States
ncome ta under secton 116(c) of the Interna Revenue Code. It s
aso hed that compensaton receved by the raway system s empoyees
who are not ctzens of the Unted States s e empt from Unted States
ncome ta under secton 116(h) of the Code, provded proper cert-
fcaton s made as requred by secton 116(h) (2) of the Code.
S CTION 117. C PIT L G INS ND LOSS S
Secton 29.117-1: Meanng of terms.
INT RN L R NU COD
Gan from sae of securtes by an offcer or drector of a corporaton
where an amount s pad to the corporaton under secton 16(b) of the
Securtes change ct of 193 . (See I. T. 069, page 2 .)
Skcton 29.117-1: Meanng of terms.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 1, page 6.)
Secton 29.117-1: Meanng of terms.
INT RN L R NU COD
Modfcaton of Mmeograph 62 3 ( . . 19 -1, ) reatng to
futures tradng. (See Mm. 67 9, page 3 .)
Secton 29.117-6: Gans and osses from
short saes; n genera.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 1, page 6.)
Secton 29.117-7: Gans and osses from n- 19 2-7-13791
vountary conversons and from the sae or Mn. 6776
e change of certan property used n the
trade or busness.
Treatment under secton 117 (|) of the Interna Revenue Code
of gans reazed upon the sae of vestock hed for draft, breedng,
or dary purposes.
Mmeograph 6660 (C. . 10 1-2, 60) revoked.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I 29.117-7.
72
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, March 6,1962.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
Teods of ppeate Staff Dstrcts, and Others Concerned:
1. Secton 117(|)() of the Interna Revenue Code was amended
by sectons 323(a), 32 , and 32 (a) of the Revenue ct of 19 1 to read
as foows:
(1) Defnton op property used n the trade or rusnfsr. For the
purposes of ths subsecton, the term property used n the trade or bus-
ness means property used n the trade or busness, of a character whch
Is sub|ect to the aowance for deprecaton provded n secton 23(1), hed
for more than 6 months, and rea property used n the trade or busness,
hed for more than 6 months, whch s not ( ) property of a knd whch
woud propery he Incudbe n the nventory of the ta payer f on hand
at the cose of the ta abe year, or ( ) property hed by the ta payer
prmary for sae to customers n the ordnary course of hs trade or bus-
ness, or (C) a copyrght, a terary, musca, or artstc composton, or
smar property, hed by a ta payer descrbed n subsecton (a)(1)(C).
Such term aso ncudes tmber or coa wth respect to whch subsecton
(k) (1) or (2) s appcabe and unharvested crops to whch paragraph
(3) s appcabe. Such term aso ncudes vestock, regardess of age,
hed by the ta payer for draft, breedng, or dary purposes, and hed by
hm for 12 months or more from the date of acquston. Such term does
not ncude poutry.
The penutmate sentence of secton 117(|) (1) of the Code, added
by secton 32 of the Revenue ct of 19 1, s appcabe wth respect
to ta abe years begnnng after December 31, 19 1, e cept that the
e tenson of the hodng perod from 6 to 12 months s appcabe ony
wth respect to ta abe years begnnng after December 31, 19 0.
The ast sentence of secton 117 (|) (1) of the Code, aso added bv
secton 32 of the Revenue ct of 19 1, s appcabe ony wth respect
to ta abe years begnnng after December 31,19 0.
2. ccordngy, for ta abe years begnnng after December 31,
19 1, and before anuary 1, 19 1, vestock, regardess of age, hed
by the ta payer for draft, breedng, or dary purposes, and hed by
hm for more than 6 months from date of acquston consttutes
property used n the trade or busness, and, under approprate cr-
cumstances (see secton 117(|) (2) of the Code), gans and osses from
saes or e changes thereof are sub|ect to treatment as gans and osses
from saes or e changes of capta assets. For ta abe years
begnnng after December 31,19 0, vestock (not ncudng poutry),
regardess of age, hed by the ta payer for draftr breedng, or dary
purposes, and hed by hm for 12 months or more from date of ac-
quston consttutes property used n the trp.de or busness, and,
under approprate crcumstances (see secton 117(|) (2) of the Code),
gans and osses from saes or e changes thereof are sub|ect to treats
ment as gans and osses from saes or e changes of capta assets.
3. The poston of the ureau wth respect to the appcaton of
secton 117(|) of the Code, as stated n Mmeograph 6660 (C. .
19 1-2, GO) dated une 27, 19 1, s, n genera, not n accord wth the
foregong. ccordngy, Mmeograph 6G60 s revoked. owever,
such revocaton shoud not be consdered as renstatng I. T. 3666
(C. . 19 , 270) or I. T. 3712 (C. . 19 ,176).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
73
20.120-1.
. Pendng amendment of Reguatons 111 to conform to secton
32 of the Revenue ct of 19 1, coectors of nterna revenue, nterna
revenue agents n charge, and heads of ppeate Staff dstrcts may
proceed n the dsposton of any case nvovng the treatment of gans
and osses reazed upon the sae or e change of vestock aeged by
the ta payer to consttute property used n the trade or busness f,
under the crcumstances of the case, the treatment prescrbed by
secton 117(|) of the Code, as amended, s ceary appcabe.
ohn . Duneap,
Commssoner.
Secton 29.117-7: Gans and osses from n-
vountary conversons and from the sae or
e change of certan property used n the
trade or busness.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. 1, page 6.)
Secton 29.117-10: Gans and osses from cer-
tan short saes of capta assets.
nterna revenue code
Reguatons 111 amended. (See T. D. 1, page 6.)
S CTION .120. UNLIMIT D D DUCTION FOR
C RIT L ND OT R CONTRI UTIONS
Secton 20.120-1: Unmted deducton for 19 2-13-13
chartabe and other contrbutons. T. D. 909
TITL 26 INT RN L R NU . C PT R I, SU C PT R . P RT 20.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 1C 1
Reguatons 111 amended to conform to Pubc Law 01 ( 1st
Cong.) C. . 19 1-:, 17 .
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On March 19 2, notce of proposed rue makng, regardng amend-
ments to the ncome ta reguatons made necessary by Pubc Law
91 ( 1st Cong.) C. . 19 1-1, 17 , approved anuary 11 19 1,
was pubshed n the Federa Regster (17 F. R. 1 99). No ob|ecton
to the rues proposed havng been receved, the amendments to Regua-
tons 111 26 CFR, part 29 set forth beow are hereby adopted.
Paragraph 1. There s nserted mmedatey precedng secton
29.120-1 26 CFR 29.120-1 the foowng:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
( 29.120-1.
7
PU LIC L W 01 , Sst CONGR SS,
PPRO D NU RY 11, 19 1
e t enacted by the Senate and ouse of Representatve of the
Unted States of merca n Congress assembed. That secton 120 of
the Interna Reveuue Code (reatng to unmted deducton for char-
tabe and other contrbutons) s hereby amended by strkng out n
respect of precedng ta abe years and nsertng n eu thereof n
respect of such year or precedng ta abe years .
Sec. 2. The amendment made by ths ct sha be appcabe to ta abe
years begnnng after December 31, 19 2.
Par. 2. Secton 29.120-1, as amended by Treasury Decson
C. . 19 1-2,1 1 , approved September 13,19 1 26 CFR 29.120-1 ,
s further amended to read as foows:
Sec. 29.120-1. Unmted Deducton for Chartab-e Np Other Contrbu-
tons. (a) Under the crcumstances specfed n secton 120, the 1 percent
mtaton mposed by secton 23(o) on the deducton for chartabe and other
contrbutons s not appcabe.
(6) The foowng rues sha appy wth respect to the ta es ncuded n
determnng for any ta abe year whether the amount of the gfts, contrbu-
tons, and ta es referred to n secton 120 e ceeds 90 percent of the net ncome
computed wthout the beneft of any deducton for gfts or contrbutons:
(1) In the case of a ta abe year begnnng before anuary 1, 19 3, there
sha be ncuded ncome, war-profts, and e cess-profts ta es pad durng
such ta abe year n respect of precedng ta abe years.
(2) In the case of a ta abe year begnnng after December 31, 19 2,
there sha be ncuded, n addton to the ncome, war-profts, and e cess-
profts ta es pad durng such ta abe year n respect of precedng ta abe
years, the amount of ncome ta pad durng such ta abe, year n respect
of such ta abe year. For e ampe, there sha be ncuded the amount
pad as estmated ta durng the ta abe year, to the e tent such amount
does not e ceed the ta for such ta abe year.
(3) In the case of a ta abe year begnnng after December 31, 19 0,
the amount of ncome ta pad durng the ta abe year sha be determned
wthout regard to any payment of ta mposed under subchapter of
chapter 1 of the Interna Revenue Code, whch subchapter reates to the ta
on sef-empoyment ncome.
(c) In the case of a husband and wfe makng a |ont return for any ta abe
year, the 1 percent mtaton mposed by secton 23(o) on the deducton for
chartabe and other contrbutons sha not be appcabe f n the ta abe
year and n each of the ten preceedng ta abe years the amount of the contrbu-
tons or gfts descrbed In secton 23(o) (or correspondng provsons of pror
revenue acts) made by the husband and wfe together durng each such year pus
the amount of ncome, war-profts, or e cess-profts ta es pad by the husband
and wfe together durng each such year (determned under the rues of (b) of
ths secton), e ceeds 90 percent of the net ncome of the husband and wfe to-
gether for each such year, as computed wthout the beneft of any deducton for
contrbutons or gfts.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32, 67;
26 U. S. C. 62, 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved une 3, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une C, 19D2, : a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
7
29.1 )-.
S CTION 127(a). W R LOSS S: C S S IN W IC LOSS
D M D SUST IN D, ND TIM D M D SUST IN D
Secton 29.127(a)-: Descrpton of war osses. 19 2-9-13 09
( so Secton 19.127(a)-1, Reguatons 103.) T. D. 92
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 19 ND
P RT 29
mendng secton 19.127(a)- of Reguatons 103 and secton
29.1 7(a)- of Refu.mons 111, reatng to descrpton of war
osses.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton , D. C.
To Coectors of Interna Revenue and Others Concerned:
Reguatons 103 26 C R, part 19 and Reguatons 111 26 C R,
part 29 are hereby amended by substtutng secton 23(e) for
secton 23(e)(3) n the fourth sentence of the second paragraph
of secton 19.127(a)- of Reguatons 103, as amended by Treasury
Decson 600 C. . 19 -1, , approved February 2, 19 26 C R
19.127(a)- , and n the s th sentence of the second paragraph of
secton 29.127(a)- of Reguatons 111 26 CFR 29.127(a)- .
The sentence n secton 29.127(a)-, Reguatons 111, as amended
by ths Treasury Decson, w read as foows:
Uness such oss s treated under secton 117(|) as a oss from the sae or
e change of a capta asset, such oss s deductbe as an ordnary oss under
the provsons of secton 23(f) n the case of a corporaton and secton 23(e)
n the case of an ndvdua.
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 62 of the Interna Revenue Code ( 3 Stat. 32;
26 U. S. C. 62).)
Inasmuch as the purpose of ths Treasury Decson s merey to
correct a technca error, t s found that t s unnecessary to ssue
ths Treasury Decson under secton (a) of the dmnstratve
Procedure ct, approved une 11, 19 6, or sub|ect to the effectve
date mtaton of secton (c) of sad ct.
ustn F. Wnke,
ctng Commssoner of Interna Revenue.
pproved pr ,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 9,19 2, : 0 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I 29.130 -1.
76
S CTION 130 . MPLOY STOC OPTIONS
Secton 29.130 -1: Meanng and use of certan 19 2-13-13 6
terms. T. D. 911
( so Sectons 29.130 -2, 29.130 -3, 29.130 - ,
29.130 - ; Secton 22(a), Secton 29.22(a)-1;
Secton 113(a), Secton 29.113(a)-1.)
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 1, 19 1
Reguatons 111 amended to conform to secton 21 of the Revenue
ct of 10 0 and secton 331 of the Revenue ct of 10 1, reatng to
restrcted stock optons.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On October 1 , 19 1, notce of proposed rue makng, regardng
secton 21 of the Revenue ct of 19 0, approved September 23, 19 0,
was pubshed n the Federa Regster ( 16 F. R. 106 0). Such notce
stated that the reguatons theren set forth n tentatve form were
sub|ect to any changes whch mght be necesstated by the Revenue
of 19 1 ( . R. 73) then pendng before the Congress. Legs-
aton reatng to the sub|ect matter of the notce was enacted as
secton 331-of the Revenue ct of 19 1, approved October 20, 19 1.
fter consderaton of a reevant matter presented by nterested
persons regardng the rues proposed, the amendments to Regua-
tons 111 26 CFR, part 29 set forth beow are hereby adopted. Such
amendments are necessary n order to conform Reguatons 111 to
secton 21 of the Revenue ct of 19 0, and to secton 331 of the
Revenue ct of 19 1.
Paragraph 1. There s nserted mmedatey foowng secton
29.130-1 26 CFR 29.130-1 the foowng:
S C. 21 . STOC OPTIONS R NU CT OF 19 0, PPRO D
S PT M R 23, 19 0 .
(a) Treatment of Cebtan mpoyee Stock Optons. Suppement
of chapter 1 s hereby amended by addng at the end thereof the
foowng new secton:
S C 130 . MPLOY STOC OPTIONS.
(a) Tbeatment of Restrcted Stock Optons. If a share of stock
s transferred to an ndvdua pursuant to hs e ercse after 19 9 of a
restrcted stock opton, and no dsposton of such share s made by
hm wthn two years from the date of the grantng of the opton nor
wthn s months after the transfer of such share to hm
(1) no ncome-sha resut at the tme of the transfer of such
share to the ndvdua upon hs e ercse of the opton wth
respect to such share;
(2) no deducton under secton 23(a) sha be aowabe at
any tme to the empoyer corporaton of such ndvdua or ts
parent or subsdary corporaton wth respect to the share so trans-
ferred ; and
(3) no amount other than the opton prce sha be consdered as
receved by ether of such corporatons for the share so transferred.
Ths subsecton and subsecton (b) sha not appy uness ( ) the
ndvdua, at the tme he e ercses the restrcted stock opton, s an
empoyee of the corporaton grantng such opton or of a parent or
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
77
29.130 -1.
subsdary corporaton of such corporaton, or ( ) the opton s e er-
csed by hm wthn 3 months after the date he ceases to be an em-
poyee of any of such corporatons.
(b) Speca ue Where Opton Prce Is etween Percent
and 9 Percent or aue or Stock. If no dsposton of a share
of stock acqured by an ndvdua upon hs e ercse after 19 9 of a
restrcted stock opton s made by hm wthn two years from the date
of the grantng of the opton nor wthn s months after the trans-
fer of such share to hm, but, at the tme the restrcted stock opton
was granted, the opton prce was ess than 9 per centum of the far
market vaue at such tme of such share, then, n the event of any
dsposton of such share by hm, or n the event of hs death (when-
ever occurrng) whe ownng such share, there sha be ncuded
as compensaton (and not as gan upon the sae or e change of a
capta asset) n hs gross ncome, for the ta abe year n whch fas
the date of such dsposton or for the ta abe year cosng wth hs
death, whchever s appcabe, an amount equa to the amount (f
any) by whch the cpton prce s e ceeded by the esser of
(1) the far market vaue of the share at the tme of such
dsposton or death, or
(2) the far market vaue of the share at the tme the opton
was granted.
In the case of the dsposton of such share by the Indvdua, the bass
of the share n hs hands at the tme of such dsposton sha be n-
creased by an amount equa to the amount so ncudbe n hs gross
ncome.
(c) cquston of New Stock. If stock transferred to an n-
dvdua upon hs e ercse of the opton s e changed by hm for stock
or securtes n an e change wthn the provsons of secton 112(b)
(2) or (3), or f new stock, as descrbed n secton 113(a) (19), s
acqured upon a dstrbuton wth respect to such stock, the stock or
securtes acqured n such e change and such new stock sha be con-
sdered as havng been transferred to hm upon hs e ercse of such
optO . smar rue sha be apped n the case of a seres of such
e changes or acqustons.
(d) Deknttuns. s used n ths secton
(1) Restrcted stock opton. The term restrcted stock op-
ton means an opton granted after February 2(, 19 , to an n-
dvdua, for any reason connected wth hs empoyment by a cor-
poraton, f granted by the empoyer corporaton or ts parent or
subsdary corporaton, to purchase stock of any of such corpora-
tons, but ony f
( ) t the tme such opton s granted the opton prce
s at east per centum of the far market vaue at such tme
of the stock sub|ect to the opton; and
( ) Such opton by ts terms s not transferabe by such
ndvdua otherwse than by w or the aws of descent and
dstrbuton, and s e ercsabe, durng hs fetme, ony by
bm: and
(C) Such ndvdua, at the tme the opton s granted,
does not own stock possessng more than 10 per centum of
the tota combned votng power of a casses of stock of
the empoyer corporaton or of ts parent or subsdary cor-
poraton. For the purposes of ths subpnraeraph
() such ndvdua sha be consdered as ownng the
stock owned, drecty or ndrecty, by or for hs brothers
and ssters (whether by the whoe or haf bood), spouse,
ancestors, and nea descendants; and
() stock owned, drecty or ndrecty, by or for a
corporaton, partnershp, estate, or trust, sha be con-
sdered as beng owned proportonatey by or for ts share-
hoders, partners, or benefcares.
(2) Parent corporaton. The term parent corporaton means
any corporaton (other than the empoyer corporaton) In an un-
broken chan of corporatons endng wth the empoyer corporaton
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.130 -1.
7
f, at the tme of grantng of the opton, each of the corporatons
other than the empoyer corporaton owns stock possessng more
than 0 per centum of the tota combned votng power of a casses
of stock n one of the other corporatons n such chan.
(3) Subsdary corporaton. The term subsdary corporaton
means any corporaton (other than the empoyer corporaton) n an
unbroken chan of corporatons begnnng wth the empoyer corpo-
raton f, at the tme of the grantng of the opton, each of the corpo-
ratons other than the ast corporaton n the unbroken chan owns
stock possessng more than 0 per centum of the tota combned
votng power of a casses of stock n one of the other corporatons
n such chan.
( ) Dsposton. The term dsposton ncudes a sae, e -
change, gft, or any transfer of ega tte, but does not ncude
( ) a transfer from a decedent to hs estate or a transfer
by bequest or nhertance:
( ) an e change whch s wthn the provsons of secton
112(b) (2) or (3) ; or
(C) a mere pedge or hypothecaton.
(e) Modfcaton, tenson, or Rknewa of Opton. For the
purposes of subsecton (d), f the terms of any opton to purchase stock
are modfed, e tended, or renewed, the foowng rues sha be apped
wth respect to transfers of stock made upon an e ercse of the opton
after the makng of such modfcaton, e tenson, or renewa:
(1) Such modfcaton, e tenson, or renewa sha be consdered
as the grantng of a new opton;
(2) The far market vaue of such stock at the tme of the grant-
ng of such opton sha be consdered as ( ) the far market vaue
of- such stock on the date of the orgna grantng of the opton,
( ) the far market vaue of such stock on the date of the makng
of such modfcaton, e tenson, or renewa, or (C) the far market
vaue of such stock at the tme of the makng of any ntervenng
modfcaton, e tenson, or renewa, whchever s the hghest.
(b) ffectve Date. The amendment made by ths secton sha be
appcabe wth respect to ta abe years endng after December 31, 19 9.
S C. 331. STOC OPTIONS. R NU CT OF 19 1, PPRO D
OCTO R 20, 19 1 .
(a) Opton Sub|ect to Stockhoder pprova. Secton 130 (d)
(reatng to defnton of restrcted stock opton) s hereby amended by
strkng out s used n and nsertng For the purposes of and by
addng at the end thereof the foowng:
( ) Stockhoder approva. If the grant of an opton s sub|ect
to approva by stockhoders, the date of grant of the opton sha be
determned as f the opton had not been sub|ect to such approva.
(b) ffectve Date. The amendment made by subsecton (a) sha
be effectve as f t had been enacted as part of secton 21S of the Revenue
ct ot 19 0.
Sec. 29.130 -1. Meanng and Use of Certan Terms. For the purpose of
secton 130
(a) Opton. The term opton ncudes the rght or prvege of an ndvdua
to purchase stock from a corporaton by vrtue of an offer of the corporaton
contnung for a stated perod of tme, whether or not rrevocabe, to se such
stock at a stated prce, such ndvdua beng under no obgaton to purchase
Such rght or prvege, when granted; must be evdenced n wrtng. The n-
dvdua who has such rght or prvege s referred to as the optonee and the
corporaton offerng to se stock under such an arrangement s referred to as
the optonor. Whe no partcuar form of words s necessary, the wrtten opton
shoud e press, among other thngs, an offer to se at a stated opton prce and
the perod of tme durng whch the offer sha reman open.
n opton may be granted as part of or n con|uncton wth an empoyee stock
purchase pan or subscrpton contract.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
79
29.130 -1.
n arrangement between a corporaton and an empoyee may nvove more
than one opton. For e ampe, f a corporaton on une 1, 19 1, grants to an
empoyee the ghtto purchase 1,000 shares of ts stock on or after une 1, 19 2,
another 1,000 shares on or after une 1, 19 3, and a further 1,000 shares on
or after une 1, 19 , a shares to be purchased before une 1, 19 , provded
the empoyee at the tme of e ercse of any of the purchase rghts s empoyed
by the corporaton, such an arrangement w be construed as the grant to the
empoyee on une 1, 19 1, of three optons, each for the purchase of 1,000 shares.
Smary, f a corporaton grants to an empoyee on anuary 1, 19 2, the rght
to purchase 1,000 shares of ts stock at per share durng 19 2, at 7 per share
(urng 19 3, and at o per share durng 19 , such an arrangement w be
construed as the grant to the empoyee on anuary 1, 19 2, of three aternatve
optons, one opton for the purchase of 1,000 shares at per share durng
19 2, an aternatve opton for the purchase of 1,000 shares at 7 per share
durng 19 3, and a thrd aternatve opton for the purchase of 1,000 shares at
6 per share durng 19 .
(6) Tme and date of grantng of opton. The words the date of the grant-
ng of the opton and the tme such opton s granted , and smar phrases,
refer to the date or tme when the corporaton competes the corporate acton
consttutng an offer pf stock for sae to an ndvdua under the terms and
condtons of a restrcted stock opton. Ordnary, f the corporate acton
contempates an mmedate offer of stock for sae to an ndvdua or to a
cass ncudng such ndvdua, or contempates a partcuar date on whch
such offer s to be made, the tme or date of the grantng of the opton s the
tme or date of such corporate acton If the offer s to be made mmedatey, or
the date contempated as the date of the offer, as the case may be. owever,
an unreasonabe deay n the gvng of notce of such offer to the Indvdua or
to the cass w be taken nto account as ndcatng that the corporaton
contempated that the offer was to be made at the subsequent date on whch
such notce s gven. If the terms of the offer do not specfy the amount of
the opton prce, the opton w not be consdered granted pror to the date
on whch the amount of the opton prce becomes f ed or determnabe.
If the corporaton mposes condtons on the grantng of an opton (as ds-
tngushed from condtons governng the e ercse of the opton), such con-
dtons sha be gven effect n accordance wth the ntent of the corporaton.
speca rue s provded by secton 1S0 (d)(6), as added by the Revenue
ct of 19 1, for optons sub|ect to stockhoders approva. If the grant of
an opton Is sub|ect to approva by stockhoders, the date of grant of the opton
sha be determned as f the opton had not been sub|ect to such approva.
condton whch does not requre corporate acton, such as the approva of some
reguatory or governmenta agency, for e ampe, a stock e change or the Se-
curtes and change Commsson, s ordnary consdered a condton upon
the e ercse of the opton uness the corporate acton ceary ndcates that
the opton s not to be granted unt such condton s satsfed. If an opton
s granted to an ndvdua upon the condton that such ndvdua w become
an empoyee of the corporaton grantng the opton or of ts parent or subsdary
corporaton, such opton Is not granted pror to the date the ndvdua becomes
such an empoyee.
In genera, condtons mposed upon the e ercse of an opton w not operate
to make neffectve the grantng of the opton. For e ampe, on une 1, 19 1,
the Corporaton grants to , an empoyee, an opton to purchase ,000 shares
of the corporaton stock e ercsabe by on or after une 1, 19 2, provded
he s empoyed by the corporaton on une 1, 19 2. Such an opton s granted
to on une 1, 19 1.
(c) Stock. The term stock means capta stock of any cass, ncudng
votng or nonvotng common or preferred stock. The term ncudes both treas-
ury stock and stock of orgna Issue. Speca casses of stock authorzed
to be ssued to and hed by empoyees are wthn the scope of the term stock
as used n secton 130 , provded such stock otherwse possesses the rghts and
characterstcs of capta stock.
d) Opton prce. The term opton prce means the consderaton In money
or property whch, pursuant to the terms of the opton, s the prce at whch
the stock sub|ect to the opton s purchased.
(e) ercse. The term e ercse , when used n reference to an opton,
means the act of acceptance by the optonee of the offer to se contaned n
the opton. In genera, the tme of e ercse s the tme when there Is a sae
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.130 -L
0
or a contract to se between the corporaton and the ndvdua. n agreement
or undertakng by the empoyee to make payments under a stock purchase pan
does not consttute the e ercse of an opton so ong as the payments made
reman sub|ect to wthdrawa by empoyee. If the terms of the offer do not
specfy the amount of the opton prce, the opton w not be consdered e er-
csed pror to the date on whch the amount of the opton prce becomes f ed
or determnabe.
(/) Transfer. The term transfer , when used n reference to the transfer
to an ndvdua of a share of stock pursuant to hs e ercse of a restrcted
stock opton means the transfer of ownershp of such share, or the transfer
of substantay a the rghts of ownershp. Such transfer must, wthn a rea-
sonabe tme, be evdenced on the books of the corporaton.
Sec. 29.130 -2. Restrcted Stock Opton. (a) In genera. restrcted
stock opton s an opton granted after February 26, 19 , to an ndvdua,
for any reason connected wth hs empoyment by a corporaton, f granted by
the empoyer corporaton or ts parent or subsdary corporaton, to purchase
stock of any of such corporatons, but- ony f (1) at the tme such opton s
granted the opton prce s at east percent of the far market vaue at
such tme of the stock sub|ect to the opton; and (2) such opton by ts terms
s not transferabe by such ndvdua otherwse than by w or by the aws
of descent and dstrbuton, and s e ercsabe, durng hs fetme, ony by hm;
and (3) such ndvdua, at the tme the opton s granted, does not own stock
possessng more than 10 percent of the.tota combned votng power of a casses
of stock ether of the empoyer corporaton or of ts parent or subsdary corpo-
raton.
t the tme the opton s granted, the reatonshp between the Indvdua to
whom an opton s granted and the corporaton grantng the opton (or a cor-
poraton whch s a parent or subsdary thereof) must be the ega and bona
fde reatonshp of empoyer and empoyee. For, rues appcabe to the determ-
naton whether the empoyer-empoyee reatonshp e sts, see secton 0 .10
of Reguatons 116, reatng to coecton of ncome ta at source on wages. n
opton granted pror to empoyment or after termnaton of empoyment s not
a restrcted- stock opton. s to the grantng of an opton condtoned upon em-
poyment, see secton 29.130 -1 (6). The opton must be granted for a rea-
son connected wth the ndvdua s empoyment by the corporaton or by ts
parent or subsdary corporaton. n opton may quafy as a restrcted stock
opton ony f, under the terms of the opton, t s not transferabe (other than
by w or by the aws of descent and dstrbuton) by the ndvdua to whom
t s granted, and s e ercsabe, durng the fetme of such ndvdua, ony
by hm. ccordngy, an opton whch s transferabe by the ndvdua to
whom t s granted durng hs fetme, or s e ercsabe durng such ndvdua s
fetme by another person, s not a restrcted stock opton.
(6) Ownershp of 10 percent of stock. In determnng the amount of stock
owned by an ndvdua, for the purpose of appyng the 10 percent test of sec-
ton 130 (d) (1) (C), stock of the empoyer corporaton or of ts parent or sub-
sdary owned (drecty or ndrecty) by or for such ndvdua s brothers and
ssters (whether by the whoe or haf bood), spouse, ancestors, and nea
descendants, sha be consdered as owned by such ndvdua. For the purpose
of secton 130 , f a corporaton, partnershp, estate, or trust owns (drecty
or ndrecty) stock of the empoyer corporaton or of Its parent or subsdary,
such stock sha be consdered as beng owned proportonatey by or for the
sharehoders, partners, or benefcares of the corporaton, partnershp, estate,
or trust.
Sec. 29.130 -3. ebcbe of Restrcted Stock Opton. The speca rues of
ncome ta treatment provded n subsectons (a) and (b of secton 130 are
appcabe ony f the foowng condtons e st wth respect t the transfer
of a share of stock to an ndvdua:
(a The share of stock s transferred to the ndvdua pursuant to hs
e ercse after 19 9 of a restrcted stock opton; and
(b) t the tme the opton s e ercsed by hm, the ndvdua s an em-
poyee of the corporaton grantng such opton (or of a parent or subsdary
thereof) or was an empoyee of any. such corporatons wthn 3 months
pror to the date the opton s e ercsed.
The speca treatment provded n subsectons (a) and (b) ef secton 130
sha appy ony f the restrcted stock opton s e ercsed by the ndvdua
to whom t was granted. Such speca treatment sha not be appcabe wth
respect- to stock transferred pursuant to the e ercse of the opton by the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
29.130 -1.
Indvdua s e ecutor, admnstrator, her, or egatee. Under the provsons of
secton 130 (d) (1) ( ), an opton may quafy as a restrcted stock opton a-
though t s transferabe at death to the ndvdua s e ecutor, admnstrator,
her, or egatee. Thus, the fact that a restrcted stock opton may be e ercsed
by an e ecutor, admnstrator, her, or egatee does not deprve the ndvdua
who e ercses such opton durng hs fetme of the speca treatment provded
n secton 130 .
t the tme of e ercse of a restrcted stock opton, the status of the ndvdua
e ercsng uch opton must be that of a bona fde empoyee of the corporaton
grantng the opton or that of a bona fde empoyee of a parent or subsdary of
such corporaton, or such ndvdua must have been a bona fde empoyee of
any such corporaton wthn 3 months prevous to the date of e ercse.
The determnaton whether an opton utmatey e ercsed s a restrcted
stock opton s made as of the date such opton -s granted. n opton whch s
a restrcted stock opton when granted does not ose ts character as such an
opton by reason of subsequent events, and an opton whch s not a restrcted
stock opton when granted does not becoue such an opton by reason of sub-
sequent events. See, however, secton 29.130 - , reatng to modfcaton, e -
tenson, or renewa of an opton. .Ths rue s ustrated as foows:
ampe 1. S-.1 Corporaton s a subsdary of S Corporaton whch, n turn,
s a subsdary of P Corporaton. On une 1, 19 1, P grants to an empoyee
of P a restrcted stock opton to purchase a share of stock of S-. On anuary
1, 19 2, S ses apporton of the S- stock whch t owns to an unreated cor-
poraton and, as of that date, S- ceases to be a subsdary of S. On May 1,19 2,
whe st empoyed by P, the empoyee e ercses hs opton to purchase a
share of.-S- stock. The empoyee has e ercsed a restrcted stock opton.
ampe 2. ssume P grants an opton to an empoyee under the same
facts as n e ampe 1 above, e cept that on une 1, 19 1, S- s not a subsdary
of ether S or P. Such opton s not a restrcted stock opton on une 1, 19 1.
On anuary 1, 19 2, S purchases from an unreated corporaton a suffcent
number of shares of -S-1 stock to make S-, as of that date, a subsdary of S.
On May 1, 19 2, whe st empoyed by P, the empoyee e ercses hs opton
to purchase a share of S- stock. The empoyee has not e ercsed a restrcted
tock opton.
Sec. 29.130 - . Modfcaton, tenson, or Renewa. Subsecton (e)
of secton 130 provdes rues for determnng whether a share of stock trans-
ferred to an ndvdua upon hs e ercse of an opton, after the terms thereof-
have been modfed, e tended, or renewed, Is transferred pursuant to the
e ercse of a restrcted stock opton. For the purpose of such determnaton,
the statute provdes that:
(a) ny modfcaton, e tenson, or renewa of the terms of an opton
to purchase stock sha be consdered as the grantng of a new opton; and
(b) The far market vaue of the stock sub|ect to the opton at the tme
of the grantng of such opton sha be consdered as the far market vaue
of such stock (1) on the date of the orgna grantng of the opton, (2)
on the date of the makng of such modfcaton, e tenson, or renewa, or
(3) at the tme of the makng of any ntervenng modfcaton, e tenson,
or renewa, whchever s the hghest.
The tme or date when an opton s modfed, e tended, or renewed sha
be determned, nsofar as appcabe, n accordance wth the rues governng
determnaton of the tme or date of grantng an opton provded n secton
29.130 -1 (6). modfcaton of an opton Incudes any matera change n
the terms or condtons of the opton. For e ampe, a matera change n
the terms of the opton wth respect to the knd or prce of the shares of stock
sub|ect to the opton-s a modfcaton of the opton. Lkewse, a matera
change n the tme of ssuance of stock sub|ect to the opton, the terms of
payment.for such stock, or an acceeraton or postponement of the e ercse date
s a modfcaton of the opton. owever, a mere change n the terms of the
opton, wth respect to the number or prce of the shares of stock sub|ect to the
opton, to refect a stock dvdend or stock spt-up Is not a modfcaton of the
opton. Where an opton s amended soey to Increase the number of shares sub-
|ect to the opton, uch ncrease sha not be consdered as a modfcaton of the
opton, but sha be treated as the grant of new opton for the addtona shares.
n e tenson of an opton refers to the grantng by the corporaton to the
optonee of an addtona perod of tme wthn whch to e ercse the opton
beyoud the tme orgnay prescrbed. renewa of an opton s the grantng
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.130 -1.
2
by the corporaton of the same rghts or prveges contaned n the orgna
opton on the same terms and condtons. The foregong rues appy as we
to successve modfcatons, e tensons, and renewas.
restrcted stock opton may, as a resut of a modfcaton, e tenson, or
renewa, thereafter cease to be a restrcted stock opton, or an opton may, by
modfcaton, e tenson, or renewa, thereafter become a restrcted stock opton.
The rue stated-n subsecton (e) of secton 130 s ustrated as foows:
ampe 1. On une 1, 19 0, the Corporaton grants to an empoyee an
opton to purchase 100 shares of the stock of Corporaton at 90 per share,
such opton to be e ercsed on or before une 1, 19 2. t the tme the opton s
granted, the far market vaue of the Corporaton stock s 100 per share.
On February 1, 19 1, before the empoyee e ercses the opton, Corporaton
modfes the opton to provde that the prce at whch the empoyee may purchase
the stock sha be 0 per share. On February 1, 19 1, the far market vaue of
the Corporaton stock s 90 per share. Under secton 130 (e), the Cor-
poraton s deemed to have granted an opton to the empoyee on February 1,
19 1, to purchase at 0 per share 100 shares of stock havng a far market
vaue of 100 per share, that s, the hgher of the far market vaue cf the stock
on une 1, 19 0, and on February 1, 19 1. The e ercse of such opton by the
empoyee after February 1, 19 1, s not the e ercse of a restrcted stock opton.
ampe 2. On une 1, 19 0, the Corporaton grants to an empoyee a
restrcted stock opton to purchase 100 shares of Corporaton stock at 90
per share, e ercsabe after December 31, 19 1, and on or before une 1, 19 2.
On une 1, 19 0, the far market vaue of Corporaton s stock s 100 per
share. On February 1, 19 1, Corporaton modfes the opton to provde that
the opton sha be e ercsabe on or after February 1, 19 1, and on or before
une 1, 19 2. On February 1, 19 1, the far market vaue of Corporaton
stock s 110 per share. Under secton 130 (e), Corporaton s deemed to have
granted an opton to the empoyee on February 1, 19 1, to purchase at 90 per
share 100 shares of stock havng a far market vaue of 110 per share, that s,
the hgher of the far market vaue of the stock on une 1,19 0, and on February
1, 19 1. The e ercse of such opton by the empoyee s not the e ercse of a
restrcted stock opton.
ampe S. The facts are the same as n e ampe 1, e cept that the empoyee
e ercsed the opton to the e tent of 0 shares on anuary 1 , 19 1, pror to
the date of the modfcaton of the opton. ny e ercse of the opton after
February 1, 19 1, the date of the modfcaton, s not the e ercse of a restrcted
stock opton. See e ampe 1, above. The e ercse of the opton on anuary
1 ,19 1, pursuant to whch 0 shares were acqured, s the e ercse of a restrcted
opton.
ampe . On une 1,19 0, the Corporaton grants to an empoyee an opton
to purchase 100 shares of the stock of Corporaton at 0 per share, such opton
to be e ercsed on-or before une 1, 19 2. t the tme the opton s granted
the far market vaue of the Corporaton stock s 100 per share. On February
1,19 1, before the empoyee e ercses the opton, the Corporaton modfes the
opton to provde that the number of shares of stock whch the empoyee may pur-
chase at 0 per share w be 2 0. On February 1, 19 1, the far market vaue
of the Corporaton stock s 90 per share. Under these facts, the Cor-
poraton has granted two optons, one opton (not a restrcted stock opton) wth
respect to 100 shares havng been granted on une 1, 19 0, and the other opt on
(a restrcted stock opton) wth respect to the addtona 1 0 shares havng been
granted on February 1, 19 1. In the absence of facts dentfyng whch opton
s e ercsed frst, the empoyee w be deemed to have e ercsed the optons
n the order n whch they were granted.
Sec. 29.130 - . Operaton of Secton 130 . Wth respect to ta abe years
endng after December 31, 19 9
(a) Rues appcabe to a restrcted stock optons. (1) In genera. If a
share of stock s transferred to an ndvdua pursuant to hs tmey e ercse
of a restrcted stock opton and s not dsposed of by hm wthn 2 years from te
date of the grantng of the opton nor wthn 6 months after the transfer of such
share to hm, then subsecton (a) of secton 130 provdes that
(1) No ncome sha resut at the tme of the transfer of such share to the
ndvdua upon hs e ercse of the opton wth respect to such share;
() No deducton under secton 23(a) sha be aowabe at any tme to
the empoyer corporaton of such ndvdua or ts parent or subsdary
corporaton wth respect to the share so transferred; and
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3
29.130 -1.
() No amount other than the opton prce sha he consdered as
receved by ether of such corporatons for the share so transferred.
For the purpose of the foregong rues, each share of stock transferred pur-
suant to a restrcted stock opton s treated separatey. For e ampe, f an
ndvdua, whe empoyed by a corporaton grantng hm a restrcted stock
opton, e ercses the opton wth respect to part of the stock covered by the
opton, and -f such ndvdua e ercses the baance of the opton more than 3
months after eavng such empoyment, the appcaton of secton 130 to the
stock obtaned upon the earer e ercse of the opton s not affected by the fact
that the ncome ta es of the empoyer and the ndvdua wth respect to the
stock obtaned upon the ater e ercse of the opton are not determned under
secton 130 .
(2) fodng perod. The speca rues provded n secton 130 (a) are not
appcabe f the ndvdua dsposes of the share of stock wthn 2 years from
the date the opton s granted or wthn 6 months after the transfer of such
share to hm. Secton 130 s not made nappcabe by a transfer wthn the 2-
year or G-nonth perod If such transfer s not a dsposton of the stock as defned
n paragraph (3) of ths subsecton, for e ampe, a transfer from the decedent
to hs estate or a transfer by bequest or nhertance. Smary, a dsposton
by the e ecutor, admnstrator, her, or egatee s not a dsposton by the
decedent.
(3) Dsposton of stock. The term dsposton , for the purpose of secton
130 , Incudes a sae, e change, gft, or any transfer of ega tte, but does not
ncude a transfer from a decedent to hs estate or a transfer by bequest or
nhertance, an e change whch Is wthn the provsons of secton 112(b) (2)
or (3), or a mere pedge or hypothecaton. owever, a dsposton of the stock
pursuant to a pedge or hypothecaton s a dsposton by the ndvdua, even
though the na-kng of the pedge or hypothecaton s not such a dsposton.
If an ndvdua e ercses a restrcted stock opton, a share of stock acqured
pursuant to such e ercse s not consdered dsposed of by the Indvdua f such
share s taken n the name of the ndvdua and another person onty wth
rght of survvorshp, or s subsequenty transferred nto such |ont ownershp,
or s retransferred from such |ont ownershp to the soe ownershp of the
ndvdua. owever, f such Indvdua and hs ont owner transfer such
share to another person, the ndvdua has made a dsposton of such share.
Lkewse, f a share of stock hed n the |ont names of such ndvdua and
another person s transferred to the name of such other person, there s a
dsposton of such share by the ndvdua. If an ndvdua e ercses a
restrcted stock opton and a share of stock Is transferred to another or s
transferred to such ndvdua n hs name as trustee for another, the ndvdua
has made a dsposton of such share.
( ) ampes. The rues of subsecton (a) of secton 130 are ustrated
as foows:
ampe 1. On une 1, 19 1, the Corporaton grants to , an empoyee, a
restrcted stock opton to purchase 100 shares of Corporaton stock at 9
per share. On that date, the far market vaue of Corporaton stock s
100 per share. On une 1, 19 2, whe empoyed by Corporaton, e ercses
the opton n fu and pays Corporaton 9, 00, and on that day Corporaton
transfers to 100 shares of ts stock havng a far market vaue of 12,000.
Pror to une 1, 19 3, makes no dsposton of the 100 shares so purchased.
reazes no ncome on une 1, 19 2, wth respect to the transfer to hm of
the 100 shares of Corporaton stock. Corporaton s not entted to any
deducton at any tme wth respect to ts transfer to of the stock. In
computng ts gan or oss, If any, upon such transfer, Corporaton s consdered
to have receved no more than 9, 00 for the stock so transferred. s bass
for such 100 shares s 9, 00.
ampe 2. ssume, n e ampe 1, that on ugust 1, 19 3, 2 years and 1
month after the grantng of the opton and 1 year and 1 month after the trans-
fer of the shares to hm, ses the 100 shares of Corporaton stock for 13,000,
whch s the far market vaue of the stock on that date. For the ta abe year
In whch the sae occurs, reazes a gan of 3, 00 ( 13,000 mnus s bass
of 9, 00), whch Is treated as ong-term capta gan.
ampe S. ssume, n e ampe 2, that on ugust 1, 19 3, makes a gft
of the 100 shares of Corporaton stock to hs son. Such dsposton resuts
In no reazaton of gan to ether for the ta abe year n whch the opton
s e ercsed or te ta abe year n whch the gft Is made. s bass of 9, 00
becomes the donee s bass for determnng gan or oss.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.130 -1.

ampe . ssume, n e ampe 1, that on May 1,19 3,1 year and 11 months
after the grantng of the opton and 11 months after the transfer of the shares
to hm, ses the 100 shares of Corporaton stock for 13,000. . The speca
rues of secton 130 (a) are not appcabe to the transfer of the stock fcy
Corporaton to , because dsposton of the stock was made by wthn
2 years from the date the opton was granted.
ampe . ssume, n e ampe 1, that des on September 1, 10 2, ownng
the 100 shares of Corporaton stock acqured by hm pursuant to hs e ercse
on une 1, 10 2, of the restrcted stock opton. On the date of death, the far
market vaue of the stock s 12, 00. No ncome s reazed by by reason of
the transfer of the 100 shares to hs estate. If s e ecutor etects to vaue the
stock as of the date of death, the bass of the 100 shares n the hands of the
e ecutor s 12, 00.
(6) ddtona rues appcabe where the opton prce t between percent
and 9 percent of the vaue of the stock. (1) In genera. If a the condtons
necessary for the appcaton of subsecton (a) of secton 130 e st, subsecton
(b) of secton 130 provdes addtona rues whch are appcabe n cases
where, at the tme the restrcted stock opton s granted, the opton prce per
share s ess than 9 percent (but not ess ttan percent) of the far market
vaue of such share. In such case, upon the dsposton of such share by the
ndvdua after the e praton of the 2-year and the 6-month perods, or upon
hs death whe ownng such share (whether occurrng before or after the
e praton of such perods), there sha be ncuded n the ndvdua s gross
ncome as compensaton (and not as gan upon the sae or e change of a capta
asset) the amount, f any, by whch the opton prce s e ceeded by the esser
of the far, market vaue of the share at the tme the opton was granted or
the far market vaue of the share at the tme of such dsposton or death.
The amount of such compensaton sha be ncuded n the ndvdua s gross
Income for the ta abe year n whch the dsposton occurs or for the ta abe
year cosng wth hs death, whchever event resuts n the appcaton of secton
130 (b).
The appcaton of the speca rues provded n secton 130 (b) sha not
affect the rues provded n secton 130 (a) wth respect to the ndvfdua
e ercsng the opton, the empoyer corporaton, or ts parent or subsdary cor-
poraton. Thus, notwthstandng the ncuson of an amount as compensaton
n the gross ncome of an ndvdua, as provded n secton 130 (b), no ncome
resuts to the ndvdua at the tme the stock s transferred to nm, and. no deduc-
ton under secton 23(a) s aowabe at any tme to the empoyer corporaton
or ts parent or subsdary wth respect to such amount. Lkewse, for the pur-
pose of determnng gan or oss, f any, reazed by any of such corporatons
by reason of the transfer of a share of stock wth respect to whch the rues of
secton 130 (b) appy, no amount other than the opton prce sha be consdered
as receved by any of such corporatons for the stock so transferred.
If the ndvdua e ercses a restrcted stock opton durng hs fetme and
des before the stock s transferred to hm pursuant to hs e ercse of the opton,
the transfer of such stock to the ndvdua s e ecutor, admnstrator, her, or
egatee s deemed, for the purpose of secton 130 , to be-a transfer of the stock
to the ndvdua e ercsng the opton and a further transfer by reason of
death from such ndvdua to hs e ecutor, admnstrator, her, or egatee.
(2) ass. If the speca rues, provded n subsecton (b) of secton
130 are appcabe to the dsposton of a share of stock by an ndvdua,
the bass of such share n the ndvdua s hands at the tme of such dspos-
ton, determned under secton 113, sha be ncreased by an amount equa to
the amount ncudbe as compensaton n hs gross Income under secten
130 (b). If .the speca rues provded n secton 30 (b) are appcabe
to a share of stock upon the death of an ndvdua, the bass of such share
n the hands of the estate or the person recevng., the stock by bequest or n-
hertance sha be determned under secton 113; and sha not be ncreased
by reason of the ncuson upon- the decedent s death of any amount n hs
gross ncome under secton- 130 (b). See e ampe , beow, wth .respect to
the determnaton of bass of. the share n the hands of a survvng |ont owner.
(3) ampes. The operaton of secton 130 (b) may be ustrated as fo-
ows :
ampe 1. On une 1, 19 1, the Corporaton grants to , an empoyee,
a restrcted stock opton to purchase a-share of Corporaton s, stock tor .
The far market vaue of the Corporaton sfock on such date s 100 per
hare. On une 1, 19 2; e ercses the restrcted stock opton and oa that
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e

29.130 -1.
date the Corporaton transfers the share of stock to . On anuary 1, 19 ,
ses the share for 1 0, Its far market vaue on that date. makes hs
ncome ta return on the bass of the caendar year. The ncome ta con-
sequences to and to Corporaton are as foows:
Compensaton n the amount of 1 s ncudbe n s gross ncome for
19 , the year of the dsposton of the share. The 1 represents the dffer-
ence between the opton prce ( ) and the far market vaue of the share
on the date the opton was granted ( 100), snce such vaue s ess than the
far market vaue of the share on the date of dsposton ( 1 0). For the pur-
pose of computng s gan or oss on the sae of the share, s cost bass of
s ncreased by 1 , the amount ncudbe n s gross ncome as com-
pensaton. Thus, s bass for the share s 100. Snce the share was sod
for 1 0, reazes a gan of 0, whch s treated as ong-term capta gan.
The Corporaton s entted to no deducton under secton 23(a) at any
tme wth respect to the share transferred to . For the purpose of com-
putng gan or oss, f any, to the Corporaton on account of the transfer
of the share to , the Corporaton sha not be consdered to have receved
any amount other than for the share.
ampe 2. ssume, n e ampe 1 above, ses the share of Corpora-
ton stock on anuary 1, 19 , for 7 , ts far market vaue on that date. Snce
7 s ess than the opton prce ( ), no amount n respect of the sae s
ncudbe as compensaton n s gross ncome for 19 . s bass for deter-
mnng gan or oss on the sae s . Snce sod the share for 7 , reazed
a oss of 10 on the sae, whch oss Is treated as a ong-term capta oss.
ampe 3. ssume, n e ampe 1 above, that nstead of seng the share
on anuary 1, 19 , makes a gft of the share oh that day. In such case,
1 s ncudbe as compensaton n s gross ncome for 19 . s cost bass
of s ncreased by 1 , the amount ncudbe n s gross ncome as com-
pensaton. Thus, s bass for the share s 100, whch becomes the donee s
bass, as of the tme of the gft, for determnng gan or oss.
ampe . ssume, n e ampe 2 above, that nstead of seng the share
on anuary 1, 19 , makes a gft of the share on that date. Snce the far
market vaue of the share on that day ( 7 ) s ess than the opton prce
( ), no amount n respect of the dsposton by way of gft Is Incudbe as
compensaton n s gross ncome for 19 . s bass for the share s ,
whch becomes the donee s bass, as of the tme of the gft, for the purpose of
determnng gan. The donee s bass for the purpose of determnng oss, deter-
mned under secton 113(a)(2), Is 7 (far market vaue of the share at the
date of gft).
ampe . ssume, n e ampe 1 above, that after acqurng the share of
stock on une 1, 19 2, des on ugust 1, 19 3. at whch tme the share has a
far market vaue of 1 0. Compensaton In the amaunt of 1 s ncudbe
n s gross ncome for the ta abe year cosng wth hs death, such 1 beng
the dfference between the opton prce ( ) and the far market vaue of
the share when the opton was granted ( 100), snce such vaue s ess than
the far market vaue at date of death ( 1 0). The bass of the share n the
bands of s estate s determned under secton 113(a)( ) wthout regard to
the 1 ncudbe In the decedent s gross Income.
ampe 6. ssume, n e ampe above, that des on ugust 1, 19 2,
at whch tme the share has a far market vaue of 1 0. though s death
occurred wthn 2 years from the date of the grantng of the opton and wthn
6 months after the transfer of the share to hm, the Income ta consequences
are the same as n e ampe .
rampe 7. ssume the same facts ns In e ampe 1 above, e cept that the
share of stock was ssued n the names of and hs wfe |onty wth rght of sur-
vvorshp, and e cept that and hs wfe so d the share on une 1 , 19 3, for
1 0, ts far market vaue on that date. Compensaton n the amount of 1
s ncudbe n s gross ncome for 19 3, the year of the dsposton of the
share. The bass of the share n the hands of and hs wfe for the purpose
of determnng gan or oss on the sae s 100, that s, the cost of ncreased
by the amount of 1 ncudbe as compensaton n s gross ncome. The
gan of 0 on the sae s treated as ong-term capta gan, and s dvded
equay between and hs wfe.
ampe . ssume the same facts as n e ampe 1 above, e cept that the
share of stock was ssued n the names of and hs wfe |onty wth rght of
survvorshp, and e cept that predeceased hs wfe on ugust 1, 19. 3. at
whch tme the share had a far market vaue of 1 0. Compensaton n the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.130 -1.
G
amount of 1 s ncudbe n s gross ncome for the ta abe year cosng
wth hs death. See e ampe , above. The bass of the share n the hands
of s wfe as survvor s, under sectons 113(a) and 130 (b), the cost of
ncreased by the 1 ncudbe n the decedent s gross ncome, or 100.
ampe 9. ssume n e ampe above that s wfe predeceased hm on
uy 1, 19 3. Secton 130 (b) does not appy n respect of her death. Upon
the subsequent death of on ugust 1, 19 3, the ncome ta consequences n
respect of s ta abe year cosng wth the date of hs death, and n respect
of the bass of the share n the hands of hs estate, are the same as n e ampe
above. If had sod the share on uy 1 , 19 3 (after the death of hs
wfe), for 1 0, ts far market vaue at that tme, the ncome ta consequences
woud be fehe same as n e ampe 1 above.
(c) cquston of other sock or securtes. Secton 130 (c) provdes that
the speca rues stated n subsectons (a) and (b) of secton 130 , f appcabe
wth respect to stock transferred to an ndvdua upon hs e ercse of an
opton, sha kewse be appcabe wth respect to (1) stock or securtes
acqured by 6uch ndvdua n e change for such stock, f the e change s
wthn the provsons of secton 112(b) (2) or (3), and (2) new stock, as
descrbed n secton 113(a) (19), acqured upon a dstrbuton wth respect to
such stock. Such new stock and such stock or securtes so acqured sha, for
the purpose of secton 130 , be consdered as havng been transferred to the
ndvdua upon hs e ercse of the opton. smar rue sha be apped
n the case of a seres of such e changes or acqustons.
For e ampe, f new stock, as descrbed n secton 113(a) (19), s acqured
upon a dstrbuton wth respect to stock transferred to the ndvdua upon
the tmey e ercse of a restrcted stock opton, and f such new stock s ds-
posed of wthn 2 years from the date the opton was granted or wthn C
months after the orgna stock was transferred to such ndvdua, secton 130
s not appcabe wth respect to such new stock. If the dsposton occurs after
the 2-year and 6-month perods, secton 130 s appcabe.
Par. 2. Secton 29.22(a)-1, as amended by Treasury Decson 600
C. . 19 -1, 61, approved February 2, 19 26 CFR 29.22(a)- ,
s further amended as foows:
( ) y strkng the frst word of the thrd paragraph, and by n-
sertng n eu thereof the foowng: cept as otherwse provded
n secton 130 , f ; and
( ) y addng at the end of the thrd paragraph thereof the fo-
owng sentence:
See secton 130 and the reguatons prescrbed thereunder for speca rues wth
respect to stock transferred from an empoyer to an empoyee pursuant to the
tmey e ercse of a restrcted stock opton.
Par. 3. Secton 29.113(a)-, as amended by Treasury Decson
02 C. . 19 , 229, 237 , approved September , 19 26 CFR
29.113(a)- , s further amended by addng at the end thereof the
foowng sentence:
For speca rues for determnng the bass for gan or oss n the case of the
dsposton of a share of stock acqured pursuant to the tmey e ercse of a
restrcted stock opton where the opton prce was between percent and 9
percent of the far market vaue of the stock at the tme the opton was granted,
see secton 130 (b).
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32, 67;
26 U. S. C. 62, 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved une ,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 9, 19 2, : a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
7
29.131-1.
SUPPL M NT C CR DITS G INST T
S CTION 131. T S OF FOR IGN COUNTRI S ND
POSS SSIONS OF UNIT D ST T S
The Cuban ta upon stock dvdends referred to n artce 23,
chapter I of Cuban Law No. 2, enacted May 22, 19 1, fas wthn
the Unted States concept of an ncome ta and s aowabe as a
credt aganst Unted States Income ta under secton 131(a) of the
Interna Revenue Code, sub|ect to the mtatons mposed by sec-
ton 131(b) of the Code.
dvce s requested whether the Cuban ta upon stock dvdends
referred to n artce 23, chapter I of Cuban Law No. 2, enacted
May 22 19 1, s aowabe as a credt aganst Unted States ncome
ta under secton 131 of the Interna Revenue Code.
The Cuban dvdend ta orgnated wth chapter 6 of the basc
ta aw of the Repubc of Cuba enacted anuary 29, 1931, such aw
havng been amended by ater aws to provde for ncreased rates of
ta . Ir L.T. 399 C. . 19 0-1, 6 ) t s hed that the ta es mposed
on dvdends by the Cuban aws n queston quafy as ncome ta es
whch are aowabe, under secton 131 of the Interna Revenue Code,
as credts aganst Unted States ncome ta . rtce 23, chapter I
of Cuban Law No. 2, enacted May 22, 19 1, contans the foowng
paragraph:
The ta sha aso be e acted In respect of dvdends pad n knd, ncudng
stock dvdends or other securtes ssued by the same company.
It s aeged that the Cuban ta ng authortes contend that ths pro-
vson of aw merey codfed e stng aw. In any event, the Cuban
ta on dvdends s mposed wth respect to a dvdends on stock,
whether they be cash dvdends, property dvdends, or dvdends
consstng of addtona shares of the same stock. Stock dvdends are
not specfcay ta ed as such; they are merey ncuded wthn the
genera scope of dvdends sub|ect to the Cuban ta .
Secton 131 of the Interna Revenue Code provdes n part as
foows:
(a) owance or Credt. If the ta payer chooses to have the benefts of
ths secton, the ta mposed by ths chapter chapter 1 of the Code
sha be credted wth :
(1) Ctzens and domestc corporatons. In the case of a
domestc corporaton, the amount of any ncome ta es pad or
accrued durng the ta abe year to any foregn country
In Mary Duke dde et a. v. Commssoner (302 U. S. 73; Ct. D.
1303, C. . 193 -1,309), the Supreme Court of the Unted States sad:
Secton 131 does not say that the meanng of ts words s to be deter-
mned by foregn ta ng statutes and decsons, and there s nothng
n ts anguage to suggest that n aowng the credt for foregn ta
payments, a shftng standard was adopted by reference to foregn
characterzatons aad cassfcatons of ta egsaton.
Snce the aw n queston s a part of the over-a Cuban ta aw
whch has been hed, n I. T. 399 , supra, to mpose an ncome ta , the
Secton 29.131-1: nayss of credt for
ta es.
19 2- -13771
I. T. 07
INT RN L R NU COD
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.131-1.

fact that some of the tems ta ed are nonncome tems s not matera
e cept nsofar as those tems affect the mtatons mposed by secton
131(b)- of the Code by beng e cuded from the numerator and de-
nomnator of the mtng fracton. ven though for mtaton pur-
poses the nature of the ncome to be ncuded or e cuded from gross
ncome s mportant, for the purposes of the ta t s not mportant
snce the ta , as such, s ndvsbe.
ccordngy, t s hed that the Cuban ta upon stock dvdends
referred to n artce 23, chapter I of Cuban Law No. 2, enacted
May 22,19 1, fas wthn the Unted States concept of an ncome ta
and s aowabe as a credt aganst Unted States ncome ta under
secton 131(a) of the Interna Revenue Code, sub|ect to the mtatons
mposed by secton 131(b) of the Code.
Secton 29.131-1: nayss of credt for 19 2-11-13 29
ta es. I. T. 0 3
INT RN L R NU COD
The profts ta of 7 percent of net revenue mposed by the Provnce
of uebec under secton 6 of the uebec Corporaton Ta ct fas
wthn the Unted States concept of an ncome ta and s aowabe
as a credt aganst Unted States ncome ta to the e tent provded
by secton 131 of the Interna Revenue Code.
dvce s requested whether the profts ta of 7 percent of net reve-
nue mposed bv the Provnce of uebec under secton 6 of the uebec
Corporaton.a ct (11 Geo. I, ch. 33) quafes as an ncome ta
whch may be aowed as a credt aganst Unted States ncome ta .
Secton 6 of the uebec Corporaton Ta ct reads n part as
foows:
In addton to the ta es on capta and upon paces of busness mentoned n ths
act, every company, partnershp or person , every hodng company
and every mnng company whose annua profts are not ta ed under the uebec
Mnng ct (Revsed Statutes, 19 1, chapter 196), havng ts head offce or an
offce n the provnce or whch s carryng on busness theren, drecty or through
a person pad by saary, commsson or otherwse, actng as empoyee, vendor,
agent, representatve or n any other capacty, sha pay annuay a ta equva-
ent to 7 per centum of the net revenue of ther respectve fnanca year n
progress at the tme of the comng nto force of ths act and of each of ther
subsequent respectve fnanca years.
Secton 7 of the uebec Corporaton Ta ct enumerates the de-
ductons aowabe n computng profts; secton thereof enumerates
those tems whch are not aowabe as deductons n computng
profts; and secton 9 enumerates e emptons and deductons from the
ta mposed under the provsons of the act.
Secton 131 of the Interna Revenue Code provdes n part as
foows:
(a) owance or Ckedt. If the ta payer chooses to have the benefts of
ths secton, the ta mposed by ths chapter chapter 1 of the Code
sha be credted wth:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
9
29.1 3-1.
(1) Ctzens and domestc corporatons. In the case of a ctzen of
the Unted States and of a domestc corporaton, the amount of any n-
come ta es pad or accrued durng the ta abe year to any
foregn country
Secton 29.131-2 of Reguatons 111 defnes foregn country as mean-
ng any foregn state or potca subdvson thereof, or any foregn
potca entty, whch eves and coects ncome, war-profts, or
e cess-profts ta es.
In construng the provsons of the Federa nterna revenue aws
reatve to credts for foregn ncome ta es, the ureau has hed that
n order for a ta to be aowabe as a credt under secton 131, the
ta mposed by the foregn country must be a ta on ncome wthn
the meanng of that term as used and understood for Federa ncome
ta purposes. (See G. C. M. 1 1 2, C. . 1937-1,1 9.)
It s ned that the profts ta of 7 percent of net revenue mposed
by the Provnce of uebec under secton 6 of the uebec Corporaton
Ta ct fas wthn the Unted States concept of an ncome ta and
s aowabe as a credt aganst Unted States ncome ta to the e tent
provded by secton 131 of the Interna Revenue Code.
SUPPL M NT D. R TURNS ND P YM NT OF T
S CTION 1 1. CONSOLID T D R TURNS
Secton 29.1 1-1: Consodated ncome and e cess
profts ta returns of affated corporatons.
INT RN L R NU COD
pportonment of ncome and e cess profts ta among members of
affated group n determnng ther earnngs and profts. (See I. T.
0 , page 6 .)
S CTION 1 3. WIT OLDING OF T T SOURC
Secton 29.1 3-1: Wthhodng ta at source. 19 2-10-13 17
( so Secton 1 , Secton 29.1 -1.) T. D. 97
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 7.
T TION PURSU NT TO TR TI S. SU P RT IR L ND, R GUL TIONS
FF CTI NU RY 1, 19 2
Reease of e cess ta wthhed, and e empton from, or red cton
n rate of, wthhodng under sectons 1 3 and 1 of the Interna
Revenue Code In the case of resdents of Ireand and of foregn
corporatons managed and controed n Ireand, as affected by the
recproca ncome ta conventon between the Unted States and
the Repubc of Ireand procamed by the Presdent of the Unted
States on December 2 ,19 1.
21 1 2 2 7
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 3-1.
00
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton , u, .
To Coectors of Interna Revenue and Others Concerned:
Tabe of Contents
Secton
7.1000. Introductory.
7.1001. Dvdends.
7.1002. Interest
7.1063. Patent and copyrght royates and fm rentas.
7.100 . Natura resource royates and rea property rentas.
7.-100 . Pensons and fe annutes.
7.1000. Reease of e cess ta wthhed at source.
7.1607. ddressee not actua owner.
7.100 . Informaton to be furnshed In ordnary course.
7.1009. enefcares of a domestc estate or trust.
7.1010. Refund of e cess ta wthhed durng 19 1.
Secton 7.1000. Introductory. The ncome ta conventon between
the Unted States and the Repubc of Ireand, sgned September 13,
19 9, procamed by the Presdent of the Unted States on December
2 ,19 1, and effectve (as respects the Unted States ta ) for ta abe
years begnnng on or after anuary 1, 19 1, herenafter referred to
as the conventon, provdes n part as foows:
rtce I
(1) The ta es whch are the sub|ect of the present conventon are:
(a) In the Unted States of merca: The Federa ncome ta es, Incudng
surta es (herenafter referred to as Unted States ta ).
(b) In Ireand: The ncome ta (ncudng surta ) and the corporaton
profts ta (herenafter referred to as Irsh ta ).
(2) The present conventon sha aso appy to any other ta es of a substan-
tay smar character Imposed by ether contractng party subsequenty to
the date of sgnature of the present conventon.
rtce II
(1) In the present conventon, uness the conte t otherwse requres:
(a) The term Unted States means the Unted States of merca, and
when used In a geographca sense means the States, the Terrtores of
aska and of awa, and the Dstrct of Coumba.
(b) The term Ireand means the Repubc of Ireand and the term
Irsh has a correspondng meanng.
(c) The terms terrtory of one of the contractng partes and terrtory
of the other contractng party mean the Unted States or Ireand as the
conte t requres.
(d) The term Unted States corporaton means a corporaton, assoca-
ton or other ke entty created or organsed n or under the aws of the
Unted States.
(e) The term Irsh corporaton means any knd of urdca person
created under the aws of Ireand.
(f) The terms corporaton of one contractng party and corporaton
of the other contractng party mean a Unted States corporaton or an Irsh
corporaton as the conte t requres.
(g) The term resdent of Ireand means any person (other than a
ctzen of the Unted States or a Unted States corporaton) who s resdent
n Ireand for the purposes of Irsh ta and not resdent n the Unted States
for the purposes of Unted States ta . corporaton Is to be regarded as
resdent In Ireand f Its busness Is managed and controed n Ireand.
(h) The term resdent of the Unted States means any ndvdua who
Is resdent n the Unted States for the purposes of Unted States ta and
not resdent In Ireand for the purposes of Irsh ta , and any Unted States
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
91
29.1 3-1.
corporaton and any partnershp created or organsed In or under the aws
of the Unted States, beng a corporaton or partnershp whch Is not res-
dent n Ireand for the purposes of Irsh ta .
() The term Irsh enterprse means an ndustra or commerca enter-
prse or undertakng carred on by a resdent of Ireand.
(|) The term Unted States enterprse means an ndustra or commer-
ca enterprse or undertakng carred on by a resdent of the Unted States.
(k) The terms enterprse of one of the contractng partes and enter-
prse of the other contractng party mean a Unted States enterprse or an
Irsh enterprse, as the conte t requres.
(1) The term permanent estabshment when used wth respect to an
enterprse of one of the contractng partes means a branch, management,
factory or other f ed pace of busness, but does not ncude an agency uness
the agent has, and habtuay e ercses, a genera authorty to negotate
and concude contracts on behaf of such enterprse or has a stock of mer-
chandse from whch he reguary fs orders on ts behaf. n enterprse
of one of the contractng partes sha not be deemed to have a permanent
estabshment n the terrtory of the other contractng party merey because
t carres on busness deangs n the terrtory of such other contractng party
through a bona fde commsson agent or broker actng n the ordnary course
of hs busness as such. The fact that an enterprse of one of the contractng
partes mantans n the terrtory of the other contractng party a f ed pace
of busness e cusvey for the purchase of goods or merchandse sha not of
tsef consttute such f ed pace of busness a permanent estabshment of
such enterprse. The fact that a corporaton of one contractng party has a
subsdary corporaton whch s a corporaton of the other contractng party
or whch s engaged n trade or busness n the terrtory of such other con-
tractng party (whether through a permanent estabshment or otherwse)
sha not of tsef consttute that subsdary corporaton a permanent estab-
shment of ts parent corporaton.
(2) For the purposes of rtces I, II, III, I , and I a resdent of
Ireand sha not be deemed to be engaged n trade or busness n the Unted
States n any ta abe year uness such resdent has a permanent estabshment
stuated theren n such ta abe year. The same prncpe sha be apped,
mutats mutands, by Ireand n the case of a resdent of the Unted States.
(3) In the appcaton of the provsons of the present conventon by one of
the contractng partes any term not otherwse defned sha, uness the conte t
otherwse requres, have the meanng whch t has under the aws of that con-
tractng party reatng to the ta es whch are the sub|ect of the present
conventon.

rtce I
(1) The rate of Unted States ta on dvdends derved from a Unted States
corporaton by a resdent of Ireand who s sub|ect to Irsh ta on such dvdends
and not engaged n trade or busness n the Unted States sha not e ceed
1 percent: provded that such rate of ta sha not e ceed percent f such
resdent s a corporaton controng, drecty or ndrecty, at east 9 percent
of the entre votng power n the corporaton payng the dvdend, and not
more than 2 percent of the gross ncome of such payng corporaton s derved
from nterest and dvdends, other than nterest and dvdends receved from
ts own subsdary corporatons. Suc reducton of the rate to percent
sha not appy f the reatonshp of the two corporatons has been arranged
or s mantaned prmary wth the ntenton of securng such reduced rate.
(2) Dvdends derved from sources wthn Ireand by an ndvdua who s
(a) a resdent of the Unted States, (b) sub|ect to Unted States ta wth respect
to such dvdends, and (c) not engaged n trade or busness n Ireand, sha
be e empt from Irsh surta .
(3) ther of the contractng partes may termnate ths rtce by gvng
wrtten notce of termnaton to the other contractng party, through dpomatc
channes, on or before the 30th day of une n any caendar year after the
caendar year n whch the e change of the nstruments of ratfcaton takes
pace and n such event paragraph (1) hereof sha cease to be effectve as
to Unted States ta on and after the 1st day of anuary, and paragraph (2)
hereof sha cease to be effectve as to Irsh ta on and after the 6th day of
pr, n the caendar year ne t foowng that n whch such notce s gven.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I 29.1 3-1.
92
RTICL II
(1) Interest (on bonds, securtes, notes, debentures, or on any other form
of ndebtedness) derved from sources wthn the Unted States by a resdent
of Ireand who s sub|ect to Irsh ta on such nterest and not engaged n
trade or busness n the Unted States, sha be e empt from Unted States ta ;
but such e empton sha not appy to such nterest pad by a Unted States
corporaton to a corporaton resdent n Ireand controng, drecty or ndrecty,
more than 0 percent of the entre votng power n the payng corporaton.
(2) Interest (on bonds, securtes, notes, debentures, or on any other form of
ndebtedness) derved from sources wthn Ireand by a resdent of the Unted
States who s sub|ect to Unted States ta on such nterest and not engaged
n trade or busness n Ireand, sha be e empt from Irsh ta ; but such
e empton sha not appy to such nterest pad by a corporaton resdent n
Ireand to a Unted States corporaton controng, drecty or ndrecty, more
than 0 percent of the entre votng power n the payng corporaton.
rtce III
(1) Royates and other amounts pad as consderaton for the use of, or for
the prvege of usng, copyrghts, patents, desgns, secret processes and formuae,
trade-marks, and other ke property, and derved from sources wthn the
Unted States by a resdent of Ireand who s sub|ect to Irsh ta on such
royates or other amounts and not engaged n trade or busness n the Unted
States, sha be e empt from Unted States ta .
(2) Royates and other amounts pad as consderaton for the use of. or
for the prvege of usng, copyrghts, patents, desgns, secret processes and
formuae, trade-marks, and other ke property, and derved from sources wthn
Ireand by a resdent of the Unted States who s sub|ect to Unted States ta
on such royates or other amounts and not engaged n trade or busness
n Ireand sha be e empt from Irsh ta .
(3) For the purposes of ths artce, the term royates sha be deemed
to ncude rentas n respect of moton pcture fms.
rtce I
(1) The rate of Unted States ta on royates n respect of the operaton
of mnes or quarres or of other e tracton of natura resources, and on rentas
from rea property or from an nterest n such property, derved from sources
wthn the Unted States by a resdent of Ireand who s sub|ect to Irsh ta wth
respect to such royates or rentas and not engaged n trade or busness n the
Unted States, sha not e ceed 1 percent: provded that any such resdent may
eect for any ta abe year to be sub|ect to Unted States ta as f such resdent
were engaged n trade or busness n the Unted States.
(2) Royates n respect of the operaton of mnes or quarres or of other
e tracton of natura resources, and rentas from rea property or from an
nterest n such property, derved from sources wthn Ireand by an ndvdua
who s (a) a. resdent of the Unted States, (b) sub|ect to Unted States ta
wth respect to such royates and rentas, and (c) not engaged n trade or
busness n Ireand, sha be e empt from Irsh surta .
rtce
(1) ny saary, wage, smar remuneraton, or penson, pad by the Govern-
ment of the Unted States to an ndvdua (other than a ctzen of Ireand
who s not aso a ctzen of the Unted States) n respect of servces rendered
to the Unted States n the dscharge of governmenta functons, sha be e empt
from Irsh ta .
(2) ny saary, wage, smar remuneraton, or penson, pad by the Govern-
ment of Ireand to an ndvdua (other than a ctzen of the Unted States who
s not aso a ctzen of Ireand) n respect of-servces rendered to Ireand n the
dscharge of governmenta functons, sha be e empt from Unted States ta .
(3) The provsons of ths artce sha not appy to payments n respect of
servces rendered n connecton wth any trade or busness carred on by ether
of the contractng partes for purposes of proft,

G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
93
29.1 3-1.
rtce II
(1) ny penson (other than a penson to whch rtce appes), and any
fe annuty, derved from sources wthn the Unted States by an ndvdua
who s a resdent of Ireand sha be e empt from Unted States ta .
(2) ny penson (other than a penson to whch rtce appes), and any
fe annuty, derved from sources wthn Ireand by an ndvdua who s a
resdent of the Unted States sha be e empt from Irsh ta .
(3) The term fe annuty means a stated sum payabe perodcay at
stated tmes, durng fe or durng a specfed or ascertanabe perod of tme,
under an obgaton to make the payments n consderaton of money pad.

rtce
(1) Dvdends and nterest pad, on or after the 1st day of anuary n the
caendar year n whch the e change of nstruments of ratfcaton takes pace,
by an Irsh corporaton sha be e empt from Unted States ta e cept where
the recpent s a ctzen of or a resdent n the Unted States or a Unted States
corporaton.
(2) Dvdends and nterest pad, on or after the 6th day of pr of the
frst year of assessment specfed In rtce II(2) (b) (I) of ths conventon,
by a Unted States corporaton sha be e empt from Irsh ta e cept where the
recpent s a resdent of Ireand.
rtce
(1) The ta aton authortes of the contractng partes sha e change such
nformaton (beng nformaton avaabe under the respectve ta aton aws
of the contractng partes) as s necessary for carryng out the provsons of
the present conventon or for the preventon of fraud or the admnstraton of
statutory provsons aganst ega avodance n reaton to the ta es whch are
the sub|ect of the present conventon. ny nformaton so e changed sha be
treated as secret and sha not be dscosed to any person other than those con-
cerned wth the assessment and coecton of the ta es whch are the sub|ect
of the present conventon. No nformaton sha be e changed whch woud
dscose any trade secret or trade process.
(2) s used n ths artce, the term ta aton authortes means, In the case
of the Unted States, the Commssoner of Interna Revenue or hs authorsed
representatve and, n the case of Ireand, the Revenue Commssoners or ther
authorsed representatve.

