There appears to be no doubt that this essence of Jamaica ginger is made for use, as the manufacturer you say declares, "as a regular household medicinal article." This is its natural and proper use; and the fact that in occasional instances it is found that there are persons reckless enough to use it as a beverage does not make it any the less a medicinal compound which may be made and sold under the proper label, without the payment of special tax therefor by the manufacturer as a rectifier and liquor dealer. You will please so inform your deputy. Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. P. A. MOCLAIN, Collector First District, Philadelphia, Pa. (429.) Special tax-Beerine. Special tax is required to be paid for the manufacture for sale of the beverage called "beerine," which is made in part of fermented malt liquor and "is like a light table beer," and tax is required to be paid on this beer by the manufacturer. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 1, 1901. SIR: Your letter of the 26th ultimo has been received, inclosing a formula for the manufacture of a beverage called “beerine.” From this formula it appears that the beverage in question is made in part of fermented malt liquor (lager beer), and that "it is like a light table beer, and should be handled as such and not like common soda water." This being the case, the beverage must be regarded as similar to weiss beer; and the manufacturer of it must be required to pay special tax as a brewer and tax on this "beerine," and other persons engaged in selling it must be required to pay special tax as malt liquor dealers. Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. H. L. REMMEL, Collector Internal Revenue, Little Rock, Ark. (430.) Porto Rico. Distilled spirits shipped to the United States from Porto Rico in bottles. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 2, 1901. SIR: I am in receipt of your letter of the 30th ultimo, calling attention to the fact that in some instances rum is shipped to the United States from Porto Rico in bottles, and so packed as not to admit of the affixing of tax-paid stamps thereto. In reply to your request for instructions in this matter, you are advised that upon the arrival of such spirits notice thereof should be given by the owner or consignee, and that the spirits should be inspected and entered for removal, as in the case of spirits received in original packages. No gauge of such spirits can, of course, be made, but the officers detailed will make such inspection as will satisfy him as to contents of the cases, in taxable proof gallons, and if necessary for the purpose, he will "proof" the contents of one or more of the bottles containing the spirits so received. Nor will tax-paid stamps be issued in such cases, but the tax ascertained to be due will be reported by the collector on his list, Form 23, for assessment. In the cases here provided for, Form 487 (parts 1, 2, 3, and 4), prescribed in Circular 606, may be modified to suit the requirements of the case. Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. CHAS. H. TREAT, Collector Second District, New York, N. Y. (431.) Legacy tax. Where a legacy exceeds $10,000, but by deduction of debts and legal expenses it appears that such legacy would be reduced to $10,000, or under, the executor must make a return and file copy of the will and schedule of assets and liabilities. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 4, 1901. SIR: This office is in receipt of a letter dated the 31st ultimo, from Messrs. Beardsley & Beardsley, attorneys, Bridgeport, Conn., relative to legacy return to be filed in certain legacy cases. The parties have been referred to you. In reply, you will please inform them that in all cases where a bequest under a testator's will exceeds $10,000, but, by the deduction of debts and legal expenses of an estate, it appears that the amount of such legacy is reduced to a sum not exceeding $10,000, thus exempting it from tax, a legacy return on Form 419, revised, must be filed, together with a copy of the will, and a schedule of all the assets and liabilities of said estate. Respectfully, ROBT. WILLIAMS, Jr., Acting Commissioner. Mr. W. FRANK KINNEY, Collector Internal Revenue, Hartford, Conn. (432.) Construction of paragraph 7, act of June 13, 1898, as amended, imposing stamp tax on bonds, and liability of bonds of administrators and executors thereunder. [Int. Rev. Circular No. 610.] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 7, 1901 Paragraph 7 of Schedule A of the act of June 13, 1898, as amended by the act of March 2, 1901, reads as follows: Bond: For indemnifying any person or persons, firm or corporation who shall have become bound or engaged as surety for the payment of any sum of money, or for the due execution or performance of the duties of any office or position, and to account for money received by virtue thereof, fifty cents. This office has construed the above paragraph as imposing stamp taxes on two classes of bonds, as follows: 1. Bonds for indemnifying any person or persons, firm, or corporation who shall have become bound or engaged as surety for the payment of any sum of money. 