to March 1, 1913, then by dividing its fair market value as of that date) by the number of tons of ore in the mine, also estimated as of that date. The plaintiff says that is not the reasonable allowance for mine depletion which the statute. gave it, but on the contrary, the allowance is unreasonable because it is ascertained in part on estimated and therefore on uncertain factors, and that, in consequence, the net income on which it was required to pay a tax was equally uncertain and therefore an unjust basis of taxation. On the contention that it was entitled to an allowance precisely equal to mine depletion the plaintiff rests its claim to deduct for depletion, year by year, the whole of its royalties until its original investment, or the fair market value of its ore as capital, has been exhausted. We are not persuaded by this contention because the plaintiff is only entitled to the allowance which the statute gave it and the statute did not give it an allowance for the precise depletion of its mine. It gave it a reasonable allowance for depletion, having regard, of course, to the impossibility of absolute precision in estimating depletion of a taxable asset of the character of a mine. If the plaintiff is right in its contention that it can deduct from its gross income (in this case royalties) all of its royalties in the form of depletion of capital until its whole capital is exhausted, its income from mines, admittedly a proper subject of taxation, would escape taxation until its capital had been worked out and nothing was left but profits. This could not have been the intention of Congress in passing the act for the raising of revenue presently. If this had been its intention, the revenue contemplated by the act would not be available, in many instances, for years, decades and centuries. For example, these properties were purchased in 1851, portions were sold and the remaining two or three thousand acres have not yet been mined to exhaustion and may not be for another seventy-three years. One corporation in this country owns anthracite mines which, it is said, will not be exhausted for two hundred years. Under this act Congress evidently intended that the Government should exact an income tax yearly, and, correspondingly, the taxable was given a right to demand an allowance for capital depletion yearly. On the theory of the statute, as we read it, depletion allowance was intended as a return to the taxpayer of the original cost of the coal so that

he may be taxed not on the whole of its sale price in the event that he is an operating owner, or on the full amount of royalties if he is a lessor, but that he may be taxed on the difference between the cost (capital) and the sale price or royalties received (income). (Of course in estimating income on sale price other factors enter.) If he were allowed to deduct in each year the full amount of the sale price or the full amount of the royalties received (as the plaintiff here claims), the practical effect would be that he would, for many years, pay no tax at all, and this regardless of the fact that the total sale price (or total royalties) may, ton by ton, show a profit over the original capital cost. It is this profit or net income annually earned which the act taxed annually. And in this regard we see no distinction in the application of the principle to a mine owner whose income is royalties and to a mine owner whose income is derived from working the mines and selling the coal. The only difference is that in the latter more factors enter into the calculation. The principle is

the same.

We do not find that the Rules and Regulations prescribed by the Secretary of the Treasury for the enforcement of the allowance for depletion under the provisions of the Revenue Act of 1916 are, in view of the subject matter of taxation, unreasonable, or that by these rules the taxable was deprived of the deduction which the statute allowed. Therefore, we affirm the judgment of the court below.

BUFFINGTON, Circuit Judge, took no part in the consideration and decision of this case.

ART. 251. Contributions or gifts.- Contributions or gifts within the taxable year are deductible to an aggregate amount not in excess of 15 per cent of the taxpayer's net income (including such payments), if made to or for the use of: (a) the United States, the District of Columbia, or any State or Territory or political subdivision thereof, for exclusively public purposes; (b) any corporation or trust, or community chest, fund or foundation, organized and operated exclusively

for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, but only if no part of the net earnings inures to the benefit of any private shareholder or individual; (c) the special fund for vocational rehabilitation authorized by section 7 of the Vocational Rehabilitation Act of June 27, 1918; (d) posts or organizations of war veterans, or auxiliary units or societies. of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private shareholder or individual; or (e) a fraternal society, order, or association, operating under the lodge system, but only if such contributions or gifts are to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. For a discussion of what corporations and organizations are included within (b) see article 517. If, during the taxable year and in each of the ten preceding tax- · able years the amount contributed in all the above cases combined exceeds 90 per cent of the taxpayer's net income for each such year, as computed without the benefit of this paragraph, the full amount of such contributions and gifts made within the taxable year is deductible.

