made, no return is required; but the certificates should be forwarded to the proper collector of interanl revenue. The annual return, or the certificates, or both, as the case may be, should be forwarded to the collector of internal revenue subsequent to the end of the calendar year and not later than March 1 of the succeeding year. The amount withheld, however, should not be forwarded to the collector until 30 days prior to March 1 of the year succeeding that in which the tax was withheld.

Withholding agent's return when Form 1008, revised, has been filed. The entries on Form 1042 should be made by a withholding agent from the facts before him after he has re ceived the authority of the collector for the refundment of a part of the amount previously withheld. When he has received notification of the amount of tax to be refunded, he has sufficient information to make correct entries on the form.

Thus, when a withholding agent has been authorized by a collector to refund, say, $10, he will reduce the amount otherwise to be entered in the column headed "Amount of tax withheld" by $10; he will reduce the amount otherwise to be entered in the column headed "Amount of income on which withholding agent is liable for tax" by $1,000; he will increase the amount otherwise to be entered in column headed "Amount of exemption claimed" by $1,000, and may change the heading to read "Amount of exemption and deductions claimed," if desired. The figures to be entered in the column headed "Amount of income" will remain the same, that amount being the actual amount passing through the hands of the withholding agent, whether or not Form 1008, revised, is filed.

Withholding from compensation paid at a per diem rate.— Per diem salaries paid on a straight basis of compensation for services rendered are subject to withholding at the source, the amount of compensation being fixed and periodic. If, however, a per diem salary rate is paid and the employee is required by the terms of his employment or contract to pay therefrom his own travel or other legitimate expenses incident

to the business of his employment, the income accruing to him from the per diem rate is not subject to withholding, the amount not being fixed or determinable.

Withholding returns required of corporations or their duly authorized withholding agents.-A corporation, having bonded indebtedness, which has withheld income tax during the preceding month is required to file a monthly list return, Form 1012, showing the amount of tax withheld. Certificates of ownership in which exemption is claimed to the extent of the amount of payment need not be listed, and if this is the only class of certificates received during the said preceding month, no return is required. However, such certificates should be forwarded to the proper collector of internal revenue, together with a letter of transmittal.

The return should be filed with the collector of internal revenue for the district in which the debtor corporation is located or has its principal place of business, provided the said debtor corporation has not filed with the said collector of internal revenue a notice of the appointment of a duly authorized withholding agent, in which case the debtor corporation is not required to file a monthly list return, Form 1012, or the corresponding annual list return, Form 1013.

This notice of appointment should be placed on file in the office of the collector of internal revenue for the district in which the debtor corporation is located or has its principal place of business, and the said collector should notify the collector of internal revenue for the district in which the duly authorized withholding agent is located. The duly authorized withholding agent is required to file its return with the collector of internal revenue for the district in which the said withholding agent is located, and is not required to file a return with the collector for the district in which the debtor corporation is located.

(T. D. 2137.)

Synopsis of rulings on questions relating to the income tax imposed by section 2 of the act of October 3, 1913.

The following synopsis of rulings on questions relating to the income tax imposed by section 2 of the act of October 3, 1913, on individuals, corporations, joint-stock companies, associations, and insurance companies, is published for the information of internal-revenue officers and others concerned. All rulings or parts of rulings heretofore made which are in conflict herewith are hereby revoked.

PART I.-Rulings in Relation to Personal Income Tax.

Aliens, nonresident, royalties paid to.-Royalties paid to nonresident aliens under an agreement of purchase of certain patent rights, the payments being based upon the quantity of goods produced by the use of such patents, are held to be income accruing to nonresident aliens by reason of property owned or business carried on within the United States; and, as provided in T. D. 2109 of December 28, 1914, the corporation or individual purchasing and using the patent rights is required to make full and complete returns of the income therefrom on Form 1040, revised, and to pay any and all tax, normal and additional, assessed upon such income of said nonresident aliens.

Commission retained by agent on his own life insurance policy. A commission retained by a life insurance agent on his own life insurance policy is held to be income accruing to the agent, and should be included in his return of income for the assessment of the income tax.

Deductions: Expenses incurred in connection with salary received from a State or a political subdivision thereof not allowable.-Expenses incurred in earning income which is not subject to tax under the income tax law do not constitute allowable deductions in computing net income from other sources which are taxable under the law.

Husband and wife, separate incomes of. The specific exemption of $4,000 may be claimed in the separate return of either husband or wife, the other claiming no exemption; or may be prorated between the two.

The separate incomes of husband and wife should not be combined in a return of income for the purpose of assessing the additional or surtax.

Life insurance.-Dividends paid on life insurance policies that have not matured, whether such dividends are drawn in cash by the insured or applied to the reduction of the annual premium due, are not considered items of taxable income under the law, and should be excluded from a return of income.

Dividends from paid-up policies, however, are considered income to the recipient, and must be included in the annual return of income whenever the taxpayer's income, including such dividends, is in excess of $20,000. They are considered the same as dividends or net earnings from corporations subject to a like tax and may, therefore, be excluded from a return of income in cases where the income is subject to the normal tax of 1 per cent only.

Partnership returns. No return for a partnership, as such, is required to be made for the year 1914 unless it shall be hereafter specifically requested. Form 1065 was provided for the returns of annual net incomes of partnerships for the year 1913, as requested by circular-letter No. 2 of July 31, 1914, but no similar request has yet been made for partnership returns for the year 1914.

The individual members of a partnership firm should include in their individual returns of income to be filed on Form 1040, revised, for the calendar year 1914, their respective distributive interests in the partnership's profits ascertained for the business year ending on any date in 1914. Line 19, page 2, of Form 1040, revised, is provided for this

purpose.

Powers of attorney.-A person acting under a power of attorney in the management of property having no title

thereto but with full power and authority to deal with the property as he sees fit is under no obligation to render returns as a fiduciary. A power of attorney does not constitute a fiduciary relationship within the meaning of the income tax law, and in all cases where no legal trust has been created in the estate controlled by the agent and attorney the liability under the law rests with the principal.

Rents, withholding from, accruing to joint owners.—When the joint owners of rented property do not desire to claim the exemption allowed by paragraph C of the income tax law and merely wish to file a statement with the lessees that will show the proportionate interests of the joint owners in order that the normal tax of 1 per cent may be properly deducted, if the amounts are such as to render deduction necessary, from the income accruing to the individuals, respectively, no certificate has been prescribed; but the desired information may be imparted to the withholding agents by the use of office Certificate 1000, revised, adapted to rentals, and executed by one of the joint owners.

Under these circumstances any proper statement of the joint ownership that may be made to the lessees will be acceptable to this office, as no certificate is required to be attached by the withholding agent to his annual return on Form 1042, his duty being fulfilled by withholding the tax from the individuals concerned, making the proper entries specified on the form relative to these individuals, and omitting the names of the individual joint owners whose interests were not sufficient in amount to require a deduction of the normal tax.

Return by a fiduciary.-A return of income by a fiduciary is required if the distributive interest of any one beneficiary in the amount entered on line 5, page 1 of Form 1041, revised, exceeds $3,000.

Line 5, page 1 of Form 1041, revised, corresponds with line 3, page 1 of Form 1041, in use for the tax year 1913.

Trustee, return of. The creator of the trust in each instance being the same person and the trustee in each instance being the same, the trustee should make a single return on