Landlord.-A landlord in receipt of annual rental from a tenant in excess of $3,000 may, at the time the amount of rental payments aggregates $3,000, file with the tenant a claim for exemption under paragraph C of the income-tax law (Form 1007, revised). He may, also, after December 31 of the taxable year, file with the tenant, or with the collector of internal revenue, a claim for deductions under paragraph B on Form 1008, revised.

For duties of tenant with reference to withholding, see Tenant. (T. D. 1965.)

Legacy. The general policy of the law and rule of interpretation require that legacies in all cases, unless clearly inconsistent with the intention of the testator, should be held to be vested rather than contingent. Where there is a vested interest the income from such interest, whether distributed or not, is subject to the tax; and when in the hands of fiduciaries they are required to account for and pay the tax thereon. Life insurance policy, premiums paid on.-See Insurance premium.

Living quarters furnished.-See Compensation, value of quarters furnished part of.

Local benefits, taxes assessed against.-Taxes paid pursuant to assessments levied by special districts, such as irrigation, reclamation, drainage districts, etc., for sidewalks in cities, street extension, grading, paving, etc., are held to be "taxes assessed against local benefits." Such taxes are not allowable deductions in a return of annual net income.

Losses in trade.-"Only those losses are deductible which are sustained during the tax year 'in trade.' Loss to be deductible must be an absolute loss, not a speculative or fluctuating valuation of continuing investment, but must be an actual loss, actually sustained and ascertained, during the tax year for which the deduction is sought to be made; it must be incurred in trade and be determined and ascertained upon an actual, a completed, a closed transaction."

The term "in trade," as used in the law and in T. D. 2005, is held to mean the trade or trades in which the per

son making the return is engaged; that is, in which he has invested money otherwise than for the purpose of being employed in isolated transactions and to which he devotes at least a part of his time and attention. A person may engage in more than one trade and may deduct losses incurred in all of them, provided that in each trade the above requirements are met. As to losses on stocks, grain, cotton, etc., if these are incurred by a person engaged in trade to which the buying or selling of stocks, etc., are incident as a part of the business, as by a member of a stock, grain, or cotton exchange, such losses may be deducted. A person can be engaged in more than one business, but it must be clearly shown in such cases that he is actually a dealer, or trader, or manufacturer, or whatever the occupation may be, and is actually engaged in one or more lines of recognized businesses before losses can be claimed with respect to either or more than one line of business, and his status as such dealer must be clearly established. (T. D. 2005.)

Mileage. The difference between the amount received as mileage and the amount of actual necessary expenses incurred on a journey shall be returned as income. Payments on account of mileage are not subject to withholding. (T. D. 2079.)

Minor child, return of.—See Guardian, natural.

Mortgage, property purchased subject to.-An individual issues coupon bonds secured by a mortgage upon real estate. Subsequently a corporation purchases the real estate and assumes (as between the mortgagor and itself) the payment of bonds and coupons. Held, that the situation is not changed by the purchase by the corporation. The corporation purchased only the mortgagor's equity of redemption (and the mortgagor's possession); the property is the security, and the character of the bond obligation remains unchanged and as created, even though the corporation is to pay all interest and will ultimately pay off the mortgage. There will be no withholding by the corporation (it being placed in the stead of the mortgagor) until the interest payment to any one person in any year exceeds $3,000. (See public utility.)

Municipality, obligation of.-See Public utility, and Mortgage, property purchased subject to.

Naval Officers.-See Oaths.

Nonresident alien, agent of.-The responsible heads, agents, or representatives of nonresident aliens who are in charge of the property owned or business carried on within the United States by nonresident aliens shall make full and complete returns of the income therefrom on Form 1040, revised, and shall pay any and all tax, normal and additional, assessed upon the said income of such nonresident aliens. (T. D. 2013.)

Notary public.-See Oaths.

Oaths. (1) A return of income rendered by an individual residing abroad may be acknowledged before any duly appointed officer of the country in which he resides authorized to administer oaths and use an official seal.

