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have been sold, and that when any ticket for passage from a port in the United States is presented to a transportation company it will be the duty of the company to see that the same is properly stamped before accepting it, no matter whether the ticket was purchased at the port where the company's vessel starts from or if it was a coupon presented in the regular course of travel on a tourist ticket around the world.

You now call my attention to the fact that this ruling and the ruling No. 30 in said Circular No. 503 are not consistent, and you ask me how they are to be harmonized and understood.

Ruling No. 30 in that circular states that "tickets issued in Canada for passage on a vessel sailing from a United States port are not subject to stamp tax." This ruling was made by an inadvertence just before the operations of the new law went into effect, and is not in accordance with the law imposing a tax upon passage tickets. It is not now authorized by this office, but instead thereof the instructions contained in the letter to you dated August 3 must be followed.

The act of June 13, 1898, imposes a tax upon passage tickets "by any vessel from a port in the United States to a foreign port," the amount of tax varying in accordance with the cost of the ticket. It is the ticket which is taxed, and not the person by whom, or the place at which, such ticket may be sold or issued, and you will readily see that if tickets issued in the Dominion of Canada for passage on a "vessel from a port in the United States to a foreign port" were to be exempted from taxation, a large part of the tax on passage tickets which should be collected would be evaded, as, under the scalper's methods ordinarily in use, a supply of passage tickets abroad from ports in this country would be furnished to the principal offices for sale of such tickets from points in the Dominion in connection with railroad trips, which would practically nullify the act in relation thereto. You will, therefore, consider the ruling in said circular, in relation to tickets issued in Canada for passage on a vessel sailing from a United States port, as having been abandoned and abrogated by this office, and that the ruling as contained in my letter of August 3 will remain in force and must be complied with.

You will consider this an answer also to your communication of the 24th ultimo, again calling my attention to the matter.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. R. M. MELVILLE, Toronto General Steamship Agency, Toronto, Canada.

(20196.)

Stamp tax-Exemption of foreign diplomatic corps.

Members of foreign diplomatic corps are not required to pay tax on passage tickets by vessel from a port in the United States to a foreign port.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., October 13, 1898.

SIR: At the verbal request of Commandant Clement de Grandprey, military attaché of your embassy, I have the honor to advise you that this office holds, pursuant to former rulings respecting the exemption of the foreign diplomatic corps from taxation under the internal-revenue laws, that members of said corps are not required to pay tax on passage tickets by any vessel from a port in the United States to a foreign port,

and that such tickets, when purchased and used by any member of the foreign diplomatic corps, may be sold and used without any stamp being required on the same.

Respectfully, yours,

Mr. JULES CAMBON,

N. B. SCOTT, Commissioner.

Ambassador E. and P. of France, Washington, D. C.

STOCKS.

(See also DECISIONS 19700, p. 240; 19710, p. 80; 19998, p. 62; 20091, p. 64; 20093, p. 66 20157, p. 68.)

(19607.)

Stamp tax-Certificates of stock.

Sales and transfers of certificates of stock.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., June 29, 1898. SIR: On the question of the construction of that part of Schedule A of the act of June 13, 1898, imposing stamp tax "on each original issue, whether on organization or reorganization, of certificates of stock,” it is held that the meaning of the words "original issue," as herein used, is limited and controlled by the words "whether on organization or reorganization;" and that therefore the only certificates of stock on which the tax of 5 cents "on each hundred dollars of face value or fraction thereof" is imposed by this act are those certificates issued on or after July 1, 1898, on the organization or reorganization of a company. In the case of a corporation having, for instance, an authorized capital stock of $1,000,000, of which it has issued only $500,000 prior to July 1, 1898, and on or after that date finds it necessary to make one or more additional issues under the authority possessed by it, each additional issue thus made is an "original issue" within the terms and meaning of the statute here under consideration, and the certificates of such issue are subject to the stamp tax.

Where any original certificate issued is presented by the holder to the company or corporation for the issuance of another certificate or certificates in lieu thereof, the certificate or certificates thereupon issued to take the place of the original certificate could not, under the language and limitation of the statute above cited, require any stamp as long as there is no sale, nor agreement to sell, nor memorandum of sale, nor transfer of any of these certificates issued in lieu of the original.

In case of sale where the evidence of transfer is shown only by the books of the company, a tax of 2 cents is required to be paid on each hundred dollars of face value or fraction thereof; and the stamp representing this is required to be placed upon such books.

Where the change of ownership is by transfer certificate-that is to

say, the executed authority to transfer is contained on the back of the stock certificate which is to be transferred-the stamp must be placed on the transfer certificate—that is to say, upon the surrendered certificate containing the transfer.

In cases of agreements to sell, or where the transfer is by delivery of the certificate assigned in blank, there must be executed a memorandum thereof, to which the stamp is required be affixed.

Under the ruling herein stated, in a case (that may be supposed) of a man who is the owner of a certificate for 100 shares of stock, and wishes to sell 10 of these to another person, the result being that one certificate would be issued for the 10 shares sold, and also an additional certificate for the 90 shares still remaining in him, the certificate for 90 shares issued (with the certificate for 10 shares sold) in lieu thereof does not require any stamp; and the certificate for the 10 shares does not require a stamp representing the tax of 5 cents on each hundred/ dollars of face value or fraction thereof, as it is not an original issue. The only stamp required with reference to these certificates is a stamp on the transfer of the 10 shares sold, representing payment of the tax of 2 cents on each $100 of face value, or fraction thereof.

