tions of the West Publishing Co., such as the Atlantic Reporter, the Pacific Reporter, the Southwestern Reporter, and so forth. We have to keep those current and every few years, of course, we have to renew our State statutes.

We will practically make no purchases of State statutes during the present year, but very likely we will have to make some during the fiscal year 1936.

It is very essential that we keep the State statutes right down to date, because we are constantly deciding cases that involve rules of property in the several States, involving the estates of decedents, and involving the corporation laws of the different States, and many other matters too numerous to mention in detail. So we must necessarily keep the State statutes right up to date, and also have other law publications for our library.

PRINTING AND BINDING

The next item is for printing and binding, and the estimated amount is $26,000, as compared with an appropriation of $20,000 for the fiscal year 1935. The reason for that increase is this. In 1934 we had to transfer to our printing and binding appropriation the amount of $3,300 from the item for salaries and expenses, and also $756 in accordance with section 216, title 2, of the Independent Offices Appropriation Act of March 28, 1934.

I may say it is almost certain we will have to transfer something to that appropriation this year in order to take care of our necessary printing and binding.

The Board's printing and binding consists almost altogether of the printing of its decisions, and that should and must be done promptly in order that the decisions be served on the taxpayer and the Government in the cases in which a decision is rendered, and also that as soon thereafter as possible the decisions may be put into our own bound volumes, in order that the public may avail itself of the Board's decisions.

The pamphlet that I hold in my hand is a sample of the printed decisions of the Board which are printed immediately after they are rendered, in order that they may be served on the parties and the type is preserved in the Government Printing Office. These decisions are later put into a bound volume of which the Board is furnished with a certain number for its own use and the different volumes are on sale at the office of the Superintendent of Documents. They are for sale to the public, and they are rather largely sold to lawyers for use in their practice. The Board does its best to economize on printing and binding. I may state that for several years the Board has made use of memorandum opinions in cases where the law point involved appears to have been covered by prior decisions of the Board and the courts, and where there would appear to be no advantage in printing the decision. We simply typewrite the memorandum opinion and file the original typewritten opinion with the papers in the case, and serve the taxpayer and the Government with a copy, such as I hold in my hand.

During the fiscal year which has just ended, 58 percent of our opinions were put out in the form of memorandum opinions, and were not printed. If we printed all those memorandum opinions

we would necessarily have to ask for a very considerable increase in our appropriation for printing and binding.

These opinions are not confidential at all; they are public records, and the list of memorandum opinions is published in the back of our printed report, and any taxpayer who desires to have a copy of a typewritten memorandum opinion may procure a copy by paying a small fee to our clerk who will have the copy made for him.

We think that no impairment results to the service at all from the use of these memorandum opinions, and quite a good deal of economy is achieved.

I believe, Mr. Chairman, that covers our estimates, and that is all I have to say in connection with the different items, unless some member of the committee desires to ask some questions about them.

ITEMS OF INCREASE IN 1936 ESTIMATE

Mr. WOODRUM. Under the heading of salaries you had appropriated for 1935, $445,850. Your estimate for 1936 is $478,500, or an increase of $32,650.

I will ask you whether that increase is entirely accounted for by the salaries being figured at 100 percent for 1936?

Mr. BLACK. Yes, sir; apparently so. I think that provides for the same number of employees that are carried in the appropriation bill for 1935, except, as I say, we have added one employee to fill a vacancy. MR. WOODRUM. A minor employee?

Mr. BLACK. Yes, sir.

Mr. WOODRUM. With that exception, the difference is accounted for by the full salary restoration?

Mr. BLACK. That is right.

Mr. WOODRUM. Of course, that salary restoration is not effective until the beginning of the next fiscal year, July 1, 1935.

Mr. BLACK. That is my understanding.

Mr. WOODRUM. The only other two items in which your breakdown shows an increase is that for furniture and fixtures, where you have an increase from $1,500 to $3,150, which you explained, and in the item for printing and binding.

Mr. BLACK. Yes, sir, that is all.

Mr. WOODRUM. You have several other items that show a decrease. Mr. BLACK. That is correct.

Mr. WOODRUM. The net increase in the appropriation is $37,884, if my figures are correct.

Mr. BLACK. Yes, sir; that is right, and as you have pointed out, that is due principally to the restoration of the full salaries.

