ernment, and the money equivalent only of the number of rooms allowed by law should be returned as income.20

HEAT AND LIGHT. Amounts received by, or paid for, an officer for heat and light should be returned as income. This includes the money equivalent, as fixed by the Government, of heat and light furnished to an officer occupying public quarters.21 Amounts expended for heat and light are in the nature of personal living expenses and differ in this respect from amounts furnished for mileage, the latter being in the nature of a business expense or an expense of the employer rather than of the employee.

MILEAGE. Mileage, as such, is not income to an officer or employee, as he is required to pay his actual expenses while traveling under mileage orders. The difference between the amount received as mileage and the amount of actual necessary expenses incurred on a journey should, however, be returned as income. The actual expenses to be deducted by the individual before ascertaining his income on account of mileage are the expenses for which reimbursement would be made by the Government if he had traveled on an actual expense basis instead of a mileage basis.22

REIMBURSEMENT FOR ACTUAL EXPENSES. Amounts paid by the Government in the nature of reimbursement for subsistence and other items of actual expense incurred while absent on business for the Government are not required to be returned as income.23

PER DIEM ALLOWANCES. The total per diem allowance is income and there may be taken as a deduction for expense, the amount actually expended from such allowance for actual necessary traveling expenses.24

Compensation of Officers and Employees of a State or Political Subdivision Thereof. The Revenue Act of 1918, does not expressly exempt "the compensation of all officers

20 T. D. 2079.

21 T. D. 2079.

22 T. D. 2079.

23 T. D. 2079.

24 Reg. 33 Rev., Art. 8; T. D. 2079; T. D. 2124.

and employees of a state, or any political subdivision thereof, except when such compensation is paid by the United States Government," as did the 1916 Law.25 It would seem, therefore, that such compensation is intended to be made taxable,26 but the Treasury Department has ruled

25 Revenue Act of 1916, § 4.

26 The general opinion that a federal tax on the salaries of officers or employees of a state is unconstitutional, is based on the case, among others, of Collector v. Day, 11 Wall. 113. In this case Day, who was Judge of the Court of Probate and Insolvency for a county in Massachusetts, was taxed on his salary in 1866 and 1867 as such officer. The question was presented "whether or not it is competent for Congress, under the Constitution of the United States, to impose a tax upon the salary of a judicial officer of a State." The court considers at some length the case of Dobbins v. Erie Co., 16 Pet. 435, in which it was decided that a State could not levy a tax on the salary of an officer of the United States, because (1) such officer was a means or instrumentality employed for carrying into effect some of the legitimate powers of the Federal Government which could not be interfered with by the States, (2) the salary or compensation for the service of the officer was inseparably connected with the office, and (3) if the officer was exempt, his salary was equally exempt. The court also considered at some length the leading case of McCullough v. Maryland, 4 Wheat. 316, and discussed the relationship between the Federal Government and the separate states. Conceding that the exemption of the salaries in question from income tax rested upon "necessary implication," the court placed its decision on the grounds that (1) in respect to the powers reserved to them, one of which was the power to maintain a judicial department, the separate states are as sovereign and independent as the Federal Government, (2) that the unimpaired existence of such reserved powers is as essential in one case as in the other, and (3) the means and instrumentalities employed by the States for carrying on the operations of their governments, for preserving their existence and for fulfilling the duties assigned to them by the Constitution, must be left free and unimpaired and must not be crippled or defeated by another taxing power. Opinion to the contrary is founded largely upon the recent cases of Peck v. Lowe, 247 U. S. 165, and U. S. Glue Co. v. Oak Creek, 247 U. S. 321. The bill as introduced into Congress expressly taxed such salaries, but the provision was stricken out in the Senate, and not restored by the Conference Committee, although that committee restored the provision taxing the salary of the President and salaries of federal judges.

