of the $200 excess over $400 excludable from gross income under section 105 (d) of the Code). The husband's salary attributable to the period during which W was incapacitated was not received through accident or health insurance, under an accident or health plan for employees, or from a sickness and disability fund for employees maintained under the law of a State, a Territory or the District of Columbia. Accordingly, sections 104(a) (3) and 105(d) of the Code are inapplicable to such income and neither H nor W is entitled to exclude from gross income under section 104 (a) (3) or section 105(d) any portion of such community income received for the period W was incapacitated. Such income constitutes compensation which must be included in the gross income of H and of W. SECTION 170.-CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS 26 CFR 1.170-2: Charitable deductions by individuals; limitations. Rev. Rul. 59-160 To the extent that mayors, councilmen, and/or other elected or appointed officials, who render the services of such offices for cities or other municipal governments without compensation, can establish that they actually incurred unreimbursable expenses directly connected with and solely attributable to the performance of their official duties (i.e., are not personal expenses), the amount of such out-ofpocket expenses constitute contributions within the meaning of section 170 of the Internal Revenue Code of 1954 and are deductible in computing taxable income, subject to the limitations imposed by that section. See Rev. Rul. 56-508, C.B. 1956-2, 126; Rev. Rul. 56-509, C.B. 1956-2, 129; and Rev. Rul. 57-38, C.B. 1957-1, 96. SECTION 691.-RECIPIENTS OF INCOME IN RESPECT OF DECEDENTS 26 CFR 1.691(a)-1: Income in respect of a decedent. Renewal commissions on the sale of life insurance policies by an individual which are paid to his widow after his death. See Rev. Rul. 59-162, page 17. SECTION 871.—TAX ON NONRESIDENT ALIEN INDIVIDUALS 26 CFR 1.871-2: Determining residence. of alien individuals. Income tax return in the case of a trustee of a trust, a nonresident alien entity, created by and for the benefit of a nonresident alien individual not engaged in trade or business in the United States. See Rev. Rul. 59-167, page 33. SECTION 1301.-COMPENSATION FROM AN EMPLOYMENT Rev. Rul. 59-161 26 CFR 1.1301-2: Compensation from an employment. A lump-sum payment received by an attorney for the trustees of an estate as a fee for preparing the final formal account of the estate may not be treated separately from other amounts received as attorney for the trustees during the administration of the estate for the purpose of qualifying under section 1301 of the Internal Revenue Code of 1954. Advice has been requested whether a lump-sum fee paid for the preparation of the final account of an estate by an individual who had served as attorney for the trustees of the estate for several years, may be computed as if the lump-sum compensation had been received ratably over the period of services and, if so, how the fee should be prorated. For ten years an attorney for the trustees of an estate was paid from income an annual fee covering such matters as servicing, closing and extension of mortgages, preparing the income tax returns of the trust, and for other miscellaneous services. He also received a lump-sum payment for preparing the final account of the trustees. Section 1301(a) of the Internal Revenue Code of 1954 provides that if an individual or partnership engages in an employment which covers a period of 36 months or more from the beginning to the completion of such employment, and the gross compensation from the employment received or accrued in the taxable year of the individual is not less than 80 percent of the total compensation from such employment, then the tax attributable to any part of the compensation which is included in his gross income shall not be greater than the aggregate of the taxes attributable to such part had it been included in his gross income ratably over that part of the period which precedes the date of such receipt or accrual. Under section 1301 (b) of the Code and section 1.1301-2(b) of the Income Tax Regulations, the term "an employment" means an arrangement or series of arrangements for the performance of personal services by an individual or partnership to effect a particular result regardless of the number of sources from which compensation therefor is obtained. All the services performed in the instant case, including those for which an annual fee was received, were performed to accomplish one particular result and therefore all of such services fall within the meaning of the term "an employment." Accordingly, it is held that a lump-sum payment received by an attorney for the trustees of the estate as a fee for preparing the final formal account of the estate may not be treated separately from other amounts received as attorney for the trustees during the administration of the estate for the purpose of qualifying under section 1301 of the Code. SECTION 1402.-DEFINITIONS [TAX ON SELF-EMPLOYMENT INCOME] 26 CFR 1.1402 (a)-1: Net earnings from self-employment. (Also Section 691; 1.691 (a)–1.)` Rev. Rul. 59-162 A trade or business must be carried on by an individual, either personally or through agents or employees, in order for the income to be included in "net earnings from self-employment" for purposes of the Self-Employment Contributions Act of 1954. Accordingly, renewal commissions paid to a surviving widow, pursuant to a contract entered into by the husband as a self-employed agent for an insurance company and the insurance company, do not constitute self-employment income for the widow, since the commissions do not represent income derived from a trade or business carried on by her but rather a trade or business carried on by her husband prior to his death. However, under section 691(a)(3) of the Internal Revenue Code of 1954, which relates to Federal income taxes, the renewal commissions are includible in the income of the widow. Advice has been requested whether insurance renewal commissions paid to a surviving widow, pursuant to a prior contract entered into between her husband, as a self-employed agent, and the insurance company, constitutes self-employment income for the widow. A sold life insurance policies for a company under a contract which called for the payment to him over a specified number of years of renewal