(T. D. 4973) Income tax Amending article 165-1 of Regulations 101, and section 19.165-1 of Regulations 103, relating to employees' trusts TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Paragraph (a) of article 165-1 of Regulations 101 [section 9.165-1, title 26, Code of Federal Regulations, 1939 Sup.] and paragraph (a) of section 19.165-1 of Regulations 103 [part 19, title 26, Code of Federal Regulations, 1940 Sup.] are each amended to read as follows: (a) Plans and trusts for employees.—A "stock bonus, pension, or profit-sharing plan of an employer for the exclusive benefit of some or all of his employees” is a definite written program and arrangement communicated to such employees, solely designed and applied to enable such employees to share in the capital or profits of such employer's trade or business or to provide for the livelihood of such employees upon their retirement from employment. A "trust forming part of a stock bonus, pension, or profit-sharing plan" is a trust formed and availed of solely to aid in the proper execution of one of the plans defined in the preceding sentence. This phrase includes only trusts created for the exclusive benefit of employees, and does not include devices for distributing profits to shareholders. All the surrounding and attending circumstances and the details of the plan will be indicative of whether it is a bona fide stock bonus, pension, or profit-sharing plan for the exclusive benefit of employees within the meaning of section 165. (This Treasury decision is issued under the authority contained in sections 62 and 165 of the Revenue Act of 1938 (52 Stat. 480, 518; 26 U.S. C., Sup. 62, 165); and sections 62 and 165 of the Internal Revenue Code (53 Stat. 32, 67).) Approved June 3, 1940: JOHN L. SULLIVAN, GUY T. HELVERING, Commissioner of Internal Revenue. Acting Secretary of the Treasury. [Filed with the Division of the Federal Register June 5, 1940, 10:25 a. m.] TREASURY DEPARTMENT ORDER NO. 30 Section 1. By virtue of and pursuant to the authority conferred upon me by sections 2 and 8 of Reorganization Plan No. III (House Document No. 681, 76th Congress) prepared in accordance with the provisions of the Reorganization Act of 1939, and transmitted to the Congress by the President on April 2, 1940, by the Joint Resolution of June 4, 1940 (Pub. Res. No. 75, 76th Cong.), by section 3170 of the Internal Revenue Code, and by section 161 of the Revised Statutes (U. S. C., title 5, sec. 22), subpart A of part 171 (Miscellaneous Regulations Related to Liquor) of title 26 of the Code of Federal Regulations is hereby amended by adding the following new sections at the end thereof to read as follows: 171.1a Basic Permit and Trade Practice Division Created. There is hereby established in the Alcohol Tax Unit in the Bureau of Internal Revenue a division 1 This Treasury decision was published in the Federal Register, Vol. 5, No. 115, as Treasury Order No. 30. By virtue of and pursuant to the authority conferred upon me by sections 2 and 8 of Reorganization Plan No. III (House Document No. 681, 76th Congress) prepared in accordance with the provisions of the Reorganization Act of 1939, and transmitted to the Congress by the President on April 2, 1940, by the Joint Resolution of June 4, 1940 (Pub. Res. No. 75, 76th Cong.), by section 3170 of the Internal Revenue Code, by section 3930 of the Internal Revenue Code, and by section 161 of the Revised Statutes (U. S. C., title 5, sec. 22), the following Order is issued: Section 1. There are hereby transferred to the Legal Division of the Treasury Department all of the personnel, records, books, furniture, and supplies connected with the legal activities of the Federal Alcohol Administration. The transfer of personnel under this section shall be in accordance with the provisions of section 10 (b) of the Reorganization Act of 1939 (53 Stat. 563), and shall be subject to the provisions of section 8 of Reorganization Plan No. III. The provisions of Department Circular No. 519 of June 20, 1934, are hereby made applicable to all duties and functions incident to the administration of the legal activities of the Federal Alcohol Administration, and to all of the personnel, records, books, furniture, and supplies hereby transferred. Section 2. All appointment and other personnel functions of the Administrator and members of the Federal Alcohol Administration, which functions are within the purview of section 404 of Reorganization Plan No. II (53 Stat. 1436) are vested in the Secretary of the Treasury. The provisions of Treasury Department Order No. 22 