Statement of Principles
of Internal Revenue
Tax Administration

The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the
laws enacted by Congress; to determine the rea-
sonable meaning of various Code provisions in
light of the Congressional purpose in enacting
them; and to perform this work in a fair and im-
partial manner, with neither a government nor
a taxpayer point of view.
At the heart of administration is interpretation of
the Code. It is the responsibility of each person
in the Service, charged with the duty of interpret-
ing the law, to try to find the true meaning of the
statutory provision and not to adopt a strained
construction in the belief that he is "protecting
the revenue." The revenue is properly protected
only when we ascertain and apply the true mean-
ing of the statute.

The Service also has the responsibility of apply-
ing and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of
law and sound administration. It should, however,
be vigorous in requiring compliance with law and
it should be relentless in its attack on unreal tax
devices and fraud.

weekly Bulletins 1975-1 through 1975-26 for
the period of January 1 through June 30, 1975.
It includes a cumulative list of announcements
relating to decisions of the Tax Court published
in the Internal Revenue Bulletins.

The Internal Revenue Bulletin is the authoritative
instrument of the Commissioner of Internal Rev-
enue for announcing official rulings and proce-
dures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders,
Tax Conventions, legislation, court decisions, and
other items of general interest.
It is the policy of the Service to publish in the

Bulletin all substantive rulings necessary to pro-

mote a uniform application of the tax laws, in-

cluding all rulings that supersede, revoke, mod-

ify, or amend any of those previously published in

the Bulletin. All published rulings apply retro-

actively unless otherwise indicated. Procedures

relating solely to matters of internal management

are not published; however, statements of internal

practices and procedures that affect the rights

and duties of taxpayers are published.

Revenue Rulings represent the conclusions of

the Service on the application of the law to the

entire state of facts involved. In those that are

based on positions taken in rulings to taxpayers

or technical advice to Service field offices, iden-

tifying details and confidential information are

deleted to comply with statutory requirements.

Rulings and procedures reported in the Bulletin

do not have the force and effect of Treasury De-

partment Regulations, but they may be used as

precedents. Unpublished rulings will not be relied

on, used, or cited as precedents by Service per-

sonnel in the disposition of other cases. In ap-

plying published rulings and procedures, the ef-

fect of subsequent legislation, regulations, court

decisions, rulings, and procedures must be con-

sidered, and Service personnel and others con-

cerned are cautioned against reaching the same
conclusions in other cases unless the facts and
circumstances are substantially the same.
Cumulative Bulletin 1975-1 is a consolidation of
all items of a permanent nature published in the

The Internal Revenue Cumulative Bulletin is pre-
pared in three parts as follows:

Part 1._1954 Code.

This part includes rulings and decisions based on

provisions of the Internal Revenue Code of 1954.

Arrangement is sequential according to Code and

regulations sections. The Code section is shown

at the top of each page.

Part II.-Treaties and Tax Legislation.

This part is divided into two subparts as follows:

Subpart A, Tax Conventions and related Treasury

Decisions and Revenue Rulings; Subpart B, Legis-

lation and related Committee Reports.

Part III.-Administrative, Procedural and Miscel-

laneous.

To the extent practicable, pertinent cross refer-

ences to these subjects are contained in the

other Parts and Subparts. Included in this part

is a list of persons disbarred or suspended from

practice before the Internal Revenue Service.

The Bulletin Index-Digest System, a research and

reference service supplementing the Bulletin,

may be obtained from the Superintendent of

Documents on a subscription basis. It consists

of four Services: Service No. 1, Income Tax;

Service No. 2, Estate and Gift Taxes; Service No.

3, Employment Taxes; Service No. 4, Excise

Taxes. Each Service consists of a basic volume

and a cumulative supplement that provide (1)

finding lists of items published in the Bulletin,
(2) digests of Revenue Rulings, Revenue Proce-
dures, and other published items, and (3) topical
indexes of Public Laws, Treasury Decisions, and
Tax Conventions.

The synopses preceding Revenue Rulings, Revenue Procedures,

and Court Decisions are intended only as aids to the reader in

identifying the subject matter covered. They may not be relied

upon as authoritative interpretations.

The contents of this publication are not copyrighted and may be

reprinted freely; a citation of the Cumulative Bulletin as the

source would be appropriate.

iii

The following abbreviations in current use and formerly used will appear in material published in the Bulletin.

A, B, C, etc. The names of individuals.
A.R.R. Committee on Appeals and Review recom-

mendation.
A.T. Alcohol and tobacco tax ruling.
B.T.A. Board of Tax Appeals.
C.B. Cumulative Bulletin.
CFR Code of Federal Regulations.
C.T. Carriers Taxing Act of 1937.
Ct. D. Court Decision.
Del. Order Delegation Order.
D.C. Treasury Department circular.
DISC Domestic International Sales Corporations.
E.0. Executive Order.
E.T. Estate and gift tax ruling.
Em. T. Employment tax ruling.
F.A.A.A. Federal Alcohol Administration Act.
FICA Federal Insurance Contributions Act.
F.R. Federal Register.
FUTA Federal Unemployment Tax Act.
G.C.M. Chief Counsel's memorandum (formerly

General Counsel's memorandum).

