Morgan Guaranty Trust Co. of New York, formerly Guaranty Trust Co. of New York, executor of estate of Mary Cotton Wood 12 89846 Pessin, Arnold G., et ux.. Potter, Walter H. and Gladys L. Erickson (formerly Woody, Charles L., estate of 12. Woody, Charles L., Jr., et al., executors, estate of 4 The Commissioner does NOT ACQUIESCE in the following decisions: Humacid Co., The... 95343 Huntsinger, Fritz, executor of the estate of Mathilde Huntsinger and individually.. 95344 Huntsinger, Mathilde, estate of.. Oakland Bank of Commerce, trustee, Sherwood Swan & Co., Ltd., Employees' Benefit Fund..... Swan, Sherwood, & Co., Ltd., Employees' Benefit Sweeney, Elsie I....... 1153-63 43 760 Wier, Mary Norwood and Tom P. Wier, executors of estate of Robert W. Wier 1 13 Wier, Robert W., estate of 1 13 a United States Board of Tax Appeals. 1 Estate Tax decision. 2 Acquiescence in result only. Acquiescence "in result only" means acceptance of the decision of the Court but disagreement with some or all of the reasons assigned for the decision. 3 Acquiescence in the issues relating to the useful life of an office building and whether W. H. Black was liable as transferee. 4 Nonacquiescence published in C.B. 1949-1, 5, is withdrawn and acquiescence is substituted therefor. 5 Acquiescence in result only relates to the issue whether petitioner is entitled to deduct as a dividend declared, under sections 204 (c) (11) of the 1939 Code and 832(c) (11) of the 1954 Code, that portion of the dividends stated to be "contributions" by its members. Acquiescence "in result only" means acceptance of the decision of the Court but disagreement with some or all of the reasons assigned for the decision. Acquiescence relates to the issue of an adjustment to the stipulated excess profits credit on Rule 50 com putation. 7 Nonacquiescence published in C.B. 1950-2, 5, is withdrawn and acquiescence is substituted therefor. 8 Acquiescence in result only. See Rev. Rul. 66-112, page 68, this Bulletin. Acquiescence "in result only" means acceptance of the decision of the Court but disagreement with some or all of the reasons assigned for the decision. Acquiescence relates to the issue whether amounts paid by a rental company to employees of its customers were ordinary and necessary business expenses or kickback payments. 19 Acquiescence in result only relates to the issue whether amounts paid by South Philadelphia Terminal, Inc., to an employee of its customer and to the daughter of an employee of its customer were ordinary and necessary business expenses or if such payments were unreasonable compensation for the services performed. Acquiescence "in result only" means acceptance of the decision of the Court but disagreement with some or all the reasons assigned for the decision. 11 Acquiescence in result only in the issue of whether the taxpayer was a collapsible corporation within the meaning of section 341(b) of the 1954 Code and therefore not entitled to the nonrecognition of gain on liquidation under section 337 of the Code. Acquiescence "in result only" means acceptance of the decision of the Court but disagreement with some or all of the reasons for the decision. 12 Acquiescence published in C.B. X-2, 46 (1931), relating to the issue whether a bankruptcy adjudication deprives the Court of jurisdiction to hear a deficiency determination covering a year prior to the bankruptcy, is withdrawn and nonacquiescence is substituted therefor. 13 Acquiescence in the issue as to the inclusion of one-half of the value of homestead property in the decedent's estate, published in C.B. 1952-1, 4, is withdrawn and nonacquiescence is substituted there for. PART I RULINGS AND DECISIONS UNDER THE INTER- NAL REVENUE CODE OF 1954, EXCEPT THOSE SUBTITLE A.-INCOME TAXES CHAPTER 1.-NORMAL TAXES AND SURTAXES SUBCHAPTER A.-DETERMINATION OF TAX LIABILITY Subpart A.-Credits Allowable The Internal Revenue Service explains the computation of the Advice has been requested concerning the computation of the divi- Section 116(a) of the Internal Revenue Code of 1954 as amended by section 201 (c) of the Revenue Act of 1964, Public Law 88-272, C.B. 1964-1 (Part 2), 6, increased the maximum dividend exclusion to $100 with respect to qualifying dividends received by an individual in taxable years beginning after December 31, 1963. If the dividends received in a taxable year exceed $100, the exclusion applies to the dividends first received in that year. Under section 34 (a) (1) of the Code, as amended by section 201(a) (1) of the Revenue Act of 1964, a 4-percent credit is allowable with respect to dividends received before January 1, 1964, and a 2-percent credit is allowable with respect to dividends received during the calendar year 1964, to the extent that they are included in the individual's income. The credit is determined with reference to the date on which the dividends are received regardless of the taxable year of the individual receiving them. Section 642 (a) (3) of the Code (which despite its repeal by section 201(d) (6) (A) of the Revenue Act of 1964 remains effective under section 201 (e) of that Act with respect to dividends received prior to January 1, 1965, in taxable years ending before that date) provides that for purposes of determining the time of receipt of divídends under section 34 and section 116 of the Code, the amount of dividends properly allocable to a beneficiary under section 652 