ANNUAL REPORT

OF THE COMMISSIONER OF INTERNAL REVENUE

FOR THE FISCAL YEAR ENDED JUNE 30

1940

UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1940

For sale by the Superintendent ofiDocuments. Washington D C Price 15 cents (paper cover)

CONTENTS

Page Introduction 1 Collections 1 Cost of administration 4 Personnel 4 Important legislative and other changes affecting the Bureau 6 Accounts and Collections Unit: Assessments of employment taxes 10, Taxes under Federal Insurance Contributions Act 19 Offers in compromise 11 Coordination with Social Security Board 11 Tax under the Federal Unemployment Tax Act 11 Offers in compromise 14 Carriers taxes (Chapter 9, Subchapter B, I. R. C.) 14 Coordination with Railroad Retirement Board 15 Income Tax Unit: General functions 15 Income and excess profits taxes 15 TREASURY DEPARTMENT Collections 15 Returns filed 16 Document No. 3110 Examination of income tax returns upon receipt 17 Investigations and adjustments of income tax returns by field Internal Revenue offices 17 Inventory of returns on hand in field offices as of June 30, 1940_ _ 17 Unagreed adjustments pending 18 Revenue results of audit and investigative efforts of Unit 18 Stage at which additional tax was assessed 19 Petitions to the Board of Tax Appeals of income tax cases 20 Refunds, abatements, and credits 20 Depreciation 21 Miscellaneous Tax Unit: Estate Tax Division: Returns 22 Claims 22 Court decisions 28 Tobacco Division 23 Sales Tax Division: Admission taxes 25 Documentary stamp taxes 26 Playing cards 26 Oleomargarine; adulterated, process, or renovated butter 26 Mixed flour 26 Firearms 26 Narcotics and marihuana 26 Bituminous coal 27 Silver tax 27 Hydraulic mining 27 Assessments 27 Field reports and returns 27 Claims 28 Credit cases 28 Offers in compromise 29 Miscellaneous tax special squads 29 Capital Stock Tax Division 29 Processing Tax Division 29 Sugar tax 30 Claims 30+ III

IV CONTENTS CONTENTS V

Alcohol Tax Unit: Page Procedure Division ------Table Page 32 13. Cigars weighing more than 3 pounds per thousand: Number of fac- Statistics 32 Ethyl and denatured alcohol tories operated, quantity of tobacco used, number of cigars manu- 33 factured, on hand at commencement and close of year, removed for Distilled spirits 33 Rectified spirits export and tax-paid, calendar year 1939, by collection districts and 33 by States ------112 Fermented malt liquors 33 Wines 14. Cigars weighing more than 3 pounds per thousand: Number removed 33 tax-paid, by classes, calendar year 1939, by collection districts and Enforcement Division 34 Field Inspection Division by States - - 114 34 15. Cigars weighing more than 3 pounds per thousand: Manufactured Laboratory Division 36 Audit Division and removed tax-paid for domestic consumption from customs 37 bonded manufacturing warehouses, class 6, by classes, calendar Assessments 37 Offers in compromise year 1939 - - 116 37 16. Cigars weighing not more than 3 pounds per thousand: Quantity of Alcohol Tax Division of the Office of the Chief Counsel ------37 Technical Staff tobacco used, number of cigars manufactured, on hand at com- 38 Field operations under decentralization mencement and close of year, removed for export and tax-paid, 43 calendar year 1939, by collection districts and by States - - 117 Coordination of Staff field activities 45 Office of the Chief Counsel: 17. Cigarettes weighing not more than 3 pounds per thousand: Number Appeals Division of factories operated, quantity of tobacco used, number of ciga- 47 rettes manufactured, on hand at commencement and close of year, Civil Division 48 Compromise Section removed for export and tax-paid, calendar year 1939, by collection 48 districts and by States - - 118 Interpretative Division 48 Penal Division 18. Cigarettes weighing more than 3 pounds per thousand: Quantity of 49 tobacco used, number of cigarettes manufactured, on hand at com- Review Division 49 Legislation and Regulations Division mencement and close of year, removed for export and tax-paid, 49 calendar year 1939, by collection districts and by States - - 120 Intelligence Unit 50 Conclusion 19. Leaf tobacco used in manufacturing cigars, cigarettes, and tobacco 50 and snuff, calendar years 1930 to 1939 - - 121 STATISTICAL TABLES 20. Production of manufactured tobacco, snuff, cigars, and cigarettes, calendar years 1930 to 1939 - - 121 RECEIPTS FROM INTERNAL-REVENUE TAXES 21. Summary of operations of manufacturers of tobacco and cigars, calen- Table dar year 1939 - - 122 1. 22. Exportation in bond of manufactured tobacco, snuff, cigars, and ciga- Receipts from specified sources of internal revenue, fiscal year ended rettes, etc., year ended June 30, 1940, by collection districts - - 125 June 30, 1940, by collection districts, States, and Territories - - - - 52 2. 23. Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes Comparative internal-revenue collections, fiscal years 1939 and 1940, from factory in bond, for shipment or delivery as sea stores, fiscal by collection districts, States, and Territories_ _ 88 3. year ended June 30, 1940 ------126 Summary of internal-revenue collections, year ended June 30, 1940, 24. by States and Territories Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes 92 from bonded internal revenue tobacco sea stores warehouses, for 4. Summary of monthly internal-revenue tax receipts for the fiscal year ended June 30, 1940, by sources shipment or delivery as sea stores, fiscal year ended June 30, 1940_ _ 127 94 25. Drawback of internal-revenue taxes allowed on tobacco, snuff, cigars, 5. Summary of internal-revenue collections, years ended June 30, 1939 and 1940, by sources and cigarettes exported, year ended June 30, 1940, by ports, and 100 comparative totals for years ended June 30, 1935 to 1939 - - 127 6. Total internal-revenue collections, years ended June 30, 1863 to 1940_ 102 7. 26. Domestic and imported cigarette papers and tubes withdrawn and Internal-revenue tax on manufactured products from Philippine internal-revenue receipts from taxes during fiscal years ended June Islands, fiscal years 1939 and 1940, by objects of taxation 102 8. 30, 1931 to 1940, inclusive - - 127 Internal-revenue tax on manufactured products from Puerto Rico, 27. Tobacco products withdrawn for consumption, computed from collec- fiscal years 1939 and 1940, by objects of taxation 102 tions from the sales of stamps, fiscal year 1940 - - 128 28. Dealers in leaf tobacco in business, leaf tobacco exported and received INCOME-TAX AUDIT from farmers, calendar year 1939, by collection districts and by 9 • Additional income tax assessments on the Commissioner's and States - - 129 29. Leaf tobacco imported by cigar manufacturers, tobacco manufac- collectors' lists made during the fiscal year 1940, by tax years - - 103 10 • Tax items appealed to the Board of Tax Appeals during turers, and dealers in leaf tobacco, calendar year 1939, by collection the fiscal year 1940 - - districts and by States - - 131 107 30. Quasi tobacco manufacturers classified: Number of factories operated TOBACCO, CIGARS, CIGARETTES, ETC. and tobacco material handled, calendar year 1939 ------133 31. Tobacco material held or owned by dealers in leaf tobacco, cigar and 11 Manufactured tobacco: Number of factories operated, leaf tobacco tobacco manufacturers on January 1, 1940, by collection districts and other materials used, calendar year 1939, by collection districts and by States ------134 and by States ------108 12. Manufactured tobacco: Quantity manufactured, on hand at com- OCCUPATIONS SUBJECT TO SPECIAL TAXES mencement and close of year, removed for export and tax-paid, 32. Number of each class of special-tax payers purchasing special-tax calendar year 1939, by collection districts and by States 110 stamps covering the fiscal year 1940, or portion thereof, under the - - various annual rates, by collection districts and States 136 VI CONTENTS CONTENTS VII

OLEOMARGARINE, RENOVATED BUTTER, MIXED FLOUR, ETC. Table Page Table 64. Distilled spirits: Losses in internal-revenue bonded warehouses from Page leakage and evaporation, by kinds of spirits and by States, and 33. Production and withdrawals of colored oleomargarine, year ended other losses, by kinds of spirits, fiscal year 1940 ------158 June 30, 1940, by collection districts - - 142 Distilled spirits: Grains and molasses used in production, by States, 34. 65. Production and withdrawals of uncolored oleomargarine, year endect . fiscal year 1940 ------158 June 30, 1940, by collection districts - - 142 66. Distilled spirits: Materials used in the production of brandy, by kinds 35. Production and withdrawals of oleomargarine (colored and uncolored), and by States, fiscal year 1940 ------159 year ended June 30, 1940, by months ------143 67. Rectified spirits and wines: Production, by kinds and by months, 36. Summary of production and withdrawals of oleomargarine (colored fiscal year 1940 ------159 and uncolored), years ended June 30, 1931 to 1940 - - 144 68. Rectified spirits and wines: Number of plants operated and produc- 37. Materials used in the manufacture of oleomargarine (colored and un- tion, by kinds and by States, fiscal year 1940 ------160 colored), year ended June 30, 1940 - - 144 69. Rectified spirits and wines: Alcoholic liquors used in rectification, by 38. Production and withdrawals of renovated butter, year ended June 30, kinds and by months, fiscal year 1940 ------160 1940, by collection districts - - 144 Rectified spirits and wines: Alcoholic liquors used in rectification, by 39. 70. Summary of production and tax-paid withdrawals of renovated butter, kinds and by States, fiscal year 1940 - - 161 years ended June 30, 1931 to 1940 ------144 Fermented malt liquors: Production and tax-paid withdrawals, by 40. 71. Production and withdrawals of mixed flour, year ended June 30, 1940, ------161 by collection districts - - months, fiscal year 1940 145 72. Fermented malt liquors: Breweries operated, production, with- 41. Production, importation, and withdrawals of playing cards, by drawals, losses, and stocks on hind June 30, by States, fiscal year months, year ended June 30, 1940 ------145 1940 ------162 73. Fermented malt liquors: Withdrawals, tax-paid and tax-free, by ALCOHOL, DISTILLED SPIRITS, BEER, ETC. States, fiscal year 1940 ------163 42. Ethyl alcohol: Production and withdrawals, by months, fiscal year 74. Fermented malt liquors: Materials used in production, by kinds and ------164 1940 ------146 by States, fiscal year 1940 75. Cereal beverages: Plants operated, production, and withdrawals, by 48. Ethyl alcohol: Plants and bonded warehouses operated, production, 165 withdrawals, warehouse losses, and stocks remaining in bonded States, fiscal year 1940 ------Still wine: Production and withdrawals, by months, fiscal year 1940_ _ 165 warehouses June 30, by States, fiscal year 1940 146 76. 44. Ethyl alcohol: Withdrawals, tax-paid and tax-free, by States, fiscal 77. Still wine: Bonded wineries and bonded storerooms operated, pro- duction, withdrawals, losses, and stocks on hand June 30, by States, year 1940 ------147 fiscal year 1940 ------166 45. Ethyl alcohol: Materials used in production, by kinds and by States, - - 78. Still wine: Tax-paid withdrawals and stocks on hand June 30, by fiscal year 1940 147 167 46. Ethyl alcohol: Production, by kinds of materials used, fiscal year alcoholic grades and by States, fiscal year 1940 ------Still wine: Amelioration and fortification occurring after fermenta- 1940 148 79. 167 47. Denatured alcohol: Plants operated, production, withdrawals, and tion, by States, fiscal year 1940 ------80. Still wine: Materials used in production, by kinds and by States, stocks on hand June 30, by States, fiscal year 1940 148 168 48. Denatured alcohol: Production, by months, fiscal year 1940____1 _ _ _ 149 fiscal year 1940 ------Sparkling wine: Production and tax-paid withdrawals, by months, 49. Completely denatured alcohol: Withdrawals, by formulas and by - - 81. 169 months, fiscal year 1940 149 fiscal year 1940 ------50. Specially denatured alcohol: Withdrawals, by formulas, fiscal year 82. Sparkling wine: Number of producers, production, withdrawals, ------169 1940 149 losses, and stocks on hand June 30, by States, fiscal year 1940 51. Specially denatured alcohol: Withdrawals, by leading formulas and 83. Sparkling wine: Tax-paid withdrawals and stocks on hand June 30, ------170 by months, fiscal year 1940 150 by size of container and by States, fiscal year 1940 Vermouth: Production and tax-paid withdrawals, by months, fiscal 52. Specially denatured alcohol: Operations of bonded dealers, by States, - - 84. 170 fiscal year 1940 151 year 1940 ------53. Specially denatured alcohol: Operations of manufacturers, by States, 85. Vermouth: Number of premises operated, production, withdrawals, ------171 fiscal year 1940 151 losses, and stocks on hand June 30, by States, fiscal year 1940 Enforcement, Alcohol Tax Unit: Seizures and persons arrested, by 54. Distilled spirits: Number of distilleries and internal-revenue bonded - - 86. 171 warehouses operated, by States, fiscal year 1940 152 months, fiscal year 1940 ------Enforcement, Alcohol Tax Unit: Seizures and persons arrested, by 55. Distilled spirits: Production, ------by- - -kinds - - - - and - - - by- - months,------fiscal - - - - year- - - - - 87. 172 1940 153 States, fiscal year 1940 ------56. Distilled spirits: Production, by kinds and by States, fiscal year 1940_ 153 57. Distilled spirits: Brandy produced, by kinds and by States, fiscal TECHNICAL STAFF year 1940 ------154 Analysis of the work of the Technical Staff during fiscal year 1940- 58. 88. Distilled spirits: Total withdrawals, tax-paid, by kinds and by - - Income, profits, estate, and gift tax cases ------173 months, fiscal year 1940 154 Analysis of work on compromise, extension of time, and final closing 59. Distilled spirits: Total withdrawals, tax-paid, by kinds and by 89. - - agreement cases, fiscal year 1940 ------176 States, fiscal year 1940 155 60. Distilled spirits: Bottled-in-bond withdrawals, tax-paid, by kinds and - - OFFICE OF THE CHIEF COUNSEL by months, fiscal year 1940 155 61. Distilled spirits: Bottled-in-bond withdrawals, tax-paid, by kinds and - - 90. Appeals Division: Cases appealed to Board of Tax Appeals, including by States, fiscal year 1940 156 those appealed from Board decisions to appellate courts, fiscal year 62. Distilled spirits: Stocks remaining in internal-revenue bonded ware- - - 1940 ------177 houses, by kinds and by States, June 30, 1940 156 91. Appeals Division: Number, and amounts, of cases shown in table 90 63. Distilled spirits: Stocks remaining in internal-revenue bonded ware- 177 for the fiscal year 1 . 940 only, by class of tax and amounts involved_ _ houses, by kinds and by years and seasons of production, June 30, 1940 - - 157

