It has been suggested that this interpretation of the Treasury Department should be included in the law in order to remove all doubt as to the legislative intent.

It has been suggested that this change can be accomplished by an amendment in substantially the following form:

Amend paragraph (3) of subdivision (a) of section 326 by striking out the semicolon and inserting a colon and the following:

Provided, That amounts payable on account of income and war profits and excess profits taxes for the preceding year may be included in computing surplus and undivided profits only for the proportionate part of the year represented by the period of time between the close of such preceding year and the date or dates upon which such taxes become due and payable;

TITLE IV-ESTATE TAX.

Section 402 (c). Transfer of property in contemplation of death.

This paragraph of the law provides for the inclusion in the gross estate of a decedent of the value of property of which he has made transfer "in contemplation of death."

It has been suggested that this part of the law should be amended in the following three ways:

1. By defining the words "contemplation of death" in the manner in which these words are defined in the California statute. The California statute reads as follows:

The words "contemplation of death," as used in this act, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall said words be limited and restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis; and it is hereby declared to be the intent and purpose of this act to tax any and all transfers which are made in lieu of or to avoid the passing of property transferred by testator or intestate laws. (Stats. of Cal. 1913, chap. 595, sec. 1, subd. (f).)

Nevada has a similar statute (Stats. of Nev., 1913, chap. 266, sec. 30).

2. To extend the present prima facie presumption of taxability so as to include transfers made within six years of the decedent's death. Wisconsin has a statute of this kind. It reads as follows:

A tax shall be, and is hereby, imposed upon any transfer of property, real, personal. or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association, or corporation, within the State.

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When the transfer is of property made by a resident or by a nonresident when such nonresident's property is within this State, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift, made within six years prior to the death of the grantor, vendor or donor, of a material part of his estate, or in the nature of a final disposition or distribution thereof, and without an adequate valuable consideration, shall be construed to have been made in contemplation of death within the meaning of this section. (Stats. of Wis., chap. 48b, sec. 1087.)

3. To make absolute the presumption that any transfer has been made in contemplation of death if the conveyance was made within two years of death.

Indiana has a statute of this kind. It reads as follows:

Provided, That any conveyance, gift, or transfer made within two years of the death of any decedent, without consideration, save and except love and affection, shall be conclusively presumed to have been made in contemplation of death. (Burns's Ann. Ind. Stats., sec. 10143a, subd. 4.)

It has been suggested that these changes could be accomplished by an amendment in substantially the following form:

Strike out subdivision (c) of section 402 and insert:

(c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property-in-the-nature-of-a-final-disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title;

The words "contemplation of death," as used in this section, shall be taken to include that expectancy of death which actuates the mind of a person on the execution of his will, and in nowise shall such words be limited and restricted to that expectancy of death which actuates the mind of a person making a gift causa mortis; and it is hereby declared to be the intent and purpose of this title to tax any and all transfers which are made in lieu of or to avoid the passing of property transferred by testate or intestate laws. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within six years prior to his death, except in the case of a bona fide sale for a fair consideration in money or money's worth, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title. Any transfer made within two years of the death of any decedent without consideration, save and except love and affection, shall be conclusively presumed to have been made in contemplation of death;

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TITLE VI-TAX ON BEVERAGES.

Section 600. Distilled spirits withdrawn for nonbeverage purposes and diverted to beverage uses.

It has been suggested that this section of the law be amended so as to provide specifically that in cases in which distilled spirits are withdrawn and tax paid for nonbeverage uses and diverted to beverage uses an additional tax of $4.20 (the difference between the beverage and the nonbeverage rate) shall be imposed upon such spirits.

It is believed that flavoring extracts, patent and proprietary medicines, antiseptic solutions, cosmetics and toilet articles, and many similar preparations have been sold in large quantities in prohibition territory to be used as beverages.

It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Amend subdivision (a) of section 600 by striking out the period at the end thereof and inserting a colon and the following:

Provided, That an additional tax of $4.20 on each proof gallen, and a proportionate tax at a like rate on all fractional parts of such proof gallon, shall be levied and collected on all distilled spirits withdrawn and tax paid at $2.20 per proof gallon for use for nonbeverage purposes, and which are shown to have been sold or used (1) for beverage purposes, or (2) in violation of any regulations governing the sale and use of nonbeverage spirits prescribed by the Commissioner, with the approval of the Secretary, or which are shown to have been used in the manufacture of any article used or intended to be used for beverage purposes, containing one-half of 1 per centum or more of alcohol by volume.

Section 600. One hundred thousand dollars limit proposed in the case of distillery warehouse bonds.

It has been suggested that distillery warehousing bonds prescribed in section 3293 of the Revised Statutes, as amended, should be limited in amount to not in excess of $100,000, on the grounds that the rates of tax on distilled spirits having been greatly increased the distillers have difficulty in inducing surety companies to obligate themselves on such bonds, and that it is improbable that any distiller will hereafter be in position to fraudulently remove a sufficient quantity of spirits from any warehouse to exceed the security afforded to the Government by a bond in the sum of $100,000.

It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Amend section 600 by adding at the end thereof a new subdivision, as follows:

(d) Distillery warehousing bonds prescribed in section 3293 of the Revised Statutes, as amended, conditioned for the payment of tax on the spirits entered into the distillery warehouse, shall be in a penal sum not less than the amount of the tax on such distilled spirits, but in no case will any new warehousing bond be required in a penal sum in excess of $100,000.

Section 620. Disposition of violations of wine tax provisions by the assertion of tax and penalty in lieu of prosecution.

It has been suggested that this section of the law be amended so as to leave no doubt as to the power of the Commissioner of Internal Revenue to assess the tax and 200 per cent penalty before conviction has been had in court in cases of willful evasion, as is similarly provided in section 23 of the Revenue Act of 1914, in section 1004 of the Revenue Act of 1917, and in section 605 of the Revenue Act of 1918. It has been suggested that this change could be accomplished by an amendment in substantially the following form:

Strike out section 620 and insert:

"SEC. 620. That whoever evades or attempts to evade any tax imposed by sections 611 to 615, both inclusive, or any requirement of sections 610 to 621, both inclusive, or regulation issued pursuant thereto, or whoever, otherwise than as provided in such sections, recovers or attempts to recover any spirits. from domestic or imported wine, or whoever rectifies, mixes, or compounds with distilled spirits any domestic wines, other than in the manufacture of liqueurs, cordials, or similar compounds, shall, on conviction, be punished for each such offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and in addition thereto-by-a penalty of double the tax evaded, or attempted-to-be-evaded, to be assessed and collected in the same manner as taxes are assessed and collected, be liable to a penalty of double the tax evaded, or attempted to be evaded, together with the tax, to be assessed and collected in the same manner as taxes are assessed and collected, and in addition thereto shall, on conviction, be punished for each such offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and all wines, spirits, liqueurs, cordials, or similar compounds as to which such violation occurs shall be forfeited to the United States. But the provisions of this section and the provisions of section 3244 of the Revised Statutes, as amended, relating to rectification, or other internalrevenue laws of the United States, shall not be held to apply to or prohibit the mixing or blending of wines subject to tax under the provisions of sections 611 to 615, both inclusive, with each.