that it is not taxable.27 The exemption under the 1916 Law applied to officers and employees of the state and of its counties, municipalities, townships and other political subdivisions. The salaries of public school teachers came within this class.28 An individual who entered into a contract with a state, or any political subdivision thereof, for the doing of a thing or things specified by the contract, the completion of which would constitute a fulfillment of the contract on the part of such individual, was held not to be an officer or employee of the State or political subdivision thereof, and the amount received by him from the State or political subdivision thereof under the terms of the contract was required to be accounted for as income.29 The exemption did not include an individual who entered into a contract with a state for the construction of public works, as such person is neither an officer nor an employee.30 It was also ruled that where a real estate corporation was employed by a city to appraise the value of property, it could not claim exemption as an employee. Officials of the governments of the District of Columbia, Porto Rico and the Philippine Islands, or the political subdivisions thereof, did not come within this class under the 1916 Law and the compensation paid to them was not exempt.31 The Treasury Department holds under the present law that compensation paid its officers and employees by a State of political subdivision thereof, fees received by notaries-public commissioned by States, and the income of State workmen's compensation insurance funds established by state statutes is not taxable; and that employees of universities, who are officers or employees of a State, receiving salaries paid in part or in whole from funds available under the Smith

27 Reg. 45, Art. 71.

28 Reg. 33, Art. 5.

29 Reg. 33 Rev., Art. 4.

30 T. D. 2152. See Revenue Act of 1918, § 213 (a) (7).

31 Revenue Act of 1916, § 23.

Lever Act of May 8, 1914, are not required to return as taxable income the salaries so received.32

Compensation of Federal Judges. The salaries of Judges of the Supreme Court and inferior courts of the United States, in office at the time the law was passed, were exempt from the tax, under the 1916 Law, but this did not include the salaries of such judges as were appointed subsequent to the passage of the law, or to retired judges.33 The Revenue Act of 1918 expressly taxes the compensation of all federal judges.34

Compensation of the President of the United States. Under the 1916 Law, the compensation of the President of the United States in office at the time the law was passed was exempt from the tax during the term for which he was elected.35 Compensation received as such by the President

32 Reg. 45, Art. 71.

33 Revenue Act of 1916, § 4; T. D. 2090. This exemption was inserted in view of the provision of the Federal, Constitution, Art. 3, § 1, which guarantees that the compensation of Federal judges shall not be diminished during their continuance in office. See Opinion of Justice Field in Pollock v. Farmers Loan & Trust Company, 157 U. S. 429; and 13 Op. Atty. Gen. 161. On February 16, 1863, Chief Justice Taney, of the United States Supreme Court, wrote a letter to Hon. S. P. Chase, then Secretary of the Treasury, vigorously protesting against the constitutionality of any construction of the income tax then in force to embrace a tax on the salaries of the Judges of the Supreme Court. The Secretary of the Treasury, having ignored this letter, Chief Justice Taney procured its entry on the records of the Supreme Court on March 10, 1863 (Tyler's Life of Taney, Pp. 432, 435). It was deemed unpatriotic to resist the collection of the tax, at least during the war and it was collected until toward the end of 1869 when the opinion of the Attorney-General referred to above was rendered, advising against the constitutionality of any tax upon the salary of the President of the United States and upon the Judges of the Supreme Court. An interesting question is presented as to how this question of constitutionality can be determined with propriety, since the judges of the courts which have jurisdiction of the question also have an interest therein.

34 Revenue Act of 1918, § 213 (a).

35 Revenue Act of 1916, § 4. In an opinion of the Attorney General in 1869 it was held that a specific tax by the United States upon the salary of the President in office at the time the act was passed, to

of the United States is expressly taxable under the 1918 Law.36

Professions and Vocations. Incomes from professions and vocations are taxable as is income from any other source. No rulings are specially applicable to these forms of income. Such income is taxable in the year in which it is received, not necessarily for the year in which it is earned. Rulings as to this point are general and are discussed in the preceding chapter.

be deducted from the salary which otherwise would be paid him, would be a diminution of his compensation in contravention of Article 2, Section 1, Clause 7, of the Federal Constitution, which provides that the compensation of the President shall neither be increased or diminished during the period for which he shall have been elected. 13 Op. Atty. Gen. 162. This consideration no doubt moved Congress to grant the exemption in the 1916 Law.

36 Revenue Act of 1918, § 213 (a).