2 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 3

Summary of collections, fiscal years 1939 and 5940— Continued Fiscal year Fisca year Increase, or decrease (—) Class of tax General source 1939 1940 1989 1940 Amount Percent Income $279, 487, 977. 51 $291, 198, 664.00 Alcohol Tax Unit—Continued. Miscellaneous internal revenue: Wines, Including fortifying brandy_ $7,754,747.08 $9, 366,706. 29 $1, 611, 959. 21 20.8 Estate 59,019, 649. 49 52,350,045.30 Fermented malt liquors, excise tax 259, 703,925.76 264,579, 036.03 4, 875, 110.27 6,354,319. 72 Special, or occupational, taxes 1.9 Gift 5, 247, 767.42 10,789,464. 92 9,484, 261.75 —1, 305, 193. 17 —12. 1 Capital stock 1, 302, 784. 84 1, 732, 327. 10 Total Sales 8, 479, 047. 99 4, 561,082. 62 687, 799, 700.68 624, 253. 156. 11 36, 453,455. 43 6.2 Liquors 3, 519, 941. 10 3,854, 693.05 Miscellaneous Tax Unit: Miscellaneous 19, 183, 519.80 7, 943, 709. 74 Tobacco 344, 588. 19 122, 703. 57 Capital stock tax ' 127, 203,008.99 132, 738, 537.17 5,535, 528.18 424, 504.29 Estate and gift taxes 4.4 Coal 312, 569. 31 360, 715, 210. 12 360, 071, 166. 94 —644, 043. 18 . 2 Silver 18,947.86 26,925.90 Tobacco taxes 580,159, 205.79 608, 518, 443. 59 28, 359, 237.85 Sales taxes (manufacturers' excise 4. 9 Sugar 4,935.83 197, 251.35 taxes, admissions communise- thne, oleomargarine, documen- Total miscellaneous 97, 428, 748. 83 77, 587. 562. 64 tary stamps, coal, etc.) 534, 738, 304. 48 583, 595, 3 82.47 48,857,077.9 9. I Employment and Carriers taxes 26, 902, 431.93 I 25, 143,458.86 Sugar tax 65, 414,058. 42 68, 145, 357. 56 2,731, 299. 14 4. 2 903, 819, 1541. 27 393,909,685. 50 Total , Grand total 1 668, 229, 787. 75 1, 753, 068,887. 73 84, 839,099. 98 5.1 teoounts and Collections Unit: Federal Insurance Contributions Includes for income taxes, $284,390,799 from the Income Tax Unit and $6,807,865 from the Accounts and Act Collections Unit. The assessments of the Income Tax Unit include $28,727,135 made under the jeopardy 529,835, 533.76 605, 350, 175.64 75, 514,641.88 14. 3 provisions of section 279 of the and section 273 of subsequent Revenue Acts. Federal Unemployment Tax Act._ 101, 186, 703.68 106, 123, 156. 21 Carriers taxes 4, 956, 452.53 4.9 Includes, for miscellaneous Internal revenue, $66,692,979.59 from the Miscellaneous Tax Unit, $7,019,890 109, 426,627. 62 122,047, 643.66 12,621,016.04 11. 6 from the Accounts and Collections Unit, and $3,854,693.05 from the Alcohol Tax Unit. Total Includes for employment and carriers taxes, $6,825,316.86 from the employment tax activities of the 740, 428,865. 06 833, 520,975. 51 93,092, 110.45 12.6 Accounts and Collections Unit and $18,518,142 from the collectors' offices. Total, all collections 5, 181, 573,952. 58 5, 340, 452, 346.78 158,878,394.20 3. 1 Refunds, etc.—Payments for the refund of taxes illegally or errone- Comparative statement of tax collections by quarters, fiscal years 1939 and 1940 ously collected and for redemption of stamps and drawbacks are made from sums appropriated for such purposes. Miscellaneous Quarter ended— Employment Income taxes Internal-revenue taxest including Total collections Number of claims paid and the amount of refunds, payments, and repayments, includ- taxes carriers taxes ing interest, during the fiscal years 1939 and 1940