rtce II
(1) The present conventon sha be ratfed and the Instruments of ratfca-
ton sha be e changed at Washngton, Dstrct of Coumba, as soon as possbe.
(2) Upon e change of ratfcatons, the present conventon sha have effect
(a) as respects Unted States ta , for the ta abe years begnnng on or
after the 1st day of anuary n the caendar year n whch the e change of
nstruments of ratfcaton takes pace;
(b) () as respects Irsh ncome ta , for the year of assessment begn-
nng on the 6th day of pr n the caendar year n whch the e change of
nstruments of ratfcaton takes pace and subsequent years; () as respects
Irsh surta , for the year of assessment begnnng on the 6th day of pr
mmedatey precedng the caendar year n whch the e change of nstru-
ments of ratfcaton takes pace, and subsequent years; and () as respects
Irsh corporaton profts ta , for any chargeabe accountng perod begn-
nng on or after the 1st day of pr n the caendar year n whch the e -
change of nstruments of ratfcaton takes pace, and for the une pred
porton of any chargeabe accountng perod current at that date.
rtce III
(1) The present conventon sha contnue n effect ndefntey but ether of
the contractng partes may, on or before the 30th day of une n any caendar
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 3-1.
9
year foowng the caendar year n whch the e change of nstruments of rat-
fcaton takes pace, gve to the other contractng party, through dpomatc
channes, notce of termnaton and, In such event, the present conventon sha
cease to be effectve
(a) as respects Unted States ta , for the ta abe years begnnng on or
after the 1st day of anuary n the caendar year ne t foowng that n
whch such notce s gven;
(b) (1) as respects Irsh ncome ta , for any year of assessment begn-
nng on or after the 6th day of pr n the caendar year ne t foowng that
In whch such notce s gven; () as respects Irsh surta , for any year
of assessment begnnng on or after the 6th day of pr In the caendar year
n whch such notce s gven; and () as respects Irsh corporaton profts
ta , for any chargeabe accountng perod begnnng on or after the 1st day
of pr n the caendar year ne t foowng that In whch such notce s
gven and for the une pred porton of any chargeabe accountng perod
current at that date.
(2) The termnaton of the present conventon or of any artce thereof sha
not have the effect of revvng any treaty or arrangement abrogated by the
present conventon or by treates prevousy concuded between the contractng
partes.
s used n ths Treasury Decson, uness the conte t otherwse-
requres, the terms defned n the above artces of the conventon sha
have the meanng so assgned to them.
Sec. 7.1001. Dvdends. (a) Genera. Under rtce I of the
conventon the rate of ta mposed wth respect to dvdends by
secton 211(a) of the Interna Revenue Code (reatng to nonresdent
aen ndvduas not engaged n trade or busness wthn the Unted
States) and by secton 231(a) of the Interna Revenue Code (reatng
to foregn corporatons not engaged n trade or busness wthn the
Unted States) s reduced to 1 percent n the case of dvdends de-
rved from a Unted States corporaton and receved n ta abe years
begnnng on or after anuary 1,19 1, by a nonresdent aen (ncud-
ng a nonresdent aen ndvdua, fducary, and partnershp) who
s resdent n Ireand for the purposes of Irsh ta , or by a foregn
corporaton (whether or not created or organzed n or under the aws
of Ireand) whose busness s managed and controed n Ireand, f
such aen or corporaton s sub|ect to Irsh ta on such dvdends
and at no tme durng the ta abe year had a permanent estabshment
wthn the Unted States. s to what s a Unted States corporaton,
see rtce 11(1) (d) of the conventon.
Thus, f a nonresdent aen who s resdent n Ireand for the pur-
poses of Irsh ta performs persona servces wthn the Unted States
durng the ta abe year, has at no tme durng such year a permanent
estabshment wthn the Unted States, and s sub|ect to Irsh ta
on a dvdend derved by hm n such year from a Unted States cor-
poraton, he s entted to the reduced rate of ta wth respect to such
dvdend, as provded n rtce I of the conventon, even though
under the provsons of secton 211(b) of the Interna Revenue Code
he has engaged n trade or busness wthn the Unted States durng
such year by reason of hs havng rendered persona servces theren.
The fact that the payee of the dvdend s not requred to pay Irsh
ta on such dvdend because of the appcaton of reefs or e emp-
tons under Irsh revenue aws does not prevent the appcaton of the
reducton n rate of Unted States ta wth respect to such dvdend.
If the dvdend woud have been sub|ect to Irsh ta had the payee
thereof derved an ncome arge enough to requre payment of ta ,
then abty to Irsh ta e sts for the purpose of the reducton n
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
9
29.1 3-1.
rate of Unted States ta . s to what consttutes a permanent estab-
shment, see rtce II (1) (1) of the conventon.
In the case of dvdends pad on or after anuary 1,19 1, by an Irsh
corporaton, as defned n rtce 11(1) (e) of the conventon, no
wthhodng of Unted States ta s requred. See rtce (1) of
the conventon.
(6) Dvdends pad by a Unted States subsdary corporaton.
Under the provso of rtce I (1) of the conventon dvdends
derved from a domestc corporaton by a foregn corporaton whose
busness s managed and controed n Ireand and whch contros,
drecty or ndrecty, at the tme the dvdend s pad 9 percent or
more of the entre votng power n such domestc corporaton are,
when receved n ta abe years begnnng on or after anuary 1, 19 1,
sub|ect to ta at the rate of ony percent, f (1) not more than 2
percent of the gross ncome of such payng corporaton for the 3-year
perod mmedatey precedng the ta abe year n whch the dvdend
s pad conssts of dvdends and nterest (other than dvdends and
nterest pad to such domestc corporaton by ts own subsdary
corporatons, f any), (2) the reatonshp between such domestc
corporaton and such foregn corporaton has not been arranged or
mantaned prmary wth the ntenton of securng such reduced
rate of percent, (3) such foregn corporaton s sub|ect to Irsh ta
on such dvdends, and ( ) such foregn corporaton at no tme durng
the ta abe year had a permanent estabshment wthn the Unted
States.
ny domestc corporaton whch cams or contempates camng
that dvdends pad or to be pad by t on or after anuary 1,19 1, are
sub|ect onv to the percent rate sha fe the foowng nformaton
wth the Commssoner of Interna Revenue as soon as practcabe:
(1) the date and pace of ts organzaton; (2) the ocaton of the
management and contro of the foregn corporaton to whch the
dvdends are pad or to be pad; (3) the number of outstandng shares
of stock of the domestc corporaton havng votng power and the
votng power thereof; ( ) the person or persons benefcay ownng
such stock of the domestc corporaton and ther reatonshp to such
foregn corporaton; ( ) the amount of gross ncome by years of the
domestc corporaton for the 3-year perod mmedatey precedng the
ta abe year n whch the dvdend s pad; (6) the amount of nterest
and dvdends by years ncuded n the gross ncome of the domestc
corporaton, and the amount of nterest and dvdends by years
receved by such corporaton from ts subsdary corporatons, f any;
and (7) the reatonshp between the domestc corporaton and the
foregn corporaton to whch t pays the dvdend.
s soon as practcabe after such nformaton s fed, the Comms-
soner of Interna Revenue w determne whether the dvdends
concerned fa wthn the scope of the provso of rtce I (1) of the
conventon and may authorze the reease of e cess ta wthhed wth
respect to dvdends whch come wthn such provso. In any case
n whch the Commssoner of Interna Revenue has notfed the
domestc corporaton that the dvdends fa wthn the scope of such
provso the reduced wthhodng rate of percent w appy to any
dvdends subsequenty pad by such corporaton to the foregn corpo-
raton, uness the stock ownershp of the domestc corporaton, or the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 -1.
90
character of ts ncome, or the pace of management and contro of the
corporaton to whch the dvdend s pad materay changes; or
uness the Commssoner of Interna Revenue determnes that the rea-
tonshp between the two corporatons s beng mantaned prmary
wth the ntenton of securng the reduced rate of ta ; and, f such
change n stock ownershp, character of ncome, or pace of man-
agement and contro occurs, the domestc corporaton sha prompty
notfy the Commssoner of Interna Revenue of the then e stng
facts wth respect thereto. The contnued appcaton of the reduced
wthhodng rate s aso dependent upon the contnued fufment of
condtons (3) and ( ) of the frst paragraph of ths subsecton.
(c) ffect of address n Ireand on wthhodng n case of dv-
dends. For the purpose of wthhodng of the ta n the case of
dvdends every nonresdent aen (ncudng a nonresdent aen n-
dvdua, fducary, and partnershp) whose address s n Ireand sha
be deemed by Unted States wthhodng agents to be a nonresdent
aen who s (1) resdent n Ireand for the purposes of Irsh ta , (2)
sub|ect to Irsh ta on such dvdends, and (3) wthout a permanent
estabshment n the Unted States; and every foregn corporaton
whose address s n Ireand sha be deemed by such wthhodng
agents to be a foregn corporaton whose busness s managed ana
controed n Ireand and whch s (1) sub|ect to Irsh ta on such
dvdends and (2) wthout a permanent estabshment n the Unted
States.
(d) ate of wthhodng. Wthhodng at source n the case of
dvdends derved from a Unted States corporaton and pad on or
after anuary 1, 19 2, to nonresdent aens (ncudng a nonresdent
aen ndvdua, fducary, and partnershp) and to foregn corpo-
ratons, whose addresses are n Ireand, sha be at the rate of 1
percent n every case e cept that n whch, pror to the date of pay-
ment of such dvdends, the Commssoner of Interna Revenue has
notfed the wthhodng agent that (1) such dvdends fa wthn
the scope of the provso of rtce I(1) of the conventon or (2)
the reduced rate of ta sha not appy.
The precedng provsons respectng the appcaton of the reduced
wthhodng rate n the case of dvdends pad to nonresdent aens
and foregn corporatons wth addresses n Ireand are based upon
the assumpton that the payee of the dvdend s the actua owner of
the capta stock from whch the dvdend s derved and consequenty
s the person abe to Unted States ta upon such dvdend. s to
acton by the recpent who s not the owner of the dvdend, see
secton 7.1007 of these reguatons.
The rate at whch Unted States ta has been wthhed from any
dvdend pad on and after 30 days from the date on whch ths Treas-
ury Decson s fed wth the Dvson of the Federa Regster to any
person whose address s n Ireand at the tme the dvdend s pad
sha be shown ether n wrtng or by approprate stamp on the check,
draft, or other evdence of payment, or on an accompanyng
statement.
Sec. 7.1002. Interest. (a) Genera. Interest (other than nterest
fang wthn the scope of (c) of ths secton) on bonds, securtes,
notes, debentures, or any other form of ndebtedness, ncudng nter-
est on obgatons of the Unted States, obgatons of nstrumenta-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
97
29.1 3-1.
tes of the Unted States, and mortgages and bonds secured by rea
property, derved from sources wthn the Unted States and receved
n ta abe years begnnng on or after anuary 1, 19 1, by a nonres-
dent aen (ncudng a nonresdent aen ndvdua, fducary, and
partnershp) who s resdent n Ireand for the purposes of Irsh ta ,
or by a foregn corporaton (whether or not created or organzed n
or under the aws of Ireand) whose busness s managed and con-
troed n Ireand, s e empt from Unted States ta under the prov-
sons of rtce II (1) of the conventon f such aen or corporaton
s sub|ect to Irsh ta on such nterest and at no tme durng the
ta abe year had a permanent estabshment wthn the Unted States.
Such nterest s, therefore, not sub|ect to the wthhodng provsons
of the Interna Revenue Code. s to what consttutes a permanent
estabshment, see rtce 11(1) (1) of the conventon.
The provsons of secton 7.1001(a) of these reguatons reatng
to the degree of abty to Irsh ta n the case of dvdends are
equay appcabe wth respect to the ncome fang wthn the scope
of ths secton.
(b) ppcaton of e empton from wthhodng. To obvate wth-
hodng at the source n the case of coupon bond nterest the nonres-
dent aen resdent n Ireand for the purposes of Irsh ta , or the
foregn corporaton whose busness s managed and controed n Ire-
and, sha for each ssue of bonds submt Form 1001-IR n dupcate
to the payng agent wth each presentaton of nterest coupons. Such
form sha be sgned by the owner of the nterest, trustee, or agent and
sha show the name and address of the obgor, the name and address
of the owner of such nterest, and the amount of such nterest. Such
form sha contan a statement that the owner (1) s resdent n Ire-
and for the purposes of Irsh ta , or s a foregn corporaton whose
busness s managed and controed n Ireand, (2) has no permanent
estabshment n the Unted States, and (3) s sub|ect to Irsh ta on
such nterest.
The e empton from Unted States ta contempated by rtce
II (1) of the conventon, nsofar as t concerns coupon bond nterest,
s appcabe ony to the owner of such nterest. The person present-
ng such coupon, or on whose behaf t s presented, sha for the pur-
pose of the e empton from ta be deemed to be the owner of the
nterest ony f he s, at the tme the coupon s presented for payment,
the owner of the bond from whch the coupon has been detached. If
the person presentng the coupon s not the owner of the bond, Form
1001, and not Form 1001-IR, sha be e ecuted.
The orgna and dupcate ownershp certfcates, Form 1001-IR,
must be forwarded to the Commssoner of Interna Revenue by the
wthhodng agent wth the quartery return on Form 1012, as pro-
vded n e stng reguatons wth respect to Form 1001. See secton
29.1 3-7 of ths chapter Reguatons 111 . Form 1001-IR need not
be sted on Form 1012.
For genera provsons pertanng to the use, wthout reference to
the provsons of the conventon, of ownershp certfcate, Form 1001,
by nonresdent aens and nonresdent foregn corporatons, see sec-
ton 29.1 3- and secton 29.1 3-6 of ths chapter.
To obvate wthhodng at the source n the case of nterest, other
than nterest payabe by means of coupons, the nonresdent aen
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 3-1.
9S
resdent n Ireand for the purposes of Irsh ta , or the foregn cor-
poraton whose busness s managed and controed n Ireand, sha
notfy the wthhodng agent by etter n dupcate that such ncome
s e empt from Unted States ta under the provsons of rtce
II (1) of the conventon. The etter of notfcaton sha be sgned
by the owner of the nterest, trustee, or agent and sha show the name
and address of the obgor and the name and address of the owner of
such nterest. It sha aso contan a statement that the owner (1)
s resdent n Ireand for the purposes of Irsh ta , or s a foregn
corporaton whose busness s managed and controed n Ireand, (2)
has no permanent estabshment n the Unted States, and (3) s
sub|ect to Irsh ta on such nterest. Ths etter sha consttute
authorzaton for the payment of such nterest wthout deducton of
the ta at source.
The etter of notfcaton n the case of nterest, other than nterest
payabe by means of coupons, must be fed for each three-caendar-
year perod, and the frst such etter fed by the ta payer wth any
wthhodng agent sha be fed not ater than 20 days precedng the
date of the frst payment of nterest n such perod. If the ta payer
fes such etter wth the wthhodng agent n the caendar year 19 2.
or n any subsequent caendar year, no addtona etter need be fed
pror to the end of the two caendar years mmedatey foowng the
caendar year n whch such etter s so fed uness the Commssoner
of Interna Revenue notfes the wthhodng agent that an addtona
etter must be fed by the ta payer at any earer date. If, after
fng a etter of notfcaton, the ta payer ceases to be egbe for
the beneft of the conventon he must prompty notfy the wthhod-
ng agent by etter n dupcate. When any change occurs n the
ownershp of the nterest as recorded on the books of the payer, the
e empton from Unted States ta w no onger appy uness a etter
of notfcaton s duy e ecuted and fed wth the wthhodng agent
by the new owner of record of such nterest.
ach etter of notfcaton, or the dupcate thereof, must be mme-
datey forwarded by the wthhodng agent to the Commssoner of
Interna Revenue, Cearng ranch, Washngton 2 , D. C.
In the. case of nterest pad on or after anuary 1, 19 1, by an Irsh
corporaton, as defned n rtce 11(1) (e) of the conventon, no
wthhodng of Unted States ta s requred. See rtce (1)
of the conventon.
(c) empton not appcabe to nterest pad by subsdary corpora-
ton to ts parent corporaton. Under the e cepton contaned n
rtce II (1) of the conventon any nterest derved from sources
wthn the Unted States and pad by a domestc corporaton to a
foregn corporaton whose busness s managed and controed n
Ireand s not e empt from Unted States ta f such foregn corpora-
ton contros, drecty or ndrecty, at the tme the nterest s pad
more than 0 percent of the entre votng power of a casses of stock
of such domestc corporaton. The e empton from Unted States
ta provded by rtce II (1) of the conventon does not, therefore,
appy to such nterest pad by such domestc corporaton.
In any case n whch a foregn corporaton whose busness s man-
aged and controed n Ireand antcpates the recept of nterest from
a domestc corporaton and the reatonshp e stng between the for-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
yy
f 29.1 3-1.
egn corporaton and the domestc corporaton s such as to render
uncertan whether, by reason of the e cepton contaned n rtce
II (1) of the conventon, the e empton w appy to such nterest,
the foregn corporaton sha not undertake to fe any Form 1001-IR
or etter of notfcaton prescrbed by (b) of ths secton uness t has,
pror to such fng, apped for and receved from the Commssoner
of Interna Revenue, Washngton 2 , D. C, a determnaton that sueh
foregn corporaton does not contro, drecty or ndrecty, more than
0 percent of the entre votng power n the payng corporaton. The
appcaton to the Commssoner sha contan a fu statement of a
the facts pertnent to a determnaton of the queston.
s soon as practcabe after the appcaton has been fed, the Com-
mssoner of Interna Revenue w determne whether the foregn
corporaton has such contro of the domestc corporaton as to render
the e empton provded by rtce I1(1) of the conventon n-
appcabe to nterest pad by such domestc corporaton to such for-
egn corporaton and sha notfy the foregn corporaton of hs
determnaton. The foregn corporaton sha forthwth fe wth
the domestc corporaton a copy of the Commssoner s etter of not-
fcaton.
If the Commssoner s determnaton s that the foregn corporaton
does not contro, drecty or ndrecty, more than 0 percent of the
entre votng power of a casses of stock of the domestc corporaton,
the foregn corporaton may thereafter obvate wthhodng at the
source wth respect to subsequent payments of such nterest Dy com-
pyng wth the provsons of (b) of ths secton, that s, by submttng
Form 1001-IR n the case of coupon bond nterest, or the etter of
notfcaton for each three-caendar-year perod n the case of nterest
other than nterest payabe by means of coupons.
determnaton of the Commssoner that the foregn corporaton
does not have such contro of the domestc corporaton as to render
the e empton provded by rtce II() of the conventon nap-
pcabe w appy unt such tme as the stock ownershp of the
domestc corporaton has changed to the e tent that nterest to be
receved from the domestc corporaton by the foregn corporaton
s no onger e empt from Unted States ta under rtce II (1) of
the conventon. If such change n stock ownershp occurs, the foregn
corporaton sha prompty notfy both the Commssoner of Interna
Revenue and the domestc corporaton of the then e stng facts wth
respect to such stock ownershp.
In any case n whch a foregn corporaton whose busness s man-
aged and controed n Ireand has receved on or after anuary 1,
19 2, nterest from a domestc corporaton and the reatonshp e st-
ng between the foregn corporaton and the domestc corporaton
was at the tme the nterest was pad such as to render uncertan
whether, by reason of the e cepton contaned n rtce II (1) of
the conventon, such nterest was e empt from Unted States ta , the
foregn corporaton sha appy to the Commssoner of Interna
Revenue for a smar determnaton as to the degree of contro at the
tme the nterest was pad. If the Commssoner s determnaton s
that at such tme the degree of contro was such as to permt the
appcaton of the e empton provded by rtce II (1) of the con-
venton, hs etter of notfcaton may, sub|ect to the provsons of
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 3-1.
100
secton 7.1006(c) of these reguatons, authorze the reease of e cess
ta wthhed wth respect to such e empt nterest.
Sec. 7.1003. Patent and Copyrght Royates and Fm Rent-
as. Royates and other amounts (ncudng rentas for the use of,
or for the rght to use, moton pcture fms) derved from sources
wthn the Unted States and receved n ta abe years begnnng on
or after anuary 1, 19 1, by a nonresdent aen (ncudng a non-
resdent aen ndvdua, fducary, and partnershp) who s resdent
n Ireand for the purposes of Irsh ta , or by a foregn corporaton
(whether or not created or organzed n or under the aws of Ireand)
whose busness s managed and controed n Ireand, when pad as
consderaton for the use of, or for the prvege of usng, copyrghts,
patents, desgns, secret processes and formuae, trade-marks, and other ,
ke property, are e empt from Unted States ta under the provsons 3
of rtce (1) and (3) of the conventon f such aen or corpora-
ton s sub|ect to Irsh ta on such ncome and at no tme durng the
ta abe year had a permanent estabshment wthn the Unted States.
Such tems of ncome are, therefore, not sub|ect to the wthhodng
provsons of the Interna Revenue Code. s to what consttutes a
permanent estabshment, see rtce 11(1) (1) of the conventon.
The provsons of secton 7.1001(a) of these reguatons reatng to
the degree of abty to Irsh ta n the case of dvdends are equay
appcabe wth respect to the ncome fang wthn the scope of ths
secton.
To obvate wthhodng at the source n the case of such tems the
nonresdent aen resdent n Ireand for the purposes of Irsh ta , or
the foregn corporaton whose busness s managed and controed n
Ireand, sha notfy the wthhodng agent by etter n dupcate that
such ncome s e empt from Unted States ta under the provsons
of rtce III of the conventon. The provsons of secton 7.1002(b)
of these reguatons reatng to the e ecuton, fng, and effectve
perod of the etter of notfcaton prescrbed theren wth respect to
nterest are equay appcabe wth respect to the ncome fang
wthn the scope of ths secton.
ach etter of notfcaton, or the dupcate thereof, must be m-
medatey forwarded by the wthhodng agent to the Commssoner
of Interna Revenue, Cearng ranch, Washngton 2 , D. C.
Sec. 7.100 . Natura Resource Royates and Rea Propertt
Rentas. Under rtce I of the conventon the rate of ta mposed
wth respect to natura resource royates and rea property rentas
by secton 211(a) of the Interna Revenue Code (reatng to nonres-
dent aen ndvduas not engaged n trade or busness wthn the
Unted States) and by secton 231(a) of the Interna Revenue Code
(reatng to foregn corporatons not engaged n trade or busness
wthn the Unted States) s reduced to 1 percent n the case of roya-
tes n respect of the operaton of mnes or quarres or of other e trac-
ton of natura resources, and n the case of rentas from rea property
or from an nterest n such property, derved from sources wthn the
Unted States and receved n ta abe years begnnng on or after
anuary 1,19 1, by a nonresdent aen (ncudng a nonresdent aen
ndvdua, fducary, and partnershp) who s resdent n Ireand for
the purposes of Irsh ta , or by a foregn corporaton (whether or not
created or organzed n or under the aws of Ireand) whose busness
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
101
29.1 3-1.
s managed and controed n Ireand, f such aen or corporaton
s sub|ect to Irsh ta on such ncome and at no tme durng the
ta abe year had a permanent estabshment wthn the Unted States.
s to what consttutes a permanent estabshment, see rtce II (1) (1)
of the conventon.
The provsons of secton 7.1001(a) of these reguatons reatng to
the degree of abty to Irsh ta n the case of dvdends are equay
appcabe wth respect to the ncome fang wthn the scope of ths
secton.
To secure the reduced rate of ta at the source n the case of such
tems the nonresdent aen resdent n Ireand for the purposes of Irsh
ta , or the foregn corporaton whose busness s managed and con-
troed n Ireand, sha notfy the wthhodng agent by etter n du-
pcate that the rate of Unted States ta wth respect to such ncome
s reduced to 1 percent under the provsons of rtce I of the con-
venton. The provsons of secton 7.1002(6) of these reguatons re-
atng to the e ecuton, fng, and effectve perod of the etter of not-
fcaton prescrbed theren wth respect to nterest are equay appca-
be wth respect to the ncome fang wthn the scope of ths secton.
ach etter of notfcaton, or the dupcate thereof, must be mmed-
atey forwarded by the wthhodng agent to the Commssoner of
Interna Revenue, Cearng ranch, Washngton 2 , D. C.
Sec. 7.100 . Pensons and Lfe nnutes. Pensons, other than
pensons pad by the Government of the Unted States to ndvduas n
respect of servces rendered thereto n the dscharge of governmenta
functons, and any fe annuty, derved from sources wthn the
Unted States n ta abe years begnnng on or after anuary 1,19 1,
by a nonresdent aen ndvdua who s resdent n Ireand for the
purposes of Irsh ta are e empt from Unted States ta under the
provsons of rtce II of the conventon.
To obvate wthhodng at the source n the case of such e empt n-
come the nonresdent aen ndvdua who s resdent n Ireand for
the purposes of Irsh ta sha notfy the wthhodng agent by etter
n dupcate that such ncome s e empt from Unted States ta under
the provsons of rtce II of the conventon. The etter of not-
fcaton sha be sgned by the owner of the ncome, sha show the name
and address of both the payer and the owner, and sha contan a state-
ment that the owner, an ndvdua, s nether a ctzen nor a resdent of
the Unted States but s resdent n Ireand for the purposes of Irsh
ta . Ths etter sha consttute authorzaton for the payment of such
ncome wthout deducton of the ta at source uness the Commssoner
of Interna Revenue subsequenty notfes the wthhodng agent that
the ta shoud be wthhed from payments of such ncome made after
recept of such notce. If, after fng a etter of notfcaton, the
owner of the ncome ceases to be egbe for the beneft of the conven-
ton, he must prompty notfy the wthhodng agent by etter n
dupcate.
ach etter of notfcaton, or the dupcate thereof, must be mmed-
atey forwarded by the wthhodng agent to the Commssoner of In-
terna Revenue, Cearng ranch, Washngton 2 , D. C.
Sec. 7.1006. Reease op cess Ta Wthhed at Source. (a)
Genera. In order to brng the conventon nto force and effect at the
earest practcabe date,
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 3-1.
102
(1) the reduced rate of ta of 1 percent to be wthhed at the
source from dvdends, natura resource royates, and rea prop-
erty rentas, and
(2) the e empton from ta otherwse wthhed at the source
from nterest, patent royates, copyrght royates, fm rentas,
and the ke,
are hereby made effectve begnnng anuary 1, 19 2, n any case n
whch such natura resource royates, rea property rentas, nterest,
patent royates, copyrght royates, fm rentas, and the ke are de-
rved from sources wthn the Unted States, or n whch such dv-
dends are derved from a Unted States corporaton, by a nonresdent
aen (ncudng a nonresdent aen ndvdua, fducary, and partner-
shp) who s resdent n Ireand for the purposes of Irsh ta , or by a
foregn corporaton whose busness s managed and controed n Ire-
and, f such aen or corporaton s sub|ect to Irsh ta on such n-
come and at no tme durng the ta abe year n whch such ncome s so
derved had a permanent estabshment wthn the Unted States.
In the case of every such ta payer whose address at the tme of pay-
ment was n Ireand and who furnshes to the wthhodng agent the
etter of notfcaton prescrbed n secton 7.1002(6), secton 7.1003, or
secton 7.100 of these reguatons, where Unted States ta at the rate
of 30 percent has been wthhed on or after anuary 1,19 2, there sha
be reeased (e cept as provded n (e) of ths secton) by the wthhod-
ng agent and pad over to the person from whom t was wthhed :
(1) n the case of natura resource royates and rea property
rentas, an amount equa to 1 percent of such royates and rent-
as, and
(2) n the case of nterest (other than coupon bond nterest),
patent royates, copyrght royates, fm rentas, and the ke, an
amount equa to the ta so wthhed.
In the case of every such ta payer whose address at the tme of
payment was n Ireand and who furnshes to the wthhodng agent
Form 1001-IR n dupcate, where Unted States ta at the rate of 2
percent or 30 percent, as the case may be, has been wthhed from
coupon bond nterest on or after anuary 1. 19 2, there sha be re-
eased (e cept as provded n (e) of ths secton) by the wthhodng
agent and pad over to the person from whom t was wthhed an
amount equa to the ta so wthhed, f such ta payer aso fes n
dupcate wth the wthhodng agent as authorzaton for the reease
of such amount a Form 1001-IR ceary marked Substtute . One
such substtute form sha be fed n dupcate wth respect to each
ssue of bonds and w serve wth respect to that ssue to repace a
Forms 1001 prevousy fed by such ta payer n the caendar year n
whch the e cess ta s reeased. The use of Form 1001-IR wth each
resentaton of nterest coupons for the purpose of obvatng wth-
odng of ta at source s set forth n secton 7.1002(6) of these
reguatons.
In the case of dvdends derved from a Unted States corporaton
and pad to a nonresdent aen (ncudng a nonresdent aen ndvd-
ua, fducary, and partnershp) or to a foregn corporaton, whose
address at the tme of payment was n Ireand, where Unted States
ta at the rate of 30 percent has been wthhed from such dvdends
on or after anuary 1, 19 2, there sha be reeased (e cept as provded
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
103
29.1 3-1.
n (d) of ths secton) by the wthhodng agent and pad over to the
person from whom t was wthhed an amount equa to 1 percent
of such- dvdends.
(b) mounts wthhed durng 19 1. For provsons respectng the
refund of e cess ta wthhed durng the caendar year 19 1, see
secton 7.1010 of these reguatons.
(c) Pensons and fe annutes. In order to brng the conventon
nto force and effect at the earest practcabe date the e empton
from ta otherwse wthhed at the source from fe annutes and
pensons, other than pensons pad by the Government of the Unted
States to ndvduas n respect of servces rendered thereto n the
dscharge of governmenta functons, s hereby made effectve begn-
nng anuary 1, 19 2, n any case n whch such pensons and fe
annutes are derved from sources wthn the Unted States by a
nonresdent aen ndvdua who s resdent n Ireand for the pur-
poses of Irsh ta .
In the case of every such ta payer whose address at the tme of
payment was n Ireand and who furnshes to the wthhodng agent
the etter of notfcaton prescrbed n secton 7.100 of these regua-
tons, where Unted States ta at the rate of 30 percent has been wth-
hed on or after anuary 1, 19 2, from such pensons or fe annutes,
as the case may be, there sha be reeased by the wthhodng agent
und pad over to the person from whom t was wthhed an amount
(d) Subsdary s dvdends. Unted States ta sha be wthhed
at the rate of 1 percent from any dvdend derved from a Unted
States corporaton and pad on or after anuary 1, 19 2, to a foregn
corporaton whose address s n Ireand uness, pror to the date of
payment thereof, the Commssoner of Interna Revenue notfes the
domestc corporaton that such dvdend fas wthn the scope of the
provso of rtce I (1) of the conventon.
In the case of every domestc corporaton recevng notfcaton
from the Commssoner of Interna Revenue under the provsons of
secton 7.1001(6) of these reguatons that dvdends pad or to be
pad by t fa wthn the scope of the provso of rtce I (1) of
the conventon, where Unted States ta n e cess of the appcabe
rate of percent has been wthhed on or after anuary 1,19 2, from
dvdends whch come wthn the scope of such provso, the wth-
hodng agent sha, f so authorzed n such notfcaton, reease and
pay over to the foregn corporaton from whch t was wthhed the
e cess ta wthhed wth respect to such dvdends.
(e) Interest pad where degree of stock ownershp s determned.
In the case of every foregn corporaton whose address at the tme of
payment was n Ireand and whch (1) furnshes to the domestc
corporaton a copy of the Commssoner s authorzaton of reease pre-
scrbed n secton 7.1002(c) of these reguatons and (2) fes the
etter of notfcaton prescrbed n secton 7.1002( ) of these regu-
atons, or the substtute Form 1001-IR prescrbed n (a) of ths
secton, whchever s appcabe, where Unted States ta at the rate
of 2 percent or 30 percent, as the case may be, has been wthhed on
or after anuary 1,19 2, the wthhodng agent sha reease and pay
over to the foregn corporaton from whch t was wthhed an amount
tqua to the ta so wthhed.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
20 1 3-1.1
10
Sec. 7.1007. ddressee Not ctua Owner. If any person wth
an address n Ireand who receves a dvdend from a Unted States
corporaton wth respect to whch Unted States ta at the rate of
ony 1 percent has been wthhed at source s a nomnee or representa-
tve through whom such dvdend fows to a person other than one
descrbed n secton 7.1001(a) of these reguatons as beng entted
to such reduced rate of 1 percent, such recpent n Ireand w wth-
hod an addtona amount of Unted States ta equvaent to the df-
ference between the Unted States ta whch woud have -been wth-
hed had the conventon not been n effect (30 percent as of the date
of approva of ths Treasury Decson) and the 1 percent wthhed
at the source wth respect to such dvdend pursuant to secton
7.1001 (d) of these reguatons.
In any case n whch a fducary or partnershp wth an address n
Ireand receves, otherwse than as a nomnee or representatve a
dvdend from a Unted States corporaton wth respect to whch
Unted States ta at the rate of ony 1 percent has been wthhed at
source, f a benefcary of such fducary or a partner n such partner-
shp s not entted to the reduced rate of ta provded n rtce
I (1) of the conventon, the fducary or partnershp w wthhod
an addtona amount of Unted States ta wth respect to the porton
of such dvdend ncuded n such benefcary s share of the dstrbuted
or dstrbutabe ncome, or n such partner s dstrbutve share of the
ncome, of such fducary or partnershp, as the case may be. The
amount of the addtona ta s to be cacuated n the same manner
as under the mmedatey precedng paragraph.
If any amount of Unted States ta s reeased pursuant to secton
7.1006(a) of these reguatons by the wthhodng agent n the Unted
States wth respect to a dvdend receved by such a person wth an
address n Ireand, the atter w aso wthhod from such reeased
amount any addtona amount of Unted States ta , otherwse re-
qured to be wthhed by the precedng provsons of ths secton n
respect of such dvdend, n the same manner as f at the tme of pay-
ment of such dvdend Unted States ta at the rate of ony 1 per-
cent had been wthhed at source therefrom.
The amounts so wthhed by such wthhodng agents n Ireand w
be deposted, wthout convertng such amounts nto Unted States do-
ars, wth the Irsh Revenue Commssoners on or before the ffteenth
dav after the cose of the caendar year quarter n whch such wth-
hodng n Ireand occurs. ach wthhodng agent makng such de-
post w render therewth the approprate Irsh form as prescrbed
n reguatons made by the revenue commssoners. The revenue com-
mssoners have arranged that the amounts so deposted w be re-
mtted by draft n Unted States doars to the Coector of Interna
Revenue, atmore, Md., U. S. ., on or before the end of the caendar
month n whch the deposts are made, such draft to be accompaned
by the Irsh form rendered by the wthhodng agents n Ireand n
connecton wth such deposts.
Sec. 7.100 . Informaton To e Furnshed n Ordnary
Course. In compance wth the provsons of rtce of the con-
venton the Commssoner of Interna Revenue w transmt to the
Irsh Revenue Commssoners, as soon as practcabe after the cose of
the caendar |ear 19 2 and of each subsequent caendar year durng
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

0

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
10
29.1 3-1.
whch the conventon s n effect, the foowng nformaton reatng
to such precedng caendar year:
(a) The name and address of each person whose address as
dscosed on each avaabe Form 10 2 s n Ireand dervng from
sources wthn the Unted States dvdends, nterest, rent, roya-
tes, saares, wages, pensons, annutes, and other f ed or de-
termnabe annua or perodca ncome; and the amount of such
ncome as dscosed on such form wth respect to each such person.
(b) The dupcate copy of each avaabe ownershp certfcate,
Form 1001-I , fed pursuant to secton 7.1002(6), and substtute
Form 1001-IR, fed pursuant to secton 7.1006(a), of these regu-
atons n connecton wth coupon bond nterest.
Sec. 7.1009. enefcares of a Domestc state or Trust.
nonresdent aen who s resdent n Ireand for the purposes of Irsh
ta and who s a benefcary of a domestc estate or trust sha be en-
tted to tht e empton from, or reducton n the rate of, Unted States
ta provded n rtces I, II, III, I , and of the conventon
wth respect to dvdends, nterest, royates, natura resource royates,
and rea property rentas to the e tent such tem or tems are ncuded
n hs share of the dstrbuted or dstrbutabe ncome of such estate or
trust. In order to be entted n such nstance to the e empton from,
or reducton n the rate of, ta such benefcary must otherwse satsfy
the requrements of these respectve artces of the conventon and
must, where appcabe, e ecute and submt to the fducary of such
estate or trust n the Unted States the approprate etter of notfcaton
prescrbed n secton 7.1002(6), secton 7.1003, and secton 7.100 of
these reguatons.
Sec. 7.1010. Refund of Income Ta Wthhed Durng 19 1. If
Unted States ta wthhed at the source durng the year 19 1 from
dvdends, nterest, royates, natura resource royates, rea property
rentas, pensons, or fe annutes s n e cess of the ta mposed by
chapter 1 (reatng to the ncome ta ) of the Interna Revenue Code,
as modfed by the conventon, a cam by the ta payer for the refund
of any overpayment sha be made under secton 322 of the Interna
Revenue Code by fng Form 3 together wth Form 10 0N , Form
10 0N -a, Form 10 0 , or Form 1120N , whchever s appcabe, or
wth an amended return.
The ta payer s tota gross ncome from sources wthn the Unted
States, ncudng every tem of capta gan sub|ect to ta under the
provsons of secton 211(a) (1) ( ) or 211(c) of the Interna Revenue
Code, sha be dscosed on the return. In the event that securtes are
hed n the name of a person other than the actua or benefca owner,
the name and address of such person must be furnshed wth the cam.
There sha aso be ncuded n such cam for refund a statement:
(a) That the ta payer was, at the tme when the tem or tems
of ncome were derved, (1) a nonresdent aen (ncudng a non-
resdent aen ndvdua, fducary, or partnershp) who at such
tme was resdent n Ireand for the purposes of Irsh ta ror (2)
a foregn corporaton whose busness at such tme was managed
and controed n Ireand.
(b) That the ta payer at no tme durng the ta abe year n
whch the ncome was derved had a permanent estabshment n
the Unted States.
21 1 2 -
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 7-1.
106
(c) That the ta payer s sub|ect to Irsh ta on the tem or tems
of ncome for whch the beneft of the conventon s camed.
If, however, the ta payer s an ndvdua who durng the ta abe
year derved from sources wthn the Unted States ncome whch con-
ssts e cusvey of pensons or fe annutes entted to the beneft of
rtce II of the conventon, the statements specfed n (6) and (c)
above w not be requred.
s to addtona nformaton requred n the case of a foregn corpo-
raton camng the beneft of the percent rate on dvdends, or n
certan doubtfu cases the beneft of the e empton wth respect to
nterest, pad by a domestc corporaton, see secton 7.1001(6) or
secton 7.1002(c) of these reguatons.
ecause t s necessary to brng nto effect at the earest practcabe
date the rues of ths Treasury Decson respectng reduced rates of,
or e emptons from, ta and the rues respectng reease or refund of
amounts wthhed n e cess of such reduced rates, or wth respect to
e empt ncome, t s hereby found that t s mpractcabe to ssue ths
Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une
11, 19 6, or sub|ect to the effectve date mtaton of secton (c) of
that ct.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 62 and 3791 ( 3 Stat, 32 and 67 ; 26 U. S. C. 62 and 3791) of
the Interna Revenue Code.)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved pr 21,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 23, 19 2, : 7 a. m.)
S CTION 1 . P YM NT OF CORPOR TION-INCOM
T T SOURC
Secton 29.1 -1: Wthhodng n the case of
nonresdent foregn corporatons.
INT RN L R NU COD
Reease of e cess ta wthhed and e empton from, or reducton
n rate of, wthhodng n case of Irsh corporatons, as affected by the
recproca ncome ta conventon between the Unted States and the
Repubc of Ireand. (See T. D. 97, page 9.)
S CTION 1 7. INFORM TION T SOURC
Secton 29.1 7-1: Return of nformaton as
to payment of 600 ( 00 for years pror
to 19 ).
INT RN L R NU COD
Mantenance payments made by chd-pacng agences to foster
parents. (See I. T. 06 , page 7.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
107
29.1 - .
S CTION 1 . INFORM TION Y CORPOR TIONS
The fng of nformaton returns (Forms 1006 and 1090) by cor-
poratons wth respect to payments of dvdends whch, durng the
caendar year, amount to 1 or more per sharehoder w be con-
sdered substanta) compance wth secton 20.1 -(a) of Regua-
tons 111, as amended by Treasury Decson 9 (C. . 10 1-2, ).
corporaton, whch durng the caendar year 19 1 pad dvdends
of ess than 1 to most of ts stockhoders, requests permsson to report
ony those dvdends whch amounted to 1 or more on nformaton
returns (Forms 1096 and 1099).
Treasury Decson 9 (C. . 19 1-2, ) dated September 20,
19 1, by amendng secton 29.1 -1 (a) of Reguatons 111, removes
the mtaton prevousy n effect under whch corporatons were
requred to fe nformaton returns wth respect to dvdend payments
amountng to 100 or more durng the caendar year. Ths change n
the reguatons resuted from the consderaton gven by the Congress
to wthhodng on dvdends n connecton wth the Revenue ct of
19 0. The ouse b ncuded a provson whch woud have requred
corporatons to wthhod ncome ta on a dvdends pad. That
provson was emnated by the Senate. The report of the Senate
Commttee on Fnance (C. . 19 0-2, 3) ndcates (C. . 19 0-2,
21) that the Commssoner proposed to revse the e stng reguatons
so as to requre compete reportng, and that n the opnon of the
commttee such revson of the reguatons woud hep to correct the
probem at whch the proposa for wthhodng on dvdends was
amed. The report of the Commttee on Ways and Means (C. .
19 0-2, 3 0) ndcates (C. . 19 0-2, 07) the understandng on the
part of the commttee that the reguatons woud be amended so as to
remove the 100 mtaton n order to mprove the reportng of dv-
dends by recpents.
though secton 29.1 -1 (a) of Reguatons 111, as amended bv
Treasury Decson 9 (C. . 19 1-2, ), provdes that corpora-
tons makng payments of dvdends to any sharehoder sha render
nformaton returns on Forms 1096 and 1099, the fng of nformaton
returns by corporatons wth respect to payments of dvdends whch,
durng the caendar year, amount to 1 or more per sharehoder w
be consdered substanta compance wth such reguatons.
Secton 29.1 - : R-turns of nformaton as to 19 2-13-13 7
patronage dvdends, rebates, or refunds. T. D. 907
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31. 1 1
Reguatons 111 amended to conform to secton 31 (c) and (d)
of the Revenue ct of 19 1 reatng to nformaton returns as to
patronage dvdends, rebates, or refunds.
Secton 29.1 -1: Return of nformaton as
to payments of dvdends.
19 2-2-137 2
I. T. 070
INT RN L R NU COD
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 - .)
10
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On February 26,19 2, notce of proposed rue makng was pubshed
n the Federa Regster (17 F. R. 16 ), n order to conform Regua-
tons 111 26 CFR, part 29 to secton 31 (c) and (d) of the Revenue
ct of 19 1 (Pubc Law 1 3, 2d Cong.), approved October 20,19 1.
fter consderaton of a such reevant matter as was presented by
nterested persons regardng the rues proposed, the amendments to
Reguatons 111 26 CFR, part 29 set forth beow are hereby adopted.
Paragraph 1. There s nserted mmedatey precedng secton
29.1 -1 of Reguatons 111 26 CFR 29.1 -1 , the foowng:
S C. 31 . INCOM T TR TM NT OF MPT COOP R -
TI S R NU d OP 19 1, PPRO D OCTO R 20,
19 1 .

(c) Informaton Returns. Secton 1 (reatng to nformaton by
corporatons) s hereby amended by addng at the end thereof the
foowng:
(f) Patronage Dvdends. ny corporaton aocatng amounts as
patronage dvdends, rebates, or refunds (whether n cash, merchan-
dse, capta stock, revovng fund certfcates, retan certfcates, certf-
cates of ndebtedness, etters of advce, or n some other manner that
dscoses to each patron the amount of such dvdend, refund, or rebate)
sha render a correct return statng (1) the name and address of each
patron to whom t has made such aocatons amountng to 100 or
more durng the caendar year, and (2) the amount of such aoca-
tons to each patron. If requred by the Secretary, any such corpora-
ton sha render a correct return of a patronage dvdends, rebates,
or refunds made durng the caendar year to ts patrons. Ths sub-
secton sha not appy n the case of any corporaton (ncudng any
cooperatve or nonproft corporaton engaged n rura eectrfcaton)
e empt from ta aton under secton 101 (10) or (11) or n the case
of any corporaton sub|ect to a ta mposed by suppement .
(d) ffectve Date. The amendment made by subsecton
(c) sha be appcabe to the caendar year 19 1 and subsequent
caendar years.
Pak. 2. There s nserted mmedatey after secton 29.1 -3 of
Reguatons 111 26 CFR 29.1 -1 the foowng:
Sec. 29.1 - . Returns of Informaton as to Patronage Dvdends, e-
bates, or Refunds. (a) In genera. ny corporaton aocatng to any pa-
tron amounts aggregatng 100 or more durng .the caendar year as patronage
dvdends, rebates, or refunds (whether n cash, merchandse, capta stock,
revovng fund certfcates, retan certfcates, etters of advce, or n some
other manner that dscoses to each patron the amount of such dvdend,
rebate, or refund) sha, for the caendar year 19 1 and for each subsequent
caendar year, render a return of nformaton wth respect to such aoca-
ton on Forms 1096 and 1099. The aocaton sha be reported for the caen-
dar year durng whch the aocaton s made, regardess of whether the
aocaton s deemed for the purpose of secton 101(12) ( ) to be made at
the cose of a precedng ta abe year of the corporaton.
(6) Contents of return; manner of makng and fng. separate Form
1099 sha be prepared for each patron showng the name and address of the
patron to whom such aocaton s made, and the amount of the aocaton. Those
forms, accompaned by transmtta Form 1096, showng the number of Forms
1099 fed therewth, sha be fed wth the Commssoner of Interna Revenue,
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
109
29.1 1.
Processng Dvson, C. C. Staton, ansas Cty 2, Mssour, on or before Feb-
ruary 2 of the foowng year, e cept that the returns for the caendar year
19 1 sha be fed on or before uy 1 ,19 2.
(c) tenson of tme for fng. In any case n whch t s mpossbe to
fe the return wthn the tme prescrbed n ths secton, the corporaton u;y,
upon a showng of such fact, obtan a reasonabe e tenson of tme for fng the
return. uthorty for grantng e tensons of tme for fng the return of n-
formaton s hereby deegated to the varous coectors of nterna revenue. p-
pcatons for such e tensons sha be addressed to the coector of nterna
revenue for the dstrct n whch the corporaton s requred to fe ts ncome
t return, must contan a fu recta of the causes for the deay, and must be
submtted on or before the date prescrbed for fng the return of nformaton.
No e tensen may be granted for mor than 6 months.
( f) Defntons. (1) Cooperatve assocaton. For the purpose of ths sec-
ton, the term cooperatve assocaton Incudes any corporaton operatng on
a cooperatve bass and aocatng amounts to patrons on the bass of the bus-
ness done wth or for ch patrons, e cept that the term does not ncude any
corporaton (ncudng any cooperatve or nonproft corporaton engaged n rura
eectrfcaton) e empt from ta aton under secton 101 (10) or (11) or any
corporaton sub|ect to a ta mposed by suppement G (reatng to nsurance
companes).
(2) Patron. For the purpose of ths secton, the term patron ncudes any
person wth whom or for whom the cooperatve assocaton does busness on a
cooperatve bass, whether a member or a nonmember of the cooperatve assoca-
ton, and whether an ndvdua, a trust, estate, partnershp, company, corpora-
ton, or cooperatve assocaton.
(3) Patronage dvdends, rebates, and refunds. For the purpose of ths sec-
ton, the term patronage dvdend, rebate, or refund ncudes any amount
aocated (whether n cash, merchandse, capta stock, revovng fund certf-
cates, retan certfcates, certfcates of ndebtedness, etters of advce, or n some
other manner that dscoses to each patron the amount of such dvdend, refund,
or rebate) by a cooperatve assocaton, to the account of a patron on the bass
of the busness done wth or for such patron. The foowng are not patronage
dvdends, rebates, or refunds:
() mounts dstrbuted n redempton of capta stock, or n redempton
or satsfacton of certfcates of ndebtedness, revovng fund certfcates,
retan certfcates, etters of advce, or other smar documents;
() In the case of a cooperatve assocaton marketng the products of
members or other patrons, the amount oad n cash or merchandse by the
assocaton for such products to the e tent such amount s f ed wthout
reference to the earnngs of the cooperatve assocaton. For ths purpose,
the term earnngs ncudes the e cess of amounts retaned by the assoca-
ton to cover e penses or other tems over the amount of such e penses or
other tems.
( ) tocaton. For the purpose of ths secton, the term aocaton Incudes
dstrbutons In cash or merchandse made by a cooperatve assocaton to a
patron, the ssuance by such assocaton of capta stock, revovng fund certf-
cates, retan certfcates, certfcates of ndebtedness, etters of advce, smar
documents, or any other act by a cooperatve assocaton whereby a patron
receves actua notce of the segregaton on the books of such assocaton o.r a
porton of ts assets f r the accounf of such patron. Thus, a mere credt to th
account of a patron on the books of the cooperatve assocaton, wthout actua
notce to the patron, s not an aocaton.
(e) ampes. The appcaton of ths secton may be ustrated by the
foowng e ampes:
ampe 1. Cooperatve , a marketng assocaton operatng on a poong
bass, receves the products of patron W on anuary , 19 2. On the same dav
Cooperatve advances to W cents per unt for the products so devered
and aocates to hm a retan certfcate havng a face vaue cacuated at th
rate of cents per unt. Durng the operaton of the poo, and before substan-
tay a the products n the poo are dsposed of, Cooperatve advances to W
an addtona 0 cents per unt, the amount beng determned by reference to the
market prce of the products sod and the antcpated prce of the unsod products.
t the cose of the poo on November 10, 19 2. Cooperatve determnes the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 - .
110
e cess of ts recepts over the sura of ts e penses and ts prevous advances to
patrons, and aocates to W an addtona 3 cents per unt and shares of the
capta stock of havng an aggregate of face vaue cacuated at the rate of
2 cents per unt.
The amount of patronage dvdends, rebates, or refunds aocated to W durng
19 2 amount to 10 cents per unt, consstng of the aggregate of the foowng
pet-unt aocatons: the face amount of the retan certfcate ( cents), the
amount of cash dstrbutons f ed wth reference to the earnngs of (3 cents),
and the face vaue of the capta stock of (2 cents).
ampe 2. Cooperatve , a marketng assocaton operatng on a poong
bass, receves the products of patron on March , 19 2. On the same day
Cooperatve pays to 1 per unt for such products, ths amount beng deter-
mned by reference to the market prce of the product when receved, and ssues
to hm a partcpaton certfcate havng no face vaue but whch enttes
on the cose of the poo to the proceeds derved from the sae of hs products
ess the prevous payment of 1 and the e penses and other charges attrbutabe
to such products. On March , 19 , Cooperatve , havng sod the products
n the poo, havng deducted the prevous payments for such products, and
havng determned the e penses and other charges of the poo, redeems the
partcpaton certfcate of n cash for 10 cents per unt. The aocaton made
to durng 19 , amountng to 10 cents per unt, s a patronage dvdend, rebate,
or refund. Nether the payment to n 19 2 of 1 nor the ssuance to hm of
the partcpaton certfcate n that year consttutes a patronage dvdend, rebate,
or refund wthn the meanng of ths secton.
ampe S. Cooperatve C, a purchasng assocaton, obtans suppes for
patron Y on May 1, 19 2, and receves n return therefor 100. On February 1,
19 3, Cooperatve C, havng determned the e cess of ts recepts over ts cost and
e penses, aocates to Y a cash dstrbuton of 1 and a revovng fund certfcate
of a face amount of 1. The amount of patronage dvdends, rebates, or refunds
aocated to Y for 19 3 are 2, the aggregate of the cash dstrbuton of 1, and
the face amount, 1, of the revovng fund certfcate.
ampe - Cooperatve D, a servce assocaton, ses the products of mem-
bers on a fee bass. It receves the products of patron Z under an agreement
not to poo hs products wth those of other members, to se hs products, and
to dever to hm the proceeds of the sae. Patron Z makes payments to Cooper-
atve D durng 19 2 aggregatng 7 for servce rendered hm by Cooperatve D
durng that year. On May 1 , 19 3, Cooperatve D, havng determned the e cess
of ts recepts over ts costs and e penses, aocates to Z a cash dstrbuton of
2. Such amount s a patronage dvdend, rebate, or refund aocated by Coopera-
tve D durng 19 3.
Par. 3. Secton 29.1 7-3, as amended by Treasury Decson 6 7
C. . 19 9-1, 9, 33 , approved February 16,19 9 26 CFR 29.1 7-3 ,
s amended by nsertng mmedatey before the frst sentence thereof
the foowng:
The provsons of ths secton sha not be appcabe wth respect to returns
of nformaton as to patronage dvdends, rebates, or refunds requred under
secton 1 (f). See secton 29.1 - .
(Ths Treasury Decson s ssued under the authorty contaned n
secton 62 of the Interna Revenue Code ( 3 Stat. 32; 26 U. S. C. 62).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved May 29,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 2, 19 2, 12 : 22 p. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
I
29.1 1-1.
SUPPL M NT F. P RTN RS IPS
S CTION 1 1. P RTN RS IP NOT T L
Secton 29.1 1-1: Partnershps. 19 2-7-13792
( so Secton 22(a), Secton 29.22(a)-; Mm. 6767
Secton 1 2, Secton 29.1 2-1.)
ureau poston for ta abe years begnnng pror to .Tnnunry 1,
19 1, wth respect to famy partnershps n whch capta s a
matera ncome-producng factor.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, February 19,19 2.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
eads of ppeate Staff Dstrcts, and Others Concerned:
In Commssoner v. W. 0. Cubertson, Sr., et u . (337 U. S. 733,
Ct. D. 1723, C. . 19 9-2, ), the Supreme Court of the Unted States
further carfed the prncpes governng the recognton of famy
members as partners for ncome ta purposes, as deveoped earer n
Commssoner v. Francs . Tower (327 U. S. 2 0, Ct. D. 1670, C. .
19 6-1,11), and . L. Lusthaus v. Commssoner (327 U. S. 293, Ct. D.
1669, C. . 19 6-1, 9).
Certan of the prncpes deveoped n the Cubertson opnon are
we understood: (1) that a partnershp s an organzaton for the
producton of ncome to whch each partner contrbutes one or both
of the ngredents of ncome, capta or servces; (2) that sectons
1 1 and 1 2 of the Interna Revenue Code, whch govern the ta aton
of the ncome of Indvduas carryng on busness n partnershp,
must be read n the ght of ther reatonshp to sectons 11 and 22(a)
of the Code, reatve to the ta aton of ndvdua ncomes; (3) that
to recognze as partners, wthn the meanng of sectons 1 1 and 1 2 of
the Code, persons who contrbuted nether capta nor servces to the
busness durng the ta abe years n queston woud voate the frst
prncpe of ncome ta aton, that ncome must be ta ed to hm who
earns t; ( ) that an ntent to provde money, goods, abor, or sk
sometme n the future s hence not enough to |ustfy recognton of
the person havng such ntent as a partner, as aganst the demands
of sectons 11 and 22(a) of the Code that he who presenty earns the
ncome of a busness through hs own abor and sk and the
utzaton of hs own capta be ta ed therefor ; and ( ) that the
suffcency of the contrbuton of an aeged partner s a queston of
fact to be determned, upon consderaton of a the facts, through
appyng the basc test of the reaty of a famy partnershp for
ncome ta purposes, whether the partes n good fath and actng
wth a busness purpose ntended to |on together n the present con-
duct of the enterprse. It s a coroary of those prncpes, recog-
nzed n the Cubertson decson tsef, that a partnershp may be vad
for ncome ta purposes as to some aeged partners but not as to
others.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 1-1.
112
Ths mmeograph s desgned to carfy the poston of the ureau
wth respect to some aspects of the famy partnershp probem for
ta abe years begnnng pror to anuary 1, 19 1, concernng whch
there appears to be uncertanty. In one way or another the aspects of
the probem that w be dscussed have to do wth the queston whether
an aeged partner s the rea owner of an nterest n the capta of a
partnershp whch s attrbuted to hm. Ths mmeograph s app-
cabe ony to cases n whch capta s a matera ncome-producng
factor.
It s emphaszed that ths mmeograph does not attempt ether to
provde a ready formua for the souton of famy partnershp cases
or to state comprehensvey a of the prncpes that are appcabe n
such cases. The matters here deat wth are accordngy to be under-
stood n ther reatonshp to the tota fact pcture n the partcuar
case and to the basc prncpes of the Cubertson opnon set out above,
whch w not be further eaborated.
1. Reaty of Capta Contrbuton. That a famy member has
acqured hs partnershp nterest by, or as the resut of, a gft, pur-
chase, or oan from the ta payer, and has not contrbuted to the
partnershp capta orgnatng wth hmsef, remans one of the fac-
tors to be consdered. It shoud be understood, however, that the
absence of orgna capta creates, rather than answers, the probem
whether an aeged partner s entted to recognton. It presents n
a cases an ssue for the e ercse of sound |udgment on a of the facts
of the partcuar case as to whether a partnershp n good fath was
ntended by the partes.
(a) asc Tests as to Gft Capta. Wth respect to gft capta,
the answer turns upon the appcaton of the over-a test of good
fath, ad down n the second porton of the Cubertson opnon, to a
of the facts bearng upon the concept of rea ownershp evoved n the
thrd porton of that opnon, readng n part as foows:
We dd not say In the Tower opnon that the donee of an ntra-
famy gft coud never become a partner through nvestment of the capta n
the famy partnershp, any more than we sad that a famy trusts are n-
vad for ta purposes n everng v. Cfford, supra. The facts may ndcate,
on the contrary, that the amount thus contrbuted and the ncome therefrom
shoud be consdered the property of the donee for ta , as we as genera aw,
purposes.
ut appcaton of the Cfford- orst prncpe does not foow automatcay
upon a gft to a member of one s famy, foowed by ts nvestment In the fam-
y partnershp. If t dd, t woud be necessary to defne famy and to set
precse mts of membershp theren. We aave not done so for the obvous
reason that e stence of the famy reatonshp does not create a status whch
tsef determnes ta questons, but s smpy a warnng that thngs may not be
what they seem. It s frequenty stated that transactons between members of
a famy w be carefuy scrutnzed. ut more partcuary, the famy rea-
tonshp often makes t possbe for one to shft ta ncdence by surface changes
of ownershp wthout dsturbng n the east hs domnon and contro over the
sub|ect of the gft or the purposes for whch the ncome from the property s
used. e Is abe, n other words, to retan the substance of fu en|oyment of
a the rghts whch prevousy he had n the property. everng v. Cfford,
supra, nt 33( .
The fact that transfers to members of the famy group may be mere camou-
fage does not, however, mean that they nvaraby are. The Tower case recog-
nzed that one s partcpaton n contro and management of the busness s
a crcumstance ndcatng nn ntent to be a bona fde partner despte the fact
that the capta contrbuted orgnated esewhere n the famy. If the donee
of property who then nvests t n the famy partnershp e ercses domnon
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
113
29.1 1.1.
and contro over that property and through that contro nfuences the conduct
of the partnershp and the dsposton of Its Income he may we be a true
partner. Whether he s free to, and does, en|oy the fruts of the partnershp s
strongy Indcatve of the reaty of hs partcpaton n the enterprse. In the
Tower and Lusthaus cases we dstngushed between actve partcpaton n the
affars of the busness by a donee of a share In the partnershp on the one hand,
and hs passve acquescence to the w of the donor on the other. Ths ds-
tncton s of obvous mportance to a determnaton of the true ntent of the
partes.
In the ordnary gft capta case, the queston whether a donee s
partnershp nterest represents a mere surface change of ownershp,
or conversey whether the donee has e ercsed domnon and contro
over hs or her nterest, represents the heart of the ssue whether a
partnershp n good fath was ntended, at east n those cases where
the donee has not performed substanta servces. In turn, a of the
eements of the test of good fath ntent ad down n the Cubertson
opnon have an mmedate bearng upon the reaty of the donee s
ownershp, those eements beng
whether, consderng a the facts the agreement, the conduct of
the partes n e ecuton of ts provsons, ther statements, the testmony of
dsnterested persons, the reatonshp of the partes, ther respectve abtes
and capta contrbutons, the actua contro of ncome and the purposes for
whch t s used, and any other facts throwng ght on ther true ntent the
parres n good fath and actng wth a busness purpose ntended to |on
together n the present conduct of the enterprse.
The ascertanment of the presence or absence of domnon and
contro n a donee over hs or her partnershp nterest through the ap-
pcaton of ths test of good fath ntent means, of course, that a of
the facts ndcatve of the e ercse or none ercse of contro by the
donee must be taken nto account, and that snge facts, such as the
donor s retenton of a ma|orty nterest enttng hm to outvote the
donee, can never be regarded as determnatve n themseves. Some
of the more mportant evdentary matters ndcatve of the presence
or absence of such domnon and contro n donees n gft capta
cases are dscussed n subsectons ( ), (c), (d), (e), and (/) of ths
secton.
(b) Documentaton Not Controng. The e ecuton of egay
suffcent and rrevocabe deeds or other nstruments of gft may,
under State aw, be essenta to the vadty of an aeged gft but s,
of course, of ess utmate sgnfcance than the conduct of the partes
after the gft has been made. Reaty and good fath are not ascer-
tanabe by any mechanca or formahstc test.
(c) Partcpaton n Management. Partcpaton n the contro
and management of the busness (as dstngushed from the reguar
performance of nonmanagera servces) s not essenta but s stronc;
evdence of a donee partner s e ercse of domnon and contro f such
partcpaton s substanta. Substanta partcpaton n manage-
ment does not necessary nvove contnuous or even frequent pres-
ence at the pace of busness, but t does nvove genune consutaton
wth respect at east to ma|or busness decsons, and t presupposes
substanta acquantance wth and nterest n the operatons, prob-
ems, and poces of the busness, aong wth suffcent maturty and
background of educaton or e perence to ndcate an abty to grasp
busness probems that s apprecaby commensurate wth the de-
mands of the enterprse concerned. ague or genera statements as
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
20.1 1-1.
11
to famy dscussons at home (or esewhere) w not be accepted as
a suffcent showng of actua consutaton, but evdence of genune
consutaton wth respect to specfc matters s entted to consd-
eraton even though t has taken pace n the home. vdence of
genune consutaton wth respect to the dstrbuton of profts or
ther retenton n the busness s sgnfcant, but t s not ndspen-
sabe. Ths subsecton presupposes a donee s freedom to partcpate
n management; e cuson from the rght so to partcpate s deat
wth n subsecton (d) of ths secton.
(d) Retaned Contros Donee s Rght To Wthdraw. On the other
hand, the donor may have retaned such compete contros of assets
essenta to the busness (for e ampe, through retenton of tte to
assets eased at w or for a reatvey short term to the aeged part-
nershp), or of ncome dstrbutons, busness management, and the
sae or wthdrawa of the nterest of the donee, that the gft and the
partnershp nterest stemmng from t shoud be consdered more
nomna than rea, and the donor shoud be treated as remanng the
substanta owner of the nterest, so that a partnershp n good fath
coud not be predcated upon the donee s capta nterest aone. The
resut shoud be the same f the donor can contro the earnng of n-
come by the aeged partnershp through hs contro of a nomnay
separate busness organzaton of wheh the aeged partnershp s
reay an ad|unct or upon whch t otherwse depends drecty or n-
drecty for ts ncome.
The presence of some of the ndcated contros, though amountng
to ess than substanta ownershp retaned by the donor, may be con-
sdered aong wth other facts as tendng to show the absence of n-
tent n good fath to |on the donee as a partner. Whe t s ntended
n ths subsecton to refer to contros e ercsabe under some prov-
son of the gft nstrument or partnershp agreement, a genera pas-
sve acquescence of the donee n the w of the donor, as evdenced
by the actua conduct of the partes, may be the equvaent of e pressy
retaned contros.
It s not uncommon n ordnary busness reatonshps for one partner
to be made managng partner or to have votng contro, and retenton
by the donor of contro of busness management or of votng contro,
standng aone, s of tte sgnfcance uness the donee ether egay
or n a practca sense woud not be free to wthdraw hs or her
nterest whenever dssatsfed wth the way n whch the busness s
beng conducted. In decdng whether a donee has such freedom to
wthdraw, t s pertnent to consder a facts ndcatve generay of
the donee s ndependence of, or dependence upon, the donor; whether
the donee has such maturty and understandng of hs or her rghts
as to be capabe of decdng to e ercse, fnd of e ercsng or brngng
about the e ercse of, such rghts: and whether he or she can do so
wthout sufferng fnanca oss (because the partnershp agreement
woud permt one or more of the partners to purchase the donee s
nterest for substantay ess than ts far market vaue). Freedom
to wthdraw, n the sense here ndcated, s aso evdence of the reaty
of a donee s nterest n cases where the donor has not retaned any
contros.
(e) Income Dstrbutons. If the donor has not retaned sgnf-
cant contros of the type deat wth n subsecton (d), above, the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
11
29.1 1-1.
actua dstrbuton to a donee partner of a or the ma|or porton of
hs dstrbutve share of the busness ncome (over and above amounts
used for ncome ta payments) s entted to substanta weght as ev-
dence of the reaty of the donee s nterest, provded that the amounts
dstrbuted were used or were avaabe for the donee s en|oyment,
freed from the donor s contro. s the Court stated n the Cuwrtson
opnon, Whether he a donee s free to, and does, en|oy the fruts of
the partnershp s strongy ndcatve of the reaty of hs partcpaton
n the enterprse. ven f sgnfcant contros have been retaned
by the donor, such dstrbutons to a donee partner are entted to some
weght, uness the contros retaned by the donor amount to sub-
stanta ownershp.
On the other hand, dstrbutons whoy or prncpay used to pay
the donee s ncome ta , or apped for the donor s beneft (as for the
payment of famy e penses for whch the donor s egay respons-
be), or deposted, oaned, or nvested n such ways that the donor
contros or can contro ther use or en|oyment, fa short of estabsh-
ng rea en|oyment by the donee. Nevertheess, the retenton of part-
nershp earnngs wth the acquescence of the donee for the reasonabe
needs of the busness s not nconsstent wth bona fde ownershp by
the donee.
(/) vdentary Matters n Genera. The dscusson n subsectons
(c), (d), and (e) of ths secton of partcpaton n management,
retaned contros, and ncome dstrbutons s desgned to emphass
the mportance of those factors as evd nce of the reaty (or ack of
reaty) of ntrafamy gfts. To gve them weght accordngy does
not affect the reevance of other evdentary facts ordnary taken
nto account, such as compance wth oca partnershp or fcttous
name regstraton statutes; other pubcty gven to the partnershp
arrangements, partcuary as affectng trade channes and banks or
other sources of fnancng; contro of busness bank accounts; recogn-
ton of the nterests of aeged partners n approprate capta and
drawng accounts n the books of account, n nsurance poces, ease ,
and other busness contracts, and n tgaton affectng the busness:
and the utmate reazaton or e change of the nterests of aeged
partners f the busness has been qudated or ncorporated, though
the remoteness n pont of tme of such qudaton or ncorporaton
may essen the weght that shoud be gven the facts n that regard.
For the e ercse of sound |udgment, a reevant facts, both favorabe
and unfavorabe to the ta payer, must be taken nto account.
(g) Purchased Interests Loans. The foregong prncpes wth
respect to the reaty of ntrafamy gfts are not appcabe, e cept to
the e tent provded n ths subsecton, to determnaton of the reaty
of the ownershp of partnershp nterests acqured from a famy
member through aeged purchase, or resutng from a oan by such
famy member or wth the ad of hs or her credt. In such cases
the reaty of the ownershp resutng from the transacton s con-
sdered to turn prmary upon whether the aeged purchase or oan
was bona fde as such, n the sense that a rea obgaton was ntended,
enforceabe aganst the purchaser or borrower rrespectve of the
success or faure of the_partnershp venture. If the aeged purchaser
or borrower had nsuffcent means or credt standng to meet the
obgaton e cept out of partnershp earnngs, the transacton may
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 1-1.
116
amount to a gft sub|ect to deferred en|oyment (that s, wth the
ncome reserved by the seer or ender unt the aeged obgaton
has been fuy pad). ut the transacton does not necessary fa
n one or another of these categores; t may be ackng n reaty
ether as a gft or as a bona fde purchase or oan.
The ureau w accept the bona fdes of an aeged purchase or oan
transacton f t meets ether of the foowng basc tests:
(I) That t has the usua characterstcs of an arm s ength
transacton, consderng the terms of the agreement tsef (as to
prce, due date of payment, rate of nterest, and securty, f any);
the credt standng of the purchaser or borrower apart from
famy reatonshp to the seer, ender, or endorser; and the
capacty of the purchaser or borrower to ncur a egay bndng
obgaton; or
(II) ssumng the ack of one or more usua characterstcs
of arm s ength deang, that the transacton was genuney n-
tended to promote the success of the busness through securng
partcpaton n the busness by the purchaser or borrower, or
the addton of hs or her credt to that of other partcpants.
Unt the aeged purchase prce or oan has been fuy pad or the
obgaton has otherwse been dscharged, the ndca of reaty wth
respect to the ownershp of gft capta under the foregong subsec-
tons of ths secton w be taken nto account n such cases ony as an
ad n determnng doubtfu questons as to whether a 6071a fde pur-
chase or oan obgaton was ntended by the partes. They are ree-
vant to that mted e tent, e cept that purported ncome dstrbutons
to the purchaser or borrower used for payment of the purchase prce
or oan are entted to tte weght.
2. Suffcency of Capta Contrbuton Servces. The prncpes
stated n ths mmeograph are, as ndcated above, concerned ony
wth cases n whch capta s a matera ncome-producng factor.
They are nappcabe n cases where the capta contrbuton of an
aeged partner must be consdered as havng been reay hs at some
tme before ts contrbuton to the partnershp, but smar prncpes
may be usefu n determnng the reaty of such pror ownershp
where the capta was acqured from a famy member.
If the nterest of any aeged partner represents capta whch s
reay hs under the prncpes stated n secton 1, and f such capta
s not ceary unnecessary to the conduct of the busness, such aeged
partner s ordnary entted to recognton. That s so whether or
not he or she performs any servces for the partnershp. The per-
formance of substanta servces may entte an aeged partner to
recognton, but there s no rue that makes the performance of serv-
ces ndspensabe to recognton as a partner n gft capta cases
or otherwse. See, however, secton 7, beow, as to the reasonabeness
of the agreed dvson of profts as bearng upon bona fde partner-
shp ntent, and as to aocaton.
3. Motve and usness Purpose. One of the most troubesome
thngs that has crept nto the famy partnershp fed s the noton
that the admsson of a famy member or trust to a busness as a
partner must have been ntended n some way to promote the success
of the busness. The thought s most often stated negatvey, as n
comments to the effect that an aeged partner has not contrbuted
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
117
29.1 1-1.
any new capta, that he has contrbuted nether capta nor servces
that were not aready avaabe to the busness, and that for ether
of those reasons no busness purpose has been served by the adms-
son of the aeged partner; hence that there s an absence of requred
busness purpose and nonrecogmton must foow. pressons of
smar mport can be found n the opnons n some of the decded
cases, and they have at tmes been thought to ay down a rue of aw
as to the need for busness purpose n antecedent famy transactons,
as we as n the partnershp undertakngs predcated upon them.
The ureau consders that the absence of new capta or added
servces, ke the absence of orgna capta, s but a part of the
tota pcture to be consdered n apprasng the reaty, good fath,
and busness purpose of famy partnershp arrangements. Defer-
ence has generay been made to such matters n the decded cases
ony where there was an absence of other facts deemed to support the
reaty and good fath of the acts of the partes.
In any event, the ureau does not adhere to the poston that there
s an absence of requred busness purpose f a gft or other antecedent
famy transacton does not beneft the busness n some way. n
ndvdua s entted freey to dspose of hs or her property so far
as the ncome ta aw s concerned, and may gve or se nterests n
a busness to members of hs famy. The queston wth whch the
aw concerns tsef s whether the ndvdua has reay done so. There
s no requrement that ntrafamy gfts be motvated by a busness
purpose, whch frequenty they woud not have, before the donee
may be recognzed as the owner, for ncome ta purposes, of the
property gven to hm, and the same s true of other antecedent famy
transactons.
The Cubertson opnon stated a test of ntent, whether the partes
n good fath and actng wth a busness purpose ntended to |on
together n the present conduct of the enterprse. Itacs supped.
The ureau consders that the test of busness purpose may be sats-
fed by the snge fact (f t be a fact) that the aeged partner has
nvested n the busness money or property, usefu to the busness, of
whch he or she s the rea owner under the prncpes stated n secton
1 hereof, even though such money or property had aready been used
n the busness before the aeged partner acqured any nterest
theren. That concuson s abundanty demonstrated by the acton
whch the Court took n the Cubertson case tsef n remandng t
for factua decson whether there was a bona fde ntent that they
the sons be partners n the conduct of the catte busness, ether
because of servces to be performed durng those the ta abe years,
or because of contrbutons of capta of whch they were the true
owners, as we have defned that term n the Cfford, ost, and Tower
cases.
That s not to say that the presence or absence of a ta avodance
motve behnd ntrafamy transactons and partnershp arrangements
s to be gnored. The presence or absence of a ta avodance motve s
one of many factors to be weghed n the determnaton of the reaty
of an ntrafamy gft, sae, or oan, and of the e stence of bona -fde
partnershp ntent. The presence of a ta avodance motve, however,
s of no consequence f the reaty of the transfer of nterest and the
good fath of the partes are satsfactory estabshed.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 1-1.
11
. Trustees as Partners. For ncome ta purposes, suppement
of subchapter C of chapter 1 of the Code treats trusts as f they were
recognzabe ega enttes. In the famy partnershp fed, however,
the queston propery to be consdered s ordnary whether the trustee
s entted to recognton as a partner n reaton to the trust. The
ureau does not adhere to the vew that a trustee cannot n any cr-
cumstances become a partner for ncome ta purposes, regardess of
some |udca e pressons of such a rue.
Recognton of a trustee as partner for ncome ta purposes must
turn upon the prncpes reatve to famy partnershps generay, and
especay those stated n secton 1 hereof, as apped to the partcuar
facts of the trust-partnershp stuaton. If the trustee s the grantor,
or f he s a person subservent or amenabe to the w of the grantor,
the provsons of the trust nstrument, partcuary wth reaton to
whether the trustee s freed from or sub|ect to the norma respons-
btes and abtes of a fducary, the provsons of the partnershp
agreement, and the conduct of the partes must a be taken nto
account n determnng whether the trustee n a fducary capacty
has become the rea owner of gft capta usefu to the busness and
whether a partnershp n good fath was ntended.
In the absence of a substanta queston whether the trust ncome s
n any event ta abe to the grantor, a trustee unreated to and nde-
pendent of the grantor, and sub|ect to the ordnary responsbtes of
a fducary, who as genera partner has partcpated n management or
has receved actua dstrbuton of a or a ma|or part of the share of
ncome dstrbutabe to the trust w ordnary be accepted as the rea
owner of the partnershp nterest whch he hods for the trust and as
a bona fde partner, uness the grantor has retaned such contros as
to reman the substanta owner of that nterest n accordance wth
secton 1 (d), above. s to trustees as mted partners, see aso sec-
ton 6, beow.
That the trustee s aso a partner n hs ndvdua capacty does
not precude hs recognton n reaton to the trust under the foregong
prncpes but does warrant speca scrutny to ascertan whether as
trustee he s subservent or amenabe to the wshes of the grantor or s
reay representng the nterests of the trust n a fducary capacty.
. Interests of Mnor Chdren (Not ed n Trust). The recogn-
ton of mnor chdren as the rea owners of nterests n partnershp
capta acqured by them n antecedent famy transactons depends
upon the appcaton of the same prncpes as are apped generay
n determnng whether any famy member s entted to recognton
,as a partner for ncome ta purposes, and the prncpes of ths state-
sary n se dong, however, to take account of speca probems, not ony
as to the ega dsabtes of mnors (ncudng the contro whch the
aw ordnary vests n others over ther property), but aso as to the
actuates of the reatve maturty or mmaturty of mnor chdren
n partcuar cases.
The ureau recognzes that n some nstances a mnor chd may
have suffcent maturty and e perence to be treated by dsnterested
persons as competent to enter nto busness deangs and otherwse
to conduct hs or her affars on an equa pane wth adut persons.
The ureau w not press the ega dsabtes of a mnor under State
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
119
29.1 1-1.
aw so far as to deny the competence of such ndvduas to contro
ther property where the evdence ceary shows the e stence of such
competence n fact. The dsabtes of mnors under State aw w,
however, be taken nto account n determnng whether a mnor has
contro of property n other cases, t beng presumed that such dsa-
btes are necessary for the protecton or the nterests of the mnor
by reason of hs or her mmaturty, ack of e perence, or submsson
to parenta authorty. cept upon a cear showng of the actua
competence of a mnor chd, the ureau w presume that contro
over hs or her property s e ercsed by some other person.
Where t s camed that the property of a mnor chd s controed
by another person who purports to represent the chd n reaton to a
partnershp of whch tne chd s an aeged member, the recognton
of the chd as the rea owner of an nterest n partnershp capta
w depend (sub|ect to other prncpes of ths statement) upon
whether such contro s n a rea sense e ercsed n a fducary capacty
for the soe beneft of the chd and whether there s such |udca
supervson of the conduct of the fducary as reasonaby to assure
that the property of the chd cannot be used for the beneft of an-
other. The use of the chd s property or ncome for support for
whch a parent s egay responsbe w for that purpose be consd-
ered a use for the parent s beneft.
udca supervson of the conduct of a fducary w be deemed
adequate to assure that the property of a mnor cannot be used for the
beneft of another f such supervson e tends to a nvestments made
by the fducary and s contnuousy e ercsed. It s consdered that
rues of State aw whch, despte the absence of such |udca super-
vson, hod a person controng or deang n a mnor chd s property
responsbe and accountabe as a fducary are ordnary not n them-
seves suffcent to assure the use of the property and ts ncome.soey
for the beneft of the chd; such abty, beng dependent upon the
nsttuton of a sut or other proceedng for ts enforcement, s sub|ect
to the nterpay of famy nfuence and other e traneous consdera-
tons to such an e tent that t s not deemed an effectve restrant upon
parents or other persons who may be sub|ect to t.
6. Lmted Partnershps. The mted partnershp devce, assumng
that t does not appear n such form that the organzaton shoud be
treated as an assocaton ta abe as a corporaton, presents a speca
type of famy partnershp probem. It s one of the fundamenta
characterstcs of a mted partnershp under the Unform Lmted
Partnershp ct, now aw n many States, that a mted partner may
not engage n the management of the busness wthout sub|ectng
hmsef to abty as a genera partner. ence, sgnfcance cannot
be attrbuted to the absence of servces and partcpaton n manage-
ment on the part of a mted partner n determnng whether a part-
nershp n good fath was ntended. On the other hand, the mted
partnershp devce ends tsef ready to the retenton of mportant
contros n the ta payer f he be a genera partner, and the nterests
of mted partners can be made more nomna than rea.
The vestng of management powers n the genera partner or
partners s one eement. The nterests of mted partners may aso
be made unassgnabe n any rea sense and may be requred to be eft
n the busness for a ong term of years, sub|ect ony to the rght of
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.1 2-1.
120
the mted partner to brng about dssouton and an accountng for
hs nterest by court decree, upon proof of some wrongdong or un-
ftness of the genera partner or partners or of speca crcumstances
renderng a dssouton equtabe. Partcuary where the genera
fartner or partners have dscreton as to dstrbutons of ncome to
mted partners t may be that a substanta ncdents of ownershp
are retaned by the donor as genera partner.
There can be no hard and fast rue as to the recognton of mted
partners. The ncdents of any mted partnershp depend n part
upon the nature of the agreement or mted partnershp certfcate
and the respectve rghts and nterests of genera and mted partners
as there provded for. The tests of secton 1, above, and especay
subsecton (d) thereof, shoud be apped n the ght of the ncdents
of the reaton under the appcabe mted partnershp statute, the
provsons of the partnershp agreement or certfcate, and a the
facts of the partcuar case.
7. Reasonabeness of greed Dvson of Profts ocaton.
whoy unreasonabe agreement as to the sharng of partnershp n-
come may be evdence of the absence of bona fde partnershp ntent
and, aong wth other pertnent evdence, may nvadate the partner-
shp for ncome ta purposes. ven f a partnershp s entted
to recognton for ncome ta purposes under the foregong and
other appcabe prncpes, however, the agreed dvson of profts
shoud be scrutnzed to ascertan whether t nvoves the donatve
defecton of ncome attrbutabe to persona servces or the dvson
of other ncome n dsproporton to capta nterests of whch the rec-
ognzed partners are accepted as the rea owners. If the agreed dv-
son of profts does not reasonaby accord wth ordnary busness
arrangements of partes deang at arm s ength, consderng the re-
spectve contrbutons by the recognzed partners of servces, sk,
credt, and capta of whch they are the rea owners, t may be appro-
prate to make a far aocaton, to dvde the ncome n shares to
whch persons deang wth each other at arm s ength woud reason-
aby agree under the partcuar crcumstances, takng nto account
the reatve proportons of the ncome attrbutabe to servces and to
capta and a such contrbutons of the severa recognzed partners.
The aocaton of adequate, reasonabe saares to actve partners be-
fore any other dvson of profts w frequenty provde adequate
compensaton for ther contrbutons of sk and servces, and the
adequacy and reasonabeness of any such saares aowed by the agree-
ment of the partes shoud aways be consdered.
ohn . Dunap,
Commssoner.
S CTION 1 2. T OF P RTN RS
Secton 29.1 2-1: Dstrbutve share of partners.
INT RN L R NU COD
Famy partnershps n whch capta s a matera ncome-produc-
ng factor. (See Mn. 6767, page 111.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
121
29.201-1.
SUPPL M NT G. INSUR NC COMP NI S
S CTION 201. LIF INSUR NC COMP NI S
Secton 29.201-1: Ta on fe nsurance com- 19 2-6-137 0
panes. T. D.
( so Sectons 29.201- , 29.201-6: Secton
202, Secton 29.202-2; Secton 203 , Sec-
tons 29.203 -1, 29.203 -2; Secton 33,
Secton 0. 33(a)-2, Reguatons 130.)
TITL 26 INT RN L R NU . CI PT I, SU C PT R , T RT 29 ND
P RT 0
Reguatons 111 amended to conform to secton 121(g) (3) of the
Revenue ct of 19 0 and Reguatons 111 and 130 amended to con-
form tc secton G of the Revenue ct of 1 ; 1, reatng to ta abty
of fe nsurance companes.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 111 26 CFR, part 29 to secton
121(g) (3) of the Revenue ct of 19 0 ( 1st Cong., 2d sess.), approved
September 23,19 0, and n order to conform Reguatons 111 26 CFR,
part 29 and Reguatons 130 26 CFR. part 0 to secton 336 of the
Revenue ct of 19 1 ( 2d Cong., 1st sess.), approved October 20,19 1,
reatng to ta abty of fe nsurance companes, such reguatons
are amended as foows:
R GUL TIONS 111 26 CFR, P RT 20
Paragraph 1. There s nserted mmedatey before secton 29.201-1
26 CFR 29.201-1 the foowng:
S C. 121. INCR S IN R T OF CORPOR TION INCOM
T S R NU CT O 10 0, PPRO D S PT M R 23,
10 0 .

