INTERNAL REVENUE. (20226.) Stamp tax—Mortgage. Where mortgage states full amount secured and provides for present and future issues of bonds, it should be stamped according to the full amount secured. TREASURY DEPARTMENT, Washington, D. C., October 13, 1898. SIR: This office is in receipt of your letter of October 8, 1898, in which you inclose a letter submitted to you by Messrs. Sheehan & Collin, 32 Nassau street, New York, under the same date as your letter. These gentlemen state that the Edison Electric Illuminating Company, of Brooklyn, is executing a mortgage to secure $10,000,000 of its bonds. The mortgage expressly provides that only $2,000,000 of the bonds are to be issued at present. The next issue of $1,875,000 is to be made in 1900. The remaining $6,125,000 of the bonds will be issued from time to time during the fifty years of the mortgage for betterments and improvements. Their first question is, Must the mortgage be now stamped on the basis that it is a mortgage for $2,000,000, which is the entire amount of money lent at the time, or must the stamp tax be compated on the entire amount of $10,000,000? These gentlemen state that they propose to affix stamps now on the basis that it is a mortgage for $2,000,000, and on each additional issue of bonds, affix an additional amount of stamps, and they wish to know if this is correct. You will advise them that the position that they have taken is incorrect. This instrument is a fully executed and completed contract which provides for a specific and liquidated amount of money upon which this company pledges its credit. There will be required no other instrument when each issue of bonds is made, although these issues are in futuro. They are certain, and specifically provided for and the amount definitely set forth. If these gentlemen wish to escape the taxation on the $8,000,000 worth of bonds to be issued in the future, they should wait until the time that they desire to issue the bonds and then execute the instrument to secure them; otherwise, this office considers that this corporation has obligated itself to the extent of $10,000,000, where the consideration is executed, although there may be some possibility of part of the consideration being considered executory. This latter can not be said to be true, considering it from the standpoint of taxation. There are no uncertainties as to time or amount, nor is there anything to be done to the instrument in the future. This law in so far as this question is concerned does not impose a taxation on the transaction. The taxation is imposed on the document, and is a pare and simple documentary taxation. The question to be decided is, Is this a mortgage for $10,000,000 or is it a mortgage for $2,000,000? This office considers it to be unquestionably a mortgage for $10,000,000, fully executed, passed and settled, with nothing remaining to be done concerning this instrument. It is, therefore, held to be subject to taxation as a mortgage for $10,000,000. These gentlemen state, secondly, that the Kings County Electric Light and Power Company also separately executes its mortgage to secure the same bonds, and they ask, Must this mortgage also be stamped, or may the two mortgages be treated as one, both being given to secure the same loan? You will advise them concerning the mortgage executed by the Kings County Electric Light and Power Company that it is subject to the same taxation as the one executed by the Edison Electric Illuminating Company, of Brooklyn. It will be seen from the opinion hereinbefore expressed that the taxation is imposed on the document. As there are two documents, there must necessarily be two taxations. If the mortgaging of these two companies' plants is made in one instrument to which they are both parties, there is but one taxation imposed; otherwise, there are as many taxations as there are instruments used in accomplishing the desired end. Respectfully, yours, N. B. SCOTT, Commissioner, Mr. FRANK R. MOORE, Collector Internal Revenue, Brooklyn, N. Y. (20227.) Special tax-Rectifier. The addition of alcohol, or alcoholic liquor, to "pop,' or any other beverage or material, thereby producing a spurious, imitation, or compound liquor, involves the person making such mixture for sale in special-tax liability as a rectifier, and also in liability to special tax as å liquor dealer for selling it. TREASURY DEPARTMENT, Washington, D. C., October 19, 1898. SIR: Your letter of the 13th instant has been received, stating that Mr. Albert Fuermann, of Watertown, Wis., "wishes to mix 2 per cent alcohol with pop for the purpose of better preservation of the product," and asking, “Can he do this without becoming liable as a rectifier or a wholesale liquor dealer ?" He can not. The mixing of alcohol or alcoholic liquors with pop or any other material, producing a spurious, imitation, or compound liquor, within the meaning of the third subdivision of section 3244, Revised Statutes, involves the person who makes such mixture for sale in liability as a rectifier; and if he sells it, he is required to pay special tax also as a liquor dealer. Respectfully, yours, G. W. WILSON, Acting Commissioner. Mr. M. F. BLUMENFELD, Collector Second District, Madison, Wis. (20228.) Special tax- Football, baseball, etc. Special tax is not required to be paid for an occasional game of football, baseball, or other game given by local clubs where an admission price is charged, not for profit, but merely to cover expenses. TREASURY DEPARTMENT, Washington, D. C., October 19, 1898. SIR: In reply to your letter of the 14th instant, you are hereby advised that while the special tax under paragraph 8 of section 2 of the act of June 13, 1898, is required to be paid for exhibitions, on