Sept. 30, 1938 $562, 716, 572.51 $666, 232, 573.67 Dec. 31, 1938 $166,307, 311. 90 $1, 395, 256, 466 08 Interest allowed (included 550, 793, 594.05 564,886, 260. 76 108, 425, 753.60 1, 281,885, 608.41 Number of Amount refunded or repaid Mar. 31, 1939 603, Ml, 813. 43 508, 504, 711.85 claims in amount refunded) June 30, 1939 228, 716, 424.38 1, 340, 762, 999.66 434, 322, 617. 11 560, 366, 944.14 178, 979, 375.18 1,163, 668,938.43 Class of tax Fiscal year 1939 1939 1940 1939 1940 2, 151, 374, 597.10 2, 289, 770, 490. 42 740, 428, 865. 06 5,181, 573,952. 58 1939 1940 Sept. 30, 1939 404, 101, 228.59 735, 155, 042.82 Dec. 31, 1939 182, 509,499. 71 I, 321, 765, 766. 12 385, 483, 116. 55 552, 500,230. 89 192,865,039. 17 1, 130, 848, 386.62 Refund of internal-rev- Mar. 31, 1990 786,069, 685. 99 enue collections: rune 539,411, 289. 00 252, 002, 566. 66 1, 552, 483, 541. 65 80. 1940 548,944, 895. 78 582, 265,881. 64 206, 143, 874.97 Income taxes 136,186 132, 532 $27, 390, 777.03 M6,022,031. 85 $4, 925, 559. 52 $9,155, 587.93 1, 335,354, 852.39 Miscellaneous Inter- Fiscal year 1940 2,102, 598,926.92 2,904, 332,444. 35 833, 520,975. 51 nal-revenue taxes: 5, 340, 452, 396.78 Bituminous coal_ 88 103 2, 336. 27 6, 567. 92 85.50 399.50 Capital stock, 2,589 2,131 468, 893.14 381,857. 55 33, 308. 59 45,437. 49 1, 182. 43 Nom—Effective July 1, 1938, the rate on distilled spirits (except brandy) was increased from $2 to $2.25 Distilled spirits 7,905 5,902 227, 161. 76 641, 275. 23 2, 813.55 per tax gallon. Estate 1,336 1,582 3, 500, 014.05 5,491,478. 11 429,879. 32 880, 308.78 The capital stock tax is due to be paid in the September quarter and the gift tax In the March quarter. Gift 580 921 923, 614. 42 3,498, 569.60 117,684. 71 541, 207.97 Other miscellaneous taxes are payable monthly. The March qua ter includes full-paid calendar year Miscellaneous Income tax returns. tax 340 462 207, 185.45 585, 298. 30 21,035. 75 60, 532. 53 The taxes on future delivery; production, refining, or processing of crude petroleum: brewers' wort, malt, Narcotics 128 127 218. 17 205.31 chewing gum, matches (at the one-half cent and 2 cent rates), toilet preparations (at the 5 percent rate), Sales . 1, 202 1, 105 1, 559, 649.47 2,165, 837.45 312, 900. 83 196,916. 29 furs, phonograph records, sporting goods, and cameras, were repealed as of close of business; June 30, 1938. Sugar 1,288 1, 537 980,019. 30 1,883, 636. 96 420.56 520.99 Tobacco 4 9 55.35 573.94 27.03 Employment taxes: I In the appendix will be found tables showing the amount of internal Carriers 626 131 93,413.91 10, 216. 61 187.53 469.73 Federal Insur- revenue tax receipts in detail for the year, with statements of com- ance Contribu- tions Act 5,186 5, 665 380, 262 46 548, 219.77 29,602.99 52,572.13 parative collections by districts, States, and Territories, during the Federal Unem- fiscal years 1939 and 1940. ployment Tax Tables are presented also showing the Act 15,913 14, 972 1, 382, 517. 67 1,909, 393.72 42,730. 72 56, 243. 52 quantities of liquor, tobacco, oleomargarine, etc., tax-paid for con- Agricultural adjust- sumption. ment 84, 773 49, 027 12, 293,817. 96 11, 503,970. 56 533, 597. 15 1, 918, 310.02 Additional assessments.—The additional assessments, including Total 258,144 215,706 49, 413,686. 40 74, 496,930. 88 6, 449, 586. 72 12,409, 716. 22 interest and penalties, resulting from office audits and field investi- Listed as pay, roll taxes in 1939 report. gations made during the fiscal years 1939 and 1940, were as follows: Listed as Social Secur ty, Title VIII. in 1939 report. 1 Listed as Social Security, Title Ix, in 1939 report. 4 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 5 Number of claims paid and the amount of refunds, payments, and repayments, includ- employees retired on annuity during the fiscal year ing interest, during the fiscal years 1939 and There were 99 1940- Continued 1940, of whom 48 were retired on account of disability. Number of Amount refunded or repaid Interest allowed (included Class of tax claims in amount refunded) IMPORTANT LEGISLATIVE AND OTHER CHANGES AFFECTING THE 1939 1940 1939 1940 1939 1940 BUREAU DURING THE FISCAL YEAR 1940 Repayments (not refund of taxes erroneously collected): Public, No. 242, approved July 28, 1939, amends the Bankruptcy Redemption of Act by conferring original jurisdiction on courts of bankruptcy with stamps: respect to any proceeding initiated by the filing of a petition on or Distilled spirits__ 2, 268 2,112 $60, 113. 39 $59, 232. 68 $1, 016. 26 $597.80 Miscellaneous__ 2,360 1,984 379, 239. 13 215, 588. 17 96, 310. 52 18,892.44 before July 31, 1940, with respect to modifications of the securities Narcotics 101 57 1, 098. 79 218. 43 Silver 3 2 104. 61 55. 00 or capital structures of railroads; provides that the provisions of sec- Tobacco 1, 746 1,985 1, 338, 945. 73 1, 832, 670.38 tions 1801, 1802, 3481, and 3482 of the shall Total 6,478 6,140 1, 779, 501.60 2,102, 769.66 47. 326. 78 19, 990. 24 not apply to the issuance, transfer, or exchange of securities or the Drawbacks: Alcohol 656 640 178, 157.78 177, 189. 98 making or delivery of conveyances to make effective any plan or Tobacco 13 17 2, 736. 83 3.823.77 adjustment confirmed under the Act; that no income, gain, or profit Total 669 657 178,894. 41 181, 013. 25 taxable under any law of the United States or of any State shall in Grand total__ 265, 291 222, 503 51, 372, 082. 41 76, 730, 708.79 6, 996, 913. 50 12, 429, 206.46 respect to the adjustment of the indebtedness of any petitioner be 4- Mon.-There were also refunded from Philippine coconu oil tax collections (trust fund) be amounts of $91,359.88, including $3,471.10 interest, covering 700 claim , during the fiscal year 1939, and $175,292.68, deemed to have accrued or to have been realized by such petitioner including $1,054.19 interest, covering 451 claims, during the fiscal year 1940. by reason of a modification of or cancellation in whole or part of the The figures in this table will not agree with those in later sections of this report for the reason that the amounts shown in the later sections relate to claims disposed of by the units, whereas this table shows the indebtedness of a petitioner affected by such proceeding; gives the actual payments made. court power to determine the amount and legality of claims of the COST OF ADMINISTRATION United States for taxes and to order payment thereof, the order of The amount of $59,877,500 was appropriated for the fiscal year 1940 the court to have the effect of adjudication of bankruptcy of the for salaries and expenses in connection with the assessment and col- petitioner for the purpose of section 274 of the Internal Revenue lection of internal revenue taxes and the administration of the internal Code; and suspends the running of the statute of limitations on the revenue laws. The expenditures and obligations against this appro- assessment or collection of any internal revenue tax while a proceed- priation were $59,675,518, leaving an unexpended balance of $201,982. ing under the Act is pending and until it is finally dismissed. The expenditures do not include amounts expended for refunding taxes Public, No. 259, approved August 4, 1939, amends the Merchant illegally or erroneously collected and for redeeming stamps. The cost Marine and Shipping Acts to provide for the exemption from Federal of collecting a total of $5,340,452,347 during the year was $1.12 per income taxes of the gain resulting from the transfer of an obsolete $100, compared with $1.13 per $100 for 1939. vessel to the Commission under the provisions of the Act, and for an The amount of $4,250,000 was appropriated for the fiscal year 1940 adjustment of the basis for gain or loss upon a sale or exchange and for salaries and administrative expenses in connection with making for depreciation of a new vessel acquired in connection with such refunds authorized by Titles IV and VII of the . transfer. The amount expended and obligated from this fund amounted to Public, No. 264, approved August 4, 1939, authorizes the Com- $3,635,549, leaving an unexpended balance of $614,451. missioner to make certain allowance for loss by leakage and evapora- Personnel.-A comparative statement of the number of employees tion upon withdrawal of packages of brandy or fruit spirits filled from in the various branches of the Internal Revenue Service on June 30, storage tanks prior to June 26, 1936. 1939, and on June 30, 1940, is given in the following table: Public, No. 334, approved August 7, 1939, amends section 2857(a) of the Internal Revenue Code by eliminating the requirement that Increase or Branch of service June 30, June 30, records of receipt and disposition of distilled spirits be kept by whole- 1939 19 0 decrease - sale liquor dealers who are such dealers only by reason of their dealings in wine at wholesale, but do not deal in distilled spirits at wholesale. Employees In the departmental service 4, 202 1 3, 993 -209 Offices of collectors of internal revenue 8, 355 2 8, 376 Internal revenue agents' forces: 21 Public, No. 361, approved August 9, 1939, provides additional Income and estate taxes 4,804 2 4, 834 30 time for the filing of claims for refund of taxes paid under the Bank- Miscellaneous and sales taxes 47 61 14 Offices of district supervisors 4, 147 i 4, 083 -64 head Cotton Act, the Kerr Tobacco Act, and the Potato Act of 1935. Miscellaneous field force (Alcohol Tax Unit) 17 16 -1 Public, No. 379, Social Security Act Amendments of 1939, approved Supervisors of accounts and collections 46 46 Field force (Intelligence Unit) 298 296 -2 August 10, 1939, comprehensively amends the Social Security Act and Field force (Assistant General Counsel's Office) 179 177 Field force (Technical Staff) 528 541 13 the tax provisions of that Act which were incorporated in the Internal Total 22, 623 22, 423 -200 Revenue Code. The most important changes made in the taxes under Exclusiveusrve o mporary employees on the internal revenue roll and 483 employees on the refunding subchapter A of chapter 9 of the Code are the reduction of the rate on processing tax roll. both employers and employees for the years 1940, 1941, and 1942 from 2 Exclusive of 548 temporary employees on the internal revenue roll, 251 permanent and 80. temporary employees on the refunding processing tax roll. 1% percent to 1 percent; the extension of coverage, effective January 11 Exclusive of 27 temporary employees and 459 general deputy collectors on the refunding processing tax roll. 1, 1940, to services of seamen on American vessels and of employees of 4 Exclusive of 2 temporary employees. 6 REPORT OF COMMISSIONER OF INTERNAL REVENITE REPORT OF COAIADRSIaNER OF INTERNAL REVENUE certain Federal and State instrumentalities (chiefly bank employees); pend on the amount of gross income rather than net income; amendir the removal, effective January 1, 1939, of the previous exemption of the provision relating to information returns to conform to the r services by individuals after they attain age 65; and the provision quirement for filing individual returns; and imposing in addition 1 for refund to an employee who because he has two or more employers the increase in individual and corporate income tax rates a flat tax pays tax on more than $3,000 of wages earned in any year after 1939. 10 percent of the tax computed under the Internal Revenue Code, With respect to the tax under subchapter C of chapter 9 of the Code, amended, designated as a "Defense Tax," effective for a 5-year perioi the major changes are the measurement of the tax for 1939 and subse- This Act also increases by 10 percent for a 5-year period the exces quent years by "wages paid" as distinguished from "wages payable" profits, capital stock, estate and gift taxes, and tax on transfers I under the prior law; the limiting of the application of the tax to the avoid income taxes. The Act continues in effect until June 30, 194 first $3,000 paid after 1939 to an employee by an employer for services certain of the manufacturers' excise taxes and miscellaneous taxi rendered in any calendar year; the liberalization of the conditions bf which would have terminated on June 30 or July 31, 1941. It ale allowance of credit against the Federal tax for 1939 and subsequent increases the rate of numerous miscellaneous taxes and lowers certai years for contributions paid to State unemployment funds; and the exemptions applicable to the miscellaneous taxes. The Act also pri extension of coverage, effective January 1, 1940, to services of em- vides that the 10 percent defense tax shall be set aside as a specs, ployees of certain Federal and State instrumentalities (chiefly bank fund which shall be available only for retirement of obligations ai employees). The amendments also provide for the liberalization of thorized by the Act to the extent of $4,000,000,000, the proceeds the conditions of allowance of credit against the Title IX tax for the which are to be used for the national defense. The Public Sala/ years 1936, 1937, and 1938 for contributions paid to State unemploy- Tax Act of 1939 was amended to relieve certain individuals receivir ment funds. Effective January 1, 1940, certain services previously compensation paid indirectly by the United States from penalties di taxable are exempt from the taxes under subchapters A and C of to failure to make return and pay tax due. chapter 9 of the Code, principally services in the field of agricultural Public, No. 671, approved June 28, 1940, amends section 3 of tl labor, certain services performed in the employ of nonprofit organiza- Act of March 27, 1934 (48 Stat. 505), as amended by the Acts of Jur tions exempt from income tax, and certain services performed by 25, 1936 (49 Stat. 1926), and April 3, 1939 (53 Stat. 560; U. S. ( students and newsboys. Public, No. 379, also extends the time for Supp., V, Title 34, sec. 496), and as made applicable to contracts fE filing claims for payment with respect to floor stocks, held on January aircraft or any portion thereof for the Army by such Act of April , 6, 1936, of certain articles processed from commodities subject to the 1939, to limit to June 30, 1942, the allowable profit on naval vessels processing tax under the Agricultural Adjustment Act. Army or Navy aircraft or portions thereof to 8 per centum of tl Public, No. 654, approved June 24, 1940, amends sections 2803(c) contract price, or 8.7 per centum of the cost of performing the contras and 2903 of the Internal Revenue Code to remove unnecessary re- or subcontract on other than prime contracts made on a cost-plus-, strictions upon the redemption of red strip stamps for containers of fixed-fee basis, in lieu of 10 percent and 12 percent specified in Publi distilled spirits and to authorize the redemption of case and strip No. 18, approved April 3, 1939. It limited the application of tl stamps for containers of spirits bottled in bond. Act to the period of the national emergency declared to exist by tl Public, No. 655, approved June 24, 1940, amends sections 3030(a) President on September 8, 1939, and to those contracts and subco (1)(A) and 3031(a) of the Internal Revenue Code as of July 1, 1940, tracts in which the award exceeds $25,000. Provision was also mac to eliminate the tax of 10 cents per proof gallon imposed on spirits for charging against a contract or subcontract a percentage of ti used in the fortification of wines, and to compensate for the loss of cost of special additional equipment and facilities acquired to facil revenues thereby occasioned by increasing by 5 cents per gallon the tate, during the national emergency, the completion of naval vesse tax on all wines containing more than 14 percent and not exceeding or Army or Navy aircraft or portions thereof in private plants pu 24 percent of absolute alcohol by volume. The Act likewise amends suant to a certification to be made to the Commissioner by the Seca section 3030(a) (2) of the Internal Revenue Code to correct a clerical tary of War or the Secretary of the Navy, as the case may be, aft error made in the Liquor Tax Administration Act, approved June agreement with the contractor or subcontractor. Such certificatio 26, 1936, where the tax on artificially carbonated wine was fixed at is to be made under regulations prescribed by the President and "1Y4 cents on each one-pint or fraction thereof." The words under- required to state the necessity for such special additional equipmer scored, descriptive of the quantitative basis of the tax, should have and facilities, the cost thereof, and the percentage of the cost to been "one-half pint." charged against the contract or subcontract. Public, No. 656, , approved June 25, 1940, The practical operation of the plan of decentralizing the determ amends the Internal Revenue Code by increasing the rate of tax on nation of income, profits, estate, and gift tax liabilities, consummate corporations; increasing individual surtax rates; increasing the rates during the fiscal year 1939, has been further perfected and standardize of tax on nonresident alien individuals; increasing the taxes on dis- during the past fiscal year. In continuation of this policy, the juri, tilled spirits, wine, fermented malt liquor, etc., and on certain occu- diction to handle a substantial volume of the offers in compromise E pations; amending the withholding of tax at source provisions to income, profits, and unjust enrichment taxes, including cases arisin conform to the rates on nonresident alien individuals and foreign cor- -under the Vinson Act and other similar legislation, and certain relate porations; decreasing the personal exemption; changing the require- offers of other taxes, under section 3761 of the Internal Revenue Cod ment for filing returns in the case of individuals and fiduciaries to de- .(formerly Revised Statutes 3229) was delegated, with the approval ( 9 8 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE the Secretary, to the Technical Staff field divisions on September pared with 5,205 as of June 30, 1939. The number of information 6, 1939. returns on hand June 30, 1940, was 5,315,926, compared with 6,026,786 Under the provisions of section 4 of Public Resolution No. 75, as of June 30, 1939. On June 30, 1940, there were 212,701 warrants Seventy-sixth Congress, approved June 4, 1940, section 2 of Re- for distraint in the custody of the collectors' field forces for collection, organization Plan No. III, transmitted to the Congress by the Presi- compared with 205,980 as of June 30, 1939. dent on April 2, 1940, became effective June 30, 1940. In conformity Collectors of internal revenue, after having taken the necessary with Order No. 30 of the Secretary of the Treasury, issued June 12, administrative action, transmitted to the Bureau or otherwise dis- 1940, pursuant to the plan of reorganization referred to, the functions posed of 249,007 claims, as compared with 312,429 claims in 1939, a heretofore performed by the Federal Alcohol Administration, the decrease of 63,422. The number of claims on hand in collectors' Administrator and officers thereof, are administered by the Deputy offices at the end of the fiscal year was 14,126, compared with 22,627 Commissioner of Internal Revenue in charge of the Alcohol Tax at the close of the previous fiscal year. Unit, under the supervision of the Commissioner of Internal Revenue During the year 379,228 warrants for distraint were served by field and the Secretary of the Treasury. deputy collectors of internal revenue, which resulted in the collection of $52,220,175. An average of 2,718 producing field deputy collectors ACCOUNTS AND COLLECTIONS UNIT made a total of 1,622,104 revenue-producing investigations, including the serving of warrants for distraint, compared with 1,889,579 such The Accounts and Collections Unit is the central administrative investigations made by an average of 2,704 producing field deputy organization for the 64 internal-revenue collection districts and makes collectors in the preceding year. The total amount collected and the administrative audit of all expenditures for the Internal Revenue reported for assessment by field deputy collectors was $84,566,072, Service. The Unit also administers the taxes imposed under Chapter as compared with $97,826,243 in the previous year. The average 9 of the Internal Revenue Code, the taxes under Subchapter A being number of investigations made per field deputy and the average with respect to employment by others than carriers, Subchapter B amount of tax collected and reported for assessment were 597 and with respect to employment by carriers, and Subchapter C with $31,113, respectively, as compared with 699 and $36,178 in 1939. respect to the tax on employers of eight or more. Since enactment The supervisors of accounts and collections submitted 113 reports of the Social Security Act Amendments of 1939 (Public, No. 379, covering their examination of the accounts of collectors of internal approved August 10, 1939), Subchapter A of Chapter 9 of the Code revenue during the year, compared with 115 reports submitted during has been known as the Federal Insurance Contributions Act and 1939. Every collector's office was examined at least once, and all but Subchapter C as the Federal Unemployment Tax Act. Prior to 18 of the collectors' offices were examined twice during the year. The enactment of the Internal Revenue Code the provisions of Sub- internal-revenue stamps in the office of the United States internal- chapters A, C, and B of Chapter 9 were contained in Titles VIII revenue stamp agent for the Philippine Islands were verified twice and IX of the Social Security Act and in the Carriers Taxing Act by the auditor general for the Philippines during the year. Four ' of 1937, respectively, and the taxes imposed thereunder are now new collectors and two acting collectors were installed during the generally designated as "Employment taxes." fiscal year. Nine collectors' offices were transferred under renewal There were 19,199,932 tax returns filed in collectors' offices during bonds and one under confirmation bond. the fiscal year 1940, an increase of 1,491,075 over the previous year. In administering the personnel of the several collection districts the Of the total returns filed, 8,988,412 were income tax returns, an in- provisions of the Classification Act of 1923 and amendatory Acts, crease of 1,416,729 during the year. The increase in tax returns filed and decisions of the Comptroller General relating thereto, have been may be largely attributed to the Public Salary Tax Act under which closely adhered to. The policy has been continued of making such employees of States and political subdivisions thereof were required appointments as have been authorized in the field collection service- to file income tax returns. at the minimum salary rate of the appropriate grade and all applica- A total of 13,351,512,052 revenue stamps, valued at $1,188,107,282, tions for positions have been carefully scrutinized and investigated was issued to collectors of internal revenue and the Postmaster Gen- with a view to maintaining the usual high standard of requirement eral during the year, compared with 12,594,476,279 stamps, valued at for employment. $1,144,003,042, issued during 1939. The Disbursement Accounting Division administratively examined Revenue stamps returned by collectors of internal revenue and by and recorded 1,553 monthly accounts of collectors of internal revenue, the Postmaster General, and credited to their accounts, amounted to internal revenue agents in charge, district supervisors, including the $31,206,229. There were 390 applications allowed for restamping Philippine branch of the district of Maryland, the internal revenue- packages from which the original stamps, had been lost, mutilated, or salary payments made by the special disbursing agent, San Juan, destroyed, compared with 431 applications in the preceding year. P. R., and the special disbursing agent, Paris, France, comprising a . During the year 34,774 income tax, 4,700 miscellaneous tax, and total of 127,646 vouchers, in addition to which 8,351 expense vouchers 77,472 employment tax returns were investigated by field deputy of employees and 14,015 vouchers covering passenger and freight collectors, and 10,505,875 information returns were verified. At the transportation and miscellaneous expenses were audited and passed' close of business June 30, 1940, there were outstanding in the 64 collec- to the Chief Disbursing Officer, Treasury Department, or General' tion districts, for field investigation, 3,212 income tax returns, com- Accounting Office for payment. 10 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 11.