(g) Technca mendments.

(3) ffectve wth respect to ta abe years begnnng after une
30, 10 0, and wth respect to ta abe years begnnng on anuary 1,
10 0, and endng on December 31, 19 0, secton 201(a) (1) (reatng
to ta on fe nsurance companes) s hereby amended by strkng
out at the rates provded n secton 13 or secton 1 (b) and In sec-
ton 1 (b) and nsertng n eu thereof computed as provded n
secton 13(b) and n secton 1 (b) .
S C. 336. LIF INSUR NC COMP NI S R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .
(a) Ta fob 19 1. Secton 201(a)(1) (reatng to mposton of
ta on fe Insurance companes) s hereby amended by addng at the
end thereof the foowng: In eu of the ta es mposed by the preced-
ng sentence, there sha be eved, coected, and pad for ta abe years
21 1 2 2 9
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.201-1.
122
begnnng In 19 1 upon the 19 1 ad|usted norma-ta net Income (as
defned n secton 203 ) of every fe nsurance company a ta equa to
the sum of the foowng:
3 per centum of the amount thereof not n e cess of 200,000,
pus
6 per centum of the amount thereof n e cess of 200,000.

(c) Technca mendments.

(2) Secton 201(f) (reatng to dsaowance of doube deduc-
tons) s hereby amended by strkng out or 203 and nsertng
n eu thereof , 203, or 203 .
(d) ffectve Date. The amendments made by ths secton sha
be appcabe to ta abe years begnnng n 19 1.
Par. 2. Secton 29.201-1, as amended by Treasury Decson 16
C. . 19 0-2, 62 , approved December , 19 0 26 CFR 29.201-1 ,
s further amended as foows:
( ) y strkng from the frst sentence the word and nsert-
ng n eu thereof the foowng: cept as otherwse provded n
secton 29.203 -1 wth respect to ta abe years begnnng n 19 1, a .
( ) y strkng the second sentence of the frst paragraph of sad
secton and nsertng n eu thereof the foowng:
Wth respect to ta abe years begnnng before uy 1, 19 0 (other than the
caendar year 19 0) the norma ta s mposed on the ad|usted norma-ta
net ncome (as defned n secton 202) and the surta s mposed on the ad|usted
corporaton surta net ncome (as defned n secton 203) at the rates provded
n secton 13 or secton 1 (b) and n secton 1 (b) as these sectons e sted
pror to ther amendment by the Revenue ct of 19 0. Wth respect to ta abe
years begnnng after une 30, 19 0, and wth respect to ta abe years begnnng
on anuary 1, 19 0, and endng on December 31, 19 0, the norma ta s mposed
on the ad|usted norma-ta net ncome (as defned n secton 202) and the surta
s mposed on the ad|usted corporaton surta net ncome (as defned n secton
203) computed as provded n secton 13(b) and n secton 1 (b).
(C) y addng at the end of the second paragraph thereof the
foowng:
For computaton of the 19 1 ad|usted norma-ta net ncome from the norma-
ta net ncome, see sectons 29.203 -1 and 29.203 -2.
(D) y strkng from the thrd paragraph 203 and nsertng n
eu thereof 203 .
Par. 3. Secton 29.201- 26 CFR 29.201- s amended by nsertng
after the frst sentence thereof the foowng:
Interest pad Is aso one of the eements to be used In computng the amount
of requred nterest for purposes of determnng the reserve nterest credt
provded n secton 203 n the case of ta abe years begnnng n 19 1. See
secton 29.203 -2.
Par. . Secton 29.201-6 26 CFR 29.201-6 s amended by nsertng
n the frst sentence mmedatey precedng certan reserves the
foowng: and aso for the purpose of determnng requred nterest
for ta abe years begnnng n 19 1, .
Par. . Secton 29.202-2 26 CFR 29.202-2 s amended by addng
at the end thereof the foowng paragraph:
For ta abe years begnnng n 19 1, an amount equa to eght tmes the amount
of the appcabe ad|ustment provded n the precedng paragraph must be
added to norma-ta net ncome as a factor n determnng 19 1 ad|usted
norma-ta net ncome.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
123
29.201-1.
Par. 6. There s nserted mmedatey foowng secton 29.203-1
26 CFR 29.203-1 the foowng:
S C. 336. LIF INSUR NC COMP NI S R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .

(b) d|usted Norma-Ta Net Income fob 19 1. Chapter 1 a
hereby amended by nsertng after secton 203 te foowng new secton:
S C. 203 . 19 1 D UST D NORM L-T N T INCOM .
(a) 19:11 d|usted Norma-Ta Net Income. For the purposes of
secton 201, the term 19 1 ad|usted norma-ta net ncome means the
norma-ta net ncome pus eght tmes the amount of the ad|ustment
for certan reserves provded n secton 202(c) and mnus the reserve
Interest credt, f any, provded n subsecton (b) of ths secton.
(b) Reserve Interest Credt. For the purposes of subsecton (a),
the reserve nterest credt sha be an amount determned as foows:
(1) Dvde the amount of the ad|usted net Income (as defned
n subsecton (c)) by the amount of the requred nterest (as defned
n subsecton (d)).
(2) If the quotent obtaned n paragraph (1) s 1.0 or more,
the reserve nterest credt sha be zero.
(3) If the quotent obtaned n paragraph (1) s 1.00 or ess,
the reserve nterest credt sha be an amount equa to 0 per centum
of the norma-ta net ncome.
( ) If the quotent obtaned In paragraph (1) s more than 1.00
but ess than 1.0 , the reserve Interest credt sha be the amount
obtaned by mutpyng the norma-ta net ncome by 10 tmes the
dfference between the fgures 1.0 and such quotent
(c) d|usted Net Income. For the purposes of subsecton (b)(1),
the terra ad|usted net ncome means the net ncome computed wthout
any deducton for ta -free nterest mnus 0 per centum of the amount
of the ad|ustment for certan reserves provded n secton 202(c).
(d) Requred Intehest. For the purposes of subsecton (b)(1),
the term requred Interest means the tota of
(1) The sum of the amounts obtaned by mutpyng ( ) each
rate of nterest assumed n computng the ta payer s fe Insurance
reserves by ( ) the means of the amounts of the ta payer s ad-
|usted reserves computed at that rate at the begnnng and end of the
ta abe year,
(2) 2 per centum of the reserve for deferred dvdends, and
(3) Interest pad.

(d) ffectve Date. The amendments made by ths secton sha
be appcabe to ta abe years begnnng n 19 1.
Sec. 29.203 -1. Ta on Lfe Insurance Companes for Ta abe Years egn-
nng IN 19 1. Secton 201(a), as amended by secton 336 of the Revenue ct
of 1901 (Pubc Law 1 3, 2d Cong.) provdes that for ta abe years begnnng
n 19 1, the ta mposed on a fe nsurance company sha consst of a ta upon
the 19 1 ad|usted norma-ta ncome of the company equa to 3 percent of the
amount of such ncome not n e cess of 200,000, pus 6 percent of the amount
of snch Income n e cess of 200,000. The term 19 1 ad|usted norma-ta net
ncome means the norma-ta net ncome (consstng of net ncome, computed
provded n secton 29.201-7, ess the credt for partay ta -e empt nterest
aowed under secton 26(a) and ess the credt for dvdends receved aowed
wder secton 26(b)) pus eght tmes the amount of the ad|ustment for certan
reserves, computed as provded n secton 202(c) (see secton 29.202-2) and
mnus the reserve nterest credt, f any, provded n secton 203 (b) (see sec-
ton 29.203 -2). The reserve and other pocy abty credt s not aowed
wr purposes of the computatons of 19 1 ad|usted norma-ta net ncome.
The ta mposed upon 19 1 ad|usted norma-ta net ncome by secton 201(a)
s n en of the ta on ad|usted norma-ta net Income and the ta on ad|usted
surta net ncome mposed by secton 201(a) for ta abe years other than
ta abe years begnnng n 19 L
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.201-1.
12
Sec. 29.203 -2. Reserve Interest Credt. In computng 19 1 ad|usted nor-
ma-ta net ncome, a reserve nterest credt s aowed where the ad|usted
net ncome of the company s ess than 10 percent of ts requred nterest. For
the purpose of computng the reserve nterest credt, the term ad|usted net
ncome means the net ncome of the company wthout any deducton for ta -
free nterest otherwse aowed by secton 201(c) (7) ( ), ess 0 percent of the
u|ustment for certan reserves on contracts other than fe nsurance or annuty
contracts provded n secton 202(c).
The requred nterest for whch a credt may be aowed conssts of the
tota of:
(1) the sum of amounts obtaned by mutpyng each rate of nterest
assumed n computng fe nsurance reserves (see secton 201(c)(2) and
secton 29.201- ) by the means of the amounts of the ad|usted reserves,
as defned n secton 201(c) (3), computed at that rate at the begnnng and
the end of the ta abe year;
(2) two percent of the reserve for deferred dvdends; and
(3) nterest pad.
To determne the amount of the reserve nterest credt, t s necessary to
dvde the amount of the ad|usted net ncome by the amount of the requred
nterest. If the ad|usted net ncome s 100 percent or ess of the requred
nterest, the reserve nterest credt s an amount equa to 0 percent of the
norma-ta net ncome. If the ad|usted net ncome s 10 percent or more of
the requred nterest, the reserve nterest credt s zero. If the ad|usted net
ncome s more than 100 percent and ess than 10 percent of the requred
nterest, the reserve nterest credt s computed by mutpyng the norma-ta
net ncome by 10 tmes the dfference between 10 percent and the percentage
estabshed. Thus, f the ad|usted net ncome of a fe nsurance company for
the caendar year 19 1 s 103,000 and the requred nterest for such year s
. 100,000, the ad|usted net ncome Is 103 percent of the requred Interest and
the reserve nterest credt, accordngy, s the norma-ta net ncome mutped
by 20 percent (10 tmes 2 percent, the dfference between 10 percent and 103
percent).
In determnng the percentage of the ad|usted net ncome to requred nterest
for purposes of determnng the reserve nterest credt, the fgures sha be
computed to at east the nearest one-tenth of a percentage pont.
R GUL TIONS 130 26 CFR, P RT 0
Par. 7. There s nserted mmedatey precedng secton 0. 33 (a) -1
the foowng:
S C. 336. LIF INSUR NC COMP NI S R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .

(c) Technca mendments.
(1) Secton 33(a) (1) ( ) (reatng to e cess profts net Income
of fe nsurance companes) s hereby amended by changng the
semcoon at the end thereof to a perod and by nsertng thereafter
the foowng: In the case of ta abe years begnnng n 19 1, there
sha be used, n eu of the fgure referred to n cause () of the
frst sentence of ths subparagraph, the fgure . 7; .

(d) ffectve Date. The amendments made by ths secton sha
be appcabe to ta abe years begnnng n 19 1.
Par. . Secton 0. 33(a)-2 26 CFR 0. 33(a)-2 s amended as
foows:
( ) y nsertng mmedatey before the perod at the end of the
frst sentence of paragraph (h) of such secton the foowng: (as
modfed, n the case of a ta abe year begnnng n 19 1, by the ast
sentence of such subparagraph) ; and
( ) y nsertng n the second sentence of paragraph (h) of such
secton after ta abe year the foowng: (or, n the case of a ta -
abe year begnnng n 19 1, by the fgure . 7) .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
12
29.203 -2.
ecause the rues set forth n ths Treasury Decson for deter-
mnng the ncome and e cess profts ta abty of fe nsurance
companes are appcabe prmary to ta abe years begnnng n
19 1, such rues, to effectuate ther purpose, shoud be avaabe to
ta payers pror to March 1 , 19 2. ccordngy, t s consdered to
be mpractcabe to ssue ths Treasury Decson wth notce and pubc
procedure thereon under secton (a) of the dmnstratve Procedure
ct. approved une 11,19 6, or sub|ect to the effectve date mtaton
of secton (c) of that ct.
(Ths Treasury Decson s ssued under authorty contaned n
sectons 62 and 3791 of the Interna Revenue Code ( 3 Stat. 32, 67; 26
U. S. C. 62,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved February 21, 19 2.
. . Foey,
ctng Secretary of the Treasury.
(F ed wth the Dvson of the Federa Regster February 27, 19 2, : 2 a. m.)
Secton 29.201- : Interest pad.
1NT N L R NU COD
Reguatons 111 amended. (See T. D. , page 121.)
Secton 29.201-6: d|usted reserves.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. , page 121.)
S CTION 202. D UST D NORM L-T
N T INCOM
Secton 29.202-2: d|ustment for certan reserves.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. , page 121.)
S CTION 2U3 .-19 1 D UST D NORM L-T
N T INCOM
Secton 29.203 -1: Ta on fe nsurance com-
panes for ta abe years begnnng n 19 1.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. , page 121.)
Secton 29.203 -2: Reserve nterest credt.
INT RN L R NU COD
Reguatons 111 amended. (See T. D. , page 121.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.211-7..
126
SUPPL M NT . NONR SID NT LI N INDI IDU LS
S CTION 211. T ON NONR SID NT LI N
INDI IDU LS
Secton 29.211-7: Ta aton of nonresdent 19 2-9-13 10
aen ndvduas. T. D. 93
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 29.
INCOM T ; T L Y RS GINNING FT R D C M R 31, 19 1
Reguatons 111 amended to conform to provsons of sectons 213,
220 (as amended by Pubc Law 2, 2d Cong.), and 221 of the Reve-
nue ct of 19 0.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton # , D. C.
To Coectors of Interna Revenue and Others Concerned:
On December 13, 19 1, there was pubshed n the Federa Regster
(16 F. R. 12 67) a notce of proposed rue makng regardng the
amendment of Reguatons 111 26 CFR, part 29 to conform to the
provsons of secton 213 (reatng to capta gans of nonresdent
aen ndvduas), secton 220 (reatng to empoyees of Unted States
workng n possessons of the Unted States or n the Cana Zone),
and secton 221 (reatng to resdents of Puerto Rco) of the Revenue
ct of 19 0 (Pubc Law 1 , 1st Cong.), approved September 23,
19 0, as amended by ct of uy 23, 19 1 (Pubc Law 2, 2d Cong.
C. . 19 1-2, 3 0 ). No ob|ecton to the rues proposed havng
been receved, the amendments set forth beow are hereby adopted.
Paragraph 1. Secton 29. -1, as amended by Treasury Decson
2 C. . 19 , 10 , approved December 29, 19 26 CFR 29. -1 ,
s further amended by strkng out 219 and nsertng n eu thereof
the foowng: 221 .
Par. 2. Secton 29.11-2 26 CFR 29.11-2 s amended as foows:
( ) y nsertng mmedatey precedng the ast sentence the
foowng:
nonresdent aen ndvdua who Is a bona fde resdenfrof Puerto Rco durng
the entre ta abe year s, n genera, abe to the .a n the same manner as a
resdent aen ndvdua. See sectons 116 (1) and 220.
( ) y strkng out of the ast sentence 219 and nsertng n
eu thereof the foowng: 221 .
Par. 3. Secton 29.23 (e)- 26 CFR 29.23(e)- s amended by
strkng out of the ast sentence of the frst paragraph secton 213
and nsertng n eu thereof the foowng: sectons 211, 213, and
220 .
Par. . Secton 29.23 (o)-, as amended by Treasury Decson 2
26 CFR 29.23(o)- , s further amended by nsertng n the fourth
sentence of the thrd paragraph, mmedatey after 213(c) , the
foowng: , 220, .
Par. . Secton 29.2 -3, as amended by Treasury Decson 6 7
C. . 19 9-1, 9 , approved February 16, 19 9 26 CFR 29.2 -3 , s
further amended by addng at the end of (d) thereof the foowng
new subparagraph:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
127
29.211-7.
(7) .en resdent of Puerto Rco. For ta abe years begnnng on or after
anuary 1, 19 1, a nonresdent aen ndvdua who Is a bona fde resdent of
Puerto Rco durng the entre ta abe year and sub|ect to ta under sectons
11 and 12 Is aowed as credts aganst net ncome the e emptons specfed n
secton 2 (b), even though as to the Unted States such ndvdua s a nonres-
dent aen. See, however, secton 1(b) (2) and reguatons thereunder whch
provde that a |ont return may not be made f ether the husband or wfe at any
tme durng the ta abe year s a nonresdent aen.
Par. 6. Secton 29. 1-1, as amended by Treasury Decson 6 7
26 CFR 29. 1-1 , s further amended by strkng out of (a)( )
thereof and every ndvdua resdng wthn the Unted States
though not a ctzen thereof, and nsertng n eu thereof the foow-
ng : by every ndvdua resdng wthn the Unted States though
not a ctzen thereof, and, n the case of ta abe years begnnng on or
after anuary 1, 19 1, by every aen ndvdua who s a bona fde
resdent of Puerto Rco durng the entre ta abe year, .
Pah. 7. Secton 29. 3-1, as amended by Treasury Decson 61
C. . 19 1-2, 1 , approved October 1 , 19 1 26 CFR 29. 3-1 ,
s further amended by nsertng n the e cepton numbered (1) n
the frst paragraph, mmedatey after nonresdent aen ndvdua ,
the foowng: (e cept, n the case of a ta abe year begnnng on
or after anuary 1, 19 1. a bona fde resdent of Puerto Rco durng
the entre ta abe year) .
Par. . There s nserted mmedatey precedng secton 29. -1
26 CFR 29. -1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF
19 0, PPRO D S PT M R 23, 19 0 .

(g)Decaraton of stmated Ta . Secton (a) (reatng to dec-
araton of estmated ta by ndvduas) s hereby amended by nsertng
after Chapter 9 s not made appcabe the foowng: , but ncudng
every aen ndvdua who s a resdent of Puerto Rco durng the
entre ta abe year .

(k) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December
31, 19 0, .
Par. 9. Secton 29. -2, as amended by Treasury Decson 6 7
26 CFR 29. -2 , s further amended as foows:
( ) y strkng out of the frst paragraph of (b)(1) thereof
and () every nonresdent aen who s a resdent of Canada or
Me co and who has wages sub|ect to wthhodng at the source
under secton 1622, and nsertng n eu thereof the foowng:
( ) every nonresdent aen who s a resdent of Canada, Me co, or, In
the case of ta abe years begnnng on or after anuary 1, 19 1, Puerto Rco
and who has wages sub|ect to wthhodng at the source under secton 1622,
and (v), n the case of ta abe years begnnng on or after anuary 1, 19 1,
every nonresdent aen who has been, or e pects to be, a resdent of Puerto
Rco durng the entre ta abe year,
( ) y revsng so much of the frst sentence of the fourth para-
graph of (b)(1) thereof as precedes and who has wages sub|ect to
wthhodng to read as foows:
nonresdent aen who s (1) a resdent of Canada or Me co who enters
nto and eaves the Unted States at frequent ntervas, or (2), n the case
of ta abe yean begnnng on or after anuary 1,19 1, a resdent of Puerto Rco,
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.211-7.
12
(C) y strkng out of the fourth paragraph of (b) (1) thereof
the foowng: In the case of a nonresdent aen gross ncome means
ony gross ncome from sources wthn the Unted States. Secton
212(a). and nsertng n eu thereof the foowng:
In the case of a nonresdent aen (other than, for ta abe years begnnng
on or after anuary 1, 19 1, an aen resdent of Puerto Rco durng the
entre ta abe year) gross ncome means ony gross ncome from sources wthn
tn Unted States. Sectons 212(a) and 220.
(D) y nsertng mmedatey after the fourth paragraph of
(b) (1) thereof the foowng new paragraph:
nonresdent aen who has been, or e pects to be, a resdent of Puerto
Rco durng the entre ta abe year s requred, In the case of ta abe years
begnnng on or after anuary 1, 19 1, to re a decaraton of estmated
ta f hs gross ncome meets the requrements of secton (a). For the purpose
of such decaraton, gross Income means gross ncome from a sources, other
than sources wthn Puerto Rco, but Incudng amounts receved for servces
performed as an empoyee of the Unted States or any agency thereof. Sectons
116(1) and 220.
Par. 10. Secton 29. -3, as amended by Treasury Decson
C. . 19 1-2, 1 1 , approved September 13,19 1 26 CFR 29. -3 ,
s further amended by nsertng n the second sentence of the fourth
paragraph of (a) thereof, mmedatey after the Unted States , the
foowng: (ncudng, on or after anuary 1, 19 1, Puerto Rco
as f a part of the Unted States) .
Par. 11. Secton 29. - , as amended by Treasury Decson 6 7
26 CFR 29. - , s further amended by nsertng at the end of
the thrd sentence of the frst paragraph, mmedatey after the
words a nonresdent aen , the foowng: , ncudng such an
aen who s a bona fde resdent of Puerto Rco durng the entre
ta abe year .
Par. 12. Secton 29. -S, as added by Treasury Decson 30 C. .
19 3, 260 , approved November 12, 19 3, and amended by Treasury
Decson 19 C. . 19 ,17 , approved November 2 ,19 26 CFR
29. - , s further amended by strkng out of the second paragraph
and awa on the 1 th day and nsertng n eu thereof the
foowng: , awa, and (n the case of ta abe years begnnng
on or after anuary 1; 19 1) Puerto Rco on the 1 th day .
Par. 13. There s nserted mmedatey precedng secton 29.116-1
26 CFR 29.116-1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF 19 0,
PPRO D S PT M R 23. 19 0 .

(c) Ta aton of Income of Resdents of Puerto Rco. Secton 116
(reatng to e cusons from gross ncome) Is hereby amended by addng
at the end thereof the foowng new subsecton:
(1) Income From Sources Wthn Puerto Rco.
(1) Resdent of Puerto Rco for entre ta abe tear. In the
case of an ndvdua who s a bona fde resdent of Puerto Rco
durng the entre ta abe year, ncome derved from sources wthn
Puerto Rco (e cept amounts receved for servces performed as
an empoyee of the Unted States or any agency thereof) ; but such
ndvdua sha not be aowed as a deducton from hs gross ncome
any deductons propery aocabe to or chargeabe aganst amounts
e cuded from gross ncome under ths paragraph.
(2) Ta are year of change of resdence from Puerto Rco.
In the case of an ndvdua ctzen of the Unted States, who h#
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
129
29.211-7.
been a bona fde resdent of Puerto Rco for a perod of at east two
years before the date on whch he changes hs resdence from Puerto
Rco, ncome derved from sources theren (e cept amounts receved
for servces performed as an empoyee of the Unted States or any
agency thereof) whch Is attrbutabe to that part of such perod of
Puerto Rcan resdence before such date; but such Indvdua sha
not be aowed as a deducton from hs gross ncome any deductons
propery aocabe to or chargeabe aganst amounts e cuded from
gross ncome under ths paragraph.

(k) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December 31,
19 0, .
Pak. 1 . There s nserted mmedatey after secton 29.116- , as
added by Treasury Decson C. . 19 7-1, 2 , approved March
2 ,19 7 26 CFR 29.116- , the foowng new secton:
Sec. 29.116-6. cuson of Certan Income Trom Sources Wthn Puerto
Rco. For ta abe years begnnng on or after anuary 1, 19 1, there s e -
cuded from gross ncome In the case of an ndvdua (whether a ctzen of the
Unted States or an aen) who s a bona fde resdent of Puerto Rco durng
the entre ta abe year ncome derved from sources wthn Puerto Rco, e cept
such ncome as conssts of amounts receved for servces performed as an em-
poyee of the Unted States or any agency thereof. Whether the ndvdua s
a bona fde resdent of Puerto Rco sha be determned n genera by appyng
to the facts and crcumstances n each case the prncpes of sectons 29.211-2,
29.211-3, 29.211 1, and 29.211- , reatng to what consttutes resdence or non-
resdence, as the case may be, n the Unted States n the case of an aen
Indvdua. Once bona fde resdence n Puerto tco has been estabshed,
temporary absence therefrom n the Unted States or esewhere on vacaton or
busness trps w not necessary deprve an ndvdua of hs status as a bona
fde resdent of Puerto Rco. n ndvdua takng up resdence n Puerto Rco
durng the course of the ta abe year s not entted for such year to the e -
cuson provded n secton 116(1).
For any ta abe year begnnng on or after anuary 1, 19 1, there Is e cuded
from gross ncome, n the case of an ndvdua ctzen of the Unted States
who durng such ta abe year changes hs resdence from Puerto Rco to a
pace outsde Puerto Rco after havng been a bona fde resdent of Puerto Rco
for a perod of at east 2 years mmedatey precedng the date of such change
n resdence, ncome derved from sources wthn Puerto Rco whch s attrbut-
abe to that part of such perod of Puerto Rcan resdence whch precedes the
date of such change n resdence, e cept such ncome as conssts of amounts
receved for servces performed as an empoyee of the Unted States or any
agency thereof.
In any case n whch any amount otherwse consttutng gross ncome s
e cuded from gross ncome under the provsons of secton 116(1), there sha
not be aowed as a deducton from gross ncome any tems of e penses or osses
or other deductons propery aocabe to, or chargeabe aganst, the amounts
so e cuded from gross ncome. The apportonment and aocaton of such e -
penses, osses, or deductons as between ncome from sources wthn Puerto
Rco and ncome from other sources sha be determned n accordance wth
the prncpes of secton 119 and the reguatons thereunder.
Par. 1 . Secton 29.117-1, as amended by Treasury Decson 2
T26 CFR 29.117-1 , s further amended by nsertng at the end thereof
the foowng new paragraph:
In the case of nonresdent aen ndvduas not engaged n trade or busness
wthn the Unted States, see secton 211 and the reguatons thereunder for the
determnaton of the net amount of capta gans sub|ect to ta wth respect to
ta abe years begnnng on or after anuary 1, 19 0.
Par. 16. Secton 29.117-2, as amended by Treasury Decson 2
26 CFR 29.117-2 , s further amended as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
( 29.211-7.
130
( ) y nsertng mmedatey precedng the second sentence,
whch commences wth the words The percentage of the gan , of
(a) thereof the foowng:
(In the case of nonresdent aen ndvduas not engaged In trade or busness
wthn the Unted States, see secton 211 and the reguatons thereunder for
the determnaton of the net amount of capta gans sub|ect to ta wth respect
to ta abe years begnnng on or after anuary 1, 19 0.)
( ) y nsertng at the end ef the frst paragraph of (o) thereof
the foowng new sentence:
In the case of nonresdent aen ndvduas not engaged n trade or busness
wthn the Unted States, see secton 211 and the reguatons thereunder.
Par. 17. Secton 29.119-1 26 CFR 29.119-1 s amended as foows:
( ) y nsertng n the frst sentence of the frst paragraph, m-
medatey after Nonresdent aen ndvduas , the foowng: (e -
cept, n the case of a ta abe year begnnng on or after anuary 1,
19 1, aen ndvduas who are bona fde resdents of Puerto Rco
durng the entre ta abe year) .
( ) y nsertng n the frst paragraph, mmedatey after
212(a), the foowng: 220, .
Par. 1 . There s nserted mmedatey precedng secton 29.131-1
120 CFR29.131-1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF 19 0,
PPRO D S PT M R 23, 19 0 .

(h) Foregn Ta Credt. Paragraphs (2) and (3) of secton 131(a)
(reatng to aowance of credt) are hereby amended to read as
foows:
(2) Resdent of the Unted States or Puerto Rco. In the
case of a resdent of the Unted States and n the case of an n-
dvdua who s a bona fde resdent of Puerto Rco durng the entre
ta abe year, the amount of any such ta es pad or accrued durng
the ta abe year to any possesson of the Unted States; and
(3) en resdent or the Unted States or Puerto Rco. In
the case of an aen resdent of the Unted States and n the case of
an aen ndvdua who s a bona fde resdent of Puerto Rco durng
the entre ta abe year, the amount of any such ta es pad or accrued
durng the ta abe year to any foregn country, f the foregn country
of whch such aen resdent s a ctzen or sub|ect, n mposng such
ta es, aows a smar credt to ctzens of the Unted States resd-
ng n such country; and .

(k) ffectve Date. The amendments made by ths secton sha
be appcabe wth respect to ta abe years begnnng after December 31,
19 0, .
Par. 19. Secton 29.131-1, as amended by Treasury Decson
126 CFR 29.131-1 , s further amended by revsng so much of the
second paragraph as precedes the credt s as foows: to read as
foows:
In the case of an aen resdent of the Unted States and, wth respect to ta -
abe years begnnng on or after anuary 1, 19 1, n the case of an aen ndvdua
who s a bona fde resdent of Puerto Rco durng the entre ta abe year, who
chooses to cam a credt for such ta es, the bass of
Par. 19 . Secton 29.131-3 26 CFR 29.131-3 s amended by strk-
ng out of the second sentence of the frst paragraph sworn to or
afhrmed. and nsertng n eu thereof the foowng: verfed by a
wrtten decaraton that t s made under the penates of per|ury. .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

1

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
131
29.211-7.
Par. 20. There s nserted mmedatey precedng secton 29.1 3-1
26 CF 29.1 3-1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OP
19 0, PPRO D S PT M R 23,19 0 .

(e) Wthhodng on en Resdents or Puerto Rco. Secton 1 3
(a) (1) (reatng to wthhodng of ta at source on ta -free covenant
bonds) and secton 1 3(b) (reatng to wthhodng of ta at source on
dvdends, nterest, etc., pad to nonresdent aens) are each amended
by addng at the end thereof the foowng:
s used n ths subsecton the term nonresdent aen ndvdua
Incudes an aen resdent of Puerto Rco.

(k) ffectve Date. The amendments made by ths secton sha
be appcabe wth respect to ta abe years begnnng after December 31,
19 0, .
Par. 21. Secton 29.1 3-1, as amended by Treasury Decson 709
C. . 19 9-2, 6 , approved une 27, 19 9 26 CFR 29.1 3-1 , s
further amended by nsertng after the frst sentence of the penut-
mate paragraph of (a) thereof the foowng new sentence:
For the purpose of secton 1 1 (a)(1) and (b) the term nonresdent aen
ndvdua ncudes an aen resdent of Puerto Rco.
Pah. 22. Secton 29.1 7-3, as amended by Treasury Decson 6 7
26 CF 29.1 7-3 , s further amended by nsertng mmedatey pre-
cedng the ast paragraph the foowng:
(m) Payments made on or after anuary 1, 19 1, to empoyees for servces
performed n Puerto Rco.
Par. 23. Secton 29.1 7-6 26 CFR 29.1 7-6 s amended by nsert-
ng theren, mmedatey after the Unted States , the foowng:
(ncudng, on or after anuary 1, 19 1, Puerto Rco as f a part of
the Unted States) .
Par. 2 . There s nserted mmedatey precedng secton 29.211-1
26 CFR 29.211-1 the foowng:
S C. 213. C PIT L G INS OF NONR SID NT LI N INDI ID-
U LS R NU CT OF 19 0, PPRO D S PT M R 23,
19 0 .
(a) Nonresdent en Indvduas Temporary n the Unted
States. Secton 211(a)(1)( ) (reatng to ta on nonresdent aen
ndvduas not engaged n trade or busness wthn the Unted States)
s hereby amended to read as foows:
( ) Capta gans of aens temporary present n the
Unted States. In the case of a nonresdent aen ndvdua
not engaged n trade or busness n the Unted States, there sha
be eved, coected, and pad for each ta abe year, n addton to
the ta mposed by subparagraph ( )
() If he Is present n the Unted States for a perod or
perods aggregatng ess than nnety days durng such ta abe
year a ta of 30 per centum of the amount by whch hs gans,
derved from sources wthn the Unted States, from saes or
e changes of capta assets effected durng hs presence In the
Unted States e ceed hs osses, aocabe to sources wthn
the Unted States, from such saes or e changes effected durng
such presence; or
() f he s present n the Unted States for a perod or
perods aggregatng nnety days or more durng such ta abe
year a ta of 30 per centum of the amount by whch hs gans,
derved from sources wthn the Unted States, from saes or
e changes of capta assets effected at any tme durng such
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.211-7.
132
year e ceed hs osses, aocabe to sources wthn the Unted
States, from such saes or e changes effected at any tme
durng such year.
For the purposes of ths subparagraph, gans and osses sha be
taken nto account ony f, and to the e tent that, they woud be
recognzed and taken nto account If such ndvdua were engaged
n trade or busness n the Unted States, e cept that such gans
and osses sha be computed wthout regard to the provsons of
secton 117(b) and such osses sha be determned wthout the
benefts of the capta oss carry-over provded n secton 117(e).
(C) Cross reference. For ncuson n computaton of ta
of amount specfed n sharehoder s consent, see secton 2 .
(b) No Unted States Trade or usness and Income of More Than
1 , 00.
(1) Secton 211 (a) (2) s hereby amended to read as foows:
(2) ggregate more than 11 . 00. The ta es mposed by para-
graph (1) sha not appy to any ndvdua f durng the ta abe
year the sum of
( ) the aggregate amount receved from the sources spec-
fed n paragraph (1) ( ), pus
( ) the amount, determned n accordance wth the pro-
vsons of paragraph (1)( ), by whch gans from saes or
e changes of capta assets e ceed osses from such saes or
e changes,
s more than 1 , 00.
(2) So much of secton 211 (c) as precedes paragraph ( ) thereof
Is hereby amended to read as foows:
(c) No Unted States usness or Offce and Gross Income of
More Than , 00. nonresdent aen ndvdua not engaged n
trade or busness wthn the Unted States sha be ta abe wthout
regard to the provsons of subsecton (a)(1) f durng the ta abe
year the sum of the aggregate amount receved from the sources specfed
n subsecton (a) (1) ( ), pus the amount (determned n accordance
wth the provsons of subsecton (a)(1)( )) by whch gans from
saes or e changes of capta assets e ceed osses from such saes
or e changes, s more than 1 , 00, e cept that
(1) The gross ncome sha ncude ony ncome from the sources
specfed n subsecton (a) (1) ( ) pus any gan (to the e tent
provded n secton 117) from a sae or e change of a capta asset
f such gan woud be taken nto account were the ta beng deter-
mned under subsecton (a) (1) ( ) ;
(2) The deductons (other than the so-caed chartabe de-
ducton provded n secton 213(c)) sha be aowed ony f and
to the e tent that they are propery aocabe to the gross ncome
from the sources specfed n subsecton (a) (1) ( ), e cept that any
oss from the sae or e change of a capta asset sha be aowed
(to the e tent provded n secton 117 wthout the beneft of the
capta oss carry-over provded n secton 117(e)) If such oss
woud be taken nto account were the ta beng determned under
subsecton (a)(1)( );
(3) The ta mposed by ths chapter (under sectons 11 and 12,
or under secton 117 (c)) sha, n no case, be ess than 30 per centum
of the sum of
( ) the aggregate amount receved from the sources spec-
fed n subsecton (a) (1) ( ), pus
( ) the amount, determned n accordance wth the pro-
vsons of subsecton (a)(1)( ), by whch gans from saes
or e changes of capta assets e ceed osses from such saes
or e changes; and .

(d) ffectve Date. The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December 31,
19 9.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
133
29.211-7.
S C. 21 . TR TY O LIG TIONS R NU CT OP 19 0,
PPRO D S PT M R 23, 19 0 .
No amendments made by ths ct sha appy In any case where Its
appcaton woud be contrary to any treaty obgaton of the Unted
States.
Par. 2 . Secton 29.211-7, as amended by Treasury Decson 709
26 CFR 29.211-7 , s further amended as foows:
( ) y revsng so much thereof as precedes (a) thereof to read
as foows:
Sec. 29.211-7. Ta aton of Nonresdent en Indvduas. For the pur-
poses of ths secton and sectons 29.212-1, 29.213-1, 29.21 -1, 29.21 -1, and
29.217-2, nonresdent aen ndvduas are dvded nto three casses: (1)
nonresdent aen ndvduas not engaged n trade or busness wthn the Unted
States at any tme durng the ta abe year and dervng In such ta abe year
an amount of not more than 1 , 00 n the aggregate whch s the gross amount
of f ed or determnabe annua or perodca ncome from sources wthn the
Unted States pus, n the case of ta abe years begnnng on or after anuary 1,
19 0, the e cess of capta gans over capta osses, determned n accordance
wth paragraph (a) (2) of ths secton, from sources wthn the Unted States;
(2) nonresdent aen Indvduas not engaged n trade or busness wthn the
Unted States at any tme durng the ta abe year and dervng n such ta abe
year an amount of more than 1 , 00 n the aggregate whch s the gross amount
of f ed or determnabe annua or perodca ncome from sources wthn the
Unted States pus. In the case of ta abe years begnnng on or after anuary
1,19 0, the e cess of capta gans over capta osses, determned n accordance
wth paragraph (a)(2) of ths secton, from sources wthn the Unted States;
and (3) nonresdent aen ndvduas who at any tme durng the ta abe
year are engaged n trade or busness In the Unted States. ( ut, n the case
of ta abe years begnnng on or after anuary 1, 19 1, see secton 29.220-1
wth respect to aen ndvduas who are bona fde resdents of Puerto Rco
durng the entre ta abe year.)
( ) y revsng so much of (a) thereof as precedes the second
sentence of the frst paragraph to read as foows:
(a) No Unted States busness Genera rue. (1) F ed or determnabe
annuo or perodca ncome. nonresdent aen ndvdua wthn cass (1),
referred to n the precedng paragraph, s abe to the ta upon the aggregate
amount receved from sources wthn the Unted States, determned under the
provsons of secton 119, whch conssts of f ed or determnabe annua or
perodca gans, profts, and ncome and, n the case of ta abe years begnnng
on or after anuary 1, 19 0, the e cess of capta gans over capta osses,
determned n accordance wth subparagraph (2) hereof.
(C) y nsertng after the frst sentence of the second paragraph of
(a) thereof the foowng:
In the case of ta abe years begnnng on or after anuary 1, 19 0, the e cess
of capta gans over capta osses, determned n accordance wth subparagraph
(2) hereof, s aso sub|ect to ta and Is to be aggregated wth such f ed or
determnabe annua or perodca ncome n determnng such 1 , 00.
(D) y nsertng mmedatey precedng paragraph (6) the fo-
owng new subparagraph:
(2) Capta gans and osses. In the case of ta abe years begnnng on or
after anuary 1, 19 0, a nonresdent aen ndvdua wthn cass (1), referred
to n the ntroductory paragraph of ths secton, s abe to a ta of 30 percent
upon the e cess of capta gans derved from sources wthn the Unted States
over capta osses aocabe to such sources, determned under the provsons
of secton 119 and n accordance wth the provsons of ths subparagraph. Ths
ta s n addton to the ta Imposed, as ndcated n subparagraph (1) hereof,
upon the gross amount of f ed or determnabe annua or perodca Income
derved from sources wthn the Unted States by such nonresdent aen n-
dvdua. owever, secton 211(a) (1) ( ) and ths subparagraph do not appy
to any capta gan whch s e empt from ta under a treaty or conventon to
whch the Unted States Is a party.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29 211-7.
13
If he has been present In the Unted States for a perod or perods aggregatng
ess than 90 days durng the ta abe year, a nonresdent aen ndvdua not
engaged n trade or busness wthn the Unted States at any tme darng
such ta abe year s abe to a ta of 30 percent upon the amount by whch hs
gans, derved from sources wthn the Unted States, from saes or e changes
of capta assets effected durng hs presence n the Unted States e ceed bs
osses, aocabe to sources wthn the Unted States, from such saes or e changes
effected durng such presence. Gans or osses from saes or e changes of capta
assets effected durng such ta abe year at tmes other than durng such
presence n the Unted States are not to be taken nto account.
If he has been present n the Unted States for a perod or perods aggregatng
90 days or more durng the ta abe year, a nonresdent aen ndvdua
not engaged n trade or busness wthn the Unted States at any tme
durng such ta abe year s abe to a ta of 30 percent upon the amount
by whch hs gans, derved from sources wthn the Unted States, from
saes or e changes of capta assets effected at any tme durng such year
e ceed hs osses, aocabe to sources wthn the Unted States, from such
saes or e changes effected at any tme durng such year. Gans or osses
from saes or e changes effected at any tme durng such ta abe year are to
bo taken nto account even though such aen ndvdua s not present n
the Unted States at the tme such saes or e changes are effected.
In computng the tota perod of presence n the Unted States for a ta abe
year, a separate perods of presence n the Unted States durng the ta abe
year are to be aggregated.
Fo- the purpose of the computaton of the e cess of capta gans over
capta osses sub|ect to ta , gans and osses sha be taken nto account
ony f, and to the e tent that, they woud be recognzed and taken nto
account f the nonresdent aen ndvdua were engaged n trade or busness
wthn the Unted States, e cept that such gans or osses sha be computed
wthout regard to the provsons of secton 117(b) and that such osses sha
be determned wthout the beneft of the provson under secton 117(e) for
the capta oss carry-over. The e cess, f any, of capta osses over capta
gans n such computaton s of no ta sgnfcance, snce such osses sha be
aowed ony to the e tent of such gans.
Where saes or e changes of capta assets (effected ether durng the perod
or perods of presence n the Unted States when such perod or perods
aggregate ess than 90 days durng the ta abe year, or at any tme durng the
ta abe year when such perod or perods aggregate 90 days or more durng
such ta abe year) resut ony n capta osses aocabe to Unted States
sources, there beng no gans derved from Unted States sources from such
saes or e changes, such osses sha not to any e tent be aowed as a deducton
from the f ed or determnabe annua or perodca ncome derved by such
nonresdent aen ndvdua from Unted States sources durng such ta abe
year.
( ) y revsng the frst three sentences of paragraph ( ) to read
as foows:
nonresdent aen ndvdua wthn cass (2), referred to n the ntroductory
paragraph of ths secton, s, n accordance wth the provsons of secton 211(c),
sub|ect to ta under sectons 11 and 12, or n the aternatve under secton 117(c),
upon the amount whch s the sum of the aggregate of hs f ed or determnabe
annua or perodca ncome specfed n secton 211(a) (1) ( ), determned under
the provsons of secton 119, pus, n the case of ta abe years begnnng on or
after anuary 1, 19.r0, any gan (to the e tent provded n secton 117) from a
sae or e change of a capta asset f such gan woud be taken nto account
were the ta beng determned under secton 211(a)(1)( ) and under para-
graph (a)(2) of ths secton, mnus (1) the deductons propery aocabe to
such f ed or determnabe annua or perodca ncome, (2) the so-caed char-
tabe contrbutons deducton provded n secton 213(c), and (3), n the case
of ta abe years begnnng on or after anuary 1, 19 0, any oss (to the e tent
provded n secton 117 wthout the beneft of the capta oss carry-over pro-
vded n secton 117(e)) from the sae or e change of a capta asset f such
oss woud be taken nto account were the ta beng determned under secton
211(a)(1)( ) and under paragraph (a)(2) of ths secton. Such nonresdent
aen s entted to the credts aganst net ncome aowabe to an ndvdua by
secton 2 , sub|ect to the mtatons provded n secton 21 . owever, the ta
thus computed under sectons 11 and 12, or n the aternatve under secton 117(c),
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
13
29.211-7.
sha In no case be ess than 30 percent (27 percent pror to October 31, 19 2,
n the case of f ed or determnabe annua or perodca Income) of the amount
whch s the sum of the aggregate of the gross amounts of f ed or determnabe
annua or perodca ncome from sources wthn the Unted States pus, In the
case of ta abe years begnnng on or after anuary 1, 19 0, the amount, deter-
mned In accordance wth the provsons of secton 211(a) (1) ( ) and of para-
graph (a) (2) of ths secton, by whch gans from saes or e changes of capta
assets e ceed osses from such saes or e changes.
Par. 26. Secton 29.212-1, as amended by Treasury Decson 600
C. . 19 -1, , approved February 2, 19 26 CFR 29.212-1 , s
further amended as foows:
( ) y strkng out the perod at the end of the frst sentence of
paragraph (a) and nsertng n eu thereof the foowng:
and, n the case of ta abe years begnnng on or after anuary 1, 19 0, any
gan from the sae or e change of a capta asset to the e tent requred to be
ncuded n gross Income under the provsons of secton 211(a) (1) ( ) or secton
211(c).
( ) y nsertng n the second sentence of paragraph (a), mme-
datey after s ta abe ncome does not ncude , the foowng:
n the case of ta abe years begnnng before anuary 1,19 0, .
(C) y strkng out the perod at the end of (a) thereof and nsert- ,
ng n eu thereof the foowng:
, e cept that n the case of ta abe years begnnng on or after anuary 1, 19 0,
any gan from the sae or e change of a capta asset Is ncudbe n the ta abe
ncome of such nonresdent aen ndvdua to the e tent requred by the
provsons of secton 211(a) (1) ( ) or secton 211(c).
Par. 27. Secton 29.213-1 26 CFR 29.213-1 s amended as foows:
( ) y strkng out of (a)(1) thereof receved. and nsertng
n eu thereof the foowng:
receved, e cept that, n the case of ta abe years begnnng on or after anuary 1,
19 0, osses aocabe to sources wthn the Unted States from saes or e changes
of capta assets sha be aowed n accordance wth the provsons of secton
29.211-7(a) (2) to the e tent of gans, derved from sources theren, from such
saes or e changes.
( ) y strkng out so much of the frst sentence of (a) (2) thereof
as foows for such year more than 1 , 00 and nsertng n eu
thereof the foowng:
n the aggregate whch s the gross amount of f ed or determnabe annua
or perodca ncome from sonrces wthn the Unted States pus, n the case
of ta abe years begnnng on or after anuary 1, 19 0, the e cess of capta
gans over capta osses, determned n accordance wth secton 29.211-7(a) (2),
from sources wthn the Unted States s aowed for such year (1) such
deductons as are propery aocabe to such f ed or determnabe annua or
perodca ncome and (2), n the case of ta abe years begnnng on or after
anuary 1, 19 0, osses from saes or e changes of capta assets, aocnbe
to sources wthn the Unted States, to the e tent and n the manner provded
by secton 29.211-7(b).
Par. 2 . Secton 29.21 -1, as amended by Treasury Decson 17
C. . 19 6-2, , approved une 12, 19 6 26 CFR 29.21 -1 , s
further amended by strkng out of (a) (2) thereof the words amount
of f ed or determnabe annua or perodca ncome and nsertng
n eu thereof the foowng: ncome descrbed n secton 211(a) (1) .
Par. 29. Secton 29.21 -1 26 CFR 29.21 -1 s amended as foows:
( ) y nsertng n (a)(1) thereof, mmedatey after the word
deductons , the foowng: (e cept as provded n secton
29.211-7ta) (2)) .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.211-7.
136
( ) y strkng out of (a) (2) thereof wherever occurrng theren
f ed or determnabe annua or perodca ncome and nsertng
n eu thereof the foowng: ncome descrbed n secton 211(a)(1).
Par. 30. There s nserted mmedatey precedng secton 29.217-1
26 CFR 29.217-1 the foowng:
S C. 213. C PIT L G INS OP NONR SID NT LI N INDI ID-
U LS R NU CT OF 19 0, PPRO D S PT M R 23,
19 0 .

(c) Technca mendment. Secton 217(b) (reatng to returns
by nonresdent aen ndvduas) s hereby amended by strkng out
secton 211(a) and nsertng n eu thereof secton 211(a) (1) ( ) .
(d) ffectve Date. The amendments made by ths secton sha
be appcabe wth respect to ta abe years begnnng after December 31,
19 9.
Par. 31. Secton 29.217-2, as amended bv Treasury Decson 6 7
26 CFR 29.217-2 , s further amended as foows:
( ) y strkng out of (a)(1) and (a)(2) thereof wherever
occurrng theren f ed or determnabe annua or perodca ncome
and nsertng n eu thereof the foowng: ncome descrbed n
secton 211(a)(1) .
( ) y strkng out of the second sentence of (a)(2) thereof
Such return and nsertng n eu thereof the foowng: cept
as to gans from transactons descrbed n secton 211(a) (1) ( ) n
a ta abe year begnnng on or after anuary 1, 19 0, such return .
Par. 32. Secton 29.219-1 26 CFR 29.219-1 s amended by strkng
out f ed or determnabe annua or perodca ncome and n-
sertng n eu thereof the foowng: ncome descrbed n secton
211(a)(1) .
Par. 33. There s nserted mmedatey after secton 29.219-1 26
CFR 29.219-1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF
19 0, PPRO D S PT M R 23, 19 0 .

(d) ens Resdng n Puerto Rco. Suppement (reatng to non-
resdent aen ndvduas) s hereby amended by addng at the end
thereof the foowng new secton:
S C. 220. LI N R SID NTS OF PU RTO RICO.
(a) No ppcaton to Certan en Resdents of Puerto Rco.
The provsons of ths suppement sha have no appcaton to an
aen ndvdua who s a bona fde resdent of Puerto Rco durng the
entre ta abe year, and such aen sha be sub|ect to the ta es
mposed by sectons 11 and 12.
(b) Cboss Reference. For e cuson from gross ncome of ncome
derved from sources wthn Puerto Rco, see secton 116(1) (1).

(k) ffectve Date. The amendments made by ths secton sha
be appcabe wth respect to ta abe years begnnng after December 31,
19 0, .
Sec. 29.220-1. en Resdents of Puerto Rco. In the case of ta abe years
begnnng on or after anuary 1, 19 1, the provsons of Suppement reatng
to the ta aton of nonresdent aen ndvduas do not appy to a nonresdent
aen ndvdua who s a bona fde resdent of Puerto Rce durng the entre
ta abe year, rrespectve of whether he has engaged n trade or busness
wthn the Unted States durng the ta abe year. The ncome of such aen
ndvdua from sources both wthn and wthout the Unted States s sub|ect
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
137
29.211-7.
to the norma ta and the surta mposed by sectons 11 and 12, respectvey,
e cept that under the provsons of secton 116(1) ncome derved from sources
wthn Puerto Rco (other than amounts receved for servces performed as
an empoyee of the Unted States or any agency thereof) s e cuded from
gross ncome. For rues respectng fng of returns and payment of ta
see sectons 1, 3, 6, , and 9 and the reguatons thereunder.
Par. 3 . There s nserted mmedatey precedng secton 29.2 1-1
26 CFR 29.2 1-1 the foowng:
S C. 220. MPLOY S OF UNIT D ST T S WOR ING IN
POSS SSIONS OF T UNIT D ST T S OR IN T C N L
ZON R NU CT OF 19 0, PPRO D S PT M R 23,
19 0, S M ND D Y PU LIC L W 2, 2d CONG.,
PPRO D ULY 23, 19 1 .
ffectve wth respect to ta abe years begnnng after December
31, 19 0, secton 2 1 (reatng to ncome from sources wthn possessons
of the Unted States) s hereby amended by addng at the end thereof
the foowng new subsecton:
( ) mpoyees of Unted States. For the purposes of ths secton,
amounts pad for servces performed by a ctzen of the Unted States
as an empoyee of the Unted States or any agency thereof sha be
deemed to be derved from sources wthn1 the Unted States.
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF
19 0, PPRO D S PT M R 23, 19 0 .
(a) Income of Indvduas From Sources Wthn Puerto Rco.
Secton 2 1(d) (reatng to ncome from sources wthn possessons of
Unted States) s hereby amended to read as foows:
(d) Defnton. s used n ths secton the term possesson of the
Unted States does not ncude the rgn Isands of the Unted
States, and such term when used wth respect to ctzens of the
Unted States does not ncude Puerto Rco.

(k) ffectve Date. The amendments made by ths secton sha
be appcabe wth respect to ta abe years begnnng after December
31, 19 0, .
Par. 3 . Secton 29.2 1-1, as amended by Treasury Decson 709
26 CFR 29.2 1-1 , s further amended as foows:
( ) y nsertng mmedatey precedng the fourth sentence, whch
commences wth the words Dvdends receved , of (2) of the frst
paragraph the foowng new sentence:
In the case of ta abe years begnnng on or after anuary 1, 19 1, the saary
or other compensaton pad for servces performed by a ctzen of the Unted
States as an empoyee of the Unted States or any agency thereof sha for pur-
poses of secton 2 1 and ths secton be deemed to be derved from sources
wthn the Unted States.
( ) y strkng out of the frst sentence of the fourth paragraph
secton 119. and nsertng n eu thereof the foowng: secton 119
and secton 2 1 (|). .
(C) y strkng out of the frst sentence of the e ampe, whch con-
sttutes the s th paragraph, the words Puerto Rco and nsertng
n eu thereof the foowng: a possesson of the Unted States .
(D) y strkng out of the thrd sentence of such e ampe the
words Puerto Rcan and by nsertng n such sentence, mmedatey
after the words rea estate , the foowng: ocated n such possesson
and .
Par. 3 . Secton 29.2 1-2 26 CFR 29.2 1-2 s amended by strk-
ng out of the thrd sentence Puerto Rcan rea estate, and nsertng
n eu thereof the foowng: rea estate ocated n the possesson, .
21 1 2 f2 10
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29.212-2.
13
Par. 36. Secton 29.2 1- , as amended by Treasury Decson 3
C. . 19 6-2, 71 , approved ugust 2 , 19 6 26 CFR 29.2 1- , s
further amended as foows:
( ) y strkng out of the second sentence the foowng: Puerto
Rco, .
( ) y nsertng at the end thereof, mmedatey after the words
sef-governng naton. , the foowng new paragraph:
In the case of ta abe years begnnng before anuary 1, 19 1, the term
possesson of the Unted States , as used n sectons 2 1 and 2 2 and secton
29.2 1-1, ths secton, and secton 29.2 2-1, aso ncudes Puerto Rco. In the
case of ta abe years begnnng after December 31, 19 0
(1) such term sha not ncude Puerto Rco when used n secton 2 1,
secton 29.2 1-1, and ths secton wth respect to ctzens of the Unted
States, and
(2) the provsons of secton 2 2(a) and the reguatons thereunder pre-
scrbed n secton 29.2 2-1 sha have no appcaton n the case of a ctzen
of Puerto Rco.
Par. 37. There s nserted mmedatey precedng secton 29.2 2-1
26 CFR 29.2 2-1 the foowng:
S C. 221. R SID NTS OF PU RTO RICO R NU CT OF 19 0,
PPRO D S PT M R 23, 19 0 .

(b) Ctzens of the Unted States Resdng n Puerto Rco.
Secton 2 2(a) (reatng to ctzens of possessons of the Unted States)
s hereby amended by addng at the end thereof the foowng new sen-
tence : Th subsecton sha have no appcaton n the case of a ctzen
of Puerto Rco.

(k) ffectve Date The amendments made by ths secton sha be
appcabe wth respect to ta abe years begnnng after December 31
19 0,
. Par. 3 . Secton 29.2 2-1 26 CFR 29.2 2-1 s amended by addng
at the end thereof the foowng new paragraph:
For ta abe years begnnng after December 31,19 0, the provsons of secton
2 2(a) and the reguatons thereunder prescrbed n ths secton sha have no
appcaton n the case of a ctzeD of Puerto Rco.
(Ths Treasury Decson s ssued under the authorty contaned
n sectons 62 and 3791 ( 3 Stat. 32 and 67; 26 U. S. C. 62 and 3791)
of the Interna Revenue Code.)
ustn F. Wnke,
ctng Commssoner of Interna Revenue.
pproved pr , 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 9, 19 2, : 0 a. m.)
S CTION 212. GROSS INCOM
Secton 29.212-2: cuson of earnngs of 19 2-6-137 1
foregn shps or arcraft from gross ncome. 1. T. 076
( so Secton 231, Secton 29.231-3.)
INT RN L R NU COD
The Repubc of Lbera satsfes the equvaent e empton requre-
ments of sectons 212(b)(1) and 231(d)(1) of the Interna eve-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
139
29.2 1- .
nue Code, reatng to e cuson from gross ncome of earnngs de-
rved from the operaton of shps documented under the aws of a
foregn country.
SUPPL M NT L FOR IGN CORPOR TIONS
S CTION 231. T ON FOR IGN CORPOR TIONS
Secton 29.231-3: cuson of earnngs of
foregn sps or arcraft from gross ncome.
nterna revenue code
Repubc of Lbera equvaent e empton requrements. (See
L T. 076, page 13 .)
suppement |. possessons of the unted states
S CTION 2 1. INCOM FROM SOURC S WIT IN
POSS SSIONS OF UNIT D ST T S
Secton 29.2 1- : Defnton. 19 2-9-13 11
I. T. 0 0
INT RN L R NU COD
The Marsha Isands, admnstered by the Unted States under
a trusteeshp agreement, effectve uy 1 , 10 7, between the Unted
States and the Securty Counc of the Unted Natons, do not const-
tute a possesson of the Unted States wthn the meanng of secton
2 1 of the Interna Revenue Code.
dvce s requested whether the Marsha Isands, admnstered by
the Unted States under a trusteeshp agreement between the Unted
States and the Securty Counc of the Unted Natons, consttute a
possesson of the Unted States wthn the meanng of secton 2 1
of the Interna Revenue Code, reatng to ncome from sources wthn
possessons of the Unted States.
The Presdent was authorzed by the ont Resouton of uy 1 ,
19 7 (61 Stat. 397), to approve, on behaf of the Unted States, the
trusteeshp agreement between the Unted States and the Securty
Counc of the Unted Natons for the former apanese mandated
sands, whch are now known as the Terrtory of the Pacfc Isands.
The Marsha Isands are a part of such terrtory.
The trusteeshp agreement for the former apanese mandated
sands (61 Stat. 3301), whch s effectve as of uy 1 , 19 7, provdes
n part as foows:
rtce 1
The Terrtory of the Pacfc Isands, consstng of the Isands formery hed by
apan under mandate n accordance wth rtce 22 of the Covenant of the
League of Natons, Is hereby desgnated as a strategc area and paced under the
trusteeshp system estabshed n the Charter of the Unted Natons. The
Terrtory of the Pacfc Isands Is herenafter referred to as the trust terrtory.
rtce 2
The Unted States of merca Is desgnated as the admnsterng authorty of
the trust terrtory.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
f 0. 7-2, Regs. 130.
1 0
rtce
The admnsterng authorty, In dschargng the obgatons of trusteeshp
n the trust terrtory, sha act n accordance wth the Charter of the Unted
Natons, and the provsons of ths agreement, and sha, as specfed n rtce
3(2) of the Charter, appy the ob|ectves of the nternatona trusteeshp system,
as set forth n rtce 76 of the Charter, to the peope of the trust terrtory.

rtce 6
In dschargng ts obgatons under rtce 70(b) of the Charter, the ad-
mnsterng authorty sha:
1. foster the deveopment of such potca nsttutons as are suted to the
trust terrtory and sha promote the deveopment of the nhabtants of
the trust terrtory toward sef-government or ndependence, as may be
approprate to the partcuar crcumstances of the trust terrtory and
ts peopes and the freey e pressed wshes of the peopes concerned; and to
ths end sha gve to the nhabtants of the trust terrtory a progressvey
ncreasng share n the admnstratve servces tn the terrtory; sha deveop
ther partcpaton n government; sha gve due recognton to the customs
of the nhabtants n provdng a system of aw for the terrtory; and sha
take other approprate measures toward these ends;
No specfc term for the trusteeshp s provded n the agreement.
In vew of the mtatons mposed by the trusteeshp agreement,
the Unted States does not have such soveregnty over the Marsha
Isands as woud |ustfy the poston that they consttute a possesson
of the Unted States. ccordngy, t s hed that the Marsha
Isands, admnstered by the Unted States under the trusteeshp agree-
ment, effectve uy 1 , 19 7, between the Unted States and the
Securty Counc of the Unted Natons, do not consttute a possesson
of the Unted States wthn the meanng of secton 2 1 of the Interna
Revenue Code.
SU C PT R D. C SS PROFITS T
P RT L R T ND COMPUT TION OF T
S CTION 33. C SS PROFITS N T INCOM
Secton 0. 33(a)-2, Reguatons 130: Computaton
of e cess profts net ncome for the ta abe year.
INT RN L R NU COD
Reguatons 130 amended. (See T. D. , page 121.)
S CTION 37. IN ST D C PIT L CR DIT
Secton 0. 37-2, Reguatons 130: Invested 19 2-13-13
capta. I. T. 0 7
( so Secton , Secton 0. -1, Regua-
tons 130.)
nterna revenue code
ta payer whch dd not fe Schedue P of Form 1120 because
t had ess than 2 .00 e cess profts net ncome n a partcuar ta -
abe year may e ercse at a ater date the eecton provded by sec-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 1
0. 39-1, Regs. 130.
ton 37(b) (1) of the Interna Revenue Code and compute Itt- n-
vested capta for such year under secton of the Code, reatng
to the hstorca nvested capta method of determnng nvested
capta, for the purpose of determnng the amount of any unused
e cess pofts credt carry-back or carry-over.
dvce s requested whether a ta payer whch dd not fe Schedue
P of Form 1120 because t had ess than 2 ,000 e cess profts net
ncome n a partcuar ta abe year may subsequenty compute ts
e cess profts credt for that year by use of the hstorca nvested
capta method under secton of the Interna Revenue Code for
the purpose of determnng the amount of any unused e cc-g profts
credt carry-back or carry-over to a precedng or subsequent year.
Secton 37(b) (1) of the Interna Revenue Code provdes n part
as foows:
(1) ecton op ta payeb. The Invested capta for any ta abe year
sha be the ad|usted nvested capta determned under paragraph (2) of
secton 37(b) of the Code , e cept that f the ta payer eects n ts return
for such ta abe year to compute ts nvested capta under the provsons of
secton , the nvested capta for such year sha be the hstorca nvested
capta determned under secton .
Secton 0. 37-2(c) of Reguatons 130 provdes n part as foows:
(c) ecton to use hstorca nvested capta. If the ta payer
eects on ts return for the ta abe year to compute ts nvested capta under
the provsons of secton , the nvested capta of the ta payer for such year
sha be the hstorca nvested capta determned under secton . sepa-
rate eecton must be made for each ta abe year, and an eecton once made s
rrevocabe wth respect to the ta abe year. ta payer makng such eecton
may not thereafter compute nvested capta for the ta abe year under secton
37(b) (2). If the hstorca method s used on the return n determnng the
e cess profts ta abty, the ta payer w be deemed to have eected the
hstorca method. ta payer whch computes ts e cess profts ta on ts
return on the bass of a credt other than the nvested capta credt may never-
theess eect the hstorca method for such year, n the event that the nvested
capta credt 3houd subsequenty become sgnfcant n the determnaton of
ts e cess profts ta abty for such year, by attachng to ts return for the
ta abe year a statement eectng the hstorca method.
It s hed that where a ta payer dd not fe Schedue P of Form
1120 because t had ess than 2 ,000 e cess profts net ncome n a
partcuar ta abe year, t may e ercse at a ater date the eecton
provded by secton 37(b)(1) of the Interna Revenue Code and
compute ts nvested capta for such year under secton of the
Code for the purpose of determnng the amount of any unused e cess
profts credt carry-back or carry-over to a precedng or subsequent
year.
The ta payer corporaton receves from a factor monetary
advances whc are charged aganst merchandse shpments to the
ta payer s customers pursuant to the factor s agreement to pur-
chase, sub|ect to credt approva, a the accounts created by the
ta payer s saes. Such advances are not evdenced by separate notes
or any other evdence of ndebtedness. Under the terms of the
agreement between the ta payer and the factor, the ta payer
assgns to the factor n absoute ownershp a accounts recevabe
19 2 -13762
I. T. 072
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
0. 39-1, Regs. 130.
1 2
created by the ta payer s saes, such assgnment Incudng the
ta payer s Interest In the merchandse sod. ed, the advances
receved by the ta payer are proceeds from the sae of accounts
recevabe to the factor and do not consttute borrowed capta
wthn the purvew of secton 39(b) of the Interna Revenue Code.
dvce s requested whether monetary advances receved by a ta -
payer from a factor, under an agreement whereby the advances are
charged aganst the accounts recevabe created by the ta payer s
saes and the factor s obgated to purchase such recevabes, con-
sttute borrowed capta under secton 39(b) of the Interna Revenue
Code.
In the nstant case, the factor advances money to the ta payer
whch s charged aganst merchandse shpments to the ta payer s
customers pursuant to an agreement on the part of the factor to
purchase, sub|ect to credt approva, a accounts created by the ta -
payer s saes. Such advances are not evdenced by separate notes
or any other evdence of ndebtedness.
The pertnent provsons of the agreement between the ta payer
and the factor are as foows:
1. We rthe factor sha purchase a the accounts created by your saes and
on a saes whch have been approved by our Credt Department we hereby
assume the rsk of your customers nsovency after the merchandse has been
actuay receved and fnay accepted wthout dspute. We sha remt to you
upon request the net proceeds due you from such saes, but n order to protect
us aganst possbe returns, cams, aowances, etc., we may reserve an amount
of past saes whch Is In our opnon reasonaby necessary to cover such con-
tngences. We may remt to you any amounts standng to your credt In e cess
of such reserves.

3. You the ta payer hereby assgn to us n absoute ownershp a aecounta
recevabe created by your saes, whch assgnment ncudes your nterest n
the merchandse sod. s such owners, we sha have a the rghts of an unpad
seer, ncudng the rghts of repevn, recamaton, and stoppng n transt, and
any merchandse so recovered w be consdered, as between us, as returned
merchandse.