PROGRESS OF WORK OF BOARD

Mr. WOODRUM. Will you tell us something about the work of the Board? The committee is always interested in knowing how your work is coming along, how near current you are, and so forth.

Mr. BLACK. I will be very glad to do that. When I was before your committee last year, I told the committee that I thought that, considering the progress we were then making in the disposal of cases, the number of pending cases on July 1, 1934, would be around 10,000 cases, which would be the lowest since April 1926. My estimate was substantially fulfilled, because on July 1, 1934, we had

102526-35--2

pending 10,057 cases, which is only 57 more cases than I estimated would be on our calendars by that time.

To give the committee a picture of our progress in disposing of cases, on October 31, 1933, and the reason I use that date is to give you a comparison, and because we have not got the statistics complete yet for the month of November just past. So I use October 31, 1933, for the purpose of comparison and at that time we had on our calendars 15,197 cases, involving deficiencies of $655,678,157.51.

During the 12-month period intervening between October 31, 1933, and October 31, 1934, we have received 3,518 new appeals involving total deficiencies of $162,381,947.08. Now, on October 31, 1934, just passed, and the latest month we have statistics available for, there were pending before the Board 9,185 cases, involving deficiencies of $523,284,881.49. Thus it will be seen that during this 12-month period, the Board has disposed of nearly 10,000 cases, or, to be exact, 9,909 cases, involving deficiencies of $307,995,562.14.

Now, I may say that this progress has continued during the month of November, and we have still further reduced our dockets so that on the 1st of December there were pending 8,977 cases. Therefore, we are very much gratified at the progress we are making, and I feel that it is safe to estimate that by July 1, 1935, we will have pending before us not more than 7,500 cases, which will be the lowest number since January 1926.

Mr. WOODRUM. Is not that accounted for by the decrease in the number of new cases?

Mr. BLACK. Yes, sir. That has a lot to do with it. I may say that the number of new appeals has greatly decreased. Our number of appeals for the fiscal year ending July 1, 1934, was, in round figures, 4,000, and it has been running at a rate something less than that since then. I would say that the average number of appeals now being received is less than 300 per month.

At one time the Board had pending before it 22,061 cases. That was the month of May 1928, and it was the high point in the history of the Board, so far as the number of pending cases is concerned. Now, as I have said, on the first of the present month the number was 8,977, and I should say that a calendar of five or six thousand pending cases might be termed current when we consider that there are 48 different States from which appeals are taken.

Mr. WOODRUM. If there is any substantial change in the law, does not that bring an increase of contests and litigation?

Mr. BLACK. The probabilities are that there will be some increase when the 1934 act gets into full play. I should like to say that in my opinion one reason why a smaller number of appeals are coming to the Board is due to the fact that the present Commissioner of Internal Revenue and his assistants are endeavoring to reach a final determination of the deficiency before they send out the notice, and, as a result, there are not so many appeals. There was a time I think when the Internal Revenue Department did not reach such a final determination in many cases. This resulted in more appeals than would otherwise have been the case. Many of those cases were settled by subsequent agreements. Now that the Commissioner is endeavoring to reach a final determination in all cases before the deficiency notices are mailed, will, I think, result in a smaller number of appeals to our Board and a larger percentage of actual hearings of the cases which are appealed to us.

EXTENT TO WHICH BOARD'S DECISIONS ARE SUSTAINED

Mr. WOODRUM. Do you have statistics available showing to what extent the decisions of the Board have been sustained?

Mr. BLACK. By the courts?

Mr. WOODRUM. Yes.

Mr. BLACK. That is covered by some of the tables which I have inserted. I can give it to you in substance as to the percentages, and then, as to the details, you will find them in table no. 4 attached to the statement. That gives the number of appeals to the United States Circuit Court of Appeals and the result of those appeals. Then statement no. 5 gives the number of cases that were carried by writ of certiorari to the Supreme Court of the United States, and the result of those appeals. I might say that an analysis of the figures will show that the Board of Tax Appeals has been affirmed in about 70 percent of the appeals to the United States Circuit Court of Appeals, and that its decisions have been reversed or modified in about 30 percent of the cases. In the case of the Supreme Court of the United States, we have fared a little better than that. As I figure it there have been about 75 percent or better of affirmances, and about 25 percent of modifications or reversals of the Board's decisions.

