described instrument appears to be more in the nature of the instruments specified in that section than of a simple promissory note. This "gold note" therefore should be taxed at the rate of 5 cents for each $100, face value, or fraction thereof. Respectfully, Messrs. G. E. FLETCHER, Acting Commissioner of Internal Revenue. (T. D. 2258.) Income tax Execution of income-tax ownership certificates by banks and trust companies. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 1, 1915. To collectors of internal revenue: You are advised that as a convenience to banks and trust companies having a large number of ownership certificates to execute in the collection of interest on bonds it is hereby provided that the name of the bank or trust company may be printed or stamped and the facsimile of the signature of the person authorized to sign for the bank or trust company in executing the said ownership certificates may be printed or stamped on the certificates: Provided, That in all cases the bank or trust company shall first file with the Commissioner of Internal Revenue a certificate of its authorization in substantially the following form: (City.) (Date.) THE COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. The undersigned hereby authorizes the use of the facsimile signature shown below upon all income-tax ownership certificates issued in its name until this authorization is revoked by written notice to you. (T. D. 2259.) Annual inventories. Inventories to be made by cigar and tobacco manufacturers on January 1 next and verified by collectors or their deputies. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 16, 1915. To collectors of internal revenue: Inventories on January 1 next by manufacturers of tobacco, snuff, cigars, and cigarettes are required to be made in accordance with the following provisions of law: SEC. 3358, R. S. Every person * * engaged in the manufacture of tobacco or snuff shall make and deliver to the collector of the district a true inventory in such form as may be prescribed by the Commissioner of Internal Revenue and verified by his own oath, of the quantity of each of the different kinds of tobacco, snuff flour, snuff, stems, scraps, clippings, waste, tin-foil, licorice, sugar, gum, and other materials held or owned by him on the 1st day of January of each year, * setting forth what portions of said goods and materials and what kinds were manufactured and produced by him and what were purchased from others. * * * And whenever any such person refuses or willfully neglects to deliver the inventory he shall be fined not less than five hundred dollars nor more than five thousand dollars and be imprisoned not less than six months nor more than three years. SEC. 3390, R. S. Every person * engaged in the manufacture of cigars (or cigarettes) shall make and deliver to the collector of the district a true inventory in such form as may be prescribed by the Commissioner of Internal Revenue, of the quantity of leaf tobacco, cigars, stems, scraps, clippings, and waste, and of the number of cigar boxes and the capacity of each box held or owned by him on the 1st day of January of each year, setting forth what portion and kinds of said goods were manufactured or produced by him and what were purchased from others, and shall verify said inventory by his oath indorsed thereon. In case of refusal or willful neglect to deliver the inventory he shall be fined not less than five bundred dollars nor more than five thousand dollars and imprisoned not less than six months nor more than three years. * * * * * These statutes also require that the collector (or his deputy) shall make personal examination of the stock sufficient to satisfy himself as to the correctness of the inventory and shall verify the fact of such examination by oath to be indorsed on the inventory. The making of true inventories is of the greatest importance. Too much stress can not be laid upon the necessity for their accuracy. No claim of failure to make a true inventory-in which certain tobacco was not included-submitted in response to notice to show cause against assessment for omitted tax on apparent deficiencies shown in an examination of a manufacturer's account will be entertained. In making the required inventory on January 1 next, manufacturers should observe carefully the following instructions: 1. All tobacco material in the factory should be segregated according to the classifications provided in the inventory blank. 2. Each class of tobacco should be weighed separately and all unstemmed tobacco stored off the bonded factory premises, for which permission has been granted by the commissioner, must be included in the inventory. Each entry made in the inventory blank should be compared with the entry made of same in the manufacturer's revenue book, which should correspond. 3. Tobacco dust, siftings, sweepings, and waste on hand shall not be included in any class of tobacco except that in cigar manufacturer's inventory Form 70b; same may be reported under the head of "Waste" only. 4. A list should be made of the weight and marks of each unopened hogshead, case, or bale, or other package of tobacco, and all broken packages or loose tobacco within the factory should be included in such list with a sufficient description of same for identification by the deputy who will call to verify the inventory, and also of all unstemmed tobacco stored off the bonded factory premises. Such list should be made on the back of the inventory form or preserved on separate sheets of the same size and attached thereto. 