per share, which would mean that the valuation would be $80,000 at three-fourths of a mill or $60 for the tax. But if the assets were $150,000 and the liabilities $160,000, with no market price (no stock sold), the tax would be three-fourths of a mill on a net valuation of zero, and the tax would be nothing.

Corporations paying dividends of less than six per cent., whose assets do not exceed the liabilities by an amount at least equal to the capital stock, or the average market price of whose stock did not equal or exceed par. Rate 34 mill on appraised valuation.-The first case presented under this subdivision is hardly a practical or even a legal proposition, for it presents the hypothesis of an insolvent corporation paying dividends, for instance:

If we take the corporation having a capital stock of $100,000 all issued and employed within the state, paying a dividend of less than six per cent.; if it had gross assets of $100,000 and liabilities $110,000, or if its market price was not equal to or greater than par, it would pay a franchise tax of three-fourths of a mill on the actual or appraised value of the capital stock employed within the state. This is a possible case under this subdivision as the law is framed, but not at all probable.

If we take the case of the corporation mentioned in the last paragraph, with a capital stock of $100,000, all issued and employed in the state, paying a dividend of less than six per cent. and with the market price of the stock at $80, it will only pay a tax of three-fourths of a mill on the appraised value of its capital stock employed within the state. If the gross assets were $150,000, and the liabilities $90,000, an appraisement of $60,000 might be justified, though less than the market price, in which event the tax would be $45.

A corporation having part of its assets within and part without the state is taxed under the same rules, except that in each

case it would be taxed on the proportion of the capital stock represented by the gross assets within the state.

Corporations paying dividends of less than six per cent. showing a surplus, or with market price above par. Rate 11⁄2 mills.-The next subdivision brings into consideration those corporations paying less than six per cent., not coming under the three-quarter mill rate supra, whose assets exceed the liabilities. by an amount equal to or greater than the capital stock (i.e., corporations with a surplus), or whose market price is equal to, or above

par.

If we take the case of the corporation mentioned, having a capital stock of $100,000, all employed within the state and paying dividends of less than six per cent., with gross assets of $220,000 and liabilities of $100,000, the net assets would be $120,000, and if the average market price for the stock were $110, in this case, the rate would be 111⁄2 mills, to be computed not on the $100,000 of capital stock at par value, or at the market price of $110, but on $120,000, the net assets, which under the third paragraph of section 182 are deemed to be the value of the capital stock employed within the state.

If we take the same corporation paying a dividend of less than six per cent. with the same net assets of $120,000, but with the market price of the stock at $125, making the value of the capital stock employed within the state $125,000, the rate of 12 mills would then be computed on this latter amount, which is higher than either the par value of the capital stock or the net value of the assets.

If we take the same corporation paying dividends of less than six per cent., with gross assets of $200,000 and liabilities of $100,000, making the net assets exactly $100,000 or par, the rate of 112 mills would be computed on that figure, provided the market price is not less than par.

Again taking the case of the corporation with $100,000 of

capital, all employed within the state, and paying less than six per cent., if the average selling price of the stock was at $120 during the year, and if the gross assets were $150,000, and the liabilities $70,000, making the net assets $80,000, or less than par, in this case the rate would be 112 mills, to be computed on the capital stock of $100,000, at $120, or on $120,000, making the tax $180.

The same figures in the last paragraph might be applied to the case of a corporation whose capital was partly employed within and partly without the state, the only difference in each case being that the tax would be based on the proportion of the capital stock represented by the amount of the gross assets within the state.

Drag net clause. Rate 11⁄2 mills.-The next subdivision includes all corporations not coming under any other paragraph. An example of this class would be one whose assets exceed the liabilities, but by an amount less than the par value of the capital stock.

