SECTION 4231.-IMPOSITION OF TAX [ADMISSIONS] Rev. Rul. 59-146 The computation of the tax on admissions on amounts paid for season tickets of admission sold on or after January 1, 1959. Advice has been requested concerning the computation of the admissions tax on amounts paid for season tickets of admission on or after January 1, 1959. A baseball club encourages preseason ticket sales by offering for sale a season ticket for a box seat at $100. The team plays 75 home games during the season, and the cost of a single admission ticket for a box seat, including the admissions tax, is $2.25. Section 4231 (1) of the Code, as amended by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, effective January 1, 1959, imposes a tax of one cent for each ten cents or major fraction thereof of the amount in excess of one dollar paid for admission to any place. In the case of a season ticket or subscription for admission to any place, that section imposes a tax of one cent for each ten cents or major fraction thereof of the amount paid for such season ticket or subscription which is in excess of one dollar multiplied by the number of admissions provided by such season ticket or subscription. Accordingly, where a season ticket for admission to 75 games is sold on or after January 1, 1959, and the price of the season ticket is $100, excluding the admissions tax, the taxable portion of the charge is computed as follows: $100.00 Established Price of the Season Ticket $25.00 Taxable Amount At the rate of one cent for each ten cents or major fraction thereof, the tax on admissions with respect to a taxable amount of $25.00 is $2.50. Therefore, the club should collect $100 plus the admissions tax of $2.50, or a total of $102.50, from the purchaser of a season ticket. Where the season ticket for admission to 75 games is sold on or after January 1, 1959, and its tax-included price is $100, the tax can be computed generally as follows: $100.00 Established Price of the Season Ticket, including the Admission Tax -75.00 Exclusion (75 games X$1 per game) $25.00 Excess Amount, including the Admission Tax Since the rate of tax is one cent on each ten cents or major fraction thereof of the amount paid for a season ticket which is in excess of one dollar multiplied by the number of admissions provided by such season ticket, one-eleventh of the excess tax-included amount would, in general, represent the correct tax. Therefore, the tax is $2.27 (1$25). Compare Revenue Ruling 59-19, I.R.B. 1959-3, 15, which holds that admission tickets may not be printed properly showing a total charge for admission and tax of $1.50, $2.05, $2.60, and certain larger amounts since the sale of such tickets would result in the collection of an incorrect amount of tax. SECTION 4243.-EXEMPTION Rev. Rul. 59-147 An organization which has been granted an exemption from Federal income tax under the provisions of section 501 (c) (7) of the Internal Revenue Code of 1954 may qualify for the exemption from the excise tax on club dues as a fraternal organization under the provisions of section 4243 of the Code. Revenue Ruling 56-334, C.B. 1956-2, 831, amplified. The Internal Revenue Service has been asked whether an organization which has been granted an exemption from Federal income tax under the provisions of section 501 (c) (7) of the Internal Revenue Code of 1954 can qualify for the exemption from the excise tax on club dues as a fraternal organization under the provisions of section 4243 of the Code. The organization consists of a national chapter and local chapters in various cities. Under the organization's constitution, the national chapter is empowered to grant dispensation and charters to the local chapters and for good cause to suspend, annul, or revoke the same. The constitutions and bylaws of the local chapters are drafted along the lines of the national constitution and bylaws. It is also required that each member of a local chapter be initiated according to the ritual of the national chapter. However, each local chapter makes its own decisions concerning the matter of dues. The national chapter and some of its local chapters have been granted an exemption from Federal income tax under section 501 (c) (7) of the Code as clubs organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes. Under the provisions of section 4241(a) (1) and (2) of the Code, a tax is imposed upon the amounts paid as dues or membership fees and initiation fees to any social, athletic, or sporting club or organization. Revenue Ruling 56-334, C.B. 1956-2, 831, holds that an organization which has been held exempt from Federal income tax under section 501 (c) (7) of the Code, as a club organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net earnings of which inures to the benefit of any private shareholder, is considered to be a social, athletic, or sporting club or organization for the purpose of the excise tax on club dues imposed by section 4241 of the Code. Accordingly, the dues, membership, and initiation fees paid to the instant organization fall within the scope of section 4241 of the Code. However, section 4243 of the Code exempts from the provisions of section 4241 of the Code all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system. Section 101.25 of Regulations 43, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, states, in part, that most fraternal organizations are in effect social clubs, but if they are operating under the lodge system, payments to them are expressly exempt from 500395-59 the tax. Section 101.30 of the regulations defines the term "operating under the lodge system" as carrying on activities under a form of organization that comprises local branches, chartered by a parent organization and largely self-governing, called "lodges," "chapters," or the like. Accordingly, it is held that the organization in the instant case qualifies as a fraternal organization within the scope of section 4243 of the Code and, therefore, that all amounts paid to such organization as dues and fees are exempt from the tax on club dues under section 4243 of the Code. Revenue Ruling 56-334, supra, is amplified. SECTION 4371.