INCOME TAX RULINGS.

TITLE I.—GENERAL DEFINITIONS.

SECTION 1.-GENERAL DEFINITIONS.

SECTION 1, ARTICLE 1501: Person.

(See 40-21-1851; sec. 202, art. 1567.) Joint-stock company reorganized into a corporation.

SECTION 1, ARTICLE 1503: Association distinguished

from partnership.

(Also Section 218, Article 321.)

44-21-1895 O. D. 1083

Certain persons entered into an agreement to carry on a private banking business. Each member is liable for all debts, and in case of failure no "stockholder's" property is exempt. Profits are divided according to the amount each member has contributed. The interests of members are represented by certificates which can not be disposed of without the consent of the other members. It is stated that the original articles of agreement are not available and that they were never followed. The bank has been taxed as a partnership in the State where located. The question is raised as to the taxable status of the bank.

Although the bank issued certificates of ownership, the individuals possessing same were not exempt from the payment of debts of the bank out of their individual property. The fact that certificates can not be transferred without the consent of the other members makes it appear that new members can only get into the organization by mutual agreement, and that such agreement constituted a new firm upon every change of certificate ownership. The bank must be treated as a partnership for the purpose of taxation.

SECTION 1, ARTICLE 1503: Association distinguished from partnership.

(Also Section 218, Article 321.)

REVENUE ACT OF 1917.

45-21-1902 A. R. R. 652

Recommended, that the action of the Income Tax Unit in requiring the association known as the M Company to pay taxes for the taxable year 1917 under section 210 of the Revenue Act of 1917 instead of under section 209 of the Act, be sustained.

The Committee has had under consideration the appeal of the M Company from the action of the Income Tax Unit in requiring pay