puted on the amount bid for the property plus the costs if paid by the purchaser, whether the purchaser is the mortgagee, judgment creditor, or any other person.

(5) A conveyance of realty by a judgment or decree in a condemnation proceeding under the power of eminent domain, or a conveyance of such property under threat or imminence of such proceeding.

(6) Conveyances to or by building and loan associations. However, the tax does not apply to a conveyance of realty to a building and loan association for the purpose of securing a loan thereon, nor to the reconveyance of the realty to its owner as part of the loan transaction.

(7) A conveyance of realty to a corporation in exchange for shares of its capital stock.

(8) A conveyance of realty by a corporation in liquidation or in dissolution to its shareholders subject to the debts of the corporation; however, if there are no corporate debts and the conveyance is made solely for the cancellation and retirement of the capital stock, the tax does not apply.

(9) Deeds to standing timber and to mines. (For definition of the term "deed", see § 43.4361-1 (a) (4) (iii).)

(10) In jurisdictions where common-law dower still exists, an instrument conveying the estate acquired by a widow upon assignment of dower. However, an instrument purporting to convey the inchoate right of dower of a wife, or the consummate right of dower of a widow prior to assignment of dower, is not subject to the tax. Where by statute dower has been abolished and in lieu thereof a different interest in the husband's real property conferred upon the wife, the taxability of an instrument purporting to convey such interest prior to its assignment must be determined by the nature of the wife's interest as fixed by the statutes and decisions of the jurisdiction in which the real estate is located.

(11) A conveyance of real estate sold to or by the United States of America (see, however, § 43.4383-1).

(12) A conveyance of realty by a partner to the partnership as a contribution of partnership assets.

(b) Conveyances not subject to tax.-In addition to the various exemptions prescribed in sections 4362 and 4382 and in the Bankruptcy Act as amended, the following are examples of conveyances not subject to tax:

(1) The reconveyance of realty, conveyed to secure a debt, upon payment of such debt.

(2) Conveyances of realty without consideration and otherwise than in connection with a sale, including a deed conveying realty as a bona fide gift, although the deed may recite a consideration for the transfer, such as "natural love and affection and $1", "desire to promote public welfare and $1", or "$1 and other valuable consideration"; a gift of realty by a husband to his wife accomplished through the conveyance of the property for an ostensible consideration to a "straw man" who immediately reconveys the property to the wife; and a deed to or by a trustee not pursuant to a sale.

(3) A deed to confirm title already vested in the grantee, such as a quitclaim deed to correct a flaw in title.

(4) A deed given by an executor in accordance with the terms of the will; however, if, by reason of a consideration passing between devisees, one of them takes a greater share in the realty than that to which he is entitled under the will, the deed given by the executor to convey such greater share is subject to a tax computed upon the amount of such consideration.

(5) A deed from an agent to his principal conveying real estate purchased for and with funds of the principal.

(6) An option for the purchase of real property or a contract for the sale of real property, if the contract does not vest legal title.

(7) Partition deeds, unless, for consideration, some of the parties take shares greater in value than their undivided interests, in which event a tax attaches to each deed conveying such greater share computed upon the consideration for the excess.

(8) Ordinary leases of real property for a definite term of years (see, however, § 43.4361–1 (a) (4) (i)).

(9) A deed executed by a debtor conveying property to a trustee for the benefit of his creditors; however, when the trustee conveys such property to a creditor or sells it to any other person, the deed executed by him is taxable.

(10) Conveyance to a receiver of realty included in the receivership assets, and reconveyance of such realty upon termination of the receivership.

(11) A deed conveying real estate situated in a foreign country. (12) Transfer of real estate in a statutory merger or consolidation from a constituent corporation to the continuing or new corporation.

43.4361-3 AFFIXING OF STAMPS.-(a) Only documentary stamps shall be used in payment of the tax imposed by section 4361. The requisite stamps shall be affixed to the deed, instrument, or other writing by which the realty is conveyed. See §§ 43.6804-1 and 43.6804-2, contained in subpart J of this part, for the appropriate use, denominations, and cancellation of such stamps.