Assessments of employment taxes .—During the year 5,479 assessment Claims under the Federal Insurance Contributions Act and/or Title VIII of the lists, an increase of 423 over the previous year, consisting of 8,049,247 Social Security Act received and disposed of during the fiscal year 1940—Con. items totaling $785,973,246, were approved by the Commissioner. Overassessments settled by: Amount These lists included original and additional assessments of taxes under Abatement ------$810, 583. 44 Chapter 9 of the Internal Revenue Code, formerly Titles VIII and Credit ------70, 554. 57 IX of the Social Security Act and Carriers Taxing Act of 1937. Refund ------467, 614. 03 Included in this total were 1,631 lists prepared by the collectors' Total ------1, 348, 752. 04 offices and adjusted by the Bureau, consisting of 8,004,830 items Interest ------49, 556. 04 totaling $779,347,929, and 3,848 lists prepared in the Bureau, con- sisting of 44,417 items totaling $6,625,317, as further analyzed in the Grand total ------1, 398, 308. 08 following tabulations: NOTE.—The amount involved in claims filed during the year 1940 was 81,364,682.99. Included in the allowed claims shown in the above tabulation were 6,206 collectors' claims for abatement, of which 160 were multiple-item claims involving 3,953 items. There were also allowed 372 collectors' claims recommending Analysis of employment tax assessments appearing on collectors lists refunds of $7,963.14 plus interest of $298.05. The amount involved in the claims rejected during the year totaled $295,138.17. Sources Items Tax and penalty Interest Total Offers in compromise.—On July 1, 1939, there were on hand 51 offers Federal Insurance Contributions Act in compromise, aggregating $4,876, which had been submitted in - - - - - 7, 606, 764 $572, 534, 357.08 Federal Unemployment Tax Act ------$509, 893.62 $573, 044, 250.70 365, 133 82, 340, 705. 83 295, 443. 78 82, settlement of an aggregate liability of $14,458 incurred under Title Carriers taxes ------32, 933 636, 149. 61 123, 652, 057.71 15, 471.00 123, 667, 528. 71 VIII of the Social Security Act. There were 267 offers received, in Total ------8, 004, 830 778, 527, 120. 62 820, 808.40 779, 347, 929. 02 the total amount of $39,626, involving an aggregate tax liability of $118,465 incurred under Title VIII of the Social Security Act and/or Analysis of employment tax assessments appearing on Commissioner's lists the Federal Insurance Contributions Act; 121 offers in the amount of Sources Items $9,931 were accepted in settlement of tax liability of $27,010; 68 Tax Penalty Interest Total offers, amounting to $7,744 and involving tax liability of $34,449, were Federal Insurance Contributions Act_ 18, 718 $977, 652. Federal Unemployment Tax Act____ 39 $125, 582.94 $50, 922. 91 $1, 154, 158. 24 rejected, leaving on hand at the close of the year, 129 offers totaling 25, 628 4,509, 399. 33 328, 536. 19 365, 000. 61 Carriers taxes ------71 247, 5, 202, 936. 13 $26,827 and involving tax liability of $71,464. 543. 94 17. 39 20, 661. 16 268, 222.49 Total ------Bureau and the 44, 417 5,734, 595. 66 Coordination with Social Security Board.—The 454, 136. 52 436, 584.68 6, 625, 316. 86 Social Security Board continued to coordinate their decisions on questions involving provisions common to Title II of the Social Taxes under the Federal Insurance Contributions Act.—Collections Security Act and the Federal Insurance Contributions Act. At the of taxes imposed under the Federal Insurance Contributions Act beginning of the fiscal year, 77 inquiries from the Board relating to amounted to $605,350,176 for the year, as compared with $529,835,534 such provisions were pending before the Bureau. During the fiscal for 1939, an increase of $75,514,642. These amounts include both the year, 613 similar inquiries were received from the Board, and 512 were employees' tax and the employers' tax, each of which was imposed disposed of, leaving 101 pending at the close of the fiscal year. Copies at the rate of 1 percent of taxable wages paid. Returns under the -of 423 opinions of the general counsel of the Federal Security Agency Act are required on a quarterly basis, 7,868,402 being filed during the were furnished to the Bureau, and copies of 90 opinions of, or rulings fiscal year, as compared with 7,520,711 filed in the preceding year. approved by, the Chief Counsel for the Bureau were transmitted to The complete and final audit of returns under the Act is conducted in the offices of collectors of internal revenue. the Federal Security Agency. Tax under the Federal Unemployment Tax Act.—The tax under the The following table sets forth information relative to claims disposed Federal Unemployment Tax Act is imposed on employers of eight or of under the Federal Insurance Contributions Act and/or Title. VIII of the Social Security Act: more. The rate is 3 percent on taxable wages paid during 1939 with respect to employment. Collections amounted to $106,123,156, as Claims under the Federal Insurance Contributions Act and/or Title VIII of the compared with $101,166,703 for the fiscal year 1939, an increase of Social Security Act received and disposed of during the fiscal year 1940 $4,956,453. There were 367,670 returns filed during the fiscal year, Claims: Number as compared with 367,235 filed during the preceding fiscal year. Pending at beginning of year ------5, 180 The return for each calendar year is due on January 31 following the Filed during year (new claims) ------.close of the year unless an extension of time for filing is granted. Received from other sources ------15, 307 342 Against the tax imposed by the Act, a taxpayer is entitled to a credit Total to be disposed of ------(not exceeding 90 percent of the tax) for contributions paid to unem- 20, 829 ployment funds under a State law approved and certified by the Social Allowed in full or in part ------Rejected ------14,391 'Security Board to the Secretary of the Treasury. With certain Canceled ------3,597 exceptions the contributions, to be allowable as credit, must be paid 197 into the State funds on or before the date the Federal return is required Total disposed of ------18, 185 to be filed. The Social Security Act Amendments of 1939, enacted August 10, 1939, extended the time within which contributions could Pending at end of year ------, Certificates of allowance issued when no claims were filed__ _ 2 644 5, 32] 12 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 13 •

be paid into a State fund in order to be allowable as credit against the Number of Federal unemployment tax returns (annual) received, reopened, and dis- Federal tax. With respect to the calendar years 1936 to 1938, posed of by the Bureau during the fiscal year 1940 and the number pending at the inclusive, the amendments provide that contributions paid before the beginning and close of the year, by tax years sixtieth day after enactment could be allowed as credit. For the On hand Received Reopened Disposed On hand year 1939 it is provided that contributions may be credited against the Tax year July 1, during during Total of during June 30, Federal tax, in addition to contributions paid on or before the last day 1939 year year year 1940 the Federal return is required to be filed, if paid after such last day but 1936 ------2, 984 5, 424 9, 999 18, 407 16, 846 1, 561 before July 1 next following. However, with respect to contributions 1937 ------39, 378 15, 241 19, 479 74, 098 61, 829 12, 269 paid after the last day the Federal return is required to be filed but 1938 ------308,789 20,248 19, 512 348,549 323, 906 24,643 before July 1 next following, the taxpayer may only credit an amount 1939 ------None 326, 757 None 326, 757 None 326, 757 which does not exceed 90 percent of the.amount which would have been Total ------351, 151 387,670 48, 990 767, 811 402, 581 365, 230 allowable as credit on account of such contributions had they been paid on or before such last day. The Bureau submitted 249 returns to the field for investigation The amendments made a further important change in the law, during the fiscal year. Independent of these cases, the field force beginning with the year 1939, by imposing the tax on a wages "paid" submitted reports, prepared in connection with income tax investiga- basis as distinguished from a wages "payable" basis as used in the tions, for the years 1936, 1937, and 1938, which are included in the prior years. Beginning with January 1, 1940, numerous changes following table: were made by the amendments in exemptions from the tax, excepted services, and the amounts which constitute taxable wages. Revenue agents' reports received and disposed of by the Bureau during the fiscal year For the calendar year 1939 unemployment compensation laws of 1940 and the number pending at the beginning and close of the year, by tax years the 48 States, the District of Columbia, and the Territories of Alaska and Hawaii were approved and certified to the Secretary of the On hand Received Disposed On hand Tax year July 1, during Total of during June 30, Treasury by the Board. 1939 year year 1940 For the purpose of enabling the Bureau to determine whether the amount of credit claimed by a taxpayer for contributions to a State 1936 304 2, 272 2, 576 2,506 70 1937 1, 101 4,141 5,242 4, 845 397 fund is correct, each State furnished the Bureau with a statement for 1938 None 4, 382 4, 382 3,542 840 each employer, showing the amount of contributions paid by the employer on or before the date the Federal return is required to be Total - 1, 405 10, 795 12, 200 10, 893 I, 307 filed and the amounts and dates of payments made thereafter. During the fiscal year 1940 there were received from the States 1,172 such Of the total of 10,893 revenue agents' reports disposed of during the statements for the year 1936, 4,446 for 1937, 55,564 for 1938, and year, 1,904 were closed showing no change in tax liability, 7,777 show- 440,888 for 1939. ing deficiencies in tax amounting to $1,158,859, and 1,212 showing In addition to the credit against the Federal tax for contributions overassessments of $216,205. actually paid into State funds, the taxpayer may be entitled to an The following table sets forth information relative to claims ad- additional credit under section 1601(b) of the Act. This additional justed and certificates of overassessment or of allowance issued under credit is allowable to an employer if, by reason of having stabilized the Federal Unemployment Tax Act and/or Title IX of the Social the employment of his employees in a State, he is granted a "merit Security Act: rate" under the laws of the State and is thereby permitted to pay contributions at a lower rate than that paid generally by other Claims under the Federal Unemployment Tax Act and/or Title IX of the Social employers. Certain conditions with respect to a State law are imposed Security Act received and disposed of and certificates of overassessment issued by the Act that must be met before an employer is entitled to the during the fiscal year 1940 additional credit. For the calendar years 1938 and 1939 the State of Claims: Number Pending at beginning of year - - - - - 8, 439 Wisconsin was the only State having a law that complied with the Filed during year (new claims) ------22, 984 conditions imposed by the Act. For the year 1938 there were 110 Received from other sources ------53 employers with employment in that State who were granted a "merit rate," and for the year 1939, 2,804. Total to be disposed of ------31, 476 Field investigations conducted by the States in connection with the Allowed in full or in part ------18, 074 administration of State unemployment laws resulted in numerous Rejected ------4, 534 correction statements being submitted to the Bureau, showing Canceled ------250 changes in the amounts standing to the employers' credit in the State funds. This caused a considerable number of cases to be reopened for Total disposed of ------22, 858 audit by the Bureau. Pending at end of year ------8, 618 Certificates of overassessment and certificates of allowance issued when no claims were filed ------7, 829 14 REPORT OF COMMISSIONER OF INTERNAL REVENUE • REPORT OF COMMISSIONER OF INTERNAL REVENUE 15 •

Claims under the Federal Unemployment Tax Act and/or Title IX of the Social . Claims under Chapter 9, Subchapter B, Internal Revenue Code, and/or the Carriers Security Act received and disposed of and certificates of overassessment issued' Taxing Act of 1937 received and disposed of during the fiscal year 1940—Con. during the fiscal year 1940—Continued Claims—Continued. Number Overassessments settled by: Amount Allowed in full or in part ------257 Abatement ------$2, 338, 112. 84 Rejected • 56 Credit ------65, 235. 65 Canceled ------17 Refund ------1, 833, 301. 74 Total disposed of ------330 Total 4, 236, 650. 23• Interest - - - -54, 178. 86 Pending at end of year ------44 Certificates of allowance issued when no claims were filed ------21 Grand total ------4, 290, 829. 09. Overassessments settled by: Amount

