policies on the life of the husband where the premiums were paid with community funds. The Texas cases uniformly hold that property acquired by a husband before marriage is his separate property, but if any part of the purchase money is paid after marriage with community funds, the community estate is entitled to reimbursement therefor. The courts say that where title to property is acquired by either spouse before marriage, its status as "separate property" is fixed at the time of its acquisition and cannot be altered thereafter by the fact that the purchase price is paid with community funds. Hillen v. Williams (Tex.), 60 S. W. 997; Jenkins v. Robinson (Tex.), 169 S. W. (2d) 250, and Colden v. Alexander (Tex.), 171 S. W. (2d) 328; MacRae v. MacRae (Tex.), 144 S. W. (2d) 320; and Farrow v. Farrow (Tex.), 238 S. W. (2d) 255. In Bergdoll v. Bergdoll, 145 S. W. (2d) 227, there is language indicating that a policy taken out by a husband before marriage may be part separate and part community property. The case involved a division of community property on divorce. The husband acquired two policies on his life before his marriage and fourteen of the nineteen annual premiums were paid after marriage with community funds. The court held that the wife was entitled to one-half of 14/19ths of the cash surrender value of the policies. However, in view of the provisions of Article 4613 of Vernon's Revised Civil Statutes, supra, defining the husband's separate property, and the decisions holding that an insurance policy is property, the decision in the Bergdoll case must be construed as merely holding that as to such policies, the wife is entitled to reimbursement for onehalf of the cash surrender value which was built up with community funds. The policy itself, having been acquired by the husband before marriage, is his separate property but upon divorce his wife is entitled to reimbursement for premiums paid with community funds. In view of the foregoing, it is held that the rules stated in paragraph (E) of Rev. Rul. 232, supra, apply equally to similar policies of insurance and the proceeds therefrom under the community property laws of the State of Texas. SECTION 812(b).-NET ESTATE: EXPENSES, LOSSES, INDEBTEDNESS, AND TAXES REGULATIONS 105, SECTION 81.36: Claims against the estate. Treatment of life insurance policies under community property laws of Texas in situations involving marital deductions. (See Rev. Rul. 54-272, p. 11.). SECTION 812(e).-NET ESTATE: BEQUESTS, ETC., REGULATIONS 105, SECTION 81.47a (a): Allowance of marital deduction. Treatment of life insurance policies under community property laws of Texas in situations involving marital deductions. (See Rev. Rul. 54-272, p. 11.) SECTION 2100.-[TOBACCO TAX]-PACKAGES REGULATIONS 8, ARTICLE 109: Packages to be approved by Commissioner. (Also Section 2111.) Rev. Rul. 54-274 The cellophane outer wrapper on certain types of containers for tobacco products, which are not complete unless wrapped, is an integral part of the package. The internal revenue tax stamp may be affixed to such cellophane wrapper and it may bear the required internal revenue marks and notices. Advice is requested whether the internal revenue stamp and the required internal revenue markings may be placed on the cellophane wrapper of certain types of containers for tobacco products. Article 109 of Regulations 8 requires manufacturers to submit a sample of each package or container which they desire to use for packaging tobacco, snuff, cigars, and cigarettes, except wooden packages used for packaging Cavendish, plug, leaf, or twist tobacco, and wooden boxes used for packaging cigars, which packages or boxes comply with the requirements of the regulations as to caution notices, factory brands or marks, and mode of affixing and canceling stamps. Metal, paper, other materials may be used either separately or in combination, or in combination with wood, in the construction of such packages. The Internal Revenue Service has consistently held that the outer cellophane wrapper, used in connection with boxes made of cardboard with sealed or interlocking bottoms and tuck-in tops, packed with cigars and then entirely overwrapped with the cellophane, is not an integral part of the statutory package. In such cases, tobacco products manufacturers are not authorized to print the required internal revenue marks or notices, or to affix the internal revenue tax stamp, to the outer cellophane wrapper on the grounds that once the outer cellophane wrapper is removed and thrown away, the box and its contents would not be properly marked, branded and protected by the necessary stamp, thus subjecting the box and cigars to seizure and forfeiture under section 2152 of the Internal Revnue Code. A similar position is taken with respect to the so-called cup type of package widely used in packing cigarettes and other types of containers for tobacco products which are complete in themselves, exclusive of the outer cellophane wrap. In view of the present wide usage of cellophane by many industries, including tobacco products manufacturers, in the packaging of many commodities, it is held that on certain types of containers, such as the tray type container extensively used in packing 5 cigars, which are not complete unless wrapped, the cellophane outer wrapper is an integral part of the package and the internal revenue tax stamp may be affixed to such cellophane wrapper and it may bear the required internal revenue marks and notices. This ruling will apply to packages made entirely of cellophane and to cellophane pouches or bags, the open end of which is sealed with a lightweight pasteboard or heavy paper saddle. A sample of any such package to be used in putting up tobacco products for sale or consumption domestically must be submitted to the Assistant Regional Commissioner, Alcohol and Tobacco Tax, for the region in which the factory where the container will be used is located, in accordance with article 109 of Regulations 8. SECTION 2135.