one, the decedent's specific exemption for the entire year ($4,000) should be claimed.

The widow is required to file a return on Form 1040, revised, in her own behalf if her entire income for the calendar year during which her husband died amounted to $3,000 or more, and should claim a specific exemption of $3,000 if not in a married status, living with a husband, on December 31 of that year.

Income of wife from sale of special articles is to be included in husband's return, when.-Unless the wife has a separate estate which requires her to file a separate return of income or to join with her husband in a return which shall set forth her income separately, a husband having a taxable income of his own should include in his return the income accruing to the wife from the sale of special magazine articles. If neither has a net income of $3,000 or more, but together they have an aggregate net income exceeding $4,000, a return of the joint income is required to be filed by either the husband or wife, and the income derived by the wife as above set forth should be included in such return. The actual proceeds coming into the wife's possession during the tax year constitute the income to be included, and not the amounts estimated upon acceptance prior to publication and payment.

Income tax as an allowable deduction.-For the purpose of claiming as allowable deductions the amounts paid to the collector and the amounts withheld at the source on account of the income tax, it is held that amounts of both classes are paid, within the meaning of the law, in the year in which assessment is made and the tax paid to the collector of internal revenue.

Information from withholding returns of income.-The income tax law is specific and mandatory in the matter of safeguarding from publicity the information acquired by reason of its requirements relative to annual returns of income. The law imposes the penalty of "fine, imprisonment, dismissal from office, and forfeiture of right to hold office, for making known in any manner not provided by law the amount or source of income * * * or any particular set forth or disclosed in any income return by any

thereof *

* * *"'

person The law does not provide for supplying corporations with a list of their bondholders drawn from withholding returns of income.

Loss.-(1) A person may have more than one business in the sense of being engaged in more than one trade, and may deduct losses incurred in all of them, provided that in each trade it can be clearly shown that he is actually a dealer, or trader, or manufacturer, or whatever the occupation may be. Neither the investment by an individual of money in the stock of a company nor the employment by the company of his services in any official capacity can serve to

make the business in which the company was engaged a matter of his individual trade.

(2) A loss is none the less actual because an individual can not divest himself of the possession of worthless stock by sale, but that condition alone does not give the loss in question such a character as appears to the department to have been contemplated by the income tax law.

Losses in trade.-"A person not a recognized or licensed dealer in stocks and bonds makes $5,000 profit during the year on a stock purchase and sale, and makes a loss during the same year on a stock purchase and sale of $4,000. Is it correct to return this difference of $1,000 in gains, or should the entire $5,000 be returned as gain?" This office holds that the profit of $5,000 is income to be included in a return of income, and that the $4,000 is not such a loss as may be deducted in a return of income, for the reason that it is not incurred "in trade" within the accepted definition of that term.

Penalty of 50 per cent additional tax. The income tax law is explicit and mandatory in its provisions relative to the additional assessment of 50 per cent of the tax otherwise due, in case of failure to file a return of income within the prescribed time, and does not give discretionary authority of remission of this additional tax to any officer of the Government.

Reimbursement of expenses.-Amounts received from a railroad company by way of reimbursement for expenses incident to an accident are not subject to the income tax.

Rental: Board, lodging, or other consideration received in lieu of cash.-Board, lodging, or other consideration received in lieu of rental is considered income equal in amount to the indebtedness in payment of which it is received, and should be included in any return of annual net income its recipient is required to render under the provisions of the income tax law.

Rental: Permanent improvements made under contract in addition to yearly.—Where a tenant enters into a contract under which he agrees to pay a yearly rental of a fixed sum, and in addition agrees to expend during the rental period a certain fixed sum in making improvements, or where he agrees to erect a building of a certain size, quality, and style of architecture in addition to a fixed annual rental, the amount expended in accordance with the contract in making permanent improvements, or in the erection of the building, forms part of the consideration named for the rental of the property, and the amount thus expended actually accrues to the benefit of the landlord and is, in effect, an advance payment of rental which is held to be income to the landlord at the time of its expenditure, and the tax computed on the amount expended for improvements should be deducted and withheld by the tenant, subject to authorized exemptions claimed,

for the taxable year in which the benefits of such expenditures accrued to the landlord, and not be prorated over the full period of the lease term.

Return on Form 1040, revised.—A return on Form 1040, revised, is not required in cases where the individual's tax liability has been or is to be paid at the source. In other words, when an individual is liable for the normal tax only, and his entire net income is subject to withholding, no return on Form 1040, revised, is required under the law. If his net income, not taking his specific exemption into consideration, includes items that are not subject to withholding, a return on Form 1040, revised, is required, although no tax may be due.

Undivided surplus of corporations, individual distributive interest in.—Subdivision 2 of paragraph A, income tax law of October 3, 1913, imposes no duty on the taxpayer to ascertain his distributive interest in the undivided surplus of corporations for the purpose of making return of the amount, in addition to the amount of dividends declared on his stock, unless the Secretary of the Treasury has certified that, in his opinion, such accumulation is unreasonable for the purposes of the business.