NOTE.— Abatement ------$104, 737. 36 The amount involved in claims filed during the year 1940 was $4,891,260.46. Included in the , allowed claims shown in the above tabulation were 3,051 collectors' claims for abatement, of which 38 were Credit ------115, 095. 14 multiple-item claims involving 613 items. There were also allowed 4,665 collectors' claims recommending Refund - - - 8, 794. 11 refunds of $65,886.79, plus interest of $1,715.59. The amount involved in the claims rejected during the year totaled $527,414.21. Total - - - -228, 626. 61 405. 57 Offers in compromise.—On July 1, 1939, there were on hand 81 offers Interest - - - - in compromise, aggregating $8,226, which had been submitted in set- Grand total ------229, 032. 18 tlement of an aggregate liability of $46,454, incurred under Title IX NOTE.—The amount involved in claims filed during the year 1940 was $168,245. Included in the allowed claims shown in the above tabulation were 50 collectors' claims for abatement. There were also allowed 4 of the Social Security Act. There were 222 offers received, in the collectors' claims recommending refunds of $940.27, plus interest of $63.72. The amount involved in the total amount of $28,895, involving an aggregate tax liability of claims rejected during the year totaled $56,279.07. $191,992, incurred under Title IX of the Social Security Act and/or the Federal Unemployment Tax Act; 74 offers in the amount of Coordination with Railroad Retirement Board.—The Bureau and the $6,364 were accepted in settlement of tax liability of $36,731; 127 Railroad Retirement Board continued to coordinate their decisions on offers, amounting to $14,249 and involving tax liability of $96,232, questions involving provisions common to the Railroad Retirement were rejected, leaving on hand at the close of the year 102 offers total- Act of 1937, the Railroad Unemployment Insurance Act, and Sub- ing $16,508 and involving tax liability of $105,483. chapters B and C of Chapter 9 of the Internal Revenue Code, as Carriers taxes (Chapter 9, Subchapter B, I. R. C.).—Collections of amended. At the beginning of the fiscal year, 2 inquiries from the employers' tax and employees' tax under Chapter 9, Subchapter B, of Board relating to such provisions were pending before the Bureau. the Internal Revenue Code (employment by carriers) aggregated During the fiscal year, 13 similar inquiries were received, and 12 were $122,037,661, as compared with $109,419,458 for the previous year, disposed of, leaving 3 pending at the close of the year. Copies of 263 an increase of $12,618,203. Each tax was imposed at the rate of 2% opinions of the General Counsel of the Railroad Retirement Board percent of the taxable compensation earned during 1939, and at the were furnished to the Bureau and copies of 18 opinions of, or rulings rate of 3 percent earned during 1940. Collections of employee repre- approved by, the Chief Counsel for the Bureau were transmitted to sentatives' tax, which was imposed at the rate of 5% percent of the the Board. taxable compensation earned during 1939, and at the rate of 6 percent INCOME TAX UNIT earned during 1940, amounted to $9,982, as compared with $7,169 for General functions.—The Income Tax Unit is charged with the the previous year, an increase of $2,813. Returns are required on a. administration of the internal-revenue laws with reference to taxes quarterly basis, 31,915 being filed by employers and 1,698 by employee on income, excess profits of corporations, excess profits on Navy and representatives, an increase of 1,294 and 291, respectively, over the. National f3efe nse Act contracts, unjust enrichment tax, and refunds previous year. The complete and final audit of these returns is con- of certain processing taxes. The administration includes interpreta- ducted in the offices of collectors of internal revenue. tive instructions and rulings regarding the provisions of the revenue The following table sets forth information relative to claims dis- laws relating to such taxes and the verification and adjustment of posed of under Chapter 9, Subchapter B, Internal Revenue Code, the returns through audits and field investigations for the purpose of and/or the Carriers Taxing Act of 1937: securing the correct determination of tax liabilities as required by law.' Claims under Chapter 9, Subchapter B, Internal Revenue Code, and/or the Carrier& Taxing Act of 1937 received and disposed of during the fiscal year 1940 INCOME AND EXCESS-PROFITS TAXES Claims: Number Collections.—During the fiscal year 1940, collections of income and Pending at beginning of year ------92 excess-profits taxes amounted to $2,121,073,129. This compares Filed during year (new claims) ------273 Received from other sources ------9 with $2,178,430,970 collected in the fiscal year 1939, a decrease of $57,357,841, or 2.6 percent. The comparison in detail is as follows: Total to be disposed of ------374 1 Returns on Form 1040-A, individual income tax returns for net incomes of not more than $5,000 derived chiefly from salaries, wages, dividends, interest, and annuities, and Form 1040-C, individual income tax returns of departing aliens, are audited by the collectors of internal revenue and not by the Income Tax Unit. 16 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL. REVENUE 17 Collections during the fiscal years 1939 and 1940 Examination of income tax returns upon receipt by the Income Tax Fiscal year Unit.-The returns described in the foregoing table, with certain ex- increase or Source decrease ceptions, are forwarded by the collectors to the Income Tax Unit at 1939 1940 Washington.' As of June 30, 1940, substantially all the returns filed within the Corporation income tax: ' Currenteelleetions 2 $963,353,166 $958, 260, 442 -$5, 092,724 fiscal year by taxpayers had been transmitted to the Washington Back collections 159, 187, 635 162, 321, 108 3, 133;473 office of the Income Tax Unit and examination had been completed Total 1, 122, 540, 801 1,120, 581, 550 -1, 959, 251 of all of these returns, with the exception of those not accepted as filed. Excess-profits tax: Current collections 2 24, 484, 167 15, 388, 825 -9, 095, 342 The number of returns of individuals, taxable fiduciaries, and corpora- Back collections 2 2, 572 206 3, 085, 378 513, 172 tions which were not accepted as filed. was 747,198. The returns not Total 27, 056, 373 18, 474, 203 -8, 582, 170 accepted as filed are transmitted to the field offices of the Income Tax Individual income tax: Current collections 2 937, 380, 280 891, 754,121 -45, 626,159 Unit for further consideration. In the main this represents the work Back collections 2 91,453, 516 90, 263, 255 -1,190, 261 load of the field offices for the fiscal year 1941. Prior to shipment Total 1, 028, 833, 796 982, 017, 376 -46, 816, 420 of these returns to the field offices various information at the source Total income and excess-profits tax 2, 178, 430, 070 2, 121,073, 129 -57,357,841 Unjust enrichment taxes 6, 683, 335 8, 536,178 1, 852, 843 forms and other documents bearing upon the audit of these returns Grand total 2, 185, 114, 305 2,129, 609, 307 -55, 504, 908 are associated with them for use in the investigation work of these offices. The number of information at the source forms filed during The corporation income tax collections for the fiscal year 1939 include 59 775 and for the fiscal year 1940 include $2,931 paid by the Alaska Railways under sections 1300 and 1301 of the Internal Revenue Code. the fiscal year showing income payments was approximately This figure differs from the corresponding item in the report for the fiscal year 1939, due to the fact that the income tax collections of $9,775 paid by the Alaska Railway were omitted from this item but were included 21,350,000. in the grants total. In addition, these collections also include tax withheld at source under sections 143 Investigations and adjustments of income tax returns by the field and 144 of the Internal Revenue Code, and reported by withholding agents, although much of this tax was withheld from taxpayers other than corporations. The exact amount of these collections cannot be stated offices.-The number of income tax returns, including partnerships as it has not been tabulated separately. 2 The term "current" collections means in general taxes paid within 12 months after the close of the tax- and fiduciaries, investigated during the fiscal year 1940 was 424,072, able year for which the return was filed. The term "back" collections means in general taxes paid more as compared with 490,673 for the previous fiscal year. These figures than 12 months after the close of the taxable year for which the return was filed. include all returns for which the examiner's report has been submitted, Returns filed.-The number of all types of income tax returns filed whether or not the case has been finally disposed of by the reviewing during the past fiscal year on which tax was assessed was 4,324,275, officers. Notwithstanding this decrease in number of investigations, compared with 3,439,041 returns filed in the fiscal year 1939,' an the additional tax assessments (excluding jeopardy and duplicate increase of 885,234, or 25.7 percent. In addition, 4,664,137 tax- items) increased, being $200,342,371 for 1940, as compared with payers filed 'returns during the fiscal year 1940 showing no income $195,278,426 for the previous year. subject to tax, compared with 4,132,592 such returns for the preceding In relation to the total technical personnel assigned to the field fiscal year. The total number of income tax returns filed by indi- offices, the average amount of additional tax assessed for each agent viduals was 7,840,079, which is larger than the number filed in any was higher for 1940 than for 1939, being $59,573 for the fiscal year previous fiscal year in which substantially similar filing requirements 1940 as against $58,695 for 1939. The actual number of individual, existed. Details on the number of returns filed are as follows: taxable fiduciary, and corporation income tax returns disposed of by the field offices during the fiscal year 1940, with and without inves- Fiscal year tigation, was 858,321-consisting of 588,631 returns in which no change in tax liability was made, 211,629 returns in which additional Income tax returns of 1939 2 1940 tax was recommended, and 58,061 in which a reduction of tax was recommended. In addition, the field offices disposed of 550,842 Taxable Nontaxable Total Taxable Nontaxable Total partnership and nontaxable fiduciary returns. There was a net Individuals I 3,099, 449 3, 314, 864 6,414, 313 3, 970, 543 3, 869, 536 7, 840,079 Domestic and foreign corpora- improvement in the position of the field offices as indicated by the tions 170,547 373, 149 543,696 200,715 340,220 540,935 following inventory. Personal holding companies 654 5, 767 6,421 397 5, 471 5,868 Nonresident alien individuals... 101, 339 (2) 101,339 73, 783 (2) 73, 783 Inventory of returns on hand in the field offices as of June 30, 1940.- Withholding agents for tax with- The number of open income tax returns on hand in the field offices as held at source 15, 167 (2) 15, 167 14, 928 (2) 14, 928 Fiduciaries 51, 88.5 160, 393 212, 278 63, 909 157, 376 221,285 of June 30, 1940, was 406,616, as compared with 455,256 for June 30, Partnerships 277,573 277, 573 290, 704 290,704 All other 896 896 830 830 1939. The net reduction as between the end of the two fiscal years 4, 132, 642 7, 571, 683 4, 324, 275 4, 664, 137 8,988, 412 was 48,640, or 10.7 percent. The net reduction in prior-year work Total 3,439,041 was 10,264 in number of returns, or 15.6 percent. The percent of 1 Includes 1,831,331 taxable and 2,228,063 nontaxable Forms 1040-A ft ed during the fiscal year 1939 and open prior-year work to open current-year work at the end of 1940 was 2,465,118 taxable and 2,748,046 nontaxable Forms 1040-A filed during the fiscal year 1910. In the 1930 report the taxable fiduciary returns were included with returns of individuals, whereas in this report these returns 15.8, as compared with 16.9 percent for 1939. are shown separately. 2 Reported with the taxable returns. I Returns on Form 1040-A, individual income tax returns for net incomes of not more than $5,000 derived Returns of nontaxable fiduciaries and partnerships and the group designated "All other" are included chiefly from salaries, wages, dividends, interest, and annuities, and Form 1040-C, individual income tar in this table for the first time and, therefore, the total nontaxable returns shown as filed for 1939 Is larger returns of departing aliens, are audited by the collectors of internal revenue and not by the Income Tax than the corresponding item in the 1939 report by the number of such returns. Unit. Nontaxable fiduciary returns, Form 1041, and partnership returns, Form 1065, are retained in the- offices of the collectors for examination by representatives of the field offices of the Income Tax Unit. ' Including in each fiscal year the delinquent returns filed during that year relating to prior years. 18 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 19

Number of income tax returns on hand in the field offices for investigation and in For a distribution of the additional income tax assessments made process of settlement, by tax years, as of June 30, 1939 and 1940 during the fiscal year 1940 by tax years to which the assessments relate, see pages 103-107. Number of income Number of income Stage at which additional tax was assessed.-Further progress was tax returns on tax returns on hand as of June hand as of June made in effecting settlement of additional tax liabilities by agreement Tax years 30- Tax years 30- with the taxpayers prior to the issuance of the statutory notice re-

1939 1940 quired in those cases in which the taxpayers desire to exercise their 1939 1940 right of appeal to the Board of Tax Appeals and the appellate courts. 1920 and prior il Of the total number of 213,339 returns on which regular additional eu 239 1933 1, 435 1, 113 1921 63 1934 4,1185 2,885 1922 assessments (including duplicate-regular) were made, 199,044, or 93.3 ct 63 1935 12, 349 5,620 1923 “' 76 1936 44, 532 18,041 percent, was by agreement with the taxpayers without the necessity of 1924 4 84 1937 100,144 26,432 1925 =C 104 1938 289,151 110,789 a statutory notice. Of the total regular additional tax assessed 1928

4 132 1939 268 240,010

.9 (including duplicate-regular), aggregating $211,475,370, the amount 1927 160 1940 388 1928 1 225 assessed by agreement was $165,810,823, or 78.4 percent.

