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HIGHLIGHTS OF THIS ISSUE

INCOME TAX:
Where a corporation purchases life insurance on the
lives of its stockholders, the proceeds of which are to
be used in payment for their stock, the premiums on
such insurance do not constitute income to the stock-
holders; Revenue Ruling 59–79, superseded.
An employees' pension, profit-sharing or stock bonus
plan will not fail to qualify merely because it provides
for voluntary contributions by employees of up to
ten percent of their compensation, provided employer
contributions or the benefits are not geared to em-
ployee contributions.

Rev. Rul. 59–184,
page 8.

Rev. Rul. 59-185,
page 11.

page 12.

The January 1959 Bureau of Labor Statistics Price In- Rev. Rul. 59-186,
dexes are acceptable for use by department stores em-
ploying the retail inventory and the last-in, first-out
inventory methods.

page 13.

Section 544 of the Code, relating to the constructive Rev. Rul. 59-187,
ownership of stock for personal holding company
purposes, has no application in determining whether
a corporation qualifies as a small business corpora-
tion under section 1371 of the Code.

This Bulletin contains the supplement to the Cumula- Announcement
tive List of Organizations contributions to which are
deductible under section 170 of the Code.

ALCOHOL TAX:

59-55, page 26.

A health clinic operated for the benefit of members of Rev. Rul. 59-188,

a union who pay monthly fees entitling them and
their families to medical care is not a clinic operated
for charity for purposes of using alcohol free of tax.

page 19.

page 20.

Winemakers may use compressed air for the aeration of Rev. Rul. 59-189,
sherry wine during the baking process, with the ap-
proval of the appropriate Assistant Regional Com-
missioner; Revenue Ruling 58-461, amplified.

(Continued on page 3)

TREASURY DEPARTMENT • INTERNAL REVENUE SERVICE

503057-59

INTRODUCTION

The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for the announcement of offi cial 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 prece dents 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,

(Continued on page 4)

CerOSITED BY THE

UNITED STATES OF AMERICA

3

HIGHLIGHTS OF THIS ISSUE (Continued from page 1)

ALCOHOL TAX-Continued

page 21.

Interim regulations have been issued to continue in effect T.D. 6373,
on and after July 1, 1959, existing regulations under
chapter 51 of the 1954 Code, pending the issuance of
permanent regulations implementing the provisions
of that chapter as amended by Public Law 85-859.

page 7.

Proposed amendment of the regulations would im- Announcement, plement the provisions of the Excise Tax Technical Changes Act of 1958 relating to the manufacture, taxpayment, removal, use, registration, and expor tation of stills and condensers.

Proposed regulations would amend requirements regarding the deposit in foreign-trade zones of distilled spirits and wines eligible for exportation with benefit of drawback of the tax paid or determined thereon.

TOBACCO TAX:

Revised publications of tobacco regulations, 26 CFR Parts 270 and 275, relating to cigars and cigarettes and to manufactured tobacco may be obtained from the Superintendent of Documents. ADMINISTRATIVE:

The Securities and Exchange Commission is authorized to inspect statistical transcript cards prepared from corporate income tax returns for taxable years ending after December 31, 1952, and corporate and individual income tax returns for taxable years ending after December 31, 1956.

LEGISLATION:

Announcement,

page 7.

Announcement

59-53, page 24.

T.D. 6374,
T.D. 6375,
E.O. 10814,

pages 14, 15, 17.

The Revenue Service charts the status of tax bills re- Announcement ported out of Committee by the 86th Congress.

59-54, page 25.

Announcement of action on decisions of the Tax Court of Page 6. the United States.

INTRODUCTION-(Continued from page 2)

personnel of the Service and others concerned must consider the 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). a year; $2.75 additional for foreign mailing.

Subscription price: $6

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