The partnership books were not closed, and, on advice of accountants, they became the books of the corporation. subject, however, to the above corporate entry.

At a meeting of the board of directors of the corporation held April, 1917, the following resolution was adopted:

RESOLVED, That upon the execution and delivery to this company of the instruments enumerated and upon the payment by A, B, and C to this corporation of said sum of a dollars in cash, in accordance with the terms of said written proposal of April, this corporation issue to said A, B, and C the entire issue of the capital stock of this corporation, to-wit, 100y shares, as provided for in said written proposal of said M Corporation dated April, 1917, and as accepted by the board of directors of this company at the board meeting held in April, 1917.

The following abstract and resolution are quoted from the minutes of a meeting of the corporation held April, 1917:

That said A, B, and C had presented a list of the nominees in whose names they desired that said capital stock should be issued, showing the name, address, and number of shares of stock to be issued to each person, firm, or corporation.

On motion, duly seconded, the following resolution was duly adopted:

RESOLVED, That the said list be set forth in full in these minutes and that as said A, B, and C had complied with their said offer of April, 1917, and had duly transferred all of the property and assets of said N partnership to this corporation, and had paid in to this corporation said additional sum of a dollars in cash, the certificates of stock prepared for that purpose be issued to said persons accordingly as the original issue of the shares of the capital stock of this corporation.

Of the 100y shares of stock issued by the corporation, the following shares were authorized by the officers of the corporation to be recorded by the transfer agent in the names of the former partners:

or a few shares less than 50 per cent of the total issue of stock to them. According to the records of the transfer agent, the remaining shares were issued to the stockholders in number from 1 to 257 shares. The stock issued to the public was very well distributed. In the corporate organization B became president and general manager, C vice president and secretary, and A chairman of the board of directors and treasurer of the corporation.

Section 208 of the Revenue Act of 1917 provides:

That in case of the reorganization, consolidation, or change of ownership of a trade or business after March third, nineteen hundred and seventeen, if an interest or control in such trade or business of fifty per centum or more remains in control of the same persons, corporations, associations, partnerships, or any of them, then in ascertaining the invested capital of the trade or business no asset transferred or received from the prior trade or business shall be allowed a greater value than would have been allowed under this title in computing the invested capital of such prior trade or business if such asset had not been so transferred or received, unless such asset was paid for specifically as such, in cash or tangible property, and then not to exceed the actual cash or actual cash value of the tangible property paid therefor at the time of such payment. Article 50 of Regulations 41 substantially follows the language of the Act. It would appear, therefore, that the sole question at issue rests upon the intent of the words "remains in control" as used in the Act. It is clear from the above facts that the partners who be

came the principal officers of the corporation continued in position to exercise direct and effective control over the affairs of the business. The corporate books were in the hands of one of the former partners and from this record he had intimate knowledge of the ownership of stock held by outside interests.

Apart from this effective control it is clear that by agreement and bill of sale the partners received the entire capital stock of the corporation for the net partnership assets and for other valuable considerations. This gave the partners immediate authority to dispose of such stock in any manner they might desire. Technically, the proceeds from the sale of any or all of the stock passed to the partnership. Out of these proceeds the partners paid to the corporation such amount or amounts as the partners had agreed to pay in part consideration for the stock received by them. In other words, the transaction was between the corporation and the partners and the latter named the proportion in which they desired the stock distributed to them and to their nominees. Hence, the partners did remain in control. They exercised this control in naming their nominees. It is immaterial that this stock control was not continuing-that it immediately passed by a small fraction into other hands.

In oral argument representatives of taxpayer laid stress on the amounts which had been expended by the partnership from time to time in developing foreign agencies. The Committee finds no provision in the law or regulations for the capitalization of such items which were invariably charged, and properly so, to cost of conducting the business.

Article 64 of Regulations 41 provides:

Amounts expended in the past for good will, trade-marks, trade brands, franchises, and other intangible assets of a like character, are controlled by the language of the statute which provides that such assets "shall be included in invested capital if the corporation or partnership made payment bona fide therefor specifically as such in cash, or tangible property." The Commissioner of Internal Revenue will recognize additions to invested capital on account of intangible assets only if such assets have been explicitly paid for in the manner prescribed by the statute. Where expenditures have been made for the general development of intangible assets, and charged as current expense, no readjustment thereof will be allowed.

It is, accordingly, the recommendation of the Committee that the action of the Income Tax Unit in disallowing this corporation a dollars, or any part thereof, as "good will, trade-marks and foreign agencies" be sustained under section 208 of the Revenue Act of 1917.

PART VII.-MISCELLANEOUS.

SECTION 336.-RETURNS.

SECTION 336, ARTICLE 961: Returns.

(See 16-21-1581; sec. 223, art. 401.) Individual excess profits tax returns (1917 Act) when income from community property (Texas).

SPECIAL.