commissions on all policies sold by him. A's status in relation to the company was that of a self-employed individual and the renewal commissions received by him constituted net earnings from selfemployment for purposes of the tax imposed by the Self-Employment Contributions Act of 1954. After A's death in 1955, the renewal commissions were paid to his widow in accordance with the terms of his contract with the company. Section 1401 of the Self-Employment Contributions Act of 1954 (chapter 2, subtitle A, Internal Revenue Code of 1954) imposes a tax upon the self-employment income of every individual. Self-employment income means the net earnings from self-employment as defined in section 1402 (a) of the Act. The term "net earnings from selfemployment" means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by substitle A of the Code which are attributable to such trade or business, plus his distributive share of the ordinary net income or loss from any trade or business carried on by a partnership of which he is a member, with certain exclusions and deductions therefrom as defined in section 1402 (c) of the Act. The trade or business must be carried on by the individual, either personally or through agents or employees, in order for the income to be included in his "net earnings from self-employment." Rev. Rul. 56-22, C.B. 1956-1, 558. Therefore, any renewal commissions received by A's widow with respect to periods subsequent to his death are not derived from a trade or business carried on by her. Accordingly, such commissions do not constitute "net earnings from self-employment" and the widow is not liable for the tax imposed by the Self-Employment Contributions Act of 1954 with respect to such commissions." 503055-59--3 However, under section 691 (a) of the Code, which relates to Federal income taxes, the renewal commissions are includible in the gross income of the widow. 26 CFR 1.1402-1: Net earnings from self-employment. Self-employment income from a business which is taken over and operated by the wife after husband's death. See Rev. Rul. 59-168, page 35. SECTION 4141.-IMPOSITION OF TAX [RADIO AND TELEVISION SETS, PHONOGRAPHS AND RECORDS] 26 CFR 40.4141: Statutory provisions; imposition of tax. (Also Section 4151, 40.4151.) T.D. 63721 TITLE 26-INTERNAL REVENUE, 1954.-CHAPTER I, SUBCHAPTER D, PART 40.— MANUFACTURERS AND RETAILERS EXCISE TAXES Regulations under sections 4141, 4142, 4151, and 4152 of the Internal Revenue Code of 1954, as amended, relating to the sale of radio and television receiving sets, phonographs, phonograph records, and musical instruments. DEPARTMENT OF THE TREASURY, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To Officers and Employees of the Internal Revenue Service and Others On October 10, 1958, notice of proposed rule making with respect to regulations under sections 4141, 4142, 4151, and 4152 of the Internal Revenue Code of 1954, as amended, relating to the tax imposed on the sale of radio and television receiving sets, phonographs, combinations of any of the foregoing, phonograph records, radio and television components, and musical instruments was published in the Federal Register (23 F.R. 7853). After consideration of all such relevant matter as was presented by interested persons regarding the rules proposed, the amendment of section 40.0-3 (26 CFR Part 40) of the Manufacturers and Retailers Excise Tax Regulations and the following regulations under the 1954 Code are hereby adopted. PARAGRAPH 1. Section 40.0-3 of the Manufacturers and Retailers Excise Tax Regulations (26 CFR Part 40) is hereby amended by striking paragraph (i) and inserting in lieu thereof the following: (i) Subpart J.-The regulations in Subpart J of this part relate to sales made by the manufacturer, producer, or importer on or after September 1, 1955, of the articles specified in that subpart. PAR. 2. The following regulations are prescribed under subchapter C of chapter 32 of the Internal Revenue Code of 1954, as amended. 1 The publication of this Treasury Decision in 24 F.R. 8109, dated April 22, 1959, contains (1) instructions for modifying the notice of proposed rulemaking published in 23 F.R. 7853, dated October 10, 1958, 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. TABLE OF CONTENTS Subpart J-Radio and Television Sets, Phonographs, Phonograph Records, and Musical Instruments RADIO AND TELEVISION SETS, PHONOGRAPHS, AND RECORDS 40.4142 40.4142-1 Section 40.4151 Statutory provisions; definition of radio and television components. MUSICAL INSTRUMENTS Statutory provisions; imposition of tax. 40.4151-1 Imposition of tax. 40.4152 Statutory provisions; exemption for religious or educational use. 40.4152-1 Sales of musical instruments not subject to tax. 40.4152-2 Other tax-free sales. AUTHORITY: 88 40.4141 to 40.4142-1, incl. and §§ 40.4151 to 40.4152-2, incl., are issued under sec. 7805, I.R.C. 1954, 68A Stat. 917; 26 U.S.C. 7805. Subpart J-Radio and Television Sets, Phonographs, Phonograph Records, and Musical Instruments RADIO AND TELEVISION SETS, PHONOGRAPHS, AND RECORDS § 40.4141 STATUTORY PROVISIONS; IMPOSITION OF TAX. SEC. 4141. IMPOSITION OF TAX. There is hereby imposed upon the sale by the manufacturer, producer, or importer of the following articles (including in each case parts or accessories therefor sold on or in connection with the sale thereof), a tax equivalent to 10 percent of the price for which so sold: Radio receiving sets. Automobile radio receiving sets. Television receiving sets. Automobile television receiving sets. Phonographs. Combinations of any of the foregoing. Radio and television components. Phonograph records. Except in the case of radio and television components and phonograph records, the tax imposed by this section shall apply only to articles of the entertainment type. [Sec. 4141 as amended by sec. 2(a), Act of Aug. 11, 1955 (Pub. Law 367, 84th Cong., 69 Stat. 690) [C.B. 1955–2, 768] § 40.4141-1 IMPOSITION OF TAX.-(a) In general.-Section 4141 imposes a tax upon the sale by the manufacturer, producer, or importer of the following articles (including in each case parts or accessories there for sold on or in connection with the sale thereof): (1) Radio receiving sets, (2) Automobile radio receiving sets, (3) Television receiving sets, (4) Automobile television receiving sets, (5) Phonographs, (6) Combinations of any of the foregoing, (7) Radio and television components, and (8) Phonograph records. |