any field, throughout a season of games of football, baseball, etc., where money is collected for admission to the field, yet it is held that the terms of this paragraph were not intended to include an occasional game of football, baseball, or other game given by a local club to which a price of admission is charged, not for profit (as in the case of the professional baseball clubs), but merely “to cover expenses," as you state. Respectfully, yours, G. W. WILSON, Acting Commissioner. Mr. Chas. C. COLE, Collector Twenty-first District, Syracuse, N. Y. (20229.) Special tax—Sale of homemade wine. Every person (except the manufacturer selling under the exempting provision of section 3246, Revised Statutes) is required to pay special tax as a liquor dealer for selling fermented wine made from grapes, or peaches, or berries. TREASURY DEPARTMENT, Washington, D. O., October 19, 1898. SIR: In reply to your letter of inquiry of the 8th ultimo, you are hereby advised that it is a violation of the internal-revenue laws of the United States for persons not holding the requisite special-tax stamps under these laws to sell any fermented wine, even though it is (as you state) homemade wine, such as that made from “blackberries sweetened with sugar and peach juice pressed out and sweetened.” It is only persons who manufacture such wine from berries or peaches, or other fruits (except grapes) of their own growing, who are permitted to sell the wine without paying special tax therefor as liquor dealers; and even they are entitled to this exemption only when they sell at the place of manufacture or at one general business office, and not at any other place (sec. 3246, Rev. Stat., amended). Manufacturers of wine from grapes, whether the grapes are of their own growing or not, are entitled to the exemption from special tax above stated. Respectfully, yours, G. W. WILSON, Acting Commissioner. Mr. M. Pitts, Rock Mills, Randolph County, Ala. (20230.) Special tax return, Form 11-Time of payment. Every special tax payer making sworn return, Form 11, within the calendar month when his liability began, thereby escaping 50 per cent penalty, must pay the tax not later than the last day of that month. If he postpones payment to a later period, he becomes liable to criminal prosecution, and should be reported to the United States district attorney accordingly. TREASURY DEPARTMENT, Washington, D. O., October 19, 1898. SIR: Your letter of the 11th instant has been received, referring to a report made by Revenue Agent Yates with reference to Mr. M. Finkle, lessee and manager of the Arch Street Theater, Philadelphia, who had not, at the time of the visit of the revenue agent, made return or paid special tax for his theater, which was opened October 1." You state that on the 10th instant the lessee, Mr. Finkle, called at your office and made return of his liability to special tax from October 1, 1898, on Form 11. It appears, however, that he did not at that time pay the special tax, but stated “that he would then make return of the tax and pay the same before the end of the month." Your deputy collector should be instructed to see that he does so, and to inform him that if he should allow the month of October to go by without the payment of the special tax be would at once thereafter become liable to criminal prosecution. The ruling of this office on this point has been published for many years, and you will find it in 25 Internal Revenue Record, on page 237, in the letter to Mr. John M. Sullivan, collector of the Twentythird district of Pennsylvania. You say: It has been the general practice in this district, when persons or firms make return of their liability to special tax during the month in which they begin business, to take no further action until the assessment is made on the basis of the return. If each person or firm, after having made the special-tax return (Form 11) also pays the tax not later than the last day of the calendar month in which the liability began, there is no assessment to be made, as the stamp must be issued at once on the date of the receipt of the money. Special tax payers must not be permitted, after having made their return, to postpone payment of the special tax to another calendar month. This is imperative, and you will give your deputies positive instructions on this point. Respectfully, yours, G. W. WILSON, Acting Commissioner. Mr. P. A. MOCLAIN, Collector First District, Philadelphia, Pa. (20231.) Stamp tax-Receipts. TREASURY DEPARTMENT, Washington, D. C., October 21, 1898. SIR: I have to acknowledge the receipt of your letter of the 20th instant, in which you request the ruling of this office as to whether a receipt in the following form LANCASTER, S. C., Received of the Bank of Lancaster, of Lancaster, S. C., dollars on account. filled out in the handwriting of an official of the bank and signed by the depositor on calling for and receiving the money, is liable to stamp duty. In reply, you are advised that, in accordance with the advice of the Attorney-General, this office holds that a receipt given to a bank by a person to whom the bank is indebted as a depositor or otherwise, or for whom it holds funds, is no more subject to a stamp than a receipt given for any other debt or demand. The purpose of the law is to require stamps upon checks, which are commercial negotiable instruments. A check, however, is not required to be in any particular form. If it is in a form sufficient to constitute an order for the payment of money and assumes the character of a commercial negotiable instrument, then it is subject to the tax. There is much banking done, especially in savings banks, without the use of checks at all, the depositor having a book in which the bank |