6. You w make no saes or deveres of merchandse wthout frst obtanng
the wrtten approva of our Credt Department as to terms and credt of pur-
chasers, and we sha have the rght to wthdraw such approva at any tme
before devery. We sha not be abe to any person or n any manner for re-
fusng to approve devery of any goods sod or for e ercsng our rghts as set
forth n ths agreement. Shppng or devery recepts are to be devered to us
prompty, and we sha have the rght to wthhod credt wth respect to any
sae unt we have receved such recept.
7. You agree to ndemnfy and protect us aganst abty, oss or e pense
caused by or arsng out of the re|ecton of goods or aeged cams or offsets of
every knd nnd nature by purchasers other than those resutng from ther
fnanca nabty to pay. You sha advse us of a dsputes wth purchasers
upon recevng notce thereof and sha, sub|ect to our approva, prompty ad|ust
the same, advse us of ad|ustments, and n case any dspute remans unad|usted
at the tme a b becomes due, we sha have the rght to charge back to your
account the amount or amounts Invoved theren and any e penses Incurred by
us, together wth nterest from the due date of orgna credt. Pendng pay-
ment of the charge-back or reassgnment or. other ad|ustment thereof to our
satsfacton, we sha reman the absoute owner of the account and of any
re|ected, returned, or recovered merchandse, and same sha be egby marked
and set apart by you as our property, and we sha have the rght to take posses-
son thereof at any tme and dspose of same wthout further notce at such
prces and terms as we may deem proper at pubc or prvate sae.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 3
( 0. -2, Regs. 130.
Secton 39(b) of the Interna Revenue Code provdes n part as
foows:
(b) Day orbowed Capta. For the purposes of ths subchapter subchap-
ter D, chapter 1 of the Code , the day borrowed capta for any day of any
ta abe year sha be determned as of the begnnng of such day and sha be
the sum of the foowng:
(1) The amount of the outstandng ndebtedness (not ncudng nterest)
of the ta payer, Incurred n good fath for the purposes of the busness,
whch s evdenced by a bond, note, b of e change, debenture, certfcate
of ndebtedness, mortgage, deed of trust, bank oan agreement, or condtona
saes contract. In the case of property of the ta payer sub|ect to a mortgage
or other en, the amount of ndebtedness secured by such mortgage or
en sha be consdered as an ndebtedness of the ta payer whether or not
the ta payer assumed or agreed to pay such ndebtedness
The provsons of secton 39(b) of the Code are smar to the pro-
vsons of repeaed secton 719 of the Code, as added by secton 201
of the Second Revenue ct of 19 0 and amended by sectons 20 and
230 of the Revenue ct of 19 2. It has been hed that to quafy an
ndebtedness as borrowed capta, two requrements must be met.
Frst, the ta payer must show an outstandng ndebtedness and,
second, such outstandng ndebtedness must be evdenced by one of
the types of documents specfed n the Code. (See eogg Comms-
son Co. v. Commssoner, 12 T. C. 1 2, and Canster Co. v. Comms-
soner, 16 Fed. (2d) 79, certorar dened, 333 U. S. 7 .)
There s no evdence n the nstant case to show ndebtedness or
abty on the part of the ta payer resutng from the monetary
advances receved from the factor. (Cf. rewster Shrt Corporaton
v. Commssoner, 1 9 Fed. (2d) 227; Ct. D. 172 , C. . 19 9-2, 0,
where the agreement ceary provded for uncondtona abty on
the part of the assgnor.) On the contrary, snce the factor s ob-
gated to purchase, sub|ect to credt approva, and the ta payer s
obgated to assgn n absoute ownershp, a accounts recevabe,
the agreement ceary ndcates an outrght sae of such recevabes.
ccordngy, t s hed that the advances receved by the ta payer
are proceeds from the sae of accounts recevabe to the factor and do
not consttute borrowed capta wthn the purvew of secton 39(b)
of the Interna Revenue Code.
S CTION 6. R G S P RIOD N T INCOM -
D PR SS D INDUSTRY SU GROUPS
Secton 0. 6-2, Reguatons 130: Determnaton 19 2-13-13 9
of depressed ndustry subgroups and ad|usted T. D. 90
rates of return therefor.
( so Secton 7, Sectons 0. 7-1 and 0. 7-2,
Reguatons 130.)
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 0.
C SS PROFITS T S; T L T RS NDING FT R UN 30, 19 0
Fna determnatons of depressed ndustry subgroups and the
ad|usted rates of return therefor; ndustry base perod yeary rates
of return and ndustry base perod rates of return.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 26, D. O.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
0. 6-2, Regs. 130.)
1
To Coectors of Interna Revenue and Others Concerned:
Paragraph 1. y vrtue of the authorty of secton 6 (c) and (e)
and secton 7 (a) and (b) of the Interna Revenue Code, added by
secton 101 of the cess Profts Ta ct of 19 0, approved anuary
3,19 1, the fna determnaton of ndustry subgroups and the ad|usted
rates of return therefor (computed to the nearest thousandth), and
the fna determnaton of ndustry base perod yeary rates of return
and ndustry base perod rates of return (computed to the nearest
thousandth), as shown n the amendments to Reguatons 130 26
CFR, part 0 made by paragraphs 2 and of ths Treasury Decson,
are hereby procamed.
Par. 2. Secton 0. 6-2 26 CFR 0. 6-2 of Reguatons 130 s
amended by addng at the end thereof the foowng:
(d) The fna determnatons of depressed ndustry subgroups and the ad-
usted rates of return therefor are the same as the tentatve determnatons
and tentatve ad|usted rates of return set forth under (c) of ths secton.
ccordngy, no redetermnaton s necessary of any appcaton of secton 6
propery made In accordance wth a tentatve determnaton and tentatve ad-
usted rate and, therefore, the perods of mtaton prescrbed under secton 322
and sectons 27 and 276 are not e tended as provded by secton 6(h) and
by (b) of ths secton, snce no overpayment or defcency n ta resuts from
the fna determnatons of depressed ndustry subgroups and the ad|usted rates
of return therefor.
Par. 3. Secton 0. 7-1 26 CFR 0. 7-1 of Reguatons 130 s
hereby amended by nsertng at the end thereof the foowng:
(e) No redetermnaton Is necessary of any appcaton of secton 2 whch
Is propery made n accordance wth a tentatve base perod yeary rate of return
for 19 6, 19 7, or 19 . s to any appcaton of secton 2 whch s propery
made n accordance wth a tentatve base perod yeary rate of return for 19 9,
and as to any appcaton of sectons 2 through whch Is propery made
n accordance wth a tentatve base perod rate of return, no redetermnaton
Is necessary n any case where the fna rate of return s the same as the tenta-
tve rate whch was prevousy effectve. The perods of mtaton prescrbed
under secton 322 and sectons 27 and 276 are not e tended, as provded by
secton 7(d) and by (d) of ths secton, e cept n a case where a redetermna-
ton s necessary because the appcabe fna rate s not the same as the tentatve
rate whch was prevousy effectve.
Par. . Secton 0. 7-2 26 CFR 0. 7-2 of Reguatons 130 s
hereby amended to read as foows:
Sec. 0. 7-2. Tentatve and Fna Industry abe Perod Rates of Return.
The ndustry cassfcatons set forth n secton 7(c), and the base perod
yeary rates of return and the base perod rate of return (both the tentatve
rates descrbed n secton 7(d) and the fna rates descrbed In secton 7 (a)
and (b)) for each ndustry cassfcaton are as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
0. 6-2, Regs. 130.
3
Fna rata
11.0
13.1
1 .3
12.0
1 .
12.
II
s
f
rate
.
.
10.1
6.2
11.3
10.0
1 .2
12.2
13.1
9.
1 .6
10.7
19.2
13.
17.
1 .3
1 1
1 .1
16.7
.3
13.2
13.3
16.
13.
1 .6
12.
1 .
13.0
2
o Sc
12.3
9.9
tc a :c o o e .o t- r p
13.
12.
20.9
10.
rt

r n

I

s
Tentatve
rate
11.9
10.7
.
I w3 r N co
1 .
9.7
a
e
12.7
9.2
.
13.
.0
1 .
11.
17.2
1 .6
1 .6
13.
1
00
3 2
e
cs


I
h
Tentatve
and fna
rate
12.
.2
2.1
oo c r C
10.
1 .2
O C O )
T3
o
r

s
Tentatvo
and fna
rate
12.
6.1
9.1
.6
a
1
111
g
I : s
1 1
t
f
S|
11M
- L C y c
3

-:.
oS S g S
S3g -
S

d
o a z cs
O fc r 3

G
S
- 3.
a
a IT

M
2S -
se

u a
Oon
S a a
,2
3 g|
- O O o . 3 3
n a a 3 S
I|k
ff p f..
1 o - 3 O r- _ 7 . - n
1 3I11 S
f I
fff fe

O O CN CS
OOO hhhfh
d
a
RMdMmMsda
a
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
0. 6-2, Regs. 130.
1 6
s
I
s
2
00 OS r- h o O 00
cr - c co -- Cr o c
oceotsoMNf ce r-a n eo
co ||| w o ot W e c ao d d
co - c- o od c aS e eo
CCOCOOMOM 00 CO -(O CO CO
|rc- orcsd o e o d
O r.: r- r | f CO
c 6 r- c td a
o c oo t- qo o c eo ce -e eo co oo
to o r (d w: : o
a _

a s
co o m c: c 3s - o
0 OqCO co
- c- o o d
63
f.g
eg C
o en - . r co
to r o o
3
g c ,
c : r r - et
T 7
ec ce oo c o c eo o co ao - 1 so - c
o r a (Cre | p p c atS d d
11 ,
m
h
I
IS
ff
s
oS
I
3

a a
1111121111
3 a o
: - :
- 2
, .S m
k I
So
a a
9
s
:
S 0 S 1
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 7
IS 0. 6-2, egs. 130.
hnomnocon
ot-nrt- t ro
1

a

e
a
|u .
S S
s
s
3
:::: ) a
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29. 1-2.
1
ecause the determnatons announced n ths Treasury Decson
are computed by specfc formuae e pressy prescrbed n sectons
6 and 7 of the Interna Revenue Code, t s found that t s
unnecessary to ssue ths Treasury Decson wth notce and pubc
procedure thereon under secton (a) of the dmnstratve Procedure
ct, approved une 11,19 6, or sub|ect to the effectve date mtaton
of secton (c) of sad ct.
(Ths Treasury Decson s ssued under the authorty contaned n
secton 62 of the Interna Revenue Code ( 3 Stat. 32; 26 U. S. C. 62).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved une 3,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 6, 19 2, : a. m.)
S CTION 7. INDUSTRY S P RIOD R T S OF
R TURN
Secton 0. 7-1, Reguatons 130: Industry
base perod rates of return.
INT RN L R NU COD
Reguatons 130 amended. (See T. D. 90 , page 1 3.)
Secton 0. 7-2, Reguatons 130: Tentatve and
fna ndustry base perod rates of return.
INT RN L R NU COD
Reguatons 130 amended. (See T. D. 90 , page 1 3.)
S CTION . ISTORIC L IN ST D C PIT L
Secton 0. -1, Reguatons 130: storca
nvested capta method of determnng n-
vested capta.
INT RN L R NU COD
ecton as to computaton of nvested capta. (See I. T. 0 7,
page 1 0.)
SU C PT R .-T ON S LF- MPLOYM NT INCOM
S CTION 1. D FINITIONS
Secton 29. 1-2: Sef-empoyment ncome. 19 2-3-137 7
( so Secton 29. 1-3.) I. T. 071
nterna revenue code
Royates derved by an ndvdua subsequent to December 31,
19 0, from a trade or busness carred on by such ndvdua on or
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 9
29. 1-2.
before December 31, 19 0, even though not carred on after that
date, consttute sef-empoyment Income wthn the meanng of
secton 1(b) of the Interna Revenue Code.
dvce s requested whether royates receved n 19 1 by an nd-
vdua from a trade or busness carred on by hm on or before, but
not after, December 31, 19 0, consttute sef-empoyment ncome
wthn the meanng of secton 1(b) of the Interna Revenue Code.
Secton 1 of the Interna Revenue Code, dennng certan terms
reatng to the ta on sef-empoyment ncome, provdes n part as
foows:
(a) Net arnngs From Sef- mpoyment. The term net earnngs from
sef-empoyment means tha gross ncome derved by an Indvdua from any
trade or busness carred on by such ndvdua, ess the deductons aowed by
ths chapter chapter 1 of the Code whch are attrbutabe to such trade or
busness
(b) Sef- mpoyment Income. The term sef-empoyment ncome means
the net earnngs from sef-empoyment derved by an Indvdua dur-
ng any ta abe year begnnng after December 31, 19 0
(c) Trade ob usness. The term trade or busness, when used wth ref-
erence to sef-empoyment ncome or net earnngs from sef-empoyment, sha
have the same meanng as when used In secton 23
It does not appear that secton 1 of the Code requres that the
trade or busness referred to be carred on after December 31, 19 0.
The requrement of the statute s that the ncome be derved durng
any ta abe year begnnng after December 31, 19 0, wthout specf-
caton as to when the trade or busness s carred on.
ccordngy, t s hed that royates derved by an ndvdua sub-
sequent to December 31, 19 0, from a trade or busness carred on by
such ndvdua on or before December 31,19 0, even though not car-
red on after that date, consttute sef-empoyment ncome wthn the
meanng of secton 1 (b) of the Interna Revenue Code.
Secton 29. 1-2: Sef-empoyment ncome. 19 2-6-137 2
I. T. 077
INT RN L R NU COD
Fees and other remuneraton receved by a drector of a corpora-
ton for performance of servces as such consttute sef-empoyment
ncome wthn the meanng of secton 1(b) of the Interna Rev-
enue Code, and t s mmatera whether such remuneraton Is re-
ceved for attendng drectors meetngs or servng on commttees.
dvce s requested whether fees receved by a drector of a cor-
poraton consttute sef-empoyment ncome wthn the meanng of
secton 1(b) of the Interna Revenue Code.
Secton 1 of the Interna Revenue Code, defnng certan terms
reatng to the ta on sef-empoyment ncome, provdes n part as
foows:
(a) Net arnngs From Sef- mpoyment. The term net earnngs from
sef-empoyment means the gross ncome derved by an ndvdua from any
trade or busness carred on by such ndvdua, ess the deductons aowed
by ths chapter chapter 1 of the Code whch are attrbutabe to such trade
or busness
(b) Sef- mpoyment Income. The term sef-empoyment Income means
the net earnngs from sef-empoyment derved by an ndvdua dur-
ng any ta abe year begnnng after December 31, 19 0
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
29. 1-3.
1 0
(c) Trade ob usness. The term trade or busness, when used wth ref-
erence to sef-empoyment ncome or net earnngs from sef-empoyment, sha
have the same meanng as when used In secton 23, e cept that such term sha
not ncude
Secton 1(c) sts a number of functons and servces whch do
not consttute the carryng on of a trade or busness for sef-empoy-
ment ta purposes. mong the e ceptons s the performance of
servce as an empoyee for I edera empoyment ta purposes. ow-
ever, the reguatons reatng to the Federa Insurance Contrbutons
ct (secton 02.20 of .Reguatons 106) and the Federa Unempoy-
ment Ta ct (secton 03.20 of Reguatons 107) provde that a
drector of a corporaton, as such, s not an empoyee of the corpora-
ton. Furthermore, t s the poston of the ureau that a drector
of a bank servng on a commttee created pursuant to a Federa or
State statute, corporate byaws, or authorty vested n the board of
drectors s deemed to be actng n the capacty of a drector, as such,
and shoud not be treated as an empoyee for Federa empoyment
ta purposes. (See Mm. 63 1, C. . 19 9-1,179.)
ccordngy, t s hed that fees and other remuneraton receved
by a drector of a corporaton for performance of servces as such
consttute sef-empoyment ncome wthn the meanng of secton
1(b) of the Interna evenue Code, and t s mmatera whether
such remuneraton s receved for attendng drectors meetngs or for
servng on commttees.
Secton 29. 1-3: Trade or busness.
INT RN L R NU COD
Royates derved subsequent to December 31, 19 0, from a trade
or busness not carred on after such date. (See I. T. 071, page 1 .)
C PT R 2. DDITION L INCOM T S
SU C PT R . C SS PROFITS T
P RT I
C SS PROFITS T COUNCIL
19 2-11-13 30
Mm. 6 00
Organzaton change cess Profts Ta Counc
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton , D. C, pr 2 ,19 .
Offcers and mpoyees of the ureau of Interna Revenue and Others
Concerned:
1. ffectve mmedatey, the organzaton of the cess Profts
Ta Counc s modfed as foows:
a) The postons of charman and vce charman are aboshed;
b) The e ecutve commttee s aboshed;
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 1
3760.
(c) Incumbents of such postons and members of such com-
mttee are restored to fu-tme duty as Counc members; and
(d) ecutve drecton of the Counc s vested n the head of
the ppeate Staff.
2. The operatons of the Counc w be under the mmedate super-
vson of a coordnator to be desgnated by the Commssoner. The
coordnator w e ercse, for the Commssoner, fna authorty wth-
n the ureau of Interna Revenue n respect to a ssues arsng under
secton 722 of the Interna Revenue Code n connecton wth determ-
natons made wth respect to partcuar cases. Panes of one or more
Counc members w contnue to make determnatons wth respect
to cases assgned to them for consderaton and hearng, such deter-
mnatons beng sub|ect to revew by the coordnator.
3. Counc members w contnue to partcpate n the estabsh-
ment of nterpretatve poces, to the e tent deemed essenta, pror
to the adopton of such poces.
. Pror nstructons, to the e tent nconsstent wth the foregong,
are superseded.
ohn . Dunap,
Commssoner.
pproved pr 2 , 19 2.
ohn W. Snyder,
Secretary of the Treasury.
C PT R 36. COLL CTION
SU C PT R F.-CLOSING GR M NTS ND COMPROMIS S
S CTION 3760. CLOSING GR M NTS
19 2-7-13793
Mm.6772
greements as to fna determnaton of ta abty under sec-
ton 3760 of the Interna Revenue Code.
Mmeograph 63 3 (C. . 19 0-2, 100) modfed.
Tkeasurt Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, March 3, 1962.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
eads of ppeate Staff Dstrcts, and Others Concerned:
1. Mmeograph 63 3 (C. . 19 9-2, 100) dated March 31, 19 9,
prescrbes the procedure to be foowed n the preparaton of agree-
ments under secton 3760 of the Interna Revenue Code as to fna de-
termnaton of ta abty (Form 66) and as to fna determna-
ton coverng specfc matters (Form 906). Consstent wth the pro-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
3760.)
1 2
vsons of secton 3760(b) of the Code, the procedure prescrbed n that
mmeograph requres the preparaton of a such agreements for the
approva of the Secretary of the Treasury, the Under Secretary, or
an ssstant Secretary.
2. y vrtue of and pursuant to the authorty vested n hm by
Reorganzaton Pan No. 26 of 19 0 (1 F. R. 93 ), the Secretary
of the Treasury has conferred and mposed upon the Commssoner
of Interna Revenue a the rghts, prveges, powers, and dutes
conferred and mposed upon the Secretary of the Treasury, the Under
Secretary of the Treasury, or any ssstant Secretary of the Treasury
by secton 3760 of the Code wth respect to any cosng agreement
reatng to the abty of any person (or of the person or estate
for whom he acts) respectng any nterna revenue ta n any case
n whch the agreement (Form 66) reates ony to ta abty for
past ta abe perods.
3. In vew of such deegaton of authorty, agreements (Forms
66) as to fna determnaton of ta abty for past ta abe pe-
rods sha no onger be prepared for the approva of the Secretary
of the Treasury, the Under Secretary of the Treasury, or an ssstant
Secretary of the Treasury. Pendng revson of Form 66, the words
f ths agreement s approved by the Secretary of the Treasury, the
Under Secretary, or an ssstant Secretary, wthn one year from the
date ths agreement s sgned by the ta payer shoud be deeted from
a present Forms 66 prepared after recept of ths mmeograph.
Mmeograph 63 3, supra, s hereby modfed.
. Correspondence reatng to ths mmeograph shoud refer to ts
number and to the symbos IT: U .
ohn . Dunap,
Commssoner.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 3 23(|), rt. 191, Regs. 7 .
INCOM T RULINGS. P RT II
R NU CT OF 193 ND PRIOR R NU CTS
SU TITL . G N R L PRO ISIONS
P RT . COMPUT TION OF N T INCOM
S CTION 23 (|). D DUCTIONS FROM GROSS
INCOM : D D TS
ktce 191, Reguatons 7 : ad debts. 19 2- -13763
G. C. M. 27137
R NU CTS OF 1921. 192 . 1926. ND 192
Under the Revenue cts of 1021, 192 , 192 , and 192 , n order for
a ta payer to obtan the beneft of a deducton for parta worth-
essness of a debt, a charge-off of the amount camed to be worth-
ess must have been made In the same ta abe year n whch the
ascertanment of parta worthessness was made.
G. C. M. 1311 (C. . III-1,116 (193 )) revoked.
Reconsderaton has been gven to G. C. M. 1311 (C. . III-1,
116 (193 )), n whch ths offce e pressed the opnon that the de-
cson of the Unted States Crcut Court of ppeas for the S th
Crcut n Lberty ank Trust Co. v. Commssoner ( 9 Fed. (2d)
320) shoud be foowed generay n determnng the deductbty of
partay worthess debts under the Revenue cts of 1921, 192 , 1926,
and 192 .
In the Lberty ank Trust Co. case, the court hed that, n order
to have the beneft of the deducton from gross ncome under.the
Revenue ct of 1921, a ta payer was not requred to charge off debts
whch were partay worthess unt the Commssoner was satsfed
of the worthessness of that part of the debts for whch the ta payer
sought the deducton. In G. C. M. 1311 , supra, ths offce accepted
the constructon thus paced upon secton 23 (a) ( ) of the Revenue
ct of 1921 and concuded that such decson was appcabe to a
ta abe years covered by the Revenue cts of 1921 to 192 , ncusve
(but was not appcabe to cases arsng under the Revenue ct of
1932and ater cts).
Subsequenty, however, that constructon was serousy questoned
by the courts, partcuary by the decson of the Unted States Crcut
Court of ppeas for the Nnth Crcut n Sa ta Monca Mountan
Park Co., Ltd., v. Unted States (99 Fed. (2d) 0, certorar granted
February 27, 1939, and dsmssed on stpuaton of counse, 306 U. S.
666), whch hed that a charge-off durng the ta abe year s a cond-
ton precedent to the aowance of a deducton for partay worthess
debts under secton 23 (a) ( ) of the Revenue ct of 1926. (See aso
Unted States v. Irand Mc . eckman, 10 Fed. (2d) 260, certorar
dened, 30 U. S. 93, and Mark T. ender v. ener, 27 Fed. Supp.
31.)
fter further consderaton of the queston n the ght of more
recent court decsons, t s the opnon of ths offce that under the
21 1 2 62 11
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
23(|), rt. 191, Regs. 7 . 1
Revenue cts of 1921,192 ,1926, and 192 , n order for a ta payer to
obtan the beneft of a deducton for parta worthessness of a debt,
a charge-off of the amount camed to be worthess must have been
made n the same ta abe year n whch the ascertanment of parta
worthessness was made. ccordngy, G. C. M. 1311 , supra, s hereby
revoked.
Mason . Lemng,
ctng Chef Counse, ureau of Interna Revenue.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
ST T ND GIFT T S
ST T T
S CTION 11. GROSS ST T
Secton 1.10, Reguatons 10 : auaton of 19 2-13-13 0
property. T. D. 906
( so Secton 12; Sectons 1.11, 1.17, 1.20,
1. , and 1. 7c, Reguatons 10 .)
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 1.
ST T T UND R C PT R 3 OF T INT RN L R NU COD , S
M ND D
Sectons 1.10, 1.11, 1.17, 1.20, 1. , and 1. 7c (d) of Regua-
tons 10 amended.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On anuary 3, 19 2, notce of proposed rue makng, wth respect
to the vauaton of certan casses of property for purposes of the
estate ta , was pubshed n the Federa Regster (17 F. R. 2). fter
consderaton of a reevant matter presented by nterested persons
regardng the rues proposed, the amendments to Reguatons 10
26 CFR, part 1 set forth beow are hereby adopted.
Paragraph 1. Secton 1.10, as amended by Treasury Decson 3 1
C. . 19 , 79 , approved March 27,19 26 CFR 1.10 , s further
amended as foows:
( ) y amendng paragraph (f) thereof to read as foows:
(|) nnutes, fe estates, remanders, and reversons; estates of decedents
dyng after December 31, 19 1. (1) In genera. The vaue of an annuty
contract, or an Insurance pocy on the fe of a person other than the decedent,
ssued by a company reguary engaged n the seng of contracts of that
character Is estabshed through the sae by that company of comparabe
contracts. See secton 6.19() of Reguatons 10 , reatng to the gft ta .
s to nsurance on the fe of the decedent, see secton 1.2 . cept wth
respect to the afore-mentoned annuty contracts and nsurance poces, the
vaues of annutes, fe estates, remanders, and reversons are to be computed
by the methods herenafter prescrbed n ths paragraph. The present worth
of such an nterest whch s dependent upon the contnuaton of, or termnaton
of the fe of one person or upon a term-certan s to be computed wth the use
of Tabe I or Tabe II of ths secton. If the Interest to be vaued s dependent
upon more than one fe or there s a term-certan concurrent wth one or more
ves, see subparagraph ( ) of ths paragraph. For the purpose of the com-
putaton, the age of a person s to be taken as the age of that person at hs
nearest brthday. If the e ecutor adopts the opton set forth n secton 11 ( )
see secton 1.11.
(1 )
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1.10, Regs. 10 .
1 6
(2) nnutes. (1) Payabe annuay at end of year. If the annuty a pay-
abe annuay at the end of each year durng the fe of an ndvdua, the amount
payabe annuay shoud be mutped by the fgure n coumn 2 of Tabe 1 opposte
the number of years n coumn 1 nearest the age of the Indvdua whose fe
measures the duraton of the annuty, or f payabe for a defnte number of years,
the amount payabe annuay shoud be mutped by the fgure n coumn 2 of
Tabe II opposte the number of years n coumn 1.
ampe (1). The decedent receved under the terms of hs father s w an
annuty of 10,000 a year payabe annuay for the fe of hs eder brother. t
the tme he ded, an annua payment had ust been made. The brother at the
decedent s death was 0 years months od. y reference to Tabe I, the fgure
n coumn 2 opposte 1 years, the number nearest to the brother s actua age. Is
found to be 17.6 3. The present worth of the annuty at the date of the de-
cedent s death s, therefore, 176, 3 ( 10,000 mutped by 17.6 3).
ampe (2). The decedent was entted to receve an annuty of 10,000 a
year paynbe at the end of annua perods throughout a term-certan. t the tme
he ded, an annua payment had ust been made and fve more annua payments
were st to be made. y reference to Tabe II, t s found that the fgure n
coumn 2 opposte years s . 1 1. The present worth of the annuty s, there-
fore, ,1 1 ( 10,000 mutped by 1 1).
(I) Payabe at end of semannua, quartery, monthy, or weeky perods.
If the annuty s payabe at the end of semannua, quartery, monthy, or weeky
perods, the vaue shoud be determned by mutpyng the aggregate amount to
be pad wthn a year by the fgure n coumn 2 of Tabe I opposte the number
of years n coumn 1 nearest the actua age of the person whose fe measures
the duraton of the annuty, or the fgure n coumn 2 of Tabe II opposte the
number of years the annuty s payabe, as the case may be, and then mutpy-
ng the product by 1.0171 for weeky payments, by 1.01 9 for monthy payments,
by 1.0130 for quartery payments, or by 1.00 7 for semannua payments.
ampe. If, n e ampe (1) gven above under subdvson (), the annuty
s payabe semannuay, the aggregate annua amount, 10,000, shoud be mu-
tped by the factor 17.6 3, and the product mutped by 1.00 7. The pres-
ent worth of the annuty at the date of death s, therefore, 17 391.62
( 10,000 17.6 3 1.00 7).
() Payabe at begnnng of annua, semannua, quartery, monthy, or
weeky perods. ( ) If the frst payment of an annuty for the fe of an n-
dvdua s to be pad at once, the vaue of the annuty s the sum of the frst
payment pus the present worth of a smar annuty, the frst payment of
whch s not to be made unt the end of the frst perod.
ampe. The decedent was entted to receve an annuty of 0 a month
payabe durng the fe of another. The decedent ded on the day a payment
was due. t the date of the decedent s death the person whose fe measures the
duraton of the annuty was 0 years of age. The vaue of the annuty at the
date of decedent s death s 0 pus the product of 0 12 1 . 6 (see Tabe
I) 1.01 9, or 9,100. 2.
( ) If the frst payment of an annuty for a defnte number of years s
to be pad at once, the appcabe factor s the product of the factor shown n
Tabe II mutped by 1.0177 for weeky payments, by 1.01 9 for monthy pay-
ments, by 1.021 for quartery payments, by 1.0262 for semannua payments, or
by 1.03 0 for annua payments.
ampe. The decedent was the benefcary of an annuty of 0 a month.
On the day a payment was due, the decedent ded. There were 300 payments
to be made, ncudng the payment due. The vaue of the annuty as of the
date of decedent s death s the product of 0 12 16. 1 (see Tabe
II) 1.01 9, or 10,07 . 0.
(3) Lfe estates and terms for years. If the nterest to be vaued conssts
of the rght of a person for hs fe, or for the fe of another person, or for
a term of years, ether to receve the ncome of certan property or to use non-
ncome-producng property, the vaue of the nterest s the vaue of the prop-
erty ess the present worth of the remander computed as shown beow under
subparagraph ( ) of ths paragraph.
ampe. The decedent was entted to receve the ncome from a fund of
0,000 durng the fe of a person 31 years od. The vaue of the fe estate
s 0,000 ess 1 , 66 (computed as shown n the e ampe under subparagraph
( ) of ths paragraph), or 3 , 3 .
( ) Remanders or reversonary nterests. If the decedent had a remander
or a reversonary nterest n property sub|ect to the fe estate of another, the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 7
1.10, Regs. 10 .
present worth of such nterest shoud be obtaned by mutpyng the vaue of
the property by the fgure n coumn 3 of Tabe I opposte the number of years
nearest to the actua age of the fe tenant. In case the remander or reverson
s to take effect at the end of a term of years Tabe II shoud be used.
Tabe I
Tabe, snge fe, Sft percent, showng the present worth of on annuty, or a fe
nterest, and of a remander nterest
1
2
3

2
3
ge
nnuty
Remander
ge
nnuty
Remander
0
23. 96
0. 16110
3
13. 221
0. 1623
1
2 . 903
. 12 3

13. 73
. 2 3
2
2 . 920
. 12 7

13. 121
. 07
3
2 . 2 6
.1311
6
12. 7679
. 312

2 . 737
. 13 1
7
12. 120
. 6

2 . 6392
. 13763

12. 0 6
. 7 09
6
2 . 326
. 1 136
9
11. 6960
. 906
7
2 . 1
. 1 3
60
11. 3369
. 60321

2 . 29 2
. 1 9 6
61
10. 9776
. 61 7
9
2 . 1713
. 1 00
62
10. 61 6
. 62 3
10
2 . 03 7
. 1 6
63
10. 260
. 6 0 9
11
23. 900
. 163 7
6
9. 9036
. 6 337
12
23. 7600
. 16 0
6
9. 6
. 66 0
13
23. 6161
. 173
66
9. 1960
. 67 1
1
2a 693
. 17 7
67
a 6
. 6903
1
23. 319
. 1 3 2
6
a 001
. 702 0
16
23. 166
. 1 917
69
a 1 7
. 71
17
2 0103
. 19 6
70
7. 200
. 72630
1
22. 11
. 20021
71
7. 71
. 7379
19
22. 6 70
. 20 96
72
7. 1 97
. 7 9 1
20
22. 179
. 211 7
73
6. 3 2
. 76066
21
22. 3 3
. 21797
7
6. 231
. 77169
22
22. 16 6
. 22 2
7
6. 21
. 7 2
23
21. 9 01
. 23070
76
. 9137
. 79302
2
21. 7902
. 2373
77
. 6201
. 0330
2
21. 9 0
. 2 1
7
. 33
. 1329
26
21. 39 2
. 2 120
79
. 0 72
. 2300
27
21. 1 7
. 2 3
0
. 7
. 32 1
2
20. 97 9
. 26
1
. 2 3
. 1 1
29
20. 7 1
. 273 7
2
. 2771
. 030
30
20. 3
. 2 129
3
. 03 1
. 77
31
20. 30 2
. 2 932

3. 023
. 6692
32
20. 0699
. 297

3. 7 9
. 7 7
33
19. 2
. 30 99
6
3. 36
. 223
3
19. 16
. 31 6
7
3. 1601
. 9 0
3
19. 32
. 323 0

2. 96
. 9623
36
19. 069
. 332 7
9
2. 77
. 9027
37
1 . 0
. 3 1
90
2. 6019
. 90 93
3
1 . 33
. 3 133
91
2. 3 2
.91 0
39
a 2 66
. 36102
92
2. 27
. 92036
0
17. 973
. 37092
93
2. 12
. 92 61
1
17. 6 3
. 3 101
9
1. 9 39
. 930 6
2
17. 3911
. 39131
9
1. 07
. 93 23
3
17. 0913
. 01 0
96
1. 72 6
. 93960

16. 7 60
. 12 9
97
1. 60 2
. 9 371

16. 7
. 2336
9
1. 9 2
. 9 7 6
6
16. 1 96
. 3 1
99
1. 39 9
. 9 11
7
1 . 3
. 6
100
1. 2973
. 9 9

1 . 133
. 703
101
1. 2033
. 9 7
9
1 . 1 31
. 6 9
102
1. 107
. 96123
0
1 . 6
. 030
103
.9973
. 96 09
1
1 . 101
. 921
10
. 31
. 970 9
2
1 .. 167
. 0 13
10
. 31
. 9 309
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1.10, Regs. 10 . 1
Tabe II
Tabe showng the present worth at S percent of an annuty for a term-certan, and
of a remander nterest postponed for a term-certan
1
2
3
1
2
a
Number of
years
nnuty
Remander
Number of
years
nnuty
Remander
1
0. 9662
0. 9661
16
12. 09 1
0. 76706
2
L 997
. 933 11
17
12. 6 13
. 720
3
2. 016
. 9019 3
1
13. 1 97
. 3 361

3. 6731
. 71 2
19
13. 709
. 201 6

. 1 1
. 1973
20
1 . 212
. 02 66
6
. 32 6
. 13 01
21
1 . 69 0
. 71
7
6. 11
. 7 991
22
1 . 1671
. 691 1

6. 7 0
. 7 9 12
23
1 . 620
. 32 6
9
7. 6077
. 733731
2
16. 0
. 379 7
10
. 3166
. 70 919
2
16. 1
. 231 7
11
9. 0016
. 6 9 6
26
16. 90
. 0 3
12
9. 6633
. 6617 3
27
17. 2
.39 012
13
10. 3027
. 639 0
2
17. 6670
. 3 16
1
10. 920
. 6177 2
29
1 . 03
. 36 7
16
11. 17
. 96 91
30
1 . 3920
. 3 627
ampe. The decedent was entted to receve property worth 0,000 upon
the death of hs eder brother, to whom the ncome for fe had been bequeathed.
The brother at the tme of the decedent s death was 31 years months od. y
reference to Tabe I, t s found that the fgure n coumn 3, opposte 31 years,
Is 0.2 932. The present worth of the remander nterest at the date of death
s, therefore, 1 , 66 ( 0,000 mutped by 0.2 932).
( ) ctuara computatons by ureau. If the Interest to be vaued s de-
pendent upon the contnuaton of, or termnaton of more than one fe, or
there s a term-certan concurrent wth one or more ves, a speca factor s
necessary. Such factor s to be computed upon the bass of the Makehamzed
mortaty tabe appearng as Tabe 3 of Unted States Lfe Tabes and ctuara
Tabes 1939-19 1, pubshed by the Unted States Department of Commerce, u-
reau of the Census, and nterest at the rate of Zk percent a year, compounded
annuay. Many such factors may be found n, or ready computed wth the
use of the tabes contaned n a pamphet entted ctuara aues for state
and Gft Ta , whch may be purchased from the Superntendent of Documents,
Unted States Government Prntng Offce, Washngton 2 , D. C.; or a case re-
qurng a speca factor (provded the case s that of an actua decedent and
not merey proposed or hypothetca) may be stated to the Commssoner who
w furnsh such factor. The request must be accompaned by a statement of
the date of brth of each person, the duraton of whose fe may affect the
vaue of the nterest, and by copes of the reevant nstruments.
( ) y nsertng after paragraph ( ) but before Tabe the
foowng:
(|) nnutes, fe estates, remanders, and reversons; estates of decedents
dyng before anuary 1, 19 2. In the case of decedents dyng before anuary 1,
19 2, the genera prncpes and methods prescrbed n paragraph () of ths
secton (wth one e cepton set forth n the ne t paragraph) are to be foowed
but the present worth of the nterest to be vaued s to be computed wth the
use of Tabe or Tabe (whch appear at the end of ths secton) and f
nether tabe s appcabe the computaton s to be made upon the bass of the
ctuares or Combned perence Tabe of Mortaty, as e tended, and nterest
at the rate of percent a year, compounded annuay. In the computaton of
the vaue of annutes the factors 1.01 20 for monthy payments, 1.01 S for
quartery payments, and 1.00990 for semannua payments are to be substtuted
for the factors appearng n (t) (2) () of ths secton; and the factors 1.021
for monthy payments, 1.02 for quartery payments, 1.02990 for semannua
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 9
1.10, Regs. 10 .
payments, and 1.0 for annua payments are to be substtuted for the factor
appearng n () (2) (111) of ths secton.
The present worth of a fe estate or term for years n specfc property s tc
be obtaned by mutpyng the approprate factor from coumn 2 of Tabe o
Tabe by .0 and mutpyng the product by the vaue of the property.
provson for the payment of ncome n semannua, quartery, or monthy nsta-
ments does not affect the vaue of the fe nterest.
Par. 2. Secton 1.11, as amended by Treasury Decson 699 C. .
19 9-1, 1 1, 1 7 , approved May 13, 19 9 26 CFR 1.11 , s further
amended by strkng therefrom the nnth and tenth paragraphs (be-
gnnng wth the words The date of vauaton of any property and
endng wth the parenthetca e presson whch foows the e ampe
n the tenth paragraph) and nsertng n eu thereof the foowng:
It s provded n subsecton (|) that any nterest or estate so affected sha
be ncuded at ts vaue at the date of death wth ad|ustment for any dfference
n ts vaue as of the ater date not due to mere apse of tme. The purpose of
ths provson s to emnate from the vaue as of the optona date changes n
vaue due to apse of tme. ccordngy, the vaues of annutes, fe, remander,
and reversonary nterests are to be obtaned by appyng the methods prescrbed
n secton 1.10(t) (or secton 1.10(/), f appcabe), usng the age of each
person, the duraton of whose fe may affect the vaue of the nterest, as of the
date of death and the vaue of the property as of the optona date. For e ampe,
a decedent was entted to receve property (whch at the tme of hs death was
worth 0,000) upon the death of another person who was entted to the ncome
therefrom for fe and who was 31 years od at the tme of the decedent s death.
The vaue at decedent s death of hs remander Interest woud, as e paned n
secton 1.10(0, be 1 , (36 ( 0,000 mutped by 0 932). If, due to economc
condtons, the property decned n vaue and was worth ony 0,000 1 year
after the date of death, the vaue of the remander nterest as of the optona
date woud be 11, 72. 0 ( 0,000 mutped by 0.2 932).
s an e ampe of the vauaton of a patent, suppose that the decedent owned
a patent whch on the date of hs death had an une pred term of 10 years and
a vaue of 7 ,000 and that the patent was sod 6 months after the decedent s
death, at whch tme, because of apse of tme and other causes ts vaue was
60,000. The ad-|usted vaue thereof woud be obtaned by dvdng 60,000 by
0. (rato of the remanng fe of the patent at the optona date to the reman-
ng fe of the patent at the date of death). The quotent, 03,1 7. 9, s the
optona vaue.
Par. 3. Secton 1.17, as amended by Treasury Decson 3 C. .
19 1-1, 72, 77 , approved March , 19 1 26 CFR 1.17 , s further
amended as foows:
( ) y changng the thrd sentence of the ffth paragraph of
(c) (1) thereof to read as foows:
See secton 1.10(t) or secton 1.10 (/), whchever s appcabe.
( ) y strkng out the second sentence of the s th paragraph
of (c)(1) thereof.
Par. . Secton 1.20 26 CF 1.20 s amended by changng the
parenthetca e presson whch appears at the end of the ne t to the
(See secton 1.10( ) or secton 1.10 (|), whchever s appcabe.)
Par. . Secton 1. , as amended by Treasury Decson 3 1 26
CFR 1. , s further amended by strkng out the fourth paragraph
and nsertng n eu thereof the foowng:
If a trust s created for both a chartabe and a prvate purpose, deducton
may be taken of the vaue of the benefca nterest n favor of the former ony
nsofar as such nterest s presenty ascertanabe, and hence severabe from
the nterest n favor of the prvate use. The present vaue of deferred payments
tc. be made for a chartabe purpose s to be determned n accordance wth the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1.13, Regs. 10 .
160
rues stated In secton 1.10(0 or secton 1.10(0. whchever Is appcabe.
Thus, f money or property s paced n trust to pay the ncome to an ndvdua
durng hs fe, or for a term of years, and then to pay the prncpa to a char-
tabe corporaton, the present vaue of the remander Is deductbe. To deter-
mne the present vaue of such remander use the approprate factor from coumn
3 of Tabe I or II of secton 1.10 (), or of Tabe or of secton 1.10 (/),
whchever s appcabe. If the Interest nvoved s such that ts vaue s to be
determned by a speca computaton (see secton 1.10(0 ( ) or secton 1.10(0 )
n request for a specfc factor accompaned by a statement of the date of brth
of each person, the duraton of whose fe may affect the vaue of the remander,
and by copes of the reevant Instruments may be submtted to the Commssoner
who n hs dscreton may suppy the factor requested. If the Commssoner
does not furnsh the factor, the cam for deducton must be supported by a
fu statement of the computaton of the present worth made, n accordance
wth the prncpes set forth n the appcabe paragraph of secton 1.10, by one
sked n actuara computatons.
Par. 6. Secton 1. 7c(d), added by Treasury Decson 699 26
CFR 1. 7c( ) , s amended to read as foows:
(d) Remander nterest. Where the ncome from property Is made payabe
to another ndvdua for fe, or for a term of years, wth remander absoutey
to the survvng spouse or to her estate, the marta deducton s based upon
the present vaue of the remander. The present vaue of the remander s to
be determned n accordance wth the rues stated n secton 1.10(0 or secton
1.10(0, whchever s appcabe. For e ampe, f, n a case to whch secton
1.10(0 appes, the survvng spouse s to receve 0,000 upon the death of a
person aged 31 years, the present vaue of the remander s 1 , 60. If the re-
mander s such that ts vaue s to be determned by a speca computaton
(see secton 1.10(0 ( ) or secton 1.10(0), a request for a specfc factor ac-
companed by a statement of the date of brth of each person, the duraton of
whose fe may affect the vaue of the remander, and by copes of the reevant
nstruments may be submtted to the Commssoner who In hs dscreton may
suppy the factor requested. If the Commssoner does not furnsh the factor,
the cam for deducton must be supported by a fu statement of the computa-
ton of the present worth made, n accordance wth the prncpes set forth n
the appcabe paragraph of secton 1.10, by one sked n actuara computatons.
(Ths Treasury Decson s ssued under the authorty contaned
n secton 3791 of the Interna Revenue Code ( 3 Stat. 67; 26 U. S. C.
3791).)
ohn . Dt|nap,
Commssoner of Interna Revenue.
pproved May 27, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 3, 19 2, : 9 a. m.)
S CTION 11(a). GROSS ST T : D C D NT S
INT R ST
Secton 1.13, Reguatons 10 : Property of
decedent at tme of death.
( so Secton 11(c), Secton 1.17; Secton
11(d), Secton 1.20; Secton 11(f), Sec-
ton 1.2 .)
INT RN L R NU COD
Where an empoyee has the rght to desgnate the benefcary of
a death beneft under a proft-sharng and retrement pan, the
empoyee, at the tme of hs death, s n possesson of such rghts
19 2-10-13 1
G. C. M. 272 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
161
1.13, Regs. 10 .
as consttute property wthn the meanng of secton 11(a) of the
Interna Revenue Code, provded that pror to the empoyee s death
the empoyer has not wthdrawn the rght of the empoyee to desg-
nate a benefcary, and has not emnated a death benefts. Thus,
the amount payabe under the pan to the desgnated benefcary
s ncudbe n the deceased empoyee s gross estate under secton
11 (a), (c), (d),and (f) of the Code.
G. C. M. 17 17 (C. . 1937-1, 2 1) modfed.
n opnon s requested wth respect to the ncuson n the gross
estate of an empoyee of a death beneft payabe under a proft-sharng
and retrement pan under whch pan the empoyer s the soe con-
trbutor and the empoyee has the rght to desgnate the benefcary.
Under the provsons of the proft-sharng and retrement pan n
the nstant case, a contrbutons to the pan are made by the company.
ach year the company transfers 1 percent of ts net ncome to the
trustee of the pan ana the trustee aocates the contrbuton to the
accounts of the egbe empoyees for that year on the bass of com-
pensaton and ength of servce of such empoyees. Income of the
trust property and any amounts forfeted by empoyees by reason
of dscharge or termnaton of empoyment are aso aocated on the
same bass. Upon the death of a partcpatng empoyee pror to
retrement, the partcpatng nterest of such empoyee s pad to the
benefcary or benefcares desgnated by hm or, n the event that no
benefcary was desgnated by the empoyee, to hs e ecutors or ad-
mnstrators. The company reserves the rght to termnate or amend
the pan. Upon termnaton, a contrbutons cease and the trustee
s requred to pay, as prompty as possbe, over to the partcpatng
empoyees, or ther benefcares, ther partcpatng nterests. No
amendment to the pan s effectve (a) whch attempts to dvert the
assets hed by the trustee to purposes other than for the e cusve
beneft of the partcpatng empoyees and ther benefcares, or (6)
whch wthout hs consent, affects the rght of any empoyee whose
partcpatng nterest has aready become payabe to hm. The em-
poyer has a rght to amend the pan to emnate the provson for
the payment of a death beneft to empoyees dyng pror to the recept
of any benefts under the pan so ong as the amendment does not
destroy the rght of an empoyee or hs desgnee to receve a death
beneft whch had aready become payabe.
In dward . Dmock v. Corwn (19 Fed. Supp. 6, affrmed on
another ssue, 99 Fed. (2d) 799), the decedent, who ded on une 11,
1930, was at the tme of hs death an empoyee of the Standard O
Co. of New York. Under a penson and death beneft pan of the
empoyer-company, the empoyee was entted to desgnate a bene-
fcary who was to receve a death beneft under the pan n the event
of the empoyee s death. The company e pressy reserved the rght
to termnate or modfy the pan at any tme. owever, t was e -
pressy provded that death benefts woud be pad n accordance wth
the pan n effect at the tme of any empoyee s death. The Comms-
soner, n that case, contended that the amount of the death beneft was
ncudbe n the decedent s gross estate under secton 302(a) of the
Revenue ct of 1926 (whch was dentca wth the present prov-
sons of secton 11(a) of the Interna Revenue Code) as property
of the decedent. The court decded that the death beneft dd not
consttute property of the decedent under such secton. Under the
pan, no death beneft was payabe f the desgnated benefcary pre-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1.13, Regs. 10 .
162
deceased the empoyee. owever; the empoyee was granted the rght
to change, at any tme, the benefcary of the death beneft. The court
aso determned that the act of desgnatng the decedent s wdow as
the recpent of the death beneft dd not consttute a transfer of
property so as to brng the death beneft nto the estate under secton
302 (c) or (d) of the Revenue ct of 1926. The court reasoned
that n vew of the fact that the empoyer e pressy reserved the
rght to termnate or modfy the pan at any tme, the empoyee
coud not be sad to have a rght to the death beneft whch woud
be the equvaent of property. It shoud be noted n connecton
wth the Dmock case that the court cted G. C. M. 17 17 (C. .
1937-1, 2 1) n support of ts concusons.
In G. C. M. 17 17, supra, ths offce e pressed the opnon that the
death beneft pad by an empoyer to a desgnated benefcary of an
empoyee s not ncudbe n the empoyee s gross estate under sec-
ton 302(a) of the Revenue ct of 1926 as property of the decedent
or under secton 302(g) of that ct as fe nsurance. The pan
under consderaton n G. C. M. 17 17 provdes for the payment of
prescrbed death benefts upon the death of empoyees who at the
date of death, or at the begnnng of ther ast ness, had been n the
empoy of the company for 1 year or more. n empoyee has the
rght to desgnate the benefcary to whom the death beneft sha
be pad. The company reserved the rght to termnate or modfy
the pan at any tme but guaranteed the payment of a death beneft
n accordance wth the pan n effect at the date of an empoyee s
death. Ths offce took the poston that n vew of the fact that the
empoyer-company had reserved the rght to modfy the pan, the
empoyee had no contractua rght to the death beneft whch coud
be treated as property sub|ect to vauaton.
The facts n the nstant case are anaogous to those consdered n
G. C. M. 17 17 and the Dmock case. For nstance, n each case t s
possbe pror to the death of a partcpatng empoyee for the em-
poyer to destroy the rght of an empoyee s desgnee to receve the
death beneft provded under the pan. owever, upon reconsdera-
ton, ths offce s now of the opnon that the mere possbty that an
empoyer may wthdraw, pror to the death of an empoyee, the rght
of the empoyee s desgnee to receve a death beneft does not ndcate
an absence of a property nterest of the decedent n the rght to desg-
nate a benefcary of the death beneft.
In both G. C. M. 17 17 and the Dmock case, t was hed that the
presence of the possbty that the empoyer woud wthdraw the rght
to a death beneft rendered the nterest of the empoyee an e pect-
ancy rather than property. The term e pectancy usuay con-
notes the nterest of an e pectant her or dstrbutee n the property
of a person pror to the atter s death. Thus, n the case of an e -
pectant dstrbutee, the recept of property of another s contngent
upon the death of the present owner and the utmate testamentary
dsposton of hs property.
On the other hand, n the nstant case, as n G. C. M. 17 17 and
n the Dmock case, the rght to desgnate the benefcary of a death
beneft may be annued by the postve act of the source of the bene-
ft, the empoyer, of wthdrawng the rght to desgnate the recpent
of the death beneft, or by amendng the pan to emnate any death
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
163
1.20, Regs. 10 .
benefts, and ths contngency s termnated by the death of the hoder
of the rght to desgnate, the empoyee. Ths s not smar to an
e pectancy.
ccordngy, t s the opnon of ths offce that where an empoyee
has the rght to desgnate the benefcary of a death beneft under a
proft-sharng and retrement pan, the empoyee, at the tme of hs
death, s n possesson of such rghts as consttute property wthn the
meanng of secton 11(a) of the Interna Revenue Code, provded
that pror to the empoyee s death the empoyer has not wthdrawn
the rght of the empoyee to desgnate a benefcary, and has not em-
nated a death benefts. Thus, the amount payabe under the pan
to the desgnated benefcary s ncudbe n the deceased empoyee s
gross estate under secton 11 (a), (c), (d), and (f) of the Code.
In vew of the foregong, G. C. M. 17 17, supra, to the e tent n-
consstent wth the above-stated opnon, s hereby modfed, and snce
the decson n the Dmock case as to ths ssue was argey based
upon the reasonng of G. C. M. 17 17, t s recommended that as to
ths pont the decson n the Dmock case shoud no onger be foowed
n the dsposton of smar cases.
Pursuant to authorty contaned n secton 3791(b) of the Code,
the nstant rung w not be apped wth respect to estates of de-
cedents dyng pror to uy 1,19 2.
Mason . Lemng,
ctng Chef Counse, ureau of Interna Revenue.
pproved pr , 19 2.
ohn . Dunap,
Commssoner of Interna Revenue.
S CTION 11(c). GROSS ST T : TR NSF RS IN CON-
T MPL TION OF, OR T ING FF CT T, D T
Secton 1.17, Reguatons 10 : Transfers n-
tended to take effect at or after the decedent s
death.
INT RN L R NU COD
Death benefts under a proft-sharng and retrement pan payabe
to a benefcary desgnated by a deceased empoyee. (See G. C. M.
272 2, page 160.)
S CTION 11(d). GROSS ST T : R OC L
TR NSF RS
Secton 1.20, Reguatons 10 : Transfers wth
power to change the en|oyment.
INT RN L R NU COD
Death benefts under a proft-sharng and retrement pan payabe to
a benefcary desgnated by a deceased empoyee. (See G. C. M.
272 2, page 160.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

2

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1.16, Regs. 10 .
16
S CTION 11(f). GROSS ST T : POW RS OF
PPOINTM NT
Secton 1.2 , Reguatons 10 : Property sub-
|ect to power of appontment by decedent.
INT RN L R NU COD
Death benefts under a proft-sharng and retrement panpayabe
to a benefcary desgnated by a deceased empoyee. (See Cr. C. M.
272 2, page 160.)
S CTION 11(1). GROSS ST T : CONT MPL TION OF
D T
Secton 1.16, Reguatons 10 : Transfers n 19 2-13-13 1
contempaton of death. T. D. 90
( so Sectons 11 (c), (d), (g), and 12(b);
Sectons 1.21, 1.27, and 1. 0, Reguatons
10 .)
TITL 26 INT RN L R NU . C PT R I, SU C PT R , .P RT 1.
ST T T UND R C PT R S OF T INT RN L R NU COD , S
M ND D
Reguatons 10 amended to conform to the estate ta provsons
of the Revenue ct of 19 0 ( 1st Cong., 2d sess.).
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. G.
To Coectors of Interna Revenue and Others Concerned:
On anuary 31, 19 2, notce of proposed rue makng, regardng
the estate ta provsons of the Revenue ct of 19 0, approved Sep-
tember 23, 19 0, and regardng Pubc Law 7 9 ( 1st Cong. 2d sess.)
C. . 19 0-2; 2 7 was pubshed n the Federa Regster (17 F. R.
92 ). No ob|ectons to such rues havng been receved, the amend-
ments set forth beow, whch are the amendments necessary to
conform Reguatons 10 26 CFR, part 1 to the estate ta
provsons of the Revenue ct of 19 0. are hereby adopted. The
amendments contaned heren do not ncude the proposed rues con-
taned n paragraphs and 9 of the append to the notce of proposed
rue makng reatng to secton 63(c) of the Interna Revenue Code,
as added by Pubc Law 7 9 ( 1st Cong.), provdng an e empton
for certan works of art. Inasmuch as secton 63(c) was further
amended by secton 60 of the Revenue ct of 19 1, approved Octo-
ber 20, 19 1, t s consdered that the rues regardng Pubc Law 7 9
shoud be ncorporated n a Treasury Decson to be ssued to conform
the reguatons to secton 60 .
Paragraph 1. There s nserted mmedatey after secton of Pub-
c Law 37 , ghty-frst Congress, frst sesson C. . 19 9-2, 27 1
(nserted by Treasury Decson 3 C. . 19 1-1, 72 , approved
March , 19 1) and precedng secton 302(c) of the Revenue ct of
1926 (as orgnay enacted), whch precedes secton 1.1 26 CFR
1.1 , the foowng:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
16
1.16, egs. 10 .
S C. 01. TR NSF RS IN CONT MPL TION OF D T R -
NU CT OF 19 0, PPRO D S PT M R 23, 19 0 .
(a) Tbansfeks, tc., n Contempaton of Death. Secton 11 (re-
atng to gross estate) s hereby amended by strkng out (1) at the
begnnng of subsecton (1) and Insertng n eu thereof (m) , and by-
nsertng after subsecton (k) the foowng new subsecton:
(1) Contempaton of Death. If the decedent wthn a perod of
three years endng wth the date of hs death (e cept n case of a bona
fde sae for an adequate and fu consderaton n money or money s
worth) transferred an nterest n property, renqushed a power, or
e ercsed or reeased a power of appontment, such transfer, renqush-
ment, e ercse, or reease sha, uness shown to the contrary, be deemed
to have been made n contempaton of death wthn the meanng of sub-
|ectons (c), (d),and (f) ; but no such transfer, renqushment, e ercse,
or reease made pror to such three-year perod sha be deemed or hed
to have been made n contempaton of death.
(b) mendments of Secton 11 (c) and (d).
(1) Secton 11(c)(1)( ) (reatng to transfers In contempa-
ton of death) s hereby amended to read as foows:
( ) In contempaton of hs death; or .
(2) Secton 11(d) (reatng to revocabe transfers) s hereby
amended by strkng out paragraph ( ) thereof.
(c) ffectve Date. The amendments made by ths secton sha be
appcabe ony wth respect to estates of decedents dyng after the date
of the enactment of ths ct.
Par. 2. Secton 1.16, as amended by Treasury Decson 3 26
CF 1.16 s further amended as foows:
( ) y strkng . mmedatey after the headng of such secton
and nsertng n eu thereof (a) In genera .
( ) y strkng from such secton the thrd and fourth paragraphs
thereof and nsertng n eu thereof the foowng:
(6) states of decedents dyng after September S3, 19 0. In the case of a
decedent dyng after September 23, 19 0, any transfer wthout an adequate and
fuU consderaton In money or money s worth made by such decedent wthn
a perod of 3 years endng wth the date of hs death Is, uness shown to the
contrary, deemed to have been made n contempaton of death. owever, no
transfer by such a decedent f made pror to such 3-year perod s consdered
to have been made n contempaton of death.
If the e ecutor contends that the vaue of property transferred by the decedent
wthn a perod of 3 years endng wth the date of hs death shoud not be
ncuded n the gross estate because he consders that such transfer was not
made n contempaton of death, be shoud fe sworn statements wth the
return, n dupcate, of a the matera facts and crcumstances, ncudng
those drecty or ndrecty Indcatng the decedent s motve n makng the transfer
and hs menta and physca condton at that tme, and one copy of the death
certfcate. owever, uness requested by the Commssoner, such data need not
be submtted wth respect to any transfer of ess than 1,000 n vaue.
(c) states of decedents dyng on or before September 23, 19 0. In the case
of a decedent dyng on or before September 23, 19 0, any transfer wthout an
adequate and fu consderaton In money or money s worth, made by the dece-
dent wthn a perod of 2 years endng wth the date of hs death, of a matera
part of hs property n the nature of a fna dsposton or dstrbuton thereof,
s, uness shown to the contrary, deemed to have been made n contempaton
of death.
If the e ecutor contends that the vaue of a transfer of ,000 or more made
by the decedent shoud not be Incuded n the gross estate because he consders
that such transfer was not made In contempaton of death, he shoud fe
worn statements wth the return, In dupcate, of a the matera facts and
crcumstances, Incudng those drecty or Indrecty Indcatng the decedent s
motve n makng the transfer and hs menta and physca condton at that
tme, and one copy of the death certfcate.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
S 1.16, Regs. 10 .
166
(C) y nsertng as a headng to the ast paragraph of such sec-
ton (whch paragraph begns: Secton of Pubc Law 37 )
the foowng:
(d) Renqushments of fe estates and other nterests n ncome.
Par. 3. Secton 1.21, as amended by Treasury Decson 3 2
CFR 1.21 s further amended as foows:
( ) y addng after If n the sentence begnnng If the re-
nqushment be not admtted the foowng: the decedent ded
on or before September 23 19 0, and f
( ) y addng mmedatey after the sentence amended by ( )
the foowng:
If the decedent ded after September 23,19 0, the renqushment, If made wthn
a perod of 3 years endng wth the date of hs death, s, uness shown to the
contrary, deemed to have been made n contempaton of death. owever, no
renqushment by a decedent made pror to such 3-year perod s consdered
to have been made In contempaton of death.
Par. . There s nserted mmedatey precedng secton 1.2 26
CFR 1.2 the foowng:
S C. 03. R RSION RY INT R STS IN C S OF LIF INSUR-
NC R NU CT OF 10 0, PPRO D S PT M R 23,
19 0 .
(a) mendment of Secton 0 (c) of Revenue ct of 19 2. ffectve
wth respect to estates of decedents dyng after October 21,19 2, secton
0 (c) of the Revenue ct of 19 2 s hereby amended by addng at the end
thereof the foowng: For the purposes of the precedng sentence, the
term ncdent of ownershp ncudes a reversonary nterest ony f
(1) at some tme after anuary 10,19 1, the vaue of such reversonary
nterest e ceeded per centum of the vaue of the pocy, and (2) the
reversonary Interest arose by the e press terms of the pocy or other
Instrument and not by operaton of aw. s used In ths subsecton,
the term reversonary nterest ncudes a possbty that the pocy,
or the proceeds of the pocy, ( ) may return to the decedent or hs
estate, or ( ) may be sub|ect to a power of dsposton by hm. The
vaue of a reversonary nterest at any tme sha be determned (wthout
regard to the fact of the decedent s death) by usua methods of vauaton,
ncudng the use of tabes of mortaty and actuara prncpes, pursuant
to reguatons prescrbed by the Secretary. In determnng the vaue of
a possbty that the pocy or proceeds thereof may be sub|ect to a
power of dsposton by the decedent, such possbty sha be vaued as
f It were a possbty that such pocy or proceeds may return to the
decedent or hs estate.
(b) No Interest on Refunds. No Interest sha be aowed or pad
on any overpayment resutng from the appcaton of subsecton (a)
wth respect to any payment made pror to the date of the enactment of
ths ct
Par. . Secton 1.27, as amended by Treasury Decson 699 C. .
19 9-1, 1 1 , approved May 13, 19 9 26 CFR 1.27 , s further
amended by strkng therefrom the ast sentence of the s th para-
graph of (a) (whch sentence ends ncdent of ownershp. ) and
nsertng n eu thereof the foowng:
For the purpose of the precedng sentence, a reversonary nterest consttutes
an ncdent of ownershp f (1) at some tme after anuary 10, 19 1, the rever-
sonary nterest e ceeded percent of the vaue of the pocy, and (2) the rever-
sonary nterest arose by the e press terms of the pocy or other nstrument
and not by operaton of aw. The term reversonary nterest ncudes a pos-
sbty that the pocy, or the proceeds of the pocy, may return to the decedent
or hs estate and a possbty that such pocy, or the proceeds of such pocy,
may be sub|ect to a power of dsposton by hm. The determnaton of wtether
the decedent has retaned a reversonary Interest arsng by the e press terms
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
167
6.19, Regs. 10 .
of the pocy or other nstrument and the determnaton of whether the vaue
of such nterest e ceeds percent of the vaue of the pocy sha be made In
accordance wth the prncpes of secton 1.17(c), as added by Treasury Dec-
son 3 , approved March ,19 1.
Par. 6. There s nserted mmedatey precedng secton 1.29 26
CFR 1.29 the foowng:
S C. 02. R P L OF D DUCTION FOR SUPPORT OF D P ND-
NTS R NU CT OF 19 0, PPRO D S PT M R 23,
19 0 .
ffectve wth resnect to estates of decedents dyng after the date of
the enactment of ths ct, secton 12(b) (reatng to deductons for
e penses, etc.) s hereby amended
(a) by nsertng the word and at the end of paragraph (3)
thereof;
(b) by strkng out of paragraph ( ) thereof the foowng:
and ;
(c) by strkng out paragraph ( ) thereof; and
(d) by strkng out (3), ( ), and ( ) e ceed and nsertng n
en thereof (3), and ( ) e ceed .
Par. 7. Secton 1. 0 26 CFR 1. 0 s amended by changng that
part of the frst sentence thereof whch precedes the coon to read as
foows:
The support of dependents of the decedent durng the settement of the estate
Is deductbe ony n the case of estates of decedents dyng on or before Sep-
tember 23,19 0, and ony pursuant to the foowng rues
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 3791 of the Interna Revenue Code ( 3 Stat. 67;
26 U. S. C. 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved May 27, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 2,19 2, : 1 a. m.)
GIFT T
S CTION 100 . GIFTS M D IN PROP RTY
Secton 6.19, Reguatons 10 : auaton of 19 2-13-13 2
property. T. D. 902
( so Secton 1000, Secton 6.2; Secton 1003,
Secton 6.11; Secton 100 , Sectons 6.13
and 6.16a, eguatons 10 .)
TITL 26 INT RN L R NU C PT R I, SU C PT R , P RT 6.
GIFT T UND R C PT R OF T INT RN L R NU COD , S
M ND D
Sectons 6.2(o), 6.11, 6.13, 6.16a (c), and 6.19 of Reguatons
10 amended.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On anuary 3,19 2, notce of proposed rue makng wth respect to
the vauaton of certan casses of property for purposes of the gft
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
6.19, Regs. 10 .
16
ta was pubshed n the Federa Regster (17 F. R. ). fter con-
sderaton of a reevant matter presented by nterested persons re-
gardng the rues proposed, the amendments to Reguatons 10 26
CFR, part 6 set forth beow are hereby adopted.
Paragraph 1. Secton 6.2(a), as amended by Treasury Decson
69 C. . 19 9-1, 226 , approved May 13, 19 9 26 CFR 6.2(a) ,
s further amended by strkng from the e ampe numbered (7) the
words such property vaued as provded n secton 6.19 ( ). and
nsertng n eu thereof the foowng:
the vaue of such property ess the vaue of hs retaned nterest theren, vaued
n accordance wth the provsons of secton 6.19(/) or secton 6.19(0), whch-
ever s appcabe.
Par. 2. Secton 6.11 26 CFR 6.11 s amended by changng the
ast sentence thereof to read as foows:
For the vauaton of future nterests, see secton 6.19 (/) or 6.19(g), whch-
ever s appcabe.
Par. 3. Secton 6.13 26 CFR 6.13 s amended by changng the
ast sentence of the ast paragraph thereof to read as foows:
To determne the vaue of such remander as of the date of gft, the vaue of
the property transferred shoud be mutped by the approprate factor from
coumn 3 of Tabe I or Tabe II of secton 6.19 (or from Tabe or Tabe ,
f appcabe).
Par. . Secton 6.16a(c), added by Treasury Decson 69 26
CFR 6.16a(c) , s amended to read as foows:
(c) Remander nterests. Where the Income from property s made payabe
to the donor or another ndvdua for fe, or for a term of years, wth remander
absoutey to the donor s spouse or to her estate, the marta deducton s equa
to one-haf the present vaue of the remander. It shoud be noted, however,
that where such remander s dstrbutabe to the estate of the donor s spouse
(or to her e ecutors or admnstrators) n the event of her death pror to the ter-
mnaton of a trust or of a precedent nterest, the marta deducton s aowabe
ony f under such crcumstances the remander nterest woud be ncudbe In
her gross estate under secton 11(a). The present vaue of the remander (that
Is, ts vaue as of the date of gft) s to be determned n accordance wth the
rues stated n secton 6.19(/) (or secton 6.19(0), f appcabe). For
e ampe, n a case to whch secton 6.19 (/) s appcabe, f the donor s spouse
s to receve 0,000 upon the death of a person aged 31 years, the present vaue
of the remander s 1 , 66. (See e ampe n secton 6.19(/) ( )). If the
remander s such that ts vaue s to be determned by a speca computaton
(see secton 6.19(/) ( )), a request for a specfc factor accompaned by a state-
ment of the date of brth of each person, the duraton of whose fe may affect
the vaue of the remander, and by copes of the reevant nstruments may be
submtted to the Commssoner who n hs dscreton may suppy the factor re-
quested. If the Commssoner does not furnsh the factor, the cam for deduc-
ton must be supported by a fu statement of the computaton of the present
worth made, t acordance wth the prncpes set forth n secton 6.19(/) (or
secton 6.19(0), f appcabe), by one sked n actuara computatons.
Par. . Secton 6.19 26 CFR 6.19 s amended as foows:
( ) y changng paragraph (/) thereof to read as foows:
(/) nnutes, fe estates, remanders, and reversons; gfts made after
December 31, 19 1. (1) In genera. nnutes purchased from fe nsurance
companes, or other companes reguary engaged n ssung annuty contracts,
and fe Insurance poces are to be vaued as e paned n paragraph () of
ths secton. cept wth respect to the afore-mentoned annuty contracts and
Insurance poces, the vaues of annutes, fe estates, remanders, and rever-
sons are to be computed by the methods herenafter prescrbed n ths para-
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
169
6.19, Regs. 10 .
graph. Where the donor transfers property In trust or otherwse and retans
an nterest theren, the vaue of the gft s the vaue of the property transferred
ess the vaue of the donor s retaned nterest Where the donor assgns or
renqushes an annuty, fe estate, remander, or reverson whch he hods by
vrtue of a transfer prevousy made by hmsef or another, the vaue of the
gft s the vaue of the nterest transferred. In ether ease the present worth
of the nterest to be vaued s to be computed wth the use of Tabe I or Tabe
II of ths paragraph f t s dependent upon the contnuaton of, or termnaton
ot the fe of one person or upon a term-certan. If such nterest s dependent
upon more than one fe or there s a term-certan concurrent wth one or more
ves, see subparagraph ( ) of ths paragraph. For the purpose of the com-
putaton the age of a person s to be taken as the age of that person at hs
nearest brthday.
(2) nnutes. () Payabe annuay at end of year. If the annuty s pay-
abe annuay at the end of each year durng the fe of an ndvdua, the
amount payabe annuay shoud be mutped by the fgure n coumn 2 of
Tabe I opposte the number of years n coumn 1 nearest the age of the n-
dvdua whose fe measures the duraton of the annuty, or f payabe for
a defnte number of years the amount payabe annuay shoud be mutped
by the fgure n coumn 2 of Tabe II opposte the number of years n coumn 1.
ampe ( ). The donor assgns an annuty of 10,000 a year payabe an-
nuay durng hs fe mmedatey after an annua payment has been made.
The age of the donor on the date of assgnment s 0 years and months. y
reference to Tabe I, t s found that the fgure n coumn 2 opposte 1 years,
the number nearest to the donor s age, s 17.6 3. The vaue of the gft s,
therefore, 176, 63 ( 10,000 mutped by 17.6 3).
ampe (2). The donor was entted to receve an annuty of 10,000 a
year payabe at the end of annua perods throughout a term of 20 years; the
donor, when 1 years have eapsed, makes a gft thereof to hs son. y refer-
ence to Tabe II, t s found that the fgure n coumn 2 opposte years, the
une pred porton of the 20-year perod, s . 1 1. The present worth of the
annuty s, therefore, ,1 1 ( 10,000 mutped by . 1 1).
() Payabe at end of semannua, quartery, monthy, or weeky perods.
If the annuty s payabe at the end of semannua, quartery, monthy, or
weeky perods, the vaue shoud be determned by mutpyng the aggregate
amount to be pad wthn a year by the fgure n coumn 2 of Tabe I opposte
the number of years n coumn 1 nearest the actua age of the person whose
fe measues the annuty, or the fgure n coumn 2 of Tabe II opposte tbe
number of years the annuty s payabe, as the case may be, and then mutpy-
ng the product by 1.0171 for weeky payments, by 1.01 9 for monthy payments,
by 1.0130 for quartery payments, or by 1.00 7 for semannua payments.
ampe. If, n e ampe (1) gven above under subdvson () the annuty
Is payabe semannuay, the aggregate annua amount, 10,000, shoud be mut-
ped by the factor 17.6 3, and the product mutped by 1.00 7. The vaue of the
gft s, therefore, 17 ,391.62 ( 10,000 17.6 3 1.00 7).
() Payabe at begnnng of annua, semannua, quartery, monthy, or
weeky perods. ( ) If the frst payment of an annuty for the fe of an n-
dvdua s to be pad at once, the vaue of the annuty s the sum of the frst
payment pus the present worth of a smar annuty, the frst payment of whch
s not to be made unt the end of the frst perod.
ampe. The donee s made the benefcary for fe of an annuty of 0
a month from the ncome of a trust, sub|ect to the rght reserved by the donor
to cause the annuty to be pad for hs own beneft or for the beneft of another.
On the day a payment s due, the donor renqushes hs reserved power. The
donee s then 0 years of age. The vaue of the gft s 0 pus the product of
0 12 1 . 6 (see Tabe I) 1.01 9, or 9,100. 2.
( ) If the frst payment of an annuty for a defnte number of years Is to
be pad at once, the appcabe factor s the product of the factor shown n Tabe
II mutped by 1.0177 for weeky payments, by 1.01 9 for monthy payments,
by 1.021 for quartery payments, by 1.0262 for semannua payments, or by
1.03 0 for annua payments.
ampe. The donee s the benefcary of an annuty of 0 a month sub|ect
to a reserved rght In the donor to cause the annuty or the cnsh vaue thereof
to be pad for hs own beneft or the beneft of another. On the day a payment
21 1 2 2 12
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
6.19, Regs. 10 .
170
s due, the donor renqushes the power. There are 300 payments to be made
coverng a perod of 2 years, Incudng the payment due. The vaue of the
gft s the product of 0 12 16. 1 (factor for 2 years, Tabe II)
1.01 9, or 10,07 : 0.
(3) Lfe estates and terms for years. If the Interest to be vaued conssts
of the rght of a person for hs fe, or for the fe of another person, or for
a term of years, ether to receve the ncome of certan property or to use
nsnncome-producng property, the vaue of the nterest s the vaue of the
property ess the present worth of the remander, computed as shown beow
under subparagraph ( ) of ths paragraph.
ampe. The donor, who s entted to receve the ncome from property
worth 0,000 durng hs fe, makes a gft of such nterest. The donor s 31
years od on the date of gft The vaue of the gft s 0,000 ess 1 , 66
(computed as shown n the e ampe under subparagraph ( ) of ths paragraph),
or 3 , 3 .
( ) Remanders or reversonary nterests. If the nterest to be vaued s
a remander or reversonary nterest sub|ect to a fe estate, the vaue of the
nterest shoud be obtaned by mutpyng the vaue of the property at the
date of the gft by the fgure n coumn 3 of Tabe I opposte the number of
years nearest the age of the fe tenant. In case the remander or reverson s
to take effect at the end of a term of years, Tabe II shoud be used.
ampe. The donor transfers by gft property worth 0,000 whch he s
entted to receve upon the death of hs brother, to whom the ncome for fe
has been bequeathed. The brother at the date of gft s 31 years of age.
y reference to Tabe I, t s found that the fgure n coumn 3 opposte 31
years s 0.2 932. The vaue of the gft s, therefore, 1 , 06 ( 0,000 0.2 932).
( ) ctuara cacuatons by ureau. If the nterest to be vaued s de-
pendent upon the contnuaton of, or termnaton of more than one fe, or there
s a term-certan concurrent wth one or more ves, or f the retaned nterest
of the donor s condtoned upon survvorshp, a speca factor s necessary.
Such factor Is to be computed upon the bass of the Makearazed mortaty
tabe appearng as Tabe 3 of the Unted States Lfe Tabes and ctuara
Tabes 1939-19 1, pubshed by the Unted States Department of Commerce,
ureau of the Census, and nterest at the rate of 3 percent a year, compounded
annuay. Many such factors may be found n, or ready computed wth the
use of the tabes contaned n a pamphet entted ctuara aues for state
and Gft Ta , whch may be purchased from the Superntendent of Documents,
Unted States Government Prntng Offce, Washngton 2 , D. C.; or a case
requrng a speca factor (provded the gft s competed and not merey pro-
posed or hypothetca) may be stated to the Commssoner who w furnsh
such factor. The request must be accompaned by a statement of the date of
brth of each person, the duraton of whose fe may affect the vaue of the
nterest, and by copes of the reevant nstruments.
( ) y amendng paragraph (g) thereof to read as foows:
(g) nnutes, fe estates, remanders, and reversons; gfts made pror to
anuary 1, 19 2. In the case of gfts made pror to anuary 1, 19 2, the genera
prncpes and methods prescrbed n paragraph (/) of ths secton (wth one
e cepton set forth n the ne t paragraph) are to be foowed but the present
worth of the nterest to be vaued s to be computed wth the use. of Tabe
or Tabe (whch appear at the end of ths secton) and f nether tabe s
appcabe the computaton s to be made upon the bass of the ctuares or
Combned perence Tabe of Mortaty, as e tended, and nterest at the rate
of percent a year, compounded annuay. In the computaton of the vaue of
annutes the factors 1.01 20 for monthy payments, 1.01 for quartery pay-
ments, and 1.909 )0 for semannua payments are to be substtuted for the factors
appearng n (f)(2)() of ths secton; and the factors 1.021 for monthy
payments, 1.02 for quartery payments, 1.02990 for semannua payments, and
1.0 for annua payments are to be substtuted for the factors appearng n
(/)(2)() of ths .secton.
The present worth of a fe estate or term for years n specfc property Is to
be obtaned by mutpyng the approprate factor from coumn 2 of Tabe or
Tabe by .0 and mutpyng the product by the vaue of the property.
provson for the payment of ncome n semannua, quartery, or monthy n-
staments does not affect the vaue of the fe nterest.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
171 6.19, Regs. 10 .
Tabe I
Tabe, snge fe, S percent, showng the present worth of an annuty, or a fe nterest,
and of a remander nterest
1
2
3
1
2
3
ge
nnuty
Remander
ge
nnuty
Remander
0
23. 96
0. 16110
3
13. 221
0. 1623
1
2 . 903
. 12 3

13. 73
. 2 3
2
2 . 920
. 12 7

13. 121
. 07
3
2 . 2 6
. 1311
6
12. 7679
. 312

2 . 737
. 13 1
7
12. 120
. 6

2 . 6392
. 13763

12. 0 6
. 7 09
6
2 . 326
. 1 136
9
11. 6960
. 906
7
2 . 1
. 1 3
60
11. 3369
. 60321

2 . 29 2
. 1 9 6
61
10. 9776
. 61 7
9
2 . 1713
. 1 00
62
10. 61 6
. 62 3
10
2 . 03 7
. 1 6
63
10. 260
. 6 0 9
11
23. 900
. 163 7
6
9. 9036
. 6 337
12
2a 7600
. 16 0
6
9. 6
. 66 0
13
23. 6161
. 173
66
9. 1960
. 67 1
1
23. 693
. 17 7
67
. 6
. 6903
1
2a 319
. 1 3 2
6
. 001
. 702 0
16
23. 166
. 1 917
69
. 1 7
. 71
17
2a 0103
. 19 6
70
7. 200
. 72630
1
22. 11
. 20021
71
7. 71
. 7379
19
22. 6 70
. 20 96
72
7. 1 97
. 7 9 1
20
22. 179
. 211 7
73
6. 3 2
. 76066
21
22. 3 3
. 21797
7
6. 231
. 77169
22
22. 16 6
. 22 2
7
6. 21
. 7 2
23
21. 9 01
. 23070
76
. 9137
. 79302
2
21. 7902
. 2373
77
. 6201
. 0330
2
21. 9 0
.2 1
7
. 33
. 1329
26
21. 39 2
. 2 120
79
. 0 72
. 2300
27
21. 1 7
.2 3
0
. 7
. 32 1
2
20. 97 9
. 26
1
. 2 3
. 1 1
29
20. 7 1
. 273 7
2
. 2771
. 030
30
20. 3
. 2 129
3
. 03 1
. 77
31
20. 30 2
. 2 932

3. 023
. 6692
32
20. 0699
. 297

3. 7 9
. 7 7
33
19. 2
. 30 99
6
3. 36
. 223
3
19. 16
. 31 6
7
3. 1601
. 9 0
3
19. 32
. 323 0

2. 96
. 9623
6
19. 069
. 332 7
9
2. 77
. 9027
37
a 0
. 3 1
90
2. 6019
. 90 93
3
a 33
. 3 133
91
2. 3 2
. 91 0
39
a 2 66
. 36102
92
2. 27
. 92036
0
17. 973
. 37092
93
2. 12
. 92 61
1
17. 6 3
. 3 101
9
1. 9 39
. 930 6
2
17. 3911
. 39131
9
1. 07
. 93 23
3
17. 0913
. 01 0
96
1. 72 6
. 93960

16. 7 60
. 12 9
97
1. 60 2
. 9 371

16. 7
. 2336
9
1. 9 2
. 9 7 6
6
16. 1 96
. 3 1
99
1. 39 9
. 9 11
7
1 . 3
. 6
100
1. 2973
. 9 9

1 . 133
. 703
101
1. 2033
. 9 7
9
1 . 1 31
. 6 9
102
1. 107
. 96123
0
1 . 6
. 030
103
. 9973
. 96 09
1
1 . 101
. 921
10
. 31
. 970 9
2
1 . 167
. 0 13
10
. 31
. 9 309
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
172
Tabe II
Tabe showng the present worth at 3 percent of an annuty for a term-certan,
and of a remander nterest postponed for a term-certan
1
2
3

1
I
Number of
years
nnuty
Remander
Number of
nnuty
1
0. 9662
0. 9661
16
12. 09 1
0. 76706
2
L 997
. 933 11
17
12. 6 13
. 720
3
2. 016
. 9019 3
1
13. 1 97
. 3 361

3. 6731
. 71 2
19
13. 709
. 201 6

. 1 1
. 1973
20
1 . 212
. 02 66
6
. 32 6
. 13 01
21
1 . 69 0
. 71
7
6. 11
. 7 991
22
1 . 1671
. 691 1