In connection with claims for deductions under this article, there shall be stated on returns of income the name and address of each organization to which a gift was made and the approximate date and the amount of the gift in each case. Where the gift is other than money, the basis for calculation of the amount thereof shall be the fair market value of the property at the time of the gift. The proportionate share of contributions made by a partnership may be claimed as deductions in the personal returns of the partners to an amount which, added to the amount of such contributions made by the partner individually, and claimed as a deduction, is not in excess of 15 per cent of the partner's net income computed without the benefit of the deduction for such contributions; but the contributions made by the partnership shall not be deducted from its gross income in ascertaining the amount of its net income to be reported on Form 1065. (See article 335.) In the case of a nonresident alien individual this deduction shall be allowed (subject to the 15 per cent limitation) only as to

contributions or gifts made to domestic corporations or to community chests, funds, or foundations created in the United States and qualifying under clause (B) of the statute, or to the vocational rehabilitation fund. See also article 325. This article does not apply to gifts by estates and trusts or corporations. (See section 219 of the statute and articles 561 and 562.)

SECTION 5.-ITEMS NOT DEDUCTIBLE

Revenue Act of 1924.

SEC. 215. (a) In computing net income no deduction shall in any case be allowed in respect of

(1) Personal, living, or family expenses;

(2) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate;

(3) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made; or (4) Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy.

(b) Amounts paid under the laws of any State, Territory, District of Columbia, possession of the United States, or foreign country as income to the holder of a life or terminable interest acquired by gift, bequest, or inheritance shall not be reduced or diminished by any deduction for shrinkage (by whatever name called) in the value of such interest due to the lapse of time, nor by any deduction allowed by this Act for the purpose of computing the net income of an estate or trust but not allowed under the laws of such State, Territory, District of Columbia, possession of the United States, or foreign country for the purpose of computing the income to which such holder is entitled.

Regulations 65.

ART. 291. Personal and family expenses.-Insurance paid on a dwelling owned and occupied by a taxpayer is a personal expense and not deductible. Premiums paid for life insurance by the insured are not deductible. In the case of a professional man who rents a property for residential purposes, but incidentally receives there clients, patients, or callers in connection with his professional work (his place of business being elsewhere), no part of the rent is deductible as a business expense. If, however, he uses part of the house for his office,

such portion of the rent as is properly attributable to such office is deductible. Where the father is legally entitled to the services of his minor children, any allowances which he gives them, whether said to be in consideration of services or otherwise, are not allowable deductions in his return of income. Alimony and an allowance paid under a separation agreement are not deductible from gross income. (See article 73.) The cost of the equipment of an Army officer to the extent only that it is specially required by his profession and does not merely take the place of articles required in civilian life is deductible. Accordingly, the cost of a sword is an allowable deduction, but the cost of a uniform is not.

ART. 292. Capital expenditures.-Amounts paid for increasing the capital value or for making good the depreciation (for which a deduction has been made) of property are not deductible from gross income. See section 214(a) (8) of the statute and article 161. Amounts expended for securing a copyright and plates, which remain the property of the person making the payments, are investments of capital. The cost of defending or perfecting title to property constitutes a part of the cost of the property and is not a deductible expense. The amount expended for architect's services is part of the cost of the building. Commissions paid in purchasing securities are a part of the cost price of such securities. Commissions paid in selling securities are an offset against the sell- . ing price. Expenses of the administration of an estate, such as court costs, attorney's fees, and executor's commissions, are chargeable against the corpus of the estate and are not allowable deductions. Amounts to be assessed and paid under an agreement between bondholders or stockholders of a corporation, to be used in a reorganization of the corporation, are investments of capital and not deductible for any purpose in returns of income. (See article 543.) (See article 543.) An assessment paid by a stockholder of a national bank on account of his statutory liability is ordinarily not deductible but, subject to the provisions of the statute, may in certain cases represent a loss. As to items not deductible by corporations, see section 235 and articles 581 and 582.

ART. 293. Premiums on business insurance. - Premiums paid by a taxpayer on an insurance policy on the life of an