page 6.

The operation of a horticultural nursery constitutes Rev. Rul. 59-12,
"farming" within the meaning of section 175 of the
1954 Code; expenditures made for soil or water con-
servation in respect of land used in such business are
deductible to the extent permitted by section 175.
Amounts contributed by an employer to a deferred pay- Rev.
ment employees' bonus or profit-sharing plan and
credited to the accounts of the participants in a non-
discriminatory manner may be used as part of the
basis upon which pension benefits may be computed.

Rul. 59-13, page 7.

A profit-sharing plan which limits coverage to a class of Rev. Rul. 59-14,

employees who are exempt from the over-time pay
provisions of the Fair Labor Standards Act will not
automatically satisfy the nondiscriminatory require-
ments of section 401 (a) of the 1954 Code.

page 8.

Rul. 59-15,

page 10.

Payments to charity made from estate income under a Rev.
settlement agreement resulting from the contest of a
will are deductible by the estate as gifts of income to
charity; Revenue Ruling 55-122, revoked.

A public hearing on the proposed regulations under Announcement

page 41.

section 481 of the 1954 Code, relating to the adjust- 59-6,
ments required by changes in method of accounting,
will be held in Washington, D. C, on Thursday,
January 22, 1959.

EXCISE TAXES:

Rul. 59-16,

page 12.

A wood-wind instrument known as a "recorder" is sub- Rev.
ject to the manufacturers tax on musical instruments;
however, the tax does not apply to a swab, a case, and
a song book which are sold with the recorder.

The manufacturers tax paid by a manufacturer on his Rev. Rul. 59-17,

sale of a piano may be credited or refunded when the
piano is resold by a dealer for use on a United States
Navy ship, under an exemption certificate signed by a
ship's officer.

page 13.

(Continued on page 3)

Finding List on page 43.

TREASURY DEPARTMENT • INTERNAL REVENUE SERVICE

490547-59-1

INTRODUCTION

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for the announcement of official rulings and procedures of the Internal Revenue Service, and for the publication of Treasury Decisions, Executive Orders, tax conventions, legislation, and court decisions pertaining to internal revenue matters. Other items considered to be of general interest are also published in the Bulletin, such as announcements relating to proposed regulations published with notice of proposed rulemaking, announcements relating to decisions of the Tax Court of the United States, announcements of the disbarment and suspension of attorneys and agents from practice before the Treasury Department, Delegation Orders, etc.

It is the policy of the Service to publish in the Bulletin all substantive and procedural rulings of importance or of general interest, the publication of which is considered necessary to promote a uniform application of the laws administered by the Service. It is also the policy to publish all rulings and statements of procedures which supersede, revoke, modify, or amend any published ruling or procedure. Except where otherwise indicated, published rulings and procedures apply retroactively. Rulings and statements of procedures relating solely to matters of internal management are not published. However, statements of internal practices and procedures affecting rights or duties of taxpayers, or industry regulation, which appear in internal management documents, are published. Revenue Rulings and Revenue Procedures are based upon rulings and internal management documents prepared in the various divisions of the National Office, including the Office of the Chief Counsel for the Internal Revenue Service. In the preparation of these, caution is exercised to conceal the identity of the taxpayer, as well as any confidential personal and business information. All Revenue Rulings published in the Bulletin have received the consideration and concurrence of the Chief Counsel.

Revenue Rulings and Revenue Procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations (including Treasury Decisions), but are published to provide precedents to be used in the disposition of other cases, and may be cited and relied upon for that purpose. Since each published ruling represents the conclusion of the Service as to the application of the law to the entire state of facts involved, Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. In applying rulings and procedures published in the Bulletin, personnel of the Service and others concerned must consider the

(Continued on page 4)

DEPOSITED BY THE

UNITED STATES OF ANI

3

HIGHLIGHTS OF THIS ISSUE-Continued

EXCISE TAXES-Continued

page 15.

For purposes of the admissions tax, the exclusion of the Rev. Rul. 59-18, first dollar paid for admission, provided in the Excise Tax Technical Changes Act of 1958, does not apply to payments for admission made prior to January 1, 1959, even though the admission does not occur until on or after that date.

Admission tickets sold on and after January 1, 1959, may not be printed showing the established price to be $1.45 and Federal tax on admissions to be five cents, since such tickets would overstate the amount of tax legally due.

Rev. Rul. 59-19, page 15.

Rev. Rul. 59-20, page 16.

The tax on playing cards does not apply to sales of a
specially designed deck of cards which is used to play
a game called "Hi-Fen," and which is not suitable for
use in the same manner as regular playing cards.
Temporary rules have been adopted to implement the T. D. 6344,
provisions of the Excise Tax Technical Changes Act
of 1958 relating to the registration requirements for
tax-free sales and the exemption from excise taxes
accorded to certain non-profit educational organiza-
tions.

page 24.

