that status, and one which is still active and is maintaining its organization for the purpose of continued efforts in the pursuit of profit and gain and such activities as are essential to those purposes.

From the facts clearly established in these cases, we think these corporations were doing business, within the meaning of the act. They were organized for the purposes stated, and their activities included something more than the mere holding of property and the distribution of the receipts thereof. As was found by the District Court, the evidence shows that these three companies sold, during each of the years named, quantities of real estate, and the same were not small. They sold stumpage from some of the properties which had been burned over, leased certain properties in the village of Hibbing, and granted leases to squatters. One of the companies made explorations and incurred expenses in the matter of test pits. They employed another company to see that the mining operations were properly carried on, and that the lessees lived up to the engagements of their contracts. "All these things indicate," said the learned district judge, "the doing of and engaging in business. It [the corporatinn] was doing the business of handling a large property, selling lots, and seeing that the lessees lived up to their contracts. If that is not engaging in business, I do not know what is." We agree that it certainly was doing business, and, as the Corporation Tax Act requires no particular amount of business in order to bring a company within its terms, we think these activities brought the corporations in question within that line of decisions in this court which have held such corporations were doing business in a corporate capacity within the meaning of the law.

439.-FAILURE TO RECEIVE FORM.

Failure to receive a form on which to make this return can not be offered as an excuse by a corporation for not filing a return. This question has come up many times and the Government has insisted that the corporation should have obtained a form without awaiting the receipt of one by mail. In all such cases the penalty has been imposed.

440.-PAYMENT OF TAX.

This tax may be paid when the return is filed in July; or later, when a notice of assessment is received. If payment is deferred until receipt of notice, it must be made within ten days of the date of the notice.

441.-NO REFUND FOR PART YEAR.

If a corporation should in July, 1918, pay tax for the entire fiscal year beginning July 1, 1918, and should during that year go out of business, it could not obtain a refund of any part of the amount paid.

CHAPTER XXVIII

ESTATE TAX

442. TAX UPON TRANSFER.

The Federal Estate Tax is imposed upon the transfer of the net estate. The tax is graduated, according to the amount of the net estate. It is a tax which must be considered as having no relation to the State Inheritance Tax. Confusion regarding the separation of the two taxes-one a Federal tax and the other a State tax-has caused a great deal of trouble.

443.-RATES VARY ACCORDING

TO DATE OF DEATH.

The Estate Tax was first imposed by the Act of September 8, 1916 upon the taxable estates of decedents dying after that date. Then the rates were increased by the Act of March 3, 1917, with respect to the estates of decedents dying after that date. And, again, the rates were increased by the Act of October 3, 1917, with respect to the estates of decedents dying after that date. The result is, therefore, that three different scales of rates are now in effect, the scale to be applied depending on the date of the decedent's death. These three scales are shown by the following table:

Rates of Taxation Upon Net Estates

444. WHEN DEATH DUE TO WAR.

Other than an increase in rates the only change made by the Act of October 3, 1917 is an exemption from the last increase in the case of a transfer of the estate of any person dying while in the military or naval service during the war or from injury received or disease contracted in the service within one year after the termination of the war. This exemption does not apply, however, to the first two tax scales shown in the table above.

445.-EXEMPTION.

An exemption of $50,000 is allowed in the case of estates of residents of the United States; but no exemption in the case of estates of non-residents. A citizen whose residence is abroad is a non-resident

446.-TERRITORY COVERED.

Residents of the Philippines or Porto Rico are "non-residents." The term "United States" means only the continental States and Hawaii, Alaska and the District of Columbia.

447.-GROSS ESTATE.

The gross estate includes the value at the time of death of all property, real or personal, tangible or intangible, wherever situated:

(a) To the extent of the decedent's interest at the time of death and which after his death is subject to payment of charges against his estate, expenses of administration and distribution.

(b) Also to the extent of any interest of which the decedent has made a transfer at any time, or with respect to which he has created a trust, in contemplation of or intended to take effect at or after his death, except a bona fide sale for money or the equivalent of money. Any transfer of a material part of his property in the nature of fina! disposition, made within two years prior to death without such a consideration, will be regarded, unless the contrary can be shown, as having been made in contemplation of death, and, therefore, the value of the property transferred would be a part of the gross estate.

(c) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part as may be shown to have originally belonged to such other person and never to have belonged to the decedent.

448.-MISCELLANEOUS ITEMS.

The value of all "tax-free" bonds-those of the United States and all others-is a part of the gross estate.

Dividends declared prior to death are to be included, whether paid before or after death.

Bond interest accrued up to the date of death is to be included. Interest on mortgage notes and certificates of deposit, dividends (if fixed and certain) on preferred stock, and all fixed and certain earnings, must be included to the amount accrued to the date of death.

The value of loans evidenced by promissory notes is to be included, even though the will provides for cancellation of the notes.

Bonds and stock of corporations are to be included. However. bonds of a domestic corporation owned by a non-resident and kept in another country are not to be included.'

Community property, held in partnership by husband and wife. is to be included only to the amount of one-half of its value in the gross estate of either husband or wife. But if the wife's interest is merely the common law right of dower the whole value is to be included in the deceased husband's gross estate. This rule also applies where the husband's interest is equivalent merely to the curtesy right.

Insurance paid directly to the beneficiary named in the policy is not to be included.

Income of the estate and appreciation of value of property after death are not to be included.

449.-NET ESTATE.

The net estate is to be ascertained by deducting from the value of the gross estate—

(a) Of a resident

(1) Funeral expenses, administration expenses, claims against estate, unpaid mortgages, losses from casualty or theft not covered by insurance, support of decedent's dependents during settlement, and such other charges against the estate as are allowed by the laws of the jurisdiction.

(2) And an exemption of $50,000.

(b) Of a non-resident—

By deducting from that part of his gross estate situated in the United States deductions computed in the proportion

that the value of the estate in the United States bears to the value of the entire gross estate. These deductions are allowed, however, only if the return shows the entire gross

estate.

450.-STATE INHERITANCE TAX

NOT DEDUCTIBLE.

The amount paid the State as Inheritance Tax cannot be deducted in ascertaining net estate. Neither can the Federal Estate tax, since the latter does not attach until after net estate has been determined.

451.-EXECUTOR MUST GIVE NOTICE.

Within 30 days after qualifying an executor must give notice to the Collector of Internal Revenue of the district in which the decedent lived. This notice should be on Form 704, which can be obtained from the Collector.

452.-RETURN AND TAX DUE.

The return must be filed on Form 706, and tax paid within one year of the decedent's death.

A return must be made for every estate of a resident with a gross value of $60,000, or with a net value, as hereinbefore explained, in excess of the exemption of $50,000. Return is required for the estate of a non-resident, whatever the value.

453.-TENTATIVE RETURN.

If it is impossible to file a complete return within one year, the Collector can grant an extension of time upon the filing of a tentative

return.

454.-AGENT MUST FILE.

The person in charge of the estate of a non-resident in the United States is required to file the return.

455.-BENEFICIARY MUST FILE.

If there are no executors or administrators, or if any part of an estate does not pass through executors or administrators, the beneficiaries must file the estate return, either in whole or in part.