1929 , e11 376 Totals 455, 256 408, 616 1930 503 A comparison of the assessments by stages at which made as between 1931 1 572 Total prior year returns 65, 693 55, 429 the fiscal years 1939 and 1940 follows: 1932 741 Total current year returns.... 389, 563 351,187 Number and amount of additional income tax assessments made by the Income Tax Unagreed adjustments pending.-The number of returns involving Unit during the fiscal years 1940 and 1939 by stages at which assessment was made unassessed back taxes was materially reduced during the year. The number of examined income tax returns involving adjustments not Stage at which additional assess- N1m Percent Additional Percent - bar of of total Interest Penalty Total agreed to by the taxpayers and pending action by the Bureau and its meet was made returns of total tax field offices on June 30, 1940, was 31,507. 1 This compares with 45,033 1 adjusted returns pending without taxpayers' agreement on FISCAL YEAR 1940 June 30, 1939, a decrease of 13,526. The number of returns for 1939 On agreements executed prior to Dollars Dollars Dollars Dollare mailing of 90-day letter 199, 044 93.3 165, 810, 823 78.4 25, 386, 378 1, 250,158 192, 956.357 shown as 45,033 is the revised figure. It was shown in the previous Default or agreement after issu- report as 43,984. ance of 90-day letter 10, 522 4. 9 12, 714, 788 6.0 2, 500, 731 821, 881 16, 037, 400 In appealed cases after trial on Revenue results of audit and investigative efforts of the Income Tax the merits and decision by the Board of Tax Appeals, or upon Unit.-The total additional assessments made during the fiscal year stipulation before the Board of cases settled by Technical 1940 was $284,442,733. Excluding jeopardy and duplicate items, the 15.8 13, 314, 964 900, 490 47,185, 213 amount was $242,856,510, which was the largest for any fiscal year Staff and/or Chief Counsel.... 3, 773 1.8 32.949, 759 Total ^13, 339 100.0 211, 475, 370 100.0 41, 202, 071 2, 981, 529 255, 658, 970 since 1929. An analysis of the assessments for the fiscal year 1940 Jeopardy provisions of the Code 1, 568 19, 676, 342 4, 307, 076 4, 800, 345 28, 783, 783 as compared with the fiscal year 1939 fol ows: Grand total 214, 907 231, 151, 712 45, 509, 147 7, 781, 874 284, 442, 733 Additional income tax assessments made during he fiscal years 1940 and 1939, by FISCAL YEAR 1939 nature of assessment On agreements executed prior to mailing of 90-day letter 226, 216 93. 8 144, 506, 648 73.1 20, 443, 922 843, 855 165, 594, 225 Default or agreement after issu- 22, 569, 375 Nature of assessment Number Additional ance of 90.day letter 10, 840 4.5 17, 767, 854 9. 0 3, 738, 315 1,063, 206 of returns tax Interest Penalty Total In appealed cases after trial on the merits and decision by the Board of Tax Appeals, or upon • stipulation before the Board of FISCAL YEAR 1940 cases settled by Technical Regular 212, 797 $290, 342, 371 $39, 631, 242 $2, 882, 897 $292, 856, 510 Staff and/or Chief Counsel._ 4,115 1. 7 35, 381, 557 17.9 15, 929, 300 388, 692 51, 879, 549 Jeopardy I I, 568 19,676, 342 9, 307, 076 4,800, 345 28, 783, 763 Duplicate I 542 11,132, 999 1, 570,829 98,632 12, 802, 460 Total 241, 171 100.0 197, 656, 059 100.0 40,1I1, 537 2, 075, 553 239, 843,149 Jeopardy provisions of the Code.. 1,904 20,301,346 5, 059, 731 3, 568, 828 28, 929, 904 Totals 214, 907 231, 151, 712 45, 509, 147 7, 781, 874 284, 442, 733 Total 243,075 217, 957, 405 45,171, 268 5, 644, 379 268, 773,053 FISCAL YEAR 1939 Regular 240, 317 195, 278, 428 39, 102, 219 1, 883, 594 236,264,239 Jeopardy I 1,904 20, 301. 346 5, 059, 731 3, 568, 826 28, 929, 903 Duplicate I 854 2,377,633 For a distribution of the additional assessments made during the 1, 009, 318 191, 960 3, 578, 911 fiscal year 1940 by tax years for each stage at which assessment was Totals 293, 075 217, 957, 405 45,171, 268 5, 644, 380 268, 773,053 made, see pages 103-107. I Duplicate assessments made under the jeopardy provisions are included with the jeopardy assessments. I Includes 5,273 income tax returns, on which statutory notices have not been issued, which were pending before the field offices of the Technical Staff as of June 30, 1940, and 4,950 such returns as of June 30, 1939. 20 REPORT OF COM1VITSSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 21

An historical comparison of the progress in settlement of addi- There were also allowed 30,950 collectors' claims, of which 14,364 tional tax liabilities by agreement with the taxpayers without the recommended abatements or credits and 16,586 recommended re- necessity of issuing a statutory notice follows: funds. These claims were largely multiple-item claims, or claims for refund to numbers of taxpayers, and involved 27,648 items for abate- Percent of total additional tax, interest, and penalties assessed by agreement with ment or credit and 72,777 items for refund. taxpayers without the necessity of issuing a statutory notice to total regular addi- There follows a table showing the amount involved in tax overassess- tional tax, interest, and penalties assessed for the fiscal years 1931 through 1940 ments settled during the years 1939 and 1940 resulting from audit of Fiscal years: Percent Fiscal years: Percent income tax returns, including cases settled by the collectors' offices as 1931 47. 2 1936 61. 4 well as the Income Tax Unit: 1932 50. 7 1937 73. 3 1933 36. 3 1938 73. 2 1934 31. 6 1939 69. 0 Amounts of overassessment, by method of settlement, and interest allowed on all income 1935 50. 9 1940 75. 3 tax cases closed during the fiscal years 1939 and 1940 Petitions to the Board of Tax Appeals of income tax cases.-Income Fiscal year ending June tax cases petitioned to the Board during the fiscal year 1940 involved 30- 5,386 returns and proposed tax deficiencies of $69,970,847. This compares with 6,197 returns and tax deficiencies of $84,191,420 for 1939 1940 the fiscal year 1939. For a statement showing the number of returns, Overassessments settled by- proposed tax, interest, and penalties in petitioned cases, classified by Abatement: tax years, see pages 103-107. Regular $33, 909, 690 $98, 764, 513 Duplicate 16, 663, 843 29, 627, 955 Refunds, abatements and credits.-The number of income tax cases Credit 12, 347, 755 11, 711,124 which involved refunds or credits of tax or interest to taxpayers or Refund 22, 772, 014 36, 824, 426 Total 85, 693, 302 176 828, 018 abatement of tax audited and closed by the Income Tax Unit during Interest 4, 907, 898 the fiscal year 1940 was 81,711, by comparison with 76,834 such cases 9, 108, 623 closed during the fiscal year 1939, an increase of 4,877, or 6.3 percent. Grand total 90, 601, 200 185, 936, 641

Of the total of 81,711 overassessments for 1940, 38,771 were made to NOTE.-The amount involved in claims filed during the year 1940 was $156,272,676, compared with $117,- taxpayers without the necessity for filing claims. This compares 408,145 the preceding year. Of the claims disposed of during the year, the amount rejected totaled with 41,930 in the previous year. $143,847,884, compared with $85,236,575 the preceding year. Of the overassessments settled by the Income Tax Unit in 1940, Depreciation.-Depreciation deductions claimed by taxpayers on 71,648 represented refunds or credits of tax or interest involving returns filed were disallowed in the aggregate amount of $103,132,078. $55,810,102, by comparison with 58,422 involving $38,020,839 in 1939. Additional tax resulting from such disallowances was proposed in the The amount involved in overassessments of all types for 1940 repre- amount of $14,661,992, of which $14,553,217 was agreed to by the sented by refunds, credits, interest, and abatements for income tax taxpayers. cases audited in the collectors' offices as well as by the Income Tax Unit was $185,936,641, as compared with $90,601,200 the previous MISCELLANEOUS TAX UNIT year. The Miscellaneous Tax Unit is concerned with the administration There follows a table showing a comparison of claims and certifi- of all internal revenue taxes except the income and excess-profits cates of overassessments issued for the fiscal years 1939 and 1940 by taxes, the taxes applicable to alcoholic beverages, and those relating the Income Tax Unit: to employment. Detailed statements concerning the particular taxes Number of certificates of overassessment issued and claims disposed of during the administered in each of the five divisions of the Miscellaneous Tax fiscal years 1939 and 1940 Unit are set forth in the pages that follow. Collections of miscellaneous taxes for the fiscal year 1940 amounted 1939 1940 to $1,753,068,908, an increase of $84,837,826 as compared with col- lections for the preceding year. Allowances: ESTATE TAX DIVISION.-The Estate Tax Division administers the Certificates of overassessment issued when no claims had been filed 41, 930 38, 771 Claim allowed in full or in par t 34,904 42,940 laws applicable to the estate tax and the gift tax. Total allowances 76,834 81, 711 Collections of estate tax for the year amounted to $330,886,049, a Status of claims: decrease of $1,393,564 as compared with collections for the preceding Pending at beginning of year 32,415 40,140 Filed during year (new claims) 51,925 53,080 year. Total to be disposed of 84,340 93,220 Collections of gift tax amounted to $29,185,118, representing an Allowed in full or in part 34, 904 42, 940 increase of $749,521 over the previous year. Rejected 9, 296 16, 775 Total disposed of 44,200 59,715 Assessment and collection of additional taxes amounting to $14,- Pending at end of year 40, 140 33, 505 410,452 proposed in 321 estate tax and gift tax cases were deferred pending the adjudication of appeals filed with the United States Board of Tax Appeals.

REPORT OF COMMISSIONER OF INTERNAL REVENUE 22 REPORT OF COMMISSIONER OF INTERNAL REVENUE 23 Returns.—There were 18,908 estate tax returns and 14,435 gift tax Court decisions.—On November 6, 1939, the Supreme Court of the returns filed during the year. United States handed down a decision in the case of Sanford's Estate The close of this fiscal year marked the end of the first full year in v. Commissioner (308 U. S., 39), which involved the question of whether which the decentralization program was in effect throughout the entire in the case of a transfer in trust the gift tax was applicable when the field. In addition to the results obtained through the post-audit donor relinquished a power to revest title in himself although he re- review of the cases closed in the field, appropriate steps were taken to tained the right to change the beneficiaries, or whether the gift was furnish the field officers with information designed to secure greater completed at a later date when he relinquished the right to change the uniformity of action and to explain or clarify the procedure and beneficiaries. The Court held that the gift was completed and the practice. Formulas and tables were furnished field officers to be used tax attached at the later date. in the determination of the tax in the more complicated cases. On January 29, 1940, the Supreme Court decided, in the case of As a result of Bureau and field investigations and audits, deficiencies Helvering v. Hallock (309 U. S., 106) and certain related cases, that in tax amounting to $47,874,115 were assessed in estate tax cases and an intervivos transfer of property in trust, with provision for return $5,693,999 in gift tax cases. or reversion of the corpus to the donor upon a contingency terminable at his death, comes within section 302(c) of the Revenue Act of 1926, Number of estate tax and gift tax returns on hand, received, and audited during the and that section as amended by section 803 of the Revenue Act of fiscal years 1939 and 1940 1932, relating to transfers intended to take effect in possession or enjoyment at or after death. Estate tax Gift tax TOBACCO DIVIBION.—The Tobacco Division is concerned with the 1939 1940 1939 1940 administration of the laws and regulations relating to the taxes on tobacco, snuff, cigars, cigarettes, cigarette papers and tubes, the pur- On hand at beginning of year 12,878 14,173 5,094 9, 814 chase and sale of leaf tobacco, and the removal of tobacco products Received 18, 265 18,908 13, 614 14, 935 without the payment of tax, for export, for use of the United States Total to be disposed of 31, 143 33,081 18, 708 19, 249 Disposed of 16, 970 20,174 13, 894 113,657 and as sea stores. On hand at end of year 14,173 12, 907 4, 814 5, 699 The collections of tobacco taxes for the year amounted to This figure does not Include any cases in which field investigations were made. There were filed with $608,518,444, which amount represents an increase of $28,359,238, or the Bureau 801 reports reflecting the field settlement of gift tax cases; post-audit reviews were made in 804 approximately 5 percent over the collections for the preceding year. eases, and on June 30, 1940, there remained 26 cases on hand awaiting the Bureau post-audit review. A comparison of the collections of tobacco taxes for the fiscal years 1939 and 1940 Claims.—Claims for refund of estate tax and gift tax, with interest thereon, were allowed in the amount of $8,997,204 in 2,003 cases. Increase or decrease (—) The amount allowed included $3,612,654, the refund of which was Source 1939 1940 authorized as a result of court decisions. Amount Percent

