Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1900-07-05
THREE DECISIONS
The Commissioner Of Internal Rev
enue Gives Some Information.
ONE RELATES TO INSURANCE POLICIES
Two Other. Relate TO Payment of spe-
cial Tax by Certain Class of
Brokers and by Retail
Liquor Dealers.


Liquor Dealers
Where life insurance company
unites with another company and the
reorganized company assumes the risk
of the absorbed company, no tax ac-
crues on policies issued in lieu of the
surrendered policies of the absorbed
: company unless an additional amount
of insurance is written.
"A person who makes it business to
buy securities, even for himself only,
without selling them, is a broker in
contemplation of the statute and re-
quired to pay special tax accordingly.
A former revenue ruling relating to
retail liquor dealers compromising spir-
its is modified by recent decision of
the United States supremecourt where
init is held that a retail liquor dealer
who compounds spirits. even i'll less
quantities than five gallons, and puts
them up in bottles and jugs, and keeps
them in stock for sale, must be re-
CURED to pay special tax as a rectifier.
These three paragraphs contain the
gist CT three revenue rulings recently
promulgated by G. W. Wilson, commits
sioner of inteInal revenue, the facts in
each case f]i!owing:
.n E.rst Case.
In the FIRST ease the facts are that
the Fra;:alin Life Association, of
Springfield Illinois, was duly organic
ell under the laws of thai state as an
assessment company in July. 1884. The
plan of this company was such as not
to require deepest. of securities with
the insurance department of the state
of Illinois in orde: to secure the pay
nent OF risks. The company being OPP
Grated on the assessment plan, no fixed
rate of insurance per annum was pro-
yidell for, the payment of losses being
made by individual pro rata assess
ment.
Second, The Peoples Insurance COM
pany of Springfield, H., was duly in
corporated under the laws of the state
of Illinois on May 81, 1885, as a legal
reserve company, and deposited with
she insurance superintendent of the
state of Illinois securities the face val
ue of which was equal to 100000,
which We're to be held as a guaranty to
policy holders that the terms of the
policies issued to them by the Peoples
Insurance company would be complied
with as provided for under chapter rs,
Revised Statutes of Illinois,
Third, On July 5. 1885, the two COM
panies heretofore referred to coasoli-
dated and merged unto one company,
the Peoples Insurance company not
having up to tl5is time issued any poll
-eiesseS, ii,ssnrasfice. The reorganization
of these two companies was made, and
the Franklin Life Insurance company
was the name adopted for the new COR
porarion. All of the policy holders in
the old Franklin Life insurance COM
pary doing business on the assessment
plan were allowed to exchange their
policies of insurance to any of the
forms issued by the reorganized com
pany. In other words, they were al
lowed to change their insurance from
assessment insurance to insurance
written upon any one of the old-line
company plans.
And the question is submitted, Are
these new policies subject to taxation?
In reply, / have to inform you that
9 am OF the opinion that no taxa
tion accrues under these circumstances
unless new insurance is written. If a
policy holder in the old company, hold
ing policy for $4,000, exchanges it for
policy in the reorganized company
for the same amounting new insurance
has, in my opinion, been written, nor
has any taxable assignment of a policy
of insurance been made.
While the above is not technicallyre-
insurance, it is yet not the writing of
new insurance.
In. lot q
rotary of the Franklin Life Insurance
Company, under date of June o, he in
forms me that when old policies have
been exchanged for new ones in the re-
organized company these new policies
have Endorsed thereon the fact that
they arc issued in lieu of old policies
IN the former company, which policies
were duly stamped or were not subject
to taxation (having been issued prior
TO the passage of the war revenue act),
according to the circumstances attend
ing each particular case. 1t is proper
and necessary that such Endorsements
should be placed upon the policies is
sued by the rcorganized company; 9TH
erwise it would be impossible to state
from the face of the policy whether it
represented new insurance or not.
If by the exchange of these policies
the insurance is increased, the policy
should have stamps affixed on a basis
of the increased insurance, but if no
increase is made, the policy holder
simply receiving the insurance in the
same amount, but on different plan,
no taxation will accrue as herein stat
ed. u
Special Tax-Rroker.
An Oregon lawyer submitted to the
commissioner for his decision case
along the line of the following facts
concerning brokers and the payment
by them of the special tax required by
law. This case, however, is slightly
different from the case of the other
brokers':
A retired merchant. who lives off the
interest of his money, but has no Of