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Banks' and bankers' month

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Sec. 3414. A true and complete return of the monthly amount of circulation,

as aforesaid, and of ly returns. the monthly amount of notes of persons, town, city, or municipal corporation, State banks, or State banking associations paid out as aforesaid for the previous six months, shall be made and rendered in duplicate on the first day of December and the first day of June, by each of such banks, associations, corporations, companies, or persons, with a declaration annexed thereto, under the oath of such person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the Commissioner of Internal Revenue, that the same contains a true and faithful statement of the amounts subject to tax, as aforesaid; and one copy shall be transmitted to the collector of the district in which any such bank, association, corporation, or company is situated, or in which such person has his place of business, and one copy to the Commissioner of internal Revenue.

The words “ of deposits and of capital” are omitted in

line 2 as obsolete. Sec, 3415. In default of the returns provided in the return detail is! preceding section, the amount of circulation, and notes of persons, town, city, and municipal corpora- mate, etc. tions, State banks, and State banking associations paid out, as a foresaid, shall be estimated by the Commissioner of Internal Revenue, upon the best information he can obtain. And for any refusal or neglect to make return and payment, any such bank, association, corporation, company, or person so in default shall pay a penalty of two hundred dollars, besides the additional penalty and forfeitures provided in other cases.

The words “deposits, capital " omitted in line 2.
See section 3176, page 108, as to additional penalties.

(United States v. N. Y. Guaranty Co., 8 Ben. 269, 27 Fed. Cas., No. 15, 872; 21 Op. Atty. Gen., 564.) SEC. 3416. Whenever any State bank or banking association has been converted into a national banking as- national sociation, and such national banking association has returns, how assumed the liabilities of such State bank or banking association, including the redemption of its bills, by any agreement or understanding whatever with the representatives of such State bank or banking association, such national banking association shall be held to make the required return and payment on the circulation outstanding, so long as such circulation shall exceed five per centum of the capital before such conversion of such State bank or banking association.

This section is practically obsolete.

State bankg converted into

banks ; tax.

2

Certain provi- Sec. 3417. The provisions of this chapter, relating to tions of this chapter not to the tax on the

circulation of banks, and to their apply to national banks.

returns, except as contained in sections thirty-four Act Feb 18, hundred and eleven, thirty-four hundred and twelve, 1875 (18 Stat., 319).

thirty-four hundred and thirteen, and thirty-four hundred and sixteen, and such parts of sections thirty-four hundred and fourteen, and thirty-four hundred and fifteen as relate to the tax of ten per centum on certain notes, shall not apply to associations which are taxed under and by virtue of Title “National Banks.”

Indictment following language of section is sufficient, although it does not aver that tax was not paid. (Rosenfeld

1. United States, 202 Fed., 469.) Insolvent banks

[Act March 1, 1879 (20 Stat., 351).] Whenever and Exempt

after

any bank has ceased to do business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or paid into the Treasury of the United States, on account of such bank, which shall diminish the assets thereof necessary for the full payment of all its depositors; and such tax shall be abated from such national banks as are found by the Comptroller of the Currency to be insolvent; and the Commissioner of Internal Revenue, when the facts shall so appear to him, is authorized to remit so much of said tax against insolvent State and savings banks as shall be found to affect the claims of their depositors.

from

CHAPTER TWENTY-SEVEN.

EXEMPTION OF LIBERTY AND OTHER BONDS FROM

TAXATION.

.

Sec.
1. Act of April 24, 1917. First Lib-

erty loan bonds.
7. Act of September 24, 1917. Second

Liberty loan bonds. 11. (Same.) Certificates of indebted

ness. 3. Act of April 4, 1918. Extension

of exemption to third Liberty

loan bonds.
16. Act of April 5, 1918. War Finance

Corporation bonds; interest on
bonds; exemption of corporation.

Sec.
3. Act of July 9, 1918. Bonds payable

in foreign money.
1. Act of September 24,- 1918. Inter-

est on Liberty loan bonds. 1. Act of March 3, 1919. Exemption

of second Liberty loan bonds. 2. (Same.) Exemption of interest. 4. (Same.) Exemptions as to non

residents and foreign corporations.

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Section 1. [Act of April 24, 1917 (40 Stat., 35).) frExemption of

bonds, The bonds herein authorized shall be in such form and subject to such terms and conditions of issue, conversion, redemption, maturities, payment, and rate and time of payment of interest, not exceeding three and one-half per centum per annum, as the Secretary of the Treasury may prescribe. The principal and interest thereof shall be payable in United States gold coin of the present standard of value and shall be exempt, both as to principal and interest, from all taxation, except estate or inheritance taxes, imposed by authority of the United States, or its possessions, or by any State or local taxing authority; but such bonds shall not bear the circulation privilege.

