would be entitled to the redemption of his special-tax stamp as a retail dealer in malt liquor on account of his paying special tax as a retail liquor dealer for the same period. Respectfully, J. W. YERKES, Commissioner. Mr. P. G. RENNICK, Collector Fifth District, Peoria, Ill. (416.) Special tax-Theaters. In a city having a population of more than 25,000, every building wherein there is a stage, with other appointments of a theater, regularly used for "dramatic or operatic or other representations, plays, or performances, for admission to which entrance money is received,” is a theater in contemplation of the sixth paragraph of section 2, act of June 13, 1898, and the fifth paragraph of section 2, act of March 2, 1901, for which the special tax of $100 is required to be paid. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 4, 1901. SIR: Your letter of the 25th ultimo has been received, submitting the question raised by your deputy, Mr. Thompson, whether the "People's Theater" is required to pay a special tax of $100 under the sixth paragraph of section 2 of the act of June 13, 1898, and the fifth paragraph of section 2 of the act of March 2, 1901. Your deputy does not think that the proprietor of this theater should be held liable for the special tax of $100 "as his shows are given in a store which has been fitted up by him, all seats being movable, no gallery, a small stage about 18 by 12 feet." But you say that you "have taken the position. that in cities of more than 25,000 population these places as concert halls should pay the $100." In the opinion of this office, the position which you have taken is correct. The statute requires that proprietors of theaters, museums, and concert halls, in cities having more than 25,000 population, as shown by the last preceding United States census, shall pay $100; and it is held that every building in which there is a stage with other appointments of a theater, museum, or concert hall, and which is regularly used for "dramatic or operatic or other representations, plays, or performances, for admission to which entrance money is received,' must be regarded as a theater as described by the statute, even though the stage therein is very small and the appointments are cheap and easily removed. Any different construction of the statute seems to be precluded by its express terms, wherein only "halls rented or used occasionally for concerts or theatrical representations" are excepted from the operation of its provisions. Respectfully, J. W. YERKES, Commissioner. Mr. JAMES D. GILL, Collector Third District, Boston, Mass. (417.) Stamp tax-Shares of stock. Tax on shares of stock pledged as collateral to secure the future payment of money.— A delivery of stock as collateral security for the future payment of money is taxable at the rate of 2 cents for each $100, or fractional part thereof, provided such delivery is accompanied by any paper, or agreement, or memorandum, or other evidence of transfer as required by statute.-A so-called collateral note, in which such stock should be described with reasonable certainty, would be such evidence. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 4, 1901. SIR: This office is in receipt of a letter from Mr. E. P. Stair, cashier of the Farmers' National Bank of York, Pa., who presents the following question for the consideration of this office: Mr. Stair asks whether revenue stamps are required when certificates of stock (with signed blank power of attorney) are given as collateral security with a note for money borrowed, said stock being held only as security and returned on payment of the note. Under Schedule A of the act of June 13, 1898, in accordance with the opinion of the honorable Attorney-General, this office ruled July 13, 1898 (see TREASURY DECISIONS, ruling 19685), that where stock certificates were given as collateral on notes stamps were not required on these certificates, as in the case of actual transfer, but they were to be stamped as a pledge for the amount for which they were hypothecated. September 21, 1898 (see TREASURY DECISIONS, ruling 20193), the Attorney-General gave an opinion that a collateral note stipulating that-certain securities or other property should be held as indemnity, or as a basis of credit generally, without specifying particular property as security for the payment of a definite and certain sum of money, was not liable to tax under the provisions of the war-revenue act. A ruling was made by this office to correspond with this opinion. Subsequently the Commissioner of Internal Revenue, through the Secretary of the Treasury, called the particular attention of the Attorney General to the following language in paragraph 1 of Schedule A, act of June 13, 1898 (since reenacted without change by the act of March 2, 1901): Or by any delivery, or by any paper, agreement or memorandum, or other evidence of transfer or sale, whether entitling the owner in any manner to the benefit of such stock, or to secure the future payment of money, or for the future transfer of any stock, on each one hundred dollars of face value or fraction thereof, two cents; And asked if the delivery of certificates of stock to secure the future payment of money was not a taxable transaction under this provision. The Commissioner also suggested that stock delivered as collateral security for the payment of promissory notes was more properly taxable under the above clause of paragraph 1 of Schedule A than under the paragraph relating to mortgage or pledge, as was held under the current ruling. To this suggestion no response was made; but to the question whether the paragraph above quoted was not applicable to stock delivered as security for the future payment of money, the Attorney General answers as follows (see TREASURY DECISIONS, ruling 80): My opinion is that it would be if the delivery of the stock was accompanied by any paper or agreement or memorandum, or other evidence of transfer such as contemplated by the statute. But I can not construe this act to mean that the mere hypothecation of certificates of stock by depositing the same without any written or printed instrument of hypothecation, although the same may be held as security for the payment of a loan or taken as a basis of credit, is subject to stamp tax. By the act of March 2, 1901, the tax on mortgages or pledges was repealed, to take effect on or after July 1, 1901, so that the delivery of stock as collateral security for the payment of notes is no longer taxable as a pledge. The act of March 2, 1901, however, reenacted without change the first paragraph of Schedule A of the war revenue act, containing the provision relative to the tax on the