Withholding agent, requirements of, on obligations other than bonds.All persons having the control or payment of annual income of another person exceeding $3,000, such income being derived from fixed or determinable annual gains such as the payment of interest upon the obligation of individuals, salaries, rents, wages, etc.—shall, when the aggregate payments exceed $3,000, withhold the normal tax of 1 per cent upon the entire amount unless exemption is claimed, and then only on the amount in excess of the exemption so claimed. Any tax withheld from income derived from this class of obligations should be reported by the debtor or withholding agent on annual list return, Form 1042, which should be filed with the collector of internal revenue for the district in which the debtor or withholding agent is located, and all certificates received during the year should accompany this return. When certificates have been filed claiming exemption to the full extent of the payments made, no return is required; but the certificates should be forwarded to the proper collector of internal revenue. The annual return, or the certificates, or both, as the case may be, should be forwarded to the collector of internal revenue subsequent to the end of the calendar year and not later than March 1 of the succeeding year. The amount withheld, however, should not be forwarded to the collector until 30 days prior to March 1 of the year succeeding that in which the tax was withheld.

Withholding agent's return when Form 1008, revised, has been filed.The entries on Form 1042 should be made by a withholding agent from the facts before him after he has received the authority of the collector for the refundment of a part of the amount previously

withheld.

When he has received notification of the amount of tax to be refunded, he has sufficient information to make correct entries on the form.

Thus, when a withholding agent has been authorized by a collector to refund, say, $10, he will reduce the amount otherwise to be entered in the column headed "Amount of tax withheld" by $10; he will reduce the amount otherwise to be entered in the column headed "Amount of income on which withholding agent is liable for tax" by $1,000; he will increase the amount otherwise to be entered in column headed "Amount of exemption claimed" by $1,000, and may change the heading to read "Amount of exemption and deductions claimed," if desired. The figures to be entered in the column headed "Amount of income" will remain the same, that amount being the actual amount passing through the hands of the withholding agent, whether or not Form 1008, revised, is filed.

Withholding from compensation paid at a per diem rate.-Per diem salaries paid on a straight basis of compensation for services rendered are subject to withholding at the source, the amount of compensation being fixed and periodic. If, however, a per diem salary rate is paid and the employee is required by the terms of his employment or contract to pay therefrom his own travel or other legitimate expenses incident to the business of his employment, the income. accruing to him from the per diem rate is not subject to withholding, the amount not being fixed or determinable.

Withholding returns required of corporations or their duly authorized withholding agents.-A corporation, having bonded indebtedness, which has withheld income tax during the preceding month is required to file a monthly list return, Form 1012, showing the amount of tax withheld. Certificates of ownership in which exemption is claimed to the extent of the amount of payment need not be listed, and if this is the only class of certificates received during the said preceding month, no return is required. However, such certificates should be forwarded to the proper collector of internal revenue, together with a letter of transmittal.

The return should be filed with the collector of internal revenue for the district in which the debtor corporation is located or has its principal place of business, provided the said debtor corporation has not filed with the said collector of internal revenue a notice of the appointment of a duly authorized withholding agent, in which case the debtor corporation is not required to file a monthly list return, Form 1012, or the corresponding annual list return, Form 1013.

This notice of appointment should be placed on file in the office of the collector of internal revenue for the district in which the debtor corporation is located or has its principal place of business, and the said collector should notify the collector of internal revenue for the

district in which the duly authorized withholding agent is located. The duly authorized withholding agent is required to file its return with the collector of internal revenue for the district in which the said withholding agent is located, and is not required to file a return with the collector for the district in which the debtor corporation is located. W. H. OSBORN,

Approved:

W. G. MCADOO,

Commissioner of Internal Revenue.

Secretary of the Treasury.

(T. D. 2136.)

Emergency revenue law-Reconsignments.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., January 28, 1915. SIR: Referring to your personal conference with this office, you are advised that it appears from statements made by you and correspondence received from others that the position of this office with regard to reconsignments as set forth in T. D. 2113 and T. D. 2122 is not yet thoroughly understood.

You are therefore advised that it is held by this office that where a car or shipment goes forward to original destination under a bill of lading duly stamped and is then delivered at that point on order of the shipper or consignee to another than the original consignee, without additional haul, it is not regarded as a taxable reconsignment. If, after reaching original destination, it is reconsigned to another point, involving an additional haul, either on the order of the shipper or the consignee, it is a reconsignment, and a new bill of lading must be issued and stamped.

If a shipment as a whole is diverted in transit to a new destination, on or off the line of the carrier first accepting the shipment, no new bill of lading or additional stamp is required, unless the carrier's tariffs require the issuance of a new bill of lading. A stamp is only required when a new document is issued. T. D. 2122 is modified to that extent.

If, either before or after reaching original destination, a shipment is split and diverted to several different points, new bills of lading must be issued and stamped. It is to be understood, however, that if the shipment is split before reaching destination, one of the split shipments may go forward on the original bill without requiring new stamp on it.