6. 7 0
. 7 9 12
23
1 . 620
. 32 6
9
7. 6077
. 733731
2
16. 0
. 379 7
10
. 3166
. 70 919
2
16. 1
. 231 7
11
9. 0016
. 6 9 6
26
16. 90
. 0 3
12
9. 6633
. 6617 3
27
17. 2
.39 012
13
10. 3027
. 639 0
2
17. 6670
. 3 16
1
10. 920
. 6177 2
29
1 . 03
. 36 7
1
11. 17
. 96 91
30
1 . 3920
.3 627
(C) y strkng from paragraph (h) thereof the ast sentence of
the frst paragraph and the second paragraph and nsertng n eu
thereof the foowng:
The vaue of each of such Interests s to be computed upon the bass prescrbed
n paragraph (/) or (g) of ths secton, whchever s appcabe.
case of ths character (provded the gft s competed and not merey pro-
posed or hypothetca) may be submtted to the Commssoner, who w advse
the donor of the appcabe factor.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 1029 and 3791 of the Interna Revenue Code ( 3 Stat. 1 7,
67; 26 U. S. C. 1029, 3791).)
ohn . Dunap,
Com|nssoner of Interna Revenue.
pproved May 27, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 2, 19 2, : 1 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
MPLOYM NT T RULINGS
INT RN L R NU COD
C PT R 9, SU C PT R . F D R L INSUR NC CONTRI UTIONS
CT
Secton 1 26: Defntons. 19 2-13-13 3
Reguatons 106, Secton 02.201: Genera T. D. 90
defntons and use of terms.
( so Subchapter C (Federa Unempoyment
Ta ct), Secton 1607; Reguatons 107,
Secton 03.201 et a; and Subchapter
(Raroad Retrement Ta ct), Secton
1 36; Reguatons 11 , Secton 11.60 et a.)
TITL 20 INT RN L R NU . C PT R I, SU C PT R D, P RTS 02, 03,
ND 11
Reguatons 106, 107, and 11 amended to conform to certan
provsons of the Soca Securty ct mendments of 19 0.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 26, D. C.
To Coectors of Interna Revenue and Others Concerned:
On February 2 , 19 2, notce of proposed rue makng, regardng
amendments to certan empoyment ta reguatons, made necessary
by certan provsons of the Soca Securty ct mendments of 19 0
(Pubc Law 73 , 1st Cong.; 6 Stat. 77 C. . 19 0-2, 217 ), ap-
proved ugust 2 , 19 0, was pubshed n the Federa Regster (17
F. R. 176 ). No ob|ecton to the rues proposed havng been receved,
the amendments set forth beow are hereby adopted. The amend-
ments are made n order to conform Reguatons 106 26 CFR, part
02 , reatng to the empoyees ta and the empoyers ta under the
Federa Insurance Contrbutons ct (subchapter , chapter 9, Inter-
na Revenue Code), to sectons 203(b), 206(b) (2), and 209 (d) and
(e) of such Soca Securty ct mendments of 19 0 (6 Stat. 27,
3 , 7, ); Reguatons 107 26 CFR, part 03 , reatng to the
e cse ta on empoyers under the Federa Unempoyment Ta ct
(subchapter C, chapter 9, Interna Revenue Code), to sectons
207(b) (1) and 209 (a), (b), (d), and (e) of such Soca Securty ct
mendments of 19 0 ( 6 Stat. 0, , 6, 7, ); and Reguatons
11 26 CFR, part 11 , reatng to the empoyers ta , empoyees ta ,
and empoyee representatves ta under the Raroad Retrement Ta
ct (subchapter , chapter 9, Interna Revenue Code), to secton
(173)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.
17
209(d) of such Soca Securty ct mendments of 19 0 ( 6 Stat
7). Such reguatons are amended as foows:
R GUL TIONS 106 (26 CFS, P RT 02
Paragraph 1. Secton 02.201 26 CFR 02.201 s amended by
nsertng after paragraph (q), added by Treasury Decson 92,
C. . 19 7-2, 16 , approved November 20, 19 7 26 CFR 02.201
(q) , the foowng new paragraph:
(r) Soca Securty ct mendments of 19 0 means the ct approved ugust
2 ,19 0 (Pubc Law 73 , 1st Cong.; 6 Stat. 77).
Pah. 2. Immedatey precedng secton 02.300 26 CFR 02.306 ,
the foowng s nserted:
S CTION 200(b)(2) OF T SOCI L S CURITY CT
M NDM NTS OF 19 0
Secton 1 03(a) of the Interna Revenue Code s amended by strkng
out the frst sentence and nsertng n en thereof the foowng: very
empoyer sha furnsh to each of hs empoyees a wrtten statement or
statements, n a form sutabe for retenton by the empoyee, showng the
wages pad by hm to the empoyee before anuary 1,19 1. (For corre-
spondng provsons wth respect to wages pad after December 31,19 0,
see secton 1633.)
Par. 3. Immedatey precedng secton 02.70 26 CFR 02.70 ,
the foowng s nserted:
S CTION 209(e) OF T SOCI L S CURITY CT
M NDM NTS OF 19 0
If a corporaton (herenafter referred to as a predecessor) ncorpo-
rated under the aws of one State s succeeded after 19 and before
19 1 by another corporaton (herenafter referred to as a successor)
Incorporated under the aws of another State, and f Immedatey upon
the successon the busness of the successor s dentca wth that of the
predecessor and, e cept for quafyng shares, the proportonate nterest
of each sharehoder n the successor s dentca wth hs proportonate
nterest n the predecessor, and f n connecton wth the successon the
predecessor s dssoved or merged nto the successor, and f the prede-
cessor and the successor are empoyers under the Federa Insurance
Contrbutons ct and the Federa Unempoyment Ta ct n the caen-
dar year n whch the successon takes pace, then
(1) the predecessor and successor corporatons, for purposes
ony of the appcaton of the 3,000 mtaton n the defnton of
wages under such cts, sha be consdered as one empoyer for such
caendar year, and
(2) the successor sha, sub|ect to the appcabe statutes of mta-
tons, be entted to a credt or refund, wthout nterest, of any ta
under secton 1 10 of the Federa Insurance Contrbutons ct or
secton 1600 of the Federa Unempoyment Ta ct (together wth
any nterest or penaty thereon) pad wth respect to remuneraton
pad by the successor durng such caendar year whch woud not
have been sub|ect to ta under such cts f the remuneraton had
been pad by the predecessor.
Par. . Immedatey precedng secton 02.70 26 CFR 02.70 ,
the foowng s nserted:
S CTION 203(b) OF T SOCI L S CURITY CT M NDM NTS
OF 19 0
So much of secton 1 01(d) (2) of the Interna Revenue Code as pre-
cedes the second sentence thereof s amended to read as foows:
(2) Wages receved durng 19 7, 19 , 19 9, and 19 0. If by
reason of an empoyee recevng wages from more than one empoyer
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
17
Regs. 106, 02.201.
durng the caendar year 19 7,19 ,19 9, or 19 0, the wages receved
by hm durng such year e ceed 3,000, the empoyee sha be entted
to a refund of any amount of ta , wth respect to such wages, Imposed
by secton 1 00 and deducted from the empoyee s wages (whether
or not pad to the coector), whch e ceeds the ta wth respect
to the frst 3,000 of such wages receved.
Pab. . Immedatey after the provsons of aw under the capton
Secton 6 of the ct of ugust 27, 19 9 (Pubc Law 271, 1st
Congress) , added by Treasury Decson 79 C. . 19 0-2, 2 ,
approved uy 6, 19 0, as set forth after secton 02. 0 26 CFR
02. 0 , the foowng s nserted:
S CTION 209(d) OF T SOCI L S CURITY CT M NDM NTS
OF 19 0
(1) Secton 1631 of the Interna Revenue Code s amended to read as
foows:
S C. 1631. F ILUR OF MPLOY R TO FIL R TURN.
In case of a faure to make and fe any return requred under ths
chapter wthn the tme prescrbed by aw or prescrbed by the Comms-
soner n pursuance of aw, uness t s shown that such faure s due
to reasonabe cause and not to wfu negect, the addton to the ta or
ta es requred to be shown on such return sha not be ess than .
(2) The amendment made by paragraph (1) sha be appcabe ony
wth respect to returns fed after December 31, 19 0.
R GUL TIONS 107 26 CFR, P RT 03
Par. 6. Immedatey precedng the capton Secton 3797 (a) and
(b) of the Interna Revenue Code as set forth precedng secton
03.201 26 CFR 03.201 , the foowng s nserted:
S CTION 209 (a) ND (b) OF T SOCI L S CURITY CT M ND-
M NTS OF 19 0
(a) (1) Secton 1607(b) of the Interna Revenue Code s amended
to read as foows:
(b) Wages. The term wages means a remuneraton for empoy-
ment, ncudng the cash vaue of a remuneraton pad n any medum
other than cash ; e cept that such term sha not ncude
(1) That part of the remuneraton whch, after remuneraton
(other than remuneraton referred to n the succeedng paragraphs
of ths subsecton) equa to 3,000 wth respect to empoyment has
been pad to an ndvdua by an empoyer durng any caendar year,
s pad to such ndvdua by such empoyer durng such caendar
year. If an empoyer (herenafter referred to as successor em-
poyer) durng any caendar year acqures substantay a the
property used n a trade or busness of another empoyer (heren-
after referred to as a predecessor), or used n a separate unt of a
trade or busness of a predecessor, and mmedatey after the ac-
quston empoys n hs trade or busness an ndvdua who mme-
datey pror to the acquston was empoyed n the trade or busness
of such predecessor, then, for the purpose of determnng whether
the successor empoyer has pad remuneraton (other than remu-
neraton referred to n the succeedng paragraphs of ths subsecton)
wth respect to empoyment equa to 3,000 to such ndvdua durng
such caendar year, any remuneraton (other than remuneraton
referred to n the succeedng paragraphs of ths subsecton) wth
respect to empoyment pad (or consdered under ths paragraph as
havng been pad) to such ndvdua by such predecessor durng
such caendar year and pror to such acquston sha be consdered
as havng been pad by such successor empoyer;
(2) The amount of any payment (ncudng any amount pad
by an empoyer for nsurance or annutes, or nto a fund, to provde
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.)
176
(or any such payment) made to, or on behaf of, an empoyee or any
of hs dependents under a pan or system estabshed by an empoyer
whch makes provson for hs empoyees generay (or for hs
empoyees generay and ther dependents) or for a cass or casses
of hs empoyees (or for a cass or casses of hs empoyees and
ther dependents), on account of ( ) retrement, or ( ) sckness
or accdent dsabty, or (C) medca or hosptazaton e penses
n connecton wth sckness or accdent dsabty, or (D) death;
(3) ny payment made to an empoyee (ncudng any amount
pad by an empoyer for nsurance or annutes, or nto a fund, to
provde for any such payment) on account of retrement;
( -) ny payment on account of sckness or accdent dsabty,
or medca or hosptazaton e penses n connecton wth sckness
or accdent dsabty, made by an empoyer to, or on behaf of,
an empoyee after the e praton of s caendar months foowng
the ast caendar month n whch the empoyee worked for such
empoyer;.
( ) ny payment made to, or on behaf of, an empoyee or
hs benefcary ( ) from or to a trust e empt from ta under secton
16 (a) at the tme of such payment uness such payment s made
to an empoyee of the trust as remuneraton for servces rendered
as such empoyee and not as a benefcary of the trust, or ( ) under
or to an annuty pan whch, at the tme of such payment, meets
the requrements of |secton 16 (a) (3), ( ), ( ), and (6).;
(6) The payment by an empoyer (wthout deducton from
the remuneraton of the empoyee) ( ) of the ta mposed upon
an empoyee under secton 1 00, or ( ) of any payment requred
from an empoyee under a State unempoyment compensaton aw;
(7) Remuneraton pad n any medum other than cash to an
empoyee for servce not n the course of the empoyer s trade or
busness;
( ) ny payment (other than vacaton or sck pay) made to
an empoyee after the month n whch he attans the age of s ty-
fve, f he dd not work for the empoyer In the perod for whch such
payment s made;
(9) Dsmssa payments whch the empoyer s not egay
requred to make.
(2) The amendment made by paragraph (1) sha be appcabe
ony wth respect to remuneraton pad after 19 0. In the case of
remuneraton pad pror to 19 1, the determnaton under secton
1607(b) (1) of the Interna Revenue Code (pror to ts amendment by
ths ct) of whether or not such remuneraton consttuted wages sha
be made as f paragraph (1) of ths subsecton had not been enacted
and wthout nferences drawn from the fact that the amendment made
by paragraph (1) s not made appcabe to perods pror to 19 1.
(3) ffectve wth respect to remuneraton pad after December 31,
19 1, secton 1607(b) of the Interna Revenue Code s amended by
changng the semcoon at the end of paragraph ( ) to a perod and by
strkng out paragraph (9) thereof.
(b) (1) Secton 1607(c) (3) of the Interna Revenue Code s amended
to read as foows:
(3) Servce not n the course of the empoyer s trade or busness
performed n any caendar quarter by an empoyee, uness the cash
remuneraton pad for such servce s 0 or more and such servce
s performed by an ndvdua who s reguary empoyed by such
empoyer to perform such servce. For the purposes of ths para-
graph, an ndvdua sha be deemed to be reguary empoyed by an
empoyer durng a caendar quarter ony f ( ) on each of some
twenty-four days durng such quarter such ndvdua performs for
such empoyer for some porton of the day servce not n the course
of the empoyer s trade or busness, or ( ) such ndvdua was
reguary empoyed (as determned under cause ( )) by such
empoyer n the performance of such servce durng the precedng
caendar quarter;
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
177
Regs. 106, 02.201.
(2) Secton 1007(c) (10) ( ) (1) of the Interna Revenue Code Is
amended by strkng out does not e ceed and nsertng n eu
thereof Is ess than 0 .
(3) Secton 1607(c) (10) ( ) of the Interna Revenue Code s amended
by strkng out n any caendar quarter and by strkng out , and the
remuneraton for such servce does not e ceed (e cusve of room,
board, and tuton) .
( ) The amendments made by paragraphs (1), (2), and (3) sha be
appcabe ony wth respect to servce performed after 19 0.
Pah. 7. Secton 03.201 26 CFR 03.201 s amended by nsertng
after paragraph (n), added by Treasury Decson 6G C. . 19 7-2,
1 , approved une 23, 19 7 26 CFR 03.201 (n) , the foowng
new paragraph:
(o) Soca Securty ct mendments of 19 0 means the ct approved ugust
2 , 19 0 (Pubc Law 73 , 1st Cong.; 6 Stat. 77).
Par. . Secton 03.202, as amended by Treasury Decson 66
26 CFR 03.202 , s further amended by strkng out the parenthet-
ca sentence at the end of the thrd paragraph and nsertng n eu
thereof the foowng: (See sectons 03.227, 03.22 , and 03.22 a,
reatng to wages.)
Par. 9. Secton 03.203(a), as amended by Treasury Decson 66
C. . 19 -2,13 , approved November 1,19 26 CFR 03.203(a) ,
s further amended as foows:
( ) y strkng out n the frst sentence and as further amended
and nsertng n eu thereof and as amended .
( ) y strkng out the perod at the end of the frst sentence and
nsertng n eu thereof a comma and the foowng: and as further
amended, effectve anuary 1, 19 1, by secton 209(b) of the Soca
Securty ct mendments of 19 0.
(C) y strkng out n the second sentence (e cept sectons 03.227
and 03.22 26 CFR 03.227 and 03.22 , reatng to wages) and
nsertng n eu thereof (e cept sectons 03.227, 03.22 , and
03.22 a, reatng to wages) .
Par. 10. Secton 03.20 26 CFR 03.20 s amended by strkng
out the seventh paragraph and nsertng n eu thereof the foowng
paragraph:
casses or grades of empoyees are ncuded wthn the reatonshp of
empoyer and empoyee. Thus, superntendents, managers, and other superor
empoyees are empoyees. Generay, an offcer of a corposaton s an empoyee
of the corporaton. owever, an offcer of a corporaton who as such does not
perform any servces or performs ony mnor servces and who nether receves
nor Is entted to receve, drecty or Indrecty, any remuneraton s not con-
sdered to be an empoyee of the corporaton. drector of a corporaton n
hs capacty as such s not an empoyee of the corporaton.
Par. 11. Secton 03.206, as amended by Treasury Decson 66
26 CFR 03.206 , s further amended as foows:
( ) y strkng out n the frst sentence and as further amended
and nsertng n eu thereof and as amended .
( ) y strkng out the perod at the end of the frst sentence and
nsertng n eu thereof a comma and the foowng: and as further
amended, effectve anuary 1, 19 1, by secton 209(b) of the Soca
Securty ct mendments of 19 0.
Par. 12. Immedatey precedng secton 03.210 26 CFR 03.210 ,
the foowng s nserted:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.
17
S CTION 209 (b) (1) ND ( ) OF T
SOCI L S CURITY CT M NDM NTS OF 19 0
(1) Secton 1607(c)(3) of the Interna Revenue Code s amended
to read as foows:
(3) Servce not In the course of the empoyer s trade or busness
performed n any caendar quarter by an empoyee, uness the
cash remuneraton pad for such servce s 0 or more and such
servce s performed by an ndvdua who s reguary empoyed
by such empoyer to perform such servce. For the purposes of
ths paragraph, an Indvdua sha be deemed to be reguary em-
poyed by an empoyer durng a caendar quarter ony If ( ) on
each of some twenty-four days durng such quarter such ndvdua
performs for such empoyer for some porton of the day servce not
n the course of the empoyer s trade or busness, or ( ) such
ndvdua was reguary empoyed (as determned under cause
( )) by such empoyer n the performance of such servce durng
the precedng caendar quarter; .
( ) The amendments made by paragraphs (1) sha be
appcabe ony wth respect to servce performed after 19 0.
Par. 13. Secton 03.210 26 CFR 03.210 s amended as foows:
( ) y revsng the headng thereof to read as foows:
Sec. 03.210. Servces Not k the Course of mpoyee s Trade on usness.
(a) Casua abor performed pror to anuary 1, 19 1.
( ) y nsertng mmedatey after the headng of paragraph (a)
of secton 03.210 as so amended the foowng new sentence:
Casua abor not n the course of the empoyer s trade or busness performed
pror to anuary 1, 19 1, Is e cepted.
(C) y nsertng at the end of paragraph (a) of secton 03.210
as so amended the foowng:
(b) Servce performed after December 31, 19 0. Servces not n the course
of the empoyer s trade or busness performed after December 31, 19 0, by an
empoyee for an empoyer n a caendar quarter are e cepted uness
(1) The cash remuneraton pad for such servces performed by the
empoyee for the empoyer n the caendar quarter Is 0 or more; and
(2) Such empoyee s reguary empoyed n the caendar quarter by such
empoyer to perform such servces.
.Uness the tests set forth n both (1) and (2), above, are met the servces are
e cepted from empoyment.
The term servces not In the course of the empoyer s trade or busness n-
cude servces that do not promote or advance the trade or busness of the em-
poyer. Servces performed for a corporaton do not come wthn the e cepton.
The test reatng to cash remuneraton of 0 or more Is based on the re-
muneraton earned durng a caendar quarter rather than on the remuneraton
pad In a caendar quarter. owever, for purposes of determnng whether
the test Is met, t s aso requred that the remuneraton be pad, athough t s
mmatera when the remuneraton s pad. Furthermore, n determnng whether
0 or more has been pad for servces not n the course of the empoyer s
trade or busness, ony cash remuneraton for such servces sha be taken Into
account The term cash remuneraton Incudes checks and other monetary
meda of e change. Remuneraton pad n any other medum, such as odgng,
food, or other goods or commodtes, s dsregarded n determnng whether the
cash-remuneraton test Is met.
For the purposes of ths e cepton, an Indvdua s deemed to be reguary
empoyed by an empoyer durng a caendar quarter ony If:
() such ndvdua performs servces not n the course of the empoyer s
trade or busness for such empoyer for some porton of the day on at east
2 days (whether or not consecutve) durng such caendar quarter; or
() such ndvdua was reguary emppyed (as determned under sub-
dvson ()) by such empoyer n the performance of servces not n the
course of the empoyer s trade or busness durng the precedng caendar
quarter (ncudng the ast caendar quarter of 19 0).
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
179
Regs. 100, 02.201.
In determnng whether an empoyee has performed servces not In the course
of the empoyer s trade or busness on at east 2 days durng a caendar quarter,
there sha be counted as one day
(a) any day or porton thereof on whch the empoyee actuay performs
such servces; and
(6) any day or porton thereof on whch the empoyee does not perform
servces of the prescrbed character but wtt respect to whch cash remu-
neraton s pad or payabe to the empoyee for such servces, such as a day
on whch the empoyee s sck or on vacaton.
n empoyee who on a partcuar day reports for work and, at the drecton of
hs empoyer, hods hmsef n readness to perform servces not n the course of
the empoyer s trade or busness sha be consdered to be engaged n the actua
performance of such servces on that day. For the purposes of ths e cepton,
a day s a perod of 2 hours commencng at mdnght and endng at mdnght.
For provsons reatng to the e cuson from wages of remuneraton pad n
any medum other than cash for servces not n the course of the empoyer s
trade or busness, see secton 03.22 a (g).
Par. 1 . Immedatey precedng the capton Secton 101 of the
Interna Revenue Code as set forth precedng secton 03.217
26 CFR 03.217 , the foowng s nserted:
S CTION 209(b) (2) ND ( ) OF T SOCI L S CURITY CT
M NDM NTS OF 19 0
( ) Secton 1607(c) (10) ( ) (1) of the Interna Revenue Code Is
amended by strkng out does not e ceed and nsertng n eu
thereof s ess than 0 .
( ) The amendments made by paragraphs (2)
sha be appcabe ony wth respect to servce performed after 19 0.
Pah. 1 . Under the capton Secton 101 of the Interna Revenue
Code as set forth precedng secton 03.217 26 CFR 03.217 , the
provson of aw (1) Labor organzatons; s strcken
out, and there s nserted n eu thereof (1) Labor, agrcutura, or
hortcutura organzatons; .
Par. 16. Immedatey precedng secton 03.217 26 CFR 03.217 ,
the foowng s nserted:
S CTION 301 (b) ND (c) OF P RT I. TITL III OF T R -
NG CT OF 19 0 (PU LIC L W 1 , 1st CONG., PPRO D
S PT M R 23, 19 0)
(b) Feeder Organzatons. Secton 101 Interna Revenue Code s
hereby amended by addng at the end thereof the foowng paragraph:
n organsaton operated for the prmary purpose of carryng on
a trade or busness for proft sha not be e empt under any paragraph
of ths secton on the ground that a of ts profts are payabe to one
or more organzatons e empt under ths secton from ta aton. For
the purposes of ths paragraph the term trade or busness sha not
ncude the renta by an organzaton of ts rea property (ncudng
persona property eased wth the rea property).
(c) Technca mendments.
(1) Secton 101 s hereby amended ( ) by strkng out The
foowng organzatons sha be e empt and nsertng n eu
thereof cept as provded n suppement U, the foowng or-
ganzatons sha be e empt , and ( ) by addng at the end of
such secton (foowng the paragraph added by subsecton (b)
of ths secton) the foowng paragraph :
Notwthstandng suppement U, an organzaton descrbed n ths
secton (other than n the precedng paragraph) sha be consdered
an organzaton e empt from ncome ta es for the purpose of any
aw whch refers to organzatons e empt from ncome ta es.
#
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 10 , 02.201.
1 0
S CTION 303 OF T R NU CT OF 19 0 (PU LIC L W 1 ,
1st CONG., PPRO D S PT M R 23, 19 0)
FF CTI D T OF P RT I
The amendments made by ths part part I, tte III, Revenue ct
of 19 0 sha be appcabe ony wth respect to ta abe years begnnng
after December 31,19 0. The determnaton as to whether an organza-
ton s e empt under secton 101 of the Interna Revenue Code from
ta aton for any ta abe year begnnng before anuary 1, 19 1, sha
be made as f secton 301(b) of ths ct had not been enacted and
wthout nferences drawn fror the fact that the amendment made
by such secton s not e pressy made appcabe wth respect to ta abe
years begnnng before anuary 1, 19 1.
S CTION 11(b) OF T SU RSI CTI ITI S CONTROL
CT OF 19 0 (PU LIC L W 31, 1st CONG, N CT D
S PT M R 23, 19 0)
No organzaton sha be entted to e empton from Federa Income
ta , under secton 101 of the Interna Revenue Code, for any ta abe
year f at any tme durng such ta abe year (1) such organzaton s
regstered under secton 7, or (2) there s n effect a fna order of the
oard Subversve ctvtes Contro oard requrng such organza-
ton to regster under secton 7.
S CTION 313 (a), (b), ND ( ) OF T R NU CT OF 19 1
(PU LIC L W 1 3, 2d CONG., PPRO D OCTO R 20, 19 1)
(a) Mutua Savngs anks. Secton 101(2) (reatng to e empton
from ta of mutua savngs banks) s hereby repeaed.
(b) udng and Loan ssocatons and Cooperatve anks.
Secton 101( ) (reatng to e empton from ta of budng and oan
assocatons and cooperatve banks) s hereby amended to read as
foows:
( ) Credt unons wthout capta stock organzed and operated
for mutua purposes and wthout proft; and corporatons or asso-
catons wthout capta stock organzed pror to September 1, 19 1,
and operated for mutua purposes and wthout proft for the pur-
pose of provdng reserve funds for, and nsurance of, shares or
deposts n
( ) domestc budng and oan assocatons,
( ) cooperatve banks wthout capta stock organzed and
operated for mutua purposes and wthout proft, or
(C) mutua savngs banks not havng capta stock repre-
sented by shares; .
(|) ffectve Date. The amendments made by ths secton sha
be appcabe ony wth respect to ta abe years begnnng after Decem-
ber 31, 19 1.
S CTION 31 (a), (b), ND (d) OF T R NU CT OF 19 1
(PU LIC L W 1 3, 2d CONG., PPRO D OCTO R 20, 19 1)
(a) mendment of Secton 101(12). Secton 101(12) s hereby
amended as foows:
(1) y nsertng after (12) the foowng: ( ) .
(2) y nsertng afer such paragraph the foowng:
( ) .
(b) Technca mendments.
(1) Secton 101 s hereby amended by strkng out cept as
provded n suppement U and nwrtng n eu thereof the fo-
owng: cept as provded n paragraph (12) ( ) and n suppe-
ment U.
(2) The ast sentence of secton 101 s hereby amended by strk-
ng out Notwthstandng suppement U and nsertng n eu
thereof Notwthstandng paragraph (12) (1 ) and suppement U .
(d) ffectve Date. The amendments made by subsectons (a) and
(b) of ths secton sha be appcabe ony wth respec to ta abe
years begnnng after December 31, 19 L
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 1
Regs. 106, 02.201.
Par. 17. Secton 03.217(b) 26 CFR 03.217 s amended to read
as foows:
(b) Remuneraton not n e cess of specfed amount for caendar quarter.
(1) Remuneraton not n e cess of for caendar quarter before 19 1. Serv-
ces performed by an empoyee n a caendar quarter before 19 1 In the empoy
of an organzaton e empt from Income ta under secton 101 of the Interna
evenue Code are e cepted, f the remuneraton for the servces does not e -
ceed . The e cepton appes separatey wth respect to each organzaton for
whch the empoyee renders servces n a caendar quarter. caendar quarter
s a perod of three caendar months endng on March 31, une 30, September 30,
or December 31. The type of servces performed by the empoyee and the pace
where the servces are performed are mmatera; the statutory tests are the
character of the organzaton n the empoy of whch the servces are performed
and the amount of the remuneraton for servces performed by the empoyee
n the caendar quarter.
(2) Remuneraton ess than 0 for caendar quarter after 19 0. Servces
performed by an empoyee n a caendar quarter after 19 0 n the empoy of an
organzaton e empt from ncome ta under secton 101 of the Interna Revenue
Code are e cepted, f the remuneraton for the servces s ess than 0. The
e cepton appes separatey wth respect to each organzaton for whch the
empoyee renders servces n a caendar quarter. caendar quarter s a
perod of three caendar months endng on March 31, une 30, September 30, or
December 31. The type of servces performed by the empoyee and the pace
where the servces are performed are mmatera; the statutory tests are the
character of the organzaton n the empoy of whch the servces are performed
and the amount of the remuneraton for servces performed by the empoyee n
the caendar quarter.
ampe (1). s a oca odge of a fraterna organzaton and s e empt
from ncome ta under secton 101(3) of the Interna Revenue Code. has a
number of pad empoyees, among them beng who serves e cusvey as re-
cordng secretary for the odge, and who performs servces for the odge as
antor of ts cubhouse. For servces performed durng the frst caendar
quarter of 19 1 (that s, anuary 1, 19 1, through March 31, 19 1, both dates
ncusve) earns a tota of 30. For servces performed durng the same
caendar quarter earns 1 0. Snce the remuneraton for the servces per-
formed by durng such quarter s ess than 0, a of such servces are e -
cepted. Thus, Is not counted as an empoyee n empoyment on any of the
days durng such quarter for purposes of determnng whether the organzaton
Is an empoyer (see secton 03.20 ). ven though t s subsequenty determned
that s an empoyer, s remuneraton of 30 for servces performed durng
the frst caendar quarter of such year s not sub|ect to ta . s servces, how-
ever, are not e cepted durng such quarter snce the remuneraton therefor s
not ess than 0. Thus, s counted as an empoyee n empoyment durng a
of such quarter for purposes of determnng whether the organzaton s
an empoyer. If t s determned that the organzaton s an empoyer, s
remuneraton of 1 0 for servces performed durng the frst caendar quarter
s ncuded n computng the ta .
ampe (2). The facts are the same as n e ampe (1), above, e cept that
on pr 1, 19 1, s saary s ncreased and, for servces performed durng
the caendar quarter begnnng on that date (that s, pr 1, 19 1, through
une 30, 19 1, both dates Incusve), earns 60. Snce s remuneraton for
servces durng such quarter s not ess than 0, such servces are not e cepted.
, therefore, s counted as an empoyee n empoyment durng a of such
quarter for purposes of determnng whether the organzaton s an empoyer.
If It s determned that the organzaton s an empoyer, s remuneraton of
60 for servces performed durng the second caendar quarter s ncuded n
computng the ta .
ampe (3). The facts are the same as In e ampe (1), above, e cept that
earns 120 for servces performed durng the year 19 1, and such amount
s pad to hm n a ump sum at the end of the year. The servces performed
by n any caendar quarter durng the year are e cepted f the porton of
the 120 attrbutabe to servces performed n that quarter s ess than 0.
In such case, s not counted as an empoyee n empoyment on any of the
days durng such quarter for purposes of determnng whether the organza-
ton s an empoyer. If, however, the porton of the 120 attrbutabe to servces
performed n any caendar quarter durng the year s not ess than 0, the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.
1 2
servces durng that quarter are not e cepted. In the atter case, s counted
as an empoyee n empoyment durng a of such quarter and, If the
organzaton s determned to be an empoyer, that porton of the 120 attrbut-
abe to servces performed n such quarter s ncuded n computng the ta .
Par. 1 . The provsons of aw under the capton Secton 101(1)
or the Interna Revenue Code , together wth the capton and
headng, as set forth mmedatey precedng secton 03.21 26 CFR
03.21 , are strcken out.
Par. 19. Immedatey precedng secton 03.221 20 CFR 03.221 ,
the foowng s nserted:
S CTION 209(b) (3) ND ( ) OF T SOCI L S CURITY CT
M NDM NTS OF 19 0
(3) Secton 1607(c) (10) ( ) of the Interna Revenue Code Is amended
by strkng out n any caendar quarter and by strkng out , and the
remuneraton for such servce does not e ceed (e cusve of room,
board, and tuton) .
( ) The amendments made by paragraphs (3) sha be
appcabe ony wth respect to servce performed after 19 0.
Par. 20. Secton 03.221 26 CFR 03.221 s amended to read as
foows:
Sec. 03.221. Students mpoyed bt Schoos, Coeges, or Unverstes Not
empt From Income Ta . (a) In genera. Ths secton deas wth the e -
cepton of servces performed by a student n the empoy of a schoo, coege, or
unversty not e empt from ncome ta under secton 101 of the Interna Revenue
Code. Paragraph (b) of ths secton appes ony wth respect to servces per-
formed before anuary 1,19 1. Paragraph (c) of ths secton appes ony wth
respect to servces performed on or after anuary 1, 19 1.
The term schoo, coege, or unversty wthn the meanng of ths e cepton
s to be taken n ts commony or generay accepted sense. (For provsons re-
atng to servces performed by a student n the empoy of an organzaton
e empt from Income ta , see secton 03.217(d).)
(b) Servces performed pror to anuary 1, 19 1. Servces performed n a
caendar quarter before 19 1 by a student n the empoy of a schoo, coege, or
unversty not e empt from Income ta under secton 101 of the Interna Revenue
Code are e cepted, f:
(1) The servces are performed by a student who s enroed and Is
reguary attendng casses at such schoo, coege, or unversty; and
(2) The remuneraton for such servces performed n such caendar quar-
ter does not e ceed , e cusve of room, board, and tuton furnshed by
the schoo, coege, or unversty.
caendar quarter s a perod of three caendar months endng on March 31,
une 30, September 30, or December 31.
For purposes of ths paragraph (b), the type of servces performed by the
empoyee and the pace where the servces are performed are mmatera; the
statutory tests are the character of the organzaton n the empoy of whch
the servces are performed, the amount of remuneraton for servces performed
by the empoyee In the caendar quarter, and the status of the empoyee as a
student enroed and reguary attendng casses at the schoo, coege, or un-
versty n the empoy of whch he performs the servces.
(c) Servces performed after 19 0. Servces performed after December 31,
19 0, by a student n the empoy of a schoo, coege, or unversty not e empt from
ncome ta under secton 101 of the Interna Revenue Code are e cepted, f the
student s enroed and s reguary attendng casses at such schoo, coege,
or unversty.
For purposes of ths paragraph (c), the type of servces performed by the
empoyee, the pace where the servces are performed, and the amount of re-
muneraton for servces performed by the empoyee are Immatera; the statutory
tests are the character of the organzaton In the empoy of whch the servces
are performed and the status of the empoyee as a student enroed and reguary
attendng casses at the schoo, coege, or unversty n the empoy of whch he
performs the servces.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 3
Regs. 106, 02.201.
Pah. 21. Immedatey precedng secton 03.227 26 CF 03.227 ,
the foowng s nserted:
S CTION 209(a) OF T SOCI L S CURITY CT M NDM NTS
OF 19 0
(1) Secton 1607(b) of the Interna Revenue Code Is amended to
read as foows:
(b) Wages. The term wages means a remuneraton for empoy-
ment, ncudng the cash vaue of a remuneraton pad n any medum
other than cash ; e cept that such term sha not ncude
(1) That part of the remuneraton whch, after remuneraton
(other than remuneraton referred to n the succeedng paragraphs
of tho subsecton) equa to 3,000 wth respect to empoyment has
been pad to an ndvdua by an empoyer durng any caendar
year, s pad to such ndvdua by such empoyer durng such ca-
endar year. If an empoyer (herenafter referred to as successor
emp|yer) durng any caendar year acqures substantay a the
pro|erty used n a trade or busness of another empoyer (heren-
after referred to as a predecessor), or used n a separate unt of
a trade or busness of a predecessor, and mmedatey after the
arquston empoys n hs trade or busness an ndvdua who
mmedatey pror to the acquston was empoyed n the trade or
busness of such predecessor, then, for the purpose of determnng
whether the successor empoyer has pad remuneraton (other
than remuneraton referred to n the succeedng paragraphs of ths
subsecton) wth respect to empoyment equa to 3,000 to such
ndvdua durng such caendar year, any remuneraton (other
than remuneraton referred to n the succeedng paragraphs of
ths subsecton) wth respect to empoyment pad (or consdered
under ths paragraph as havng been pad) to such ndvdua
by such predecessor durng such caendar year and pror to such
acquston sha be consdered as havng been pad by such succes-
sor empoyer;
(2) The amount of any payment (Incudng any amount pad
by an empoyer for nsurance or annutes, or nto a fund, to pro-
vde for any such payment) made to, or on behaf of, an empoyee
or any of hs dependents under a pan or system estabshed by
an empoyer whch makes provson for hs empoyees generay
(or for hs empoyees generay and ther dependents) or for a cass
|r casses of hs empoyees (or for a cass or casses of hs empoyees
and ther dependents), on account of ( ) retrement, or ( ) sck-
ness or accdent dsabty, or (C) medca or hosptazaton e -
penses n connecton wth sckness or accdent dsabty, or (D)
death;
(3) ny payment made to an empoyee (ncudng any amount
pad by an empoyer for Insurance or annutes, or nto a fund, to
provde for any such payment) on account of retrement;
( ) ny payment on account of sckness or accdent dsab-
ty, or medca or hosptazaton e penses n connecton wth sck-
ness or accdent dsabty, made by an empoyer to, or on behaf
of, an empoyee after the e praton of s caendar months fo-
owng the ast caendar month n whch the empoyee worked
for such empoyer;
( ) ny payment made to (or on behaf of, an empoyee or hs
benefcary ( ) from or to a trust e empt from ta under secton
16 (a) at the tme of such payment uness such payment s made
to an empoyee of the trust as remuneraton for servces rendered
as such empoyee and not as a benefcary of the trust, or ( )
under or to an annuty pan whch, at the tme of such payment,
m- ets the requrements of secton 163(a) (3), ( ), ( ) and (6) ;
(6) The payment by an empoyer (wthout deducton from
the remuneraton of the empoyee) ( ) of the ta mposed upon
an empoyee under secton 1 00, or ( ) of any payment requred
from an empoyee under a State unempoyment compensaton aw;
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, S 02.201.
1
(7) Remuneraton pad n any medum other than cash to an
empoyee for servce not n the course of the empoyer s trade or
busness;
( ) ny payment (other than vacaton or sck pay) made
to an empoyee after the month n whch he attans the age of
s ty-fve, If he dd not work for the empoyer In the perod for
whch such payment s made;
(9) Dsmssa payments whch the empoyer s not egay
requred to make.
(2) The amendment made by paragraph (1) sha be appcabe
ony wth respect to remuneraton pad after 19 0. In the case of
remuneraton pad pror to 19 1, the determnaton under secton
1607(b)(1) of the Interna Revenue Code (pror to ts amendment
by ths ct) of whether or not such remuneraton consttuted wages
sha be made as f paragraph (1) of ths subsecton bad not been
enacted and wthout Inferences drawn from the fact that the amend-
ment made by paragraph (1) s not made appcabe to perods pror
to 19 1.
(3) ffectve wth respect to remuneraton pad after December 31,
19 1, secton 1007(b) of the Interna Revenue Code s amended by
changng the semcoon at the end of paragraph ( ) to a perod and
by strkng out paragraph (9) thereof.
Par. 22. Secton 03.227(a), as amended bv Treasury Decson 0
C. . 19 0-2, 112 , approved ugust 30, 19 0 26 CFR 03.227(a) ,
s further amended as foows:
( ) y strkng out n the frst sentence and as further amended
and nsertng n eu thereof and as amended .
( ) y strkng out the perod at the end of the frst sentence
and nsertng n eu thereof a comma and the foowng: and as
further amended, effectve anuary 1, 19 1, by secton 209(a) of the
Soca Securty ct mendments of 19 0.
(C) y strkng out the second sentence and nsertng n eu
thereof the foowng:
Ths secton of the reguatons appes wth respect ony to remuneraton pad
on or after anuary 1, 19 0, for empoyment performed after December 31, 193 .
Secton 03.22 (reatng to e cusons from wages) appes wth respect ony
to remuneraton pad on or after anuary 1, 19 0, and pror to anuary 1, 19 1,
for empoyment performed after December 31, 193 . Secton 03.22 a (reatng
to e cusons from wa|res) appes wth respect ony to remuneraton pad on
or after anuary 1, 19 1, for empoyment performed after December 31, 193 .
(D) y strkng out n the second paragraph (see secton 03.22
of these reguatons) and nsertng n eu thereof (see sectons
03.22 and 03.22 a of the reguatons n ths part) .
( ) y strkng out n the frst sentence of the ffth paragraph
the words The medum and nsertng n eu thereof the foowng:
cept In the case of remuneraton pad for servces not n the course of the
empoyer s trade or busness (see secton 03.22 a(g) of the reguatons In ths
part), the medum.
Par. 23. Secton 03.22 , as amended by Treasury Decson 66
26 CFR 03.22 , s further amended as foows:
( ) y strkng out the secton headng and nsertng n eu
thereof the foowng: Sec. 03.22 . cusons From Wages Wth
Respect to Remuneraton Pad) Pror to anuary 1,19 1 .
( ) y addng at the end of both the ffth paragraph of secton
03.22 (a) (2) and the s th paragraph of secton 03.22 (a) (3) the
foowng sentence:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1
Regs. 106, 02.201.
(In connecton wth the appcaton of the 3,000 mtaton, see aso secton
209(e) of the Soca Securty ct mendments of 10 0, set forth precedng
secton 03.602 of the reguatons n ths part, reatng to certan crcumstances
nnder whch a predecessor empoyer and hs successor are treated as one
empoyer.)
(C) y addng at the end of such secton the foowng:
(f) ppcabty of secton. The provsons of ths secton do not appy wth
respect to remuneraton pad after December 31, 19. 0.
Sec. 03.22Sa. cusons Fuom Wages Wth IIespect to FruN t ToN Pad
fter Decemreb 31, 10 0. (a) 3,000 mtaton. (1) In genera. The term
wages- does not ncude that part of the remuneraton pad wthn any caendar
year begnnng after December 31, 19 0, by an empoyer to nn empoyee whch
e ceeds the frst 3,000 of remuneraton (e cusve of remuneraton e cepted
from wages n accordance wth paragraphs (b) through (|) of ths secton)
pad wthn such caendar year by such empoyer to such empoyee for empoy-
ment performed for hm at any tme after December 31, 193 .
The 3,000 mtaton appes ony f the remuneraton pad durng any one
cnendnr year by an empoyer to the same empoyee for empoyment performed
after 193 e ceeds 3,000. The mtaton n such case reates to the amount
of remuneraton pad durng any one caendar year for empoyment after 193
and not to the nuouut of remuneraton for empoyment performed n any one
caendar year.
ampe (1). mpoyer , n 19 1, pays empoyee S2. 00 on account of
.000 due hm for empoyment performed n 19 1. In 19 2 empoyer pays
empoyee the baance of . 00 due hm for empoyment performed n the pror
year (19 1), and thereafter n 19 2 aso pays 3,000 for empoyment per-
formed n 19 2. The 2, 00 pad n 19 1 s sub|ect to ta n 19 1. The bnance
of 00 pad n 19 2 for empoyment durng 19 1 Is sub|ect to tn n 19 2, as s
aso the frst 2, 00 pad of the 3,000 for empoyment durng 19 2 (ths 00
for 19 1 empoyment added to the frst 2, 00 pad for 19 2 empoyment const-
tutes the ma mum wages whch coud be pad n 19 2 by to ). The fna
00 pad by to n 19 2 s not ncuded as wages and s not sub|ect to the ta .
If durng a caendar year an empoyee s pad remuneraton by more than
one empoyer, the mtaton of wages to the frst 3,000 of remuneraton pad
appes, not to the aggregate remuneraton pad by a empoyers wth respect
to empoyment performed after 103 , but nstead to the remuneraton pad
durng such caendar year by each empoyer wth respect to empoyment per-
formed after 193 . In such ense the frst 3,000 pad durng the caendar year
by each empoyer consttutes wages and s sub|ect to the ta . (In connecton
wth the appcaton of the 3,000 mtaton, see aso subparagraph (2) beow,
reatng to the crcumstances under whch wages pad by a predecessor empoyer
are deemed to be pad by hs successor.)
ampe (2). Durng 19 1 empoyer D pays to empoyee C a saary of 000
a month for empoyment performed for D durng the frst 7 months of 19 1, or
tota remuneraton of ,200. t the end of the th month C has been pad
3,000 by empoyer D, and ony that part of hs tota remuneraton from D
consttutes wages sub|ect to the ta . The 000 pad to empoyee C by empoyer
D n the Cth month, and the ke amount pad n the 7th month, are not ncuded
as wages and are not sub|ect to the tn . t the end of the 7th month C eaves
the empoy of D and enters the empoy of . mpoyer pays to C remunera-
ton of 600 a month n each of the remanng months of 19 1, or tota remuner-
aton of 3,000. The entre 3,000 pad by to empoyee C consttutes wages and
s sub|ect to the tn . Thus, the frst 3,000 pad by empoyer D and the entre
3,000 pad by empoyer consttute wages.
ampe (3). Durng the caendar year 19 1 F s smutaneousy nn offcer
(an empoyee) of the Corporaton, the Y Corporaton, and the Z Corporaton,
each such corporaton beng an empoyer for such year. Durng such year P
s pad a saary of 3,000 by each corporaton. ach 3,000 pad to by each
of the corporatons, , Y, and Z (whether or not such corporatons are reated),
consttutes wages and s sub|ect to the tn .
(2) Wages pad by predecessor attrbuted to successor. If an empoyer (here-
nafter referred to as a successor) durng any caendar year begnnng after
December 31, 19 0, acqures substantay a the property used n a trade or
busness of another empoyer (herenafter referred to as a predecessor), or used
21 1 2 2 13
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.
1 6
In a separate unt of a trade or busness of a predecessor, and f mmedatey
after the acquston the successor empoys n hs trade or busness an ndvdua
who mmedatey pror to the acquston was empoyed In the trade or busness
of such predecessor, then, for purposes of the appcaton of the 3,000 mtaton
set forth n subparagraph (1) above, any remuneraton (e cusve of remunera-
ton e cepted from wages n accordance wth paragraphs (b) through ( ) of
ths secton) wth respect to empoyment pad (or consdered under ths prov-
son as havng been pad) to such ndvdua by such predecessor durng such
caendar year and pror to such acquston sha be consdered as havng been
pad by such successor. Wages pad by a predecessor sha not be consdered as
havng been pad by the successor uness both the predecessor and the successor
are empoyers as defned n secton 1607(a) of the ct for the caendar year n
whch the acquston occurs (see secton 03.20 of the reguatons n ths part,
reatng to who are empoyers).
The wages pad, or consdered as havng been pad, by a predecessor to an
empoyee sha, for purposes of the 3,000 mtaton, be treated as havng been
pad to such empoyee by a successor, f:
() the successor durng a caendar year acqured substantay a the
property used n a trade or busness, or used n a separate unt of a trade
or busness, of the predecessor;
() such empoyee was empoyed n the trade or busness of the predeces-
sor mmedatey pror to the acquston and s empoyed by the successor n
hs trade or busness mmedatey after the acquston ; and
() such wages were pad durng the caendar year n whch the acqus-
ton occurred and pror to such acquston.
The method of acquston of the property s mmatera. The acquston may
occur as a consequence of a corporate merger or consodaton, the ncorporaton
of a busness by a soe propretor or a partnershp, the contnuance of the bus-
ness wthout nterrupton by a new partnershp resutng from the death or
retrement of a former partner or the admsson of a new partner, or a purchase
or any other transacton whereby substantay a the property used n a trade n
busness, or used n a separate unt of a trade or busness, of one empoyer s
acqured by another empoyer.
Substantay a the property used n a separate unt of a trade or busness
may consst of substantay a the property used n the performance of an
essenta operaton of the trade or busness, or t may consst of substantay
a the property used n a reatvey sef-sustanng entty whch forms a part of
the trade or busness.
ampe (1). The M Corporaton whch s engaged n the manufacture of
automobes, ncudng the manufacture of automobe engnes, dscontnues
the manufacture of the engnes and transfers a the property used n such
manufacturng operaton to the N Company. The N Company s consdered to
have acqured a separate unt of the trade or busness of the M Corporaton,
namey, ts engne manufacturng unt.
ampe (2). The R Corporaton whch s engaged n the operaton of a
chan of grocery stores transfers one of such stores to the S Company. The S
Company s consdered to have acqured a separate unt of the trade or busness
of the Corporaton.
successor may receve credt for wages pad to an empoyee by a prede-
cessor ony f mmedatey pror to the acquston the empoyee was empoyed
by the predecessor n hs trade or busness whch was acqured by the successor
and f mmedatey after the acquston such empoyee s empoyed by the
successor n hs trade or busness (whether or not n the same trade or busness
n whch the acqured property s used). If the acquston nvoves ony a
separate unt of a trade or busness of the predecessor, the empoyee need not
have been empoyed by the predecessor n that unt provded he was empoyed n
the trade or busness of whch the acqured unt wns a part.
The appcaton of the foregong provsons may be ustrated by the foowng
e ampe:
ampe. (3). The T Corporaton n 10 1 acqures a the property of the
Manufacturng Company and mmedatey after the acquston empoys
n ts trade or busness empoyee . who. mmedatey pror to the acquston,
was empoyed by the Company. oth the Y Corporaton and the Company
are empoyers, as defned n the ct, for the caendar year 19 1. The Com-
pany has n 19 1 (the caendar year n whch the acquston occurs) and pror to
the acquston pad 2,000 of wages to . The Y Corporaton n 19 1 pays
to remuneraton wth respect to empoyment of 2,000. Ony 1,000 of such
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 7
(Regs. 106, 02.201.
remuneraton s consdered to be wages. For the purposes of the 3,000 mta-
ton, the Y Corporaton s credted wth the 2,000 pad to by the Company.
If, n the same caendar year, the property s acqured from the Y Corporaton
by the Z Company, an empoyer for such year, and mmedatey after the
acquston s empoyed by the Z Company n ts trade or busness, no part of
the remuneraton pad to by the Z Company n the year of the acquston
w be consdered to be wages. The Z Company w be credted wth the
remuneraton pad to by the Y Corporaton and aso wth the wages pad to
by the Company (consdered for purposes of the appcaton of the 3,000
mtaton as havng aso been pad by the Y Corporaton).
(b) mpoyers pans provdng for payments on account of retrement,
sckness or accdent dsabty, medca or hosptazaton e penses, or death.
The term wages does not ncude the amount of any payment (ncudng any
amount pad by an empoyer for nsurance or annutes, or nto a fund, to pro-
vde for any such payment) made to, or on behaf of, an empoyee or any of
hs dependents under a pan or system estabshed by an empoyer whch
makes provson for hs empoyees generay (or for hs empoyees generay and
ther dependents) or for a cass or casses of hs empoyees (or for a cass
or casses of hs empoyees and ther dependents), on account of:
(1) an empoyee s retrement,
(2) sckness or accdent dsabty of an empoyee or any of hs dependents,
(3) medca or hosptazaton e penses n connecton wth sckness or
accdent dsabty of an empoyee or any of hs dependents, or
( ) death of an empoyee or any of hs dependents.
The pan or system estabshed by an empoyer need not provde for payments
on account of a of the specfed tems, but such pan or system may provde
for any one or more of such tems. Payments for any one or more of such
tems under a pan or system estabshed by an empoyer soey for the depend-
ents of hs empoyees are not wthn ths e cuson from wages.
Dependents of an empoyee ncude the empoyee s husband or wfe, chdren,
and any other members of the empoyee s mmedate famy.
It s mmatera for purposes of ths e cuson whether the amount or poss-
bty of such beneft payments s taken nto consderaton n f ng the amount
of an empoyee s remuneraton or whether such payments are requred, e -
pressy or mpedy, by the contract of servce.
(c) Retrement payments. The term wages does not ncude any payment
made by an empoyer to an empoyee (ncudng any amount pad by an em-
poyer for nsurance or annutes, or nto a fund, to provde for any such
payment) on account of the empoyee s retrement. Thus, payments made to
an empoyee on account of hs retrement are e cuded from wages under ths
e cepton even though not made under a pan or system.
(d) Payments on account of sckness or accdent dsabty, or medca or
hosptazaton e penses. The term wages does not ncude any payment made
by an empoyer to, or on behaf of, an empoyee on neeount of the empoyee s
sckness or accdent dsabty or the medca or hosptazaton e penses n
connecton wth the empoyee s sckness or accdent dsabty, f such payment
s made after the e praton of s caendar months foowng the Inst caendar
month n whch such empoyee worked for such empoyer. Such payments are
e cuded from wages under ths e cepton even though not made under a pan
or system. If the empoyee does not actuay perforn servces for the empoyer
durng the requste perod, the e stence of the empoyer-empoyee reatonshp
durng that perod s mmatera.
(e) Payments from or to certan ta -e empt trusts or under or to certan
annuty pans. The term wages does not ncude
(1) any payment made by an empoyer, on behaf of an empoyee or
hs benefcary, nto a trust or annuty pan, f at the tme of such payment
the trust s e empt from ta under secton 10 (a) of the Interna Revenue
Code or the annuty pan meets the requrements of secton 163(a) (3),
( ), ( ), and (6) of the Interna Revenue Code; or
(2) any payment made to, or on behaf of, an empoyee or hs benefcary
from a trust or under an annuty pan, f at the tme of such payment the
trust s e empt from ta under secton 16.1(a) of the Code or the annuty
pan meets the requrements of secton 163(a) (3), ( ), ( ), and (6) of
the Code.
payment made to an empoyee of a trust e empt from ta under secton 16 (a)
of the Code for servces rendered as an empoyee of such trust and not as a
benefcary of the trust s not wthn ths e cuson from wages.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.)
1
(f) Payment by an empoyer of empoyees ta or empoyees 1 contrbutons
under a State aw. The tern wages does not ncude any payment by an
empoyer (wthout deducton from the remuneraton of, or other rembursement
from, the empoyee) of ether (1) the empoyee ta mposed by secton 1 00 of
the Federa Insurance Contrbutons ct, or (2) any payment requred from
an empoyee under a State unempoyment compensaton aw.
(g) Payments other than n cash for servces not n te course of empoyer s
trade or busness. The term wages does not ncude remuneraton pad n
any medum other than cash for servces not n the course of the empoyer s
trade or busness. Cash remuneraton ncudes checks and other monetary
meda of e change. Remuneraton pad n any medum other than cash, such
as odgng, food, or other goods or commodtes, for servces of the prescrbed
character does not consttute wages. Remuneraton pad n any medum other
than cash for other types of servces does not come wthn ths e cuson from
wages. For provsons reatng to the crcumstances under whch servces not
n the course of the empoyer s trade or busness do not consttute empoyment,
see secton 03.210.
(h) Payments to stand-by empoyees. The term wages does not ncude any
payment (other than vacaton or sck pay) made by an empoyer to an empoyee
after the caendar month n whch the empoyee attans age 0 , f:
(1) such empoyee does no work (other than beng sub|ect to ca for
the performance of work) for such empoyer n the perod for whch such
payment s made; and
(2) the empoyer-empoyee reatonshp e sts between the empoyer and
empoyee throughout the perod for whch such payment s made.
acaton or sck pay s not wthn ths e cuson from wages. If the empoyee
does any work for the empoyer n the perod for whch the payment s made,
no remuneraton pad by such empoyer to such empoyee wth respect to such
perod, s wthn ths e cuson from wages. For e ampe, f empoyee s em-
poyed by the Company on a stand-by bass and. after he has attaned the age
of 6 , s pad 200 by the Company for beng sub|ect to ca durng the month
of anuary 1 ) 1 and an addtona 2 for work performed for the Company
on one day durng that month, then none of the 22 s e cuded from wages
under ths e cepton.
() Dsmssa payments. ny payment made by an empoyer to an empoyee
on account of dsmssa, that s, nvountary separaton from the servce of
the empoyer, s e cuded from wages , provded the empoyer s not egay
bound by contract, statute, or otherwse, to make such payment. Ths e cu-
son does not appy wth respect to remuneraton pad after December 31, 19 1.
(|) Msceaneous. In addton to the e cusons specfed n paragraphs
(a) through () of ths secton, the foowng types of payments are e cuded
from wages:
(1) Remuneraton for servces whch do not consttute empoyment under
secton 1607(c) of the ct;
(2) Remuneraton for servces whch are deemed not to be empoyment
under secton 1G07(d) of the ct; and
(3) Tps or gratutes pad drecty to an empoyee by a customer of
an empoyer, and not accounted for by the empoyee to the empoyer.
(k) ppcabty of secton. The provsons of ths secton appy ony wth
respect to remuneraton pad after December 31, 19 0.
Par. 2 . Secton 03.302 26 CFR 03.302 s amended by strkng
out n the parenthetca cross-reference sectons 03.227 and 03.22 ,:
and by nsertng n eu thereof sectons 03.227, 03.22 , and
03.22 a .
Par. 2 . Immedatey precedng secton 03. 01 26 CFR 03. 01 ,
the foowng s nserted:
S CTION 207(b)(1) OF T SOCI I, S CURITY CT
M NDM NTS OF 19 0
Secton 3312 of the Interna Revenue Code s amended by Insertng
mmedatey after the words gft ta es (whch words mmedatey
precede subsecton (a) thereof) a comma and the foowng: and
e cept as otherwse provded n secton 163 wth respect to empoyment
ta es under subchapters and D of chapter 9 .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

3

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
1 9
Regs. 106, 02.201.
Par. 26. Secton 03. 0 26 CFR 03. 0 s amended by strkng
out the ast sentence of the frst paragraph and nsertng n eu thereof
the foowng sentence:
If fed wthn the prescrbed tme the statement so made w reeve the em-
poyer from abty for the addton to ta mposed for the denquent fng
of the return (see sectons 03.013 (a) and 03.60 a, reatng to the addton
to ta ), provded that, wthout unnecessary deay, such tentatve return s
suppemented by a return made on the proper form.
Par. 27. Secton 03. 06 26 CFR 03. 06 s amended by strkng
out n the ffth sentence secton 03.60 (a) and nsertng n eu
thereof sectons 03.60 (a) and 03.60 a .
Par. 2 . Secton 03. 0 20 CFR 03. 0 s amended by strkng
out n the ast sentence and 03.60 of these reguatons and nsertng
n eu thereof 03.60 , and 03.60 a of the reguatons n ths part .
Par. 29. Secton 03. 11(a) C2) 26 CFR 03. 11(a)(2) s
amended bv strkng out (see sectons 03.227 and 03.22 ) and n-
sertng n eu thereof (see sectons 03.227, 03.22 , and 03.22 a) .
Par. 30. Immedatey precedng secton 03.602 26 CFR 03.002 ,
the foowng s nserted:
S CTION 200(e) OF T SOCI L S CURITY CT M NDM NTS
OF 10 0
If a corporaton (herenafter referred to as a predecessor) ncor-
porated under the aws nf one State s succeeded after 10 and before
19 1 by another corporaton (herenafter referred to as a successor)
ncorporated under the aws of another State, and f mmedatey upon
the successon the busness of the successor s dentca wth that of
the predecessor and, e cept for quafyng shares, the proportonate
nterest of each sharehoder n the successor s dentca wth hs pro-
portonate nterest n the predecessor, and f n connecton wth the
successon the predecessor s dssoved or merged nto the successor,
and f the predecessor and the successor are empoyers under the
Federa Insurance Contrbutons ct and the Federa Unempoyment
Ta ct n the caendar year n whch the successon takes pace,
then
(1) the predecessor and successor corporatons, for purposes
ony of the appcaton of the 3,000 mtaton n the defnton
of wn es under such cts, sha be consdered as one empoyer
for such caendar year, and
(2) the successor sha, sub|ect to the appcabe statutes of
mtatons, he entted to a credt or refund, wthout nterest,
of any ta under secton 1 10 of the Federa Insurance Contr-
butons ct or secton 1G00 of the Federa Unempoyment Ta
ct (together wth nny nterest or penaty thereon) pad wth
respect to remuneraton pad by the successor durng such caendar
year whch woud not have been sub|ect to ta under such cts
f the remuneraton had been pad by the predecessor.
Par. 31. Secton 03.003. as amended bv Treasury Decson 79 ,
approved uy 6, 19 0 26 CFR 03.603 , s further amended by
strkng out provded by secton 1631 and nsertng n eu thereof
mposed n certan cases for the denquent payment of the ta
(see secton 03.60 a, reatng to the mnmum addton to the ta ) .
Par. 32. Secton 03.00 (a), as amended by Treasury Decson
79 26 CFR 03.00 (a) . s further amended by strkng out n the
second sentence provded by secton 1631 and nsertng n eu
thereof mposed for the denquent fng of the return (see secton
03.60 a, reatng to the mnmum addton to the ta ) .
Par. 33. Immedatey after the provsons of aw under the capton
Secton 6 of the ct of ugust 27, 19 9 (Pubc Law 271, 1st
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 106, 02.201.
190
Congress) , added by Treasury Decson 79 , as set forth after sec-
ton 03.60 26 CFR 03.60 , the foowng s nserted:
S CTION 209(d) OF T SOCI L S CURITY CT M NDM NTS
OF 19 0
(1) Secton 1631 of the Interna Revenue Code s amended to read as
foows:
S C. 1631. F ILUR OF MPLOY R TO FIL R TURN.
In case of a faure to make and fe any return requred under ths
chapter wthn the tme prescrbed by aw or prescrbed by the Comms-
soner n pursuance of aw, uness t s shown that such faure s due to
reasonabe cause and not to wfu negect, the addton to the ta or
ta es requred to be shown on such return sha not be ess than .
(2) The amendment made by paragraph (1) sha be appcabe ony
wth respect to returns fed after December 31,19 0.
Sec. 03.60 a. Mnmum ddton to the Ta . (a) Returns fed pror to
anuary 1,19 1. In the case of returns requred to be fed or ta whch becomes
due on or after ugust 27, 19 9, f a person fas to make and fe a return
requred by the reguatons n ths part, or pay the ta , wthn the prescrbed
tme, uness t Is shown that the faure s due to reasonabe cause and not to
wfu negect, the addton to the ta sha not be ess than . (See sectons
03. 06 and 03. 07, reatng to the tme for fng returns, and sectons 03. 0S
and 03. 09, reatng to the tme for payment of ta .) Ths provson s to be
apped n accordance -vth the foowng rues:
(1) In the case of faure to make and fe a return wthn the prescrbed
tme, the addton to the ta sha be computed as provded by secton
3612(d)(1) of the Interna Revenue Code (see secton 03.60 (a) of the
reguatons n ths part) and f ess than sha be ncreased to .
(2) In the case of faure to pay the ta when due, the addton to the
ta sha be computed as provded by secton 160 (b) of the ct (see
secton 03.603 of the reguatons n ths part) and f ess than sha be
ncreased to .
(3) In the case of concurrent faure to make and fe the return and to
pay the ta wthn the prescrbed tme, the ad vaorem penaty provded
by secton 3612(d) (1) of the Interna Revenue Code and the nterest pro-
vded by secton 160 (b) of the ct sha be aggregated and f ess than
sha be ncreased to .
The provsons of ths paragraph (a) appy ony wth respect to returns fed
before anuary 1, 19 1, and to the ta requred to be shown on such returns.
(b) Returns fed after December SI, 19 0. If a person fas to make and fe
a return requred by the reguatons n ths part wthn the prescrbed tme,
uness t s shown that the faure s due to reasonabe cause and not to wfu
negect, the addton to the ta requred to be shown on such return sha not
be ess than . (See sectons 03. 06 and 03. 07, reatng to the tme for fng
returns.) The addton to the ta sha be computed as provded by secton
3612(d) (1) of the Interna Revenue Code (see secton 03.00 (a) of the regua-
tons n ths part) and f ess than sha be ncreased to . The provsons
of ths paragraph (b) appy ony wth respect to returns fed after December
31, 19 0.
R GUL TIONS 11 20 CFR, P RT 11
Par. 3 . Secton 11.60 26 CFR 11.60 s amended by strkng
out the ast sentence of the frst paragraph and nsertng n eu thereof
the foowng sentence:
If fed wthn the prescrbed tme the statement so made w reeve the ta -
payer from abty for the addton to ta mposed for the denquent fng of
the return (see sectons 11.900(a) and 11.90 a, reatng to the addton to
ta ), provded that wthout unnecessary deay such tentatve return s suppe-
mented by a return made on the proper form.
Par. 3 . Secton 11.60 26 CFR 11.60 s amended by strkng
out n the seventh sentence secton 11.90 (a) and nsertng n eu
thereof sectons 11.90 (a) and 11.90 a.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
191
Regs. 106, 02.201.
Par. 36. Secton 11.606 26 CFR 11.606 s amended by strkng
out n the ast sentence and 11.90 and nsertng n eu thereof
11.90 , and 11.90 a.
Par. 37. Secton 11.903, as amended by Treasury Decson 79 ,
approved uy 6,19 0 26 CFR 11.903 , s further amended by strk-
ng out provded by secton 1631 and nsertng n eu thereof m-
posed n certan cases for the denquent payment of the ta (see sec-
ton 11.90 a, reatng to the mnmum addton to the ta ).
Par. 3 . Secton 11.90 (a), as amended by Treasury Decson 79
26 CFR 11.90 (a) , s further amended by strkng out n the second
sentence provded by secton 1631 and nsertng n eu thereof m-
posed for the denquent fng of the return (see secton 11.90 a,
reatng to the mnmum addton to the ta ).
Par. 39. Immedatey after the provsons of aw under the capton
Secton 6 of the ct of ugust 27, 19 9 (Pubc Law 271, 1st
Congress) , added by Treasury Decson 79 , as set forth after sec-
ton 11.90 26 CFR 11.90 , the foowng s nserted:
S CTION 209(d) OF T SOCI L S CURITY CT M NDM NTS
OF 19 0 (PU LIC L W 73 , 1st CONGR SS)
(1) Secton 1631 of the Interna Revenue Code s amended to read as
foows:
S C. 1631. F ILUR OF MPLOY R TO FIL R TURN.
In case of a faure to make and fe any return requred under ths
chapter wthn the tme prescrbed by aw or prescrbed by the Comms-
soner n pursuance of aw, uness t s shown that such faure s due
to reasonabe cause and not to wfu negect, the addton to the ta or
ta es requred to be shown on such return sha not be ess than .
(2) The amendment made by paragraph (1) sha be appcabe ony
wth respect to returns fed after December 31, 19 0.
Sec. 11.90 a. Mnmum ddton to the Ta (a) Returns fed pror to
anuary 1, 19 1. In the case of returns requred to be fed or ta whch be-
comes due on or after ugust 27, 19 9, f a person fas to make and fe a
return requred by the reguatons n ths part, or pay the ta , wthn the pre-
scrbed tme, uness t s shown that the faure s due to reasonabe cause and not
to wfu negect, the addton to the ta sha not be ess than . (See secton
11.60 , reatng to the tme for fng returns, and secton 11.606, reatng to
the tme for payment of ta .) Ths provson s to be apped n accordance
wth the foowng rues:
(1) In the case of faure to make and fe a return wthn the prescrbed
tme, the addton to the ta sha be computed as provded by secton
3612(d)(1) of the Interna Revenue Code (see secton 11.90 (a) of the
reguatons n ths part) and f ess than sha be ncreased to .
(2) In the case of faure to pay the ta when due, the addton to the
ta sha be computed as provded by secton 1 30(c) of the ct (see sec-
ton 11.903 of the reguatons n ths part) and f ess than sha be n-
creased to .
(3) In the case of concurrent faure to make and fe the return and
to pay the ta wthn the prescrbed tme, the ad vaorem penaty pro-
vded by secton 3612(d)(1) of the Interna Revenue Code and the n-
terest provded by secton 1 30(c) of the ct sha be aggregated and f
ess than sha be ncreased to .
The provsons of ths paragraph (a) appy ony wth respect to returns fed
before anuary 1, 19 1, and to the ta requred to be shown on such returns.
(b) Returns fed after December 31, 19 0. If a person fas to make and
fe a return requred by the reguatons n ths part wthn the prescrbed tme,
uness t s shown that the faure s due to reasonabe cause and not to wfu
negect, the addton to the ta or ta es requred to be shown on such return
sha not be ess than . (See secton 11.60 , reatng to the tme for fng
returns.) The addton to the ta sha be computed as provded by secton
3612(d) (1) of the Interna Revenue Code (see secton 11.90 (a) of the regu-
atons n ths part) and f ess than sha be ncreased to . The provsons
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 12 , 0 .226.)
192
of ths paragraph (b) appy ony wth respect to returns fed after December
31, 19 0.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 1 29, 1 3 , 1609, and 3791 of the Interna Revenue Code ( 3
Stat. 17 ,1 3,1 , 67; 26 U. S. C. 1 29,1 3 ,1609,3791).)
ohn . Dt|nap,
Commssoner of Interna Revenue.
pproved May 27, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 3, 19 2, : 9 a. m.)
Secton 1 26: Defntons.
Reguatons 12 , Secton 0 .20 : Who are em-
poyees.
Status, after 19 0, of agent-drvers and commsson drvers. (See
Mm. 67 7, beow.)
Secton 1 26: Defntons. 19 2-10-13 19
Reguatons 12 , Secton 0 .226: Wages. Mm. 67 7
( so Reguatons 12 , Secton 0 .20 .)
Procedure for computng wages of agent-drvers and comms-
son-drvers for purposes of the Federa Insurance Contrbutons ct
(subchapter , chapter 9, Interna Revenue Code), as amended
by the Soca Securty ct mendments of 19 0.
Mmeograph 6601 (C. . 19 1-1, 103) suppemented.
Treasury Department,
Offce of Commssoner of Interna Revenue.
Washngton 2 , D. C, pr 1, 19- 3.
Coectors of Interna Revenue and Others Concerned:
1. The ureau has receved a substanta number of nqures
reatng to the computaton of wages n the cases of agent-drvers and
commsson-drvers who are empoyees under the statutory defn-
ton of empoyee contaned n secton 1 26(d) (3) ( ) of the Federa
Insurance Contrbutons ct, as amended by the Soca Securty ct
mendments of 19 0. The purpose of ths mmeograph s to state the
ureau s poston n the matter whch, n effect, suppements Mmeo-
graph 6601 (C. . 19 1-1,103).
2. In the ma|orty of the cases n ths occupatona group consdered
by the ureau, t has been found that the agent-drvers and com-
msson-drvers who meet the test provded n secton 1 26(d) (3) ( )
of the Federa Insurance Contrbutons ct, as amended, are nd-
vduas who operate ther own trucks and whose compensaton s the
dfference betweea the prce they charge the customers and the prce
they pay ther prncpas for the products or servces. In many of
such cases the empoyers have stated that they are unabe to determne
the wages of ther drver-empoyees for the reason that the drvers
are sub|ect to numerous e penses, such as the costs of the mantenance
and operaton of ther trucks, cense fees, credt osses, etc., and the
empoyers have no nformaton wkh respect to such e penses.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
193
Regs. 12 , 0 .606.
3. Where an agent-drver or commsson-drver performs serv-
ces for hs prncpa under crcumstances whch meet the statutory
test provded n secton 1 20(d)(3)( ) of the Federa Insurance
Contrbutons ct, as amended, he s an empoyee for purposes of the
ta es mposed by such ct. It s the poston of the ureau that f
such ndvdua submts a statement to hs prncpa showng hs gross
recepts, the ordnary and necessary e penses (other than transporta-
ton e penses) ncurred by hm n dstrbutng the partcuar products
or servces, and the far renta vaue of the truck used n performng
the servces (where he owns or rents such truck), then the dfference be-
tween such gross recepts and such e penses and far renta vaue
shoud be consdered as the agent-drver s or commsson-drver s
wages for purposes of the ta es mposed under the Federa Insur-
ance Contrbutons ct, as amended. If such statement s not fur-
nshed by the ndvdua, the dfference between the suggested seng
prce to the customers for the products or servces and the prce he pays
hs prncpa consttutes hs wages for purposes of such ct. In
ether case approprate arrangements shoud b made by the empoyer
wth the empoyee for the coecton of the empoyee s ta .
. Ths method of computng wages s mted to the cccupatona
group fang wthn the contempaton of secton 1 20(d) (3) ( ) of
the Federa Insurance Contrbutons ct, as amended.
. Correspondence reatng to ths mmeograph shoud refer to the
number thereof and to the symbos mT: RR.
ohn . Dunap,
Commssoner.
Secton 1 30: Other aws appcabe. 19 2-3-137
Reguatons 12 , Secton OS.GOG: Pace and Mm. C737
tme for fng returns.
Inspecton of empoyer s quartery Federa ta returns, Form 911,
by State unempoyment compensaton commssons.
.Suppeaentng Mmeograph 0310 (C. . 10 -2, 1 0.)
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, December 19, 19 1.
Coectors of nterna Revenue and Others Concerned:
1. The empoyer s quartery Federa ta return, Form 9 1, com-
bnes the reportng of ta es under the Federa Insurance Contrbu-
tons ct and ncome ta wthhed under secton 1022 of the Interna
Revenue Code. The ta porton of such returns sha be made ava-
abe for nspecton by offcas of State unempoyment compensaton
commssons n the same manner and to the same e tent as returns
on Form SS-a. The authorzaton and nstructons of Mmeograph
0310 (C. . 19 -2, 1 9), are hereby e tended and made appcabe
to the quartery returns on Form 9 1.
2. Correspondence n regard to the contents of ths mmeograph
shoud refer to ts number, and to the symbos mT: RR.
ohn . Dunap,
Commssoner.
pproved December 1 , 19 1.
Thomas . Lynch,
ctng Secretary of the Treasury.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 107, 03. 01.
19
C PT R 9, SU C PT R . R ILRO D R TIR M NT T CT
Sectons 1 30 and 1 36.
Reguatons 11 , Sectons 11.60 , 11.60 ,
11.606, 11.903, and 11.90 .
Reguatons 11 amended to conform to certan provsons of the
Soca Securty ct mendments of 19 0. (See T. D. 90 , page 173.)
C PT R 9, SU C PT R C F D R L UN MPLOYM NT T CT
Sectons 1600, 160 , 1607, 160 , and 1610.
Reguatons 107, Sectons 03.201, 03.202,
03.203, 03.20 , 03.200, 03.210, 03.217,
03.221, 03.227, 03.22 . 03.302, 03. 06,
03. 0 , 03, 11, 03.603, and 03.60 (a).
Reguatons 107 amended to conform to certan provsons of the
Soca Securty ct mendments of 19 0. (See T. D. 90 , page 173.)
Secton 1601: Credts aganst ta . 19 2-7-1379
Reguatons 107, Secton 03. 01: Credt aganst T. D. 6
ta for contrbutons pad.
( so Secton 1601; Reguatons 107, Secton 03. 03.)
TITL 26 INT RN L R NU C PT R I. SU C PT R D, P RT 03.
CIS T ON MPLOY RS UND R T F D R L UN MPLOYM NT T
CT
Reguatons 107 amended wth respect to proof of credt In con-
necton wh contrbutons under a State unempoyment compen-
saton aw.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Reguatons 107 26 CFR, part 03 , reatng to the e cse ta en
empoyers under the Federa Unempoyment Ta ct (subchapter
C, chapter 9, Interna Revenue Code), are hereby amended as
foows:
Paragraph 1. Secton 03. 01(f) 26 CFR 03. 01(f) s amended
by strkng out Commssoner under oath and nsertng n eu
thereof coector (or, f the return was fed pror to anuary 1, 19 2,
the Commssoner) .
Par. 2. Secton 03. 03(a), as amended by Treasury Decson 3 3
C. . 19 , 60 , approved une 2 , 19 26 CFR 03. 03(a) , s
further amended as foows:
( ) y strkng out n the frst sentence the word Commssoner
and nsertng n eu thereof coector (or, f the return was fed
pror to anuary 1, 19 2, the Commssoner) .
( ) y nsertng n the ast sentence after the word Comms-
soner the words or the coector .
Par. 3. Secton 03. 03(b) 26 CFR 03. 03(b) s amended as
foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
19
Regs. 107, 03. 01.
( ) y strkng out n the frst sentence the word Commssoner
and nsertng n eu thereof coector (or. f the return was fed
pror to anuary 1,19 2, the Commssoner): .
( ) y nsertng n the ast sentence after the word Comms-
soner the words or the coector .
Par. . Secton 03. 03(c) 26 CF 03. 03(c) s amended as
foows:
( ) y strkng out the headng and nsertng n eu thereof the
foowng: (c) ddtona credt under secton 1601 (6) of the ct.
(1) Returns fed pror to anuary 1.10 2.
( ) y nsertng n the frst sentence mmedatey after the words
the ta for any caendar year the words wth respect to whch a
return was fed pror to anuary 1,19 2, .
(C) y strkng out the subparagraph desgnatons (1) and
(2) and nsertng n eu thereof () and () , respectvey.
(D) y addng at the end of such secton the foowng:
(2) Returns fed after December SI, 19 1. ddtona credt under secton
1601(b) of the ct sha not be aowed nganst the ta for any caendar year
wth respect to whch a return s fed after December 31, 19 1, uness there s
submtted:
() To the Commssoner a certfcate of the pruper offcer of each State
(wth respect to the aw of whch the addtona credt s camed) showng
the hghest rate of contrbutons apped under the State aw n such caen-
dar year to any person havng ndvduas n hs empoy; and
() To the coector a certfcate of the proper offcer of each State (wth
respect to the aw of whch the addtona credt s camed) showng for the
ta payer:
( ) The tota remuneraton wth respect to whch contrbutons were
requred to be pad by the ta payer under the State aw wth respect to
such caendar year; and
( ) The rnte of contrbutons apped to the ta payer under the
State aw wth respect to such caendar year.
If under the aw of such State dfferent rates of contrbutons were apped
to the ta payer durng partcuar perods of such caendar year, the certf-
cate sha set forth the nformaton caed for n ( ) and ( ) wth respect
to each such perod. #
() Such other or addtona proof as the Commssoner or the coector
may deem necessary to estabsh the rght to the addtona credt provded
for under secton 1601(b) of the ct.
ecause ths Treasury Decson merey makes certan technca
amendments made necessary by reason of the deegaton of certan
functons to coectors of nterna revenue, t s found that t s unnec-
essary to ssue ths Treasury Decson wth notce and pubc pro-
cedure thereon under secton (a) of the dmnstratve Procedure
ct, approved une 11,19 6, or sub|ect to the effectve date mtaton
of secton (c) of sad ct.
(Ths Treasury Decson s ssued under the authorty contaned n
sectons 1609 and 3791 of the Interna Revenue Code ( 3 Stat. 1 ,
G7;26U.S. C. 1609,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved March 11,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster March 13, 19 2, : 9 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .102. 196
Secton 1601: Credts aganst ta .
Reguatons 107, Secton 03. 03: Proof of
credt.
Change n procedure for submttng nformaton for aowance of
addtona credt. (See T. D. , page 19 .)
C PT R 9, SU C PT R D. COLL CTION OF INCOM T T
SOURC ON W G S
Secton 1621: Defntons. 19 2-9-13 12
Reguatons 116, Secton 0 .102: cusons T. D. 91
from wages.
( so Secton 1622; Reguatons 116, Sectons
0 .20 and 0 .206.)
TITL 26 INT RN L R NU . C PT R I. SU C PT R D, P RT 0 .
COLL CTION OF INCOM T T SOURC ON W G S
Reguatons 116 amended to conform to sectons 201, 202, 20 , 30 ,
and 310 of the Revenue ct of 19 1.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 116 26 CFR, part 0 to sectons
201, 202, 20 , 30 , and 310 of the Revenue ct of 19 1, approved
October 20, 19 1, such reguatons are hereby amended as foows:
Paragraph 1. There s nserted mmedatey precedng the capton
Sec. 209(c) of the Soca Securtt ct mendments op
19 0 , as nserted by Treasury Decson 2 C. . 19 1-1,
111 , approved anuary 22,19 1, as set forth precedng secton 0 .101
26 CFR 0 .101 , the foowng:
S C. 30 . COMP NS TION OP C RT IN M M RS OF T
RM D FORC S R NU CT OF 19 1, PPRO D
OCTO R 20,. 19 1 .