I.R.B. Internal Revenue Bulletin.
IR-Mim. Published IR-Mimeograph.
I.T. Income tax ruling.
M, N, X, Y, Z, etc. The names of corporations,

places or businesses, according to context. M.T. Miscellaneous tax ruling. Mim. Published mimeograph. 0.D. Office Decision. Pub.L. Public Law PS Pension, profit-sharing, stock bonus or annuity

plan ruling. Rev. Proc. Revenue Procedure. Rev. Rul. Revenue Ruling. R.S. Revised Statute. S.M. Solicitor's Memorandum. Sol. Op. Solicitor's Opinion. S.P.R. Statement of Procedural Rules. S.R. Solicitor's Recommendation. S.S.T. Social Security Tax. S.T. Sales tax ruling. Stat. Statutes at Large. T.C. The Tax Court of the United States. T.D. Treasury Decision. TIR Technical Information Release. U.S.C. United States Code. x and y are used to represent certain numbers and when used with the word "dollars" represent sums of money.

Advisory Committees: 635 757 759 Committee Reports: Senate: 813 (P.L. 89-487), 392 93-554 (P.L. 93-597), 497 93-854 (P.L. 93-502) 402 93-1183 (P.L. 93-579), 448 93-1298 (P.L. 93-618), 505 93-1356 (P.L. 93-647), 545 93-1357 (P.L. 93-625), 517 93-36 (P.L. 94-12), 590 House: 125 (P.L. 90-23), 399 93-1416 (P.L. 93-579), 434 94-19 (P.L. 94-12), 569 Conference: 93-1200 (P.L. 93-502), 420 93-1642 (P.L. 93-625), 538 93-1644 (P.L. 93-618), 509 94-120 (P.L. 94-12), 624 Court Decisions: 1968, 377 1969, 329 1970, 379 1971, 372 Delegation Orders: 35 (Rev. 6), 635 42 (Rev. 6), 635 73 Revocation Notice, 636 77 (Rev. 7), 636 77 (Rev. 8), 636 96 (Rev. 2), 637 97 (Rev. 12), 637 112 (Rev. 1), 638 113 (Rev. 2), 639 113 (Rev. 3), 640 127 (Rev. 1) Revocation Notice, 640 139 (Rev. 1), 641 149, 641 Disbarments & Suspensions List: 759 Executive Orders: 11822, 641 11859, 642 Public Laws 89-487, 391 90-23, 397 93-502, 400 93-531, 425 93-579, 426 93-597, 495 93-618, 501 93-625, 510 93-644, 542 93-647, 543 94-12, 545 Railroad Retirement Tax Act: 324 325 Revenue Procedures: 75-1, 642 75-2, 642 75-3, 643 75-4, 644 75-5, 645 75-6, 646 75-7, 648 75-8, 648

Revenue Procedures-Continued 75-9, 649 75-10, 651 75-11, 652 75-12, 653 75-13, 662 75-14, 662 75-15, 671 75-16, 676 75-17, 677 75-18, 687 75-19, 687 75-20, 688 75-21, 715 75-22, 717 75-23, 719 75-24, 719 75-25, 720 75-26, 722 75-27, 725 75-28, 752 75-29, 754 75-30, 756 Revenue Rulings: 75-1, 5 75-2, 99 75-3, 108 75-4, 165 75-5, 166 75-6, 178 75-7, 244 75-8, 309 75-9, 348 75-10, 389 75-11, 27 75-12, 62 75-13, 67 75-14, 90 75-15, 317 74-16, 340 75-17, 344 75-18, 345 75-19, 382 75-20, 29 75-21, 367 75-22, 49 75-23, 290 75-24, 306 75-25, 359 75-26, 339 75-27, 355 75-28, 68 75-29, 91 75-30, 235 75-31, 10 75-32, 14 75-33, 115 75-34, 271 75-35, 131 75-36, 143 75-37, 148 75-38, 161 75-39, 272 75-40, 276 75-41, 323 75-42, 359 75-43, 383 75-44, 15 75-45, 47 75-46, 55 75-47, 62 75-48, 62

Revenue Rulings—Continued 75-49, 151 75-50, 152 75-51, 190 75-52, 198 75-53, 234 75-54, 293 75-55, 74 75-56, 98 75-57, 141 75-58, 374 75-59, 177 75-60, 179 75-61, 180 75-62, 188 75-63, 294 75-64, 16 75-65, 79 75-66, 85 75-67, 169 75-68, 184 75-69, 253 75-70, 301 75-71, 309 75-72, 310 75-73, 313 75-74, 152 75-75, 154 75-76, 154 75-77, 7 75-78, 8 75-79, 184 75-80, 292 75-81, 326 75-82, 5 75-83, 112 75-84, 236 75-85, 239 75-86, 242 75-87, 325 75-88, 341 75-89, 351 75-90, 17 75-91, 39 75-92, 75 75-93, 101 75-94, 111 75-95, 114 75-96, 139 75-97, 167 75-98, 196 75-99, 197 75-100, 303 75-101, 318 75-102, 351 75-103, 17 75-104, 18 75-105, 29 75-106, 31 75-107, 32 75-108, 69 75-109, 69 75-110, 167 75-111, 251 75-112, 274 75-113, 19 75-114, 138 75-115, 178 75-116, 182 75-117, 273 75-118, 390 75-119, 48