The morning news. [volume] (Savannah, Ga.) 1887-1900, 1899-10-07
TO AVOID DOUBLE TAX.
Brokers Must BE Careful I'm Making
stock Transfers.

soner Of Internal revenue to the effect
that in all cases Of sales Of stock involving
a double transfer, as from one broker 10
another. and then TO the customer, the
revenue tax upon such transfers must be
paid in each case, thus in effect requiring
double tax for single transaction.
The war revenue act places a tax Of
cents on each 800 share of stock sold or
transferred. or for which an agreement Of
sale Is made, and this tax Is required each
time the stock is transferred, even though
it passes through half dozen hands on
the same day. It is easy to see that if the
law be rigidly adhered to that shares of
stock which are frequently traded in are
/ likely to become fairly pasted over with
revenue stamps. The law requires that
where the transfer is made on the books
Of the corporation by which the stock Is
issued that the stamps shall be affixed
upon the books, that where written
transfer or agreement of sale Is made that
the stamps shall be affixed to this paper,
and that where the sale is made of the
stock direct, that the stamps must be af-
fixed to the stock or certificates.
II IS not unlikely that the Faw is fire.
quently evaded At tie same time il seems
thar there has been no complaint from the
brokers as 10 any hardship worked upon
them by the law ard 50 far as can BE-
learned the law has been generally OBJ
| served. So long as the tax was only two
cents on each $50 share sod or transferred
or 50 on the 100 shares the brokers were
not disposed to complain. A recent cecis-
ion of the commissioner Of internal reve-
nue., however, practically doublss the tax
in ordinary brokerage transact OCs II is
the custom of The brokers, when an or Ter
for stock is received which cannot be ia
ed in the local market to telegraph a cor
responde Mt in New York TO make the pur-
chase for them there, Q stock icing first
transferred to the 10 al broker and by him
10 his customer. Being only one transac-
! ton the brokers have ga ded them elves
or their s.omers as liable for only one
tax. The dec sion of the internal revenue
commissioner, however, holds strictly that
the tax must be paid for each separate
transfer, Notwithstanding that one trans
fer may have been made simply for the
purpose Of getting The stock to the custom
A local broker. who was spok 10 on the
subject, said that the double tax cou
very easily be avoided by Civ ng the New
York broker the name of the rarty for
whom the stock was to be purchased, and
having the stock transferred 10 the Gus
toner in he first instance. There are OBJ
| ject.ons to this method, however, the
broker frequently has good reasons for
keeping the name of his cusi Omer 10 him
self. The broker does not usually care to
have IL known who his customers are and
frequently the customer also desires to
keep his IDENTITY a secret.
"A very simple means OF avoiding not
only the double tax, but practically avoid
! ing the tax altogether, with the exception
] of the first transfer" said the broker, is
/ simply to place his stock in the name
of some bank, allowing it to remain in the
| bank and simply making the sale from
/ one party to another without transferring
! the stock on the books of the company.
! This is a very simple matter where stock
| is deposited in bank as collateral. 1t is
| a matter of indifference to the bank who
| owns the stock so Tong as the interest on
! the loan Nor which it stands as security
| is paid. This Is the way in which stock
transactions are commonly conducted in
| New York, there being a very small per-
| centage of transfers compared with the
! actual number of sales. II Is not neces-
! sary that the stock should be in the name
| of the bank. 1t can be deposited in the
/ name of any customer of the bank and
! allowed to stand in hat name though
transferred subsequently to various other
| parties"
Mr.. r. NJ. Cunningham, treasurer of
! the Central Of Georgia Railway Company,
/ when asked about the matter said that
! the ruling OF The commissioner was no
| surprise to him, as he had placed this in
! depreciation upon the .aw from the begin
ming. each and every separate transfer
being regarded as a distinct transaction
| and liable to the revenue tax.
eve cannot distinguish between brok-
ers and other parties where transfers are
! made" said Mr. Cunningham. I'm each
instance the stamps must be affixed as re
quired by law, either upon the books OF
| the corporal lion, or upon the certificate 0f
| stock or the agreement of transfer, accord
| ing to the manner in which the transfer
| is made 1t is true that where stock
| changes hands frequently the frequent
| payment of the tax can be evaded by al
| lowing the stock to remain as collateral
in bank without transferring on the books
| of the company"
Having posted themselves on the new
| ruling, the brokers are NOT likely to be
| caught for the double tax in many in
| stances. The only trouble they have 10
| apprehend Is that the government may at
| tempt TO collect back taxes upon transact
tons involving dual transfer where only
one tax was paid. This would cause trou-
Bile and would work hardship upon the
brokers' as they would hardly be abe 10
| come back upon the customers for whose
benefit the transactions were made and
would have to stand the loss out of their
own pockets. No notice has been served
| upon the brokers here of any intention OF
this kind, however
The following portion of the commits
! sloner's ruling is of interest:
! Relative to the stamp tax on transfers
| of shares of stock, | have to advise you
! that this office holds that the law i'm
! poses a tax on every sale of stock. on
! every agreement TO sell stock, and on every
! transfer of stock. But when the agree
! ment TO sell results in sale. or when a
! sale results in a transfer, there is no
! double tax, because the stamped memo
randum of sale or agreement to sell Sc
| cures the transfer without stamping the
| certificate of shares to be transferred.
| when a transfer Of stock is not the re-
suit of a sale or an agreement to sell the
| certificate of shares must he stamped ac-
| cording TO its par value in order to eff
| feet the transfer on the books of the cor
! poration. Such transfers are generally in
| pursuance of gifts, requests, SUGGESTIONS
| or conveyances by trustees to cestui que
| trusts.
| There is no other feasible rule than
to consider the person in whose name the
| stock stands rs the owner of the legal
! title, and any transfer to another name