Estate tax and gift tax claims received and disposed of during the fiscal year 1940 Cigars (large): Class A $9, 748,072. 51 $9, 894, 669.58 $145, 997.07 Class B 139, 641.82 127,370. 58 —12, 271. 24 ca o6 Estate tax claims Gift tax claims Class C 2, 472, 023.36 2, 435,020. 80 —37,002.56 to Class El 374,686. 98 378,882. 52 4, 195. 54 -an Class E 57,525.82 61,820.09 4, 294. 27 Refund Abatement Refund Abatement Total 12, 792. 550. 49 12, 897, 763.57 105,213.08 .8 Num Num- Num- Amount Num Amount Ainount Amount Cigars (small) 120, 452.82 97,685. 79 —22, 757.03 —14. 9 ber ber ber ber Cigarettes (large) 19, 267. 94 16, 854. 96 —2,412.98 —12.5 Cigarettes (small) 504,036, 932 48 533,042, 544.34 29.005, 811.86 5. & Claims filed: Tobacco, manufactured 54, 757, 043.76 54, 383,802 79 —373, 240.97 On hand July 1, 19W 435 $6, 718,066.46 6 $2, 456.38 177 $13, 712,713.40 Snuff 6.932,019. 20 6, 798, 556. 53 —133,46267 Received 793 11, 51E 535. 55 320 4,018, 176.34 393 3, 649,078.91 68 $57, 521.55 Reopened 49 1,064, 795. 12 34 190, 725.11 Total 61, 689,062. 96 61,182.359. 32 —506, 703.64 Total to be dis- Leaf tobacco sold 7, 163. 25 I, 727.71 posed of 277 19,299, 397 13 326 , 020, 632. 72 604 17, 552, 517. 42 es 57, 521.56 Cigarette papers 1,977, 931.76 1, 252, 252.40 —225,1179. 36 —15.3' Cigarette tubes 15,854.04 27, 255. 50 11,401.46 71. 9 Allowed 565 2, 597,930. 63 294 976, 938.54 219 2, 698,000. 60 63 18, 622.49 Rejected 275 4,632,853. 79 4 1, 541. 47 208 11,010, 562. 41 Grand total 680, 159, 205.79 608,518,443. 59 28, 359, 237.85 4.9 Total disposed of 840 7,23%844. 42 298 , 978, 480.01 427 13, 708, 563.01 63 18. 622. 49 On hand June 30, 1940 437 12,088, 552.71 28 42, 152. 71 177 3, 843, 964.41 5 38,891 06 The tax on small cigarettes amounted to $533,042,544, an increase No claims filed, ovens- of $29,005,612, or 5.8 percent over the previous fiscal year, repre- sessments allowed ,017 2,015, 380.08 846 , 879, 125. 51 202 284,325. 96 44 112, 783.16 Interest allowed 880, 308. 78 541, 207. 97 senting 87.6 percent of the total tobacco taxes collected during the current year. Total amount al- lowed, including 421 3, 503, 534.53 107 131, 405. 65 The withdrawals of tobacco products tax-free for use of the United interest ,582 5, 493, 669.49 640 , 856, 904. 05 States amounted to 66,407,000 cigarettes and 313,460 pounds of

REPORT OF COMMISSIONER OF INTERNAL REVENUE 25 REPORT OF COMMISSIONER OF INTERNAL REVENUE 24 Collections during the fiscal years 1939 and 1940— Continued 2,352 permits were issued manufactured tobacco. During the year Increase or Source 1939 1940 for such withdrawals. decrease (—)

Number of claims for the refund and abatement of tobacco taxes, for the redemption Oleomargarine: and disposed of during the fiscal Colored $38,657.40 $31,116. 52 —$7, 540.88 of tobacco stamps, and for drawback, received Uncolored 822, 417.67 759, 463. 51 —62, 954.16 year 1940 Special taxes 1, 349,310. 98 1, 223, 020. 00 —126, 290.98 —196, 786.02 Uneollectible Drawback Total 2, 210, 386.05 2,013, 600.03 Refund Redemption Abatement Adulterated butter 6, 661.06 13, 275. 31 6, 614.25 Num- Renovated butter 8, 488.86 7,002.89 —1,485.97 Num- Num- Amount Num- Amount Amount 6, 214. 71 6, 241. 83 27.12 Num- Amount Amount ber ber ber Mixed flour ber ber Filled cheese 155. 24 155. 24 1 919.63 21,364.63 26, 675. 27 5,310.64 18 53, 420.86 Total 3 $312. 73 274 $170, 457. 37 $726.26 16 3,804.21 On hand July 1, 1939. 1,964 1, 842, 806.77 73 11,530.28 9 Revenue Act Received 11 3, 303.80 1 69.86 Manufacturers' excise taxes (Title IV, 12 1,694.75 651.8' 1 3,823.77 of 1932, as amended, and Subtitle C, Chapter 29, Reopened I, 985 1, 832, 670.38 68 7, 536.00 .07 356,965, 318.61 404, 298, 499.35 47, 333,180. 74 Allowed 6 1 364.40 19 6,658. 61 74. 37 Internal Revenue Code, as amended) 4 559.59 27 3, 776. 06 Transportation of oil by pipe line 10, 954, 732.60 11, 510, 646.54 555,913.94 Rejected 238 178, 512. 45 7 826. 39 39,859,173.55 92, 338, 501.94 2,479,328.39 On hand June 30, 1040 2, 692.54 1 Electrical energy Telegraph, telephone, cable and radio messages, etc 22, 631, 282.09 25, 000,050. 81 2, 368, 768.72 Leased wires, etc. (telegraph and telephone) 1,462,436. 76 I, 367, 894. 21 —94, 542. 55 1, 980, 525.03 1,988,933.79 8, *B. 76 1 In addition, interest in the amount of $14.68 was allowed. Safe deposit boxes redemp- Total 433,853,468. 64 486, 504, 526. 64 52, 651,058.00 sum of $1,832,670, representing claims allowed for there The Admissions 19,470, 801. 85 21,887,916.00 2,417, 114.15 tion of stamps, includes the following: Stamps which were ndered Dues and initiation fees 6, 216,900. 39 6,334,908.82 118,008. 53 useless, $1,366,697; stamps for which the owner alleged he had no fur- 25, 687, 702. 14 28, 222,824. 82 2, 535,122.68 ther use, $13,787; and the value of stamps affixed to packages of Total Pistols and revolvers 66, 511.36 89, 508.54 22,997.18 tobacco products withdrawn from the market by the manufacturer Narcotics 567, 550.40 605, 395.66 37,845.26 Marihuana 4,537. 53 4,702.60 165.07 or importer, $452,186. 5 96, 294.55 5 502, 322.11 406,027.56 Under the provisions of section 317 of the Tariff Act of 1930, manu- Delinquent under repealed laws facturers are authorized to withdraw from their factories tobacco Total 734, 893.84 1,201,928.91 467, 035.07 products, without the payment of tax, for use as sea stores. These Coconut oils, etc., processed 27, 664,929. 62 22, 794,354.47 —9,920, 575.15 Crude petroleum processed, refined, etc 1 106, 055.32 (4) —106,055. 32 products are delivered directly to vessels or to bonded tobacco sea National Firearms Act__ 9,079.08 12, 388. 68 3, 309. 60 stores warehouses for subsequent delivery to vessels. There are 26 Total 27, 780, 064.02 22, 756, 743.15 —5,023,327.87 such warehouses now in operation. Hydraulic mining 2, 326.14 2,326. 14 Detailed statistics covering the manufacture and removal of manu- Bituminous coal 5 3, 317, 259.01 4, 161,663. 02 844,404.91 factured tobacco, snuff, cigars, and cigarettes, the receipt and shipment Other miscellaneous receipts 51, 621. 37 23,768. 63 —27,852. 74 of leaf tobacco, and the removal of cigarette papers and tubes will be Grand total 534, 739, 599.12 583, 595, 402. 83 48, 855, 803.71 found in the tables in the appendix. Driusiox.—The functions of the Sales Tax Division Repealed as of June 30, 1938. SALES TAX 2 Includes taxes of $83,898.18 on jewelry, $5,361.79 on soft drinks, $4,288.24 on checks, $1,500.65 on candy, include the work relating to the manufacturers' excise taxes, he taxes $1,294.64 on dividends, and $1.05 on grape concentrate. Does not include taxes on sales of produce (future delivery), brewer's wort and malt, toothpastes and toilet soaps, etc., articles made of fur, sporting goods, applicable to the transportation of oil by pipe line, electrica tl energy, cameras, chewing gum, and crude petroleum processed, refined, etc., which were repealed as of June 30, telegraph, telephone, cable and radio communications and facilities, 1938. 3 Includes taxes of $159,810.57 on fur, $193,095.47 on sporting goods, $7 1,655.79 on candy, $64,332.64 on safe deposit boxes, admissions and dues, pistols and revolvers, the Jewelry, $45,242.33 on toothpastes and toilet soaps, etc., $6,822.13 on cameras and lenses, $2,488.17 on malt, $2,363.58 on Checks, $2,075.86 on chewing gum, $2,061.60 on soft drinks, $1,588.13 on brewer's wort, $555.39 processing of coconut and other vegetable oils, bituminous coal, silver, on crude petroleum processed, refined, etc., $270.09 on grape concentrate, and $20.36 on dividends. 4 Collections for fiscal year 1990 included in "Delinquent under repealed laws." hydraulic mining, narcotics and marihuana, the documentary stamp 1939 collections reported in text under Bituminous Coal and silver Tax Divisions. taxes, special occupational taxes, and the enforcement of the National Firearms Act and the Federal Firearms Act. Admission taxes.—Considerable attention has been paid to cases where attempts have been made to avoid payment of the proper taxes Collections during the fiscal years 1939 and 1940 on tickets or cards of admission to theaters, operas, and other places Increase or of amusement, sold at prices in excess of the established price thereof. 1939 1940 decrease (—) Source Investigations were likewise conducted with respect to the delinquent taxes on admissions to cabarets. Collections of delinquent taxes from —$1,221,201.98 Documentary stamps: $19, 366,429.92 $18, 145, 227.94 these sources were materially increased and a number of theater ticket Bonds of indebtedness, capital stock issues, etc_ _ 15,527,050. 19 —1, 536, 537.89 17,064,488.08 —298,982.30 brokers and proprietors of places of amusement and cabarets were Capital stock sales or transfers 1 248, 982. 30 Sales of produce (future delivery) 4, 814,430.40 673, 263. 80 prosecuted for evading payment of appropriate taxes and for failure 4,141,166. 60 —68, 035.73 Playing cards 5 261, 772. 52 193,736.79 Silver bullion, sales or transfer s properly to stamp tickets. Convictions were obtained and fines and 0 41,082,839. 42 38,681,345. 32 —2,401,494.1 terms of imprisonment were imposed in a number of cases. Total 269679-40-3 1 Repealed as of June 30, 1932 Bituminous Coal and Silver Tax Division. 4 1939 collections repotted In text under 26 REPOR'' OF COMMISSIOINER OF INTERNAL REVENUE REPORT OF COMMISSIONER. OF INTERNAL REVENUE 27

