ership should nevertheless be filed with the local collector as proof of the fact that the nominal stockholder is not the actual owner of the stock. If the actual owner is a non-resident alien partnership, the nominal owner is required to make no return and account for no tax unless and until he is so instructed by the Commissioner of Internal Revenue; certificates disclosing the actual ownership should, however, be obtained by the nominal stockholder and transmitted to the local collector.5

Procedure When the Nominal Stockholder Is a NonResident Alien, When the record owner of stock of domestic or resident corporations is a non-resident alien individual or partnership, he or it should disclose the actual owner, or the tax will be assessed on the basis of apparent ownership. When the actual ownership is disclosed, the Commissioner of Internal Revenue will make such assessments and issue such instructions to the paying corporations in this country as will insure the proper collection of the tax in accordance with actual tax liabilities. The certificates disclosing ownership should be filed by non-resident alien individuals and partnerships with the Collector of Internal Revenue at Baltimore, Maryland, being attached to the return of annual net income of the nominal stockholder, if such a return is filed. In case the non-resident nominal stockholder is a corporation or organization against which the tax will be withheld at the source on payments of dividends, the certificate disclosing actual ownership may be filed with the corporation paying the dividend or its paying agent in the United States, and upon the filing thereof, the

5 T. D. 2401.

6 T. D. 2452. The form to be used is Form 1037 striking out the words "to be filed with representative in the United States

paying corporation will not withhold the tax upon such amounts as are shown by the certificates disclosing actual ownership to be owned by others than non-resident foreign corporations or organizations subject to withholding. If the certificates disclosing actual ownership indicate that the actual owner is a non-resident foreign corporation, the corporation paying the dividend will deduct the tax on the amounts of dividends paid to the nominal stockholder for the account of such non-resident foreign corporation. There is no duty on the part of a non-resident nominal stockholder to file any return or account for any tax on behalf of the actual owner. That duty is imposed only when the nominal stockholder is a resident of this country. A foreign partnership, although not itself subject to tax, should file certificates disclosing the actual ownership of stock standing in its name, in order to release its individual members from the tax liability which would otherwise attach on their distributive shares of the partnership profits by reason of the apparent ownership.

Dutch Administration Offices. A special ruling has been made with respect to the so-called "Administraof such foreign principal" in the caption and the words "in the United States'' in the body of the form, and executing the certificate as the representative of the actual owner in the space provided for signature.

7 Letters from Treasury Department dated October 6, 1917, and October 23, 1917; I. T. S. 1917, ¶¶ 2466 and 2467.

8 T. D. 2452 seems to impose such a duty on non-residents, but a subsequent letter from the Treasury Department dated April 7, 1917 (I. T. S. 1917, ¶ 2187), states that the requirements set forth in that T. D. to the effect that the nominal owner will be required to render annual returns for and in behalf of the actual owner applies only to such nominal owners as are residents of the United States.

tion Offices" in Holland, which has application to many similar situations in foreign countries. It appears that the Dutch Administration Offices are the registered owners of large blocks of American stocks, against which they have issued bearer certificates, with coupons attached. These coupons on presentation and surrender entitle the bearer to dividends declared on the stock. The Administration Offices are held to be agents for the holders of the bearer certificates and are prima facie liable for the tax on all dividends paid on the stock standing in their names, unless they disclose the names of the actual owners by use of the proper certificates.9 They are required to make returns of income and pay the tax on all dividends received, except such amounts as are shown by certificates disclosing actual ownership to have been received for the account of non-resident alien individuals. Such certificates should be attached to the return when filed.10

Bearer Certificates. When stock of an American corporation is floated in some European countries, where investors are accustomed to bearer stock certificates, a block of the stock is sometimes issued to a trust company in this country which in turn issues bearer certificates entitling the holder to certificates of stock for the number of shares designated, upon the surrender of the bearer certificate, and to any dividends which may

9 Form 1087.

10 T. D. 2386. The Treasury Department also provided in this treasury decision for the appointment of an agent in this country by such Administration Offices, upon doing which the tax will not be withheld at the source. It seems, also, that by filing certificates disclosing actual ownership with the paying corporation withholding at the source may be avoided to the extent indicated in T. D.

be declared on such shares while the bearer certificate is outstanding. The bearer certificates pass by delivery, the dividends being claimed through foreign banks by presentation and surrender of numbered coupons attached thereto. In such cases the trust company is in the position of a resident nominal stockholder and to avoid liability for the tax on dividends received by it on such stock, should obtain and file certificates disclosing actual ownership and proceed in other respects as indicated above.

CHAPTER 8

FIDUCIARIES

The law provides that "Guardians, trustees, executors, administrators, receivers, conservators, and all persons, corporations, or associations, acting in any fiduciary capacity, shall make and render a return of the income of the person, trust, or estate for whom or which they act, and be subject to all the provisions of this title which apply to individuals."1 For the purpose of discussion in this book fiduciaries are divided into two classes, this chapter dealing with the subject in general and with the particular provisions applicable to domestic fiduciaries, that is, those which reside in this country or have an office or place of business here and consequently are within the jurisdiction of this Government. Foreign fiduciaries, which subject is treated in the following chapter, are defined for the purpose of this book as fiduciaries who neither reside in this country nor have an office or place of business here, that is, those who are not within the jurisdiction of this Government. A non-resident citizen acting as a fiduciary would, it seems, be entitled to be classed with the domestic fiduciaries since the United States has some measure of jurisdiction over him as a citizen, and since the withholding provisions of the law do not apply to non-resident citizens.

1 Act of September 8, 1916, § 8 (c).