to capital stock tax, in which event the new corporation is required to file a return and pay the tax. In the case of foreign corporations "engaged in business" means the transaction of any business within the United States.

ART. 31. Corporations claiming exemption.-As corporations are generally organized to do business, every existing company is presumed to be subject to the tax unless satisfactory evidence is submitted showing that it is exempt. Organizations claiming exemption should fill out Form 707 but instead of computing the tax should enter in the space provided for the computation the notation "Exemption claimed." The determination of liability rests with the Commissioner of Internal Revenue and without complete information it is impossible to make a decision. Therefore in all such cases the return so filled out must be filed with the collector, together with a comprehensive statement of the reasons for claiming exemption except as provided hereinafter.

When a corporation has once established to the satisfaction of the commissioner that it is an insurance company or a corporation entitled to exemption under section 231 of the law, and has been notified officially that it is not liable for capital stock tax, it need not thereafter file a return, unless it changes the character of its organization or operations or the purpose for which it was created.

Any change in status of an organization from that on which exemption was predicated will make the organization affected liable for filing a complete return in July following the change, and failure to file will subject the corporation to the penalty provision of the law covering delinquent filing of returns.

Collectors will keep a list of the exempt organizations to the end that they may occasionally inquire into the status and ascertain whether or not they are observing the conditions upon which exemption is predicated.

Any corporation claiming exemption on the ground of not being engaged in business or on any ground other than those specified hereinbefore is not affected by the foregoing provisions and must file a capital stock tax return, as required by law, in July of each year. In such cases, however, if exemption has been allowed for the preceding taxable year and there has been no change in the status or conditions of

the company then the first 13 numbered lines of Form 707 should be completed and a statement attached to the effect that exemption is claimed for the same reasons as for the previous year and that the same status and conditions of the company exist for the taxable period in question. In this way the records of the collectors' offices will be complete and corporations will avoid requests for the filing of returns and unnecessary correspondence.

ART. 32. No authority for credit of excess payment of captal stock tax.-Section 238 of the Revenue Act of 1924 provides for a credit against additional income taxes due to previous overpayments of income or excess-profits taxes. The law does not authorize the credit of an excess payment of capital stock tax for a given period against an assessment of the same or other tax for a previous or subsequent period. A claim for abatement or refund for the excess assessment should be filed and payment made of the correct tax due for the previous or subsequent period.

CHAPTER V

RETURNS, PAYMENT, ETC.

Revenue Act of 1924.

SEC. 700 (c) Section 257 shall apply to all returns filed with the Commissioner for the purposes of the tax imposed by this section.62

SEC. 704. Any person who carries on any business or occupation for which a special tax is imposed by section 700, 701, or 702, without having paid the special tax therein provided, shall, besides being liable for the payment of such special tax, be subject to a penalty of not more than $1,000 or to imprisonment for not more than one year, or both.

Regulations 64.

ART. 37. Doing business without payment of tax.-Every corporation which does business without having paid the tax is liable to a penalty of $1,000. A corporation paying the capital stock tax is not on that account exempt from any occupational tax.

PARK FALLS LUMBER CO. v. BURLINGAME (Circuit Court of Appeals of the United States, 1924. 1 Fed. (2nd) 855, 5 Am. Fed. Tax R. 5111.)

PAGE, Circuit Judge. This is a writ of error to reverse. a judgment of dismissal of petition of plaintiff in error, here called plaintiff, against defendant in error, here called defendant, brought by plaintiff, a Wisconsin corporation, to recover $1,930, additional capital stock tax, assessed against and paid by plaintiff under protest under the following circumstances:

Plaintiff was incorporated under a different name in 1907. The present management came into control in February, 1913, and $3,450,000 full-paid capital stock was issued. At the time here in question plaintiff had surplus and undivided profits of $155,259.91. To represent the actual value of its property on March 1, 1913, plaintiff, in addition to the 62 For Section 257, see ante, p. 439.

values then carried upon its books, added "unearned surplus" $1,774,802.03.

When plaintiff, on or about August 31, 1920, filed its capital stock tax return for the year ending June 30, 1920, it represented its stock to be worth no more than its par value of $3,450,000. It also disclosed "unearned surplus" as above stated, and its surplus and undivided profits as above. Accompanying that statement was an explanation, which shows that plaintiff arrived at the amount of tax paid for the year of $3,450 by taking as the fair value of the total capital stock the actual par value, less $5,000, deductible under the provisions of the Revenue Act of 1918, Title X, Special Taxes (sec. 1000 (a) (1), 40 Stat. 1126), thereby eliminating the total of the surplus and undivided profits and the "unearned surplus" aggregating $1,930,141.94. Upon the latter amount, the additional tax of $1,930 in question was assessed. The Commissioner found that the fair average value of the capital stock of the plaintiff for the time in question was the total of the capital stock paid in, undivided profits and surplus, and unearned surplus.

The defendant answered, making specific admissions of fact and denying all allegations of the complaint not expressly admitted.

The following jury waiver was filed:

"It is stipulated and agreed that trial by jury be waived in the above entitled action and that the issues of fact and of law in said action be heard, tried and determined by the judge of the above named court and that special findings be made by said court on the issues raised in said action."

During the progress of the trial, plaintiff made certain offers of proof, all of which were excluded by the court, and the petition was dismissed.

1. Complaint is made that the method adopted in disposing of the case by the trial court was unusual. We cannot say that the exact method adopted by the trial court has heretofore been pursued, but there is no reason why a case should not be finally disposed of, after a full statement by counsel of the proposed proof, if the facts, so stated, would not in law support a recovery. In this case the trial court