Mr. WOODRUM. That is better than the average for appeals from the law courts, is it not?

Mr. BLACK. I would not say, because I have not made a study of that, but I consider we have made a very good record.

Mr. WOODRUM. In what percentage of cases have appeals been taken from your final decisions?

Mr. BLACK. If you will wait just a minute, I think I can give you that information rather accurately. Now, taking the period from 1926 to October 31, 1934, the total number of cases which might have been appealed was 23,410. By that statement is meant this: During that period of time there were actually disposed of by the Board about 70,000 cases, but a very large number of those cases were settled by stipulation or agreement between the parties, and that closed them. The 23,410 cases to which I have referred as appealable were docket numbers that had actually been decided by the Board's decisions, and of that number, there were appealed to October 31, 1934, 3,607 docket numbers, which would represent a little better than 15 percent. That means that about 85 percent of our decisions have been accepted by both the Government and the taxpayer, and not appealed from, whereas about 15 percent have been carried to the United States Circuit Courts of Appeal by petitions for review.

Mr. WOODRUM. And of that 15 percent where your decisions have been appealed from, you were sustained in about 70 percent of the cases?

Mr. BLACK. Yes, sir; in the United States Circuit Court of Appeals, and the percentage of affirmances was some better than that in the Supreme Court of the United States.

DUPLICATIONS IN TAX LIABILITY FIGURES

Now, there is one more thing of which I would like to make a word of explanation, and that is the figures showing the amount of deficiencies pending before the Board. The figures that I have submitted

showed pending before the Board on October 31, 1934, $523,284,881.49. Now, there is not actually that much money involved in the deficiencies which have been determined. For example, the transferee section of the law gives the Commissioner the right to do this: If a corporation owes a tax, and dissolves and distributes its property among its stockholders, the law gives the Commissioner the right to assert a deficiency, or, rather, a liability as transferee, against each of the stockholders to the extent of the property that he has received, but not more than the tax involved. For example, one stockholder or more may have received enough to pay all the tax. If he has, then he gets a liability notice for the entire tax. Another stockholder may have received property to the extent of not more than 10 percent of the tax, and he receives a liability notice to the extent of his receipts. of property. Now, when you add all of that up, it is sometimes very much more than the original tax. But, of course, only one collection of the tax is made.

Now then, there is another instance where there is a necessary duplication, and that arises under the Revenue Act of 1928. Under that act, the Commissioner was permitted by law to prescribe regulations which must be accepted as a prerequisite for the filing of consolidated returns by corporations, and one of the regulations promulgated under that act requires that when a parent corporation files a consolidated return for itself and its subsidiaries, each much agree that it is severally liable for the tax. For example, I have in mind a conspicuous illustration of that in a case where the Commissioner, on December 27, 1932, assessed a deficiency against the American Commonwealths Power Corporation, 120 Broadway, New York, of $1,108,784.57, and, also, at the same time determined the same deficiency against 56 subsidiary corporations, as provided in article 15 (a) of Regulations 75, prescribed under section 141 (b) of the Revenue Act of 1928. The total of the deficiencies determined against the 57 corporations was more than $57,000,000 although only $1,108,784.57 of actual deficiency was involved. Thus the Board's statistics at that time showed more than $57,000,000 involved in these deficiencies when, as a matter of fact, only $1,108,784.57 was actually involved.

On March 2, 1934, stipulations were filed with the Board in all these cases by which it was agreed that the deficiency was $354,992.50, and judgments were entered in each one of the cases to the effect that there was a deficiency of $354,992.50. Thus the deficiency judgments entered were 57 times $354,992.50. As a matter of fact, however, as soon as the parent corporation, namely, the American Commonwealths Power Corporatoin, paid the one deficiency of $354,992.50, plus interest, that was a complete payment and satisfaction of all the deficiencies. This example is merely given as one of the outstanding examples of the necessary duplication of statistics under the law. The illustration is an extreme one and is not typical of the cases which are pending before us. Nevertheless in reading our statistics to the effect that $523,284,881.49 in deficiencies were pending before our Board on October 31, 1934, these duplications to which I have called attention should be considered. The true amount is much less than that.

Mr. WOODRUM. Do you have a rough idea as to what was the actual amount involved in those cases?

Mr. BLACK. We have not made a study of that kind.