Mr. John Jones, B. NEW YORK, 8/31, 1898, DEAR SIR: We have this day bought for your account and risk We have this day sold for your account and risk 100 shares of St. Paul at 115. It is further understood that on all marginal business the right is reserved to close transactions when margins are within a half per cent of exhaustion, without further notice, and to settle contracts in accordance with rules and customs of exchange where order is executed. C. No. [Revenue stamp here.] shares at $ At our option, or on three days' notice, we agree to receive (and pay in full) from Mr. per share, provided cash is on deposit with us to margin this stock on commodity above the N. Y. Exchange price at all times pending demand or delivery, otherwise this agreement is null and void and to be returned to Deposit, $ NEW YORK, 1898. For value received, I hereby assign this agreement to In regard to these forms, you ask the following questions: (1) Where A is used by the broker on the floor of the exchange and is stamped at the rate of 2 cents for each $100 of face value or fraction thereof, and B is afterwards used to notify the customer of the transaction of sale, is B liable to stamp duty in such a case as a broker's memorandum of sale at the rate of 10 cents on each notice? (2) Where B is used only as a notice of sale, no other paper having been issued or stamped in connection with the transaction, and without regard to what class of brokers use the same, is said paper liable to stamp duty at the rate of 2 cents on each $100 of face value or fraction thereof? (3) Where C is used only, without regard to the class of brokers that use the same, no other paper having been used or stamped in connection with the transaction, is C liable to stamp duty at the rate of 2 cents ou each $100 of face value or fraction thereof? In reply, you are advised as follows: (1) Where Form A is used by the broker in making the sale of stock on the floor of the exchange, and it is properly stamped, and Form B is afterwards used in the same transaction to notify the customer for whom the purchase was made, no tax whatever accrues on Form B either as a broker's note or otherwise. It is the ruling of this office that no tax accrues under the paragraph in Schedule A headed "Contract," on the sales of stocks, such sales being otherwise provided for in the act. (2) Where Form B is used only as a notice of purchase or sale of stock, no other paper having been issued or stamped in connection with 12593- -5 the transaction, and regardless of the class of brokers using the same, it is liable to stamp duty at the rate of 2 cents on each $100 of face value or fraction thereof as a memorandum of sale of stock. (3) When Form C is used only in stock transactions, irrespective of the class of brokers using the same, it is taxable at the rate of 2 cents for each hundred dollars of face value or fractional part thereof as an agreement for the future transfer of stock. Respectfully, yours, N. B. SCOTT, Commissioner. Mr. ROBERT WILLIAMS, Revenue Agent, New York, N. Y. (20093.) Stamp tax-Brokers' sales of stock. Tax upon shares of stock sold under what are known as "privileges" issued by a broker under the names of "puts," "calls," and "spreads." TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., September 24, 1898. SIR: Your letter of the 14th instant, inclosing two letters from Mr. Russell Sage, of your city, one being dated the 14th and the other the 15th instant, has been received. Mr. Sage states to you that he has been called upon by RevenueAgent Williams for payment of tax on account of insufficiently stamping transfers of stock, and that upon inquiry at your office he learns that the tax claim is upon certain "privileges" issued by him since July 1, 1898. He inclosed sample printed forms of the "privileges" which he issued, and the question is submitted, What tax is due upon transactions in such an instance? The three blank forms which he incloses are designated, respectively, as a "put," "call," and "spread." The one designated as a "put" appears to be an agreement by the person who issues it to purchase any specided number of shares of stock at an agreed price at any time within a certain period; the "call" appears to be an agreement to sell any specified number of shares of stock at an agreed price at any time within a certain period; and the "spread" seems to be an agreement to sell or to buy at option, all three of the papers being agreements with "the bearer" thereof. Mr. Sage designates these papers as "privileges." He represents that such a privilege is not a transfer of stock, but only conveys to the holder the right or privilege to deliver or call for a certain quantity of specified stock at a specified price within a certain time, if desired. He also represents that it is not an agreement to sell in the sense of an ordinary "buyer's option" or "seller's option" transaction, in which case the stock so sold must be delivered and paid for within the time specified, and in which case also the seller agrees to deliver, and the buyer agrees to receive and pay for, the stock at the price and within the time named. He further represents that in the case of the "privilege" under consideration there is no agreement or obligation on the part of the person accepting the same to either receive or deliver the stock named therein, it being simply his right to make his choice of doing either if he so desires, there being no actual transfers until the determination of such choice is made. He also contends that an agreement to sell must have two parties to it, and that these "privileges" are not agreements in that sense, as they are sigued by only one party, and there is no agreement or obligation on the part of any other party to accept the conditions offered. He objects to payment of a tax on the agreement to sell the stock named in the privilege, for the reason that when the stock is actually delivered and paid for, in case the priv ilege is availed of, the tax on the transfer of the shares of stock is then paid, and a double tax would thus be collected for the one transfer. There appears to be some confusion in regard to the tax due upon the papers used in this class of transactions. The first paragraph of Schedule A of the act of June 13, 1898, is very clear in its requirements that on all sales, or agreements to sell, or memoranda of sales, or deliveries, or transfers of shares, or certificates of stock in any