(2) If a return is executed in a State before a notary who is not required by the laws of the State to use a seal, and none is used, the notary should file with the Commissioner of Internal Revenue the certificate of an officer possessing a seal, showing that he is duly commissioned and authorized to administer oaths; otherwise the certificate will not be recognized.

(3) Returns acknowledged before commanding officers of naval vessels while at sea or in foreign ports will be accepted.

(4) Returns executed before a summary court officer, United States Army, will not be accepted.

Ownership certificates.-Ownership certificates should be filed with coupons of exempt organizations when presented for collection. (See Exempt organizations.)

Partnership Identity of income.-The character of partnership profits divisible between persons has no reference to any character which, as income accruing to the partnership, it may have borne prior to receipt by the partnership. It is therefore held that income received from a partnership can not be traced to its source behind the partnership for the purpose of claiming individual exemption.

Income, when accrued.-It is held that the income from a partnership accrues to the individual partner at the time his distributive interest is determined and reducible to possession. In the returns of income made by individuals for the calendar year, therefore, there should be included such income accruing from the business of partnerships for their business years as may have been definitely ascertained by means of a book balance, whether distributed or not. In other words, members of partnerships are required to make returns of income like other individauls for the calendar year, and should include in their returns the net proceeds of their interest in partnership profits ascertained at the end of the business year falling within the calendar year for which the individual return is being rendered.

Pay.-Congress has clearly specified the conditions under which officers and enlisted men are entitled to foreign service pay, aids' pay, and pay for certificate of merit, and such items of income are considered as fixed and determinable and subject to the withholding provisions of the income-tax law.

Penalty for failure to render a return.-See Failure to render a return, penalty for.

Pension, foreign.-License not required for collection of foreign pensions paid to resident aliens or citizens of the United States.

Pensions.-Pensions paid by the United States Government are subject to the income tax.

Per diem allowances in lieu of subsistence while traveling under orders.-The difference between the amount received as a per diem allowance and the amount of actual necessary expenses incurred on a journey shall be returned as income and is not subject to withholding. (T. D. 2079.)

Power of attorney, fiduciary relation can not be created by. -A person can not, by a power of attorney, delegate to another a duty which he himself could not perform, and inasmuch as an individual can not relieve a withholding agent from the withholding requirements of the income-tax law by filing Form 1015, a person holding a power of attorney from another is without authority to file this certificate as a fidu

ciary. However, for income-tax purposes he is authorized to file any certificate which his principal, as such, would be entitled to file.

Premium on bond.-See Bond, premium on.

Principal place of business of corporations.-See Corporations, principal place of business of.

Profit from sale of real estate.-Profit is the difference between the selling price and the cost where the selling price is more than the cost.

"Cost of property purchased prior to the incidence of the special excise tax (Jan. 1, 1909), or the incidence of the income tax (Mar. 1, 1913), will be the actual price paid for the property, including the expense incident to the procurement of the property in the first instance and its sale thereafter, together with carrying charges of interest actually paid, insurance, and taxes actually paid prior to the incidence (special assessments, if any, 'actually paid' as 'local benefits' in connection with real estate); provided that where, up to the incidence of the tax, the expense of carrying property has exceeded the income from it, the difference between the expense of carrying and the income from the property shall be added to the purchase price, and the sum thus ascertained shall be the cost of the property; and provided further, that in the case of property purchased prior to the incidence of the tax and sale thereof subsequent to the incidence of the tax, there shall be excluded from consideration in ascertaining cost of any items of income, expense, interest, and taxes previously taken into account in preparing a return of annual net income.

"The cost of property acquired subsequent to the incidence of the tax will be the actual price paid for it, together with the expense incident to the procurement of the property in the first instance, and its sale thereafter, and the cost of improvement or betterment, if any."

The entire profits realized by individuals or corporations from the sale of real estate will be taxable except where the property in connection with which the profit is obtained was acquired prior to March 1, 1913, in the case of individuals,