or 662 of the Code shall be deemed to have been received by the beneficiary ratably on the same dates that the dividends were received by the estate or trust. A similar provision, for purposes of section 116(a) of the Code only, is contained in section 116(c)(3) of the Code, as amended by section 201 (d) (6) (C) of the Act, effective with respect to dividends received after December 31, 1964, in taxable years ending after such date. If an individual as a beneficiary of an estate or trust is deemed to have received from the estate or trust dividends, part of which were deemed received in 1963 and part in 1964, the dividend exclusion allowable in 1964 for dividends deemed received in 1963 is limited to $50 (or the amount of dividends deemed to have been received in 1963 if less than $50), plus the dividends deemed to have been received in 1964. However, the total amount of dividends excluded, including both those deemed received in 1963 and deemed received in 1964, shall in no case exceed $100, the maximum exclusion for dividends received in 1964. The computation of the dividend exclusion allowable for 1964 may be illustrated by the following examples. In each case the individual received no dividends except those deemed received from the trust. 1. A simple trust reporting income on the basis of a fiscal year ending March 31 received quarterly dividends of $25 on June 1, September 1, and December 1, 1963, and March 1, 1964. All of these dividends are allocable to an individual filing returns on a calendar year basis and are reported in his income tax return for 1964. Since he is deemed to have received these dividends when the trust received them, he is allowed a dividend exclusion of $75 for 1964. 2. The facts are the same as in the first example, except that the amount of the quarterly dividends received by the trust was $100. The individual is allowed a dividend exclusion of $100. Of this amount, $50 (the limitation for 1963) is excludable from those deemed received in 1963 and $50 from those deemed received in 1964. 3. An individual is sole beneficiary of a simple trust which is a participant in a common trust fund. The common trust fund's taxable year ends on April 30; the taxable year of the trust ends on September 30; and the beneficiary of the trust computes his income on the basis of a calendar year. Charges are made to the common trust fund for the amount distributable to each participant four times a year, on the last day of July, October, January, and April. The trust is required to distribute its income to the beneficiary during its taxa ble year. The trust's proportionate share of the amount of dividends received by the common trust fund during its fiscal year ended April 30, 1964, was $240, one-half of which was received in 1963 and the balance in 1964. The individual beneficiary is deemed to have received $120 in dividends during 1963 and $120 in 1964, when they were received by the common trust, and is allowed a dividend exclusion of $100. The individual is allowed a dividends received credit of 4 percent for those dividends deemed to have been received by him in 1963 and 2 percent for those deemed to have been received by him in 1964, to the extent that they are included in his income. Accordingly, the dividends received credit allowable in the examples given above is: 1. $1 (4 percent of $25). 2. $11 (4 percent of $250 plus 2 percent of $50). 3. $4.20 (4 percent of $70 plus 2 percent of $70). However, because of the limitation imposed by section 34 (b) (2) of the Code, as amended by section 201 (a) (2) of the Revenue Act of 1964, the credit for the calendar year 1964 may not exceed 2 percent of the individual's taxable income for that year, or the tax for the year reduced by any allowable foreign tax credit, whichever is the lesser. In view of the repeal of section 34 of the Code by section 201(b) of the Revenue Act of 1964, effective with respect to dividends received after December 31, 1964, no dividends received credit is allowable to individuals in respect of dividends received after December 31, 1964. However, that portion of this Revenue Ruling dealing with the dividends received credit is applicable to dividends deemed to have been received in 1964 to the extent that a beneficiary is required to include such dividends in his gross income for 1965. That portion of this Revenue Ruling dealing with the dividends received exclusion, which remains effective with respect to taxable years beginning after December 31, 1963, is equally applicable, for purposes of determining the time of receipt of dividends, to dividends deemed received from an estate or trust in 1965 and subsequent taxable years. SECTION 38.-INVESTMENT IN CERTAIN DEPRECIABLE PROPERTY 26 CFR 1.38-1: Investment in certain depreciable property. (Also Section 48; 1.48-1.) Rev. Rul. 66-89 Examples of certain farm improvements are offered as guides in determining farm improvements which may qualify as "section 38 property" for purposes of the investment credit allowed by section 38 of the Internal Revenue Code of 1954. Advice has been requested concerning the qualification of farm improvements as "section 38 property" for purposes of the investment credit allowed by section 38 of the Internal Revenue Code of 1954. Section 38 of the Code allows a credit against Federal income tax for qualified investment in "section 38 property." The amount of this |