of June 30, 1939, issued under such section 404 of Reorganization Plan No. II and relating to submission to the Administrative Assistant to the Secretary of the Treasury of certain personnel actions enumerated therein for final approval. are hereby made applicable to all such personnel actions in connection with all personnel transferred to the Alcohol Tax Unit of the Bureau of Internal Revenue by Treasury Department Order No. 30 of this date, and to all such personnel actions in connection with the personnel transferred to the Legal Division by section 1 of this Order. Section 3. This Order shall take effect on the date that section 2 of Reorganization Plan No. III becomes effective. H. MORGENTHAU, JR., to be known as the Basic Permit and Trade Practice Division, at the head of which shall be an Assistant Deputy Commissioner who shall be appointed by the Secretary of the Treasury under the provisions of section 2 (c) of the Federal Alcohol Administration Act (49 Stat. 977), and shall perform his duties under the immediate direction and supervision of the Deputy Commissioner of Internal Revenue in charge of the Alcohol Tax Unit, and under the general direction and supervision of the Commissioner of Internal Revenue and the Secretary of the Treasury. 171.16 Transfer of Federal Alcohol Administration Personnel and Property. Except as provided in Treasury Department Order No. 31 of June 12, 1940 (uncodified), relating to the transfer of certain legal personnel and property, there are hereby transferred to the Basic Permit and Trade Practice Division of the Alcohol Tax Unit all of the personnel, records, books, furniture, and supplies of the Federal Alcohol Administration and of the office of the Administrator thereof (other than the Administrator), which Administration and office were abolished by section 2 of Reorganization Plan No. III: Provided, however, That such transfer shall be in accordance with the provisions of section 10 (b) of the Reorganization Act of 1939 (53 Stat. 563), and shall be subject to the provisions of section 8 of Reorganization Plan No. III. Section 2. By virtue of and pursuant to the authority set out in section 1 of this Order, Part 171 of title 26 of the Code of Federal Regulations is hereby further amended by inserting between subpart B and subpart C thereof a new subpart B (A) to read as follows: SUBPART B (A)-ADDITIONAL DUTIES OF ALCOHOL TAX UNIT 171.4a Delegation of Federal Alcohol Administration Functions. Except as provided in par. 171.1a, relating to the appointment of an Assistant Deputy Commissioner, and except as provided in Treasury Department Order No. 31 of June 12, 1940 (uncodified), relating to certain legal and personal functions, all functions of the Federal Alcohol Administration, and the office of the Administrator and the offices of the members thereof, are hereby delegated to the Deputy Commissioner of the Bureau of Internal Revenue in charge of the Alcohol Tax Unit, to be exercised by him under the direction and supervision of the Commissioner of Internal Revenue and the Secretary of the Treasury through the Basic Permit and Trade Practice Division, and the officers and employees thereof: Provided, however, That with the approval of the Commissioner of Internal Revenue and the Secretary of the Treasury, said Deputy Commissioner may exercise any of such functions through any other division of the Alcohol Tax Unit, and the officers and employees thereof. 171.46 Prior Regulations Adopted. Except as herein, or as may be hereafter, otherwise provided, all regulations prescribed, all orders and instructions issued, and all forms adopted for the enforcement of the laws heretofore administered by the Administrator of the Federal Alcohol Administration, the Federal Alcohol Administration, and the officers and employees thereof, will continue in effect as regulations, orders, instructions, and forms of the Alcohol Tax Unit of the Bureau of Internal Revenue. The term "Administrator" wherever used in such regulations, orders, instructions, and forms, shall be held to mean "Deputy Commissioner of Internal Revenue". Section 3. This Order shall take effect on the date that section 2 of Reorganization Plan No. III becomes effective. H. MORGENTHAU, JR., [Filed with the Division of the Federal Register June 12, 1940, 11:39 a. m.] (T. D. 4975) Income tax Regulations affecting the taxation of nonresident alien individuals, residents of Sweden, and of Swedish corporations under the Tax Convention between the United States and Sweden, proclaimed by the President of the United States December 12, 