For example, we will take a corporation whose capital stock is $100,000, all issued and employed in the state. The gross assets are $150,000 and the liabilties are $70,000, with a dividend of four per cent. declared, but no stock sold during the year. It manifestly does not come under subdivision 1, paying dividends of six per cent. or more, because the dividend is less than six per cent., nor does it come under subdivision 2, of section 182, because its assets exceed its liabilities by an amount not equal to or greater than the capital stock, nor was its market price below par, because the stock was not sold during the year. Neither does it come under subdivision 3, of section 182, because its assets did not exceed its liabilities by an amount equal to or greater than the capital stock at par, nor was its market price above par, there being no stock sold. It therefore comes under subdivision 4, and pays a tax, in this case, of 111⁄2 mills

under the last paragraph of section 182 on the actual value of the capital stock, or on $80,000, viz., $120.

Corporations having more than one kind of capital stock.— A class of cases, for which no illustrations have yet been furnished, is the fourth or last class but one, mentioned in section 182, viz., that of a corporation paying a dividend on two kinds of stock, or paying no dividend on one kind of stock, and paying dividends of six per cent. or more, or less than six per cent. on the other kind of stock. Take for instance, a corporation having a capital stock of $100,000, divided into $40,000 of preferred and $60,000 of common stock, which pays a dividend of eight per cent. on the preferred and four per cent. on the common, with the common stock selling at $60 and the net assets, $120,000. It will pay a tax on the par value of $40,000 of preferred stock at the rate of two mills, making the tax $80. The common stock will pay a tax of 34 mill on $60,000, at a valuation of $120,000 for the $100,000 of capital stock, or at 6-5 of $60,000, making the valuation of the common stock $72,000, and the tax will be $54. The entire tax to be paid by this corporation will be $134.

The provision in the statute covering this subdivision has evident reference to the ordinary case of preferred and common stock. People ex rel. N. Y. C. & H. R. R. Co. v. Gaus, 200 N. Y. 328 (1911).

Annual franchise tax payable in advance.-The amendment of 1906 makes the annual franchise tax payable in advance, but the basis of the tax is computed on the capital stock employed during the preceding year, unless the capital stock was increased prior to October 31st, when it seems the tax will be payable on the increased amount, because payable in advance. People ex rel. N. Y. C. & H. R. R. Co. v. Gaus, 200 N. Y. 328 (1911). In the very recent case, People ex rel. Mercantile S. D. Co. v.

Sohmer, 158 App. Div. 110 (September, 1913), where there had been a distribution of profits of $880,250 on $300,000 of outstanding capital stock, and the stock reduced at the end of the year to $100,000, the court held that it was the capital stock on which the dividends were paid within the year, and not the amount outstanding at the end of the year on which no dividends were paid, that determined the rate of dividend and the basis of the tax. If the corporation ceases to do business before the end of the fiscal year, it escapes taxation for the ensuing year. If the corporation was organized during the preceding year and only in business for a portion of the year, on October 31st it will pay on the average capital, irrespective of the time employed, because the tax is payable in advance.

Average capital and average market price.-Where section 182 of the Tax Law requires the actual capital to be ascertained, the rule for determining it, is to take it for the entire fiscal year and divide it by the number of days. The same general principles were applied prior to the amendment of 1906 in ascertaining the average value of the capital employed during the year. If the capital was employed for less than a year, the tax was based on its average employment for the year. People ex rel. Brooklyn Rapid Transit Co. v. Morgan, 57 App. Div. 335, aff'd 168 N. Y. 672; People ex rel. Mutual Trust Co. v. Miller, 177 N. Y. 51 (1903); People ex rel. Rees' Sons v. Miller, 90 App. Div. 592 (1904); People ex rel. Cohen & Co. v. Miller, 94 App. Div. 564 (1904). Since the amendment of 1906, it would seem that where the capital stock has been increased during the year the capital employed at the end of the preceding fiscal year, viz., the capital stock outstanding on October 31st, would govern the amount on which the tax was payable. People ex rel. N. Y. C. & H. R. R. Co. v. Gaus, supra. The average price of stock is to be determined from the different sales irrespective of the amount sold on the