(c) Wthhodng on Wages. Secton 1621(a) (1) (reatng to defn-
ton of the term wages ) s hereby amended to read as foows:
(1) for actve servce as a member of the armed forces of the
Unted States performed pror to anuary 1, 19 , n a month for
whch such member s entted to the benefts of secton 22(b) (13),
or .
(d) ffectve .Dates. The amendment made by sub-
secton (c) sha be appcabe wth respect to wages pad after the
tenth day foowng the date of the enactment of ths ct.
Par. 2. Secton 0 .102(b), as amended by Treasury Decson 2
26 CFR 0 .102(b) , s further amended as foows:
( ) y nsertng mmedatey after November 1, 19 0, n the
second sentence and before October 31,19 1, , so that the sentence w
read as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
197
Regs. 116, 0 .102.
Remuneraton pad on or after November 1, 19 0, and before October 31, 10 1,
for actve servce, as a member of the rmed Forces of the Unted States,
performed n a month durng any part of whch such member served n a combat
zone (as determned under secton 22(b) (13)) s e cepted from the defnton
of the term wages and s, therefore, not sub|ect to wthhodng.
( ) y nsertng mmedatey after such second sentence the
foowng:
Remuneraton pad on or after October 31, 19 1, for actve servce, as a member
of the rmed Forces of the Unted States, performed pror to anuary 1, 19 , n
a month durng any part of whc such member served n such a combat zone
or s hosptazed at any pace as a resut of wounds, dsease, or In|ury ncurred
whe servng n such a combat zone, s aso e cepted from the defnton of
the term wages and s, therefore, not sub|ect to wthhodng. The e cepton
wth respect to hosptazaton s appcabe, however, ony f durng a of
such month there are combatant actvtes n some combat zone (as determned
under secton 22(b) (13)).
Par. 3. There s nserted mmedatey precedng secton 0 .201
26 CFR 0 .201 the foowng:
S C. 201. P RC NT G M T OD OF WIT OLDING R NU
CT OF 19 1, PPRO D OCTO R 20, 19 1 .
Secton 1022(a) (reatng to percentage method of wthhodng on
wages) s hereby amended by nsertng before the perod at the end
thereof the foowng: , e cept that n the case of wages pad on or
after November 1, 19 1, and before anuary 1, 19 , the ta sha be
equa to 20 per centum of such e cess n eu of 1 per centum .
S C. 202. W G R C T WIT OLDING R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .
So much of secton 1022(c) (1) as precedes the tabes n such secton
s hereby amended to read as foows:
(1) ( ) Wages pad after October 31, 19 1, and before an-
uary 1, 19 . t the eecton of the empoyer wth respect to any
empoyee, the empoyer sha deduct and wthhod upon the wages
pad to such empoyee after October 31, 19 1, and before anuary 1,
19 , a ta determned n accordance wth the foowng tabes,
whch sha be n eu of the ta requred to be deducted and wth-
hed under subsecton (a) :
If the payro perod wth respect to an empoyee s weeky
nd the wasc;
nd the number of wthhodng e emptons camed s
ut ess
than
The amount of ta to be wthhed sha be
O f 3
13
1
1
1
1
16
f
17
17
1
1
19
10
20
20
21
21
22
22
23
23
2
21 .
2
fs
2f
SO , of
0
0
0
0
0
to
0
SO
0

rugC
2. 70
. 10
0
0
0
0
0
0
0
0
0
2.90
.30
0
0
0
0
0
0
0
0
0
3. 10
. 0
0
0
0
0
0
0
0
0
0
3.30
.70
0
0
0
0
0
0
0
0
0
3. 0
.90
0
0
0
0
0
0
0
0
0
3.70
1. 10
0
0
0
0
0
0
0
0
0
3.90
1.30
0
0
0
0
0
0
0
0
0
. 10
1. 0
0
0
0
0
0
0
0
0
0
.30
1.70
0
0
0
0
0
0
0
0
0
. 0
1.90
0
0
0
0
0
0
0
0
0
.70
2. 10
0
0
0
0
0
0
0
0
0
.90
2.30
0
0
0
0
0
0
0
0
0
6. 10
2. 0
0
0
0
0
0
0
0
0
0
.30
2.70
.20
0
0
0
0
0
0
0
0
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .102. 19
// the payro perod wth respect to an empoyee s weeky Contnued
nd the wages are
nd the number of wthhodng e emptons camed s
0
1
2
3

6
6
7

9
10 or
at ess
more
than
The amount of ta to be wthhed sha be
2
. 0
2.90
0. 0
0
0
to
0
0
to
0
to
29 . .
6. 70
3.10
. 60
o
o
o
o
o
o
a

30
.90
3.30
. 0
0
0
0
0
0
0
0
0
31
6. 10
3. 0
1.00
0
0
0
0
0
0
0
0
32
6.30
170
1.20
0
0
0
0
0
0
0
0
33
6. 0
ago
1. 0
0
0
0
0
0
0
0
0
3
6.70
.10
1.60
0
0
0
0
0
0
0
n
3
6.90
.30
1. 0
0
0
0
0
0
0
0

36
7. 10
. 0
2.00
0
0
0
0
0
0
0
37
7.30
.70
2.20
0
0
0
0
0
0
0
(
3 .
7. 0
.90
2. 0
0
0
0
0
0
0
0
c
39
7.70
.10
260
0
0
0
0
0
0
0
n
10
7.90
.30
2 0
.20
0
0
0
0
0
0
1
s. 10
0
3.00
. 0
0
0
0
0
0
0

2
.30
.70
3.20
.60
0
0
0
0
0
0

3
. 0
90
3. 0
. 0
0
0
0
0
0
0

70
6. 10
3. 60
1.00
o
o
o
o
o
o
.90
6.30
3. 0
1.20
0
0
0
0
0
0
r,
S
9.10
6 0
.00
1. 0
0
0
0
0
0
0
0
7
9. 30
6.70
.20
1.60
0
0
0
0
0
0
0

9. 0
6.90
. 0
1. 0
0
0
0
0
0
0
0
9
9.70
7.10
.60
2.00
0
0
0
0
0
0
0
0
9.90
7.30
. 0
2.20
0
0
0
0
0
0
0
SSI.
10. 10
7. 0
00
2 0
0
0
0
0
0
0
0
2
10 30
7. 70
6. 20
2. 60
o
0
o
o
o
o
3
10. 0
7.90
0
2 0
.20
0
0
0
0
0
0
.
10.70
.10
6.00
100
. 0
0
0
0
0
0
0

10. 90
30
. 0
120
.60
0
0
0
0
0
0
6
11.10
. 0
6.00
3. 0
. 0
w
0
0
0
0
0
7
11.30
70
6. 20
3.60
1.00
0
0
0
0
0
0

11. 0
90
6. 0
3. 0
1.20
0
0
0
0
0
0
9
11.70
9.10
a 60
.00
1. 0
0
0
0
0
0
0
60
11.90
9.30
6. 0
.20
1.60
0
0
0
0
0
0
62
12.20
9.60
7.10
. 0
1.90
0
0
0
0
0
0
0
12.60
10.00
7. 0
.90
230
0
0
0
0
0
0
6
13.00
10. 0
7.90
30
270
.20
0
0
0
0
r
6
13. 0
10. 0
.30
.70
3.10
.60
0
0
0
0
0
70.
13. 0
11.20
70
6.10
3.60
1.00
0
0
0
0
0
72
1 .20
11.60
9. 10
6. 0
3.90
1. 0
0
0
0
0
(1
7
1 .60
12 00
9. 0
6.90
.30
1. 0
0
0
0
0
1
76
1 00
12. 0
9.90
7.30
.70
220
0
0
0
0

7
1 0
12. 0
10.30
7.70
10
260
0
0
0
0
11
S0
1 . 0
1120
10.70
10
. 0
100
. 0
0
0
0
0
2
16.20
13.60
11.10
0
90
1 0
. 0
0
0
0


16.60
1 .00
11. 0
a 90
6.30
1 0
1.20
0
0
0
0
6
17.00
1 . 0
11.90
9.30
6.70
.20
1.60
0
0
0
0

17. 0
1 . 0
12.30
9.70
7. 10
.60
200
0
0
0
0
90
17. 0
1 .20
12.70
10. 10
7. 0
.00
2 0
0
0
0
0
92
1 .20
1 60
13.10
I. 0
7.90
. 0
2 0
.30
0
0
0
9
1 .60
16.00
13. 0
10.90
30
0
120
.70
0
0
0
96
19.00
16. 0
13.90
11.30
170
6.20
160
1. 10
0
0
0

19. 0
16. 0
1 .30
11.70
9.10
6.60
.00
1. 0
0
0
0
100
19. 0
17. 20
1 .70
12 10
9. 0
7.00
. 0
1.90
0
0
0
10
20. 0
17.90
1 . 0
12 0
10. 20
7.70
10
260
0
0
0
110
21. 0
1 .90
16. 0
13. 0
11.20
70
6. 10
160
1.00
0
0
11
22. 0
19.90
17. 0
1 . 0
12 20
9.70
7.10
.60
200
0
0
120
23. 0
20.90
1 0
1 0
13.20
10.70
. 10
.60
100
. 0
0
12
2 . 0
21.90
19. 0
16. 0
1 .20
1L70
9.10
6.60
.00
1. 0
0
130
2 . 0
22.90
20. 0
17. 0
1 . 20
12 70
10. 10
7.60
00
2 0
0
13
26. 0
23.90
21. 0
1 . 0
16 20
11 70
11. 10
60
6.00
1 0
.90
1 0
27. 0
2 .90
22. 0
19. 0
17.20
1 .70
12 10
9.60
7.00
. 0
1.90
1
2 . 0
2 .90
23. 0
20. 1)
1 . 20
1 . 70
11 10
10.60
100
. 0
290
1 0
29. 0
26.90
2 . 0
21. 0
19. 20
16.70
1 . 10
11.60
9.00
6. 0
190
160
31.00
2 . 0
2 .90
23.30
20.70
1 .20
1 .60
13. 10
10. 0
7.90
0
170
33.00
30. 0
27.90
2 .30
22.70
20.20
17.60
1 . 10
12 0
9.90
7. 0
1 0
3 .00
32 0
29.90
27.30
2 .70
22 20
19.60
17.10
1 . 0
11.90
9. 0
190
37.00
3 . 0
31.90
29.30
26 70
2 .20
21.60
19. 10
16. 0
1190
11. 0
200
39.00
36. 0
33. .0
31.30
2 .70
26.20
23.60
21 10
1 0
1 .90
11 0
20 percent of the e cess over 200 pus
0.00
37. 0
3-1.90
32 30
29.70
27.20
2 60
2210
19. 0
16.90
1 . 0
200 and over.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
199 Regs. 116, 0 .102.
// the payro perod wth respect to an empoyee s bweeky
nd the wages arc
t east
ut ess
than
to
2
2
2
2
30
oo
32
32..
3
3
36
36
3
13 ...
U .
0
2
2
.

6.
::::::::

0
0.
2
2
.

6
6


60
ten
62
2
6

66
S 6
6
6
70
no
72
77
7
7
76
7
7
7
0
0
2
1 2


6



00
00
92
92
9
0 _ .
96
F ...
9
0
100
100
102
102
10
10
106
10
10
110
110
110
112
112
11
11
116
116
11
11
121)
120
12
12
12
12
132
132
136
136
1 0
1 0
1
1
1
1
1 2
1 3
1 6
160.
160
16 .
m.::::::
16
tss
172
171
176
176
1 0
1 0
1
1
1
1
192
192
196
196
200
200
210
210
220
220
230
230
2 0
2 0
2 0
2 0
260
260
270
2 0
nd the number o wthhodng e emptons camed Is
0
1
2
3

10 or
The amount of ta to be wthhed sha bo
more
ot
0
O
0
to
0
0
0
0
0
. 0
.30
0
0
0
0
0
II
0
0
0
6. 0
.70
0
0
0
0
0
0
0
0
0
6.20
1.10
0
0
0
0
II
0
0

0
6.60
1. 0
0
0
0
0
0
0
0
0
0
7.00
1.00
0
0
0
0
0
0
0
0
0
7. 0
2.30
0
0
0
0
0
0
0
0
0
7. 0
2.70
0
0
0
0
0
0
0
0
0
.20
3.10
0
0
0
0
II
0
0
0
0
.00
3. 0
0
0
0
0
0
II
0
II
0
9.00
3.90
0
0
0
0
0
II
0
0
0
9. 0
.30
0
0
0
0
0
0
0
0
0
9. 0
.70
0
0
0
0
0
0
0
0
0
10.20
. 10
0
0
0
0
0
0
II
0
0
10.60
. 0
.30
0
0
0
II
0
0
0
0
11. I
.90
.70
0
0
0
0
0
II
0
0
11. 0
6.30
1.10
0
0
0
0
0
0
0
0
11. 0
6.70
1. 0
0
II
0
0
0
0
0
0
12.20
7.10
1.90
0
0
0
0
0
0
0
0
12.60
7. 0
2.30
0
0
0
0
0
0
0
0
13.00
7.90
2.70
0
0
0
0
0
0
II
0
13. 0
.30
3.10
0
0
0
0
0
0
0
0
13. 0
.70
3. 0
0
0
0
0
0
0
0
0
1 .20
9.10
3.90
0
0
0
0
0
0
0
II
1 .60
9. 0
.30
0
0
0
0
0
0
0
0
1 .00
9.90
.70
0
0
0
0
0
0
0
0
1 . 0
10.30
.10
0
0
0
0
0
0
0
0
1 . 0
10.70
. 0
. 0
0
0
0
0
0
0
0
16.20
11.10
.90
. 0
0
0
0
0
0
0
0
16.60
11. 0
6.30
1.20
0
0
0
II
0
0
0
17.00
11.90
6.70
1.60
0
0
0
0
0
0
0
17. 0
12.30
7.10
2.00
0
0
0
0
0
0
0
17. 0
12.70
7. 0
2. 0
0
0
0
0
0
0
0
1 .20
13.10
7.00
2. 0
0
0
0
0
0
0
0
1 .60
13. 0
.30
3.20
0
0
0
0
0
0
0
19.00
13.90
.70
3.60
0
0
0
0
0
0
0
19. 0
1 .30
9.10
.00
0
0
0
0
0
0
0
19. 0
1 .70
9. 0
. 0
0
0
0
0
0
0
0
20.20
1 . 10
9.90
. 0
0
0
0
0
0
0
0
20.60
1 . 0
10.30
.20
.10
0
0
0
0
0
0
21.00
1 .90
10.70
.60
. 0
0
0
0
0
0
0
21. 0
1130
11.10
6.00
.90
0
0
0
0
0
0
21. 0
16.70
11. 0
6. 0
1.30
0
0
0
0
0
0
22.20
17.10
11.90
6. 0
1.70
0
0
0
0
0
0
22.00
17. 0
12.30
7.20
2. 10
0
0
0
0
0
0
23.00
17.90
12.70
7.60
2. 0
0
0
0
0
0
0
23. 0
1 .30
13.10
.00
2.90
0
0
0
0
0
0
23. 0
1 .70
13. 0
. 0
3.30
0
0
0
0
0
0
2 . 0
19.30
1 .10
9.00
3.90
0
0
0
0
0
0
2 .20
20.10
1 .90
9. 0
.70
0
0
0
0
0
0
2 .00
20.90
1 .70
10.60
. 0
. 0
0
0
0
0
0
2-, w
21.70
16. 0
11. 0
6.30
1.20
0
0
0
0
0
27.60
22. 0
17.30
12.20
7.10
2.00
0
0
0
0
0
2 . 0
23.30
1 .10
13.00
7.90
2. 0
0
0
0
0
0
29.20
2 .10
1 .90
13. 0
.70
3.60
0
0
0
0
0
30.00
2 .90
19.70
1 .60
9. 0
. 0
0
0
0
0
0
30. 0
2 .70
20. 0
1 . 0
10.30
n
0
0
0
0
0
31.60
26. 0
21.30
16.20
11.10
6.00
. 0
0
0
0
0
32. 0
27.30
22.10
17.00
11.90
11. M)
1.60
0
0
0
0
33.20
2 .10
22.90
17. 0
12 70
7.60
2. 0
0
0
0
0
3 .00
2 .90
23.70
1 .60
13. 0
. 0
3.20
0
0
0
0
3 . 0
29.70
2 . 0
19. 0
1 . 30
9.20
.00
0
0
0
0
3 .60
30. 0
2 .30
20.20
1 .10
10.00
. 0
0
0
0
0
36. 0
31.30
26.10
21.00
1 .90
10. 0
.60
. 0
0
0
0
37.20
32.10
26.90
21. 0
16.70
11.60
6. 0
1.30
0
0
0
3 .00
32.90
27.70
22.60
17. 0
12. 0
7.20
2.10
0
0
0
3 . 0
33.70
2 . 0
23. 0
1 .30
13.20
.00
2.90
0
0
0
39.60
3 . 0
29.30
2 .20
19.10
1 .00
. 0
3.70
0
0
0
1.00
3 .90
30.70
2 .60
20. 0
1 . 0
10.20
6.10
0
0
0
3.00
37.90
32.70
27.60
22. 0
17. 0
12.20
7.10
2.00
0
0
.00
39.90
3 .70
29.60
2 . 0
19. 0
1 .20
9.10
.00
0
0
7.00
1.90
36.70
31.60
26. 0
21. 0
16. 20
11.10
6.00
. 0
0
9.00
3.90
3 .70
33.60
2 . 0
23. 0
1 .20
13.10
v m
2. 0
0
1.00
.90
0.70
3 . GO
30. 0
2 . 0
20.20
1 .10
10.00
. 0
0
3.00
7.90
2 70
37.00
32. 0
27. 0
22 20
17.10
12.00
0. 0
1.70
.00
9.90
.70
39.60
3 . 0
29. 0
2 .20
19.10
1 .00
. 0
3.70
7.00
61.90
6.70
1.00
36. 0
31. 0
26.20
21.10
16.00
10. 0
.70
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .102. 200
If the payro perod wth respect to an empoyee s bweeky Contnued
nd the wa es are
nd the number of wth
hodng
e emptons camed s
0
1
2
3

6
6
7

9
10 or
ut ess
more
t east
than
The amount of ta to be wthhed sha be
290
300
9.00
62.00
63.90
66.90
S .70
61.70
3.60
6.60
3 . 0
1.60
33. 0
36. 0
2 .20
31.20
23.10
26.10
1 .00
21.00
12. 0
1 . 0
7.70
10.70
Moo
320
320
3 0
66.00
60.90
6 .70
0.60
6.60
0. 0
36.20
30.10
2 .00
19. 0
1 .70
3 0
.300
70.00
7 .00
6 .90
6 .90
9.70
63.70
.60
.60
9.60
3. 0
. 0
. 0
39.20
3.20
3 .10
3 .10
29.00
33.00
23. 0
27. 0
1 .70
22.70
360
S3 0
3 0
C0
7 .00
72,90
67.70
62.60
7.60
2. 0
7.20
2.10
37.00
31. 0
26.70
20 percent of the e cess over 00 pus
0.00
7 .90
69.70
6 .60
69. 0
6 . 0
9.20
.10
39.00
33. 0
2 .70
// the payro perod wth respect to an empoyee s semmonthy
nd tu wages are
nd tho number of wthhodng e empton camed s
0
1

3

6
6
7

9
10 or
more
t east
Dut ess
than
The amonnt of ta to be wthhed sha be
to
2
20 o
wage.
0

to
to
0
0
0
0
0
to

30
6. 0
.20
0
0
0
0
0
0
0
0
0
130
32
6.20
.60
0
0
0
0
0
0
0
0
0
32
3
6.60
1.00
0
0
0
0
0
0
0
0
0
13
36
7.00
1. 0
0
0
0
0
0
0
0
0
0
3
3
7. 0
1. SO
0
0
0
0
0
0
0
0
0
3
0
7. 0
2.20
0
0
0
0
0
0
0
0
0
0
2
. 20
2.60
0
0
0
0
0
0
0
0
0
2

.60.
3.00
0
0
0
0
0
0
0
0
0

6
9.00
3. 0
0
0
0
0
0
0
0
0
0

1
9. 0
3. 0
0
0
0
0
0
0
0
0
0

0
9. 0
.20
0
0
0
0
0
0
0
0
0

2
10.20
.60
0
0
0
0
0
0
0
0
0
2

10.60
6.00
0
0
0
0
0
0
0
0
0
6
tt
11.00
11. 0
. 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
66
6
. 0
.30
6
00
11. 0
6.20
.70
0
0
0
0
0
0
0
0
00
12.20
6. 60
1.10
0
0
0
0
0
0
0
0
62

12.60
13.00
7.00
7. 0
1.60
1.90
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6
06
06

13. 0
13. 0
7. 0
.20
2.30
2.70
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
6
70
70
1 .20
.60
3. 10
0
0
0
0
0
0
0
0
7
7
1 .60
9.00
3. 0
0
0
0
0
0
0
0
0
:
76
1 .00
9. 0
3.90
0
0
0
0
0
0
0
0
76
7
1 . 0
. M
.30
0
0
0
0
0
0
0
0
7
0
1 . 0
10.20
.70
0
0
0
0
0
0
0
0
0
2
16.20
10.60
. 10
0
0
0
0
0
0
0
0
2

10.60
11.00
6. 0
0
0
0
0
0
0
0
0


17.00
11. 0
6.90
.30
0
0
0
0
0
0
0
0...

17. 0
11. 0
6.30
.70
0
0
0
0
0
0
0

90
17. 0
12.20
6.70
1.10
0
0
0
0
0
0
0
90
92
1 .20
1Z60
7. 10
1.60
0
0
0
0
0
0
0
92
9
1 .60
19.00
13.00
.
7. 0
7.90
1.90
2.30
0
0
0
0
0
0
0
0
0
0
0
0
0
9
9
0
9
9
19. 0
13. 0
.30
Z70
0
0
0
0
0
0
0
9
100
19. 0
1 .20
.70
3. 10
0
0
0
0
0
0
0
100..
102
20.20
1 .60
9.10
3. 0
0
0
0
0
0
0
0
10
20.60
1 . 00
9. 0
3.90
0
0
0
0
0
0
0
106
21.00
1 . 0
9.90
.30
0
0
0
0
0
0
0
10
10
21. 0
16. 0
10.30
.70
0
0
0
0
0
0
0
10
110
21. 0
16.20
10.70
.10
0
0
0
0
0
0
0
110
112
22.20
11 .. 60
11. 10
.60
0
0
0
0
0
0
0
112
11
22. 0
17.00
11. 0
.90
. 0
0
0
0
0
0
0
11 .
116
23.00
17. 0
11.90
0.30
. 0
0
0
0
0
0
0
11
11
23. 0
17. 0
12.30
6.70
1.20
0
9
0
0
0
0
11
120
23. 0
1 .20
12.70
7. 10
1.60
0
0
0
0
0
0
120
12
2 . 0
1 . 0
13.30
7.70
2.20
0
0
0
0
0
0
12
12
2 .20
19. CO
1 .10
.60
3.00
0
0
0

o

G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
201 Regs. 116, 0 .102.
// the payro perod wth respect to an enpoyee s semmonthy Contnued
nd the wages are
nd the number of wthhodng e emptons camed s
0
1
3

6
0
7

9
10 or
more
The amount of ta to be wthhed sha be

26.00
20. 0
1 .90
t9.30
1.3. 0
0
0
to
to
ro
to
20. 0
21.20
1 .70
10. 10
.00
0
0
0
0
0
0
27.60
22.00
10. 0
10.90
. 0
0
0
0
0
0
0
2 . 0
22. 0
17.30
11.70
0.20
.60
0
0
0
0
II
29.20
23.00
1 .10
12. 0
7.00
1. 0
0
0
0
0
0
30.00
2 . 0
1 .90
13.30
7. 0
2.20
0
0
0
0
0
30. 0
2 .211
19.70
1 .10
.60
3.00
0
0
0
0
0
31.60
20.00
20.60
1 .90
9. 0
3. 0
0
0
0
0
0
32. 0
26. 0
21.30
1 .70
10.20
.60
0
0
0
0
0
33.20
27.60
22. I
16. 0
11.00
6 0
0
0
0
0
0
3 .00
2 . 0
22.90
17.30
11. 0
6.20
.70
0
0
0
0
3 . 0
29.20
23.70
1 . 10
12. 00
7.00
1. 0
0
0
0
0
3 .60
30.00
2 . 0
s. M
13. 0
7. 0
2.30
0
0
0
0
30. 0
30. 0
2 .30
19.70
1 .20
aso
3.10
0
0
0
0
37.20
31.60
2( . 10
20. 0
1600
. 0
3.90
0
0
0
0
3 .00
32. 0
26.90
21.30
16 0
a2o
.70
0
0
0
0
3 . 0
33.20
27.70
22.10
16.60
11.00
6 0
0
0
0
0
39.60
3 .00
2 . 0
22.90
17. 0
11. 0
6.30
.70
0
0
0
1.0(1
3 . 0
29.90
2 .30
1 . 0
13.20
7.70
2.10
0
1
II
3.00
37. 0
31.90
20.30
20. 0
1 .20
9.70
. 10
0
0
0
.00
39. 0
33.90
2. 30
22. 0
17.20
11.70
6. 10
.60
0
0
7.00
1. 0
3 .90
30.30
2 . 0
19.20
13.70
.10
2.60
0
0
9. on
3. 0
37.90
32.30
26. 0
21.20
16 70
ao
.60
0
0
1.00
. 0
39.90
3 .30
2 . 0
23.20
17.70
12. 10
6.60
1.00
0
3.00
7. 0
1.90
30.30
3a 0
2 .20
19.70
1 . 10
.60
3.00
0
.00
9. 0
3.90
3 .30
32. 0
27.20
21. 70
16. 10
10.00
600
0
7.00
1. 0
.90
0.30
3 . 0
29.20
23. 70
1 . 10
12.60
7.00
1. 0
9.00
3. 0
7.90
2.30
36. 0
31.20
2 .70
2a o
1 .00
9.00
3. 0
62.00
6. 0
0.00
.30
39. 0
3 . 20
2 .70
23.10
17.60
12.00
6. 0
66.00
60. 0
.90
9.30
3. 0
3 .20
32.70
27. 10
21.60
16.00
10. 0
70.00
6 . 0
.90
63.30
7. 0
2 20
30. 70
31.10
26.60
20. 00
1 . 0
7 .00
0 . 10
02.90
7.30
1. 0
0. 20
0. 70
36 10
29.60
2 .00
1 . 0
7 .00
72. 0
60.90
61. 30
6 0
0. 20
. 70
39. 10
33.60
2a 00
22. 0
2. U0
76. 0
70.90
6 .30
9. 0
.20
. 70
3.10
37. 60
32.00
20. 0
Sf.00
0. 0
7 .90
69.30
63. 0
6.20
2.70
7. 10
1. 60
36.00
30. 0
9a oo
. 0
7 .
73.30
67. 0
62.20
0. 70
1. 10
.60
0.00
3 . 0
9 .00
. 0
2.90
77.30
71. 0
60.20
ca 70
6 10
9.60
.00
3 . 0
9 .00
92. 0
6.90
1.30
76 0
70.20
6 .70
9. 10
3.60
.00
2 0
21 percent of the e cess over 01 pus-
1 61.10
100.00
9 . 0
.90
3.30
77. 0
72.20
66.70
.60
0.00
. 0
t 1
ut ess
than
12
132
13
11 0
1
1
1 2
1 0
tm.
16 .
172
170
176
1 0
110
1
SIM
1
1
192
192
196
196
200
200.
210
210
220
220
230
230
2 0
2(0
2 0
2 0
260
060
270
270
2 0 :.
2 0
290
290
300.
300
320
320
3 0
3 0
360
300..
3 0
3 0
00
O0
20
20
0
0.. ...
60
60
0
0
00
1 00 and over..
// the payro perod wth respect to an empoyee s monthy
nd the wages are
nd the number o w.thhodng e emptons camed
t
ut 1
than
) or
more
The amount of ta to be wthhed sha be
It o
(
0
0
0
0
to
0
to
0
to
U1.60
. 0
0
0
0
0
0
0
0
u
II
12. 0
1.30
0
0
0
0
0
0
0
0
1
13.20
2.10
0
0
0
0
0
0
0
0
11
1 .00
2.90
0
0
0
0
0
0
0
0
0
1 . 0
3.70
0
0
0
0
0
0
0
0
0
16 60
. 0
0
0
0
0
0
0
0
0
0
16. 0
630
0
0
0
0
0
0
0
0
0
17.20
6.10
0
0
0
0
0
0
0
0

aoo
ft 90
0
0
0
0
0
0
0
0
0
aso
7.70
0
0
0
0
0
0
0
0
0
19.60
aso
0
0
0
0
0
0
0
0
0
20. 0
9.30
0
0
0
0
0
0
0
0
0
21 20
a o
0
0
0
0
0
0
0
0
0
22.00
a9o
0
0
0
0
0
0
0
0
0
22. 0
11.70
.60
0
0
0
0
0
0
0
0
23.60
12. 0
1. 0
0
0
0
0
0
o
0
0
N L
6 ..
72
76
0 ,


92
99
noo
0
10
112
110
6 ..
72..
76..
0__
..
..
92..
96..
100..
10 ..
10 ..
112.
t6_.
120.
21 1 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .102. 202
// the payro perod tcth respect to an empoyee s monthy Contnued
nd the wages ore
nd the number of wthhodng e emptons camed s
0
1
2
3

0
7

9
10 or
t east
ut ess
than
The amount of ta to be wthhed sha I ;
more
120.
12
2 . 0
13.30
2.20
to
0
0
O
to
1
0
n
12
12
2 .20
1 . 10
3.00
0
0
0
0
0
0
0
0
12 .
132
211 00
1 .90
3. 0
0
0
0
0
0
0
0
0
132....
136
26. 0
1 . 70
. 60
0
0
0
0
0
0
o
0
136
1 0
27.60
16. 0
. 0
0
0
0
0
0
0
o
0
1 0

2a 0
17.30
6.20
0
0
0
0
0
0
0
0
11
1
29.20
IS. 10
7.00
0
0
0
0
0
0
0
0
1
1 2
30.00
1 .60
7. 0
0
0
0
0
0
0
0
0
1 2
1 6
3a so
19.70
.60
0
0
0
0
0
0
0
0
1 6
160
31.60
2a 60
9. 0
0
0
0
0
0
0
0
0
160
16
32. 0
21.30
10. 20
0
0
0
0
0
0
0
0
16
16
33.20
22. 10
11.00
0
0
0
0
0
0
0
0
16
172
3 .00
22. 90
11. 0
.70
0
0
0
0
0
0
0
172
176
3 . 0
23. 70
12.60
1. 0
0
0
0
0
0
0
0
176.
1 0
3 .60
2 . 0
13 0
2.30
0
0
0
0
0
0
0
1 0
1
36. 0
2 .30
1 .20
3. 10
0
0
0
0
0
0
0
1
1
37.20
26. 10
1 .00
390
0
0
0
0
0
0
0
1 ..
192
3 .00
26.90
1 0
. 70
0
0
0
0
0
0
0
192
196
3 . 0
27.70
16.60
. 0
0
0
0
0
0
0
0
196
200
39. 60
2 . 0
17. 0
6.30
0
0
0
0
0
0
0
200
20
0. 0
29.30
1 .20
7.10
0
0
0
0
0
0
0
20
20
1. 20
30.10
19.00
7.90
0
0
0
0
0
0
0
20
212
2.00
30.90
19. 0
.70
0
0
0
0
0
0
0
212
216
2. 0
31. 70
20.60
9. 0
0
0
0
0
0
0
0
216
220
3.60
32. 0
21. 0
10.30
0
0
0
0
0
0
0
220
22
. 0
33.30
22. 20
11. 10
0
0
0
0
u
0
0
22
22
. 20
3 .10
23.00
11.90
. 0
0
0
0
0
0
0
22
232
6.00
3 .90
23. 0
12. 70
1.60
0
0
0
0
0
0
232 ... .
236
6. 0
3 . 70
2 . 60
13. 0
2. 0
0
0
0
0
0
0
236
2 0
7.60
30. 0
2 . 0
1 .30
320
0
0
0
0
0
a
2 0
2
. 0
37. 70
26.60
1 . 0
. 0
0
0
0
0
0
0
2
2. 0
sa 0
39.30
2 .20
17.10
6.00
0
0
0
0
0
0
2 6
26
2.00
a 90
29. 0
1 . 70
7.60
0
0
0
0
0
0
26
272
3.60
2.60
31. 0
2a 30
P. 20
0
0
0
0
0
0
272
2 0
. 20
.10
33.00
21.90
10. 0
0
0
0
0
0
0
2 0
2
6. 0
.70
3 .60
23. 0
12. 0
1.20
0
0
0
0
0
2 .
296
. 0
7.30
36. 20
2 .10
1 .00
2. 0
0
0
0
0
0
206
30
60.00
.90
37. 0
26.70
1 .00
1 0
0
0
0
0
0
30
312.
61. 60
a 0
39. 0
2 .30
17. 20
6.00
0
0
0
0
0
W2
320
63.20
2.10
1.00
29.90
1 . 0
7.00
0
0
0
0
0
32
6 . 0
sa 70
2.60
31. 0
20. 0
9. 20
0
0
0
0
0
32
336
66. 0
.30
.20
33. 10
22. I
aso
0
0
0
0
0
336
3
6 .00
6.90
. 0
3 .70
23.60
12 0
1.30
0
0
0
0
3 2 1
3 2
69.60
. 0
7. 0
36. 30
2 .211
1 .00
2.90
0
0
0
0
360
71.20
60.10
9.00
37.90
26. 0
1 ,60
. 0
0
0
0
0
360
36
72. 0
61.70
0.00
39.10
2 . 0
17.20
6.10
0
0
0
0
36
376
7 . 0
SZ. 30
2.20
1.10
3tt OC
1 . 0
7.70
0
0
0
0
376
3
76.00
6 .90
3. 0
2. 70
31.60
20. 0
9.30
0
0
0
0
3
392
77.60
66. 0
. 0
.30
33 20
22.00
a90
0
0
0
0
392
00
79.20
6 . 10
7.00
. 90
3 . 0
23.60
12. 0
1. 0
0
0
0
00
20
2.00
70.90
9. 0
a 70
37.60
26 0
1 .30
.20
0
0
0
20
10
6.00
7 .90
63. 0
2.70
1.60
30. 0
19.30
.20
0
0
0
0
60
90.00
7 .90
67. 0
6. 70
.60
3 . 0
23.30
12.20
1. 10
0
0
60
0
9 .00
2.90
71. 0
ea 70
9.60
3 . 0
27.30
16.20
.10
0
0
0
00
9 .00
6.90
7 . 0
6 .70
3.60
2. 0
31.30
2tt 20
9.10
0
0
00
20
102.00
90.90
79. 0
6 . 70
7.60
0. 0
3 . 30
2 .20
13. 10
2.00
0
20
0
106.00
9 .90
3. 0
72. 70
61.60
sa 0
39.30
2 .20
17. 10
6.00
a
0.
60
naoo
9 . 90
7. 0
76. 70
6 . 60
. 0
3. 30
32.20
21. 10
aoo
0
60
6 0
11 .00
102.90
01. (1
0. 70
69. 60
. 0
7.30
36.20
2 . 10
1 .00
2.90
0 .
600
11 .00
106.90
9 . 0
. 70
73.60
C2. 0
1.30
0. 20
29.10
IS. 00
a 90
600
6 0
12 .00
112.90
101. 0
oa 70
79.60
6 . 0
7.30
6.20
3 .10
2 .00
12.90
6 0
6 0
132.00
12a 90
109. 0
9 . 70
7.60
76. 0
6 . 30
.20
3. 10
32.00
2a 90
6 0
720
naoo
12 .90
117. 0
106. 70
9 . 60
. 0
73.30
62. 20
1. 10
0.00
2 .90
720
760
1 .00
136.90
12 . 0
11 . 70
103. 60
92. 0
1.30
70.20
9.10
s. oo
36.90
760
00
1 6.00
1 .90
133. 0
122. 70
111.00
100. 0
9.30
7 .20
67.10
6.00
.90
00
0
16 .00
1 2.90
1 1. SO
130. 70
119.00
10R. 0
97.30
S6. 20
7 .10
6 .00
2.90
0
0
172.00
160. 90
1 9. 0
13 .70
127. 60
116. 0
10 .30
9 .20
3. 10
72.00
6a 90
0
920
s 00
16 .90
1 7. 0
1 6. 70
13 .60
12 . 0
113.30
102.20
91.10
0.00
6 .90
920
9 0
1 .00
176.90
16 . 0
1 .70
1 3.60
132. 0
121.30
110.20
99. 10
S.00
76.90
060
1,000.
196.00
1 .90
173. S0
162. 70
1 1.60
1 0. 0
129.30
11 .20
107. 10
16.00
. CO
1,000 and over
20 percent o the e cess over 1,000 pus-
200.00
1 .90
177. 0
166.70
1 .60
1 . 0
133.30
122.20
11L10
100.00
.90
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
203 Regs. 116, 0 .102.
If the payro perod tcth respect to an empoyee s a day payro perod or a
msceaneous payro perod
nd the
wages d-
vded by the num-
ber of days n such
nd the number of wthhodng e emptons camed s-
perod are
0
1
2
3

0
7

9
10 or
: east
nt ess
The amount of ta to be wthhed sha be the fo wnc amount mutped by
the number of dys In sath perod
more
10
2.00

0
to
0
0
0
0
0
0
0
0
2.00
2.2
0. 0
.0
0
0
0
0
0
0
0
0
0
2.2
;2. 0
.
.10
0
0
0
0
0
0
0
0
0
2. 0
2.7
. 0
.1
0
0
0
0
0
0
0
0
0
2.7
3.00
.
.20
0
0
0
0
0
0
0
0
0
.00
3.2
.60
.2
0
0
0
0
0
0
0
0
0
3.2f
3. 0
.6
.30
0
0
0
0
0
0
0
0
0
3. 0
3.7
.70
.3
0
0
0
0
0
0
0
0
0
00
7
. 0
.0
0
0
0
0
o
o
o
0
f .00
.2
. 0
.
.10
0
0
0
0
0
0
0
0
a: s
.M
.
. 0
.16
0
0
0
0
0
0
0
0
U O
.7
.90
. 6
.20
0
0
0
0
0
0
0
0
.7
.00
.0
.60
. 2
0
0
0
0
0
0
0
0
n|oo
.2
1.00
.6
.30
0
0
0
0
0
0
0
0
S .2
. 0
1.0
.70
.36
0
0
0
0
0
0
1
0
. 0
.7
1.10
.7
. 0
.0
0
0
0
0
n
I
0
.7
6.00
1. 1
. 0
.
.10
0
0
0
0
0
0
0
6.00
6.2
L20
.
. 0
.1
0
0
0
0
0
0
0
6.2
6. 0
1.2
.90
.6
.20
0
0
0
0
0
0
0
6. 0
6.7
1.30
.96
.6)
. 2
0
0
0
0
0
0
0
6.7
7.00
1.36
1.00
.66
.30
0
0
0
0
0
0
0
7.00
7.2
1. 0
1.0
.70
.3
0
0
0
0
0
0
0
7.2
7. 0
1.
L 10
.7
. . 0
0
0
0
0
0
0
0
7. 0
7.7
1. 0
1.1
. 0
.
.0
0
0
0
0
0
0
7.7
.00
1.
1.20
.
. 0
.10
0

0
0
0
0
W OO
.2
1.60
1.2
.90
.66
.1
0
0
0
0
0
0
.2
. 0
1.0
1.30
.9
.60
.:o
0
0
0
0
0
0
. 0
1.70
L3
1.00
.66
.2
0
0
0
0
0
0
.7
9.10
1.7
1. 0
1.0
.70
.30
0
0
0
0
0
0
19.00
0.2
1. 0
L
L 10
.7
.3
0
0
11
0
0
0
; .2S
9. 0
1.
1. 0
1. 1
. 0
. 0
.0
0
0
0
0
0
9. 0
1.90
1.6
1.20
. 6
.
.10
u
0
0
0
0
S0.7
10.00
1.9
1.60
1.26
.90
.60
. 1
0
0
0
0
0
MO.0O
10. 0
2.0
1.70
1.30
.9
.60
.20
0
0
0
0
0
MO O
11.00....
2.1
1.S0
1. 0
1.0
.70
.30
0
0
0
0
0
11.00
11. 0....
2.2
L90
1. 0
L 1
. 0
. 0
.0
0
0
0
0
I1 0
12.00
2.3
2.00
1.60
1.2
.90
.60
.1
0
0
0
0
S12.00
12. 0....
2.
2.10
1.70
1.3
Loo
.60
.2
0
0
0
0
,12. 0
p.on
2.
2.20
1. 0
1.
1.10
.70
.3
0
0
0
0
t3M
3. 0....
2.6
2.30
1.90
1.
1.20
. 0
.
.10
0
0
0
13 0
1 .0(1....
2.7
2. 0
2.00
1.0
1.30
.90
.
.20
0
0
0
1 .00
1 . 0....
2.
2. 0
2.10
1.7
1. 0
1.00
.6
.30
0
0
0
1 . 0
1 . 0
2,9
2.00
220
1. S
1. 0
1.10
.7
. 0
.06
0
0
S 1 .00
1 . 0
a 0
2 70
2.30
1.9
1. 60
1.20
.
. 0
. 1
0
0
1 O
16.
3.1
2. 0
2. 0
2.0
1.70
1.30
. .
.60
.26
0
0
ML0O
16. 0....
32
2.90
2. 0
2.1
1. 0
1. 0
1.0
.70
.3
0
0
16. 0
17 00....
336
300
2.00
2. 2
1.00
1. 0
1.1
. 0
.
.0
0
17.00
17. 0
3
3 10
2.70
2.3
200
1.60
1.2
.90
.
.1
0
17. 0
1 .00
3 6
3.20
2 0
2.
2.10
1.70
1.36
1.00
.66
.2
0
1 .00
1 . 0
3 6
330
290
2.
220
1. 0
1.
1. 10
.7
.36
0
1 SO
19.00
3.76
3. 0
300
2.6
2 30
1.90
1. 6
1.20
.
.
.10
1(1.00
19. 0
3
3. 0
3 10
2.7
2 0
2.00
1.6
1.30
.9
.6
.20
19. 0
20.01)
3.9
3.60
3 20
2.
2 0
2. 10
1.7
1. 0
1.0
.6
.30
20.00
21.00
. 10
3 7
13
300
2 6
22
1.90
1.
1.20
. 0
.
21.00
22
.30
39
3.
320
2. 6
2.10
1.7
1. 0
L00
.6
22 O ..
23.00
. 0
. 1
3. 7
.
3 0
2.0
2.30
1.9
1.00
L20
.
23.00
2 .00
.70
.3
3 9
3. 60
3.2
2.
2. 0
2.1
1. 0
1. 0
1.0
2 .00
2 .00
.90
. 6
.1
3 0
3
30
2 70
23
2.00
1.60
L2
2 .00
26.00....
6. 10
.7
.3
.00
3.6
3.2
2.90
2
2.20
L 0
1.
26.00
27.00
.30
.9
.
.20
3.
3.
3. 10
2.7
2. 0
200
1.6
27.00
2 .00
6. 0
. 1
.7
. 0
.0
36
3.30
2.9
2.00
2.20
1.
2 .00
29.00
.70
.3
1.9
.60
.2
3
3. 0
3. 1
2. 0
2 0
2 0
29.00
30.00....
6.90
6.66
6. 1
. 0
.
.0
370
3 3
300
2.00
2.2
30 and over
20 percent of the e cess over 30 pus
6.00
.66
.2;
.10
.
. 1
3 0
1
3 10
2 70
2.3
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .102.
20
( ) Wages pad after December 31, 19 3. t the eecton of the
empoyer wth respect to any empoyee, the empoyer sha deduct
and wthhod upon the wages pad to such empoyee after December
31, 19 3, a ta determned n accordance wth the foowng tabes,
whch sha be n eu of the ta requred to be deducted and wthhed
under subsecton (a) : .
Par. . Thare s nserted mmedatey precedng secton 0 .20 26
CFR 0 .20 the foowng:
S C. 310. GROSS INCOM OF D P ND NT OF T P Y R
R NU CT OF 19 1, PPRO D OCTO R 2U, 10 1 .
(a) Increase n mount of Gross Income Permtted. Secton
2 (b)(1)(D) (reatng to e emptons for dependents of ta payer) s
hereby amended by strkng out 00 and nsertng n eu thereof
000 .
(b) ffectve Date. The amendment made by subsecton (a) sha
be appcabe ony wth respect to ta abe years begnnng after December
31, 19 a
Par. . Secton 0 .20 , as amended by Treasury Decson 6S
C. . 19 9-1, 1 G , approved anuary 7, 19 9 26 CFR 0 .20 , s
further amended by strkng from the paragraph desgnated (c)
00 and nsertng n eu thereof 600 (for ta abe years begnnng
before anuary 1, 19 1, 00)so that such paragraph w read as
foows:
(c) For the empoyee to be entted on any day of the caendar year to a wth-
hodng e empton for an ndvdua as a dependent, such ndvdua must on
such day be reasonaby e pected to receve ess than 000 (for ta abe ye.rs
begnnng before anuary 1, 19 1, 00) of gross ncome for such caendar
year .
Par. 6. Secton 0 .20G, as amended by Treasury Decson G 26
CFR 0 .200 , s further amended as foows:
( ) y strkng from the paragraph desgnated (c) n the fourth
undesgnated paragraph 00 and nsertng n eu thereof 600
(for ta abe years begnnng before anuary 1, 19 1, 00) , so that
such paragraph w read as foows:
(c) The empoyee fnds that an ndvdua camed as a dependent on a
wthhodng e empton certfcate w receve 000 (for ta abe years begn-
nng before anuary 1, 1C 1, 00) or more of gross ncome of hs or her own
durng the current caendar year.
( ) y strkng from the seventh undesgnated paragraph 00
and nsertng n eu thereof 600 (for ta abe years begnnng
before anuary 1, 19 1, 00) , so that such paragraph w read as
foows:
Thus, for e ampe, a decrease n the number of wthhodng e emptons to
whch an empoyee s entted at the begnnng of the ne t ta abe year under
chapter 1 of he Interna Revenue Code resuts when a dependent of
the empoyee begns to receve ncome ate m the year so that t s reasonabe to
e pect that the dependent w have a gross ncome of 000 (for ta abe years
begnnng before anuary 1, 19 1, 00) or more for the ensung year.
ecause the amendments made by ths Treasury Decson merey
conform Reguatons 116 to amendments of the Interna Revenue Code
and because those amendments are aready effectve wth respect to
the wthhodng of ta at source on wages, t s found that t s
unnecessary to ssue ths Treasury Decson wth notce and pubc pro-
cedure thereon under secton (a) of the dmnstratve Procedure
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
20 Regs. 116. 0 .213.
ct approved une 11,19 6, or sub|ect to the effectve date mtaton
of secton (c) of that ct.
(Ths Treasury Decson s ssued under the authorty contaned
n sectons 1 29 and 3791 ( 3 Stat. 17 , 67; 26 U. S. C. 1 29, 3791).)
ustn F. Wnke,
ctng Commssoner of Interna Revenue.
pproved pr ,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 10, 19 2, : a. m.)
Secton 1622: Income ta coected at source.
Reguatons 116, Secton 0 .20 : ght to
cam wthhodng e emptons.
Increase n gross ncome of dependents, Reguatons 116 amended.
(See T. D. 91, page 196.)
Secton 1622: Income ta coected at source.
eguatons 116, Secton 0 .206: Wthhodng
e empton certfcates.
Increase n gross ncome of dependents, Reguatons 116 amended.
(See T. D. 91, page 196.)
Secton 1622: Income ta coected at source. 19 2-7-1379
Reguatons 116. Secton 0 .213: ddtona T. D. 7
wthhodng.
TITL 26 INT RN L R NU . C PT R I, SU C PT R D, P RT 0 .
COLL CTION OF INCOM T T SOURC ON W G S
Reguatons 130 amended to conform to secton 203 of the Revenue
ct of 10 1.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
On anuary 3,19 2, notce of proposed rue makng amendng Regu-
atons 116, reatng to coecton of ncome ta at source on wages
26 CFR, part 0 , to conform to secton 203 of the Revenue ct
of 19 1, approved October 20, 19 1, was pubshed n the Federa
Regster (17 F. R. 6). fter consderaton of a reevant matter
resented by nterested persons regardng the proposed amendments,
eguatons 116 are hereby amended by nsertng mmedatey after
secton 0 .212 26 CFR 0 .212 the foowng:
S C. 203. DDITION L WIT OLDING OF T ON W G S
UPON GR M NT Y MPLOY R ND MPLOY TITL
II, R NU CT OF 19 1, PPRO D OCTO R 20, 19 1 .
Secton 1622 (reatng to Income ta coected at source on wages) Is
hereby amended by addng at the end thereof the foowng new sub-
secton:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 116, 0 .213.
206
(k) ddtona Wthhodng. The Secretary s authorzed by
reguatons to provde, under such condtons and to such e tent as he
deems proper, for wthhodng n addton to that otherwse requred
under ths secton n cases n whch the empoyer and the empoyee agree
(n such form as the Secretary may by reguatons prescrbe) to such
addtona wthhodng. Such addtona wthhodng sha for a pur-
poses be consdered ta requred to be deducted and wthhed under ths
subchapter.
S C. 20 . FF CTI D T TITL II, R NU CT OF 19 1,
PPRO D OCTO R 20, 19 11.
The amendments made by ths tte sha be appcabe ony wth re-
spect to wages pad on or after November 1, 19 1.
Sec. 0 .213. ddtona Wthhodng. In addton to the ta requred to be
deducted and wthhed n accordance wth the provsons of secton 1022, the
empoyer and empoyee may agree, wth respect to wages pad on or after
November 1, 19 1, that an addtona amount sha be wthhed from the em-
poyee s wages. The agreement sha be n wrtng and sha be n such form
as the empoyer may prescrbe. The agreement sha be effectve for such perod
as the empoyer and empoyee mutuay agree upon; however, uness the agree-
ment provdes for an earer termnaton, ether the empoyer or the empoyee,
by furnshng a wrtten notce to the other, may termnate the agreement effectve
wth respect to the frst payment of wages made on or after the frst status
determnaton date ( anuary 1 and uy 1 of each year) whch occurs at east
30 days after the date on whch such notce s furnshed.
The amount deducted and wthhed pursuant to an agreement between the em-
poyer and empoyee sha be consdered as ta requred to be deducted and wth-
hed under secton 1622. provsons of aw and reguatons appcabe wth
respect to the ta requred to be deducted and wthhed under secton 1622 sha be
appcabe wth respect to any amount deducted and wthhed pursuant to the
agreement.
The amount deducted and wthhed pursuant to an agreement between the
empoyer and empoyee, together wth the ta requred to be deducted and wth-
hed under secton 1622, sha be reported on Form W-2 and on Form 9 1 as
Federa ncome ta wthhed from wages.
(Ths Treasury Decson s ssued under the authorty contaned n
secton 1622(k) of the Interna evenue Code as added by secton 203
of the Revenue ct of 19 1, approved October 20, 19 1.)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved March 7, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster March 7, 19 2, 11: 2 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
CIS T RULINGS
INT RN L R NU COD
ST MP T S
COIN-OP R T D G MING D IC S
Reguatons 9, Sectons 323.20, tc. 19 2-2-137 0
T. D. 76
TITL 26 INT RN L R NU . C PT R I, SU C PT R C, P RT 323.
SP CI L T S WIT R SP CT TO COIN-OP R T D MUS M NT ND
G MING D IC S, OWLING LL YS, ILLI RD T L S, ND POOL T L S
Increase n rate of ta on con-operated gamng devces
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 9 26 CFR, part 323 , reatng to
speca ta es wth respect to con-operated amusement and gamng
devces, bowng aeys, bard tabes, and poo tabes to the Revenue
ct of 19 1 (Pubc Law 1 3, 2d Cong., 1st sess.), approved October
20,19 1, such reguatons are hereby amended as foows:
Paragraph 1. Immedatey precedng secton 323.20 26 CFR
323.20 , there s nserted the foowng:
S C. 63. T ON COIN-OP R T D G MING D IC S R -
NU CT OF 10 1, PPRO D OCTO R 20, 19 1 .
Secton 3267(a) (ta on con-operated gamng devces) s hereby
amended by strkng out 1 0 wherever appearng theren and nsertng
n eu thereof 2 0 .
S C. 6 . FF CTI D T OF P RT I R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .
The amendments made by sectons 63 sha take effect
on the frst day of the frst month whch begns more than ten days after
the date of the enactment of ths ct. In the case of the year begnnng
uy 1, 19 1, where the trade or busness on whch the ta s mposed
was commenced pror to the frst day of the month specfed n the pre-
cedng sentence, the ncrease n ta resutng from such amendments
sha be reckoned proportonatey from the frst day of such month to
and ncudng the thrteth day of une foowng and sha be due on,
and payabe on or before, the ast day of the month specfed n the
precedng sentence.
(207)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 9, 323.20, etc.
20
Par. 2. Secton 323.20, as amended bv Treasury Decson S27
C. . 19 1-1, 1 2 , approved anuary 16, 19 1 26 CFR 323.20 , s
further amended by strkng out so much of such secton as precedes
paragraph (6) and nsertng n eu thereof the foowng:
Sec. 323.20. ffectve Dates of Ta . Te effectve dates of the rates of
tns wth respect to con-operated amusement and gamng devces mposed by
secton 3207, added to the Interna Revenue Code by secton of the Revenue
ct of 10 1, ncudng changes made n such rates by secton 017 of the Revenue
ct of 10 2, secton 003 of t e Revenue ct of 10 0, and secton 03 of the
Revenue ct of 10 1. are as foows:
( ) cept us ndcated by (c) beow, the rates of ta appcabe wth respect
to ganng devces operated by means of the nserton of a con, token, or smar
ob|ect are:
(1) October 1, 10 1, through une 30, 10 3, . 0 per annum;
(2) uy 1, 10 3, through October 31, 10 0, 100 per annum;
(3) November 1, 10 0, through October 31, 19 1, 1 0 per annum;
( ) On and after November 1, 10 1, 2 0 per annum.
Par. 3. Secton 323.22, as amended by Treasury Decson S27 2G
CFR 323.22 , s further amended
( ) y strkng out so much of the paragraph desgnated (d) ts
precedes n the case of and nsertng n eu thereof the foowng:
( ) ffectve October 1, 10 1, through une 30, 10 3, 0, effectve uv 1,
10 3. through October 31, 10 0, 100, effectve November 1, 10 0. through October
31, 10 1, 1 0. and effectve on and after November 1, 10 1, 2 0, per year.
( ) y addng after the fourth paragraph begnnng wth Those
persons who pror to November 1, 19 0, the foowng:
Those persons who pror to November 1, 10 1, pad or ncurred the speca
ta abty at the rate of 1 0 per year for gamng devces and contnued to
mantan for use such devces on November 1, 10 1, are abe for addtona ta
for the perod November 1, 10 1, through une 30, 19 2, at the ncreased rate of
100 per annum. The addtona ta abty for the -month perod from
November 1, 10 1, through une 30, 10 2, sha be computed on the bass o
eght-twefths of 100, or 00.07, for each devce.
Par. . Secton 323. 0 26 CF 323. 0 s amended as foows:
( ) y strkng out n the ast sentence of the frst paragraph the
foowng: , subscrbed, and attested .
( ) y strkng out the ast sentence of the fourth paragraph.
ecause ths Treasury Decson makes technca amendments to
the reguatons, t s found that t s unnecessary to ssue ths Treasury
Decson wth notce and pubc procedure thereon under secton (a)
of the dmnstratve Procedure ct, approved une 11, 19 6, or
sub|ect to the effectve date mtaton of secton (c) of sad ct.
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 3791 of the Interna Revenue Code ( 3 Stat. 07:
26 U. S. C, 3791).)
on . Du ap,
Commssoner of Interna Revenue.
pproved December 2 , 19 1.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster anuary 2, 10 2, : 3 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
209
fRegs. 132, 32 .21.
S CTIONS 323 ND 3290. W G RING T S
Reguatons 132, Secton 32 .21: Scope of ta . 19 2-6-137
M. T. 3
ppcaton of wagerng ta es, mposed by sectons 32 and 3290
of the Interna Revenue Code, where merchants gve tckets or
chances to customers n connecton wth the sae of merchandse, and
the successfu hoders of tckets or chances are awarded przes n
the form of merchandse.
dvce s requested concernng te appcaton of wagerng ta es,
mposed by sectons 32 and 3290 of the Interna Revenue Code, where
merchants, n order to encourage patronage, gve tckets or chances to
customers n connecton wth the sae of merchandse, and the success-
fu hoders of tckets or chances are awarded przes n the form of
merchandse.
Secton 32 of the Code, whch mposes on wagers an e cse ta
equa to 10 percent of the amount thereof, de nes te tern wager
as ncudng any wager paced n a ottery conducted for nrcft.
Secton 3290 of the Code provdes that a speca ta of 0 per year
sha be pad by each person who s abe for the 10 percent e cse ta
under secton 32 of the Code and by every person who s ennrTed n
recevng wagers for or on behaf of any person abe for t e p- se ta .
The abty of a merchant for such wagerng ta es word dor erd
n each ndvdua case upon the manner n whch the merchandsng
pan s operated.
Where t s reasonabe to nfer from the crcumstances surroundng
the operaton of the pan that a customer does not pay more for mer-
chandse n order to obtan such tckets or chances than he woud other-
wse pay for the merchandse aone, then no wager sub|ect to the e cse
ta woud appear to have been paced. Conversey, f a customer
does pay more for merchandse n order to obtan a chance on a prze
than he woud otherwse pay for the merchandse aone, such e cess
amount woud appear to consttute a consderaton for the chance and
a wager sub|ect to the e cse ta . mong the crcumstances that
shoud be consdered are the vaue of the chance n reaton to the prce
pad for the merchandse, the reatve prce of the merchandse as
compared wth the prce charged by comparabe stores whch do not
award przes n connecton wth saes of merchandse, the present prce
of the merchandse as compared wth the prce charged by the same
store before adopton of such pan, and the emphass that the merchant
paces on the chance n seng hs merchandse. Whether chances are
dstrbuted wth saes of a merchandse generay, whether they are
offered ony wth saes of a partcuar knd of merchandse not ord-
nary carred n the store, and smar factors shoud aso be consdered
n resovng ths queston.
It s to be noted that each person abe for the 10 percent e cse ta
mposed by secton 32 of the Code s aso abe for the speca ta of
0 per year mposed by secton 3290 of the Code. Moreover, abty
for the speca ta s ncurred by every person engaged n recevng
wagers for or on behaf of the person so abe for the e cse ta .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 132, 32 .21(0.
210
Reguatons 132, Secton 32 .21(f) : Scope of 19 2-13-13 60
ta . Mm. 6 1
ppcaton of wagerng ta es to the operaton of sut cubs and
other merchandse cubs.
U. S. Treasury Department,
. Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, May 22, 19 2.
Coectors of Interna Revenue, Fed Offcers n Charge, and Others
Concerned:
1. The purpose of ths mmeograph s to set forth the poston
of the ureau concernng the appcaton of the wagerng ta es,
mposed by sectons 32 and 3290 of the Interna Revenue Code,
wth respect to the operaton of sut cubs and other merchandse
cubs conducted on a smar bass.
2. Generay, sut cubs and smar merchandse cubs are oper-
ated by merchants n the foowng manner:
One hundred persons pay 1 a week for a ma mum perod
of 30 weeks. fter the second payment has been made, one
person s name s drawn each week from the members st. The
frst wnner receves 30 worth of merchandse for the 2 pad
and s not requred to make any further payments. The second
wnner receves 30 worth of merchandse for hs 3, and so on
unt the 30 weeks e pre. owever, each member n the cub
receves the fu 30 n trade, credt, or payment on account.
Shoud any member drop out before the e praton of the 30-
week perod, he receves n trade, credt, or on account the amount
he has pad nto the cub.
3. Secton 32 of the Interna Revenue Code, whch mposes on
wagers an e cse ta equa to 10 percent of the amount thereof, defnes
the term wager as ncudng any wager paced n a ottery conducted
for proft. Secton 32 .21(f) of Reguatons 132 provdes, n genera,
that a ottery conducted for proft ncudes any scheme or method
for the dstrbuton of przes among persons who have pad or
promsed a consderaton for a chance to wn such przes.
. The ureau hods that a sut cub or any other merchandse
cub operated n ths manner consttutes a ottery conducted for
proft for the purposes of wagerng ta es. ccordngy, a sums
paced wth, or advanced to, merchants n the operaton of these
cubs are hed to be wagers sub|ect to such ta es. Thus, each such
merchant s abe for the 10 percent e cse ta mposed by secton
32 of the Code. In addton, each such merchant, and each agent,
cerk, or other empoyee engaged n recevng such wagers for or on
behaf of the merchant, s abe for the 0 occupatona ta mposed
by secton 3290 of the Code.
. Under the authorty of secton 3791(b) of the Interna Revenue
Code, and n vew of a the crcumstances, the rung set forth heren
w not be apped to the operaton of sut cubs or smar mer-
chandse cubs pror to uy 1, 19 2, e cept that no wagerng ta es
pad wth respect to such operaton w be refunded. In appyng
ths rung n the case of the occupatona ta under secton 3290
of the Code, a sut or merchandse cub w be consdered to be n
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
211
Regs. 132, 32 .21(0.
operaton after une 30,19 2, f any wnner s seected or announced,
or f any payment n connecton therewth s made nto the cub,
after such date; and the e cse ta mposed by secton 32 of the
Code w appy to amounts, f any, so pad nto a sut or merchandse
cub after such date.
6. Inqures regardng ths mmeograph shoud refer to ts number
and to the symbos T: M.
ohn . Dun ap,
Commssoner.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 3 (19 1), 101.3. 212
DMISSIONS T
S CTIONS 1700(a) ND 1G 0, S M ND D.-T ON DMISSIONS
Reguatons 3 (19 1), Secton 101.3: Meanng 19 2-1-13739
of the term pace. Ct. D. 17 0
admssons ta nterna revenue code decson of court
dmsson to a Pace musement Park Rdes and muse-
ment Devces.
Ta payers are sub|ect to admssons ta on charges mrde for
rdng on certan devces n an amusement park. the rdes In
queston were ocated n f ed, defnte, statonary spots or paces
In the park. ach and a, e cept the mnature gasone autos and
the pony rdes, are component parts of defnte, statonary structures
consttutng paces wthn the meanng of secton 1700(a) of the
Interna Revenue Code, and amounts pad by persons who took com-
pete rdes thereon represent amounts pad for admsson to a pace.
In the Unted States Court of ppeas for the Seventh Crcut
rthur . Frtz and nna . Frtz, dong busness as ddcand, pantffs-
appeees, v. ohn T. arcck, Coector of Interna Revenue for the Frst
Dstrct of Inos, defendant-appeant
ppea from the Unted States Dstrct Court for the Northern Dstrct of Inos.
astern Dvson
efore Fnnboan, Lndey, and Swam, Crcut udges
une G, 19 1
OPINION
Fnnegan, Crcut udge. Sut was brought by the appeees, rthur and
nna . Frtz to recover penates assessed aganst them by the Coector of
Interna Revenue for the frst Inos Dstrct because of ther faure to co-
ect admsson ta es under secton 1700(a) of the Interna Revenue Code, for
the perod e tendng from pr 19 S up to and through November 19 .
The case was tred n the dstrct court wthout a |ury. The facts, n the
man, were stpuated though one of the appeees gave some testmony. udg-
ment was entered aganst the coector for 9, 1 .20, wth nterest. e prosecutes
ths appea to reverse that |udgment.
ppeant cams that the fndngs of fact are not n e act accord wth the
stpuaton between the partes. We have e amned and compared the fnd-
ngs and the stpuaton and fnd no substanta matera dfference.
ppeees owned and operated a recreatona area on the outskrts of the
cty of Chcago. It was an open tract of and comprsng about 1 acres. arous
paths, anes and roadways, refreshment stands, booths, patforms, canopes,
tunnes, brdges, tracks and other structures, ether fuy or partay encosed,
had been erected on the grounds. Rdes and amusement devces of dfferent
sorts, ncudng mnature gasone automobes, mnature steam trans, and
tracks on whch to operate them, a merry-go-round or carrouse, a ferrs whee
0 feet n dameter, a mnature roto-whp, mnature automobes, n sma gaso-
ne tran runnng on tracks, together wth vng pones, were avaabe.
were desgned for the peasure of the attendant pubc, especay the |uvene
porton thereof.
The varous devces and rdes were operated and controed by empoyees
empoyed for that purpose. The merry-go-round or carrouse was typca. It
conssted of a crcuar patform appro matey 1 feet n dameter, contan-
ng varous effges or reproductons of anmas and other ob|ects upon whch
persons mght seat themseves. The patform, eevated about 9 nches above
ground, rotated about a centra f ed a s, the motve power beng furnshed
by a ten (10) horsepower motor. When the devce was about to be paced n
moton, an attendant woud wak about the patform of the rde and coect
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
213
Regs. 3 (10 1), 101.3.
tckets from the rders. Tckets woud be taken from a persons rdng on the
patform, e cept for chdren n arms. The patform of the rde was surrounded
for appro matey three-fourths ( ) of ts crcumference by a wooden fence
ocated appro matey s (0) feet from the outsde crcumference of the pat-
form. Ths fence was mantaned by the pantffs n order to prevent acc-
dents whch mght resut from persons nadvertenty wakng Into the merry-go-
round or attemptng to |ump on the same when n moton. Save and e cept
for the tme when the merry-go-round was n moton, a members of the gen-
era pubc were free to enter wthn the encosure made by such fence, and
upon and around the patform and upon and n a devces mounted thereon
wthout presentng a tcket.
The same prveges of free entry were accorded on a the other rdes. Ony
those who took the rde were obged to pay.
Portons of the appcabe statute and Treasury reguatons adopted there-
under, as n force at the tmes matera, are as foows:
Secton 1700 of the Interna Revenue Code, 20 D. S. C. . provdes: There
sha be eved, assessed, coected, and pad a ta of 1 cent for each
10 cents or part thereof of the amount pad for admsson to any pace, ncud-
ng admsson by season tcket or subscrpton, and that the ta mposed sha
be pad by the person payng for such admsson.
Secton 171 provdes: very person recevng any payments for adms-
sons sub|ect to the ta mposed by secton 1700 sha co-
ect the amount thereof from the person makng such payments, and that the
amounts so coected sha be pad to the coector .
Secton 101.2 of Treasury Reguatons 3 provdes: The ta s mposed on
the amount pad for admsson to any pace, and appes to the amount whch
must be pad n order to gan admsson to a pnce . The term ad-
msson means the rght or prvege to enter nto a pace, and secton 101
of Reguatons 3 provdes: The ta under secton 1700(a) of the Code s on
the amount pad for admsson to any pace. Pace s a word of very broad
meanng, and t s not defned or otherwse mted by the Code. ut the basc
dea t conveys s that of a defnte encosure or ocaton. The phrase to any
pace therefore, does not narrow the meanng of the word admsson, e cept
to the e tent that t mpes that the admsson s to a defnte encosure or
ocaton.
Secton 10 0 of the Interna Revenue Code (2G U. S. C. . 10 0 ed. as amended
by secton 302(a) of the Revenue ct of 10 3-c, 63, stnt. 21) mposes a war
ta rate effectve as of pr 1, 19 , of 1 cent for each cents or ma|or fracton
thereof of the amount pad for admsson to any pace wthn the meanng of
secton 1700(a) of the Code, as amended, whch ta s payabe by the person
payng for the admsson. Chdren under 12 years of age nre e empt from the
mposton of the ta where the admsson charge s ess than 10 cents.
Secton 171 (c) mposes as a penaty a sum equa to the amount of the ad-
msson ta upon the faure of the person or persons controng the admsson
to coect the ta .
The coector concedes that rdes on the mnature gasone automobes and
on the pones were not wthn the terms of the statute and reguatons, but
says that, under the facts of ths case the charges coected by appeees for
other rdes come wthn the purvew of the Code as admssons to a pace.
Durng each caendar year, appeees operated ther park each day durng a
season begnnng about pr frst and contnung to the mdde of November,
operaton durng other perods beng mpractcabe because of weather cond-
tons. Durng each season pror to pr 1, 19 (and aso on pr 23, 30. and
May 1,19 ) appeees charged an admsson ta as mposed by secton 1700(a).
On anuary 22, 19 , by etter, appeees requested a rung from the Interna
Revenue Department, Washngton, D. C, on the ta abty of ther type of
busness, especay the pony rdes. The Deputy Commssoner of Interna
Revenue reped that the admsson ta was payabe on the amusement de-
vces, but that f pony rdes were conducted wthn the encosure, and
If a charge s made ony for those partes who rde the pones and other
persons are admtted to the encosures free of charge, the charge s not for ad-
msson to a pace and s not sub|ect to the ta .
On February 2 , 19 , appeees agan wrote to the Deputy Commssoner,
encosng pctures of ther devces as e hbts, and camed a of ther amuse-
ment rdes were operated n the same manner as the pony rdes, agan request-
ng a rung as to whether the other amusement devces were sub|ect to an
admsson ta .
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 3 (19 1), 101.3.
21
The Deputy Commssoner reped that no ta shoud be eved, assessed,
coected or pad n connecton wth tckets sod for use on the pony rde or the
mnature gasone automobe rde, but that a ta on admssons attached to
each of the varous other amusement devces operated snce the
charges represent amounts pad for .an admsson to a pace wthn the meanng
of the Code.
ppeees coected no admsson ta from ther patrons from pr 1 to
November 30, 19 (e cept on three days pr 23, pr 30, and May 1, 19 , on
whch dates admsson ta es were charged and remtted to the coector.)
Thereafter appeees pad, under protest, 9, 76.6 as admsson ta and pena-
tes for the perod here nvoved, and on anuary 31, 19 9, fed a cam for
refund, statng that ddeand (1) charges no admsson to any pace and (2)
that none of the rdes operated by them were paces wthn the meanng of
secton 1700(a), and (3) that the amounts pad by patrons were pad for rdes
and not for admsson to any pace. Ths cam was re|ected and ths sut,
to recover the penates pad, foowed.
ppeees urge, In support of ther |udgment, (1) that ther charges were
for rdes on the varous amusement devces and not for admsson to a pace,
and (2) that patrons were not charged for the rght and prvege of enterng
and seatng themseves n or on the varous devces, whe the appeant con-
tends that appeees charges were made for the rght and prvege of enterng
and seatng themseves n or on the varous amusement devces and en|oyng
the purpose for whch they were operated, hence were charges for admsson
to a pace wthn the meanng of secton 1700(a), as amended, and are sub|ect
to the ta at the rate mposed n secton 16 0 of the Code.
s we vew t, the soe queston for determnaton s: whether secton 1700(a),
as amended, s appcabe to the charges made, to anyone rdng on the s rdes
n queston, under the facts here presented.
The tra court concuded:
Under the facts n ths case, the charges assessed by the pantffs were not
charges for admsson to a pace wthn the meanng of secton 1700(a) of the
Interna Revenue Code, but were charges for the prvege of rdng upon the
devces furnshed by pantffs.
Where the utmate fndng s a concuson of aw or a determnaton of a
m ed queston of aw and fact, we may substtute our |udgment for that of the
tra court. moor Country Cub v. Unted States, 119 Fed. (2d) 961-963. so
n Orvs v. ggns, 1 0 Fed. (2d) 37- 39, the court sad:
Where a tra |udge sts wthout a |ury where the evdence s
party ora and the baance s wrtten or deas wth undsputed facts,
we may gnore the tra |udge s fndng and substtute our own.
ppeees contend that under the facts of ths case the charges were not for
admsson to a pace wthn the meanng of secton 1700(a), but were charges
for the prvege of rdng upon the devces furnshed by them as the dstrct
court found.
Few, f any, admssons ta abe under secton 1700(a) are not accompaned
by a use of the property or equpment to whch the aduttees cense e tends.
Wmette Park Dstrct v. Campbe, 33 U. S. 11- 1 . The pubc was admtted
to a pace (the open park) wthout charge. The rdes n queston were stuated
n defnte ocatons or paces In the park. The pubc wns admtted wthout
charge to a such paces for nspecton, for the purpose of pacng chdren on
the rdes or seeng them safey from the rdes, and for the purpose of takng
pctures, whe such rdes or paces were not n moton. ut those who wanted
to use the amusement devces or equpment, for the purpose for whch they were
constructed, that s, to reman thereon whe the rdes were n moton, and to
en|oy a compete rde, an admsson charge was requred and coected by
appeees.
We concude that a rdes n queston were ocated n f ed, defnte, sta-
tonary spots or paces n the park, that each and a, e cept the mnature
gasone autos and the pony rdes, are component parts of defnte, statonary
structures consttutng paces wthn the meanng of secton 1700(a), and that
amounts pad by persons who took a compete rde thereon represent amounts
pad for admsson to a pace and that the ta on admssons attached thereto.
Unted States v. ocr, 2 7 Fed. 1 ; Tcn Fas Natatorum v. Unted States,
22 Fed. (2d) 30S; moor Country Cub v. Unted States, 119 Fed. (2d) 961.
The |udgment s reversed wth drectons to dsmss the compant.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
21
Regs. 6 (19 0), 316. .
M NUF CTUR RS CIS T S
S CTION 3 03(c), S M ND D. UTOMO IL S, TC., P RTS OR
CC SSORI S
Reguatons 6 (19 0), Secton 316. . 19 2- -1376
S. T. 9 1
Ta abty of ftng |acks as parts or accessores under the pro-
vsons of secton 3 03(c) of the Interna Revenue Code.
dvce s requested as to the ta abty of ftng |acks as parts or
accessores for automobes, etc., wthn the meanng of secton 3 03(c)
of the Interna Revenue Code.
Secton 3 03(c) of the Code, as amended, provdes:
Parts or accessores (other than tres and nner tubes and other than rado
and teevson recevng sets) for any of the artces enumerated n subsecton
a) or (b), per centum, e cept that on and after pr 1, 19 , the rate sha
be per centum. For the purposes of ths subsecton and subsectons (a) and
(b), spark pugs, storage batteres, eaf sprngs, cos, tmers, and tre chans,
whch are sutabe for use on or n connecton wth, or as component parts of,
any of the artces enumerated n subsecton (a) or (b), sha be consdered
parts or accessores for such artces, whether or not prmary adapted for
such use. Ths subsecton sha not appy to chasss or bodes for automobe
trucks or other automobes.
The appcabe Reguatons 6, secton 316. provdes n part:
Defnton of Pabts or ccessores. The term parts or accessores for
an automobe truck or other automobe chasss or body, ta abe tractor, or
motorcyce, ncudes (a) any artce the prmary use of whch s to mprove,
repar, repace, or serve as a component part of such vehce or artce, (6) any
artce desgned to be attached to or used n connecton wth such vehce or
artce to add to ts utty or ornamentaton, and (c) any artce the prmary
use of whch s n connecton wth such vehce or artce whether or not essen-
ta to ts operaton or use.
The term parts and accessores sha be understood to embrace a such
artces as have reached such a stage of manufacture that they are commony
or commercay known as parts and accessores whether or not fttng opera-
tons are requred n connecton wth nstaaton. The term sha not be under-
stood to embrace raw materas used n the manufacture of such artces.
Spark pugs, storage batteres, eaf sprngs, cos, tmers, and tre chans, whch
are sutabe for use on or In connecton wth, or as component parts of, auto-
mobe truck or other automobe chasss, ta abe tractors, or motorcyces, are
consdered parts of or accessores for such artces whether or not prmary
desgned or adapted for such use.
In the case of Waker Manufactvrng Co. v. Unted States, (6 Ct.
Cs. 39 (192 ), certorar dened, 27 U. S. 617; T. D. 1 , C. ,
II-2,3 2) the court consdered the appcaton of secton 900 of the
Revenue ct of 191 and secton 900 of the Revenue ct of 1921 whch
provded for a ta on:
(1) utomobe trucks and automobe wagons (ncudng tres, nner tubes,
parts and accessores therefor, sod on or n connecton therewth or wth the
sae thereof), 3 per centum.
(2) Other automobes and motorcyces (ncudng tres, nner tubes, parts,
and accessores therefor, sod on or n connecton therewth or wth the sae
thereof), e cept tractors, per centum.
(3) Tres, nner tubes, parts, or accessores, for any of the artces enumerated
n subdvson (1) or (2), sod to any person other than a manufacturer or
producer of any of the artces enumerated n subdvson (1) or (2), per
centum. (See 0 Stat. 10 7, 1122 and 2 Stat. 227, 201.)
_ rtce 16 of Reguatons 7, promugated under the above-men-
toned revenue acts, defned an accessory as an artce prmary
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 0 (19 0), 310. . 216
adapted for use n connecton wth a ta abe motor vehce. rtces
havng a genera commerca use not pecuary adapted for use n
connecton wth motor vehces were e cuded from the defnton,
ctng as an e ampe a too sod n hardware stores for genera use.
The court found that the amost unversa use for the |acks n ques-
ton was demonstrated by the fact that such |acks consttute part of
the automobe equpment of a vast ma|orty of automobe owners.
The ta was hed to appy.
In Unversa attery Co. v. Unted States (2 1 U. S. 0; Ct. D. 220,
C. . I -2, 22) and reated cases, the Supreme Court consdered the
same statutory provsons n determnng the ta abty of storage bat-
teres, gascoators, gears and housngs, and bumper parts. There the
cam was chefy that the artces were sod for genera use rather
than for motor vehce use. The Court e pressy approved the con-
structon of the terms parts and accessores whch the ureau had
adopted as comprehendng artces havng some reaton tc ta abe
motor vehces and hed that the ta was appcabe.
In consderng the proper rues to be used n determnng ta abty
of artces as accessores t s to be noted that the Code secton 3 03(c)
now sts severa tems whch are ta abe as accessores f they are
sutabe for use n connecton wth one of the enumerated vehces.
The defnton contaned n Reguatons C, secton 316. , supra, bases
the determnaton n some cases on prmary use and n other crcum-
stances on desgn fo - use n connecton wth one of the enumerated
vehces.
revew of ths queston estabshes that there are a number of
factors to be consdered n arrvng at a decson as to the ta abty
of |acks, and each case must be determned on ts own facts. It has
been concuded, however, that a |ack whch has no pecuar character-
stcs mtng ts use to motor vehces but whch s hed out by the
manufacturer as especay desgned for such use s ta abe under
secton 3 03(c) when sod by the manufacturer. In addton |acks
whch (1) are sod and chefy used n connecton wth a ta abe motor
vehce or (2) are amost unversay sod and used n motor vehce
trade channes are presumed to be ta abe under secton 3 03(c) when
sod by the manufacturer. The fact that a |ack s mechanca rather
than hydrauc does not, standng aone, estabsh ta abty.
The ureau has for a consderabe perod of tme hed that hydrauc
a e |acks and scssors |acks are not sub|ect to the ta mposed by
secton 3 03(c) of the Code. ecause of ths ong and unform hod-
ng of the ureau and the consequent reance of manufacturers on
these rungs, t has been concuded that, under the authorty con-
taned n secton 3791(b) of the Code, the rung set forth heren,
nsofar as t s appcabe, to the afore-mentoned |acks, w not be
apped retroactvey wth respect to saes of such |acks pror to
February 1 , 19 2, the date of ths uetn, e cept that any ta
whch has been pad on the sae of such |acks w not be refunded,
uness n a partcuar case t s estabshed to the satsfacton of the
Commssoner, as requred by secton 3 3(d) of the Code, that the
manufacturer, by reason of reyng on an e stng rung that the sae
of such a |ack was not ta abe, dd not ncude n hs prce any part
of the manufacturers e cse ta whch he may have subsequenty pad
on the sae.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
217
Regs. 6, 31G. 0, etc.
FIR RMS, S LLS, ND C RTRIDG S
Reguatons 6, Sectons 316. 0, 316. 1, and 10 2- -13773
316.20 . T. D. 0
TITL 26 INT RN L R NU . C PT R I, SU C PT R C, P RT 16.
CIS T S ON S L S T M NUF CTUR R
Frearms, shes, and cartrdges purchased wth funds appropr-
ated for the mtary departments.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 6, D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 6 26 CFR. part 316 , reatng to
manufacturers e cse ta es under chapter 29, subchapter of the
Interna Revenue Code, to secton 706 of the Second Suppementa
ppropraton ct, 19 1 (Pubc Law 911, 1st Cong., 2d sess.), ap-
proved anuary 6, 19 1, such reguatons are hereby amended as
foows:
Paragraph L Immedatey precedng secton 316. 0 26 CFR
316. 0 , there s nserted the foowng:
S C. 706. S COND SUPPL M NT L PPROPRI TION CT, 10 1
(PU LIC L W 011, 1st CONG., 2d S SS.), PPRO D NU RY
6, 10 1.
None of the frearms, shes, and cartrdges purchased wth
funds approprated for the mtary departments by ths or any other
ct sha be sub|ect to any ta Imposed on te sae or transfer of such
artces.
Par. 2. Secton 316. 1, as amended bv Treasury Decson 3
C. . 19 ,613 , approved March 1 ,19 26 CFR 316. 1 , s further
amended as foows:
( ) y strkng out Sec 316. 1. empt Saes. and nsertng
n eu thereof Sec. 316. 1. empt Saes. (a) For use of Unted
States, State, Terrtory, or possesson of Unted States.
( ) y strkng out the second paragraph and nsertng n eu
thereof the foowng:
y vrtue of the amendment made by secton 307(a) (3) of the Revenue ct
of 19 3 of secton 3 07, and the appcaton of secton 307(b) (2) to such amend-
ment, the e empton wth respect to saes of frearms, shes, and cartrdges by
the manufacturer for the use of the Unted States termnated on une 30, 10 7.
ccordngy, saes of such artces by the manufacturer thereof on and after
uy 1, 19 7, to the Unted States for ts own use are sub|ect to ta , uness the
sae Is made pursuant to a contract entered nto pror to uy 1, 19 7, or to any
agreement or change order suppementa to such contract bearng the same
Government contract number. (For saes to the mtary departments of the
Unted States, see paragraph (6) beow.)
(C) y addng at the end thereof the foowng:
(6) Purchases for the mtary departments of the Unted States y vrtue
of the pro Isons of secton 70 of the Second Suppementa ppropraton ct,
19 1 (Pubc Law 011, 1st Cong., 2d sess.), no ta attaches to the sae of frearms,
shes, and cartrdges pad for after anuary , 19 1, wth funds approprated
for the mtary departments of the Unted States by such ct or any other ct
For the purposes of ths e empton the term mtary departments Incudes
21 1 2 62 I
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 6, 316. 0, etc.
21
ony the Department of the rmy, Department of the Navy, and the Department
of the r Force. Incuded n the Navy are nava avaton and Marne Corps,
and the Coast Guard when operatng as a servce n the Navy pursuant to the
provsons of secton 3 of tte 1 of the Unted States Code. ny manufacturer
camng e empton under ths paragraph must be prepared to produce evdence
whch w estabsh the rght to esempton. Generay, ceary dentfed orders
or contracts of a mtary department when sgned by an authorzed offcer of
such department w be accepted n support of the e empton. owever, n the
absence of such orders or contracts, a statement sgned by an authorzed offcer
o a mtary department that the frearms, shes, or cartrdges sod were pur-
chased wth funds approprated for tha mtary departments w be acceptabe.
Par. 3. Immedatey precedng secton 316.20 26 CFR 316.20 ,
there s nserted the foowng:
S C. 706. S COND SUPPL M NT L PPROPRI TION CT, 19 1
(PU LIC L W 911, 1st CONG., 2d S SS.), PPRO D N-
U RY 6, 19 1.
None of the frearms, shes, and cartrdges purchased wth
funds approprated for the mtary departments by ths or any other
ct sha be sub|ect to any ta mposed on the sae or transfer of such
artces.
Par. . Secton 316.20 , as amended by Treasury Decson
C. . 19 1-2, 20 , approved September 13, 19 1 26 CFR 316.20 ,
s further amended by addng at the end thereof the foowng new
paragraph:
In any case where the manufacturer, producer, or mporter of frearms, shes,
and cartrdges has pad ta on the sae of such artces to the mtary depart-
ments and payment of the purchase prce was made after anuary , 19 1, wth
funds approprated for the mtary departments, a credt or refund may be
aowed n the amount of such ta upon compance wth the provsons of the
thrd paragraph of ths secton f the manufacturer, producer, or mporter has
n hs possesson the evdence requred to support ta -free saes to the mtary
departments as prescrbed n secton 316. 1(b).
ecause secton 706 of the Second Suppementa ppropraton
ct, 19 1, became effectve on anuary 6, 19 1, the date of the enact-
ment of such aw, t s found that t s mpractcabe and unnecessary
to ssue ths Treasury Decson wth notce and pubc procedure
thereon under secton (a) of the dmnstratve Procedure ct,
approved une 11, 19 6, or sub|ect to the effectve date mtaton of
secton (c) of sad ct.
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 706 of the Second Suppementa ppropraton ct,
19 1 (Pubc Law 911, 1st Cong., 2d sess.) and secton 3791 of the
Interna Revenue Code ( 3 Stat. 67; 26 U. S. C. 3791).)
ohn . Dunap,
Commssoner of Interna Revenue-
pproved February 11,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Ped wth the Dvson of the Federa Regster February 13, 19 2, : 3 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
219 Regs. 7. rts. 1, 9, and 1 .
PISTOLS ND R OL RS
Reguatons 7, rtces 1, 9, and 1 . 19 2- -1377
T. D. 79
TITL 26 INT RN L R NU . C PT R I, SU C PT R C, P RT 302.
CIS T S ON S L OF PISTOLS ND R OL RS
Pstos and revovers purchased wth funds approprated for
the mtary departments.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. 0.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 7 26 CFR, part 302 , reatng
to the ta on saes of pstos and revovers by the manufacturer,
to secton 706 of the Second Suppementa ppropraton ct, 19 1
(Pubc Law 911, 1st Cong., 2d sess.), approved anuary 6, 19 1,
such reguatons, but ony as prescrbed and made appcabe to the
Interna Revenue Code by Treasury Decson C. . 1939-1
(part 1), 396 , approved February 11, 1939 26 CFR, Cum. Supp.,
p. 76 , are hereby amended as foows:
Paragraph 1. Immedatey precedng artce 1 26 CFR 302.1 ,
there s nserted the foowng:
S C. T06. S COND SUPPL M NT L PPROPRI TION CT, 19 1
(PU LIC L W 911, 1st CONG., 2d S SS.), PPRO D N-
U RY 6, 19 1.
None of the pstos, revovers, purchased wth
funds approprated for the mtary departments by ths or any other
ct sha be sub|ect to any ta mposed on the sae or transfer of such
artces.
Par. 2. rtce 9, as amended by Treasury Decson 3 6 C. .
19 , 62 , approved March 1 , 19 26 CFR 302.9 , s further
amended as foows:
( ) y strkng out rt. 9. empt Saes. and nsertng n
eu thereof rt. 9. empt Saes. (a) For use of Unted States,
State. Terrtory, or possesson of Unted States.
( ) y strkng out the second paragraph and nsertng n eu
thereof the foowng:
y vrtue of the amendment made by secton 307(a) (2) of the Revenue ct
of 19 3 of secton 2700(b) (1), and the appcaton of secton 307(b) (2) to such
amendment, the e empton wth respect to saes of pstos and revovers by
the manufacturer for the use of the Unted States termnated on une 30, 19 7.
ccordngy, saes of such artces by the manufacturer thereof on and after
uy 1, 19 7, to the Unted States for ts own use are sub|ect to ca , uness the
sae s made pursuant to a contract entered Into pror to uy 1, 19 7, or to any
agreement or change order suppementa to such contract bearng the same
Government contract number. (For saes to the mtary departments of the
Unted States, see paragraph (6) beow.)
(C) y addng at the end thereof the foowng:
(6) Purchases for the mtary departments of the Unted States. y vrtue
of the provsons of secton 706 of the Second Suppementa ppropraton ct,
19 1 (Pubc Law 911, 1st Cong., 2d sess.), no ta attaches to the sae of pstos
and revovers pad for after anuary , 19 1, wth funds approprated for the
mtary departments of the Unted States by such ct or any other ct. For the
purposes of ths e empton the term mtary departments ncudes ony the
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 7, rts. 1, 9, and 1 .1
220
Department of the rmy, Department of the Navy, and the Department of the
r Force. Incuded In the Navy are nava avaton and Marne Corps, and
the Coast Guard when operatng as a servce In the Navy pursuant to the pro-
vsons of secton 3 of tte 1 of the Unted States Code. ny manufacturer
camng e empton under ths paragraph must be prepared to produce evdence
whch w estabsh the rght to e empton. Generay, ceary dentfed orders
or contracts of a mtary department when sgned by an authorzed offcer of
such department w be accepted n support of the e empton. owever. In the
absence of such orders or contracts, a statement sgned by an authorzed offcer
of a mtary department that the pstos and revovers sod were purchased wth
funds approprated for the mtary departments w be acceptabe.
Par. 3. Immedatey precedng artce 1 26 CF 302.1 , there
s nserted the foowng:
S C. 706. S COND SUPPL M NT L PPROPRI TION CT, 19 1
(PU LIC L W 911, 1st CONG., 2d S SS.), PPRO D
NU RY 6, 19 1.
None of the pstos, revovers, purchased wth
funds approprated for the mtary departments by ths or any other
ct sha be sub|ect to any ta Imposed on the sae or transfer of such
artces.
Par. . rtce 1 , as amended by Treasury Decson 676
C. . 19 -2, 190 , approved November 23, 19 26 CFR 302.1 ,
s further amended by addng at the end thereof the foowng new
paragraph:
In any case where the manufacturer, producer, or Importer of pstos and
revovers has pad ta on the sae of such artces to the mtary departments
and payment of the purchase prce was made after anuary , 19 1, wth funds
approprated for the mtary departments, a credt or refund may be aowed
n the amount of such ta upon compance wth the precedng provsons of
ths artce f the manufacturer, producer, or Importer has n hs possesson
the evdence requred to support ta -free saes to the mtary departments
as prescrbed n artce 9(b) secton 302.9(b) .
ecause secton 706 of the Second Suppementa ppropraton
ct, 19 1, became effectve on anuary 6, 19 1, the date of the enact-
ment of such aw, t s found that t s mpractcabe and unnecessary to
ssue ths Treasury Decson wth notce and pubc procedure thereon
under secton (a) of the dmnstratve Procedure ct, approved
une 11, 19 6, or sub|ect to the effectve date mtaton of secton
(c) of sad ct.
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n secton 706 of the Second Suppementa ppropraton
ct, 19 1 (Pubc Law 911, 1st Cong., 2d sess.) and secton 3791
of the Interna Revenue Code ( 3 Stat. 67; 26 U. S. C. 3791).)
ohn . Du|tap,
Commssoner of Interna Revenue.
pproved February ,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster February 7, 19 2, : 1 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
221
Regs. , 31 .30, etc.
S CTION 3 0 (a).-T ON M C NIC L P NCILS, TC.
19 2- -13776
S. T. 9 3
ppcaton of manufacturers e cse ta where an artce ta abe
under secton 3 0 (a) of the Interna Revenue Code and a nonta abe
artce are sod by the manufacturer as a unt.
dvce s requested concernng the appcaton of the manufacturers
e cse ta where mechanca pencs, fountan pens, or ba pont pens,
whch are ta abe under secton 3 0 (a) of the Interna Revenue Code,
and nonta abe artces, such as a sprng-oaded ree or a notebook, are
sod by the manufacturer as a unt.
Secton 3 0 (a) of the Code mposes on mechanca pencs, fountan
pens, and ba pont pens when sod by the manufacturer, producer,
or mporter a ta equa to 1 percent of the prce for whch they are
fcod.
It s hed that, where an artce ta abe under secton 3 0 (a) of the
Code and a nonta abe artce are sod by the manufacturer as a unt,
the ta attaches to that porton of the manufacturer s sae prce of the
unt whch s propery aocabe to the ta abe artce. Normay, the
ta abe porton of such unt may be determned by appyng to the
manufacturer s sae prce of the unt, the rato whch the separate
manufacturer s sae prce of the ta abe artce bears to the sum of the
sae prces of both the ta abe and nonta abe artces, f such artces
are sod separatey by the manufacturer. Where the artces (or
ether one of thorn) are not sod separatey by the manufacturer and
do not have estabshed sae prces, the ta abe porton s to be deter-
mned from a comparson of the actua costs of the artces to the
manufacturer. Thus, f the cost of the ta abe artce represents four-
ffths of the tota cost of the compete unt, the ta attaches to four-ffths
of the prce charged by the manufacturer for such unt.
T S ON G SOLIN , LU RIC TING OIL, ND M TC S
Reguatons , Sectons 31 .30, 31 .3 , and 19 2- -13772
31 .66. T. D. 3
TITL 26 INT RN L R NU C PT R I. SU C PT R C, P RT 31 .
T S ON G SOLIN . LU RIC TING OIL, ND M TC S
Increased rate of ta on gasone and foor stocks ta on pasone
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons (19 edton) 26 CFR, part
31 , reatng to ta es on gasone, ubrcatng o, and matches under
chapter 29 of the Interna Revenue Code, to secton 9 of the Revenue
ct of 19 1 (Pubc Law 1 3, 2d Cong., 1st sess.), approved October
20,19 1, such reguatons are hereby amended as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. , 31 .30, etc.
222
Paragraph 1. Immedatey precedng secton 31 .30 26 CF
31 .30 , there s nserted the foowng:
S C. 9. T ON G SOLIN R NU CT OF 19 1, PPRO D
OCTO R 20, 19 1 .
(a) Increase n Rate. Secton 3 12(a) Is hereby amended by
strkng out 1 cents and nsertng n eu thereof 2 cents and by
addng at the end thereof the foowng new sentence: On and after
pr 1,19 , the ta mposed by ths secton sha be 1 cents a gaon
n en of 2 cents a gaon.