association, company, or corporation, a tax of 2 cents must be paid on each $100 of face value or fraction thereof, and this tax is to be paid whether the sales or agreements to sell are made upon or shown by the books of the association, company, or corporation, or by any assignment in blank, or by any delivery, or by any paper, or agreement, or memorandum, or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, or to secure the future payment of money, or for the future transfer of any stock. It further specifies that in case of an agreement to sell there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers; and a penalty is imposed upon any person, or his agent, or broker who shall make any such sale without having the proper stamps affixed thereto. It appears to be the intention of the law to include in its imposition of tax in such cases the agreements to sell and for the future transfer, as well as the actual sales and transfers of stock, and to include such agreements as taxable whether or not they are afterwards completed. The "call" privileges issued by Mr. Sage are undoubtedly agreements to sell the stock therein named upon demand of the bearer of the privilege, while the "put" comes also as plainly within the terms of the law declaring "any paper, agreement, or memorandum the future transfer of any stock" subject to taxation. The "spread" privileges include in one instrument the agreements contained in both the "call" and "put," and all these papers, evidencing such agreements, must be stamped to the amount required by the act. If the for transaction in any case is completed by a transfer of the stock, no further tax will become due, the tax having already been paid upon the agreement made for such transfer. Mr. Sage represents that the proper tax upon such agreements would be a 10-cent stamp for each paper, as for other contracts. This is an erroneous view, as transactions of this kind are provided for in the first paragraph of Schedule A. Respectfully, yours, N. B. SCOTT, Commissioner. Mr. CHAS. H. TREAT, Collector Second District, New York, N. Y. (20157.) Special tax-Brokers. A party is involved in liability as broker whose business it is to sell stocks and bonds for clients, also city scrip and county warrants on commission, or for a fee. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 7, 1898. GENTLEMEN: In reply to your letter of the 26th ultimo, from which it appears that part of your business is "selling notes for clients, selling stocks and bonds for clients, selling city scrip and county warrants for clients, buying any security," etc., for "all of which" you are paid a commission or a fee by the person or by the buyer, as the case may be, you are hereby advised that this clearly involves you in liability as brokers under the definition contained in paragraph 2 of section 2 of the act of June 13, 1898, and that the special tax heretofore, as you state, paid by you to the deputy collector was properly paid. Respectfully, yours, W. H. HUDSON & Co., Houston, Tex. (20160.) * N. B. SCOTT, Commissioner. Special tax-Brokers. A person who, in the month of July, engages in any business for which special tax is required to be paid, must pay the tax for the entire year, beginning July 1, and if thereafter he takes in a partner, the firm thus created must also pay special tax, reckoned from the first day of the month in which it began the business to the 1st day of July following, and take out a stamp in the firm name, without any rebate or allowance on account of the tax paid by the person in question for the business carried on by him individually prior to the creation of the firm. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 10, 1898. SIR: In reply to your letter of the 1st instant, you are hereby advised that the special tax of $50 paid by you on July 1, 1898, as a broker, for the year beginning on that date, was the tax required to be paid for that business carried on by you in your individual capacity. When you (as you state) took in a partner on the 1st instant, the firm thus created (an entirely distinct and separate person in law from the individuals composing it) was required to pay the special tax, which you state has been paid ($37.50), reckoned from the 1st of October to the 1st day of July, 1899, in accordance with the provisions of section 3237, Revised Statutes, as amended. There is no warrant of law for any rebate or allowance to you on account of the tax which you paid in July. When any person carries on a business for which special tax is imposed, even if he discontinues the business after having been engaged in it but for the briefest period, the tax is required by the law to be paid for the entire time, reckoned from the first day of the month in which the liability began to the 1st day of July following; and the stamp (which is merely a receipt for tax and not a "license") can not be transferred or made over to answer for the business carried on by any other person, except in the single instance provided for by section 3241, Revised Statutes, namely, the death of the special-tax payer. Respectfully, yours, Mr. C. L. MCCREA, Dayton, Ohio. (20163.) N. B. SCOTT, Commissioner. Stamp tax-Brokers' money orders. Money orders issued by Italian brokers in the United States for transmission abroad are taxable. TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C., October 11, 1898. SIR: Some weeks ago the attention of this office was called to certain forms used by Italian money brokers in New York and other large cities in transmitting money abroad and a ruling of this office asked as to what stamps were required. It appears that these brokers receive money, say, from A, in Boston, to remit to B, in Genoa. Upon receiving the money from A the broker hands to him or mails to his address two papers, one of which acknowl edges the receipt of the money from A, and is probably retained by A. The other advises B, in Genoa, that a certain amount has been sent to him in a registered letter and should be mailed by A to B. In addition to these two papers, instructions are sent by the broker to a bank in Genoa to put in a registered letter, addressed to B, a certain amount of Italian coin or currency. This office ruled that this latter paper was an order for the payment of money, and should pay a tax for a sum not exceeding $100 4 cents, and for each $100 or fractional part thereof in excess of $100 4 cents. Complaints has been made that in some |