C. B. 4-1600A Dept. Cir. 230

LAWS AND REGULATIONS GOVERNING THE RECOGNITION OF ATTORNEYS AND AGENTS AND OTHER PERSONS REPRESENTING CLAIMANTS BEFORE THE TREASURY DEPARTMENT AND OFFICES THEREOF.

[1921. Department Circular No. 230. Chief Clerk.]

TREASURY DEPARTMENT,

OFFICE OF THE SECRETARY, Washington, February 15, 1921.

The following statutes relate to the recognition of attorneys, agents, and other persons representing claimants before the Treasury Department and the Bureaus thereof:

That the Secretary of the Treasury may prescribe rules and regulations governing the recognition of agents, attorneys, or other persons representing claimants before his Department, and may require of such persons, agents, and attorneys, before being recognized as representatives of claimants, that they shall show that they are of good character and in good repute, possessed of the necessary qualifications to enable them to render such claimants valuable service, and otherwise competent to advise and assist such claimants in the presentation of their cases. And such Secretary may after due notice and opportunity for hearing suspend, and disbar from further practice before his Department any such person, agent, or attorney shown to be incompetent, disreputable, or who refuses to comply with the said rules and regulations, or who shall, with intent to defraud, in any manner willfully and knowingly deceive, mislead, or threaten any claimant or prospective claimant, by word, circular, letter, or by advertisement. (Act of July 7, 1884. 23 Stat., 258.)

Any person prosecuting claims, either as attorney or on his own account, before any of the departments or bureaus of the United States, shall be re quired to take the oath of allegiance, and to support the Constitution of the United States, as required of persons in the civil service. (Sec. 3478, Revised Statutes.)

The Act of May 13, 1884 (23 Stat., 22) provides that the oath shall be that prescribed by section 1757, Revised Statutes, which is as follows:

I,

do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God.

The oath provided for in the preceding section may be taken before any justice of the peace, notary public, or other person who is legally authorized to administer an oath in the State or district where the same may be administered. (Sec. 3479, Revised Statutes.)

Whoever, being an officer of the United States, or a person holding any place of trust or profit, or discharging any official function under, or in connection with, any executive department of the Government of the United States, or under the Senate or House of Representatives of the United States, shall act as an agent or attorney for prosecuting any claim against the United States, or in any manner, or by any means, otherwise than in discharge of his proper official duties, shall aid or assist in the prosecution or support of any such claim, or receive any gratuity, or any share of or interest in any claim from any claimant against the United States, with intent to aid or ssist, or in consideration of having aided or assisted, in the prosecution of (408)

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such claim, shall be fined not more than five thousand dollars, or imprisoned not more than one year, or both. (Act of Mar. 4, 1909, sec. 109, 35 Stat., 1107.) It shall not be lawful for any person appointed after the first day of June, one thousand eight hundred and seventy-two, as an officer, clerk, or employee in any of the departments, to act as counsel, attorney, or agent for prosecuting any claim against the United States which was pending in either of said departments while he was such officer, clerk, or employee, nor in any manner, nor by any means, to aid in the prosecution of any such claim, within two years next after he shall have ceased to be such officer, clerk, or employee. (Sec. 190, Revised Statutes.)

That it shall be unlawful for any person who, as a commissioned officer of the Army, or officer or employee of the United States, has at any time since April 6, 1917, been employed in any bureau of the Government and in such employment been engaged on behalf of the United States in procuring or assisting to procure supplies for the Military Establishment, or who has been engaged in the settlement or adjustment of contracts or agreements for the procurement of supplies for the Military Establishment, within two years next after his discharge or other separation from the service of the Government, to solicit employment in the presentation or to aid or assist for compensation in the prosecution of claims against the United States arising out of any contracts or agreements for the procurement of supplies for said bureau, which were pending or entered into while the said officer or employee was associated therewith. A violation of this provision of this chapter shall be not more than $10,000 or imprisonment for not more (Act of July 11, 1919, 41 Stat., 131.)

punished by a fine of than one year, or both. [No claim agent or attorney may be recognized in the presentation or adjudication of War Risk Insurance claims (allotments and family allowances, compensation for disability and death, or insurance), except as provided by the acts of May 20, 1918 (40 Stat., 555), and June 25, 1918, section 313 (40 Stat., 613).]

Pursuant to the authority contained in the statutory provision first quoted above, the following rules and regulations are prescribed:

