purchase made by us for our customer, and we have no ownership or interest therein." No broker who has filed a certificate under the foregoing clause (a) of this ruling should file a certificate under the foregoing clause (b) with reference to the transfer of any shares of stock covered by the certificate filed by him under clause (a) 29

TRANSFERS TO CLEARING HOUSE. No tax is imposed upon transfers or deliveries to a clearing house for the sole purpose of clearing or adjusting accounts between members, where no beneficial interest is vested in said clearing house or clearing association and there has been no change of title or interest: Provided, the exchange, by appropriate by-laws or regulations, requires from its members that all transactions of such members in shares of stock be promptly reported to such clearing house to the end that the stamp taxes thereon may be collected and that no other clearances or settlements or trading in balances are permitted.30

FORMAL TRANSFERS WHERE NO CHANGE OF TITLE TAKES PLACE. The act does not seem to contemplate a tax unless there is a transfer of legal title to the shares or certificates. Hence, it would seem that the following rulings made under the former law would be applicable to the present law: Where a new corporation was formed for the purpose of reorganization the stock certificates of the new company were held subject to tax as original issue but the exchange of certificates of the old company for certificates of the new company to the same person were held not taxable as transfers. In the case of a merger it was held that the exchange of stock of the old companies for stock of the new company resulting from the

29 Regulations 40, Art. 5. 30 Regulations 40, Art. 5.

merger were not subject to the transfer tax. Where upon reorganization new stock was issued to a broker and subsequently transferred by the broker to his customer no tax was imposed upon the transfer. It was also held that preferred stock issued in lieu of common stock was not taxable when there was no change of ownership.

STOCK REDEEMED BY THE ISSUING CORPORATION. Under the former law it was held that where stock was redeemed by a corporation the transfer from the stockholder to the corporation was subject to tax whether or not the stockholder merely surrendered the certificate for cancellation or executed the assignment on the back of the certificate.

LOAN OF CERTIFICATES OF STOCK. Where stock was sold in the regular way but delivery could not be consummated because of non-arrival, and stock was borrowed for the purpose of making delivery, the borrowed stock being subsequently returned to the lender, it was held under the former law that no stamps were required either upon the lending of the certificates or the return of borrowed certificates to the lender. It was required that a certificate should be attached to such transfers to the effect that they were exchanges on account of accommodation loans that in accordance with the ruling of the Treasury Department documentary stamps were not required.31

TRANSFERS TO AND BY FIDUCIARIES. Under the former law it was held that transfers from a deceased to his executor or administrator were not taxable. Transfers from a trustee to a substitute trustee were not taxable but transfers from an executor or administrator to a trustee were taxable as were also transfers from the trustee to the beneficiary under the trust. It would seem,

31 T. D. 2182.

however, that under the present law transfers of legal title are taxable whether or not the transferee acquires any beneficial interest in the stock.

WHERE TITLE TO THE STOCK PASSED PRIOR TO THE INCIDENCE OF THE TAX. No tax is imposed upon the transfer of such stock on the books of a corporation although made after the date on which the tax was first imposed.32

TRANSFER OF STOCK BEFORE ISSUE OF CERTIFICATE. The existence of a stock certificate is not essential in order to make the transfer of shares subject to the tax. A trans fer affecting a change of ownership of the shares whether made before or after the issuance of the original certificates is taxable.33 Under the 1914 Law it was held that transfers of subscription warrants entitling the holder to certificates of stock were taxable as transfers of stock.

RIGHTS TO SUBSCRIBE TO STOCK. A right to subscribe to additional stock is neither a share of stock nor a certificate of stock and hence a transfer thereof is not taxable. Under the former law it was held that the transfer of such rights were not taxable.34 Under the present law "rights" are included in the definition of the term "share or shares of stock" 34a but it is doubtful if a tax can be legally exacted on transfers of such rights.

SHARES WITHOUT PAR VALUE. The law provides that the tax shall be imposed at the rate of two cents a share unless the actual value of the share is in excess of one hundred dollars, in which case the tax shall be two cents

32 Letter from Treasury Department dated November 30, 1917. This was also the rule under the former law.

33 T. D. 2599.

34 Letter from Treasury Department dated March 12, 1915. 34a Reg. No. 40, Part 1, Art. 1.

on each one hundred dollars of actual value or fraction thereof. The actual value of shares without par value is determined by the market value at the time of the sale or transfer, which value is considered by the Treasury Department to be the actual value.35

TAX PAID BUT ONCE. Where shares of stock are sold and the tax has been paid and stamps affixed to a bill or memorandum of sale, stamps are not again required when the transfer is made on the books of the company from the name of the party selling to the name of the purchaser.36

MEMORANDUM OF SALES. Every person who makes sales, or agreements to sell, or memoranda of sales or deliveries of, or transfers of the legal or beneficial title to shares of stock, at, in or on any exchange or similar place of business, and every person who makes any agreement to sell stock or makes a transfer of stock by delivery of the certificate therefor assigned in blank, shall as a part of every such transaction, promptly make and deliver to the buyer a bill, or memorandum of sale, or agreement to sell, duly signed by the principal or his agent, which shall show the date of the transaction evidenced by it, the names of the seller and buyer, the shares of stock to which it relates, the number of shares and the price per share of said stock, and shall bear a number upon the face thereof. No more than one such bill or memorandum made by the seller on any given day shall bear the same number; Provided, however, that no single transaction of a purchase or sale that is made upon an exchange by one member for another member

35 Letter from Treasury Department dated November 26, 1917. 36 T. D. 2073.

shall require to be evidenced by more than one stamped memorandum of sale or agreement to sell.37

STOCK OF FOREIGN CORPORATIONS. When certificates of stock of a foreign corporation are sold or delivered within the United States they are subject to the same tax as certificates of stock of a domestic corporation.38

VOTING TRUST CERTIFICATES. Under the Act of October 22, 1914, it was held that the transfer of the title to stock to voting trustees, the transfer back to the stockholder at the termination of the voting trust, and any and all transfers of the voting trust certificates during the period of the trust were subject to tax as transfers of stock.3 39 It has also been so ruled under the present law.39a

AFFIXING AND CANCELLATION OF STAMPS. In case the transfer is effected by delivery of the certificate of stock assigned in blank the stamp shall be affixed to the bill, memorandum, or agreement to sell.

In case the change of ownership is by transfer of the certificate of stock, the stamp shall be affixed to the certificate, and in no event shall any company or registrar or transfer agent accept or transfer any shares of stock or certificates therefor unless stamps for all transfer tax required to be affixed to the certificate are attached thereto properly canceled.

In case the evidence of the transfer is shown only by the books of the company the stamp shall be placed upon the books.

In all other cases the payment shall be evidenced by

37 Regulations 40, Art. 6.

38 T. D. 2073.

39 Letter from Treasury Department dated January 7, 1915. 39a Reg. No. 40, Part 1, Art. 1.