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be, and the tax shall have been assessed and paid under such return, such income is thereby freed of all tax liability and may be thereafter dealt with without further regard to the provisions of the income-tax law.

Under the provisions of section 2(b) it is held that estates during the period of administration have but one beneficiary, and that beneficiary is the estate. Therefore a return on Form 1040 or 1040A, subject to all the deductions and exemption, shall be made by the executor or administrator for such beneficiary and the entire tax paid thereon.

Deed of trust.-A deed of trust must be absolute so far as the conveyance of title is concerned and irrevocable by the donor, otherwise the income from the property in question will accrue to the donor and must be accounted for by him.

Executors and administrators.-Where, during the period of administration, an executor converts the estate in his possession as such executor into money for the purpose of settling the estate and closing the administration and in which conversion a profit is realized which with other income exceeds $1,000 a return of income should be made by the executor covering the period of administration in which should be included all gains, profits, and income of the estate during such period, and he should pay the tax found by such return to be due. The income of the estate being thus freed of income-tax liability may thereafter be dealt with without further regard to incometax requirements.

Proceeds of life insurance policies payable to the estate of a decedent, when received by an executor or administrator, are, in the amount by which such proceeds exceed the premium or premiums paid by the decedent, income of the estate to be accounted for by the executor or administrator under the provisions of section 2 (b), act of September 8, 1916. This return is to be made on income-tax Form 1040 or 1040A.

Administrator or executor.-Liability for payment of income tax attaches to the person of an executor or administrator for income tax up to and including the date of his discharge, regardless of the fact that the time in which claim is made and filed against the estate has expired or where, prior to distribution and discharge, the executor or administrator had notice of his obligations to the Federal Government or where he failed to exercise due diligence in determining whether or not such obligations existed.

198 Liability for the tax due from a deceased person, or from his estate, also attaches to the estate itself, and when by reason of distribution of the estate and discharge of the executor or administrator it shall appear that collection of the tax can not be made from the executor

or administrator, the collector will make demand on the distributees for their proportionate share of the tax due and unpaid.

Depreciation deduction in return of.-In the case of a trust estate 199 where the terms of the will or trust or the decree of a court of competent jurisdiction provides for keeping the corpus of the estate intact, and where physical property forming a part of the corpus of such estate has suffered depreciation through its employment in business, a deduction from gross income for the purpose of caring for this depreciation, where the deduction is applied or held by the fiduciary for making good such depreciation, may be claimed by the fiduciary in his return of income. Fiduciaries should set forth in connection with their returns the provision of law, trust, or decree requiring such depreciation deduction where any exists or when actual depreciation occurs, the amount thereof, and that the same has been or will be preserved and applied as such. All amounts paid by fiduciaries to beneficiaries of trust estates from the income of such trust estates, whether from reserves or otherwise, are held to be distributions of income and will be treated for income-tax purposes in accordance with the provisions of law and regulations applicable to income of such beneficiaries.

Nonresident alien beneficiary.-Where a fiduciary in the United 200 States is the recipient of trust income for which there is but one beneficiary and that beneficiary a nonresident alien, the fiduciary will be required to make full and complete return on Income Tax Form 1040 cr 1040A, as the case may be, for this trust income on behalf of the nonresident alien and pay any and all tax found by such return to be due. Where there are two or more beneficiaries, one or all of whom are nonresident aliens, the fiduciary shall render a return on Form 1041, and a personal return on Form 1040 or 1040A for each nonresident alien beneficiary.

Parent-Minor child. The parent is held to be the natural guardian 201 of a minor child. Income received by the minor child from sources other than the parent should be included by the parent in his return of income. The fact that such income is not appropriated by the parent is immaterial, as it will be held, in the absence of a showing of fact to the contrary, that such income was subject to appropriation and was appropriated by the parent, and that the child receives the same as a gift from the parent. Where the income is from a separate estate and the parent has been appointed guardian and the conditions are such that the income so received is to be held for the use of the child, it shall not be included in the return of income of the parent, but shall be accounted for otherwise for the purposes of the income tax in manner and form as called for by the facts of the particular case.

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Trust, return of.-Where, in the case of more than one trust, the creator of the trust in each instance is the same person and the trustee in each instance is the same, the trustee should make a single return on Form No. 1041 for all of the trusts in his hands, notwith standing the fact that they arise from different instruments. When a trustee holds trusts created by different persons for the benefit of the same beneficiary, he should make return for each trust separately on Form No. 1041. This ruling is based on the identity of the creator and the identity of the trustee of the various trusts, and not upon the identity of the beneficiary. 203 Incompetents.-A committee of the property of an incompetent person is held to be a fiduciary for the purpose of income tax and required to make a return on Form 1040, revised, for the incompetent whenever the amount of income is sufficient to require a return. 204 Two estates.-A fiduciary acting for a beneficiary in more than one estate or trust is required to account for each estate separately when the amounts are such as to require the filing of a return, and also a return of information.

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A fiduciary acting for a minor or insane person having a net income of $1,000 or $2,000, according to the marital status of such person, will be required to file a return for such incompetent on Form 1040 and 1040A and pay the tax found by such return to be due, in addition to the requirement in the preceding paragraph when there is more than one beneficiary of the income of the same trust.