delivery of stock as security for the future payment of money. In this state of the law, I am of the opinion that under the opinion of the honorable Attorney-General, above quoted, a delivery of stock as collateral security for the future payment of money is taxable at the rate of 2 cents for each $100, or fraction thereof, provided such delivery is accompanied by any paper, or agreement, or memorandum, or other evidence of transfer as required by the statute, and I am further of the opinion that a so-called collateral note, in which such stock should be described with reasonable certainty, would be such evidence. Please inform Mr. Stair of this conclusion. Respectfully, J. W. YERKES, Commissioner. Mr. H. L. HERSHEY, Collector Internal Revenue, Lancaster, Pa. (418.) Retail liquor dealer-Compounding liquors. A retail liquor dealer who reduces with water a small quantity of whisky (less than 5 gallons) and mixes it with sugar, or other material, keeping it in a demijohn or other receptacle, merely for his own convenience in meeting orders of his customers at his bar, and does not make it a practice to put up the compound in bottles in advance of orders therefor for sale, is not to be regarded as having thereby involved himself in special-tax liability as a rectifier.-Ruling 177 (TREASURY DECISIONS, 1900, vol. 3, p. 267) modified accordingly. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 5, 1901. SIR: In the case of a retail liquor dealer whom you reported to this office on the 24th of August, 1901, as having involved himself in special-tax liability as a rectifier because of his having mixed "whisky, sugar, and water" in less quantity than 5 gallons, "and keeping it on hand for sale previous to its having been ordered," there has been no assessment as yet made; and if this compound, which you say you saw on his premises "in a demijohn," was merely thus put up and kept by him for his own convenience in meeting orders of his customers at the bar, and it has not been his practice to put up this compound in bottles or other receptacles in advance of orders therefor for sale, the case is not one which calls for assessment. Ruling 177 (TREASURY DECISIONS, 1900, vol. 3, p. 267) is hereby modified accordingly. Respectfully, J. W. YERKES, Commissioner. Mr. J. N. GARNER, Revenue Agent, Omaha, Nebr. (419.) Special tax-Executor selling liquor: The executor of the estate of a person who had not been a liquor dealer, but among whose assets are some packages of distilled spirits, is entitled to sell these spirits in one parcel only or at public auction in parcels not less than 20 wine gallons without paying special tax therefor, in view of the exempting provision of section 4, act of March 1, 1897. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 7, 1901. SIR: I am in receipt of your letter of the 1st instant, stating that C. N. Simpson, executor of the estate of the late J. R. Simpson, who at the time of his death was neither a distiller nor a liquor dealer, finds among the assets 2 barrels of corn whisky and a few cases of bottled whisky, and requests permission to sell these spirits in unbroken packages to some dealers. By reference to the exempting provision of section 4, act of March 1, 1897 (Compilation of Internal Revenue Laws, 1900, p. 126), you will see that Mr. Simpson, as executor, is entitled to sell these spirits "in one parcel only or at public auction in parcels not less than twenty wine gallons" without paying special tax therefor as a liquor dealer under the internal-revenue laws. Respectfully, J. W. YERKES, Commissioner. Mr. H. S. HARKINS, Collector Fifth District, Asheville, N. C. (420.) Legacy tax. It is not the intention of the office to require returns and the payment of tax on reversionary interests where estates have been settled prior to July 1, 1901, in accordance with rulings then in force. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 17, 1901. SIR: Your letter of the 16th ultimo, relative to legacy tax in the case of the estates of Ann A. Dow and Andrew T. Meserve, has been received. This office formerly held that the tax on reversionary interests was payable when the beneficiaries entered into the possession and enjoyment of their legacies. The amendment to section 30 of the war-revenue law, approved March 2, 1901, which went into effect July 1, 1901, necessitated a change in this ruling, and on July 20, 1901, this office ruled that reversionary interests which are vested are taxable on their present worth (TREASURY DECISIONS, internal-revenue ruling 383). It is not the intention of the office to require returns and payment of the tax on such interest where estates have been settled prior to July 1, 1901, in accordance with rulings then in force. Respectfully, J. W. YERKES, Commissioner. Mr. JAMES D. GILL, Collector Third District, Boston, Mass. (421.) Exemption of druggists from special tax as liquor dealers by provisions of section 3246, Revised Statutes-Sale of malt extracts, bitters, and tonics. [Int. Rev. Circular No. 608.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To collectors of internal revenue : Washington, D. C., October 18, 1901. By the provisions of section 3246, Revised Statutes, a druggist is permitted to keep spirits and wines, and use them, in combination with drugs, in the preparation of medicines that are not beverages, and to sell such medicines without paying special tax as a liquor dealer under the internal revenue laws of the United States. But under the uniform rulings of this office and the decisions of the United States courts he can not, without subjecting himself to this special tax, sell spirits or wines that are not combined with drugs or materials of any kind taking these liquors out of the class of beverages, even when he sells the liquors on a physician's prescription and for medicinal use only. Besides the medicinal compounds which a druggist is, authorized to sell without paying special tax as a liquor dealer, although they contain alcoholic liquors, there are other compounds containing spirits which, while they are not medicines, are nonpotable articles that do not come under the head of "distilled spirits, wines, or malt liquors," in contemplation of the internal-revenue laws, and which, therefore, he is entitled to sell without paying special tax-i. e., toilet articles, such as cologne and bay rum; ether with alcohol, for use in photography; benzine or ether with alcohol, for cleaning purposes; castor oil and alcohol, for toilet use; Florida water, violet water, etc., toilet articles made from alcohol; camphor and alcohol; alcohol and ammonia and whiting, a cleaning preparation; alcohol and shellac, for paiuters, etc. |