2133. Committee of Review and Appeals to take place of Advisory Tax Board. Organization of a Committee of Review and Appeals to take over the work of the Advisory Tax Board which goes out of existence on October 1 was announced by Commissioner of Internal Revenue, Daniel C. Roper, in a statement issued yesterday. "Taxpayers in many parts of the country," said the Commissioner, "have expressed interest in the plans of the Bureau for continuing the important work entrusted to the Advisory Tax Board. The function of the Board has been to review, upon appeal, the administrative decisions of the Income Tax Unit in important income and excess profits cases, particularly cases involving exceptional or unusual conditions with respect to questions of invested capital, amortization, depletion, depreciation, etc. The newly organized Committee on Review and Appeal will take over this highly important function, and taxpayers are assured of the same thoughtful and impartial consideration of their problems that has been a feature of the work of the retiring Board. "P. S. Talbert, Head of the Technical Division of the Income Tax Unit, has been selected as Chairman of the Committee because of his exceptional experience and peculiar qualifications for this important task. Mr. Talbert is one of our leading experts on income tax matters. He worked continuously with the Tax Advisers in drafting the administrative regulations for the enforcement of the 1917 law and has also played an important part in framing the regulations under the Act of February 24, 1919. Mr. Talbert will be relieved from duty as Head of the Technical Division in order that he may devote his entire time to the work of the committee. "The individual members of the Committee on Review and Appeals will be selected with the greatest care from our most experienced men in order that their combined judgment may represent the best experience and highest intelligence of the Bureau's personnel. I am confident that this body of men will continue in a most satisfactory manner the work inaugurated by the Advisory Tax Board and taxpayers may be assured of courteous, intelligent and impartial hearings." [Announcement by Bureau of Internal Revenue released Sept. 28.] ¶2134. Announcement by the Bureau of Internal Revenue relating to emigrants. With the resumption of foreign travel and the exodus of aliens since the signing of the armistice and the treaty of peace, many travelers are discovering that there are certain requirements of the income tax laws to be observed before departure. In the interest of the traveler and proper administration, the Bureau of Internal Revenue has established a uniform method of procedure for the collection of income taxes from persons seeking passage abroad. Compliance with these regulations means avoidance of delay at the point of embarkation. Aliens, whether resident or nonresident, desiring to depart from this country, should appear before the collector of internal revenue for the district in which they last resided and satisfy all income tax obligations up to and including the month preceding their departure. Such an alien is questioned as to his earnings for 1916, 1917, 1918 and 1919. The collector prepares a return for the alien and collects in proper cases the sum due. The return is executed in duplicate, and a copy retained by the alien for presentation to the internal revenue agent in charge at the port of embarkation, accompanying his request for a sailing permit. In this permit, which can be issued only by internal revenue agents at the point of embarkation, it is certified that the person named has complied with all the requirements of the Revenue Act for 1918 and prior years. An alien who has failed to appear before the collector for the district in which he last resided is required to appear before the collector for the district in which the port of embarkation is located in order to obtain a certificate of compliance with income tax laws. An American citizen applying for a sailing permit must furnish the internal revenue agent in charge evidence that he has paid all installments of his income tax due up to the date of his departure, and has made arrangements for the payment of future installments as they fall due. American citizens and aliens who are not subject to the income tax and have filed no returns are required to satisfy internal revenue officers of that fact in order to obtain a sailing permit, which is required of all persons departing from the United States. [Announcement by Bureau of Internal Revenue released Sept. 26.] ¶ 2135. (See ¶ 670) T.D. 2922. The final edition of Regulations 45 is amended by changing Article 307 to read as follows: Art. 307. When nonresident alien individual entitled to personal exemption. The following countries are added to subdivision (a): Bohemia, Carniola, Galicia, Goritz, Gradisca, Lower Austria, Salzburg, Silesia, Styna, Trieste, Tyrol, Upper Austria. The following name is added to subdivision (b): Slovakia; and to subdivision (c) Sweden is added [T.D. 2922, approved September 18, 1919]. 2136, Page 181. T.D. 2924. Modification of Articles 1566 and 1567 of Regulation 45 (See ¶985 and 986), relating to exchange of property for stock and stock for stock. 