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22. Companies organized in Porto Rico and not engaged in business in the United States not subject to tax. See p. 200.

23. Corporations owning sugar or other plantations and disposing of the products thereof not entitled to exemption as agricultural organizations.

24. Corporations organized to sell provisions, etc., to stockholders and others not exempted.

25. Corporations organized for the purpose of holding real estate to make return of income derived from the property so held.

26. Corporations going into liquidation during any tax period, may, at the time of such liquidation, prepare a "final return" covering the business done during the fractional part of the year during which they were engaged in business, and immediately file the same with the collector of the district in which the corporation has its principal place of business.

27. Corporations organized for the purpose of insuring against death, or injury by accident, or against damage to property by hail, storm, or lightning, however maintained, are held to be insurance companies, and unless they may be properly classed as "fraternal beneficiary organizations operating under the lodge system," must make returns of annual net income. (T. D. 1738.)

28. Corporations engaged in agricultural or horticultural pursuits for profit are liable under the law to make returns and to pay the special excise tax thereby shown to be due. Agricultural and horticultural associations specifically enumerated as exempt are held to be such associations as county fairs or like organizations, not themselves engaged in such pursuits, but which, by means of awards, etc., are intended to encourage better production, and no part of whose net income inures to the benefit of any private stockholder or individual. (T. D. 1737.)

29. Fruit growers' associations whose purpose is to promote the mutual benefit of their members in growing, harvesting, and marketing their products, and which are not organized for profit and have no capital stock represented by shares, and whose income is derived wholly from membership fees, dues, and assessments to meet necessary expenses, are not liable.

30. Corporations engaged in growing fruits, vegetables, and like products for profit, and distributing such profits among their members on the basis of the capital invested, are liable and must make returns and pay taxes, if any are found to be due. (T. D. 1737.)

31. Associations or trusts voluntarily formed by parties at interest and not organized "under

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the laws of the United States or of any State or Territory thereof, or of the laws applicable to the District of Columbia or Alaska, are not corporations within the meaning or intent of the law, and are not liable. (See Eliot v. Freeman, 220 U. S. 178.)

32. National banks do not come within any of the exemptions named in the act.

33. "Agricultural organizations" held not to come within the statutory exemption, unless their chief object is the promotion or advancement of agricultural interest, and no part of the net income inures to the benefit of their stockholders.

34. Mutual Hail Association regarded as an insurance company and not as an agricultural association, and therefore liable to tax.

35. Exemption in favor of fraternal beneficiary associations does not apply to mutual fire insurance companies.

36. Limited partnership, if organized for profit and having a capital stock represented by shares, although no "certificates of stock" are issued, is liable to the tax imposed. (28 Atty. Gen. Op. 189.)

37. Interest received on Government bonds to be included in gross income. (28 Atty. Gen. Op. 138.)

38. Returns should be signed and verified

by two of the officers designated in the law. Signing of one person holding two such offices not permitted. Agents for foreign steamship companies may sign the required returns, if so authorized by their companies.

39. Returns not required to have corporate seal affixed.

40. Returns filed with deputy collector regarded as having been filed with collector.

41. No form of protest prescribed. Any form of protest sufficient if filed before payment of tax. Right of protest not to be denied.

INVENTORIES, ACCOUNTS, ETC.

42. Where an inventory or its equivalent was not taken at the close of the year 1908, a supplemental statement showing such inventory approximately must be submitted with the return on the regular form. Such supplemental statement shall be verified under oath by the treasurer or principal financial officer submitting the same. (T. D. 1578.)

43. Profits realized on sale of real estate during the year, also increase in value of unsold property, if taken up on the books of the corporation, to be included in income.

44. Cost of manufactured articles, or articles in process of manufacture, held to include

original cost of materials used, plus cost of labor, etc.

45. Mortgaged real estate should be inventoried at its full value and amount of mortgage reported as indebtedness.

46. Receipts from sale of patent rights to be included in income.

47. No particular system of bookkeeping or accounting will be required by the department. However, the business transacted by corporations, etc., must be so recorded that each and every item therein set forth may be readily verified by an examination of the books and accounts where such examination is deemed necessary.

48. Any increase in the value of the capital assets, as determined by a physical revaluation and taken cognizance of by the corporation in book entries, is gain and must be accounted for as income for the year in which such increase is so recognized and recorded.

DEDUCTIONS, EXPENSES, ETC.

49. It is immaterial whether the deductions are evidenced by actual disbursements in cash or whether evidenced in such other way as to be properly acknowledged by the corporate officers and so entered on the books as

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