(b) Documentary stamps may be purchased, and requisition forms for the purchase of such stamps may be obtained, only from the sources and in the manner provided in § 43.6802-1, contained in subpart J of this part. For provisions relating to distribution, supply, and redemption of stamps, see sections 6801, 6802 (§ 43.6802), 6805 ($ 43.6805), and the regulations thereunder contained in the Regulations on Procedure and Administration (26 CFR Part 301).

§ 43.4362 STATUTORY PROVISIONS; EXEMPTIONS.

SEC. 4362. EXEMPTIONS.

(a) SECURITY FOR DEBT.-The tax imposed by section 4361 shall not apply to any instrument or writing given to secure a debt.

(b) OTHER EXEMPTIONS.-For other exemptions, see section 4382.

43.4362-1 EXEMPTIONS.-Section 4362 expressly exempts from the tax imposed by section 4361 any instrument or writing, such as a mortgage or a deed of trust, given to secure a debt.

§ 43.4363 STATUTORY PROVISIONS; CROSS REFERENCES.

SEC. 4363. CROSS REFERENCES.

For penalties and other general and administrative provisions applicable to this subchapter, see section 4383 and subtitle F.

§ 43.4363-1 CROSS REFERENCES.-(a) For definitions, see section 4381, §§ 43.4381-1 and 43.4381-2, and section 7701 (§ 43.7701). (b) For penalties, see section 7271 and § 43.7271-1.

(c) For other general and administrative provisions, see sections 4383, § 43.4383-1, subpart J of this part, and the applicable sections of the Regulations on Procedure and Administration (26 CFR Part 301).

SUBPART H.-TAX ON POLICIES ISSUED BY FOREIGN INSURERS

§ 43.4371 STATUTORY PROVISIONS; IMPOSITION OF TAX.

SEC. 4371. IMPOSITION OF TAX.

There shall be imposed a tax on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer at the following rates:

(1) CASUALTY INSURANCE AND INDEMNITY BONDS.-Four cents on each dollar, or fractional part thereof, of the premium charged on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d);

(2) LIFE INSURANCE, SICKNESS, AND ACCIDENT POLICIES, AND ANNUITY CONTRACTS.-One cent on each dollar, or fractional part thereof, of the premium charged on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 816;

(3) REINSURANCE.-One cent on each dollar, or fractional part thereof, of the premium charged on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). [Sec. 4371 as amended by Act of Mar. 13, 1956, 70 Stat. 49; effective with respect to taxable years beginning after December 31, 1954]

§ 43.4371-1 IMPOSITION OF TAX ON POLICIES ISSUED BY FOREIGN INSURERS; SCOPE OF TAX.-(a) Certain insurance policies, and indemnity, fidelity, or surety bonds.-Section 4371(1) imposes a tax upon each policy of insurance (other than those referred to in paragraph (b) of this section), upon each indemnity, fidelity, or surety bond, or upon each certificate, binder, covering note, receipt, memorandum, cablegram, letter, or other instrument by whatever name called, whereby a contract of insurance of the character involved or an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed, if issued

(1) By a nonresident alien individual, a foreign partnership, or a foreign corporation, as insurer, and the policy or other instrument is not signed or countersigned by an officer or agent of the insurer in a State, Territory, or the District of Columbia in which the insurer is authorized to do business; and

(2) To or for, or in the name of, a domestic corporation, domestic partnership, or an individual resident of the United States, against or with respect to hazards, risks, losses, or liabilities wholly or partly within the United States; or

(3) To or for, in the name of, a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or

business within the United States with respect to hazards, risks, or liabilities wholly within the United States.