1. Article 1566 of Regulations 45 (See ¶ 985), first authorized April 17, 1919, is considered as not being warranted in law, and is hereby modified to read: "ART. 1566. Exchange of property and stock. Where property is transferred to a corporation in exchange for its stock, the exchange constitutes a closed transaction and the former owner of the property realizes a gain or loss if the stock has a market value, and such market value is greater or less than the cost or the fair market value as of March 1, 1913 (if acquired prior thereto), of the property given in exchange. For the rule applicable where a corporation. in connection with a reorganization, merger or consolidadation, exchanges property for stock, see Article 1567." 2. Article 1567 of Regulations 45, (See ¶986) as amende i by Treasury Decision 2870 (See ¶ 1549), is amended to read as follows: "ART. 1567. Exchange of stock for other stock of no greater par value. In general where two (or more) corporations unite their properties by either (a) the dissolution of corporation B and the sale of its assets to corporation A. or (b) the sale of its property by B to A and the dissolution of B, or (c) the sale of the stock of B to A and the dissolution of B, or (d) the merger of B into A, or (e) the consolidation of the corporations, no taxable income is received from the transaction by A or B or the stockholders of either, provided the sole consideration received by B and its stockholders in (a), (b), (c), and (d) is stock or securities of A, and by A and B and their stockholders in (e) is stock or securities of the consolidated corporation, in any case of no greater aggregate par or face value than the old stock and securities surrendered. The term 'reorganization', as used in Section 202 of the statute, includes cases of corporate readjustment where stockholders exchange their stock for the stock of a holding corporation, provided the holding corporation and the original corporation, in which it holds its stock, are so closely related that the two corporations are affiliated as defined in Section 240 (b) of the statute and article 633, and are thus required to file consolidated returns. So-called 'no-par-value stock' issued under a statute or statutes which require the corporation to fix in a certificate or on its books of account or otherwise the amount of capital or an amount of stock issued which may not be impaired by the distribution of dividends, will for the purpose of this section be deemed to have a par value representing an aliquot part of such amount, proper account being taken of any preferred stock issued with a preference as to principal. In the case (if any) in which no such amount of capital or issued stock is so required, 'no-par-value stock' received in exchange will be regarded for purposes of this section as having in fact no par or face value, and consequently as having 'no greater aggregate par or face value' than the stock or securities exchanged therefor." [T.D. 2924, approved September 26, 1919.] The effect of the change in Article 1566 is to eliminate the presumption that there is no profit when 50 per cent or more of the stock remains in the same persons who owned the property. A gain or loss resulting from the exchange of property for stock, even though 50 per cent or more of the stock remains in the same persons who owned the property, shall be included in the Income tax return for the year during which the exchange occurred in accordance with this Treasury Decision. The only change made in Article 1567 is the addition of that part printed in italics. The purpose of this addition is to state more specifically those cases which the term "reorganization" embraces. ¶2137, Page 311. Consolidated returns: Apportionment and payment of tax. In connection with the assessment and payment of income and profits taxes of affiliated corporations, the opinion apparently prevails among taxpayers that the tax must be assessed against and paid by each corporation within an affiliated group. Unless a subsidiary has made a payment, the Bureau greatly prefers that the parent or principal reporting corporation take up and pay the entire tax, making any desired adjustment thereof by charging the affiliated corporations through their own records. The amount reported by the subsidiary in answer to question 9, Form 1122, will be used as the basis for assessment and payment. If the subsidiaries have reported an appointment in this manner, but the parent corporation has paid the tax installments on account of such subsidiaries, an amended Form 1122 showing "none" in answer to question 9, should be filed. If the last condition obtains, but the taxpayer insists upon apportionment, the Collector of the subsidiary's district will request abatement of such portion of the subsidiary's tax as may have been previously paid by the parent corporation in another district. As a basis for such advice, the latter collector will secure from the parent corporation a schedule showing apportionment of the total tax and installments to the respective affiliated corporations. If a subsidiary has filed a tentative return and paid an installment of the tax, it should be assessed the amount shown on Form 1122, and will pay future installments as they fall due. (I. T. Mim. 2221, signed by Commissioner Daniel C. Roper, and dated August 8, 1919.) |