Temporary rules have been adopted to implement the T. D. 6347,
provisions of the Excise Tax Technical Changes Act
of 1958 relating to the collection by proprietors of the
cabaret tax from concessionaires.

ALCOHOL TAX:

page 37.

page 18.

Liquors, including wines and beer, may be withdrawn Rev. Rul. 59-21, free of tax or with benefit of drawback for lading on aircraft engaged in foreign trade and may be used. while such aircraft are over the United States on nonstop flights to a foreign destination.

page 19.

Where Form 30, Distiller's Bond, is given without surety, Rev. Rul. 59-22, but instead is supported by Form 1571, Transportation and Warehousing Bond, Form 1533, Consent of Surety, must be appropriately worded and executed by the principal and the surety.

page 20.

Under certain circumstances, alcohol may be used in the Rev. Rul. 59-23, production of vodka at a rectifying plant; however, the transfer of alcohol in bond to a registered distillery for such use is not authorized; Revenue Ruling 58-336, amplified.

A bottler of distilled spirits for export may repackage Rev. Rul. 59-24, remnant cases of such distilled spirits for the purpose of making up cases of assorted spirits to be used as samples in taking orders in foreign markets.

page 21.

Form 1479, Application for Permit to Use Specially De. Rev. Rul. 59-25,

natured Alcohol, may be accepted without the corporate seal affixed thereto; however, the corporate seal

must be affixed to Form 1447, Application for Basic
Permit to Use Alcohol Free of Tax.

page 22.

INTRODUCTION-(Continued from page 2)

effect of subsequent legislation, regulations, court decisions, rulings and procedures.

Each published ruling is designated as a "Revenue Ruling," and each published procedure is designated as a "Revenue Procedure." These should be cited by reference to the year of issuance and the Bulletin and page where reported. Thus, Revenue Ruling No. 11 for 1958, which is reported on page 8 of Bulletin No. 2 for 1958, should be cited as "Rev. Rul. 58-11, I. R. B. 1958-2, 8," until it appears in the Cumulative Bulletin, when it should be cited as "Rev. Rul. 58-11, C. B. 1958-1,-" Similarly, Revenue Procedure No. 1 for 1958, which is reported on page 15 of Bulletin No. 3 for 1958, should be cited as "Rev. Proc. 58-1, I. R. B. 1958-3, 15," until such time as it appears in the Cumulative Bulletin. Revenue Rulings are keyed to the applicable sections of the Internal Revenue Code and regulations. The Bulletin is published weekly, and the contents thereof are consolidated at least semiannually into a permanent Cumulative Bulletin. Persons so desiring may subscribe to the Bulletin through the Superintendent of Documents, as indicated below.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Price 20 cents (single copy). Subscription price: $6.00 a year; $2.75 additional for foreign mailing.

FOREWORD

The Internal Revenue Bulletin is prepared in six parts as follows: I. Part I includes rulings and decisions which are based on the application of provisions of the Internal Revenue Code of 1954 and, unless otherwise stated in the ruling or decision, are published without consideration as to any application of the provisions of the Internal Revenue Code of 1939 or other related public laws.

II. Part II includes rulings and decisions which are based on the application of the Internal Revenue Code of 1939, the Federal Firearms Act, and other public laws except those pertaining to the various alcohol taxes; and, unless otherwise noted therein, they are published without consideration as to any application of the provisions of the Internal Revenue Code of 1954. Part II is subdivided into three subparts according to matters issued under the Internal Revenue Code of 1939 (Subpart A), the Federal Firearms Act (Subpart B), and other public laws (Subpart C).

III. Part III contains rulings and decisions pertaining to the various alcohol taxes. This part is subdivided into four subparts according to matters issued under the Internal Revenue Code of 1954 (Subpart A), the Internal Revenue Code of 1939 (Subpart B), the Federal Alcohol Administration Act (Subpart C), and other public laws (Subpart D).

IV. Part IV contains treaties and tax legislation, including related committee and Conference Reports. This part is subdivided into three subparts according to tax conventions, Treasury Decisions and Revenue Rulings issued with respect thereto (Subpart A), legislation (Subpart B), and Committee Reports (Subpart C). House, Senate and Conference Committee Reports printed in the Bulletin do not include the portion entitled "Changes in Existing Law."

V. Part V is devoted to administrative, procedural and miscellaneous matters.

VI. Part VI includes general announcements which are deemed to be of interest to the general public. With the exception of the disbarment list included in this part, none of the other announcements will be consolidated in the Cumulative Bulletin. The Highlights of this Bulletin include a reference to each item published in the Bulletin. Because these are grouped according to the type of tax involved, the Highlights for a particular issue serve as an index to matters published therein. The Bulletin service carries a cumulative index on a monthly basis. That index appears in the first Bulletin for each month and indexes matters published during the preceding month. These monthly indexes are cumulated on a quarterly and semiannual basis, and the indexes so cumulated are published in the first Bulletin of the succeeding quarterly period, respectively.