Stock dividends paid from earnings or profits accumulated after March 1, 1913, received by a fiduciary and retained as an accretion to the estate under the terms of the will or trust are held to be income to the estate and taxable as such to the estate.

Income accumulated in trust for unascertained persons or persons with contingent interests is held to be income accruing to the estate and is taxable to the estate.

Incorne held for future distribution under the terms of the will or trust shall be likewise taxed except when returned by the beneficiary for the purpose of the tax.

All fiduciaries are indemnified against the claims or demands of every beneficiary for all payments of taxes which they shall be required to make under the provisions of this title and they shall have credit for such payments in any accounting which they make as such fiduciaries.

The beneficiary will be required in the case of trust estates to account for the actual amounts distributed or credited to him.

Art. 30. Partnerships.-Partnerships as such are required to make return of income for income-tax purposes only when requested so to do by the commissioner or collector, and when so requested they shall render a correct return of the earnings, profits, and income

of the partnership, except income exempt from tax under section 4 of the income-tax law, setting forth the item of gross income and the deductions and credits allowed by law as for an individual, citizen, or resident alien, and the names and addresses of the individuals who would be entitled to the net earnings, profits, and income, if distributed. In computing its profits, for the purpose of the income tax and return as aforesaid, a partnership shall not deduct premium's on life-insurance policies covering the lives of members of the partnership, its employees, or those financially interested in the business or trade conducted by the partnership or otherwise. Individuals entitled to share in partnership net income are required to include in their returns of income their respective shares of such partnership net income, whether distributed or not. In reporting their share of partnership net income the partners will exclude such part thereof as may have been received by the partnership from sources exempt from tax under provisions of section 4, act of September 8, 1916, as amended, and which shall have been included by the partnership in its statement of net income distributed to the partners. The partners shall include in their returns of income their proportionate share of partnership net income derived from dividends, but the amount of such dividends so received shall be allowed as a credit for the purpose of computing the normal income tax. Partnerships having a net income of $6,000 cr over will be required to render returns for the purpose of excess-profits tax.

Insurance premiums.-Insurance premiums paid on life-insurance 212 policies covering the lives of officers, employees, or those financially interested in any business conducted as a partnership or by an individual shall not be deducted in computing the net income of such individual or in computing the profits of such partnership for the purposes of paragraph (e) of section 8 of the act of September 8, 1916, as amended.

Identity of income.-The character of partnership profits divisible 213 between persons has no reference (except as otherwise specially provided for in sec. 8 (e), act of Sept. 8, 1916, as amended) to any character which, as income accruing to the partnership it, may have borne prior to the receipt by the partnership, and hence, with the exception noted, income received from a partnership can not be traced to its source behind the partnership for the purpose of claiming individual exemption. Where the result of partnership operation is a net loss, the loss will be divisible between the partners in the same proportion as net income would have been divisible, and may be used by the individual partners in their returns of income

Art. 31. A partnership shall have the privilege of firing and mak-214 ing return on the basis of a fiscal year the same as provided for cor

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porations by section 13 (a) and (3), act of September 8, 1916, a amended. If the fiscal year of a partnership (other than the calenda year) ends in a calendar year for which there is a rate of tax, differ ent from the rate for the preceding calendar year, for the purpos of the income tax, each partner's share of partnership profits shal be divided in the proportion of the different calendar years compo ing said fiscal year and the rate of tax for the respective calenda years shall apply to that part of such profits as thus falls within sa calendar years.

Any partnership may at its option designate the last day of an month as the close of its fiscal year. In each case where the partner ship's fiscal year differs from the calendar year it shall, not less tha 30 days prior to March 1, give notice in writing to the collector internal revenue of the district in which its principal place of bus ness is located that the day it has thus designated is the closing da of its fiscal year.

Art. 32. Nonresident alien individuals.-A nonresident alien ind vidual shall make a full and accurate return of all net income r ceived from sources within the United States, regardless of amount unless the tax on such income has been fully paid at the source; an is not entitled to the benefit of the several deductions and credi provided by section 6 of the act of September 8, 1916, as amende by the act of October 3, 1917, unless such return is filed by him or h authorized agent.

Return of income.-Nonresident aliens are not entitled to any sp cific exemption as a deduction from net income from sources with the United States. The responsible heads or representatives of no resident aliens in connection with any sources which said nonreside aliens may have within the United States, shall make a full and con plete return of such income and shall pay any and all tax, normal and additional, assessed upon the income received by them in behal of their nonresident alien principals, in all cases where the incom tax on income. so in their receipt, custody, or control shall not hav been withheld at the source.

Where nonresident aliens have various sources of income withi the United States so that at any one source or from all sources con bined, the amount of income shall call for the assessment of add tional tax and a return of income shall not be filed by or on behal of a nonresident alien for the purpose of the assessment of incom tax, the Commissioner of Internal Revenue will cause a return of income to be made and include therein the income of the nonresiden alien from all sources concerning which he has information and shall assess the tax and collect the same from one or more or all o the sources of income within the United States of said nonresiden alien, without allowance for deductions and credits under section 6.