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sale, agreement of sale, or agreement to sell, and to place thereon the stamp required by the act, which is 1 cent for each $100 in value of the said sale, agreement of sale, or agreement to sell, and 1 cent for each additional $100 or fractional part thereof in excess of $100.

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Tax on sales "at any exchange, or board of trade, or other similar place"-Live stock comes within the classification of "any products or merchandise”—“Similar place" defined in reference to the selling of live stock; sales of live stock at such places as those defined subject to taxation.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., September 13, 1898.

SIR: Your letter of the 2d instant, relative to the business transactions at the Union Stock Yards, South Omaha, has been received, with inclosures.

You report that at this place commission merchants have in charge various lots of live stock shipped from different points to them for sale, and that it is the practice there for commission men to meet with buyers for the large packing house companies, who inspect the various lots of such stock as they desire to purchase, make offers for the same, and when a trade or deal is made the stock yards company issues to the seller a ticket showing the items relating to the transaction, and the commission men (the sellers) issue to the person to whom the stock is sold a bill of sale describing the stock sold, with weight and rate, and giving the date and place where sold, samples of which papers in a transaction by Wood Brothers with the Hammond Packing Company and by the Rosenbaum-Buchanan Company with Swift & Co. are inclosed with your letter.

You state that a member of the Rosenbaum-Buchanan Company informed you that similar papers were submitted to this office for decision some time ago, but that no answer had been received. "He also stated that business was done in the same manner at the Union Stock Yards, of Chicago; that his firm was ready and willing to stamp if they were liable, and would show their books and pay from the time the law went into effect, but that they could not observe the law if others did not, because the expense of stamping would be charged up to their customers, and if they should charge and others did not they would lose trade; they are, therefore, waiting to see what Chicago is

going to do, and for a decision as to their liability." You state that during the trading at this place everything is done verbally, and that no memoranda of sale are made or passed, but at the conclusion of the deal the stock yards company make a ticket showing the class, number, and weight of the stock sold, upon which the commission merchant who sells the stock makes out a bill (like the sample you inclose) and sends to the buyer of the stock; that the company purchasing indorses this bill with an order for the bank to pay the amount, attaching a 2-cent revenue stamp, the same as to a check. This bill or memorandum of sale complies, in its terms, with the requirements imposed by the provisions of the act of June 13, 1898, in Schedule A, in all respects, with the exception that there is not affixed to the same a lawful stamp or stamps in value equal to the amount of tax on the sale. The commission merchant also makes out and renders an account of sales to the party shipping live stock to him.

The case submitted by the Rosenbaum-Buchanan Company was settled on the 10th instant in a letter to Hon. William V. Allen, United States Senator from Nebraska, who had forwarded the papers therein by request of Mr. E. M. Bartlett, their attorney. In his legal opinion Mr. Bartlett advised these parties that their business is that of a commission merchant, and he objects to the payment of tax by commission merchants on their contracts, as he styles them. It was explained, however, in the decision in regard to their case that the question depends entirely upon the method under which the business is conducted, and they will understand fully from its terms that they come within the provisions of the law imposing a tax upon sales made at "any exchange or board of trade or other similar place." There can be no question but that live stock must be included within the desig nation of "products or merchandise," upon the sales of which tax is imposed. Whether or not the place where their sales are made is similar to that of an exchange or board of trade is the only point remaining. The distinctive feature prominent at an exchange or board of trade is an assemblage of traders in order to obtain the best market and most favorable dealings. It is not necessary, in order that sales of live stock should be brought within the provisions of this act, that they should be conducted at a building in the heart of the city. Similar features to those of an exchange or board of trade can exist as well at the Union Stock Yards or any other chosen place-that is to say, at a place where a number of traders, buyers and sellers, meet.

The Union Stock Yards at your city, or such yards in any other part of the country, are not an exchange or a board of trade, but in the business transacted at all such places, and within their limits, the trading and opportunities afforded to make trade by the commingling of traders, buyers and sellers, of the property there dealt in, they come within the exact description of being a "similar place" thereto, and the sales made there are clearly within the provisions of the law impos

ing a tax upon sales at any "exchange, or board of trade, or other similar place." It must be understood by these parties that the tax is imposed not upon their business as commission merchants, but upon the sales made at the particular place of selling. Sales made at a private yard, or while a lot of stock was in the cattle cars, or pasturing on the prairie, where the environments limited the dealings, would not be subject to taxation, while sales made at a general meeting place of traders, sought out for the advantages there to be obtained, are clearly within the provisions of the law.

