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LEASES.

(See also DECISION 19932, p. 231.)

(19684.)

Stamp tax-Leases.

Receipts setting forth terms of a lease required to be stamped as a lease, unless there has been a separate lease made which has been duly stamped.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., July 12, 1898.

SIR: In reply to the letter addressed to you on the 2d instant by Mr. Collie E. Kinney, of Indianapolis, Ind., which you have referred to me, inquiring whether that provision of the act of June 13, 1898, Schedule A, imposing stamp tax "on lease, agreement, memorandum, or contract for the hire, use, or rent of any land, tenement, or portion thereof," applies to an instrument in the form of a receipt for money paid, which contains the words "in consideration of his having this day leased of me the house known as No. 250 North Illinois street, in the city of Indianapolis, Marion County, Ind., for the term of one month from this date," will you please inform him that it is held that this receipt, or any other receipt or instrument setting forth any terms of a lease, must be required to be stamped as a lease, unless there has been a separate lease made in the case which has been duly stamped, in which event the receipt, though containing the terms in question, does not require a stamp. A mere receipt, given under the terms of a lease duly stamped, does not require a stamp.

A receipt given on or after July 1, 1898, though it contains reference to the terms of a lease fully executed before July 1, 1898, does not require a stamp; but it is advisable in each of these cases that reference should be made in the receipt to the lease and to the date of its execution.

There will be no liberal ruling in favor of persons interested in these and other cases under the stamp-tax act. The construction must be broadly in favor of the revenue, to prevent evasion.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Hon. C. W. FAIRBANKS, United States Senate.

(20069.)

Stamp tax-Leases

Transfer of lease subject to taxation for the unexpired term.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., September 19, 1898.

SIR: This office is in receipt of a letter from Mr. Frank Drake, 15 Harrison street, Shelbyville, Ind., under date of September 9, 1898, in

which he asks, Is it necessary to place revenue stamps on the transfer of a lease, and, if so, how much?

When a lease is transferred to a new lessee it is subject to taxation for the unexpired term of the lease and should be stamped accordingly. N. B. SCOTT, Commissioner.

Respectfully, yours,

Mr. AMBROSE E. NOWLIN,

Collector Sixth District, Lawrenceburg, Ind.

(20318.)

Stamp tax-Leases of rights of way.

Leases of rights of way of land are subject to taxation under act of June 13, 1898. TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., November 11, 1898.

SIR: This office is in receipt of a letter under date of October 18, 1898, from Mr. O. H. Waddle, Somerset, Ky., in which this gentleman asks if leases of rights of way of land are subject to taxation. You will inform him that they are.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. JOHN W. YERKES, Collector Internal Revenue, Danville, Ky.

LEGACIES AND DISTRIBUTIVE SHARES.

(19561.) Legacy tax.

The law does not apply to cases where the grantor died before June 13, 1898.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., June 23, 1898. SIR: Your letter of the 20th instant, in regard to the tax on legacies and distributive shares of personal property under the provisions of the act of June 13, 1898, has been received.

A tax on legacies or distributive shares arising from personal property where the whole amount of such personal property shall exceed the sum of $10,000, passing after the passage of said act, is imposed as follows:

On sums between $10,000 and $25,000

First, on benefits to the lineal issue or lineal ancestor, brother, or sister of the deceased at the rate of 75 cents for every $100.

Second, to the descendant of a brother or sister at the rate of $1.50 for every $100.

Third, to the brother or sister of the father or mother, or a descendant of a brother or sister of the father or mother, at the rate of $3 for every $100.

Fourth, to the brother or sister of the grandfather or grandmother, or a descendant of the brother or sister of the grandfather or grandmother, $4 for every $100.

Fifth, to those, of any other degree of collateral consanguinity, or strangers in blood, or a body politic or corporate, at the rate of $5 for every $100.

All legacies or property passing by will, or by the laws of any State or Territory, to husband or wife, are exempted from tax or duty.

On sums ranging between $25,000 and $100,000 the rates of tax are to be multiplied by one and one half; on those ranging from $100,000 to $500,000 the rates are to be multiplied by two; on those ranging from $500,000 to $1,000,000 the rates are to be multiplied by two and onehalf, and on those above $1,000,000 the rates are to be multiplied by

three.

This tax is made a lien upon the property of the deceased for twenty years, or until the same shall within that period be paid. It is required that the tax shall be satisfied before the legatee is paid.

Every executor, administrator, or trustee, before payment to the legatees or parties entitled to beneficial interest, shall pay to the collector or deputy collector of the district of which the deceased was a resident the amount of the duty or tax upon such legacy or distributive share. He will render to the collector or deputy collector a statement in detail of the amount of such legacy or distributive share, together with the amount of duty which has accrued, or shall accrue, verified by his oath or affirmation on Form No. 419.