S C. 90. FF CTI D T OF P RT III R NU CT OF
19 1, PPRO D OCTO R 20, 19 1 .
cept as otherwse e pressy provded n ths part, the amendments
made by ths part sha take effect on the frst day of the frst month
whch begns more than 10 days after the date of the enactment of ths
ct
Par. 2. Secton 31 .3 26 CFR 31 .3 s amended to read as
foows: .
Sec. 31 .3 . Rate of Ta . The ta s payabe by the Importer or producer
thereof, or by any producer of gasone, at the rate of 1 cents a gaon pror
to November 1, 19 1, at the rate of 2 cents a gaon for the perod November 1,
19 1, to March 31, 19 , ncusve, and at the rate of 1 cents a gaon on and
after pr 1,19 .
Par. 3. Secton 31 .66 s renumbered as secton 31 .7 .
Par. . There s nserted mmedatey after the te t of secton 36
of the Interna Revenue Code the foowng new subpart .
Subpart Foor Stocks Ta on Gasone
S C. 9. T ON G SOLIN R NU CT OF 19 1, PPRO D
OCTO R 20,19 1 .

(b) Foor Stocks Ta and Refund. Secton 3 12 Is hereby amended
by addng at the end thereof the foowng new subsectons:
(f) 19 1 Foor Stocks Ta . On gasone sub|ect to ta under ths
secton whch, on the effectve date of secton 9(a) of the Revenue ct
of 19 1, s hed and Intended for sae, there sha be eved, assessed,
coected, and pad a foor stocks ta at the rate of cent per gaon.
The ta sha not appy to gasone n reta stocks hed at the pace
where Intended to be sod at reta, nor to gasone hed for sae by a
producer or mporter of gasone. The provsons of secton 3 3 sha
be appcabe to the foor stocks ta mposed by ths subsecton so as to
entte, sub|ect to a the provsons of such secton, (1) any manu-
facturer or producer to a refund or credt of such ta under subsecton
(a) (1) of such secton,-and (2) any person payng such foor stocks ta
to a refund or credt thereof where gasone s by such person or any
other person used or resod for any of the purposes specfed n subpara-
graphs ( ) (), (), and () of subsecton (a)(3) of such secton.

Sec. 31 .70. Rate and Scope of Foor Stocks Ta . The foor stocks ta at
the rate of cent per gaon s mposed on gasone as descrbed n secton
31 .30. In genera ths ncudes (a) a products commony or commercay
known or sod as gasone (ncudng casnsbead and natura gasone), benzo,
benzene, or naphtha, regardess of ther cassfcatons or uses; and (6) any
other qud of a knd prepared, advertsed, offered for sae or sod for use as,
or used as, a fue for the propuson of motor vehces, motor boats, or arpanes.
The term gasone does not, however, ncude kerosene, gas o, or fue o.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
223
Regs. , 31 .30, etc.
The foor stocks ta Is on gasone whch s hed and ntended for sae at the
frst moment of November 1, 19 1, by any person other than a producer or
mporter of gasone or a person hodng gasone n reta stocks at the pace
where ntended to be sod at reta. The foor stocks ta Is on gasone whch Is
hed and ntended for sae and not on the sae of gasone.
Gasone s regarded as hed by the owner thereof at the frst moment of
November 1, 19 1, athough at that tme the gasone s n transt to the owner.
Where tte does not pass to the consgnee unt devery, the consgnor of the
gasone n transt at the frst moment of November 1, 19 1, s regarded as the
owner at that tme.
The foor stocks ta does not appy to gasone hed on November 1, 19 1,
n reta estabshments where such gasone s to be sod or dsposed of e -
cusvey at reta drect to consumers. The terra hed at the pace where
Intended to be sod at reta means gasone hed n those tanks from whch
t s devered drect through gasone pumps to the utmate consumer and does
not ncude gasone hed n buk storage tanks for repenshment of the suppy
n the tanks servng the reta gasone pumps even though such gasone may
be hed n storage tanks or n tank cars on premses occuped by a reta estab-
shment. The foor stocks ta kewse does not appy to gasone hed for
sae on November 1, 19 1, by a producer or mporter of gasone, or to gasone
hed by any person for use rather than for sae.
Sec. 31 .71. Inventory. very person abe t ) pay foor stocks ta on gaso-
ne sha prepare an nventory of such gasone sub|ect to the foor stocks ta
hed at the frst moment of November 1, 19 1. Persons hodng gasone at
more than one ocaton sha prepare a separate nventory n dupcate for each
such ocaton. One copy of the separate nventory sha be retaned at such
ocaton and one copy sha be forwarded to and kept at the ta payer s prn-
cpa pace of busness. ach nventory sha show the name of the ta payer,
the ocaton of the partcuar premses for whch the nventory s made, and
the name and address of the prncpa offce from whch the foor stocks return
w be fed. Separate nventores forwarded to the ta payer s prncpa pace
of busness sha be consodated nto a sntre nventory for the purpose of
computng the ta and makng the return. The nventores sha not be fed
wth the return hut sha be retaned by the ta payer at hs prncpa pace of
busness.
Sec. 31 .72. Credt or Refund of- Foor Stocks Ta . The provsons of
secton 3 3 are appcabe to foor stocks ta mposed by secton 9(b) of
the Revenue ct of 19 1 so as to entte any manufacturer or producer to a
refund or credt 3f foor stocks ta pad on gasone purchased by hm and
used by hm as matera n the manufacture or producton of, or as a component
part of, an artce wth res ect to whch ta has been pad or whch has been
sod free of ta by vrtue of secton 3 2, reatng to ta -free saes. ny person
who pays a foor stocks ta on gasone may obtan a refund or credt of the
ta pad n cases where the gasone s used or resod by hm or by any other
person for any of the purposes specfed n secton 3 3(a) (3) ( ) (), (), and
() of the Code, reatng to saes to States, etc., saes for use as fue suppes
on certan vesses, etc., and saes for nonmotor fue use. (See secton 31 .6 .)
Sec 31 .73. Returns. Form 7. Revsed 19 1, s prescrbed as the form on
whch persons abe to foor stocks ta on gasone sha make return and
pay ta . The return sh be prepared n dupcate; the orgna sha be fed
on or before December 31, 19 1, wth the coector for the dstrct n whch
a ocated the ta payer s prncpa pace of busness and the dupcate sha be
retaned at the ta payer s prncpa pace of busness.
Sec. 31 .7 . Records. Records showng payment of foor stocks ta on gasone
together wth the consodated and separate nventores and other reevant
Papers and matera must be kept by the ta payer for a perod of years from
the date the ta s due.
ecause the amendments of secton 3 12 of the Interna Revenue
Code by secton 9 of the Revenue ct of 19 1 ncreased the rate of
ta and provded a foor stocks ta on gasone, both effectve on No-
vember 1, 19 1, and ths Treasury Decson refects such amendments,
t s hereby found that t s mpractcabe and unnecessary to ssue
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. , 31 .30, etc.
22
ths Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une 11,
19 6, or sub|ect to the effectve date of mtaton of secton (c) of
sad ct,
(Ths Treasury Decson s ssued pursuant to the authorty con-
taned n sectons 3 0 and 3791 of the Interna Revenue Code ( 3
Stat. 19, 67; 26 U. S. C. 3 0, 3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved February 12, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster February s, 1902, : 0 a. nu)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
22
Regs. 1 (19 1), 320.31, etc.
R T IL RS CIS T S
S CTION 2 00. T ON W LRY, TC.
Reguatons 1 (19 1), Sectons 320.31, 320.32,
and 320.33.
19 2- -1377
S. T.9 2
ppcaton of retaers e cse ta Imposed by secton 2 00 of the
Interna Revenue Code to buttons, ncudng those made of or orna-
mented wth mtatons of precous metas, pears, or precous or
semprecous stones, when sod separatey as such or when sod as
part of wearng appare.
The ureau has reconsdered ts poston concernng the appcaton
of the retaers e cse ta mposed by secton 2 00 of the Interna
Revenue Code to buttons made of or ornamented wth mtatons of
precous metas, pears, or precous or semprecous stones and now
hods that such artces, whether sod separatey as such or sod as part
of wearng appare, and whether detachabe or desgned to be perma-
nenty attached to cothng, are n the nature of dress fndngs and
are not sub|ect to retaers e cse ta .
To avod any msunderstandng, t shoud be noted that ths rung
appes to buttons ony, and s not ntended to make any change n the
ta abe status of costume |ewery. rtces consttutng costume
|ewery, ncudng, among other thngs, studs, pns, cps, nks, and
ape ornaments, reman sub|ect to the ta mposed by secton 2 00
of the Code, regardess of the matera of whch made, and notwth-
standng that the artce may ncude buttons whch f sod separatey
woud not be ta abe. Moreover, buttons made of or ornamented wth
precous metas, pears, or precous or semprecous stones are not con-
sdered to be dress fndngs and are therefore sub|ect to the ta .
When ta abe artces are attached to a dress or other garment sod
at reta, the ta appes to that porton of the reta prce of the com-
pete garment whch s fary and reasonaby aocabe to the ta abe
artces. Such aocaton may be made by ascrbng to the ta abe
artces a vaue equvaent to the prce at whch they are normay sod
at reta when sod separatey. In the event the ta abe artces are
not normay sod separatey at reta, the aocaton may be made on
the bass of the rato that the cost of the ta abe artces to the garment
manufacturer bears to hs cost of the compete garment, whch rato
shoud be ascertaned from the manufacturer. Such rato shoud then
be apped to the reta prce of the compete garment n determnng
the porton sub|ect to ta .
The rues stated heren may be apped to saes made before or after
anuary 1, 19 2, e cept that any ta pad wth respect to saes made
pror to anuary 1,19 2, w not be refunded.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
MISC LL N OUS RULINGS
19 2-9-13 13
R ORG NIZ TION PL N No. 1 OF 19 2
onse of Representatves, ghty second Congress, Second Sesson, Document No. 327
anuary 1 , 10 2
M SS G FROM T PR SID NT OF T UNIT D ST T S TR NSMITTING
R ORG NIZ TION PL N NO. 1 OF 19 2, PRO IDING FOR R ORG NIZ TIONS
IN T UR U OF INT RN L R NU OF T D P RTM NT OF T
TR SURY, PR P R D IN CCORD NC WIT T R ORG NIZ TION CT
OF 19 0
7o the Congress of the Unted States:
I transmt herewth Reorganzaton Pan No. 1 of 19 2, prepared n
accordance wth the Reorganzaton ct of 19 9 and provdng for
reorganzatons n the ureau of Interna Revenue of the Depart-
ment of the Treasury.
comprehensve reorganzaton of that ureau s necessary both to
ncrease the effcency of ts operatons and to provde better machnery
for assurng honest and mparta admnstraton of the nterna
revenue aws. The reorganzaton pan transmtted wth ths message
s essenta to accompsh the basc changes n the structure of the
ureau of Interna Revenue whch are necessary for the knd of com-
prehensve reorganzaton that s now requred.
y brngng addtona personne n the ureau of Interna Revenue
under the mert system, Reorganzaton Pan No. 1 kewse removes
what the Commsson on Organzaton of the ecutve ranch of the
Government descrbed as one of the chef handcaps to effectve
organzaton of the Department .
It s mv determnaton to mantan the hghest standards of ntegrty
and effcency n the Federa servce. Whe those standards have
been observed fathfuy by a but a reatvey few pubc servants,
the betraya of ther trust by those few demands the strongest cor-
rectve acton.
The most vgorous efforts are beng and w contnue to be made
to e pose and punsh every Government empoyee who msuses hs
offca poston. ut we must do even more than ths. We must
correct every defect n organzaton that contrbutes to neffcent
management and thus affords the opportunty for mproper conduct.
The thorough reorganzaton of the ureau of Interna Revenue
whch I propose w be of great hep n accompshng a of these
ends. It s an ntegra part of a program to prevent mproper conduct
n pubc servce, to protect the Government from nsdous nfuence
pedders and favor seekers, to e pose and punsh wrongdoers, and to
mprove the management and effcency of the e ecutve branch.
(227)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
22
I am confdent that the Congress and the pubc are as deepy and
earnesty concerned as I am that the pubc busness be conducted
entrey upon a bass of farness, ntegrty, and effcency. I therefore
hope that the Congress w gve speedy approva to Reorganzaton
Pan No. 1, n order that we may move ahead rapdy n achevng
the reorganzaton of the ureau of Interna Revenue.
The task of coectng the nterna revenue has e panded enormousy
wthn the past decade. Ths e panson has been occasoned by the
necessary addtona ta aton brought on by Word War II and
essenta postwar programs. In fsca year 19 0, ta coectons
made by the ureau of Interna Revenue were sghty over
bons of doars; n 19 1, they totaed amost 01 bons. In 19 0,
19 mon ta returns were fed; n 19 1, 2 mon. In 19 0, there
were 22,000 empoyees workng for the ureau; n 19 1, there were
7,000.
Throughout ths tremendous growth, the structure of the revenue-
coectng organzaton has remaned substantay unchanged. The
present fed structure of the ureau of Interna Revenue s com-
prsed of more than 200 fed offces whch report drecty to Wash-
ngton. Those 200 offces carry out ther functons through more
than 2,000 suboffces and posts of duty throughout the country. The
Washngton offce now provdes operatng supervson, gudance, and
contro over the prncpa fed offces through 10 separate dvsons,
thus further addng to the compe tes of admnstraton.
Snce the end of Word War II, many procedura mprovements
have been made n the ureaurs operatons. The use or automatc
machnes has been greaty ncreased. The handng of cases has been
smpfed. One ma|or advance s represented by the recenty com-
peted arrangements to e pedte crmna prosecutons n ta -fraud
cases. In these cases, fed representatves of the ureau of Interna
Revenue w make recommendatons for crmna prosecutons drecty
to the Department of ustce. These procedura changes have
ncreased the ureau s effcency and have made t possbe for the
ureau to carry ts enormousy ncreased workoad. owever,
mprovements n procedure cannot meet the need for organzatona
changes.
Part of the authorty necessary to make a comprehensve reorgan-
zaton was provded n Reorganzaton Pan No. 26 of 19 0, whch was
one of severa unform pans gvng department heads fuer authorty
over nterna organzatons throughout ther departments. The
studes of the Secretary of the Treasury have cumnated snce that
tme n a pan for e tensve reorganzaton and modernzaton of the
ureau. owever, hs e stng authorty s not broad enough to
permt hm to effectuate a of the basc features of the pan he has
deveoped.
The prncpa barrer to effectve organzaton and admnstraton
of the ureau of Interna Revenue whch pan No. 1 removes s the
archac statutory offce of coector of nterna revenue. Snce the
coectors are not apponted and cannot be removed by the Comms-
soner of Interna Revenue or the Secretary of the Treasury and snce
the coectors must accommodate themseves to oca potca stua-
tons, they are not fuy responsve to the contro of ther superors n
the Treasury Department. Resdence requrements prevent movng
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
229
Msc.
a coector from one coecton dstrct to another, ether to promote
mpartaty and farness or to advance coectors to more mportant
postons. Uncertantes of tenure add to the dffcuty of attractng
to such offces persons who are we versed n the ntrcaces of the
revenue aws and possessed of broad-gaged admnstratve abty.
It s approprate and desrabe that ma|or potca offces n the
e ecutve branch of the Government be fed by persons who are
apponted by the Presdent by and wth the advce and consent of the
Senate. On the other hand, the technca nature of much of the Gov-
ernment s work today makes t equay approprate and desrabe that
postons of other types be n the professona career servce. The
admnstraton of our nterna-revenue aws at the oca eve cas for
postons n the atter category.
Instead of the present organzaton but around the offces of
potcay apponted coectors of nterna revenue, pan No. 1 w
make t possbe for the Secretary of the Treasury to estabsh not
to e ceed 2 dstrct offces. ach of these offces w be headed by a
dstrct commssoner who w be responsbe to the Commssoner
of Interna Revenue and w have fu responsbty for admnster-
ng a nterna-revenue actvtes wthn a desgnated area. In add-
ton, a essenta coecton, enforcement, and appeate functons can
be provded for n each oca area and under one roof so far as s pract-
cabe. It s not proposed to dscontnue any essenta factes whch
now e st n any oca areas. Rather, the factes w be e tended
and the servce to ta payers mproved. These new arrangements
shoud make t possbe for the ndvdua ta payer to conduct hs
busness wth the ureau much more convenenty and e pedtousy.
In addton to makng possbe greaty mproved servce to the
ta payer, the estabshment of the dstrct offces w provde oppor-
tunty n the fed servce of the ureau of Interna Revenue for the
deveopment of hgh-caber admnstrators wth e perence n a
phases of revenue admnstraton. These offces w be the backbone
of a modern, streamned pattern of organzaton and operatons wth
cear and drect channes of responsbty and supervson from the
owest fed offce to the Commssoner, and through hm to the
Secretary of the Treasury. The creaton of ths new framework of
dstrct offces s a necessary step n carryng out the over-a reorgan-
zaton of the ureau.
Pan No. 1 aso makes t possbe to provde a new framework of
supervsory offces n the headquarters of the ureau of Interna
Revenue. Under pan No. 1, the offces of Deputy Commssoner,
Speca Deputy Commssoner, and ssstant Commssoner are abo-
shed. Three ssstant Commssoners, a n the cassfed cv
servce, are authorzed, and w be avaabe, to perform such functons
as may be assgned to them. The ntenton of the Secretary of the
Treasury under the comprehensve reorganzaton s to utze one
ssstant Commssoner to assst the Commssoner of Interna Rev-
enue n supervsng the operatons of the dstrct offces, another
ssstant Commssoner to ad n the preparaton of technca rungs
and decsons, and the thrd ssstant Commssoner to supervse for
the Commssoner the nspecton actvtes of the ureau.
Two addtona advantages w be obtaned when the reorganzaton
around ths new framework s competed.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
230
Frst, the strong nspecton servce whch the Secretary s estab-
shng w keep the work of the ureau under cose and contnuous
observaton. Workng under the drect contro of the Commssoner
of Interna Revenue, t w be responsbe for prompty detectng
and nvestgatng any rreguartes.
Second, the new pattern of organzaton w strengthen and carfy
nes of responsbty throughout the ureau, thus smpfyng and
makng more effectve and unform the management contro of the
organzaton. Ths s essenta n any effort to provde our prncpa
revenue coecton agency the best possbe admnstraton.
In order to emnate Presdenta appontment and senatora
confrmaton wth respect to the ssstant Genera Counse for the
ureau of Interna Revenue, and n order to provde a method of
appontment comparabe to that obtanng n the case of other assst-
ant genera counse of the Department of the Treasury, pan No. 1
aboshes that offce and provdes n eu thereof a new offce of ssst-
ant Genera Counse wth appontment under the cassfed cv
servce.
The success of the reorganzaton of the ureau of Interna Revenue
w to a consderabe e tent depend upon the abty to attract the
best quafed persons to the key postons throughout the ureau.
In order to do so, t s necessary to make provson for more adequate
saares for such key postons. Pan No. 1 estabshes n the ureau
of Interna Revenue a ma mum of 70 offces wth ttes determned
by the Secretary of the Treasury. Those offces are n addton to
the offces wth specfc ttes aso provded for n pan No. 1 and to
any postons estabshed under other authorty vested n the Depart-
ment of the Treasury. The compensaton of these offcas w be
f ed under the Cassfcaton ct of 19 9, as amended, but wthout
regard to the numerca mtatons on postons set forth n secton
0 of that act. Ths provson w enabe the Charman of the Cv
Servce Commsson, or the Presdent, as the case may be, to f .rates
of pay for those offces n e cess of the rates estabshed n the Cass-
fcaton ct of 19 9 for grade GS-1 whenever the standards of the
cassfcaton aws so permt.
organzatona changes under pan No. 1 w be put nto effect
as soon as t s possbe to do so wthout dsruptng the contnued
coecton of revenue. Pan No. 1 w n any event be effectve n ts
entrety no ater than December 1, 19 2.
The takng effect of the reorganzatons provded for n Reorgan-
zaton Pan No. 1 of 19 2 w make possbe many benefts n mproved
organzaton and operatons whch may be e pected to produce sub-
stanta savngs n future years. Those savngs shoud not be e pected
to be refected n an mmedate reducton n e pendture by the ureau
of Interna Revenue but n an mproved servce to the pubc and a
more effcent coecton of revenue.
It shoud be emphaszed that aboton by pan No. 1 of the offces
of coectors and others w n no way pre|udce any rght or potenta
rght of any ta payer. The aboton of offces by pan No. 1 w not
abosh any rghts, prveges, powers, dutes, mmuntes, abtes,
obgatons, or other attrbutes of those offces e cept as they reate
to matters of appontment, tenure, and compensaton nconsstent
wth pan No. 1. Under the Reorganzaton ct of 19 9, a of these
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
231
Msc.
attrbutes of offce w attach to the offce to whch the functons of
the aboshed offce are deegated by the Secretary of the Treasury.
fter nvestgaton, I have found and hereby decare that each
reorganzaton ncuded n Reorganzaton Pan No. 1 of 19 2 s
necessary to accompsh one or more of the purposes set forth n
secton 2(a) of the Reorganzaton ct of 19-19.
I have found and hereby decare that t s necessary to ncude n
the accompanyng Reorganzaton Pan No. 1, by reason of reorgan-
zatons made thereby, provsons for the appontment and compen-
saton of the offcers specfed theren. The rates of compensaton
f ed for these offcers are not n e cess of those whch I have found
to preva n respect of comparabe offcers n the e ecutve branch.
I cannot emphasze too strongy the mportance whch shoud be
attached to the reorganzaton pan that I am now transmttng to
the Congress. The far and effcent admnstraton of the Federa
nterna-revenue aws s of vta concern to every ctzen. of us
have a rght to nsst that the ureau of Interna Revenue be provded
wth the fnest organzaton that can be devsed. of us are en-
tted to have that organzaton manned by personne who get ther
|obs and keep them soey because of ther own ntegrty and compe-
tence. Ths reorganzaton pan w be a ma|or step n achevng
those ob|ectves.
arry S. Truman.
The Whte ouse,
anuary 1 , 10 2.
Reorganzaton Pan No. 1 of 10 2
Prepared by the Presdent and transmtted to the Senate and the
ouse of Representatves n Congress assembed, anuary 1 , 10 2,
pursuant to the provsons of the Reorganzaton ct of 19 9,
approved une 20, 19 0.
L U OF INTFRN L R NU
Secton 1. boton of e stng offces. There are aboshed the
offces of ssstant Commssoner, Speca Deputy Commssoner,
Deputy Commssoner, ssstant Genera Counse for the ureau
of Interna Revenue, Coector, and Deputy Coector, provded for
n sectons 390 , 3910, 391 , 3931, 39 1, and 3990, respectvey, of the
Interna Revenue Code. The provsons of the foregong sentence
sha become effectve wth respect to each offce aboshed thereby
at such tme as the Secretary of the Treasury sha specfy, but n
no event ater than December 1,19 2. The Secretary of the Treasury
sha make such provsons as he sha deem necessary respectng
the wndng up of the affars of any offcer whose offce s aboshed
by the provsons of ths secton.
Sec. 2. stabshment of nec offces. (a) New offces are hereby
estabshed n the ureau of Interna Re enue as foows: (1) three
offces each of whch sha have the tte of ssstant Commssoner
of Interna Revenue ; (2) so many offces, not n e cess of twenty-
fve e stng at any one tme, as the Secretary of the Treasury sha
from tme to tme determne, each of whch sha have the tte of
dstrct commssoner of nterna revenue ; and (3) so many other
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
232
offces, not n e cess of seventy e stng at any one tme, and wth
such tte or ttes, as the Secretary of the Treasury sha from tme
to tme determne.
(b) There s hereby estabshed n the Department of the Treas-
ury a new and addtona offce whch sha have the tte ssstant
Genera Counse .
Sec. 3. ppontment and compensaton. ach ssstant Comms-
soner and dstrct commssoner, the ssstant Genera Counse, and
each other offcer provded for n secton 2 of ths reorganzaton pan
sha be apponted by the Secretary of the Treasury under the cass-
fed cv servce and sha receve compensaton whch sha be f ed
from tme to tme pursuant to the cassfcaton aws, as now or
hereafter amended, e cept that the compensaton may be f ed wthout
regard to the numerca mtatons on postons set forth n secton
0 of the Cassfcaton ct of 19 9, as amended ( U. S. C. 110 ).
Sec. . Transfer of functons. There are transferred to the Secre-
tary of the Treasury the functons, f any, that have been vested by
statute n offcers, agences, or empoyees of the ureau of Interna
Revenue of the Department of the Treasury snce the effectve date
of Reorganzaton Pan Numbered 26 of 19 0 (1 F. R, 93 ).
S CTION 36 7. P YM NT Y UNIT D ST T S NOT S
ND C RTIFIC T S OF IND T DN SS
19 2-1-137 0
T. D. 7
TITL 26 INT RN L NU . C PT R I, SU C PT R , P RT 71.
CC PT NC OF TR SURY NOT S IN P YM NT OF INCOM , ST T , ND
GIFT T S
Reguatons governng the acceptance of Treasury notes of Ta
Seres -19 3, -19 3, -19 , -19 , -19 , Treasury notes of
Ta Seres C, and Treasury savngs notes, Seres , Seres C, and
Seres D, n payment of ncome (ncudng e cess profts), estate,
and gft ta es.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
Secton 71.1. cceptance of Treasury Notes of Ta Seres
-19 3, -19 3, -19 , -19 , -19 , Treasury Notes of Ta
Seres C, and Treasury Savngs Notes, Seres , Seres C, and
Seres D, n Payment of Income (Incudng cess Profts),
state, and Gft Ta es. Notes of the Unted States desgnated as
Treasury notes of Ta Seres -19 3, -19 3, -19 , -19 , -19 ,
Treasury notes of Ta Seres C, and Treasury savngs notes, Seres
, Seres C, and Seres D, may be accepted n payment of ncome
ta es (current and back persona and corporaton ta es, and e cess
profts ta es) and estate and gft ta es (current and back), at par
and nterest accrued, e cept n the case of Treasury savngs notes,
Seres , to the month, ncusve, n whch presented (but no accrua
beyond the maturty date). In the case of Treasury savngs notes,
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
233
Mso,
Seres , nterest w be accrued to the day when the ta es are due,
f such day fas on the 1 th day of a caendar month, whether the
notes are receved on or before that day; f the ta es are due on any
other day of the month than the 1 th, accrued nterest w be credted
to the accrua date ne t precedng the day when the ta es are due.
Coectors of nterna revenue are authorzed and drected to accept
such notes, e cept n the case of Treasury savngs notes, Seres ,
durng and after the second caendar month after the month of pur-
chase (as shown by the ssung agent s datng stamp on each note).
In the case of Treasury savngs notes, Seres , coectors of nferna
revenue are authorzed and drected to accept the notes at any tme
sfter 2 months from the ssue date. For e ampe, a note of Ta Seres
-19 purchased n September 19 2 may be accepted n November
19 2 but such a note purchased n October 19 2 may not be accepted
unt December 19 2. note of Treasury savngs notes, Seres ,
dated anuary 1 ,19 2, may be presented for credt aganst ta es due
March 1 , 19 2, but a note dated February 1 , 19 2, may not be ac-
cepted for credt aganst ta es due pror to pr 1 , 19 2.
Such notes may be accepted ony n payment of ncome (ncudng
e cess profts), estate, and gft ta es (current and back) due from
the orgna purchaser thereof or hs estate. Such notes sha be n
the name of the ta payer (ndvdua, corporaton, or other entty)
and may be presented for ta payment by ony the ta payer, hs
agent, or hs estate. There s no mt upon the amount of such notes
whch may be accepted n payment of ncome (ncudng e cess pro-
fts) , estate, or gft ta es.
Such notes, nscrbed n the name of a ta payer, may be accepted
n payment of ncome ta wthhed at the source by such ta payer,
and such notes nscrbed n the name of a ta payer may be accepted
n payment of transferee abty assessed aganst such ta payer for
ncome (ncudng e cess profts), estate, or gft ta es.
Coectors of nterna revenue sha not n any case aow credt
to a ta payer on account of such notes, or accept such notes for an
amount greater than ther prncpa amount pus accrued nterest,
nor sha such notes be accepted n an amount (ncudng accrued
nterest) greater than the unpad abty of the ta payer. Such
notes sha be forwarded to the coector of nterna revenue wth whom
the ta return s fed, at the rsk and e pense of the ta payer, and,
for the ta payer s protecton, shoud be forwarded by regstered
ma, f not presented n person.
Sec. 71. 2. Procedure Wth Respect to Treasury Notes of Ta
Seres -19 3, -19 3, -19 , -19 , -19 , Treasury Notes op
Ta Seres C, and Treasury Savngs Notes, Seres , Seres C, and
Seres D. Deposts of Treasury notes of Ta Seres -19 3, -19 3,
-19 , -19 , -19 , Treasury notes of Ta Seres C, and Treasury
savngs notes, Seres , Seres C, and Seres D, receved n payment
of ta es sha be made by the coector of nterna revenue n a Fed-
era reserve bank or a branch Federa reserve bank. Pror to depost
the coector of nterna revenue w certfy on the reverse sde of
the notes that they were receved n payment of ncome (ncudng
e cess profts), estate, or gft ta , as the case may be, and w show
n the endorsement stamp the date of depost.
2101 2 62 16
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
23
Snc. 71.3. Pror Treasury Decson Superseded. Treasury
Decson 6 6 C. . 19 9-1, 1 9 , approved anuary 31, 19 9 26
CFR, 19 0 Supp., part 71 s hereby, superseded.
ecause ths Treasury Decson merey revses e stng reguatons
governng the acceptance of Treasury notes and Treasury savngs
notes n payment of ncome (ncudng e cess profts), estate, and gft
ta es so as to make such reguatons appcabe aso to Treasury
savngs notes, Seres . t s found that t s unnecessary to ssue ths
Treasury Decson wth notce and pubc procedure thereon under
secton (a) of the dmnstratve Procedure ct, approved une
11, 19 6, or sub|ect to the effectve date mtaton of secton (c)
of sad ct.
(Ths Treasury Decson s ssued under the authorty of sectons
36 7 and 3791 of the Interna Revenue Code ( 3 Stat. 7, 67 ; 26
U.S.C. 36 7,3791).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved December 11, 19 1.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster December 13, 10 1, : 0 a. m.)
DISCLOSUR OF OFFICI L INFORM TION
19 2-1-137 1
Mm. 6727
Dscosure of offca nformaton
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C, December 7,19 1.
Coectors of Interna Revenue, Interna Revenue gents n Charge,
and Others Concerned:
1. Tte 26, Code of Federa Reguatons, Part 600 (orgnay pub-
shed over the sgnature of the ctng Secretary of the Treasury as
F. R. Doc. 6-1 3 7 appearng at page 177 -22, part II, secton 1 of
the ssue of the Federa Regster of September 11,19 6), and artce 0
of Reguatons 12, as amended, reate to the dscosure of offca nfor-
maton of the ureau of Interna Revenue. In the future ths mmeo-
graph, or the reguatons quoted heren, shoud be cted rather than
Department Crcuar 91 (C. . 193 -2, 9 ) wth respect to the ds-
cosure of such nformaton. Tte 26, -Code of Federa Reguatons,
reads n part as foows:
Subchapter F Records and Procedure
P RT COO R CORDS
Secton 600.1. Cassfcaton. Matters of offca record n the ureau of
Interna Revenue Incude:
(a) Documents submtted by members of the pubc pursuant to the nterna
revenue aws or reguatons, such as ta returns, nformaton returns, statements
requred by statute or reguaton, cams for credt, refund, or abatement, offers
In compromse, bends, appcatons for regstraton, and wavers of statutes of
mtaton.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
23
MIm
(b) Fna opnons and orders under the nterna revenue aws and reguatons
n ta matters, such as assessment sts, certfcates of orerassessment, and statu-
tory defcency etters, and documents evdencng determnatons of such matters
as cams for abatement, credt, or refund, offers n compromse, appcatons for
e cess profts ta reef, regstraton appcatons, cosng agreements, and ds-
trants and sezures. (R. S. 161; U. S. 0. 22) 11 F. R. 177 -22,1 261; redesg-
nated at 13 F. R. 7710
Sec. 600.2. Pubcaton and Pubc Inspecton. (a) Genera. Sectons ,
2 6, 2 7, 2 9 , 327 , and 0 7 of the Interna Revenue Code contan broad pro-
hbtve and pena provsons aganst the dscosure of certan nformaton de-
scrbed theren obtaned by the ureau of Interna Revenue from members of the
pubc In the performance of ts functons. The above provsons necesstate
severe mtatons by the ureau of Interna Revenue upon pubcaton and pubc
nspecton of ts offca records, ncudng fna opnons or orders n partcuar
cases. The e tent to whch pubc dscosure may be made of matters of offca
record to persons propery and drecty concerned s set forth n ths secton.
(1) Inspecton of ta returns. The nspecton of returns s governed by the
provsons of the nterna revenue aws and rues promugated by the Presdent
or by the Secretary of the Treasury pursuant to such provsons. See Treasury
Decson 73, approved by the Presdent November 12,193 , as amended; Treas-
ury Decson 7 , approved by the Secretary anuary ,1939; Treasury Decson
929, approved by the Presdent ugust 2 ,1939, as amended; Treasury Decson
13 , approved by the Presdent pr 20, 19 2 (subpart of part of ths
chapter) ; Treasury Decson 9 , approved by the Secretary September 20, 1939
(subpart of part of ths chapter).
(2) Pubc sts of persons makng ncome ta returns. Lsts of persons
makng ncome ta returns n each year are avaabe to pubc nspecton n
the offces of coectors of nterna revenue. See secton (e) of the Code.
(3) Pubc sts of persons payng occupatona ta es. Lsts of persons payng
occupatona ta es under chapter 27 of the Code are avaabe for pubc nspec-
ton n the offces of coectors of nterna revenue pursuant to the provsons
and mtatons of secton 327 of the Code. See Reguatons 20 cted n sec.
601.66(c) and reguatons cted n sec. 601.93 of ths chapter.
( ) Record of sezure and sae of rea estate. Record 21 Record of sezure
and sae of rea estate s open for pubc nspecton n offces of coectors of
nterna revenue and copes are furnshed on appcaton. See Treasury Decson
2 , 10 F. R. 622.
( ) State quor cases. If the nterests of the Unted States w not be
eopardzed thereby, and f nformaton w not be dvuged contrary to secton
0 7(a) (1), Interna Revenue Code, dstrct supervsors of the coho Ta Unt
may upon recept of subpoenas or requests of State authortes, and at the
e pense of the State, authorze nvestgators and other empoyees under ther
supervson to attend tras and admnstratve hearngs n quor cases n whch
the State s a party, produce records and testfy as to facts comng to ther
knowedge n ther offca capactes.
(6) Pubc sts of empoyers makng returns under the Federa Unempoyment
Ta ct. Lsts of empoyers of eght or more makng annua returns on Form
9 0 under the Federa Unempoyment Ta ct (subchapter C of chapter 9 of
the Code) are avaabe for pubc Inspecton n the offces of coectors of nterna
revenue. See sectons (e) and 160 (c) of the Code.
(7) Informaton returns of certan ta -e empt organzatons and certan
trusts. Informaton returns fed pursuant to secton 1 3 of the Code by cer-
tan ta -e empt organzatons (Form 990- ) and by trusts camng chartabe
or other deductons under secton 162(a) (Form 10 1- ) are avaabe for
pubc nspecton n the offces of coectors of nterna revenue n whch they
are fed. See Reguatons 111, secton 29.1 3- 26 CFR 29.1 3-3 .
(b) Fna opnons and orders. In conformty wth the pocy of the pro-
vsons of aw referred to n paragraph (a) of ths secton, fna opnons and
orders n the ad|udcaton of cases arsng under the nterna revenue aws are,
wth mted e ceptons, treated by the ureau as confdenta and are not
pubshed nor made avaabe for pubc nspecton. The e ceptons are:
(1) cess profts ta reef; pubcaton of aowances. Pursuant to the
provsons of secton 722(g) of the Code, there s pubshed from tme to tme
n the Federa Regster the nformaton specfed n such secton reatve to
e cess profts ta reef aowed partcuar ta payers.
(2) Pubcaton of decsons. Rungs and decsons on matters arsng under
the Interna revenue aws whch because they announce a rung or decson
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
236
upon a nove queston or upon a queston In regard to whch there e sts no
prevousy pubshed rung or decson, or for other reasons, are of such mpor-
tance to be of genera nterest, or whch revoke, amend or affect n any manner
a pubshed rung or decson are, after rephrasng to emnate any confdenta
nformaton reatng to a partcuar case, ncudng dentty of persons, regu-
ary pubshed n the Interna Revenue uetn. No unpubshed rung or
decson w be cted or reed upon by any offcer or empoyee of the ureau
of Interna Revenue as a precedent n the dsposton of other cases.
(c) Rues. rues reatng to the functons of the ureau of Interna Revenue
other than those deang soey wth nterna management w, to the e tent
consstent wth the mtatons contaned n the provsons of aw referred to n
paragraph (a) of ths secton, be made avaabe to pubc nspecton. s to rues
generay and ther pubcaton, see sec. 601.13 of ths chapter.
(d) Requests. Requests for Informaton n connecton wth matters of offca
record n whch the procedure for nspecton s not set out n rues referred to n
subparagraphs above shoud be submtted to the Commssoner of Interna
Revenue, Washngton 2 , D. C. The request shoud ceary state the nformaton
desred and must set forth the nterest of the appcant n the sub|ect matter and
purpose for whch the nformaton s desred. If the appcant s an agent or
attorney actng for another he w attach to the appcaton evdence of hs
authorty to act for hs prncpa. If such evdence s satsfactory such agent or
attorney w be gven access to any record to whch hs prncpa woud be gven
access. The determnaton as to whether the Informaton requested Is avaabe
for dscosure n any partcuar case w be made by the Commssoner of Interna
Revenue or such other offcer authorzed under the provsons of aw referred to
n paragraph (a) of ths secton.
Whenever t s determned that a matter of offca record s avaabe for ds-
cosure n a partcuar case, a copy of sad offca record w be furnshed the
party requestng the same or the offcer passng upon the request may n hs
dscreton aow a persona nspecton of the offca record n queston at the
pace where the document s normay kept. reasonabe fee may In the dscreton
of the determnng offcer be charged for furnshng copes of offca records.
(R. S. 161; U. S. C. 22) 11 F. R. 177 -22, 2o, as amended at 12 F. R. 3220,
13 F. R 122, redesgnated at 13 F. R. 7710
2. rtce 0 of Reguatons 12. as amended by Treasury Decson
6 0, C. . -1, 9 (1936), and Treasury Decson 2 , C. . 19 ,
62 (whch artce may be cted where ony the furnshng of testmony
s nvoved), reads as foows:
rt. 0. Contents Not To e Ptsctosed Wthout Permsson. records n
the offces or n charge of offcers of nterna revenue, responsbe or subordnate,
are In ther custody and contro for governmenta purposes ony. They have no
contro and no dscreton wth regard to the use of them for any other purpose:
Provded, That Record 21, Record of sezure and sae of rea estate, mantaned
n offces of coectors of nterna revenue, sha be open for pubc nspecton n
such offces, and a certfed or uncertfed copy of any such record coverng
partcuar property w be furnshed by the coector upon appcaton to hm
and payment of a fee of 1.
cept as otherwse provded n the precedng paragraph nterna revenue
offcers are hereby prohbted from gvng out any records, or any copes thereof,
to prvate persons or to oca offcers, or to produce such records or copes thereof
n a State court, whether n answer to subpoena duces tecum or otherwse, or to
testfy to facts comng to ther knowedge n ther offca capactes wthout
e press authorty from the Commssoner .
Whenever subpoenas sha have been served upon them they w, uness other-
wse e pressy drected, appear n court n answer thereto and respectfuy
decne to produce the records or gve the testmony caed for, on the ground of
beng prohbted therefrom by the reguatons of the Treasury Department.
Offcers dsobeyng these nstructons w be dsmssed from the servce and may
ncur crmna abty. See secton 3167, Revsed Statutes now codfed as 1
U. S. C. sec. 190 and 26 U. S. C. sees. (f) and 0 7 (a) .
mong the cases whch artce 0 states may be cted n support of the
nstructons contaned theren s oske v. Comngore, 177 U. S. 9.
ohn . Dunap,
Commssoner.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
237
Msc.
COLL CTORS, D PUTY COLL CTORS, TC.
19 2-12-13 37
T. D. 900
TITL 26 INT RN L R NU . C PT R I, SU C PT R , P RT 76.
R F R NC S TO C RT IN OFFIC RS IN R GUL TIONS. R TURNS. TC., CON-
FORM D TO NOM NCL TUR PRO ID D Y TR SURY D P RTM NT ORD RS
Coectors, deputy coectors, etc.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Offcers and mpoyees of the Interna Revenue Servce and
Others Concerned:
In rues and reguatons appcabe to the ureau of Interna
Revenue and n returns, notces, mmeographs, nstructons, crcuars,
or any other forms or pubcatons of whatever nature prescrbed,
furnshed, or used n or by the ureau of Interna Revenue,
(a) reference to a coector of nterna revenue sha be deemed
to refer to a drector of nterna revenue,
( ) reference to a deputy coector sha be deemed to refer
to an nterna revenue agent, and
(c) reference to a dstrct supervsor sha be deemed to refer
to an ssstant Dstrct Commssoner, coho and Tobacco Ta ,
nsofar as these references pertan to a coector, deputy coector, or
dstrct supervsor n a terrtory embraced wthn the |ursdcton of
any offce of a dstrct commssoner estabshed from tme to tme
pursuant to Reorganzaton Pan No. 1 of 19 2 page 227, ths u-
etn (17F.R.22 3.)
ecause the soe purpose of ths Treasury Decson s to conform
the documents specfed heren to Treasury Department orders to be
ssued pursuant to Reorganzaton Pan No. 1 of 19 2 (17 F. R,
2213), upon the effectve dates of such orders, t s hereby found that
t s unnecessary to ssue ths Treasury Decson wth notce and pubc
procedure under secton (a) of the dmnstratve Procedure ct,
approved une 11, 19 6, or sub|ect to the effectve date mtatons
of secton (c) of sad ct.
Ths Treasury Decson sha be effectve upon ts fng for pubca-
ton n the Federa Regster.
(Ths Treasury Decson s ssued under authorty of secton 3791,
Interna Revenue Code ( 3 Stat. 67; 26 U. S. C. 3791) and Re-
organzaton Pan No. 1 of 19 2 (17 F. R. 22 3).)
ohn . Donap,
Commssoner of Interna Revenue.
pproved May 13, 19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster May 1 , 19 2, 9 : 7 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
23
COLL CTORS, D PUTY COLL CTORS, DISTRICT SUP R ISORS
19 2-12-13 3
T. D. 901
TITL 27 INT RN L R NU . C PT R I, R F R NC S TO C RT IN OFFI-
C RS IN R GUL TIONS, R TURNS, TC., CONFORM D TO NOM NCL TUR
PRO ID D Y TR SURY D P RTM NT ORD RS
Coectors, deputy coectors, dstrct supervsors
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. G.
To Offcers and mpoyees of the Interna Revenue Servce and
Others Concerned:
In rues and reguatons appcabe to the ureau of Interna Reve-
nue and n returns, notces, mmeographs, nstructons, crcuars, or
any other forms or pubcatons of whatever nature prescrbed, fur-
nshed, or used n or by the ureau of Interna Revenue, to whch
Treasury Decson 900 page 237, ths uetn , approved May 13,
19 2, s not appcabe,
(a) reference to a coector of nterna revenue sha be deemed
to refer to a drector of nterna revenue,
(6) reference to a deputy coector sha be deemed to refer
to an nterna revenue agent, and
(c) nference to a dstrct supervsor sha be deemed to refer
to an ssstant Dstrct Commssoner, coho and Tobacco Ta .
nsofar as these references pertan to a coector deputy coector, or
dstrct supervsor n a terrtory embraced wthn the |ursdcton of
any offce of a dstrct commssoner estabshed from tme to tme
mrsuant to Reorganzaton Pan No. 1 of 19 2 page 227, ths u-
etn (17F.R.22 3.)
ecause the soe purpose of ths Treasury Decson s to conform
the documents specfed heren to Treasury Department orders to be
ssued pursuant to Reorganzaton Pan No. 1 of 19 2 (17 F. R. 22 3 ,
upon the effectve dates of such orders, t s hereby found that t s
unnecessary to ssue ths Treasury Decson wth notce and pubc
procedure under secton (a) of the dmnstratve Procedure ct,
approved une 11, 19 6, or sub|ect to the effectve date mtatons
of secton (c) of sad ct.
Ths Treasury Decson sha be effectve upon ts fng for pubca-
ton n the Federa Regster.
(Ths Treasury Decson s ssued under authorty of secton 3791,
Interna Revenue Code ( 3 Stat. 67: 26 U. S. C. 3791) and Reorgan-
zaton Pan No. 1 of 19 2 (17 F. R. 22 3).)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved May 1 , 19 2.
. . Foey,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster May 19, 19 2, : a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
239 Regs. 3, 1 2.9 , etc.
INDUSTRI L LCO OL
INT RN L R NU COD
Reguatons 3, Sectons 1 2.9 , tc. 19 2-6-137 3
T. D.
TITL 26 INT RN L ND . C PT R I, SU C PT R C, P ST 1 2.
INDUSTRI L LCO OL
Transfers by ppene of specay denatured acoho to premses
of bonded deaers.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. G.
To Dstrct Supervsors and Others Concerned:
L Reguatons 3, Industra coho (26 CFR, part 1 2), ap-
proved March 6,19 2, are hereby amended as foows:
qupment
denaturng pants
Sec. 1 2.9 . Ppenes. Ppenes for the conveyance of acoho to and from
acoho storage tanks, from such tanks to weghng or m ng tanks, and from
m ng tanks to denatured acoho storage tanks, f provded, and ppenes
for the conveyance of qud denaturants and denatured acoho, sha be of
a f ed and permanent character, constructed, secured, and e posed to vew
throughout ther entre engths, n conformty wth the provsons of secton
1 2. 2. Ppenes for the conveyance of specay denatured acoho to con-
tguous premses operated by the propretor of the denaturng pant, pursuant
to wthdrawa permt, Form 1 77 or Form 1 , and ppenes for the transfer
of competey denatured acoho to contguous premses operated by the propre-
tor of the denaturng pant, sha be securey constructed and connected, and so
arranged as to be e posed to vew throughout ther entre engths: Provded,
That such ppenes sha be equpped wth a vave wthn the denaturng pant,
n order that the same may be ocked wth a Government ock, when denatured
acoho s not beng removed.

( 3 Stat. 31 , 3 , 3C , 373 as amended, 37 ; 26 U. S. C. 2 29, 310 , 312 , 3170,
3176.)
SP CI LLY D N TUR D LCO OL OND D D L RS PR MIS S
Sec. 1 2.102. Tanks. If the propretor desres to receve specay denatured
acoho n tank cars, tank trucks, or by ppene from a denaturng pant on
contguous premses operated by hm, he must provde sutabe storage tanks for
the storage of the specay denatured acoho so receved by hm. ach
such tank must be constructed n the manner prescrbed n secton 1 2.99, and
a openngs affordng access to the contents sha be equpped for ockng.
ach such tank must have pany and egby panted thereon the words
Specay denatured acoho storage tank, foowed by ts sera number
and capacty 1c wne gaons, and be equpped wth a sutabe measurng devce,
whereby the actua contents w be correcty ndcated. ( 3 Stat. 31 , 3 , 36 ,
373 as amended, 37 ; 26 U. S. C. 2 29,310 , 312 , 3170, 3176.)
Operaton of Industra coho Denaturng Pants
approved contaners

Sec. 1 2.730. Ppenes. (a) Specay denatured acoho. Ppenes con-
structed n conformty wth the provsons of secton 1 2.9 w be consdered
as approved contaners ony for the purpose of transferrng specay denatured
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 3, 1 2.93, etc.
2 0
acoho from the denaturng pant to contguous bonded deaer premses or
manufacturng premses operated by the propretor of the denaturng pant
and covered by basc permt, Form 1 76 or Form 1 1, as the case may be.
Specay denctured acoho may not be thus transferred unt recept of appro-
prate wthdrawa permt, Form 1 77 or Form 1 . Specay denatured acoho
thus transferred sha be weghed or measured by voume n a tank equpped
wth sutabe scaes or a measurng devce on the denaturng pant premses.
The specay denatured acoho w be weghed or measured and removed from
the denaturng pant premses under the mmedate supervson of the store-
keeper-gauger. The vave n the ppene sha be cosed and ocked wth a
Government ock at a tmes when t s not n use.
(6) Competey denatured acoho. Competey denatured acoho may be
smary transferred by ppene, constructed n conformty wth secton 1 2. ) ,
to contguous premses operated by the propretor of the denaturng pant n the
same manner as specay denatured acoho, n accordance wth the provsons
of paragraph (a) of ths secton, wth the e cepton that a wthdrawa permt
s not requred. Competey denatured acoho may uso be removed by ppene
for storage n tanks or other approved contaners marked Competey denatured
acoho Storage on ad|acent premses owned or controed by the propretor of
the denaturng pant, but when packaged t w be sub|ect to the provsons of
ths part, the same as when packaged on denaturng pant premses, e cept that
the regstry number of the denaturng pant w not be marked on the packages.
( 3 Stat. 307, 3 , 3 , 3 9, 3G0, 36 , 373 as amended, 37 ; 26 U. S. C. 2 0S,
3070, 310 , 310 , 3109, 311 , 312 , 3170, 3176.)
WIT DR W L OF SP CI LLY D N TUR D LCO OL
Sec 1 2.7 . Genera. Specay denatured acoho may be procured under
approprate permt by manufacturers usng specay denatured acoho, deaers
n specay denatured acoho, and the Unted States or any governmenta agency
thereof. Prospectve permttees or manufacturers may procure sampes of
specay denatured acoho, as provded n secton 1 2. 20. Specay denatured
acoho must be removed from denaturng pants n approved contaners, Incudng
tank cars and tank trucks provded the consgnee s premses are equpped wth
sutabe storage tanks. Specay denatured acoho may aso be removed by
ppene to contguous bonded deaer premses or manufacturng premses oper-
ated by the propretor of the denaturng pant and covered by basc permt, Form
1 76 or Form 1 1, n accordance wth the provsons of secton 1 2.730(a), f
the recevng premses are equpped Trth sutabe storage tanks. The e act
contents of each package must be determned and the package marked n
accordance wth the reguatons n ths part. Specay denatured acoho
removed from denaturng pants (other than by ppene) must be transported n
accordance wth secton 1 2.677. The denaturer sha present the permt, Form
1 77, 1 , I 6, or 1 12, authorzng shpment, to the storekeeper-gauger pror
to wthdrawa. Wthdrawa of specay denatured acoho by bonded deaers
and users w be made n accordance wth secton 1S2.7 (6) or 1 2.7 (c), as
the case may be. Wthdrawas of specay denatured acoho by the Unted
States or governmenta agency w be made n accordance wth sectons 1 2.7 d
and 1 2.7 . ( 3 Stat. 3 , 3 , 3 9, 360. 36 , 373 as amended, 37 ; 26 D. S. C.
3070, 310 , 310 , 3109, 311 , 312 , 3170, 3176.)
recept of specay denatured acoho
Operatons by Deaers n Specay Denatured coho

Sec. 1S2.S11. Raroad Tank Cars, Tank Trucks, or Ppenes. If the bonded
deaer receves specay denatured acoho n raroad Lnk cars, raroad sdng
factes for the recept of such tank cars must be provded at the bonded deaer s
premses. Specay denatured acoho receved n tank cars, tank trucks, or by
ppene must be mmedatey deposted n storage tanks constructed n conformty
wth the provsons of secton 1 2.102. When so deposted, the formua of the
specay denatured acoho sha be pany marked on the storage tank. Form
1 73 w be dsposed of n accordance wth secton 1 2. 11a. ( 3 Stat. 3 , 3 ,
36 , 373 as ame.ded, 37 ; 26 U. S. C 3070, 310 ; 312 , 3170, 3176.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 1 Regs. 3, 1 2.9 , etc
Operatons by Usees of Specay Denatured coho
recept of denatured acoho

Sec. 1 2. 3 . Raroad Tank Cars, Tank Trucks, or Ppenes. If tbe per-
mttee receves specay denatured acoho In raroad tank cars, raroad sdng
factes for the recept of such tank cars must be provded at the permttee s
premses. Specay denatured acoho receved n tank cars, tank trucks, or by
ppene must be mmedatey deposted n storage tanks constructed n conform-
ty wth the provsons of secton 1 2.99. When so deposted the formua of the
specay denatured acoho sha be pany marked on the storage tank. Form
1 73 w be dsnosed of n accordance wth secton 1 2. 3 a. ( 3 Stat. 3 , 3 ,
36 , 373 as amended, 37 ; 26 U. S. C. 3070, 310 , 312 , 3170, 3176.)
2. The purpose of the amendments s to authorze ppene removas
of specay denatured acoho from a denaturng pant to contguous
bonded deaer s premses operated by the denaturer, consstent wth
e stng authorty to make such transfers by ppene to contguous
manufacturng premses operated by the denaturer.
3. It s found that compance wth the notce, pubc rue-makng
procedure, and effectve date requrements of the dmnstratve Pro-
cedure ct (6 U. S. C. 1001 et seq.) s unnecessary n connecton wth
the ssuance of these reguatons for the reason that the changes made
are of a berazng character.
. Ths Treasury Decson sha be effectve mmedatey upon the
date of ts pubcaton n the Federa Regster. (Ths Treasury De-
cson s ssued under the authorty contaned n 3 Stat. 307, 31 , 3 ,
3 , 3 9, 360, 36 , 373 as amended, 376; 26 U. S. C. 2 0 , 2 29, 3070,
310 ,310 ,3109,311 ,312 ,3170,3176.)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved February 21,19 2.
. . Foey,
ctng Secretary of the Treasury.
(Pubshed n the Federa Regster February 2 , 19 2)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 7, 10, 1 , and 20. 2 2
DISTILL D SPIRITS
INT RN L R NU COD
Reguatons 7, 10, 1 , and 20. 19 2-10-13 20
T. D. 9
TITL 26 INT RN L R NU C PT R I, SU C PT R C. P RTS 17 , 1 ,
190, ND 19
(Reguatons 7, 10, 1 , and 20)
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Dstrct Supervsors and Others Concerned:
1. In order to conform Reguatons 7, Producton, Fortfcaton,
Ta Payment, tc., of Wnes (26 CFR, part 17 ; 10 F. R. 12307),
Reguatons 10, Warehousng of Dsted Sprts (26 CFR, part
1 ; 1 F. R. 233), Reguatons 1 . Rectfcaton of Sprts and
nes (26 CFR, part 190; 1 F. R. 790), and Reguatons 20,
Whoesae and Reta Deaers n Lquors (26 CFR, part 19 ; F. R.
2170), to the provsons of the Revenue ct of 19 1 (Pubc Law 1 3,
2d Cong.), whch ncreased the e cse ta es on dsted sprts, wnes,
queurs and cordas, and the speca (occupatona) ta es on whoe-
sae quor deaers, whoesae deaers n fermented mat quor and
reta quor deaers, such reguatons are hereby amended.
2. Sectons 17 .23 , 17 .239, and 17 .2 1 of Reguatons 7 are
amended to read as foows:
RTICL T P YM NT OF WIN S

Sec. 17 .23 . Ta on St Wnes The foowng are the rates of ta on st
wnes, artfca or mtaton wnes or compounds sod as st wnes, and vermouth
or other apertf wne produced n a bonded wnery, the percent of acoho to be
reckoned by voume:
(a) 17 cents per wne gaon when contanng not more than 1 percent
of absoute acoho;
(6) 67 cents per wne gaon when contanng more than 1 percent and
not e ceedng 21 percent of rhsoute acoho;
(c) 2.2 per wne gaon when contanng more than 21 percent and not
e ceedng 2 percent of absoute acoho;
(d) When contanng more than 2 percent of absoute acoho, such
products sha be cassed as dsted sprts and sha be ta ed accordngy.
( 3 Stat. 3 7 as amended, 37 , 7 . ; 20 U. S. C. 3030, 3176, 3901.)
Sec. 17 .230. Ta on Champagne, Sparkng Wne, and rtfcay Carbon-
ated Wne. The foowng are the rates of ta on champagne, sparkng wne,
and artfcay carbonated wne:
(a) On each botte or other contaner of champagne or sparkng wne,
17 cents on each one-haf pnt or fracton thereof;
(6) On each botte or other contaner of artfcay carbon-ted wne,
12 cents on each one-haf pnt or fracton thereof;
(c) ny of the foregong artces contanng more than 2 percent of
absoute acoho by voume sha be cassed as dsted sprts and sha be
ta ed accordngy.
( 3 Stat. 3 7 as amended, 37 , 77; 20 U. S. G. 3030, 3176, 3001.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 3
Regs. 7, 10, 1 , and 20.
Sec. 17 1. Computng Ta on Champagne, Sparkng Wne, and btf-
ca y Carbonated Wne. The ta on champagne, sparkng wne, and artf-
cay carbonated wne must be computed on each botte, and not on the aggregate
contents of the case. Thus, the ta on a one-ffth gaon botte of champagne or
sparkng wne amounts to 6 cents, and on a case of 12 such bottes the ta
amounts to .16. ( 3 Stat 3 7 as amended, 37 , 77; 26 U. S. C. 3030, 3176,
3901.)
3. Secton 1 .606 of Reguatons 10 s amended to read as foows:
Subpart Ta -pad Wthdrawas n Packages

Sec. 1 .000. Issuance of Rectfed Sprts Stamps. Where the Form 179
covers bended brandes ta -pad at the rate mposed by secton 2 00(a)( ),
I. R. C, n addton to the ta mposed by secton 2 00(a) (1), I. R. C, the co-
ector sha ssue a cass rectfed sprts stamp, wth proper coupons attached,
for each package and sha enter the sera number of the stamps n the proper
coumn of Form 1 20. ( 3 Stat. 29 as amended, 300 as amended, 37 ; 26 U. S. C.
2 00, 2 01, 3176.)
. Sectons 190. 7 ,190. 7,190. ,190. 0, and 190. 2 of Regua-
tons 1 are amended to read as foows:
Subpart Y Rectfcaton

bendng of wnes

Sec. 190. 7 . ddtona Wne Ta . Where the ta abe grade of wne s n-
creased by bendng, addtona gaonage wne ta must be pad on the resutant
product representng the dfference between the ta orgnay pad on the wne
and the ta due on the bended product, as provded n subpart of ths part.
For e ampe, f 100 gaons of wne contanng 20 percent acoho, on whch wne
ta n the amount of 67 has been pad, are bended wth 100 gaons of wne
contanng 12 percent acoho, on whch wne ta n the sum of 17 has been pad,
makng a tota wne ta pad on the two wnes of , and the resutant product
contans 16 percent acoho, the wne ta on whch woud amount to 13 , add-
tona wne ta of 0 must be pad on the bended product, regardess of whether
or not the SO-cent rectfyng ta s ncurred by the bendng. ( 3 Stat. 3 7 as
amended, 2 ; 26 U. S. C. 3030, 3190.)
Subpart Commodty Ta es on Rectfed Sprts and Products

Sec. 190. 7. ermouth. ermouth made at a rectfyng pant, whch s sub-
|ect to the rectfcaton ta of 30 cents per proof gaon mposed by secton
2 00(a) ( ), I. R. C, s n addton thereto sub|ect to the ta mposed upon ver-
mouth by secton 3030(a)(1), I. R. C, whch ta s as foows:
(a) On vermouth contanng not more than 1 per centum of absoute
acoho, 17 cents per wne gaon, the per centum of acoho to be reckoned
by voume and not by weght;
(6) On vermouth contanng more than 1 per centum and not e ceedng
21 per centum of absoute acoho, 67 cents per wne gaon;
(c) On vermouth contanng more than 21 per centum and not e ceedng
2 per centum of absoute acoho 2.2 per wne gaon ;
(d) vermouth contanng more than 2 per centum of absoute aco-
ho by voume (e cept vermouth contanng ta -pad sweet wne, ctrus-
frut wne, peach wne, cherry wne, berry wne, aprcot wne, prune wne,
pum wne, pear wne, pawpaw wne, papaya wne, pneappe wne, cantaoup
wne, or appe wne, fortfed, respectvey, wth grape brandy, ctrus-frut
brandy, peach brandy, cherry brandy, berry brandy, aprcot brandy, prune
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 7, 10 1 , and 20.
brandy, pum brandy, pear brandy, pawpaw brandy, papaya brandy, pne-
appe brandy, cantaoup brandy, or appe brandy) sha be cassed as ds-
ted sprts and sha be ta ed accordngy.
( 3 Sat. 29 as amended, 300 as amended, 3 7 as amended, 37 ; 20 U. S. O. 2 00,
2 01, 30.30, 3176.)
Sec. 190. . Lqueubs, Conn t.s, tc., Ta abe Undeb Secton 3030(a)(2),
I. R. C Secton 3030(a) (2), I. R. C, Imposes a ta on certan products of rec-
tfcaton, as foows: On each botte or other contaner of queurs, cordas, or
smar compounds, by whatever name sod or offered for sae, contanng sweet
wne, ctrus-frut wne, peach wne, cherry wne, berry wne, aprcot wne, prune
wne, pum wne, pear wne, pawpaw wne, papaya wne, pneappe wne, canta-
oup wne, or appe wne, fortfed, respectvey, wth grape brandy, ctrus-frut
brandy, peach brandy, cherry brandy, berry brandy, aprcot brandy, prune
brandy, pum brandy, pear brandy, pawpaw brandy, papaya brandy, pneappe
brandy, cantaoup brandy, or appe brandy, 12 cents on each one-haf pnt or
fracton thereof. Lqueurs, cordas, and smar compounds on whch a ta s
mposed and pad under secton 3030(a) (2), I. R. C, are e empt from the 30-cent
rectfcaton ta . Uy queurs, cordas, or smar compounds Is meant those
products that contan not ess than 2 6 percent by weght of sweetenng matera
and possess the taste, aroma, and characterstcs generay attrbuted to queurs
and cordas. ( 3 Stat. 300 as amended, 3 7 as amended, 37 ; 26 U. S. C. 2S01,
3030. 3176.)
Sec. 190. 0. Cabbonatct anb Spabkng Wnes. The carbonatng of ta -pad
wnes, ether by secondary fermentaton of the wne wthn the botte or contaner
or by chargng the wne artfcay wth carbon do de, must be done at a
rectfyng pant. The carbonated wne s sub|ect to the rectfcaton ta of 30
cents per proof gaon, and, n addton thereto, the ta mposed by secton
3030(a)(2), I. R. C, upon sparkng wne, or artfcay carbonated wne, as
the case may be, must be pad. Ths ta s as foows:
(a) On each botte or other contaner of champagne or sparkng wne,
17 cents on each one-haf pnt or fracton thereof;
(6) On each botte or other contaner of artfcay carbonated wne, 12
cents on each one-haf pnt or fracton thereof;
(c) ny of the foregong artces contanng more than 2 per centum of
absoute acoho by voume sha be cassed as dsted sprts and sha
be ta ed accordngy.
1 3 Stat. 300 as amended, 3 7 as amended, 37 ; 20 . S. C. 2 01, 3030, 3176.)
Sec. 190. 2. endeb Wnes. ny bendng of ta -pad wnes by rectfers,
e cept the bendng of domestc ta -pad wnes for the soe purpose of perfectng
such wnes accordng to recognzed commerca standards, sub|ects the resutant
product to the 30-cent rectfcaton ta . Where the ta abe cass of wne s
ncreased by bendng wnes wth each other, addtona wne ta due on the
bended wnes must be pad, regardess of whether or not the 30-cent rectfca-
ton ta s ncurred by such bendng. Ths addtona wne ta represents the
dfference between the wne ta due on the bended wne under ts new cass-
fcaton and :he ta prevousy pad on the wnes used for such bendng. Secton
3030(a)(1), I. R. C, mposes a ta upon a st wnes, and a artfca or
Imtaton wnes or compounds sod as st wne, at the foowng rates:
(a) On wnes contanng not more than 1 per centum of absoute acoho,
17 cents per wne gaon, the per centum of acoho to be reckoned by voume
and not by weght;
(6) On wnes contanng more than 1 per centum and not e ceedng 21
per centum of absoute acoho, 67 cents per wne gaon;
(c) On wnes contanng more than 21 per centum and not e ceedng 2
per centum of absoute acoho, 2.2 per wne gaon;
(tf) such wnes contanng more than 2 per centum of absoute acoho
bv voume sha be cassed as dsted sprts and sha be ta ed accordngy.
( 3 Stat. 300 as amended, 3 7 as amended, 37 ; 26 U. S. C. 2 01, 3030, 3176.)
. Sectons 19 .37, 19 . (a), and 19 . 9 of Reguatons 20 are
amended to read as foows:
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2
egs. 7, 10, 1 , and 20.
RTICL I P YM NT OF SP CI L T
Pec. 10 .37. Speca Ta Rates. Speca ta es are Imposed upon quor deaers
at the foowng annua (fsca year) rates:
Reta deaers n quors 0. 00
Whoesae deaers n quors 200.00
Reta deaers n fermented mat quors 22.00
Whoesae deaers n fermented mat quors 100. 00
( 3 Stat. 37 , 3 as amended, 67; 26 U. S. C. 3170, 32 0, 3701.)
RTICL SP CI L T ST MPS