5. An accurate record should be kept of the quantity of each class of tobacco (in the condition in which inventoried) used after the inventory is taken to the date of the visit of the deputy calling to verify the same. Collectors will detail as many deputies as possible, and direct them to so arrange their routes for the purpose of verifying the inventories at the earliest practicable date after January 1 next, and they should (a) See that each class of tobacco has been properly inventoried and the foregoing instructions observed. (b) Determine, from the quantities of each different kind of tobacco sold and used between the dates of inventory and his visit and on hand and purchased, as to the correctness of the inventory and require any necessary amendments to be made by the manufacturer before the latter makes oath to same before him and before inventory is taken up. (c) Note carefully the provisions of Regulations No. 8, revised July 1, 1910, page 60, headed "Deficiencies found by examining officers,” and report each such case found by him immediately to the collector. Collectors are hereby instructed to cause a copy of this decision, together with the proper inventory blank, to be delivered to each manufacturer of tobacco, snuff, cigars, or cigarettes registered in their respective districts, not later than the 15th day of December of this year, to enable them to comply with the law in regard to inventory on January 1 next. G. E. FLETCHER, Acting Commissioner of Internal Revenue. (T. D. 2260.) Fifty per cent penalty. Where taxpayers make application for blanks disclosing their liability in time no 50 per cent penalty accrues, provided said return is filed within 30 days after receipt of necessary blanks.-T. D. 239 of November 3, 1900, revoked. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 15, 1915. To collectors of internal revenue: Attention is invited to T. D. 239, under date of November 3, 1900, which was published under stress of certain conditions which were developed mainly through the assessment and collection of the large number of new special taxes created by the act of June 13, 1898. It was found that in many cases collectors were unable to furnish all taxpayers in their districts with the blanks prescribed by this office in time to enable them to file their returns of tax duly signed and sworn to before the close of the month in which their liabilities were incurred. The failure to furnish the necessary blanks as stated was occasioned, for the most part, either on account of the extraor dinary demands made upon collectors' offices in the enforcement of new legislation or because in many instances persons who became liable to special tax did not come to the notice of collectors or their deputies in time. It was held, therefore, in effect, by the decision referred to, that where a person liable to pay a special tax disclosed his business for which the tax was due to a collector or deputy, or asked for blanks on which to file his return, at any time during the month in which such business was begun, no 50 per cent penalty should be imposed. It was not intended, however, that this action on the part of the taxpayer would relieve him of the obligations to file the prescribed return under oath placed upon him by law. As the wording of the decision referred to appears to have been construed by many taxpayers as well as some collectors as not requiring such sworn return, the decision is hereby revoked, and in lieu thereof it is held that where a person at any time during the month of commencing business voluntarily discloses to a collector or his deputy in writing, in the absence of the necessary blanks, the kind of business he is engaged in, or about to be engaged in, and for which special tax is required to be paid, collectors will furnish such person, as soon as possible, with the requisite blanks and instructions. No penalty of 50 per cent will be assessed in such cases, provided such person files with the collector or his deputy his return, duly signed and verified, not later than the last day of the month of commencing such business or within 30 days after the blanks have been furnished him. This ruling under the conditions outlined above will extend the time only for proper completion and filing of returns as is provided by section 3176, Revised Statutes, in the case of sickness or absence, and will in no manner relieve the taxpayer from the assessment of 50 per cent penalty made mandatory by law upon his refusal or neglect to file the proper return under oath. Notifications should be made to collectors in writing as a matter of record. Persons claiming to have given verbal notice and seeking relief from penalties on this account will not be given favorable consideration, unless such claims receive the unqualified corroboration of the collector or a deputy collector. All special taxpayers who have not filed the proper return in time, but who have given informal notice to collectors in time, should be reported upon the assessment lists, Form 23, within 30 days after blanks have been furnished, with the date of furnishing said blanks and the date of the receipt of the return under oath. G. E. FLETCHER, Acting Commissioner of Internal Revenue. (T. D. 2261.) Corporation excise tax-Act of August 5, 1909-Decision of court. 1. DEDUCTION ON ACCOUNT OF INTEREST. In determining net income under the corporation tax, act of August 5, 1909, payment of interest on bonds of a corporation engaged in leasing and operating an office building erected by it on its own realty can be deducted only to an amount not exceeding the paid-up capital stock outstanding at the close of the year. 2. DECISION OF LOWER COURTS REVERSED. The decision of the United States District Court (209 Fed., 991) and the United States Circuit Court of Appeals (213 Fed., 777) reversed, and cause remanded for further proceedings. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 13, 1915. The appended decision of the Supreme Court of the United States in the case of Anderson, collector, v. Forty-Two Broadway Co.. 78411°-VOL 17-15--17 |