In short, the corporation is no poorer and the stockholder is no richer than they were before. Logan County v. United States (169 U. S., 255, 261). If the plaintiff gained any small advantage by the change it certainly was not an advantage of $417,450, the sum upon which he was taxed. It is alleged and admitted that he receives no more in the way of dividends and that his old and new certificates together are worth only what the old ones were worth before. If the sum had been carried from surplus to capital account without a corresponding issue of stock certificates, which there was nothing in the nature of things to prevent, we do not suppose that any one would contend that the plaintiff had received an accession to his income. Presumably his certificate would have the same value as before. Again, if certificates for $1,000 par value were split up in 10 certificates, each for $100, we presume that no one would call the new certificates income. What has happened is that the plaintiff's old certificates have been split up in effect and have diminished in value to the extent of the value of the new. Judgment reversed. Mr. Justice MCKENNA concurs in the result. (T. D. 2635.) Release, under the provisions of section 1212, war-revenue act of October 3, 1917, of tax withheld at source in cases where substitute certificates (Form 1059) were used. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 24, 1918. To collectors of internal revenue and others concerned: Under the provisions of section 1212 of the war-revenue act of October 3, 1917, any withholding agent who, during the year 1917, deducted and withheld at the source any amount of normal tax from income paid to a citizen or resident of the United States, other than interest on corporate obligations containing a so-called "tax-free" or "no-deduction" clause, is required to release and pay over the amount so withheld to the person entitled to receive the same. With reference to this provision of law, inquiry has arisen as to how a debtor corporation is to release and pay over the amount of tax so withheld in a case where a bank or other collection agency detached the ownership certificate which accompanied an interest coupon and substituted its own certificate (Form 1059), which does not disclose the name and address of the bond owner. It is held that where substitute certificate (Form 1059) has been used in connection with coupons from bonds which do not contain a "tax-free" or "no-deduction" clause, the withholding agent shall request the bank or collection agency to disclose the name and address of the owner of the bonds, as shown by the original certificate, and it shall be the duty of the bank or collection agency to make such disclosure to the withholding agent. If the owner of the bond is a citizen or resident of the United States, the withholding agent shall refund the amount of tax deducted, as provided by law, and if a non resident alien, no refundment shall be made, but the withholding agent shall make return thereof on or before March 1, and on or before the time fixed by law for the payment of the tax shall pay the amount withheld to the officer of the United States Government authorized to receive the same. Approved: W. G. MCADOO, DANIEL C. ROPER, Commissioner of Internal Revenue. Secretary of the Treasury. (T. D. 2636.) Distilled spirits. Modification of section 3283, Revised Statutes, and authorization of 48-hour ferment ing period. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 24, 1918. To collectors of internal revenue, distillers, and others concerned: Section 302, act of October 3, 1917, contains, among other things, the following provisions: Under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, the manufacture, warehousing, withdrawal, and shipment, under the provisions of existing law, of ethyl alcohol for other than (1) beverage purposes or (2) use in the manufacture or production of any article used or intended for use as a beverage, and denatured alcohol, may be exempted from the provisions of section thirty-two hundred and eighty-three, Revised Statutes of the United States. Under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe, manufacturers of ethyl alcohol for other than beverage purposes may be granted permission under the provisions of section thirty-two hundred and eighty-five, Revised Statutes of the United States, to fill fermenting tubs in a sweet-mash distillery not oftener than once in forty-eight hours. In view of the foregoing, all distillers operating in the production of alcohol exclusively for other than beverage purposes may continue to operate on Sundays the same as on week days, and collectors under authority contained in regulations No. 7 (pp. 40-41) may require storekeeper-gaugers and storekeeper-gaugers in the capacity of gaugers to remain on duty. In such cases it is suggested that a notation be made on the vouchers (Form 107 and Form 150) for the monthly compensation to the effect that the distilleries were in operation under the provisions of section 302, act of October 3, 1917. Distillers manufacturing ethyl alcohol for other than beverage purposes exclusively may be granted permission to fill fermenting tubs in a sweet-mash distillery not oftener than every 48 hours. Upon re ceipt of notice on Form 27A from such a distiller, the collector will make survey of the distillery accordingly, utilizing the information already in his office with the new factor of the 48-hour fermenting period for the purpose. Approved: W. G. MCADOO, DANIEL C. ROPER, Commissioner of Internal Revenue. Secretary of the Treasury. (T. D. 2637.) Estate tax. Condition under which time for filing estate-tax returns may be extended beyond 90 days from the day a year after the death of the decedent. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 24, 1918. To collectors of internal revenue: It has been found in numerous cases that, at the expiration of the 90-day extension granted by collectors for the filing of estate-tax return, the condition of the estate is such as to preclude the filing of final return upon which the exact tax due can be determined. Accordingly, Article XXIX of regulations 37 is amended to the following extent: Where the executor has requested and has been granted an extension of not to exceed 90 days for the filing of estate-tax return, and represents to the collector that complete return can not then be filed the collector upon investigation, and if he is satisfied that the cause for further delay is unavoidable, may extend the time for filing until in his judgment the reasonable ground for delay has been removed. In every such case it should be pointed out to the executor that, regardless of the further extension, interest attaches from the close of the original 90-day extension upon all the unpaid tax. This interest s required to be computed from the day of the decedent's death and is at the rate of 6 per cent per annum. Collectors should note that in every case of overdue estate tax, where the additional extension of time herein provided for has not been granted, the interest rate is 10 per cent instead of 6 per cent per annum, and such interest is also computed from the day of the decedent's death. Where either an original 90-day extension or the additional extension herein provided for is granted the collector should promptly report all facts to this office. Collectors must also promptly notify this office whenever in their judgment the unavoidable cause for delay in filing return in any case has been removed Persons liable for the payment of the tax imposed by section 600, paragraphs (g) and (h) of the act of October 3, 1917. TREASURY Department, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 24, 1918. To collectors of internal revenue and others concerned: The following synopsis of rulings by the Commissioner of Internal Revenue on questions relating to excise taxes imposed by the warrevenue act of October 3, 1917, is published for the information of revenue officers and others concerned. DANIEL C. ROPER, Commissioner of Internal Revenue. (1) A person manufacturing a preparation under his own formula and offering it for sale under his own private label or trade-mark is liable for the tax imposed upon the article. (2) The manufacturer of a preparation who also bottles and otherwise prepares the same into a salable condition, and who, for advertising purposes only, places the name on the label of any dealer who may handle such preparation, is liable for the tax upon the same The dealer in this case has no interest whatever in the production of the preparation, but his name is placed upon the label for advertising purposes only. (3) Where a manufacturer prepares an article according to the formula and at the instance of a dealer, and also bottles, labels, and otherwise prepares the same into a salable condition, even though the name of the dealer only appears upon the product, the manufacturer and not the dealer is responsible for the tax. (4) Where goods manufactured by a person require further manufacture before being used by the consumer, the one completing the manufacture is liable for the tax. The same rule would apply to bulk goods that require to be bottled or otherwise prepared in order to put them into a salable condition. Therefore, the person preparing the goods into smaller packages, labeling and bottling them is the manufacturer within the meaning of the act. (T. D. 2639.) Instructions relative to acceptance of certificates of indebtedness for income and excess profits taxes. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., January 28, 1918. To collectors of internal revenue: In accordance with the provisions of section, 1010 of the act of October 3, 1917, collectors are directed to receive United States certificates of indebtedness maturing June 25, 1918, at par and accrued interest in payment of income and excess profits taxes when payable at or before the maturity of the certificates. Hereto attached is a schedule showing the exact amount of accrued interest payable per certificate of each issue on any day from January 2 to June 25, 1918. The amount, at par and accrued interest, of the Treasury certificates of indebtedness presented by any taxpayer in payment of income and excess profits taxes must not exceed the amount of the taxes to be paid by him. Deposits of certificates of indebtedness and interest must be made in the Federal reserve banks of the districts in which collectors' offices are located. If the amounts are transmitted by registered mail they should be insured. Other deposits should be made as usual. Until certificates of deposit are received from the banks, the amounts must be carried as "cash on hand" and not credited as "collections," as the dates of certificates of deposit determine the dates of collections. See "Instructions" in record No. 9. The collectors should make, in tabular form, a schedule in duplicate of the certificates of indebtedness to be sent to the Federal reserve bank, showing the serial number of each certificate, date of issue, face value, amount of accrued interest, and amount for which accepted. At the bottom of the schedule there should be a statement giving the amounts of corporation income, individual income, and excess profits tax collections, in order that these amounts may be entered by the bank on the face of the certificate of deposit. The excess profits tax collections should be interlined on the certificate of deposit, just above the total, as "Excess profits tax, $and included in the total. One copy of this schedule must accompany the certificates sent to the Federal reserve bank and the other retained by the collector. Approved: W. G. McADOO, DANIEL C. ROPER, Commissioner of Internal Revenue. Secretary of the Treasury. |