1. Committee on enrollment and disbarment.-A committee on enrollment and disbarment is hereby created, consisting of five members, one of whom shall be detailed from the office of the Secretary of the Treasury and shall act as chairman and have the custody of all papers, records, rolls, etc., and one from each of the following offices: Commissioner of Internal Revenue, Comptroller of the Treasury, Solicitor of the Treasury, and Bureau of War Risk Insurance. The members of the committee shall serve for the calendar year and shall perform the duties herein prescribed in addition to their other duties. The said committee shall meet regularly on the first Monday of each month, if a business day, and shall meet specially on other days at the call of the chairman or any member. Three members shall constitute a quorum. The committee shall receive and consider applications to be recognized as attorney, agent, or other representative before the Treasury Department or offices thereof; receive complaints against those enrolled; conduct hearings, make inquiries, perform other duties as prescribed herein, and do all things necessary in the matter of proceedings for enrollment or disbarment of such attorneys, agents, or other representatives, pursuant to these regulations; and submit recommendations therein to the Secretary of the Treasury for approval. 2. Applications for enrollment.-Applicants for enrollment pursuant to these regulations shall submit to the Secretary of the Treasury an application, properly executed, on the form attached hereto (Exhibit A). Applications in any other from will not be considered. Persons members of the bar of a court of record will apply for enrollment as attorney"; all others will apply for enrollment as "agent." Members of a firm may apply for enrollment either individually or collectively. In the latter case application should be made in the firm name, giving the name of each member and the required information as to each, and the application should be signed in the firm name and by each member of the firm. The Secretary of the Treasury may in any case require other and further evidence of qualification. Applicants will be notified of the approval or rejection of their application.

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3. Restriction of right to be heard to parties and enrolled attorneys and agents. The committee on enrollment and disbarment shall maintain in the office of the chief clerk, Treasury Department, a roll of attorneys and agents entitled to practice before the Treasury Department. It shall likewise main

tain lists of those whose applications for enrollment have been rejected and those who have been suspended or disbarred. The chief clerk shall furnish copies of the said roll and lists, with such additions thereto or subtractions therefrom as may be made from time to time, to the bureaus, offices, and divisions of the Treasury Department.

All bureaus, offices, and divisions of the Treasury Department are hereby prohibited from recognizing or dealing with anyone appearing as attorney or agent unless the name of such attorney or agent appears upon the list of those entitled to practice before the Treasury Department. Nothing herein contained shall preclude individual parties or members of firms or officers of corporations from appearing, upon proper identification, as representatives of their own interests or of their respective firms or corporations in any matter before the Department in which such person, firm, or corporation is concerned as a principal; but attorneys, counsel, or solicitors or other agents for such persons, firms, or corporations must be enrolled.

It shall be the duty of the bureaus, offices and divisions of the Treasury Department to ascertain in each case whether the name of one appearing before them in a representative capacity appears on the roll of those entitled to practice. In any case where such enrollment does not appear, the requirement therefor shall be brought to the attention of such representative. The head of such bureau, office, or division may, in his discretion, temporarily recognize such representative pending application for enrollment, provided his name does not appear on the list of those whose applications for enrollment have been rejected or on the list of those who have been suspended or disbarred. 4. Complaints and disbarment proceedings.-If the head of a bureau, office, or division has reason to believe, or if the complaint is made to him, that an enrolled attorney or agent has violated any of the provisions of these laws and regulations or otherwise engaged in any improper practice, he shall forthwith make report thereof to the committee on enrollment and disbarment. The committee shall thereupon mail to the usual address of such attorney or agent notice thereof, detailing briefly the charge or charges made, and giving the time and place of hearing, which shall be not less than 30 nor more than 40 days from the date of mailing the notice. The respondent may file an answer with the committee at or before the time of the hearing, in which case the complainant shall be entitled to reply within 10 days thereafter. If the answer is verified, the reply must also be verified. The committee may, in its discretion, extend the time for answer or reply, or postpone the date of hearing. It may also initiate charges against any enrolled attorney or agent.

The committee shall conduct the hearing according to such rules of procedure as it shall determine. The respondent may be represented by counsel. The testimony of witnesses may be required to be under oath, and shall in all cases be stenographically transcribed. Depositions for use at the hearing may be taken by either party before an officer duly authorized to administer an oath for general purposes, upon 10 days' written notice if the deposition is to be taken within the District of Columbia and upon 20 days' written notice if it is to be taken elsewhere. Expenses incurred in the taking of depositions shall be borne by the party at whose instance the deposition is taken.

The committee shall, within 30 days from the date of the conclusion of the hearing, or, if the respondent does not appear in person for the hearing, within 30 days from the date set therefor, submit to the Secretary of the Treasury a copy of the notice of hearing, the complaint, answer, and reply, if any, the record of the hearing, and the written findings of fact of a majority of the committee, together with a recommendation either that the charges be dismissed, or that the respondent be reprimanded, suspended for a given period of time, or disbarred. The findings and recommendation shall be signed by all members of the committee agreeing thereto. Members of the committee dissenting therefrom shall submit statements of their reasons therefor. If any members of the committee were not present at the hearings the fact shall be stated.

Upon the suspension or disbarment of an attorney or agent, notice thereof shall be given to the heads of bureaus of the Treasury Department and to the other branches of the Government, and thereafter until duly reinstated such person shall not be recognized as an attorney or agent in any claim or other matter before the Treasury Department or any office thereof. All records of proceedings shall be filed under the direction of the committee. and access thereto for inspection or for the making of copies thereof shall be under its control.

Upon notification that an attorney or agent enrolled in the Treasury Department has been disbarred from practice before some other branch of the Gov