1939, effective January 1, 1940 1 1 TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and Others Concerned: Sec. 25.0 Sec. 25.1 Sec. 25.2 TABLE OF CONTENTS Introductory. Scope of Convention with respect to determination of "industrial and commercial profits" of a nonresident alien individual resident of Sweden or of a Swedish corporation of other entity carrying on a Swedish enterprise in the United States. (a) General (b) No United States permanent establishment. (c) United States permanent establishment. Control of a domestic enterprise by a Swedish enterprise. Income from real property. Patent and copyright royalties. Dividends and interest. Sec. 25.4 Sec. 25.6 Sec. 25.7 Mineral royalties. Sec. 25.8 Sec. 25.9 Sec. 25.10 Capital gains. Wages, salaries and similar compensation, pensions and life annuities. Remittances. Scope of Article XIV. (a) General. (b) Credit for Swedish income taxes. Information to be furnished in the ordinary course. Sec. 25.17 Information in specific cases. Sec. 25.18 Mutual assistance in the collection of taxes. Section 25.0 Introductory.-The Tax Convention and Protocol between the United States and Sweden, hereinafter referred to as the Convention, proclaimed by the President of the United States on December 12, 1939, and effective January 1, 1940, provides as follows: Article I The taxes referred to in this Convention are: (a) In the case of the United States of America: 1 Sections 25.0 to 25.18 issued under the authority contained in section 62 of the Internal Revenue Code (53 Stat. 32) and the tax convention between the United States and Sweden (54 Stat. 1759). (1) The Federal income taxes, including surtaxes and excess-profits taxes (2) The Federal capital stock tax. (b) In the case of Sweden: (1) The National income and property tax, including surtax. (2) The National special property tax. (3) The communal income tax. It is mutually agreed that the present Convention shall also apply to any other or additional taxes imposed by either contracting State, subsequent to the date of signature of this Convention, upon substantially the same bases as the taxes enumerated herein. The benefits of this Convention shall accrue only to citizens and residents of the United States of America, to citizens and residents of Sweden and to United States or Swedish corporations and other entities. Article II An enterprise of one of the contracting States is not subject to taxation by the other contracting State in respect of its industrial and commercial profits except in respect of such profits allocable to its permanent establishment in the latter State. The income thus taxed in the latter State shall be exempt from taxation in the former State. No account shall be taken, in determining the tax in one of the contracting States, of the mere purchase of merchandise effected therein by an enterprise of the other State. The competent authorities of the two contracting States may lay down rules by agreement for the apportionment of industrial and commercial profits. Article III When an enterprise of one of the contracting States, by reason of its participation in the management or capital of an enterprise of the other contracting State makes or imposes on the latter in their commercial or financial relations conditions different from those which would be made with an independent enterprise, any profits which should normally have appeared in the balance sheet of the latter enterprise but which have been in this manner diverted to the former enterprise may, subject to applicable measures of appeal, be incorporated in the taxable profits of the latter enterprise. In such case consequent rectifications may be made in the accounts of the former enterprise. Article IV Income which an enterprise of one of the contracting States derives from the operation of ships or aircraft registered in that State is taxable only in the State in which registered. Income derived by such an enterprise from the operation of ships or aircraft not so registered shall be subject to the provisions of Article II. Article V Income of whatever nature derived from real property, including gains derived from the sale of such property, but not including interest from mortgages or bonds secured by real property, shall be taxable only in the contracting State in which the real property is situated. Article VI Royalties from real property or in respect of the operation of mines, quarries, or other natural resources shall be taxable only in the contracting State in which such property, mines, quarries, or other natural resources are situated. |