You will, therefore, inform all parties making sales through the medium of such places that for each $100 in value of the sale or agreement of sale or agreement to sell, 1 cent, and for each additional $100, or fractional part thereof in excess of $100, 1 cent in taxes must be paid by stamps to be affixed to the bill, memorandum, agreement, or other evidence of the sale. The books showing all such sales subsequent to July 1, 1898, must be produced and examined, and the amount of tax which should have been paid must be ascertained and collected, and hereafter the tax must be paid promptly in the manner provided by law.

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Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. GEORGE H. WHEELOCK, Revenue Agent, Omaha, Nebr.

BANK DRAFTS.

(See CHECKS, DRAFTS, NOTES, ETC.)

BANKS AND BANKERS.

(See also DECISION 19701, p. 226; 20192, p. 104.)

(19695.)

Special tax-Capital of banks.

In estimating special tax of banks upon capital and surplus, the amount invested in United States bonds is not to be deducted.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 14, 1898.

SIR: In reply to a letter addressed to this office by Mr. Henry C. Stroup, president of the Farmers and Mechanics' National Bank of Philadelphia, you will please inform him that in estimating the amount of special tax required to be paid by his bank, based, as the law requires, upon capital and surplus, the amount invested in United

States bonds is not to be deducted. There is no provision of the law which warrants such deduction.

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A bank engaged in business in the month of July must pay special tax for the entire year beginning July 1, 1898.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 25, 1898.

GENTLEMEN: In reply to your letter of the 20th instant, you are hereby advised that your bank, being engaged in business in the month of July, 1898, is required to pay the special tax imposed by the first paragraph of section 2, act of June 13, 1898, and that this special tax, under the provisions of section 3237, Revised Statutes (which applies to all special taxes under the internal-revenue law of the United States), must be paid for the entire year beginning July 1. Return should accordingly be made to the collector within this month, in order to avoid the penalty of 50 per cent, which the provisions of section 3176, Revised Statutes, make it the imperative duty of the Commissioner to add to the amount of special tax if such return is not made within the time prescribed by the law, viz, within the calendar month in which the liability begins (section 3237, Revised Statutes, as amended by section 53 of the act of October 1, 1890).

Respectfully, yours, G. W. WILSON, Acting Commissioner. The FIRST NATIONAL BANK, Philadelphia, Pa.

(19797.)

Special tax-Returns of banks.

Tax to be computed upon capital including surplus, undivided profits, etc.-Method of computing capital and surplus for preceding fiscal year.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 29, 1898.

SIR: Your letter of the 27th instant relative to the preparation of your return for payment of special tax imposed by the war-revenue act of June 13, 1898, to take effect July 1, 1898, has been received.

In preparing your return you will be guided by the following rules: The law, section 2, specifically provides that the tax shall be computed upon the capital, and that, in estimating capital, surplus shall be included. In estimating surplus this office holds that undivided profits1 must be included. The law also specifically provides that the amount of such annual tax shall in all cases be computed on the basis of the capital and surplus for the preceding fiscal year, and this office holds that if the capital and surplus varied from time to time during the preceding fiscal year the same may be averaged, as was specifically provided by law in the case of capital under the revenue act of June 30, 1864. It was found to be necessary in the case of deposits under the act of 1864 to ascertain the average by adding together the amounts at the close of business of each business day and dividing the amount by the number of business days. This method should be adopted under the new law. The need of averaging is obviously greatest as to undivided profits. It is held to be improper to reduce the amount of undivided profits by unaccrued interest or by profits to be divided.

Respectfully, yours,

Mr. L. W. BURLEN,

N. B. SCOTT, Commissioner.

Cashier The Columbian National Bank, Boston, Mass.

(19827.)

Special tax-Banks.

Where capital and surplus have varied from time to time during the preceding fiscal year, the average for the year should be ascertained and the special tax reckoned on that basis.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., August 4, 1898. SIR: Your letter of the 29th ultimo has been received, inclosing a statement made by one of the banks in your city, and referring to their return as filed with your June list, showing that they have paid special tax only on $90,000 capital, claiming that the undivided profits1 which were on hand June 30, 1898, should not be taken into account with the capital and surplus for the preceding fiscal year, in ascertaining the amount of special tax due, as they "were paid out on the first day of July as earnings of the preceding six months."

'After this publication went to press, the honorable Attorney-General, on February 4, 1899, rendered an opinion that "the undivided profits of a bank are not surplus and can not be estimated under the law in question as a part of the bank's surplus." (For further information, see the opinion, printed in Treasury Decisions, Vol. 1, No. 6, 1899, p. 287.)

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