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Opinion of the Attorney General on the question of exemption from income tax of corporation dividends paid in the form of Liberty loan bonds. (T. D. 2512.)

Corporation dividends paid in the form of Liberty bonds not taxable; but a corporation owning these bonds not exempt from excise, franchise, and other corporation taxes. (T. D. 2512.)

Promissory notes issued on or after April 6, 1918, secured by United States bonds and obligations issued after April 24, 1917, are exempt from internal revenue stamp tax.

(T. D. 2701.) Sec. 7. [Act of September 24, 1917 (40 Stat., 288).] Exemption of That none of the bonds authorized by section one, nor of the certificates authorized by section five, or by section six, of this Act, shall bear the circulation privilege. All such bonds and certificates shall be exempt, both as to principal and interest from all taxation now or here

loan bonds.

after imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of such bonds and certificates the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in subdivision (b) of this section.

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certain

certifi.

Sec. 11.

That section two of an Act of Con-1 gress approved February fourth, nineteen hundred and ten, entitled " An Act prescribing certain provisions and conditions under which bonds and certificates of indebtedness of the United States may be issued, and for

other purposes,” is hereby amended to read as follows: Exemption of

“SEC. 2. That any certificates of indebtedness herecates of indebt. after issued shall be exempt from all taxes or duties of .

the United States (but, in the case of certificates issued after September first, nineteen hundred and seventeen, only, if and to the extent provided in connection with the issue thereof), as well as from taxation in any form by or under State, municipal, or local authority; and that a sum not exceeding one-tenth of one per centum of the amount of any certificates of indebtedness issued is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to pay the expenses of preparing, advertising, and issuing the same.”

Interest paid within the year on indebtedness incurred for purchase of Liberty 4 per cent bonds is deductible in computing net income subject to income surtaxes and excess profits taxes. (T. D. 2541.)

Liberty 4 per cent bonds of second series issued in exchange for Liberty 31 per cent bonds are obligations of the United States issued after September 1, 1917," and are not subject to tax; current earnings invested in Liberty 31 per cent bonds are not subject to tax upon distributed net income of corporations if retained for employment in the business. (T. D. 2570.)

Interest on obligations of the United States or its possessions not to be included as income (hut, in the case of obligations issued after September 1, 1917, only if and to the extent provided in the act authorizing issue thereof). (T. D. 2690.)

Income from not to exceed $5,000 face value of Liberty bonds, Treasury certificates of indebtedness, and war-savings certificates authorized by the act of September 24, 1917, is exempt from all income and war excess profits taxes. (T. D. 2585.)

Exemption of third Liberty loan bonds.

Sec. 3 (Act of April 4,1918 (40 Stat., 502,504.)] That section four of said Act approved September twenty

fourth, nineteen hundred and seventeen, is hereby amended by adding two new paragraphs as follows:

“That holders of bonds bearing interest at a higher rate than four per centum per annum, whether issued (a) under section one, or (b) upon conversion of four per centum bonds issued under section one, or (c) upon conversion of three and one-half per centum bonds issued under said Act approved April twenty-fourth, nineteen hundred and seventeen, or (d) upon conversion of four per centum bonds issued upon conversion of such three and one-half per centum bonds, shall not be entitled to any privilege of conversion under or pursuant to this section or otherwise. The provisions of section seven shall extend to all such bonds.

Sec. 16. [Act of April 5, 1918 (40 Stat., 506).] That bonds issued by any and all bonds issued by the Corporation shall be War Financo exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, corporations, or associations. The interest interest on bonds! on an amount of such bonds the principal of which does not exceed in the aggregate $5,000 owned by any individual, partnership, corporation, or association, shall be exempt from the taxes referred to in clause (b). The Corporation, including its franchise and the capital and reserve or surplus thereof, and the income derived therefrom, shall be exempt from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except that any real property of the Corporation shall be subject to State, county, or municipal taxes to the same extent, according to its value, as other real property is taxed.

of

Exemption Corporation.

Sec. 3. [Act of July 9, 1918 (40 Stat., 844).] That, Exemption of notwithstanding the provisions of the Second Liberty bonds and War Bond Act, as amended by the Third Liberty Bond Act, Finance Corporaor of the War Finance Corporation Act, bonds and certificates of indebtedness of the United States payable in any foreign money or foreign moneys, and bonds of the War Finance Corporation payable in any foreign money or foreign moneys exclusively or in the alternative, shall, if and to the extent expressed in such bonds at the time of their issue, with the approval of the Secretary of the Treasury, while beneficially owned by a nonresident alien individual, or by a foreign corporation, partnership, or association, not engaged in business in the

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