Evening star., 1937-06-16

7
charity. Early in
1888 the question of taxes came up and
a contract was entered into with the
agent by which Mrs. Roosevelt agreed
to speak over the radio for certain
fee for each broadcast and the checks
for the services she rendered were
to be made out directly to the charities
she designated
Rulings Are Strict.
Now, under the rulings of the Bu-
reau of Internal Revenue, taxes have
to be paid not only on actual money
received, but on what is known as
a constructive receipt" AS for the
assignment of income to third par
ties, the official ruling of the bureau
Is as follows:
Cases in which one person con-
tracts to perform services for Sec
ond person, and it is agreed that the
remuneration therefor shall be paid
to a third party, the receipt of the
third party must be held to be a
constructive receipt by the person per-
forming the services.
1IlCOUlS, Wlltblltl AZ 10 utllhSu 4LoLl
labor, from the use of capital, or from
the sale of capital assets is n each
case income, and the same rules with
regard to constructive receipt apply
in all cases.
The ruling as above set forth rep
resents the position which this office
has consistently held"
Other Taxpayers Would Fail.
Undoubtedly Mrs. Roosevelt has in
terpreted the law as it ought to be,
and most people will concur in her
view that if she doesn't actually
receive the money she ought not to
pay taxes upon it. But the rules OF
the Internal Revenue Bureau are the
law today, and other taxpayers who
attempt to assign their income to a
third party and thus have it excluded
from their own gross income would
probably come into collision with the
Internal Revenue Bureau.
The fact that the taxpayer does
not actually possess the money for
single instant does not seem to have
have held of such cases. Thus the
late Justice Oliver Wendell Holmes,
the great liberal, speaking on behalf
of a unanimous Supreme Court of
the United States. dealt with this
aspect of the matter in certain case
several years ago when he said in
formal opinion:
There is no doubt that the statute
could tax salaries to those who earned
them and provide that the tax could
not be escaped by anticipatory ar
rangements and contracts however
skillfully devised to prevent the SAL
sry when paid from vesting even
for second in the man who earned it.
That seems to us to be tho Import
of the statute before us, and We think
that no distinction can be taken ac-
cording to the motives leading to
the arrangement by which the fruits
are attributed to a different tree
from that on which they grew"
Earned 500, 900 in One Year.
Mrs. Roosevelt is lucky that she
can assign checks to charity amount
ing 70 SO large part OF the income
from the services she renders and
avoid taxation herself. In one year
she is estimated to have earned
100000 for charities. Any other in
dividual would be in hot water if he
diverted so large part of his in
come to charity. The law allows IS
per cent deduction for charity. In
other words. out of the $4,000 earned
by Mrs. Roosevelt, for example, she
could deduct about little less than
one-sixth as charity deduction and
on the balanced, namely, about S76,-
500, she would have to pay a per-
sonal tax, and then from whatever
she had left after the payment of
nx she could give as much to charity
IS &he desired
What Mrs. Roosevelt may not have
discovered as yet is that the Govern
ment of the United States assumes
the right to do its own charity giving,
and that the taxpayer is gradually
losing that privilege because of the
large sums taken in taxes. Only IS
per cent h the allowable deduction
now for charity. If the case of Mrs.