HIGHLIGHTS OF THIS ISSUE-(Continued from page 1) EXCISE TAXES: Regulations have been issued under the provisions of T. D. 6356, Four specific drugs have been found to have an addic- New rules for reporting and paying the 20-percent caba- ALCOHOL TAX: page 10. Proclamation 3266, page 31. Announcement 59-14, page 38. Announcement 59-17, page 41. page 32. Procedures are set forth for filing claims under section Rev. Proc. 59-5, page 23. The regulations are amended to conform to Treasury De- T. D. 6357, TOBACCO TAX: Procedures are set forth for filing claims under section Rev. Proc. 59-6, 209 of the Excise Tax Technical Changes Act of 1958, covering tobacco products and cigarette papers and tubes lost, rendered unmarketable, or condemned by reason of a major disaster occurring after December 31, 1954, and not later than September 2, 1958. ADMINISTRATIVE: page 36. page 32. District Directors of Internal Revenue are authorized to Del. Order No. 40, 59-13, page 38. A correction is made with respect to certain footnotes Announcement " is now 59-16, page 41. The complete annual report, "Statistics of Income- Announcement INTRODUCTION-(Continued from page 2) personnel of the Service and others concerned must consider the effect of subsequent legislation, regulations, court decisions, rulings and procedures. Each published ruling is designated as a "Revenue Ruling," and each published procedure is designated as a "Revenue Procedure.” These should be cited by reference to the year of issuance and the Bulletin and page where reported. Thus, Revenue Ruling No. 11 for 1959, which is reported on page 18 of Bulletin No. 2 for 1959, should be cited as "Rev. Rul. 59-11, I.R.B. 1959-2, 18," until it appears in the Cumulative Bulletin, when it should be cited as "Rev. Rul. 59-11, C.B. 1959-1,-" Similarly, Revenue Procedure No. 1 for 1959, which is reported on page 61 of Bulletin No. 6 for 1959, should be cited as "Rev. Proc. 59-1, I.R.B. 1959-6, 61," until such time as it appears in the Cumulative Bulletin. Revenue Rulings are keyed to the applicable sections of the Internal Revenue Code and regulations. The Bulletin is published weekly and may be obtained on a subscription basis from the Superintendent of Documents, as indicated below. The contents of the Bulletin are consolidated at least semiannually into a permanent, indexed, Cumulative Bulletin. These are sold on a single-copy basis. Subscribers to the weekly Bulletin will be notified when copies of the Cumulative Bulletins are available. The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate. For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Price 20 cents (single copy). Subscription price: $6.00 a year; $2.75 additional for foreign mailing. FOREWORD The Internal Revenue Bulletin is prepared in six parts as follows: I. Part I includes rulings and decisions which are based on the application of provisions of the Internal Revenue Code of 1954 and, unless otherwise stated in the ruling or decision, are published without consideration as to any application of the provisions of the Internal Revenue Code of 1939 or other related public laws. II. Part II includes rulings and decisions which are based on the application of the Internal Revenue Code of 1939, the Federal Firearms Act, and other public laws except those pertaining to the various alcohol taxes; and, unless otherwise noted therein, they are published without consideration as to any application of the provisions of the Internal Revenue Code of 1954. Part II is subdivided into three subparts according to matters issued under the Internal Revenue Code of 1939 (Subpart A), the Federal Firearms Act (Subpart B), and other public laws (Subpart C). III. Part III contains rulings and decisions pertaining to the various alcohol taxes. This part is subdivided into four subparts according to matters issued under the Internal Revenue Code of 1954 (Subpart A), the Internal Revenue Code of 1939 (Subpart B), the Federal Alcohol Administration Act (Subpart C), and other public laws (Subpart D). IV. Part IV contains treaties and tax legislation, including related committee and Conference Reports. This part is subdivided into three subparts according to tax conventions, Treasury Decisions and Revenue Rulings issued with respect thereto (Subpart A), legislation (Subpart B), and Committee Reports (Subpart C). House, Senate and Conference Committee Reports printed in the Bulletin do not include the portion entitled "Changes in Existing Law." V. Part V is devoted to administrative, procedural and miscellaneous matters. VI. Part VI includes general announcements which are deemed to be of interest to the general public. With the exception of the disbarment list included in this part, none of the other announcements will be consolidated in the Cumulative Bulletin. The Highlights of this Bulletin include a reference to each item published in the Bulletin. Because these are grouped according to the type of tax involved, the Highlights for a particular issue serve as an index to matters published therein. The Bulletin service carries a cumulative index on a monthly basis. That index appears in the first Bulletin for each month and indexes matters published during the preceding month. These monthly indexes are cumulated on a quarterly and semiannual basis, and the indexes so cumulated are published in the first Bulletin of the succeeding quarterly period, respectively. ANNOUNCEMENT RELATING TO PROPOSED REGULATIONS PUBLISHED WITH NOTICE OF PROPOSED RULEMAKING Under the Administrative Procedure Act, changes in regulations are (with certain exceptions described in such act) published in the Federal Register in tentative or proposed form to provide interested parties with an opportunity to file their objections or suggestions for consideration prior to final adoption of such regulations. The Internal Revenue Service will announce in the Internal Revenue Bulletin the issuance of tentative or proposed regulations relating to internal revenue matters which have been published in the Federal Register with notice of proposed rulemaking. These announcements will appear in the Bulletin during the period which has been prescribed for the submission and consideration of any views, arguments, or suggestions pertaining to the proposed regulations so published. Statement of such views, arguments or suggestions should be submitted in writing in duplicate to the Commissioner of Internal Revenue, Washington, D.C. PART I RULINGS AND DECISIONS UNDER THE INTERNAL REVENUE CODE OF 1954 Rulings and decisions published in Part I of the Internal Revenue Bulletin are based on the application of provisions of the Internal Revenue Code of 1954 and, unless otherwise stated in the rulings or decisions, are published without consideration as to any application of the provisions of the Internal Revenue Code of 1939 or related public laws. SECTION 61.-GROSS INCOME DEFINED 26 CFR 1.61-1: Compensation for services, including fees, commissions and similar items. (Also Sections 162, 3121, 3306, 3401; 1.162-10, 31.3121 (a)-1, 31.3306 (b)-1, 31.3401(a)-1.) Rev. Rul. 59-58 Advice has been requested whether the value of a turkey, ham, or other item of merchandise purchased by an employer and distributed generally to each of the employees engaged in his business at Christmas, or a comparable holiday, constitutes wages subject to income tax withholding or income subject to tax for income tax purposes, and whether the cost of such items is deductible by the employer as an ordinary and necessary business expense. Section 31.3401(a)−1(b)(10) of the Withholding Tax Regulations provides that, ordinarily, facilities or privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases), furnished by an employer to his employees generally, are not considered as wages subject to withholding if such facilities or privileges are of relatively small value and are furnished by the employer merely as a means of promoting the health, good will, contentment, or efficiency of his employees. Similar provisions are contained in the regulations pertaining to the employment taxes imposed by the Federal Insurance Contributions Act and the Federal Unemployment Tax Act (Chapters 21 and 23 of the Internal Revenue Code of 1954). See sections 31.3121(a)-1(f) and 31.3306(b)-1(f) of such regulations. It is accordingly held that the value of a turkey, ham, or other item of merchandise of similar nominal value, distributed by an employer to an employee at Christmas, or a comparable holiday, as part of a general distribution to employees engaged in the business of the em |