2. Bonds for the due execution or performance of the duties of any office or position, and to account for money received by virtue thereof. This construction was the same as was formerly made by this office upon almost the same language appearing in the act of July 1, 1862. That this construction was the only true one appears from the following considerations: In the technical sense, a bond is an obligation in writing and under seal, binding the obligor to pay a sum of money to the obligee. *** Under this definition is included every sealed obligation for the payment of money, whether absolutely or upon condition. (See Am. Ency. of Law, 2d ed., vol. 4, p. 620.) There are two great classes of bonds-single bonds (simplex obligatio) and conditional bonds. A single bond is an absolute promise to pay money, usually executed without sureties. A conditional bond has a condition in the nature of a defeasance, upon the performance of which the obligation shall be void, or for the specified breach of which the obligation in the nature of a penalty becomes payable. Conditional bonds are usually executed with sureties, and are primarily obligations to pay money. Therefore, as all bonds are obligations to pay money, Congress, in imposing a tax on bonds to indemnify persons who shall have become bound as surety for the payment of any sum of money, covered all bonds which could be given to indemnify any surety on a bond. Consequently, the second clause of said paragraph must refer to another class of bonds, viz, conditional bonds for the due performance of the duties of any office or position, and to account for money received by virtue thereof. The bonds of administrators, executors, guardians, receivers, and other fiduciaries appointed by State courts become liable to tax under the second clause of this paragraph, because such bonds are for the due performance of the duties of an office or position, and to account for money received by virtue thereof, and because the exemption that was made in Schedule A of the war-revenue act of bonds required in legal proceedings was omitted in the act as amended. The word "position," as used in the second clause of paragraph 7 above referred to, is construed to refer to an employment which could not be characterized properly as an office. Therefore, the bonds given by all officers or employees, whether public or private, conditioned for the due execution or performance of the duties of any office or position, and to account for money received by virtue thereof, are taxable, except that this office has ruled, in conformity with the decisions of the United States courts, that the official bonds of State, county, or municipal officers are exempt from tax. There is only one class of indemnity bonds taxable under the first clause of paragraph 7, namely, bonds to indemnify persons who have become sureties on other bonds. Bonds given by contractors for the due performance of public or private work require no stamps under the law as amended. ROBT. WILLIAMS, Jr., Acting Commissioner. (433.) Difference between cigarette stamps representing tax of 54 cents per thousand and those representing tax of $1.08 per thousand. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To all officers of internal revenue : Washington, D. C., November 16, 1901. It is found that there is a lack of familiarity on the part of internalrevenue field officers with the difference in the appearance of cigarette stamps representing the tax of 54 cents per thousand and those representing the tax of $1.08 per thousand, as imposed by section 3 of the act of March 2, 1901. The first-mentioned stamps are of a rather dark blue color and have the figures and words "54 cents per M" on the upper margin in minute characters. The stamps representing the tax of $1.08 per thousand are green in color, and have the words and figures "$1.08 per M" on the upper margin. The last-specified stamps are required by the act referred to for cigarettes weighing not more than 3 pounds per thousand and of a wholesale price or value of more than $2 per thousand." The tax on cigarettes weighing more than 3 pounds per thousand remains, under the act of June 13, 1898, at $3.60 per thousand. Field officers should familiarize themselves with the difference in the appearance of the two varieties of stamps. It is not anticipated that there will be found any considerable number of instances of the use of stamps representing a tax of 54 cents per thousand upon cigarettes sold by the manufacturer or the general distributer at wholesale for more than $2 per thousand. A few such cases have, however, been reported, and the matter is for this reason brought to the attention of internal-revenue officers. In any case of a brand of cigarettes stamped at the lower rate, which, from the quality and the price at which sold at retail, warrants the belief that its wholesale price is more than $2 per thousand, if such price can not be learned from the dealer and the factory is in another district, the case should be reported to this office, and further information will be sought from the books of the manufacturer or general distributer. J. W. YERKES, Commissioner. (434.) Vested interests defined. Vested remainders and contingent remainders contradistinguished. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., November 21, 1901. SIR: Replying to your letter of the 12th instant, relative to the estate of, deceased, in which you ask for explicit instructions as to vested and contingent remainders, you are advised that this office holds that an estate is vested When there is an immediate right of present enjoyment, or a present fixed right of future enjoyment. * * It is the present capacity of taking effect in possession, * * * * if the possession were to become vacant, and not the certainty that the possession will become vacant before the estate, limited in remainder determines, that distinguishes a vested from a contingent remainder. When the event on which the preceding estate is limited must happen, and when it also may happen before the expiration of the estate limited in remainder, that remainder is vested. In the case the wife, who has a life interest in the estate, is 56 years old, while the daughter, who has a reversionary interest in the estate, is but 35 years old. It must be held that the daughter's interest is vested, as she has "a present fixed right of future enjoyment." By reference to the tables, we are able to approximately determine the duration of the first life estate. The same tables enable us to determine the present value of the daughter's reversionary interest. tax is assessed upon her present capacity of taking and upon her expectancy of outliving her mother, as shown by the tables. Respectfully, J. W. YERKES, Commissioner. Mr. P. A. MOCLAIN, Collector Internal Revenue, Philadelphia, Pa. |