For definition of the term "indemnity bond", see section 4372 (c). (b) Life insurance, sickness, and accident policies and annuity contracts.-Section 4371 (2) imposes a tax upon each policy of insurance or annuity contract, or certificate, binder, covering note, receipt, memorandum, cablegram, letter, or other instrument by whatever name called, whereby a contract of insurance or an annuity contract is made, continued, or renewed, if issued

(1) By a nonresident alien individual, a foreign partnership, or a foreign corporation, as insurer, and the policy or other instrument is not signed or countersigned by an officer or agent of the insurer in a State, Territory, or the District of Columbia, in which such insurer is authorized to do business, or if not so signed or countersigned, the insurer is not subject to tax under section 816 (or, in the case of taxable years beginning before January 1, 1955, section 807); and (2) To any person with respect to the life or hazards to the person of a citizen or resident of the United States.

(c) Reinsurance.-Section 4371 (3) imposes a tax upon each policy of reinsurance, certificate, binder, covering note, receipt, memorandum, cablegram, letter, or other instrument by whatever name called, whereby a contract of reinsurance is made, continued, or renewed, if issued

(1) By a nonresident alien individual, a foreign partnership, or a foreign corporation, as reinsurer, and the policy or other instrument is not signed or countersigned by an officer or agent of the reinsurer in a State, Territory, or the District of Columbia in which such reinsurer is authorized to do business; and

(2) To any person against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts described in section 4371(1) or (2).

(d) Exempt indemnity bonds.-The tax imposed by section 4371 does not apply to any indemnity bond described in section 4373 (2).

§ 43.4371-2 RATE AND COMPUTATION OF TAX.-(a) Rate of Tax.(1) The tax under section 4371(1) is imposed at the rate of 4 cents on each dollar, or fractional part thereof, of the premium charged.

(2) The tax under section 4371 (2) and (3) is imposed at the rate of 1 cent on each dollar, or fractional part thereof, of the premium charged.

(b) Computation of tax.-The tax is measured strictly by the amount of the premium charged. The time and method of payment of the premium are immaterial; the tax liability attaches if the insurance becomes effective, even though the premium is never paid. The full rate of tax applies to each fractional part of a dollar of the premium charged. For example, upon a premium charge of $10.10, the tax at the rate of 4 cents amounts to 44 cents, and at the rate of 1 cent amounts to 11 cents.

(c) Meaning of premium.-For purposes of the regulations in this part, the term "premium" means the agreed price or consideration for assuming and carrying the risk or obligation, and includes any additional assessment or charge which may be assessed or charged under the contract, whether payable in one sum or installments.

§ 43.4372 STATUTORY PROVISION; DEFINITIONS.

SEC. 4372. DEFINITIONS.

(a) FOREIGN INSURER OR REINSURER.-For the purpose of this subchapter, the term "foreign insurer or reinsurer" means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond.

(b) POLICY OF CASUALTY INSURANCE.-For the purpose of section 4371(1), the term "policy of casualty insurance" means any policy (other than life) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed.

(c) INDEMNITY BOND.-For the purpose of this subchapter, the term "indemnity bond" means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond.

(d) INSURED.-For the purpose of section 4371(1), the term "insured"

means

(1) A domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or

(2) A foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, with respect to hazards, risks, or liabilities within the United States. (e) POLICY OF LIFE, SICKNESS, OR ACCIDENT INSURANCE, OR ANNUITY CONTRACT. For the purpose of section 4371(2), the term "policy of life, sickness, or accident insurance, or annuity contract" means any policy or other instrument by whatever name called whereby a contract of insurance or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States.

(f) POLICY OF REINSURANCE.-For the purpose of section 4371(3), the term "policy of reinsurance" means any policy or other instrument by whatever name called whereby a contract of reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371.

§ 43.4373 STATUTORY PROVISIONS; EXEMPTIONS.

SEC. 4373. EXEMPTIONS.

The tax imposed by section 4371 shall not apply to

(1) DOMESTIC AGENT.-Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, Territory, or District of the United States within which such insurer is authorized to do business; or

(2) INDEMNITY BOND.-Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant or check, issued by the United States.

§ 43.4374 STATUTORY PROVISIONS; AFFIXING OF STAMPS.

SEC. 4374. AFFIXING OF STAMPS.

Any person to or for whom or in whose name any policy, indemnity bond, or annuity contract referred to in section 4371 is issued, or any solicitor or broker acting for or on behalf of such person in the pro