Sec. 19 . . Stamps fob Deaers n Wnes Ony, or Wnes and Mat Lquobs
Ony. (a) Reta and whoesae deaers n quors who se or offer for sae
wnes ony, or wnes and mat quors ony, may obtan stamps as reta or whoe-
sae deaers n quors, as the case may be, under the foowng desgnatons upon
appcaton and payment of speca ta at the annua (fsca year) rates Indcated:
Reta deaer n wnes 0. 00
Reta deaer In wnes and mat quors 0. 00
Whoesae deaer n wnes 200.00
Whoesae deaer n wnes and mat quors 200. 00

( 3 Stat. 37 , 301, 07; 20 U. S. C. 3170, 32 , 3701.)
Sec 10 . 0. Stamps for Dbuq Stores and Phabmaces Seng Through
Lcensed Pharmacsts. Propretors of drug stores and pharmaces makng saes
of dsted sprts through duy censed pharmacsts, may procure stamps desg-
nated Medcna Sprts Stamp Ta upon appcaton and payment of speca
ta at the 0 annua rate The hoders of such stamps are sub|ect to a pro-
vsons of nterna revenue aws reatng to reta quor deaers. Coectors sha,
n the absence of specfc demand or appcaton for such stamps, ssue the reguar
reta quor deaer speca ta stamp. ( 3 Stat. 37 , 3 as amended, 67 ; 26
U. S. C. 3176, 32 0, 3701.)
6. Snce the e cse and speca ta provsons of the Revenue ct
of 19 1 were effectve on November 1,19 1, these reguatons, pursuant
to secton 3791, Interna Revenue Code, are beng made retroactvey
effectve to that date. It s therefore found mpractcabe to compy
wth the notce, pubc rue makng, and effectve date requrements of
the dmnstratve Procedure ct ( U. S. C. 1001 et seq.).
7. Ths Treasury Decson sha be effectve on November 1,19 1.
(Ths Treasury Decson s ssued under the authorty contaned n
3 Stat. 29 as amended, 300 as amended, 3 7 as amended, 37 , 3 as
amended, 391, 67, 77; 26 U. S. C. 2 00, 2 01, 3030, 3176, 32 0, 32 ,
3791, 3901.)
ohn . Dunap,
L ommssoner of Interna Revenue.
pproved pr 21,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 23, 19 2, : 7 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 20, 19 ,26.
2 6
Reguatons 20, Secton 19 .26: Saes by agences 19 2-13-13
and nstrumentates of the Unted States. T. D. 910
TITL 26 INT RN L R NU . C PT R I, SU p FT R C, P RT 19 .
W OL S L ND R T IL D L RS IN LI UORS
mendng Reguatons 20
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Dstrct Supervsors and Others Concerned:
1. Secton 60 of the Revenue ct of 19 0 (Pubc Law 1 , 1st
Cong.) provdes as foows:
S C. 60 . F D R L G NCI S OR INSTRUM NT LITI S.
Subchapter of chapter 27 (reatng to occupatona ta es) s hereby amended
by addng at the end thereof the foowng new secton:
S C. 32 3. F D R L G NCI S OR INSTRUM NT LITI S.
ny ta mposed by ths chapter sha appy to any agency or nstrumentaty
of the Unted States uness such agency or nstrumentaty s granted by statute
a specfc e empton from such ta .
2. Pursuant to the foregong provson of aw secton 19 .26 of Reg-
uatons 20, Whoesae and Reta Deaers n Lquors (26 CFR, part
19 ; F. R. 2170), as amended, s amended to read as foows:
SP CI L T S

Sec. 19 .26. Saes by gences and Instrumentates of the Unted
States. Secton 32 3 of the Interna Revenue Code, effectve September 3,
1900, provdes that any ta mposed by chapter 27 of the Interna Revenue Code
sha appy to any agency or nstrumentaty of the Unted States uness such
agency or nstrumentaty s granted by statute a specfc e empton from such
ta . ccordngy, any agency or nstrumentaty of the Unted States, Incudng
post e changes, shp s stores, shp s servce stores, and commssares estabshed
and conducted under the reguatons of the Department of Defense, engagng n
the busness of seng, or offerng for sae, acohoc quors, must pay speca
ta for the carryng on of such busness on and after September 23, 19 0. ny
canteen, cub, mess, or smar organzaton operated under reguatons of the
Department of Defense, whether or not ocated on the premses of the Depart-
ment of Defense, seng, or offerng for sae, quors, s abe to speca ta for
any perod durng whch the organzaton carres on the busness. ( 3 Stat
391, 67, 6 Stat. 96 ; 26 U. S. C. 32 , 3791, 32S3.)
3. Snce the provsons of secton 60 of the Revenue ct of 19 0
were effectve on September 23, 19 0, ths amendment to reguatons,
pursuant to secton 3791, Interna Revenue Code, s beng made retro-
actvey effectve to that date. It s, therefore, found mpractcabe
to compy wth the notce, pubc rue makng, and effectve date re-
qurements of the dmnstratve Procedure ct ( U. S. C. 1001 et
seq.).
. Ths Treasury Decson sha be effectve on September 23, 19 0.
(Ths Treasury Decson s ssued under the authorty contaned n
3 Stat. 391, 67, 6 Stat. 96 ; 26 U. S. C. 32 ,3791,32 3.)
ohn . Dunap,
Commssoner of Interna Revenue.
pproved une 3,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster une 6, 19 2, : a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 7
Regs. 21, 191. 0, etc.
muatons 21, Sectons 191. 0, tc. 19 2-10-13 21
T. D. 96
TITL 26 INT RN L R NU C PT R I, SU C PT R C, P RT 1 1.
IMPORT TION OP DISTILL D SPIRITS. WIN S, ND F RM NT D M LT
LI UORS
(Reguatons 21)
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. G.
To Dstrct Supervsors and Others Concerned:
1. In order to conform Reguatons 21, Importaton of Dsted
Sprts, Wnes, and Fermented Mat Lquors (26 CFR, part 191; 16
F. R. 30), to the provsons of the Revenue ct of 19 1 (Pubc Law
1 3, 2d Cong.), whch ncreased, among others, the e cse ta on ds-
ted sprts, wnes, queurs, and cordas, sectons 191. 0, 191. 1,
191. 2, 191. 3, 191. , 191. , and 191. 6 of such reguatons are
amended to read as foows:
Subpart D Ta on Imported Dsted Sprts, Wnes, Fermented Lquors,
and Imported Perfumes Contanng Dsted Sprts
dsted sprts and perfumes
Sec. 191. 0. Dsted Sprts. Dsted sprts n customs bonded ware-
house or mported nto the Unted States are sub|ect to an nterna revenue ta ,
when wthdrawn, at the rate of 10. 0 per proof gaon, or wne gaon when beow
proof, and a proportonate ta at a ke rate on a fractona parts of such proof
or wne gaon. ( 3 Stat. 29 as amended, 373 as amended, 37 , 67; 26 U. S. C.
2 00, 3170, 3176, 3791.)
Sec. 191. 1. Perfumes Contanno Dsted Sprts. Imported perfumes
contanng dsted sprts are sub|ect to an nterna revenue ta , when wth-
drawn, at the rate of 10. 0 per wne gaon and a proportonate ta at a ke rate
on a fractona parts of such wne gaon. ( 3 Stat. 29 as amended, 373 as
amended, 37 , 67; 26 U. S. C. 2 00,3170, 3176, 3791.)
WIN S
Sec. 191. 2. St Wnes. st wnes, ncudng vermouth or other apertf
wne, and a artfca or mtaton wnes or compounds sod as st wne, n
customs bonded warehouse or mported nto the Unted States are sub|ect to an
nterna revenue ta , when wthdrawn from customs custody, as foows:
(a) On wnes contanng not more than 1 per centum of absoute acoho,
17 cents per wne gaon, the per centum of acoho under ths secton to be
reckoned by voume and not by weght;
(6) On wnes contanng more than 1 per centum and not e ceedng 21
per centum of absoute acoho, 67 cents per wne gaon ;
(c) On wnes contanng more than 21 per centum and not e ceedng 2
per centum of absoute acoho, 2.2 per wne gaon;
(d) such wnes contanng more than 2 per centum of absoute acoho
by voume sha be cassed as dsted sprts and sha be ta ed accordngy.
( 3 Stat. 29 as amended. 3 7 as amended, 373 as amended, 37 , 67 ; 26 U. S. C.
2 00, 3030, 3170, 3176, 3791.)
Sec 191. 3. Sparkng Wnes. sparkng wnes and artfcay carbonated
wnes n customs bonded warehouse or mported nto the Unted States are
sub|ect to an nterna revenue ta , when wthdrawn from customs custody, as
foows:
(a) On each botte or other contaner of champagne or sparkng wne,
17 cents on each one-haf pnt or fracton thereof ;
(6) On each botte or other contaner of artfcay carbonated wne, 12
cents on each one-haf pnt or fracton thereof.
( 3 Stat. 3 7 as amended, 373 as amended, 37 , 67; 26 U. S. C. 3030, 3170, 3176,
379L)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. 21, 191. 0, etc.)
2
Sec. 191. . Wnes Contanng Over 2 Per Centum of coho. Champagne
and other sparkng wnes, st wnes, artfcay carbonated wnes, and ver-
mouth ur other apertf wne, f contanng over 2 per centum of acoho by
voume, n customs bonded warehouse or Imported nto the Unted States are
sub|ect to an nterna revenue ta , when wthdrawn, at the rate of 10. 0 per
proof gaon, or wne gaon when beow proof, and a proportonate ta at a
ke rate on a fractona parts of such proof or wne gaon. ( 3 Stat. 29 as
amended, 3 7 as amended, 373 as amended, 37 , 67; 26 U. S. C. 2 00, 3030,
3170, 3170, 3791.)

LI U URS, CORDI LS, ND OT R COMPOUNDS ND PR P R TIONS
Sec. 191. . Lqueurs, Cordas, and Smar Compounds. Lqueurs, cordas,
and smar compounds, contanng dsted sprts, n customs bonded warehouse
or mported nto the Unted States are sub|ect to an Interna revenue ta , when
wthdrawn, at the rate of 10. 0 per proof gaon, or wne gaon when beow
proof, and a-proportonate ta at a ke rate on a fractona parts of such proof
or wne gaon. Fortfed or unfortfed wnes, contanng not over 2 per centum
of acoho by voume, to whch sweetenng or favorng materas, but no dsted
sprts, have been added are not cassfed as queurs, cordas, or smar com-
pounds, but are consdered to be favored wnes ony and are sub|ect to nterna
revenue ta at the rates appcabe to wnes. ( 3 Stat. 29 as amended, 3 7 as
amended, 373 as amended, 37 , 67; 26 U. S. C. 2 00, 3030, 3170, 3176, 3791.)
Sec. 191. 6. Other Compounds and 1 reparatons. Compounds and prepara-
tons, other than those specfed n secton 191. , contanng dsted sprts,
whch are ft for beverage purposes, n customs bonded warehouse or mported
nto the Unted States are sub|ect to nterna revenue ta at the rate of 10. 0
per proof gaon, or wne gaon when beow proof, and a proportonate ta at a
ke rate on a fractona parts of such proof or wne gaon. Compounds and
preparatons, contanng fortfed or unfortfed wne, but no dsted sprts,
whch are ft for beverage purposes and whch are so|d as wne, are sub|ect to
nterna revenue ta at the rates appcabe to wnes. ( 3 Stat. 29 as amended,
3 7 as amended, 7 , 67; 26 U. S. C. 2 00, 3030, 3176, 3791.)
2. Snce the e cse ta provsons of the Revenue ct of 19 1 were
effectve on .November 1, 19 1, these reguatons, pursuant to secton
3791, Interna Revenue Code, are beng made retroactvey effectve
to that date. It s, therefore, found mpractcabe to compy wth the
notce, pubc rue makng, and effectve date requrements of the
dmnstratve Procedure ct ( U. S. C. 1001 et seq.).
3. Ths Treasury Decson sha be effectve on November 1, 19 1.
(Ths Treasury Decson s ssued under the authorty contaned n
3 Stat. 29 as amended, 3 7 as amended, 37 , 67; 26 U. S. C. 2 00,
3030, 3176, 3791.)
ohn . Dunap,
Commssoner of Interna tevenue.
Frank Dow,
Commssoner of Customs.
pproved pr 21,19 2.
Thomas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster pr 23, 19 2, : 7 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 9 Regs. (193 ), rts. 29, etc.
TO CCO, SNUFF, CIG RS, CIG R TT S, TC.
INT RN L R NU COD
Reguatons (193 ), rtces 29, ra 19 2-1-137 2
T.D. 72
TITL 2ft INT RN L R NU . C PT R I, SU C PT R C, P RT 1 0.
T S ON TO CCO, SNUFF, CIG RS, CIG R TT S, CIG R TT P P RS ND
TU S, ND PURC S ND S L OF L F TO CCO
Decrease n rate of ta on tobacco and snuff and Increase n rate
of ta on cgarettes weghng not more than 3 pounds per thousand.
Treasury Department,
Offce of Commssoner of Interna Revenue,
Washngton 2 , D. C.
To Coectors of Interna Revenue and Others Concerned:
In order to conform Reguatons 26 CFR, part 1 0 , reatng to
the ta es on tobacco, snuff, cgars, cgarettes, cgarette papers and
tubes, and purchase and sae of eaf tobacco, to sectons 21 and 23
of the Revenue ct of 19 1 (Pubc Law 1 3, 2d Cong., 1st sess.),
approved October 20, 19 1, such reguatons, but ony as prescrbed
and made appcabe to the Interna Revenue Code by Treasury Dec-
son , approved February 11,1939 26 CFR, Cum. Supp., p. 70 ,
are amended, effectve November 1,19 1, as foows:
Paragraph 1. rtce 29 20 CFR 1 0.29 s amended by nsertng
after 1 cents per pound the foowng: pror to November 1, 19 1,
and 10 cents per pound on and after November 1, 19 1, .
Par. 2. There s nserted mmedatey precedng artce 3 26 CFR
1 0. 3 , the foowng:
S C. 2000. R T OF T INT RN L R NU COD .
(a) Tobacco and Snuff. Upon a tobacco and snuff manufactured
n or mported nto the Unted States, and sod by the manufacturer or
mporter, or removed for consumpton or sae, there sha be eved,
coected, and pad the foowng ta es:
(1) Snuff. On snuff, manufactured of tobacco or any substtute
for tobacco, ground, dry, damp, pcked, scented, or otherwse, of
a descrptons, when prepared for use, a ta of 1 cents per pound.
(2) Tobacco. On a chewng and smokng tobacco, fne-cut,
cavendsh, pug or twst, cut or granuated, of every descrpton;
on tobacco twsted by hand or reduced nto a condton to be con-
sumed, or n any manner other than the ordnary mode of dryng
and curng, prepared for sae or consumpton, even f prepared wth-
out the use of any machne or nstrument, and wthout beng
pressed or sweetened; and on a fne-cut shorts and refuse scraps,
cppngs, cuttngs, and sweepngs of tobacco, a ta of 1 cents p|r
pound.
The ta mposed by ths subsecton sha be n addton to any mport
dutes mposed upon mported tobacco and snuff.
(b) Snuff Four. Snuff four, when sod, or removed for use or
consumpton, sha be ta ed as snuff.

21 1S2 32 17
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Regs. (193 ), rts. 29, etc. 2 0
S C. 23. R DUCTION OF T ON TO CCO ND SNUFF R -
NU CT OF 19 1, PPRO D OCTO R 20, 19 1 .
(a) Reducton n ate. Secton 2009(a) (reatng to ta on tobacco
and snuff) s hereby amended by strkng out 1 cents per pound ,
wherever t appears theren, and nsertng n eu thereof 10 cents per
pound .
(b) ffectve Date. The amendment made by subsecton (a) sha
take effect on the frst day of the frst month whch begns more than
ten days after the date of the enactment of ths ct.
Par. 3. rtce 3 26 CFR 1 0. 3 s amended to read as foows:
rt. 3 20 CFR 1 0. 3 Rate of Ta on Tobacco and Snuff. On and after
November 1, 19 1, a ta of 10 cents per pound s mposed on a manufactured
tobacco, snuff manufactured of tobacco or any substtute therefor, and on snuff
four, when sod or removed for consumpton or sae. The ta attaches at the
tme of manufacture of such artces and must be pad by the manufacturer by
purchasng and aff ng the proper stamps to the packages of such artces before
remova from the factory.
Par. . There s nserted mmedatey precedng artce 72 26
CFR 1 0.72 , the foowng:
S C. 21. T ON CIG R TT S R NU CT OF 19 1. P-
PRO D OCTO R 20, 19 1 .
(a) Increase n Rate. Secton 2000(e)(2) (ta on cgarettes) s
hereby amended by strkng out 3. 0 per thousand and nsertng n
eu thereof per thousand .
(b) ffectve Date. The amendment made by subsecton (a) sha
take effect on the frst day of the frst month whch begns more than
10 days after the date of the enactment of ths ct
Par. . rtce 72, as amended by Treasury Decson 209, approved
anuary , 19 3 26 CFR 1 0.72 , s further amended as foows:
( ) The sentence precedng the tabe n paragraph (a) s amended
to read as foows:
The rates of ta on a cgars and on cgarettes weghng more than 3 pounds
per thousand mposed by secton 2000(c) (1) and (2) of the Interna Revenue
Code, as amended by secton 60 (a) and (b) of the Revenue ct of 19 2, effectve
November 1, 19 2, and the rate of ta on cgarettes weghng NOT more than
3 pounds per thousand mposed by secton 2000(c) (2) of the Code, as amended
by secton 21 of the Revenue ct of 19 1, effectve November 1, 19 1, are
as foows:
( ) The tabe foowng the frst sentence n paragraph (a) s
amended by strkng out 3. 0 wherever t appears theren as the
rate of ta on cgarettes, and nsertng n eu thereof .00 .
ecause the changes n the rates of ta set forth n ths Treasury
Decson become effectve on November 1. 19 1, t s hereby found
mpractcabe to ssue ths Treasury Decson wth notce and pubc
procedure thereon under secton (a) of the dmnstratve Procedure
ct, approved une 11,19 6, or sub|ect to the effectve date mtaton
of secton (c) of sad ct.
(Ths Treasury Decson s ssued under the authorty contaned n
secton 3791 of the Interna Revenue Code ( 3 Stat. 67; 26 U. S. C.
3791).)
ohn . Dr/N p,
Commssoner of Interna Revenue.
pproved December 7, 19 1.
T|omas . Lynch,
ctng Secretary of the Treasury.
(Fed wth the Dvson of the Federa Regster December 12,19 1,- : 2 a. m.)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 1 IMso.
TO CCO ND SNUFF
19 2-2-137 3
Tob. 321
Tobacco and snuff manufactured n and removed from domestc factores durng
the month of November 19 1, compared wth the same month of 19 0
Manufactured
Ta -pad
Removed
Ta -free
November
1 1
November
19 0
November
19 1
November
1960
November
19 1
November
1 0
Pounds
Poundt
3,2 ,
7,317
232,020
2,91 ,7S
, 9 ,176
3,2 6, 1 3
Pounds
Pounds
3,196,6 7
337, 9
231,301
Pounds
63, 9
3 ,936
Pound
99,132
6,2 0
Pug
, 776, 73
76, 23
2 ,223
3,3 6,636
, 2 2.676
3, 2 ,36
3,603, 231
37,171
236,0 7
3,110, 2
9,039.697
3, 71,370
Fne-cut chewng
Scrag chewng,...
2, 6 , 03
,763, 71
3. 2 9,19
,
210,377
6, 79
3,230
213,719
1,260
Snuff m
Tota
20,62 ,011
19,063,29
19, 96, 60 1 1 ,6 ,039
1
316,2
373, 1
19 2-1-13766
Tob. 32
Tobacco and snuff manufactured n and removed from domestc factores durng
the month of December 19o, compared cth the same month of 19 0
Manufactured
Ta -pad Ta -free
Removed
December
19 1
December
19 0
December
19 1
December
19 0
December
19 1
December
19 0
Pounds
Pounds
Pounds
2,629, 79
26 ,11
211.32
2,6 ,2
6,9 6,2 2
3,177, 62
Pounds
2, 99, 02
269, 777
21 . 12
2,7 ,6 0
, 7,390
,0 ,170
Pounds
12 , 67
1,3 2
Pounds
1 0,0 3
93,92
Pug
2. ,31
30 .902
216.
2,6 2,79
3 1,6 7
219,200
2, OSS, 7
6,62 , 3
2,99 ,062
TTOt
Scrap chewng... .
2,662,7 6
6,017, 7
20, 3
2 ,317
2,206
1 ,266
303,016
2, 3
3, 201, 09
Tota
1 ,96 ,
1 , 20,07
1 ,902, 22
1 , 27 , 29
7, 102
, 62
fgures are sub|ect to revson unt Incorporated n the tota for the caendar year to
be pubshed n the Commssoner s annua report.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc.
2 2
19 2-7-13796
Tob. 327
Tobacco and snuff manufactured n and removed from domestc factores durng the
month of anuary 19 S, compared wth the same month of 19 1
Manufactured
Ta -pad
Removed
Ta -free
anuary
19 2
anuary
19 1
nmnry
19 2
anuary
19 1
anuary
1962
anuary
1961
Pounds
3, 16, 9 9
20, 772
2 6,170
3, 31, 79
,61 ,91
3,7 9,231
Pounds
3, 6 , 3
1, 0
237,3 7
3, 7,976
, 10,062
3,70 ,3 7
Pounds
3, 7 ,276
391, 93
2 7, 16
3, 2 ,12
7, 9, 2
3,7 0, 93
Pounds
3, 63 , 763
399,0 6-
2 0,197
3, 69,021
,2 ,336
3,717,279
Pounds
61, 13
70,767
Pour.
116, 13
60,630
Twst
Fne-cut chewng
77,1 2
6 0,17
3, 10
13,10
200,11
2.306
19, 3, 32
19, 09,61
19, 2 1, 6
19, 63 , 672
793,100
392,662
19 2- -13 0
Tob. 330
Tobacco and snuff manufactured n and removed from domestc factores durng
the month of February 19 2, compared cth the same month of 10 1
Manufactured
Ta -pad
omoved
Ta -free
February
19 2
February
19 1
February
19 2
February
19 1
February
19 2
February
19 1
Pounds
3.366,962
06.110
217,9 0
3. 263,377
7, 26, 6
3, 72,93
Pounds
3,3 . 7
367, 9
227,321
3,129,399
7, 7 , 69
3,292, 69
Pounds
3,063, 96
33 ,
220,610
3,019,029
7, 11, 1
3, 2,601
Pounds
Pounds
19 ,1 6
1,7 0
Pounds
0, 00
36,63
Pug
3,0 3,636
310,333
222,133
3.039.901
7, 62,290
3,260,
Twst
Fne-cut chewng
Scrap chewng .
22.996
29 , 3
3,7 0
13,010
233, 96
1,170
Smokng
Snuf
Tota
1 , 62, 02
1 ,160,1 3
17,603, 21
17,33 ,677
626, 06
6 ,009
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 3
Msc.
19 2-10-13 2
Tob. 333
Tobacco and snuff manufactured n and removed from domestc factores durng
the month of March 19 2, compared wth the same month of 19 1
Manufactured
Ta -pad
Removed
Ta -free
March
March
19 1
March
19 2
March
19 1
March
19 2
March
19 1
19 2
Pounds
3, U3 , 21
363,006
219, 279
3,0 7,0 1
7,729, 2 9
3. 77,6
Pounds
3,3 , 1
22,992
230,710
3,329,0 1
,7 ,1
3, 6 , 23
Pounds
2,716, 71
297,0 7
21 , 2
3,016,1 7
7,397, 706
3, 13,716
Pounds
3,222, 69
3 ,11
233,
3, 17 , 26
,32 , 3
3, 06, 97
Pounds
13 ,322
9,02
Pounds
217, 12
66,630
Pug
Twst.
Fne-cut chewng
Scrap chewng
9, 17
3 7,797
2, 6
31,979
627,727
2, 3
Snuff -
17,911,762
19,676,96
17,0 7,0 9
1 , 10,
9 , 12
36,9 3
19 2-13-13
Tob. 33G
Tobacco and snuff manufactured n and removed from domestc factores durng
the month of pr 19 2, compared tpth the same month of 19 1
Ta -pad
Removed
Ta -free
1962 19 1
19 2
19 1
19 2
19 1
Pounds
3, ISO, 3
371, 1
210, 37
3, 136, 6
7, 2,337
3,297,6
Pounds
Pounds
3, 1 ,321
319, 0
21 ,3 0
3,0 , 3
7,691, 903
3,316,0
Pounds
2, 92 ,
31 , 992
21 , 72
2,93 , 2
,106, 07
3,236, 37
Pounds
Pound
,306
,2 2
Pug
3,0 . 011
379, 331
212, 173
3, 036, 67
,732,33
3, 299, 1
3 , 1
129, 9
Twst _
Fne-cut chewng
1, 19
1 1,1 6
3, 0
21,9 1
1 ,036
2,3
Smokng
SnufI
Tota
1 , 0 , 103
1 , 70 , 6 1
17, 7 9, 202
17, 73 , 7
01, 7 7
672,9 0
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc. 2
CIG R TT S ND SM LL CIG RS
19 2-1-137 3
Tob. 320
Cgarettes and sma cgars manufactured n and removed from domestc factores
durng the month of November 19 1, compared wth the same month of 19 0
Sma cgarettes
Large cgarettes
Sma cgars
19 1
19 0
1961
1960
19 1
1960
Manufactured
3 ,017, 7, 0
33, 993, 660, 73
3,707,96 ,1 6
32,72 , 62,373
29, 2 , 26 , 70
2, 36, 17, 13
6 ,300
6 ,700
600
3,100
67, 00
, 62 , 390
, 96,220
12,000
6, 12, 30
6, 99, 910
36,000
Removed ta -pad
Removed ta -free.........
19 2- -1376
Tob. 323
Cgarettes and sma cgars manufactured n and removed from domestc fac-
tores durng the month of December 19 1, compared th the same month
of 19 0
Sma cgarettes
Large cga-
rettes
Sma cgars
19 1
19 0
19 1
19 0
19 1
19 0
26, 96,1 0, 32
23, 7,166,130
3, 0 , 76, 969
27, 219, 77 ,739
2 ,000,31 , 6
2,61 ,666,60
79, 00
79, 00
2,600
, 00
300
,0 7,720
,313, 30
9,000
6,0 0. 20
6, 1 , 00
9,000
Removed ta -free
19 2-6-137 6
Tob. 326
Cgarettes and sma cgars manufactured n and removed from domestc factores
durng the month of anuary 19 2, compared wth the same month of 19 1
Sma cgnrettes
Largo cgarettes
Sma cgars
19 2
19 1
19 2
19 1
19 2
1961
Manufactured
37, 97, 7 6, 00
33, 132,990,3 2
, 1 1, 2 2,970
36,301,971,073
33, 7 , 07,170
2,3 ,070, 20
173, 30
173,930
300
7,000
7, 0
COO
, 9,220
,00 ,200
36,000
7,06 ,390
6, 90,0 0
Removed ta -pad
fgures are sub|ect to revson unt Incorporated In tbe tota for the caendar year to
be pubshed n the Commssoner s annua report.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2
Msc.
19 2- -13 0
Tob. 329
Cgarettes and sma cgan manufactured n and removed from domestc factores
durng the month of February 19 2, compared wth the same month of 19 1
Sma cpfrettes
Large cgarettes
Sma dgar
1M
1961
1962
1961
1962
1961
32,2 6, 91,969
29,307,692,2 1
2,97 ,310,12
31, 1,066,696
2 , 67,361,007
3,003,06 ,3
9,0 0
6,300
,900
,670,260
,707,600
6,29 , 20
. 19,630
6,000
30,000
19 2-10-13 2
Tob. 332
Cgarettes and sma cgars manufactured n and removed from domestc factores
durng the month of March 19 2, compared wth the same month of 19 1
Sma cgarettes
Large cgarettes
Sma cgars
19 2
19 1
19 2
1961
19 2
1961
33,027,716,00
29. 7 ,02 ,13
,106,60 , 19
33,662,293,61
30,160, 7 , 16
3,609,997,1 1
170,210
166, 10
6,600
92, 0
91,3 0
300
,616,720
, 2, 760
96,000
6,767,700
,0 2, 00
12,000
Removed ta -tree
19 2-12-13 1
Tob. 33
Cgarettes and sma cgars manufactured n and removed from domestc
factores durng the month of pr 19 2, compared wth the same month
of 19 1
Sma cgarettes
Large cgarettes
Sma cgars
1962
1961
19 2
19 1
19 2
19 1
Manufactured
3 .69 ,060, 7
31, 77 . 2 , 36
2, , 232, 360
32,96 ,112,201
29, 23, 969, 99
3,1 , 2 , 79
1 ,7 0
1 1, 0
300
6 , 00
6 .300
300
6, 1, 000
6,970,620
, 6 0, 690
,092,710
,000
Removed ta -pad
Removed ta -free
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
Msc. 2 6
L RG CIG RS
19 2-2-137
Tob. 322
Large cgars manufactured n and removed from domestc factores durng the
month of November 19 1, compared wth the same month of 19 0
November 19 1
November 1960
Removed:
Ta -pad
1 , 1, 2
61 ,107, 2
Cass
1,7 7,69
20,71 ,760
19 ,932,062
67,296,97
2 1,721,739
2 ,9 6,60
9, 1 ,970
, ,MO
1 ,2 , 7
Cass
Cass C
190, 61,66
6, 90,06
Cass D
Cass
231,2 0,270
13,76 , 909
21,2 3,010
Cass F__
Cass 0
62,192, 79
9,631,700
629, 12,913
Ta -free
,6 ,627
19 2- -13777
Tob. 32
Large cgars manufactured n and removed from domestc factores durng the
month of December 19 1, compared wth the same month of 19 0
December 19 1
December 19 0
Removed:
Ta -pad
36 , 6 ,362
3 . 9,3 1
Cass
t 73, 27
1 ,1 , 930
1 2, 072, 9 7
, 12 , 7 3
16 ,109. 972
9,373, 967
6, 99,906
1, 31,269
13,09 . 63
12 .100, 667
1. 799, 36
17 , 9 , 161
1,030,7 3
,230, 196
Cass C
Cass
Cass F
Cass
Tota ta -pad
3 1, 03, 7 0
9, 6 , 16
36 , 6 2, 93
6, 17,600
Ta -free - .
fgures are sub|ect to revson unt Incorporated n the tota for the caendar year to be pubshed
In the Commssoner s annua report.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
2 7 Msc.
19 2- -13 03
Tob. 32
Large cgars manufactured n and removed from domestc factores durng the month
of anuary 19 2, compared wth the same month of 19 1
anuary 19 2
anuary 19 1
Manufactured
96.663,1 7
, 7,0 9
Removed:
Ta -pad
Cass
1,9 .96
1 ,117.2 0
177,9 6,077
7, 29,129
1 S, 70S, 2
11,611, 0
.111, 99
1,31 , 72
1 ,672.90
17 ,932,361
6, 6,9 0
1 .0 1.9
11,377, 13
3,92 . 01
Cass
Cass D
Cass F
Tota ta -pad
9,9 ,210
10, 20 , 9
11, , 6
, ,6 0
19 2-10-13 22
Tob. 331
Large cgars manufactured n and removed from domestc factores durng the
month of February 19 2, compared wth the same month of 19 1
February 19 2
February 19 1
Manufactured
7 , 7 ,679
71,290,161
Removed:
Ta -pad
2,223,900
16,0 ,0 0
171,009,366
6,1 6,609
1 9,292,01
,7 ,696
6,002, 16
1, 36, 3
12,2 2,9 0
162,07 , 93
,107, 39
1 2,3 , 1
,33 ,679
6,6 2, 93
Cass D
Cass C
Cass D...
Cass F
Cass G
Tota ta -pad
39, 7,1 2
9,02 ,3 6
16,267, 97
6, 12,70
Ta -free
; t
19 2-12-13 39
Tob. 33
Large cgars manufactured n and removed from domestc factores durng the
month of March 19 2, compared wth the same month of 19 1
1002
19 1
9, 0,669
Ta -pa 1
Cass
Cass
Cass O
Cass D
Cass
Cass F_.
OafsO
1, 9 , 0
17,971,060
16 ,2 , 3
7,009,030
1 6, ,096
10, 9, 392
,76 , 7
Tota ta -pad.
Ta -free
3 ,617,371
10, 9, 797
92, 092, 37
1, 76,72
11, 6,11
1 7,62 ,07
6,3 6, 212
177,19 ,060
,606,7 6
6,723, 39
07, 19, 7
7,16 , 99
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
L GISL TION
19 2-12-13 0
S. 136 . PU LIC L W 3 2, IG TY-S COND CONGR SS
C PT R 2 9, S COND S SSION
n ct To assst Federa prsoners n ther rehabtaton
e t enacted by the Senate and ouse of Representatves of the
Unted States of merca n Congress assembed, That chapter 31
of tte 1 of the Unted States Code s amended by addng the foow-
ng new secton:
1 2 . dvances for rehabtaton.
(a) The ttorney Genera, under snch reguatons as he prescrbes, actng
for hmsef or through such offcers and empoyees as he desgnates, may use
so much of the trust funds desgnated as Commssary Funds, Federa Prsons
(31 U. S. C. 72 s(22)), as may be surpus to other needs of the trust, to provde
advances to prsoners at the tme of ther reease, as an ad to ther rehabtaton.
(b) n advance made hereunder sha n no nstance e ceed 1 0 e cept
wth the specfc approva of the ttorney Genera, and sha n every case be
secured by the persona note of the prsoner condtoned to make repayment
monthy when empoyed, or otherwse possessed of funds, wth nterest at a
rate not to e ceed 6 per centum per annum and sub|ect to an agreement on the
part of the prsoner that the funds so advanced sha be e pended ony for the
purposes desgnated n the oan agreement. Repayments of prncpa and
nterest sha be credted to the trust fund from whch the advance was made.
ny unpad prncpa or nterest ou sad note sha be consdered as a debt due
the Unted States.
Sec. 2. The ttorney Genera may accept gfts or bequests of money
for credt to the Commssary Funds, Federa Prsons , whch gfts
or bequests, for the purpose of Federa ncome, State, and gft ta es,
sha be deemed to be gfts or bequests to or for the use of the Unted
States.
Sec. 3. The anayss of chapter 31 of tte 1 , Unted States Code,
mmedatey precedng secton 2 1, s amended by addng the foow-
ng new tem:
2 . dvances for rehabtaton.
pproved May 1 ,19 2.
19 2-13-13 6
. R. 99 . PU LIC L W 3 2, IG TY-S COND CONGR SS
C PT R 319, S COND S SSION
n ct To amend the e cse ta on photographc apparatus
e t enacted by the Senate and ouse of Representatves of the
Unted States of merca n Congress assembed, That (a) the second
sentence of secton 3 06(a)( ) of the Interna Revenue Code as
(2 9)
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
260
amended by secton 6(a) of the evenue ct of 19 1 s further
amended by addng after the comma foowng the words to -ray
fm the foowng: to unperforated mcrofm, .
(b) The provsons of subsecton (a) sha be effectve as of Novem-
ber 1,19 1.
pproved May 21, 19 2.
19 2-13-13 7
. R. 71 9. PU LIC L W 3 3, IG TY-S COND CONGR SS
C PT R 320, S COND S SSION
n ct To amend the provsons of the Interna Revenue Code
whch reate to machne guns and short-barreed frearms, so as to
mpose a ta on the makng of sawed-off shotguns and to e tend such
provsons to aska and awa, and for other purposes.
e t enacted by the Senate and ouse of Representatves of the
Unted States of merca n Congress assembed,
IMPOSITION OF T ON T M ING OF C RT IN FIR RMS
Secton 1. Subchapter of chapter 2 of the Interna Revenue
Code s hereby amended by addng at the end thereof the foowng
new secton:
S C. 273 . T ON M ING FIR RMS.
(a) Rate. There sha be eved, coected, and pad upon the makng n the
Unted States of any frearm (whether by manufacture, puttng together, atera-
ton, any combnaton thereof, or otherwse) a ta at that rate provded n
secton 2720(a) whch woud appy to any transfer of the frearm so made.
(b) ceptons. The ta mposed by subsecton (a) sha not appy to the
makng of a frearm
(1) by any person who s engaged wthn the Unted States n the busness
of manufacturng frearms;
(2) from another frearm wth respect to whch a ta has been pad,
pror to such makng, under ether secton 2720(a) or under subsecton (a)
of ths secton; or
(3) for the use of ( ) the Unted States Government, any State, Terr-
tory, or possesson of the Unted States, any potca subdvson thereof,
or the Dstrct of Coumba, or ( ) any peace offcer or any Federa offcer
desgnated by reguatons of the Secretary.
ny person who makes a frearm n respect of whch the ta mposed by sub-
secton (a) does not appy by reason of the precedng sentence sha make such
report n respect thereof as the Secretary may by reguatons prescrbe.
(c) y Whom Pad; When Pad. The ta mposed by subsecton (a) sha
be pad by the person makng the frearm. Such ta sha be pad n advance
of the makng of the frearm.
(d) ow Pad. Payment of the ta Imposed by subsecton (a) sha be rep-
resented by approprate stamps to be provded by the Secretary.
(e) Decaraton. It sha be unawfu for any person sub|ect to the ta
mposed by subsecton (a) to make a frearm uness, pror to such makng, he
has decared n wrtng hs ntenton to make a frearm, has aff ed the stamp
descrbed n subsecton (d) to the orgna of such decaraton, and has fed
such orgna and a copy thereof. The decaraton requred by the precedng
sentence sha be fed at such pace, and sha be n such form and contan such
nformaton, as the Secretary may by reguatons prescrbe. The orgna of
the decaraton, wth the stamp aff ed, sha be returned to the person makng
the decaraton. If the person makng the decaraton s an ndvdua, there
sha be Incuded as part of the decaraton the fngerprnts and a photograph of
such ndvdua.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
231
T NSION OF FIR RMS T S TO L S ND W II
Sec. 2. (a) Secton 2720(a) of the Interna Revenue Code s hereby
amended by strkng out contnenta Unted States and nsertng
n eu thereof Unted States .
(b) Secton 2733(c) of the Interna Revenue Go.de (dennng the
term contnenta Unted States ) s hereby repeaed.
(c) Paragraphs (d), (e), and (f) of secton 2733 of the Interna
Revenue Code are hereby amended by strkng out contnenta Unted
States n eacn such paragraph and nsertng n eu thereof Unted
States .
T C NIC L M NDM NTS
Sec. 3. (a) Secton 2723(c) of the Interna Revenue Code s hereby
amended to read as foows:
(c) Documents. To ccompany Transfers. No person sha transfer a fre-
arm uness such person, n addton to compyng wth subsecton (b), transfers
therewth (n compance wth such reguatons as may be prescrbed under ths
subchapter for proof of payment of a ta es on such frearm)
(1) for each pror transfer of such f p:rm whch was sub|ect to the ta
mposed by secton 2720(a), the stamp-aff ed order provded n ths secton,
and
(2) for any makng of such frearm whch was sub|ect to the ta mposed
by secton 273 (a), the stamp-aff ed decaraton provded n secton 273 .
(b) Secton 2726(a) of the Interna Revenue Code s hereby
amended to read as foows:
(a) Possessng Frearms Unawfuy Transferred or Made. It sha be
unawfu for any person to receve or possess any frearm whch has at any tme
been transferred n voaton of secton 2720, 2721 (b), 2722, 2723, 2727, or 2731 of
ths subchapter, or whch has at any tme been made n voaton of secton 273
of ths subchapter.
(c) Secton 2730(a) of the Interna Revenue Code s hereby
amended by strkng out transferred and nsertng n eu thereof
transferred or made .
(d) Secton 2731 of the Interna Revenue Code s hereby amended
by strkng out secton 2720(a) and nsertng n eu thereof sec-
tons 2720(a) and 273 (a) .
(e) Secton 3261(b) of the Interna Revenue Code s hereby
amended by strkng out the provso and by addng at the end of such
secton 3261(b) the foowng new sentence: No person sha be
requred to regster under ths subsecton wt respect to a frearm
whch such person acqured by transfer or mportaton or whch such
person made, f provsons of subchapter of chapter 2 apped to
such transfer, mportaton, or makng, as the case may be, and f the
provsons whch apped thereto were comped wth.
(f) Secton 3261(c) of the Interna Revenue Code s hereby
repeaed.
(g) Secton 3263(b) of the Interna Revenue Code s hereby
amended by nsertng or a stamp-aff ed decaraton as provded n
6ecton 273 after secton 2723 .
FF CTI D T
Sec. . (a) The effectve date of the amendments made by ths
ct sha be the frst day of the fourth month foowng the month
n whch ths ct s enacted.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
262
(b) Notwthstandng subsecton (a), regstraton under secton
3261 of the Interna Revenue Code whch s requred by reason of the
amendments made by ths ct sha commence on the frst day of the
second month foowng the month n whch ths ct s enacted.
(c) Nothng n subchapter of chapter 2 of the Interna Revenue
Code or of part III of subchapter of chapter 27 of the Interna
Revenue Code, as amended by ths ct, sha mpose any abty
(whether crmna or otherwse) n respect of any act or faure to
act occurrng before the effectve date specfed n subsecton (a),
uness such abty woud have e sted n respect of such act or
faure to act under the provsons of such subchapter and part
III as they e sted on the day pror to the effectve date specfed n
subsecton (a).
(d) In the case of any person who s abe for a ta under any
rovson of secton 3260(a) of the Interna Revenue Code soey
y reason of the amendments made by ths ct and who (pror to
the effectve date of these amendments) commenced the actvty whch
makes hm sub|ect to ta under such provson, such ta sha be
reckoned proportonatey from the begnnng of the effectve date of
these amendments to and ncudng the 30th day of une foowng;
and such ta sha be due on, and payabe on or before, the ast day of
the fourth month after the month n whch ths ct s enacted.
pproved May 21, 9 2.
19 2-13-13
. R. 2 2. PU LIC L W 3 , IG TY-S COND CONGR SS
C PT R 322, S COND S SSION
n ct To amend secton 2 00(a) ( ) of the Interna Revenue Code
e t enacted by the Senate and ouse of Representatves of the
Unted States of merca n Congress assembed, That secton
2 00(a) ( ) of the Interna Revenue Code s amended by deetng the
perod at the end thereof and addng the foowng: or to vodka pro-
duced from pure sprts n the manner authorzed at regstered
dsteres.
Sec. 2. The amendment made by ths ct sha take effect on the
frst day of the frst month whch begns more than ten days after the
date of the enactment of ths ct.
pproved May 22,19 2.
19 2-13-13 9
. R. 7230. PU LIC L W 361, IG TY-S COND CONGR SS
C PT R 329, S COND S SSION
n ct To amend the Interna Revenue Code, so as to make non-
ta abe certan stock transfers made by nsurance companes to
secure the performance of obgatons.
e t enacted by the Senate and ouse of Representatves of
the Unted States of merca n Congress assembed, That (a) secton
1 02(b) of the Interna Revenue Code s hereby amended by nsert-
ng after the thrd provso thereof a coon and the foowng new
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
263
provso: Provded further, That the ta sha not be mposed upon
any devery or transfer to a trustee or pubc offcer, made pursuant to
Federa or State aw to secure the performance of an obgaton, or
upon a redevery or retransfer of such shares or certfcates to the
transferor, f such devery, transfer, redevery, or retransfer s
accompaned by a certfcate settng forth the facts .
(b) Secton 3 1(a) of the Interna Revenue Code s hereby
amended by nsertng after the thrd provso thereof the foowng
new provso: : Provded further. That the ta sha not be mposed
upon any devery or transfer to a trustee or pubc offcer, made pur-
suant to Federa or State aw to secure the performance of an obga-
ton, or upon a redevery or retransfer of such nstruments to the
transferor, f such devery, transfer, redevery, or retransfer s
accompaned by a certfcate settng forth the facts .
(c) ffectve Date. The amendments made by ths ct sha take
effect on the day foowng the date of the enactment of ths ct.
pproved May 23,19 2.
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
IND
d|usted rates of return, depressed ndustry subgroups, Regua-
tons 130 amended
ffated corporatons:
pportonment of ncome and e cess profts ta n determn-
ng earnngs and profts
tenson of tme for fng returns for ta abe years endng
after March 31, 19 1, and before pr 1, 19 2
greements, cosng, fna determnaton of ta abty
coho, ndustra, transfers by ppene, Reguatons 3 amended.
ens, nonresdent, ta aton of, Reguatons 111 amended
mendments:
Reguatons 130
Secton 0. 33(a)-2
Sectons 0. 6-2, 0. 7-1, 0. 7-2..
Reguatons 116
Sectons 0 .102, 0 .20 , 0 .206
Secton 0 .213 (added) ---
Reguatons 11
Sectons 11.60 , 11.60 , 11.606, 11.903, 11. 0 ...
Reguatons 111
Sectons 29. -1, 29.11-2, 29.23(e)-, 29.23(o)-, 29.2 -
3, 29. 1-1, 29. 3-1, 29. -2, 29. -3
29. - , 29.116-6 (added), 29.117-1,
29.119-1, 29.131-1, 29.131-3, 29.1 3-1,
29.1 7-6, 29.211-7, 29.212-1, 29.213-1,
29.21 -1, 29.217-2, 29.219-1, 29.220-1
29.2 1-1, 29.2 1-2, 29.2 1- , 29.2 2-1
Sectons 29.22(a)-, 29.113(a)-, 29.130 -1 (added),
29.130 -2 (added), 29.130 -3 (added), 29.130 -
(added), 29.130 - (added)-
Secton 29.22(b) ( )-
Sectons 29.23(bb)- (added), 29.113(b)()- ...
Secton 29.2 -1 -
Secton 29.3 -2 (added)
Sectons 29.107-2, 29.117-1, 29.117-6, 29.117-7,
29.117-10 (added).. -
Sectons 29.111-1, 29.11 - , 29.11 -6
Secton 29.112(b) (7)-3
Secton 29.120-1
Secton 29.127(a)-
Sectons 29.1 7-3, 29.1 - (added)
Sectons 29.201-1, 29.201- , 29.201-6, 29.202-2,
29.203 -1 (added), 29.203 -2 (added)
Reguatons 10
Sectons 6.2 6.11, 6.13, 6.16a, 6.19
Reguatons 107
Sectons 03.201, 03.202, 03.203, 03.20 , 03.206,
03.210, 03.217, 03.221, 03.227, 03.22 , 03.302,
03. 06, 03. 0 , 03. 11, 03.603, and 03.60 (a).
Sectons 03. 01(f), 03. 03 (a), (b), (c)
Reguatons 106
Secton 02.201 (r) (added)
29. - ,
29.117-2,
29.1 7-3,
29.21 -1,
(added),
No.
13 9
13 36
137 9
13793
137 3
13 10
137 0
13 9
13 12
1379
13 3
Page
13 10
126
13 6
70
137 7
1
1373
23
137
31
13
36
13769
6
13 3
63
13 23
6
13
73
13 09
7
13 7
107
137 0
121
13 2
167
13 3
173
1379
19
13 3
173
21 1 2
-1
(26 )
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
266
mendments Contnued
Reguatons 10
Sectons 1.10, 1.11, 1.17, 1.20, 1. , 1. 7c
Sectons 1.16, 1.21, 1.27, 1. 0
Reguatons 103
Secton 19.127(a)- -
Reguatons 9
Sectons 323.20, etc
Reguatons 7
rtces 1, 9, 1
Reguatons f
Sectons 310. 0 316. 1, 316.20
Reguatons
Sectons 31 .30. 31 .30,31 .66
Reguaton 21
Sectons 191. 0, etc
Reguatons 20
Sectons 19 .37. 19 . (a), 19 . 9 -.-
Reguatons 1
Sectons 190. 7 , etc --
Reguatons 10
Secton 1 .606
Reguatons
rtces 29, etc
Reguatons 7
Sectons 17 .23 , 17 .239, 17 .2 1
Reguatons 3
Sectons 1 2.9 , etc
musement park, rdes and amusement devces, appcaton of
admssons ta to
nnutes:
auaton
Reguatons 10 amended
Reguatons 10 amended
rtstc work, ta on ncome from, Reguatons 111 amended-.
ttorneys fees:
Incurred n contestng gft ta defcency
Pad for producton or coecton of amony, Reguatons
111 amended
utomobes. (/See cse ta es.)

ad debts, parta worthessness, charge-off under Revenue

cts of 1921 to 192 , ncusve
ase perod yeary rates of return. Reguatons 130 amended...
aseba, payer s contract wth renewa opton ,
ass, gan or oss, stock acqured under restrcted stock optons,
Reguatons 111 amended
cntonte, bass for depeton, transportaton from deposts to
treatment pant more than 0 mes away
onds:
changed for new bonds of same corporaton n same
prncpa amount, recaptazaton
Interest, accrua for perod precedng ssuance
orrowed capta, advances by factor...
ureau of Interna Revenue:
Dscosure of offca nformaton
Reorganzaton Pan No. 1 of 19 2
ureau reorganzaton, conformaton of references to certan
offcers to nomencature n Treasury Department
No.
13 0
13 2
13769
13 1
137
13763
13 9
13 00
13 6
13770
13 27
13 3
13762
137 1
13 13
13 37
13 3
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
267
usness e penses:
aseba payer s contract wth renewa opton
Payment to corporaton by offcer or drector under secton
16(b) of Securtes change ct of 193
Payments by optcans to doctors prescrbng eyegasses...
uttons, |ewery. (See cse ta es.)
C
Capta assets, artstc work defned, Reguatons 111 amended
Capta e pendtures:
Crcuaton e penses of newspapers, magaznes, and other
perodcas, Reguatons 111 amended
Deveopment costs of o and gas wes
Capta gans and osses:
rtstc work, Reguatons 111 amended.
Futures tradng, saes or e changes, treatment for ncome
ta purposes, Mm. 62 3 modfed
Nonresdent aens, Reguatons 111 amended
Sae of securtes by an offcer or drector of a corporaton,
amount pad to corporaton under secton 16(b) of
Securtes change ct of 193
Short saes, Reguatons 111 amended
Capta gans, vestock hed for draft, breedng, or dary pur-
s, treatment under secton 117(|), I. R. C., of gans from
ty osses, sustaned by ndvduas due to war condtons
Word War II
Charge-off, partay worthess bad debts, Revenue cts of 1921
to 192 , ncusve
Chartabe contrbutons, unmted deducton, Reguatons 111
amended
Chd-pacng agences, mantenance payments made to foster
parents, nformaton returns
Cgarette ta , Okahoma, deductbty by consumer-purchaser
Cgarettes:
Manufactured n and removed from domestc factores
November, 19 1 and 19 0
December, 19 1 and 19 0...
anuary, 19 2 and 19 1
February, 19 2 and 19 1
March, 19 2 and 19 1
pr, 19 2 and 19 1 -
Reguatons amended
Cgars:
Manufactured n and removed from domestc factores
Large
November, 19 1 and 19 0
December, 19 1 and 19 0
anuary, 19 2 and 19 1
February, 19 2 and 19 1
March, 19 2 and 19 1
Sma-
November, 19 1 and 19 0
December, 19 1 and 19 0..
anuary, 19 2 and 19 1
February, 19 2 and 19 1
March, 19 2 and 19 1
pr, 19 2 and 19 1
Crcuaton e pendtures, newspapers, magaznes, and other
perodcas, Reguatons 111 amended.
Cosng agreements, fna determnaton of ta abty
Rung No.
13 00
137
13799
13769
1373
137 6
13769
13 0
13 10
137
13769
13791
13 3
13763
13
13737
13 31
137 3
1376
137 6
13 0
13S2
13 1
137 2
137
13777
13 03
13 22
13 39
137 3
1376
137 6
13S0
13 2
13 1
1373
13793
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
26
Con-operated gamng devces, ncrease n rate of ta
Coecton of ncome, estate, and gft ta es, reguatons govern-
ng acceptance of Treasury notes
Compensaton:
Contrbutons by empoyers under New York dsabty
benefts aw
Retroactve wage ncreases and saary ad|ustments awarded
by Saary Stabzaton oard, when deductbe
Consodated returns. (See Returns, consodated.)
Contempaton of death, transfers wthn 3-year perod endng
wth date of death, Reguatons 10 amended
Contracts, renewabe baseba payer s cost of
Contrbutons:
Chartabe, unmted deducton, Reguatons 111 amended.
mpoyers, New York dsabty benefts aw
Cooperatve assocatons, nformaton returns as to patronage
dvdends, rebates, or refunds, Reguatons 111 amended
Corporatons:
ffated
pportonment of ncome and e cess profts ta n
determnng earnngs and profts
tenson of tme for fng returns for ta abe years
endng after March 31, 19 1, and before pr 1, 19 2.
en empoyees of raway system owned and operated by
foregn government
Drector s fees and other remuneraton, sef-empoyment
ncome
tenson of tme for fng returns and payment of ta for
ta abe vears ended after March 31, 19 1, and before
December 1. 19 1.. -
Informaton returns, payment of dvdends
Ma mum e tenson of tme for fng returns and payment
of ta for ta abe years ended after March 31, 19 1, and
before December 1, 19 1 ;
New corporaton organzed under aws of same State as
predecessor, returns
Court decsons:
Commssoner; Thomas 27. Ly et U .
Commssoner v. Phadepha Transportaton Co
Commssoner v. Ward I. Thompson e u
Frtz, vthur ., and nna . Frtz v. areck, ohn T.,
Coector
areck, ohn T., Coector; Frtz, rthur ., and nna .
Frtz v -
Ly et u ., Thomas ., v. Commssoner
Lykes, oseph T., v. Unted States.. - -.
Phadepha Transportaton Co.; Commssoner v
Putkn, ames, v. Unted Staes
Thompson et u ., Ward I.; Commssoner v
Unted States; oseph T. Lykes v
Unted States; ames Putkn v
Credt, e cess profts, borrowed capta, advances by factor
Credts aganst ta :
Cuban ta on stock dvdends
Profts ta mposed by Provnce of uebec under uebec
Corporaton Ta ct
Speca refunds of empoyee soca securty ta , Regua-
tons 111 amended
Ta es of foregn countres and Unted States possessons
pad by resdents of Puerto Pco, Reguatons 111
amended .
Rung No.
137 0
137 0
13779
13 01
13 1
13 00
13
13779
13S 7
13 36
137 9
13 2
137 2
137
137 2
13790
13S02
13799
13 3
13 31
13739
13739
13799
13 1
13 3
13 07
13 31
13 1
13 07
13762
13771
13 29
13
13 10
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
269
Credts or refunds, speca refunds of empoyee soca securty
ta , Reguatons 111 amended
Cuba, ta on stock dvdends, credt aganst Unted States
ncome ta
Death benefts, payabe to benefcary desgnated by deceased
empoyee under a proft-sharng and retrement pan
Decedents, gross estate, death benefts payabe to benefcary
desgnated by deceased empoyee under a proft-sharng and
retrement pan
Deductons:
ttorneys fees pad for producton or coecton of amony,
Reguatons 111 amended
ad debts, parta worthessness, charge-off under Revenue
cts of 1921 to 192 , ncusve
Unmted, chartabe contrbutons, Reguatons 111
amended
When to be taken
Cost of baseba payer s contract wth renewa opton
Interest on predated bonds ssued n connecton wth
reorganzaton
Retroactve wage ncreases and saary ad|ustments
awarded by Saary Stabzaton oard
Department stores empoyng the reta nventory and eectve
nventory methods, prce ndces for anuary 19 2
Depeton:
ass, transportaton of bentonte from deposts to treat-
ment pant more than 0 mes away
Deveopment costs of o and gas wes
Deprecaton, deveopment costs of o and gas wes
Depressed ndustry subgroups, fna determnatons, Regua-
tons 130 amended
Drectors, corporatons, fees and other remuneraton, sef-em-
poyment ncome
Dscosure of offca nformaton
Dsted sprts:
Reguatons 7, 10, 1 , and 20 amended
Reguatons 21 amended
Dvdends:
Dstrbutons out of ncrease n vaue of property accrued
pror to March 1, 1913, Reguatons 111 amended
Informaton returns by corporatons
Patronage, nformaton returns, Reguatons 111 amended.
Documents, charges for furnshng copes

arnngs and profts, corporatons, apportonment of ncome

and e cess profts ta among members of affated group
ectons:
Captazaton of crcuaton e pendtures of newspapers,
magaznes, and other perodcas, Reguatons 111
amended
storca nvested capta method, computaton of e cess
profts credt
Sharehoders, recognton of gan n certan corporate
qudatons, Reguatons 111 amended
mpoyee stock optons, restrcted, Reguatons 111 amended-.
Rung No. I
13
13771
13 1
13 1
137
13763
13
13 00
13 3
13 01
13 33
13770
137 6
137 6
13 9
137 2
137 1
13 20
13 21
13 3
137 2
13 7
137 1
13 36
1373
13
13 23
13 6
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
270
mpoyment ta es:
Interna Revenue Code
Credt, addtona, change n procedure for submttng
nformaton for aowance of
Drvers, agent and commsson, status after 19 0
Inspecton of returns, Form 9 1, by State unempoy-
ment compensaton commssons
Wages
Computaton procedure under FIC , agent and
commsson drvers
quvaent e empton requrements, Repubc of Lbera
state ta :
Gross estate, death benefts payabe to benefcary desg-
nated by deceased empoyee under a proft-sharng and
retrement pan
Reguatons 10 amended to conform to Revenue ct of
19 0 --- -
auaton of annutes, fe estates, remanders, and rever-
sons, Reguatons 10 amended
cess profts credt, eecton as to computaton by use of hstor-
ca nvested capta method
cess profts ta :
orrowed capta, advances by factor
Fna determnatons of depressed ndustry subgroups, etc.,
Reguatons 130 amended
cess Profts Ta Counc, organzaton change
changes:
onds for new bonds of same corporaton n same prncpa
amount, recaptazaton
cse ta es:
dmssons ta es
musement park, rdes and amusement devces
Manufacturers ta es
utomobes, parts or accessores, ta abty of ftng
|acks
Frearms, shes, and cartrdges
Gasone, ncrease n rate of ta
Mechanca pencs, sae of ta abe and nonta abe
artces as a unt
Pstos and revovers
Retaers ta es
ewery., buttons, appcaton of ta to
Stamp ta es
Con-operated gamng devces, ncrease n rate of ta ..
Wagerng ta es
Sut cubs and other merchandse cubs
Tckets or chances n connecton wth sae of mer-
chandse
cusons from gross ncome:
Income from sources wthn Puerto Rco, Reguatons 111
amended
Raway system owned and operated by foregn government,
ncome of system and empoyees
penses, nonbusness, attorneys fees pad for producton or
coecton of amony, Reguatons 111 amended
tenson of tme:
Fng ncome ta returns
Fng of corporaton returns and payment of ta for ta -
abe years ended after March 31, 19 1, and before De-
cember 1, 19 1
Ma mum perod
Returns of affated corporatons, ta abe years endng after
March 31, 19 1, and before pr 1, 19 2
torton, money obtaned by
Rung No. I
1379
13 19
137
13 19
137 1
13 1
13 1
13 0
13
13762
13 9
13 30
13 27
13739
1376
13773
13772
13776
1377
1377
137 0
13 60
137
13 10
13 2
137
137
137
13790
137 9
13 07
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
271
Famy partnershps, recognton for ta abe years begnnng
pror to anuary 1, 19 1
Federa empoyees, workng n Unted States possessons, Regu-
atons 111 amended
Fees:
ttorneys
Incurred n contestng gft ta defcency
Pad for producton or coecton of amony, Regua-
tons 111 amended
Drector of corporaton, sef-empoyment ncome
Frearms. (See cse ta es.)
Foregn governments, raway system owned and operated by,
ta abty of ncome
Foregn ta es:
Cuba, stock dvdends, credt aganst Unted States ncome
ta
Profts ta mposed by Provnce of uebec under uebec
Corporaton Ta ct, credt aganst Unted States
ncome ta
Forms:
66, agreement as to fna determnaton of ta abty
9 1, nspecton of, by State unempoyment compensaton
commssons
Futures tradng, saes or e changes, gan or oss, Mm. 62 3
modfed
G
Gan or oss:
ass
Securtes retaned by offcer or drector where pay-
ment made to corporaton under secton 16(b) of
Securtes change ct of 193
Stock acqured under restrcted stock optons, Regua-
tons 111 amended
Dstrbutons by corporatons out of ncrease n vaue of
property accrued pror to March 1, 1913, Reguatons
111 amended
change of bonds for new bonds of same corporaton n
same prncpa amount, recaptazaton
Futures tradng, saes or e changes, Mm. 62 3 modfed...
Recognton, eectons by sharehoders n certan corporate
qudatons, Reguatons 111 amended
Gasone. (See cse ta es.)
Gft ta :
auaton of annutes, fe estates, remanders, and rever-
sons, Reguatons 10 amended
Gross ncome:
cusons
Raway system owned and operated by foregn gov-
ernment, ncome of system and empoyees
Incusons
Lessor s Federa ncome ta es pad by essee
Mantenance payments receved by foster parents
from chd-pacng agences
Money obtaned by e torton
When ncuded., optons open to owners of maturng Unted
States Savngs onds of Seres
storca nvested capta, eecton to use method n com-
putaton of e cess profts credt
ouse of Representatves Commttee on the udcary, nspec-
ton of returns ... ...........
Rung No. I
13792
13 10
13 1
137
137 2
13 2
13771
13 29
13793
137
13 0
137
13 6
13 3
13 27
13 0
13 23
13 2
13 2
1379
13737
13 07
13761
13
13 1
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
272
Indvduas, osses sustaned due to condtons after Word War
II -
Industra acoho, transfers by ppene, Reguatons 3 amended.
Industry base perod rates of return, Reguatons 130 amended..
Informaton at source:
Dvdend payments by corporatons
Mantenance payments made by chd-pacng agences to
foster parents
Patronage dvdends, rebates, or refunds, Reguatons 111
amended
Informaton, offca, dscosure of
Inspecton of returns:
Commttee on the udcary, ouse of Representatves
Form 9 1, State unempoyment compensaton commssons.
Senate Commttee on rmed Servces
Senate Commttee on pendtures n the ecutve
Departments
Senate Commttee on Interor and Insuar ffars
Senate Commttee on Rues and dmnstraton
Insurance companes:
Lfe-
d|usted norma-ta net ncome, ta abe years be-
gnnng n 19 1, Reguatons 111 amended
cess profts net ncome, ncome method, ta abe
years begnnng n 19 1, Reguatons 130 amended..
Reserve nterest credt, ta abe years begnnng n
19 1, Reguatons 111 amended
Makng nonta abe certan stock transfers of (P. L. 361)..
Interest:
Predated bonds ssued n connecton wth reorganzaton
State obgatons, speca ta bs ssued for speca benefts
to property, Reguatons 111 amended
Inventores, eectve method, prce ndces for anuary 1S 2
for use by department stores
Invested capta credt, eecton to use hstorca nvested capta
method
Ireand, Repubc of, ncome ta conventon, wthhodng reg-
uatons. .

ewery, buttons. (See cse ta es.)

udcary Commttee, ouse of Representatves, nspecton
of returns
L
Leases, essor s Federa ncome ta es pad by essee
I ega e penses, ncurred n contestng gft ta defcency
Legsaton:
ghty-second Congress
Pubc Law No. 3 2
Pubc Law No. 3 2..
Pubc Law No. 3 3
Pubc Law No. 3
Pubc Law No. 361...
Lbera, Repubc of, equvaent e empton requrements
Lfe estates:
auaton
Reguatons 10 amended
Reguatons 10 amended. .
Rung No.
13 3
137 3
13 9
137 2
13737
13 7
137 1
13 1
137
137 9
1376
137
137 9
137 0
137 0
137 0
13 9
13 3
137 7
13 33
13
13 17
13 1
1379
13 1
13 0
13 6
13 7
13
13 9
137 1
13 0
13 2
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
273
Lfe nsurance companes:
d|usted norma-ta net ncome, ta abe years begnnng
n 19 1, Reguatons 111 amended
cess profts net ncome, ncome method, ta abe years
begnnng n 19 1, Reguatons 130 amended
Reserve nterest credt, ta abe years begnnng n 19 1,
Reguatons 111 amended
Lqudatons, corporatons, eectons by sharehoders as to
recognton of gan, Reguatons 111 amended
Lvestock, hed for draft, breedng, or dary purposes, treat-
ment under secton 117 ), I. R. C., of gans from sae
Losses:
Securtes, payment to corporaton by offcer or drector
under secton 16(b) of Securtes change ct of 193 ..
Sustaned by ndvduas due to war condtons after Word
War II
War, Reguatons 103 and 111 amended
M
Machne guns and short-barreed frearms, amendng prov-
sons of Interna Revenue Code (P. L. 3 3) -
Marsha Isands, status as possesson of Unted States
Mechanca pencs. (See cse ta es.)
Mnes, bass for depeton, transportaton of bentonte from
deposts to treatment pant more than 0 mes away
N
New York contrbutons by empoyers under dsabty benefts
aw
Nonbusness e penses:
ttorneys fees
Incurred n contestng gft ta defcency
Pad for producton or coecton of amony, Regu-
atons 111 amended
Nonresdent aens, capta gans and osses, Reguatons 111
amended
Notes, Treasury, reguatons governng acceptance n payment
of ncome, estate, and gft ta es
O
Obgatons of State, nterest on speca ta bs ssued for
speca benefts to property, Reguatons 111 amended
O and gas wes, deveopment costs
Okahoma, cgarette ta , deductbty by consumer-purchaser.
Optcans, payments to doctors, prescrbng eyegasses
Optons, empoyee restrcted stock, Reguatons 111 amended.
Organzaton change, cess Profts Ta Counc
P
Partnershps, famy, recognton for ta abe years begnnng
pror to anuary 1, 19 1
Patronage dvdends, rebates, or refunds, nformaton returns,
Reguatons 111 amended
Payment of ncome, estate, and gft ta es, reguatons govern-
ng acceptance of Treasury notes
Payment of ta :
Corporatons
tenson of tme for ta abe years ended after March
31, 19 1, and before December 1, 19 1
Ma mum e tenson of tme for ta abe years ended
after March 31, 19 1, and before December 1, 19 1
Rung No.
137 0
137 0
137 0
13 23
13791
137
13 3
13 09
13 7
13 11
13770
13779
13 1
137
13 10
137 0
137 7
137 6
13 31
13799
13 6
13 30
13792
13 7
137 0
137
13790
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
27
Persona e penses, attorneys fees ncurred n contestng gft
ta defcency
Photographc apparatus, amendng e cse ta on (P. L. 3 2)
Pstos and revovers. (See cse ta es.)
Possessons of Unted States:
Federa empoyees workng n, Reguatons 111 amended.
Marsha Isands
Prsoners, Federa, rehabtaton (P. L. 3 2)
Property of decedent at tme of death, death benefts payabe to
benefcary desgnated by deceased empoyee under a proft-
sharng and retrement pan
Pubc aws:
ghty-second Congress
No. 3 2, assstng Federa prsoners n ther rehab-
taton
No. 3 2, amendng the e cse ta on photographc
apparatus
No. 3 3, amendng provsons of the Interna Revenue
Code reatng to machne guns and short-barreed
frearms
No. 3 , amendng secton 2 00 (a) ( ), I. R. C
No. 361, amendng Interna Revenue Code makng
nonta abe certan stock transfers of nsurance com-
panes
Puerto Rco, ncome of resdents, Reguatons 111 amended
uebec, Provnce of, profts ta mposed under uebec Corpo-
raton Ta ct, credt aganst Unted States ncome ta .
Rates of return, ndustry base perod. Reguatons 130 amended.
Reguatons (See ao mendments: Reguatons).
Dscosure of offca nformaton
Wthhodng, Unted States-Ireand ncome ta conventon
Remanders:
auaton
Reguatons 10 amended
Reguatons 10 amended
Rent, essor s Federa ncome ta es pad by essee
Reorganzaton:
change of bonds for new bonds of same corporaton n
same prncpa amount
Reorganzaton Pan No. 1 of 19 2, ureau of Interna Revenue
Repubc of Lbera, equvaent e empton requrements
Restrcted stock optons, Reguatons 111 amended .
Returns:
ffated corporatons, ta abe years endng after March
31, 19 1, and before pr 1, 19 2, e tenson of tme for
fng
Charges for furnshng copes
Consodated, apportonment of ncome and e cess profts
ta n determnng earnngs and profts
Corporatons-
tenson of tme for fng for ta abe years ended
after March 31, 19 1, and before December 1, 19 1...
Ma mum e tenson of tme for fng for ta abe years
ended after March 1, 19 1, and before December 1,
19 1
Organzed under aws of same State as predecessor
Income ta , e tensons of tme for fng ..
Rung No. I
13 1
13 0
13 10
13 11
13 0
13 1
13 0
13 6
13S 7
13
13 9
13 10
c 29
13 9
137 1
13 17
13 0
13 2
1379
13 27
13 13
137 1
13 6
137 9
137 1
13 36
137
13790
13 02
137
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
27
Returns Contnued
Informaton
Mantenance payments made by chd-pacng agen-
ces to foster parents
Patronage dvdends, rebates, or refunds, Reguatons
III amended
Payments of dvdends by corporatons
Inspecton
Commttee on the udcary, ouse of Representatves.
Form 9 1, State unempoyment compensaton com-
mssons
Senate Commttee on rmed Servces
Senate Commttee on pendtures n the ecutve
Departments
Senate Commttee on Interor and Insuar ffars
Senate Commttee on Rues and dmnstraton
Revenue ct of 19 1, amendment of Reguatons 116 to conform
to ---
Reversons:
auaton
Reguatons 10 amended
Reguatons 10 amended..
Royates, derved after December
busness, sef-empoyment ncome.
31, 19 0, from trade or
S
Savngs bonds, Unted States, Seres , optons open to owners
upon maturty
Securtes change ct of 193 , payment to corporaton by
offcer or drector under secton 16(b)
Sef-empoyment ncome:
Fees receved by drector of corporaton
Royates derved after December 31, 19 0, from trade or
busness
Senate Commttee on rmed Servces, nspecton of returns
Senate Commttee on pendtures n the ecutve Depart-
ments, nspecton of returns
Senate Commttee on Interor and Insuar ffars, nspecton of
returns
Senate Commttee on Rues and dmnstraton, nspecton of
returns
Shps, Repubc of Lbera, equvaent e empton requrements
Short saes, capta gans and osses, Reguatons 111 amended
Snuff:
Manufactured n and removed from domestc factores
November, 19 1 and 19 0
December, 19 1 and 19 0
anuary, 19 2 and 19 1
February, 19 2 and 19 1
Mardh, 19 2 and 19 1
pr, 19 2 and 19 1
Soca Securty et mendments of 19 0, Reguatons 106, 107,
and 11 amended to conform to certan provsons of
Soca securty ta , wthhed from empoyee, credt for speca
refunds aganst ncome ta abty, Reguatons 111
amended
Speca ta bs, ssued for speca benefts to property, nterest
on, Reguatons 111 amended
State obgatons, nterest on speca ta bs ssued for speca
benefts to property, Reguatons 111 amended
Stock optons, empoyee restrcted, Reguatons 111 amended.
Sut cubs and other merchandse cubs, appcaton of wagerng
Rung No.
13737
13 7
137 2
13 1
137
137 9
1376
137
137 9
13 12
13 0
13 2
137 7
13761
137
137 2
137 7
137 9
1376
137 .
137 9
137 1
13769
137 3
13766
13796
13 0
13 2
13
13 3
13
137 7
137 7
13 6
13 G0
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

6

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g

e
276
T
Ta Court of the Unted States, The:
Decsons of, st of acquescences and nonacquescences
Ta es:
Federa ncome, pad by essee to or for account of essor
Foregn
Cuba, stock dvdends, credt aganst Unted States
ncome ta
Profts ta mposed by Provnce of uebec under
uebec Corporaton Ta ct, credt aganst Unted
States ncome ta
Okahoma cgarette, deductbty by consumer-purchaser
Theft, osses sustaned by ndvduas due to war condtons
after Word War II
Tobacco:
Manufactured n and removed from domestc factores
November, 19 1 and 19 0
December, 19 1 and 19 0
anuary, 19 2 and 19 1
February, 19 2 and 19 1. __
March, 19 2 and 19 1
pr, 19 2 and 19 1..
Reguatons amended
Trade or busness, royates derved after December 31, 19 0,
sef-empoyment ncome
Transportaton, bentonte, deposts to treatment pant more
than 0 mes away, bass for depeton
Treasury notes, reguatons governng acceptance n payment
of ncome, estate, and gft ta es
U
Unted States Savngs onds, Seres , optons open to owners
upon maturty
Unmted deducton for chartabe contrbutons, Reguatons
111 amended
auaton:
Computaton for estate ta purposes, Reguatons 10
amended
Computaton for gft ta purposes, Reguatons 10
amended
odka produced from pure sprts, secton 2 00(a)( ), I. R. C,
amended (P. L. 3 )
W
Wagerng ta es. (See cse ta es.)
Wages:
Computaton procedure under FIC , agent and com-
msson drvers
Pad on or after November 1, 19 1, addtona wthhodng. .
Retroactve ncreases awarded by Saary Stabzaton
oard, when deductbe
War osses, Reguatons 103 and 111 amended
Wthhodng of ta at source:
ddtona, wages pad on or after November 1, 19 1
Contrbutons by empoyers under New York dsabty
benefts aw
Reguatons 116 amended to conform to the Revenue ct
of 19 1
Reguatons under Unted States-Ireand ncome ta con-
venton
ung No.
13 2
1379
13771
13 29
13 31
13 3
137 3
13766
13796
13 0
13 2
13
137 2
137 7
13770
137 0
13761
13
13 0
13 2
13
13 19
1379
13 01
13 09
1379
13779
13 12
13 17
O
G
e
n
e
r
a
t
e
d

f
o
r

L

n

Z
h
a
n
g

(
N
e
w

Y
o
r
k

U
n

v
e
r
s

t
y
)

o
n

2
0
1
3
-
0
1
-
2
1

2
1
:

7

G
M
T


/


h
t
t
p
:
/
/
h
d

.
h
a
n
d

e
.
n
e
t
/
2
0
2
7
/
u
c
1
.
b
3
2
9
6
9
2
1
P
u
b

c

D
o
m
a

n
,

G
o
o
g

e
-
d

z
e
d


/


h
t
t
p
:
/
/
w
w
w
.
h
a
t
h

t
r
u
s
t
.
o
r
g
/
a
c
c
e
s
s
_
u
s
e
#
p
d
-
g
o
o
g