-[TOBACCO TAX]-EXEMPTION FROM TAX REGULATIONS 73, ARTICLE 6: Application for withdrawal and entry for exportation (Form 550, Revised). Rev. Rul. 54-275 Manufacturers, withdrawing tobacco products from their factories for consignment to officers of the Armed Forces of the United States for subsequent exportation to Armed Forces beyond the jurisdiction of the internal revenue laws, may reproduce a supply of Form 550, "Application for Withdrawal and Entry for Exportation," appropriately modified for use in such cases provided the proposed reproduction is approved by the National Office. Advice is requested whether Forms 550, "Application for Withdrawal and Entry for Exportation," may be reproduced by tobacco manufacturers in a modified form for use in the case of withdrawals of tobacco products for delivery to officers of the Armed Forces for subsequent exportation, in lieu of having the original Forms 550 overprinted. Various entries on Forms 550 required in the case of usual withdrawals for exportation are not applicable in the case of withdrawals for consignment to officers of the Armed Forces for subsequent exportation to Armed Forces beyond the jurisdiction of the internal revenue laws. Therefore, manufacturers withdrawing tobacco products for such purposes may reproduce a supply of Form 550, appropriately modified. The proposed reproduction must first be approved by the National Office, Internal Revenue Service, Washington, D. C. SECTION 2197.-[TOBACCO TAX]-TERRITORIAL EXTENT OF LAW REGULATIONS 76, ARTICLE 1: Shipment or delivery restricted. Rev. Rul. 54-276 Nontaxpaid tobacco products may be withdrawn from sea stores warehouses for delivery to fishing vessels which have been issued permits by the United States customs authorities to "touch and trade" for use as sea stores beyond the jurisdiction of the internal Advice is requested whether fishing boats which go outside the continental United States, but do not enter or clear, are entitled to receive sea stores cigarettes. Section 2197 of the Internal Revenue Code provides that the internal revenue laws imposing taxes on tobacco, snuff, cigars, or cigarettes shall be held to extend to such articles produced anywhere within the exterior boundaries of the United States, whether the same be within a collection district or not. This section further provides that the shipment or delivery of manufactured tobacco, snuff, cigars, cigarettes, or cigarette papers or tubes, for consumption beyond the jurisdiction of the internal revenue laws of the United States, as above defined, shall be deemed exportation within the meaning of the internal revenue laws applicable to the exportation of such articles without payment of internal revenue tax. Article 1 of Regulations 76 provides that the shipment or delivery of tobacco products as sea stores may be made for consumption of such articles on the high seas beyond the 3-mile limit on various vessels, including vessels clearing through customs en route to places beyond the jurisdiction of the internal revenue laws. Upon proper application, the Collectors of Customs at the various ports issue permits authorizing vessels to "touch and trade." Such permits authorize the vessels to put in at foreign ports to take on supplies. However, in accordance with customs regulations, if a vessel which has been granted a permit to "touch and trade" returns to a port in the United States, whether or not it has touched at a foreign port or place, such permit is surrendered to the Collector of Customs. Deliveries of nontaxpaid tobacco products to such vessels for consumption beyond the jurisdiction of the internal revenue laws of the United States, pursuant to section 2197 of the Internal Revenue Code, are accomplished under the supervision of customs officers at the ports of lading who furnish certificates or other evidence of lading of the merchandise on such vessels and dates of sailing of the vessels. In view of the above procedure the Internal Revenue Service has approved of deliveries of nontaxpaid tobacco products of domestic manufacture to fishing vessels, operating under "touch and trade" permits issued by United States customs officers, for consumption beyond the jurisdiction of the internal revenue laws. Where permits have been issued to fishing vessels to "touch and trade," proprietors of sea stores warehouses may withdraw nontaxpaid tobacco products for delivery to such fishing vessels. Before credit against the sea stores warehouse bond can be allowed for such deliveries, the Assistant Regional Commissioner, Alcohol and Tobacco Tax, must receive copies of Forms 550-B on which the certificates of inspection, receipt, and clearance have been properly executed. PART II-RULINGS AND DECISIONS UNDER PRIOR REGULATIONS INTERNAL REVENUE CODE SECTION 433 (b).-EXCESS PROFITS NET INCOME: TITLE 26-INTERNAL REVENUE.--CHAPTER I, SUBCHAPTER A, PART 40.- EXCESS PROFITS TAX; TAXABLE YEARS ENDING AFTER JUNE 30, 1950 Regulations 130 amended to conform to sections 1, 2, 3, and 4 of Public Law 594, Eighty-second Congress [C. B. 1952–2, 365], To Officers and Employees of the Internal Revenue Service and On January 21, 1954, a notice of proposed rulemaking was pub- lished in the Federal Register [19 F. R. 383] to conform Regulations 130 [26 CFR, pt. 40] to sections 1, 2, 3, and 4 of Public Law 594, Eighty-second Congress [C. B. 1952-2, 365], appproved July 21, 1952. After consideration of such relevant suggestions as were presented regarding the proposals, the amendments set forth below are hereby PARAGRAPH 1. There is inserted immediately preceding section SEC. 4. Effective with respect to taxable years ending after June 30, 1950, section 433 (b) of the Internal Revenue Code (relating to the computation of average base period net income) is hereby amended by inserting at the end thereof two new paragraphs reading as follows: "(18) ADJUSTMENT FOR BASE PERIOD LOSSES FROM BRANCH OPERA- TIONS.-In the case of a taxpayer which during two or more such |