The words "passing after the passage of this act" mean where the grantor dies after the passage of the act. That is the time when the will or intestate laws of the State or Territory take effect.

The law does not apply to estates now in process of settlement, where the grantor died before the 13th of June, 1898.

Respectfully, yours,

Mr. A. B. WHITE,

N. B. SCOTT, Commissioner.

Collector Internal Revenue, Parkersburg, W. Va.

(20061.) Legacy tax.

As to Form 419 for making return-The value of an estate to be taken from the inventory and appraisement—If the personal property exceeds $10,000 in value the tax accrues.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., September 15, 1898. SIR: Yours of the 9th instant is received, inclosing letter to you from Mr. William M. Fausset, Pottsville, Pa., in which he refers to the fact that in the Form 419 for making return of legacies and distributive shares there is a column for "amount exempt." He asks what personal property is exempt from taxation.

In reply, you are advised that the form in question was in use under the old law, and was hastily reprinted for use under the present law. The column "Amount exempt" might, however, be used in case of a legacy or distributive share to a surviving wife or husband.

The column in the form headed "Age of legatee at testator's death" is useless under the present law. The form will be revised, and this column will be eliminated in the next edition.

Mr. Fausset also asks if tax is to be computed on the whole amount of the estate or on the amount of each share. He instances the case of a person leaving by will a personal estate worth $60,000 to his four children. He asks if the gross amount is to be divided by four and the tax computed at the rate of 75 cents on every $100, or whether the value of the estate in its entirety is to be taken and the tax computed at the rate of $1.12 on the $100.

In answer, I have to say that the rate of tax is to be determined by the value of the whole amount of the personal property passing to an executor or to beneficiaries direct. In the case specified, where the amount exceeded $25,000 and did not exceed $100,000, the rate of tax under each share would be $1.12 on each $100 of clear value.

In reply to the last question asked by Mr. Fausset, you are advised that, as the inventory and appraisement of an estate must be made under oath and filed in the office of the register or other probate officer, I can see no reason why the collector may not properly accept as correct the taxable values given by the appraisers. The acceptance of such values would not prevent a reopening of the case should there be discovery of fraudulent undervaluation.

In conclusion, you state that you are "unable to determine whether it is the intention of the act to in all cases exempt the sum of $10,000, making the tax really on the excess of such amount."

In answer, I have to say that the sum of $10,000 is exempt from taxation only in cases where the whole value of the personalty does not exceed $10,000. If the personal property exceeds $10,000 in value the tax accrues, though the aggregate amount of the separate shares distributed may fall considerably below $10,000, owing to the deduction of expenses of distribution.

Respectfully, yours,"

N. B. SCOTT, Commissioner.

Mr. P. A. MCCLAIN, Collector First District, Philadelphia, Pa.

(20089.) Legacy tax.

Section 29 of the act of June 13, 1898, construed.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., September 21, 1898.

SIR: Your letter of the 8th instant is received, asking for a construction of the following portion of section 29 of the war-revenue act:

Where the whole amount of said personal property shall exceed in value ten thousand and shall not exceed in value the sum of twenty-five thousand dollars the tax shall be, etc.

You ask whether this means the whole amount of the personal property of which the testate or intestate died seized or the amount or amounts received by the legatee or legatees.

In reply, you are advised that this office construes section 29 as follows:

Where the value of the whole amount of personal property left by a decedent does not exceed $10,000, no tax is imposed. Where such whole value exceeds $10,000 and does not exceed $25,000, the tax is imposed, and the rate of tax upon the clear value of each share is determined by the degree of relationship of the beneficiary. Where the value of the whole amount of the personal property left by a decedent exceeds $25,000, the rate of tax upon the clear value of each share is determined by the degree of consanguinity and by the value of the whole amount, as provided in the last paragraph of section 29 of the war-revenue act.

You ask whether the tax upon legacies should come out of the corpus of the estate or out of each share.

Each share should bear its own tax, unless, in case of devise by will, it was otherwise specified in the will.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. J. C. BOEVERS, State's Attorney, Galena, Ill.

(20188.) Legacy tax.

The fact that distributive shares arising from personal property of an estate are represented by United States bonds does not relieve the shares from legacy tax.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., October 12, 1898.

SIR: In reply to your inquiry of 5th instant, whether or not Government bonds are subject to legacy tax, you are advised that where certain distributive shares arising from the personal property of an estate are represented by bonds of the United States it does not constitute ground for holding such shares to be exempt from tax on legacies and distributive shares under the internal-revenue laws. (24 Int. Rev. Rec., 33.) Respectfully, yours, N. B. SCOTT, Commissioner.

Mr. CHARLES WRIGHT, Collector First District, Detroit, Mich.

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