-IMPOSITION OF TAX 26 CFR 43.4371-1: Imposition of tax on Rev. Rul. 59-148 Since Puerto Rico is not a State or Territory of the United States, a Puerto Rican insurance company is a "foreign insurer" for purposes of the documentary stamp tax imposed by section 4371 of the Internal Revenue Code of 1954 on policies issued by foreign insurers. Advice has been requested whether a Puerto Rican insurance company is a "foreign insurer" for purposes of the documentary stamp tax on policies of insurance issued by a foreign insurer. Section 4371 of the Internal Revenue Code of 1954 imposes a stamp tax on certain policies of insurance or reinsurance issued by any foreign insurer or reinsurer. Section 4372(a) of the Code defines the term "foreign insurer or reinsurer" as an insurer or reinsurer who is a nonresident alien individual, a foreign partnership, or a foreign corporation. Section 7701 (a) (4) of the Code provides that the term "domestic" when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or any State or Territory. Section 7701(a)(5) of the Code provides that the term "foreign" when applied to a corporation or partnership means a corporation or partnership which is not domestic. Accordingly, it is held that, since Puerto Rico is not a State or Territory of the United States, a Puerto Rican insurer is a foreign insurer. Therefore, policies issued by such insurers are subject to the provisions of section 4371 of the Code. SECTION 4401.-IMPOSITION OF TAX 26 CFR 44.4401: Statutory provisions; imposition T. D. 63701 TITLE 26-INTERNAL REVENUE, 1954.-CHAPTER 1, SUBCHAPTER D, PART 44.- Regulations prescribed under chapter 35 and certain other pro- OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington 25, D.C. To Officers and Employees of the Internal Revenue Service and Others Concerned: On January 8, 1959, notice of proposed rule making regarding the regulations under chapter 35, relating to the taxes on wagering, and certain other provisions of the Internal Revenue Code of 1954, as amended, was published in the Federal Register (24 F.R. 206). After consideration of all such relevant matter as was presented by interested persons regarding the rules proposed, the following regulations are hereby adopted. TABLE OF CONTENTS TAXES ON WAGERING Subpart A.-Introduction Section 44.0-1 44.0-2 44.0-3 44.0-4 44.4401 Introduction. General definitions and use of terms. Scope of regulations. Extent to which the regulations in this part supersede prior regulations. Subpart B.-Tax on Wagers Statutory provisions; imposition of tax. Person liable for tax. Statutory provisions; exemptions. 44.4401-1 44.4401-2 44.4401-3 When tax attaches. 44.4402 44.4402-1 44.4403 44.4403-1 44.4404 44.4404-1 44.4405 Statutory provisions; record requirements. The publication of this Treasury Decision in 24 F.R. 2613, dated April 4, 1959, contains (1) instructions for modifying the notice of proposed rulemaking published in 24 F.R. 206, dated January 8, 1959, and (2) the full context of the regulations with such modifications. As here published, the Treasury Decision reflects the full context of such regulations, with modifications. The individual instructions have been omitted. 44.4411 44.4411-1 44.4412 44.4412-1 44.4413 44.4413-1 44.4414 Subpart C.-Occupational Tax Statutory provisions; imposition of tax. Statutory provisions; registration. Statutory provisions; certain provisions made applicable. Statutory provisions; cross references. Subpart D.-Miscellaneous and General Provisions Applicable to Taxes on Wagering 44.4421 44.4421-1 44.4422 44.4422-1 44.4423 44.4901 44.4901-1 44.4902 44.4902-1 MISCELLANEOUS PROVISIONS Statutory provisions; definitions. Definitions. Statutory provisions; applicability of Federal and State laws. Statutory provisions; inspection of books. GENERAL PROVISIONS RELATING TO OCCUPATIONAL TAXES Statutory provisions; payment of tax. Statutory provisions; liability of partners. Statutory provisions; liability in case of different businesses of Statutory provisions; liability in case of death or change of location. Subpart E.-Administrative Provisions of Special Application to Taxes 44.6001 44.6001-1 44.6011(a) 44.6011(a)-1 44.6071 44.6071-1 44.6091 44.6091-1 44.6151 44.6151-1 44.6419 44.6419-1 44.6419-2 44.6806 (c) 44.6806 (c)-1 44.7262 44.7262-1 44.7272 44.7273 (b) 44.7701 44.7805 on Wagering Statutory provisions; notice or regulations requiring records, statements, and special returns. Record requirements. Statutory provisions; general requirement of return, statement, or list; general rule. Returns. Statutory provisions; time for filing returns and other documents. Statutory provisions; place for filing returns or other documents. Statutory provisions; time and place for paying tax shown on Time and place for paying taxes. Statutory provisions; credit or refund of wagering tax. Credit or refund generally. Credit or refund on wagers laid off by taxpayer. Statutory provisions; posting occupational tax stamps; occupa tional wagering tax. Special tax stamp to be posted. Statutory provisions; violation of occupational tax laws relating to wagering; failure to pay special tax. Failure to pay special tax. Statutory provisions; penalty for failure to register. Statutory provisions; penalties for offenses relating to special taxes; special wagering tax. Statutory provisions; definitions. Statutory provisions; rules and regulations. AUTHORITY: 88 44.0-1 to 44.7805, incl., issued under sec. 7805, I.R.C. 1954; 68A Stat. 917; 26 U.S.C. 7805. |