The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1901-10-30

stock received as collateral security Tor
the future payment of money is quoted
raN ON shares of stock pledged as
collateral To secure the future payment
of money. a delivery of stock as col-
lateral security for the future payment
of money is taxable at the rate of 2
cents FOR each $780, or fractional part
thereof. provided such delivery is acc
Companied by any paper or agreement
or memorandum. or other evidence of
transfer as required by statute. A 500
called collateral note, I'm which such
stock should be described with reason
able certainty would be such evidence.
Office of Commissioner Of Internal Re
venue. Washington.
Sir. This office Is i'm receipt of "a let
ter from MIR. +. p. Stair. cashier of the
Farmers National Bank of York, Pa.
who presents the following question for
the consideration of this office:
Mr. stair asks whether revenue
stamps are required when certificates of
stock with signed blank power of at
torneyD are given as collateral security
with a note for money borrowed said
stock being held only as security and
returned on payment OF the note.
Under Schedule A of the act of June
13. 1885, In accordance with the opinion
of the honorable AttorRey-General this
office ruled July 49, 1898 (see Treasury
Decisions. ruling 1860, that where
stock certificates were given as COLA
teral on notes stamps were not required
on these certificates, as i'm the case Of
actual transfer, but they were TO be
stamped as pledge for the amount for
which they were hypothecated
September p, 1898 (see Treasury De-
cisions ruling 20l93), the Attorney-Gen-
eral gave an opinion that a collateral
note stipulating that certain securities
or other property should be held as in
demnty, or as basis of credit general
ly, with out specifying particular pro-
perty as security for the payment of
a definite and certain sum of money,
was not liable to tax under the provi-
sions of the war-revenue act. A ruling
was made by this office to correspond
with this opinion. Subsequently the
Commissioner of Internal Revenue,
through the Secretary of the Treasury,
called the particular attention Of the
Attorney General TO the following lam
guage i'm paragraph ! Of Schedule A,
act of June 10, 1898 (since re-enacted
without change by the act of March
19OD:
or by any delivery, or by any paper,
agreement or memorandum, or other
evidence Of transfer or sale. whether en-
titltng the owner 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, on each
one hundred dollars of face value or
fraction thereof, two cents; And asked
if the delivery of certificates of stock
to secure the future payment of money
was not a taxable transaction under
this provision.
The Commissioner also suggested that
stock delivered as collateral security
for payment of promissory notes was
more properly taxable under the above
clause of paragraph 1 of Schedule 4
than under the paragraph to mortgage
or pledge, as was held under the current
ruling.
To this suggestion no response was
made; but to the question whether the
paragraph above quoted was not ap-
plicable to stock delivered as security
FOR the future payment of monev the
Attorney answers as follows
(see Treasury Decisions, ruling 500:
My opinion is that it would be if the
delivery of the stock was accompanied
by any paper or agreement or memo
randum, or other evidence of transfer
such as contemplated by the statute.
But l can not construe this act to mean
that the mere hypOthecation of certi-
hcates of stock by depositing the same
without any written or printed instru-
same may be held as security for the
payment of loan or taken as a basis
OF credit, is subject to stamp tax.
BY the act of March 2 1901, the tax on
mortgages or pledges was repealed. to
take effect on or after July l, 1901, so
that the delivery of stock as collateral
security for the payment of notes is no
longer taxable as a pledge. The act of
Mafch 2, 1901, however. re-enacted with
out change the first paragraph of Sche-
dule A of the war-revenue act, contain
ing the provision relative to the tax on
the delivery of stock as security for the
future payment of money.
In this state of the law, / am of the
opinion that under the opinion of the
honorable Attorney General above
quoted, delivery of stock as collateral
security for the future payment of
money is taxable at the rate of 2 cents
for each 500. or fraction thereof. pro-
vided such delivery is accompanied bv
any paper, or agreement, or memoran-
dunn, or other evidence of transfer as
required by the statute, and / am fur
ther of the opinion that so-called col
lateral note, in which such stock should
De described with reasonable certainty
would be such evidence.
Please inform Mr.. Stair of this con-
clusion.
j. w. YERKES,
Commissioner.
Mr.. II. l.. Hershey, Collector Internal
Revenue, Lancaster, Pa.
The local banks who have all failed 10 .
comply with the tax, were notified yes
terday Of their liability by Collector
Chamberlain and win comply with the
I S,1 some OF them stated that they