REGULATIONS 64 RELATING TO CAPITAL STOCK TAX Under the Provisions of Section 701 of the Revenue Act of 1934. CHAPTER I GEOGRAPHICAL SCOPE SECTION 801 (10) OF THE REVENUE ACT OF 1934 The term "United States when used in a geographical sense includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia. ARTICLE 1. Geographical scope of applicability of the tax.-The provisions of section 701 of the Revenue Act of 1934, relative to capital stock tax, are applicable only to the United States, the Territories of Alaska and Hawaii, and the District of Columbia. 78188-84 DEFINITIONS SECTION 801 OF THE REVENUE ACT OF 1934 (a) When used in this Act (1) The term " person means an individual, a trust or estate, a partnership, or a corporation. (2) The term "corporation" includes associations, joint-stock companies, and insurance companies. (3) The term “partnership" includes a syndicate, group, pool, Joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this Act, a trust or estate or a corporation; and the term “partner includes a member in such a syndicate, group, pool, joint venture, or organization. (4) The term " domestic" when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State or Territory. (5) The term "foreign" when applied to a corporation or partnership means a corporation or partnership which is not domestic. * (8) The term "stock" includes the share in an association, joint-stock company, or insurance company. (9) The term "shareholder" includes a member in an association, joint-stock company, or insurance company. (10) The term "United States" when used in a geographical sense includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia. 66 (11) The term Secretary" means the Secretary of the Treas ury. (12) The term "Commissioner ternal Revenue. means the Commissioner of In (13) The term "collector" means collector of internal revenue. (14) The term " taxpayer" means any person subject to a tax imposed by this Act. (b) The terms "includes " and "including" when used in a definition contained in this Act shall not be deemed to exclude other things otherwise within the meaning of the term defined. ART. 11. Definitions. As used in these regulations— (a) The terms defined in the above provisions of law shall have the meaning so assigned to them. (b) The term "Act" means the Revenue Act of 1934, with specifio reference to section 701 thereof, relative to capital stock tax. (o) The term "tax" means the capital stock tax imposed by section 701 of the Revenue Act of 1934. (d) The term "corporation" includes an association and a jointstock company, but not a partnership. (e) The term "domestic corporation" means a corporation created or organized in the United States or under the laws of the United States, or of any State, or of the Territory of Alaska, or of the Territory of Hawaii. (ƒ) The term “foreign corporation " means any corporation other than a domestic corporation. (g) The term stock includes a share or interest in a corpo ration as defined above. (h) The term "insurance company" includes a voluntary unincorporated association of employees formed for the purpose of relieving sick and aged members and the dependents of deceased members, whether the fund for such purpose is created wholly by membership dues or partly by contributions from the employer. CORPORATIONS DISTINGUISHED FROM OTHER ART. 21. Associations and joint-stock companies.-Associations and joint-stock companies include associations, common-law trusts, and organizations by whatever name known, which act or do business in an organized capacity, whether created under and pursuant to State laws, agreements, declarations of trust, or otherwise, the net income of which, if any, is distributed or distributable among the shareholders on the basis of the capital stock which each holds, or, where there is no capital stock, on the basis of the proportionate share or capital which each has or has invested in the business or property of the organization. A corporation which has ceased to exist in contemplation of law but continues its business in quasicorporate form is an association or corporation within the meaning of section 801. ART. 22. Association distinguished from partnership.-An organization the membership interests in which are transferable and the business of which is conducted by trustees or directors and officers without the active participation of all the members as such, is an association and not a partnership. Organizations which have a fixed capital stock divided into shares represented by certificates transferable only upon the books of the company, which manage their affairs by a board of directors or executive officers and conduct their business in the general form and mode of corporations, are jointstock companies or associations, even though under State law such organizations are technically partnerships. ART. 23. Association distinguished from trust.-Where trustees merely hold property for the collection of income and its distribution among the beneficiaries of the trust, and are not engaged, either by themselves or in connection with the beneficiaries, in the carrying on of any business, no association exists. Where the trustees are not restricted to the mere collection of funds and their payment to the beneficiaries, but have powers similar to or greater than those of the directors in a corporation for the purpose of carrying on some business enterprise, the trust is an association within the meaning of the Act. ART. 24. Limited partnership as partnership.-So-called limited partnerships of the type authorized by the laws of New York and most of the other States are partnerships and not corporations within the meaning of the Act. Such limited partnerships, which can not limit the liability of the general partners, although the special partners enjoy limited liability so long as they observe the statutory conditions, which are dissolved by the death or attempted transfer of the interest of a general partner, and which can not take real estate or sue in the partnership name, are partnerships for the purpose of the Act. Michigan and Illinois limited partnerships are partnerships. A California special partnership is a partnership. ART. 25. Limited partnership as corporation.-Limited partnerships of the type of partnerships with limited liability or partnership associations authorized by the statutes of Pennsylvania and of a few other States are only nominally partnerships. Such so-called limited partnerships, offering opportunity for limiting the liability of all the members, providing for the transferability of partnership shares, and having the rights of holding real estate and bringing suit in the partnership name, are taxable as corporations and are subject to the capital stock tax. In all doubtful cases limited partnerships will be treated as corporations unless they submit satisfactory proof that they are not in effect so organized and operated. A Michigan partnership association is a corporation. |