In another case (stated for illustration) where a man holds several certificates for shares of stock aggregating 100 shares, and, for his convenience, calls upon the company to issue to him in lieu thereof one certificate for 100 shares, there being no sale, nor agreement to sell, nor memorandum of sale, or delivery or transfer of this new certifi cate, the statute does not require the affixing of any stamp thereto. Respectfully, yours, N. B. SCOTT, Commissioner. Mr. P. A. MCCLAIN, Collector First District, Philadelphia, Pa.

(19888.)

Stamp tax-Transfers of shares of stock.

Transfers of shares or certificates of stock-How stamps are to be attached-Stamp tax to be reckoned on face value of certificate-Illustration.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

Washington, D. C., August 12, 1898.

SIR: Mr. Goulding Marr, broker, Nashville, Tenn., has written to this office under date of the 4th instant, inclosing a copy of certain requirements regarding the stamp act, stating that local bankers have decided, for their own convenience, to have some copies of the same printed, and before doing so they submit them to the proper authorities for approval.

12593-17

The paper submitted is inclosed, and you are requested to return the same to Mr. Marr. The requirements are copied almost entirely from Circular No. 503, and demand no change except the last item, which is in the following language:

On all transfers of shares or certificates of stock the stamps must be attached to the new certificates.

In regard to this matter I now state that the intention of the law was to tax the original issue of certificates of stock, and to impose a tax upon every change of ownership. When stock is transferred for which no certificate has been issued, and the evidence of transfer is shown only by the books of the company, the stamps shall be placed on such books. Where the change of ownership is by the transfer of a certificate, and the certificate contains a blank form of assignment on the back, which is filled in by the insertion of the name of the person to whom the stock is transferred, the stamp shall be placed upon the certificate.

In case of an agreement to sell, or where the transfer is by the delivery of the certificate, signed in blank, the name of the transferee or vendee to be filled in afterwards, there shall be made and delivered by the seller to the buyer a bill or memorandum of sale, to which the stamp should be affixed.

Where certificates of stock are sold, and the tax has been paid and stamps affixed in the manner stated, when the transfer is made on the books of the company from the name of the party selling to the name of the purchaser, no stamps are required on the new certificates issued in lieu of those canceled.

Mr. Marr further states that ruling No. 8 in Circular No. 503 is not clear, and wishes a hypothetical case given, so that the matter can be easily understood. The ruling referred to is as follows:

Where one certificate represents several shares of stock (however large the number of shares), on transfer of this certificate the stamp tax is to be reckoned on its face value, and not on the face value of each separate share of stock which it represents.

As an illustration: On a transfer of one certificate of stock, representing 500 shares, $5 par value, the face value of the certificate being $2,500, the stamp required is 50 cents. Again, where stock is sold of the par value of $100, and upon which it appears that only $25 have been paid, the tax is to be reckoned upon the face value of $100, and not upon $25.

Respectfully, yours,

N. B. SCOTT, Commissioner.

Mr. D. A. NUNN, Collector Fifth District, Nashville, Tenn.

(20070.)

Stamp tax-Transfers of stock.

Transfers of stock from guardian to ward subject to taxation.

TREASURY DEPARTMENT,

OFFICE OF COMMISSIONER OF INTERNAL REVENUE,

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

SIR: This office is in receipt of your letter of July 21, 1898, in which you state that you have in your care some certificates of national bank and building and loan association stock belonging to your brother, who has recently become of age. The certificates, although representing his property, are in the name of his mother as guardian, and he would like them in his own name. You state further that you understand that in a case like this, where there is no transfer of ownership from one person to another, there are no revenue stamps required, and you ask to be advised if you are correct in this understanding.

In reply, you are advised that this office holds that a transfer of stock from a guardian to a ward is subject to taxation, and that it is such a change of ownership as requires the imposition of a tax.

It

Guardians of all descriptions are treated by courts as trustees. is a fiduciary relationship in which the guardian does not have the legal and equitable title to the stock. He holds it in his name for the ward. He does not have absolute control of the stock; he is subject to the order and supervision of the court.

In most cases the guardian is bonded to secure his faithful performance of the trust, and to state there is no change of ownership when the stock is transferred from the guardian to the ward would be to make a statement in which this office can not concur.

Although the guardian's possession of the property of the ward is not such as gives him a personal interest, it is a possession for the purposes of agency. (See Parsons on Contracts, vol. 1, chap. 9, sec. 2.)

This office looks upon this relationship in the light of a trustee holding property in trust until the happening of some event.

In this case the ward has become of age and can claim his property and desires to have this stock in his own name. This office holds it to be such a transfer of stock as is subject to taxation.

In regard to stock of a building and loan association, you are informed that, if this stock is stock of a cooperative building and loan association whose capital stock does not exceed $10,000, and it is such an association that makes loans only to its shareholders, the law specially exempts stock of this kind in such associations from taxation. Of course, if it is such stock, and it is in the name of the guardian, the transfer to the ward would not be subject to taxation, as the stock itself would be exempt. Respectfully, yours, N. B. SCOTT, Commissioner.

Mr. A. J. CLYMER, Van Wert, Ohio.

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