Documentary stamp taxes.—The collections of documentary stamp Bituminous coal.—Under the provisions of the Bituminous Coal. taxes applicable to the issue and transfer of corporate bonds, the issue Act of 1937, now Chapter 33 of the Internal Revenue Code, two and transfer of shares of stock, deeds of conveyance, passage tickets, taxes are imposed with respect to the sale or other disposal of bitu- and foreign insurance policies amounted to $33,673,178, as compared minous coal by the producer—a tax of 1 cent per ton on all sales or with $36,679,900 for the preceding year. other disposals and a tax in an amount equal to 19% percent of the Playing cards.—There were 67 manufacturers, repackers, or im- selling price or fair market value of the coal while the producer is not a porters of playing cards registered during the year. There were member of the Bituminous Coal Code if the transaction is subject to manufactured, repacked, or imported a total of 51,667,930 packs of the provisions and conditions of the code. playing cards, as compared with 45,143,829 packs manufactured, During the current year, 63,624 returns of tax were filed by pro- repacked, or imported during the preceding year. ducers and the collections of bituminous coal taxes amounted to Oleomargarine; adulterated, process, or renovated butter.—At the $4,161,664, as compared with 69,243 returns and $3,317,259 in collec- beginning of the year there were 40 manufacturers of uncolored oleo- tions for the preceding year. margarine engaged in the business, and at the end of the year there Silver tax.—Section 8 of the Silver Purchase Act of 1934, now were 41 such manufacturers. The number of manufacturers of colored section 1805 of the Internal Revenue Code, imposes a tax equal to 50 oleomargarine was 24 at the beginning of the year and 24 at the close percent of the net profit realized on the transfer of an interest in of the year. The production of colored oleomargarine amounted to silver bullion, with certain exemptions and rights of abatement avail- 1,859,931 pounds and the production of uncolored oleomargarine able to registered dealers and producers. The collections of silver tax amounted to 301,857,570 pounds, as compared with 1,380,891 pounds amounted to $193,737 during the year, as compared- with $261,773 of colored and 331,591,928 pounds of uncolored oleomargarine pro- for the preceding year. duced during the previous fiscal year. During the year 17,378 returns Hydraulic mining.—The Act of March 1, 1893 (as amended by an were filed by manufacturers and wholesale dealers in oleomargarine. Act of June 19, 1934), known as the California Debris Control Act, The withdrawals, tax free, for export of colored oleomargarine imposes a tax with respect to certain hydraulic mining, the debris amounted to 649,489 pounds, as compared with 155,748 pounds of from which flows into or is in whole or in part restrained by dams or colored oleomargarine withdrawn for export during the preceding other works erected for the detention of debris by the California year, and the tax-free withdrawals of colored oleomargarine for use Debris Commission. The first of four dams to be erected has been of the United States amounted to 896,387 pounds, as compared with completed and one mining operation performed. The tax is paid 867,925 pounds so withdrawn during the previous year. annually and the rate of tax for the completed darn has been determined There were no registered manufacturers of adulterated butter en- by the California Debris Commission to be 2.6 cents per cubic yard gaged in business during the year. Four manufacturers of process or mined. The collections of taxes for the year amounted to $2,326. renovated butter were in business, producing 2,706,852 pounds of Assessments.—A total of $1,109,316,701, representing 990,074 process or renovated butter, as compared with a production of items, was assessed on 2,503 miscellaneous tax assessment lists, which 2,906,117 pounds in the previous year. included original and additional assessments of all miscellaneous Mixed flour.—There were 21 makers, packers, or repackers of mixed internal revenue taxes. Included in the lists were 42,015 additional flour engaged in business during the year, who made, packed, or assessments resulting from office audits and field investigations, repacked a total of 25,468,470 pounds of mixed flour, as compared representing taxes of $66,692,980, and the interest assessed and paid with 23,767,230 pounds for the fiscal year 1939. amounted to $7,650,060.' Firearms, under the National Firearms Act and the Federal Firearms Field reports and returns.—At the beginning of the year there Act.—There were registered with the Bureau during the year, in were on hand 266 field reports, representing additional taxes in the accordance with the requirements of the National Firearms Act, amount of $7,479,833. During the year, 8,496 field reports were 11,223 machine guns and other firearms subject to the provisions of ithat received, representing $8,408,339 in additional taxes. At the close Act, and 141,768 transfers of firearms were made under applications of the year there were on hand 119 reports which were awaiting for such transfers. The total number of firearms registered in additional data or which had not yet been reached for consideration. accordance with the provisions of the Act from July 26, 1934, the In addition to the foregoing, 439,292 sales tax returns, representing effective date of the Act, to June 30, 1940, is 59,399. The collections $524,353,288, were received and examined during the year. of taxes under the National Firearms Act, including .special taxes, As a matter of administrative convenience, the Sales Tax Division completes assessments, schedules amounted to $12,389. claims and certificates of overassessment, and passes on offers in compromise for the Estate Tax Division, the Tobacco Division, the Capital Stock Tax Division, and the Processing Tax Division with respect to The total number of licenses issued during the current year to sugar-tax claims. manufacturers and dealers in firearms, in accordance with the pro- visions of the Federal Firearms Act, was 27,352. Narcotics and marihuana.—The collections of taxes on narcotics, including special taxes, amounted to $605,396, as compared with $567,550 collected during the preceding year. Collections of taxes on marihuana, including special taxes, amounted to $4,703, as com- pared with $4,538 for the preceding year. REPORT OF C'OMMISSIO'NER OF INTERNAL REVENUE 29 28 REPORT OF COMMISSIONER OF INTERNAL REVENUE number of claims received and disposed of by the Offers in compromise.—On July 1, 1939, there were on hand 553 Claims. — The is offers in compromise, aggregating $463,036, which had been submitted Sales Tax Division during the fiscal year ended June 30, 1940, in settlement of civil and criminal liabilities incurred in connection shown in the following table: with the various miscellaneous taxes. There were received 6,206 Number of claims ,received and disposed of by the Sales Tax Division during the fiscal offers, aggregating $994,287; 5,971 offers, aggregating $744,905, were year 1940 accepted; 234 offers in the amount of $89,397 were rejected, and 36 1Incollectible offers totaling $12,158 were withdrawn during the year. At the close Refund Abatement Redemption of the year there were on hand 518 offers aggregating $610,863 Claims awaiting additional evidence or under consideration. Num- Num Num- Num-ber Amount ber Amount ber Amount ber Amount Miscellaneous tax special squads.—The group of internal revenue agents and general deputy collectors assigned to duty under the Sales taxes: direction of the Miscellaneous Tax Unit and operating as a mobile On hand July 1, 1939 . _ __ 1, 342 $10, 355, 146.40 477 $5, 733, 099.55 2 $9, 590. 64 Received 1,989 7, 526, 391. 55 831 2, 960, 108. 21 1,457 659, 513 90 force investigating delinquent taxes on gasoline, lubricating oil, ad- Reopened 100 763, 333. 57 42 259, 266.47 Allowed 1, 505 2, 338, 369. 43 795 3, 545, 316.86 1,458 609,049. 54 missions, documentary stamps, oleomargarine, tobacco, and various Rejected 1, 020 8, 260, 998. 83 197 2, 033, 037. 07 other miscellaneous and manufacturers' excise taxes, continued to On hand June 30, 1940.. 906 8, 044 503.26 358 3, 374,120. 30 1 5.00 Miscellaneous stamps: obtain excellent results in connection with these activities. During the On hand July 1, 1939.... 206 513, 052. 73 92 299, 399. 08 379 $78, 749. 55 1 945.50 Received 281 317, 338.72 220 344, 953.88 2, 557 376, 630.86 225 83, 792.81 year field officers reported a total of 2,640 cases involving $4,855,673 Reopened 14 54, 396. 79 10 42, 453.97 16 28, 605. 43 in additional taxes, penalties, and interest. Allowed 356 450, 084. 23 194 288,904. 63 1, 941 197, 222. 16 225 73, 938.31 76 211, 677. 14 495 93, 263.72 1 10, 800.00 CAPITAL STOCK TAX PlIvistex.—The capital stock tax is imposed Rejected 84 289, 753. 73 516 193,499.96 On hand June 30, 1940... 81 144,950.8 52 186, 225. 16 upon corporations carrying on or doing business during any part of -Narcotics: 13. 00 (2) (2) On hand July 1, 1939.-_ 29 59.50 2 19, 558. 26 the taxable year and is measured by the adjusted declared value of Received 116 180.75 8 223.25 48 370.96 26 Reopened 19, 558. 26 the capital stock of domestic corporations or by the adjusted declared Allowed 135 221. 56 7 16. 75 46 218. 68 26 Rejected 1 5.44 4.00 1 14.00 value of the capital employed in the United States in the case of foreign On hand June 30, 1940... 9 13.25 1 202.50 3 151. 28 corporations. Marihuana: I 1 1 28, 800.00 The collections of capital stock tax during the year amounted to On hand July 1, 1939 28, 990.96 7 16.00 37 195, 955. 26 Received 3 609.78 8 $132,738,537, an increase of $5,535,528 as compared with collections Reopened 1 1,577.30 38 174, 755. 26 Allowed 1 250. 00 3 28, 554. 75 6 12.00 for the preceding year. Rejected 250.00 5 1,913.51 On hand June 30, 1940... 1 109.78 1 100.00 1 4.00 During the year domestic and foreign corporations filed a total of Silver: On hand July 1, 1939 1 203.37 530,584 returns. Of the total number of returns received during the Received 3 130, 581. 57 78 18, 213. 89 3 105. 00 year, 30,609 were filed by corporations organized subsequent to June Reopened 1 203. 37 Allowed 77 18, 022.94 2 55.00 30, 1938, and 31,573 were delinquent returns covering the years 1933 Rejected 3 130, 581. 57 1 50.00 On hand June 30, 1940 1 190. 95 to 1938, inclusive. Coal: 2 11 2 1, 330. 37 As a result of the review and audit of returns during the year, On hand July 1, 1939 . . _ . 001 °93 2 98 2 24 697.66 57, 446. 61 Received 101 12, 931. 76 901 332, 278. 55 735 16,457 assessments were made, involving tax in the amount of Reopened 1 452. 55 2 4.53 710 51, 398.95 Allowed 106 6, 390.84 834 302, 044.04 6, 809. 25 $1,732,327, as compared with 15,772 assessments totaling $1,302,785 Rejected 12 6, 987. 43 67 21, 240. 70 32 On hand June 30, 1840... 8 309.69 100 31, 696.00 4 568.78 made during the previous fiscal year. Total claims: 10, 868, 562. 28 3 667 36 , 055, 196. 29 a 381 278, 762. 55 3 15 3 40, 616. 51 On hand July 1, 1939.... 21, 601 2, 046 3, 684, 768.74 2, 615 377, 122. 82 2, 481 966,470. 21 Number of capital stock tax claims received and disposed of during the fiscal year 1940 Received 2, 493 7, 988, 034.13 55 303,302. 27 16 28, 605.43 Reopened 115 818, 182. 91 4, 182, 859. 97 1,995 197, 507.84 2, 458 988, 903. 69 Allowed 2,103 2, 795, 316.06 1,910 33 17, 609. a Refund Abatement Uncollectible Total Rejected 1,121 8, 688, 577. 00 345 2.267,872.42 497, 93, 327.n 573.7E On hand June 30, 1940... 985 8,190, 888.8 513 3, 592, 534.91 520,I193, 655. 24 5 Num-ber Amount Ni-u Amount Amount Num-ber Amount Num-ber ber One claim for $28,800 transferred from narcotics uncollectibles on hand to marihuana uncollectibles on band. Transferred from Bituminous Coal and Silver Tax Division to Sales Tax Division on July, 1939. On hand July 1, 1939 497 $635, 966.42 108 $41, 622.97 99 $11, 297. 20 704 $688, 886.59 Includes 133 claims involving $24,331.68 transferred from Bituminous Coal and Silver Tax Division to Received 19, 750 45, 433, 665. 46 876 337, 171. 36 1, 525 105, 749. 22 22, 151 95, 876, 586. 04 Sales Tax Division on July 1, 1939. Reopened 77 58, 986. 28 11 1, 339. 17 88 60, 325.45 Allowed 2,195 351, 782.65 617 152, 555. 10 1, 317 100, 400. 18 4, 129 604, 737.93 Rejected 17, 407 44, 448, 488.78 162 77, 502.52 4 1, 918. 03 17, 573 44, 527, 909. 33 Interest was allowed in connection with the claims shown in the On hand June 30, 1940 722 1, 328, 346.73 216 150, 075.88 303 14, 728. 21 1, 241 1, 493, 150. 82 foregoing table in the amount of $286,801. Credit cases.—At the beginning 'of the fiscal year there were on hand 1,172 sales tax credit cases involving $1,001,077. During the Of the 19,750 claims for refund filed during the year 16,407 were year 8,546 cases involving were received and 8,741 based on the contention that the capital stock tax statute is uncon- cases involving $11,743,173 were disposed of by allowances totaling stitutional. $11,708,569 and rejections in the amount of $34,604. At the close PROCESSING TAX DIVISION. —The Processing Tax Division is con- of the year there were on hand 977 sales tax credit cases involving cerned with the administration of the tax imposed on the manufacture $1,215,428. In addition, 2,673 bituminous coal tax credit cases were of manufactured sugar under Chapter 32 of the Internal Revenue disposed of during the year.

30 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 31 Code, and the adjustment of several types of claims arising as a result Claims for refund or payment received and disposed of during the fiscal year 1940- of the invalidation of the taxing provisions of the Agricultural Adjust- Continued ment Act and the repeal of related legislation. Sugar Tax.-During the fiscal year 1940 monthly returns numbering Cotton Ginning Act Tobacco Act 1,927 were filed by manufacturers and tax was collected in the amount Potato Act Number Amount of $68,145,358, as compared with 1,950 monthly returns and collec- Number Amount Number Amount tions of $65,414,058 for the fiscal year 1939, a gam in collections of On hand July 1, 1939 2,481 $51, 174. 09 5,542 $271, 850.20 $2,731,300. There were 1,614 claims in the total amount of $2,048,263 Received 19,933 Reopened 942,066. 29 14,352 484,586.02 2 filed for refund of tax applicable to sugar exported, as compared with 158 2,486.67 501 21,192.13 1 $N11.i Ii; 1,151 claims filed, in the total amount of $842,541, during the preced- Total 22,572 996,327.00 20,395 777,2835 3 681.10 § gi

ing fiscal year. Allowed i. eq 330,817.61 539,421.89 Rejected 666,788. 28 . 931.11 Claims.-The following types of claims are handled by the Process- Transferred to Income Tax Unit 229,950. 55 249.99

On hand July 1, 1940 1 ing Tax Division: 8, 721. 11 18, 766.91 (a) Claims under section 601 of the Revenue Act of 1936 with Total 22, 572 996,327. 00 respect to certain articles exported or delivered for charitable distri- 20,895 777,628.35 3 681.10 bution or use. (b) Claims under section 602 of the Revenue Act of 1936 for pay- Grand total ment with respect to floor stocks held on January 6, 1936, of certain articles made from commodities subject to processing tax under the Number Amount On hand July 1, 1939 Agricultural Adjustment Act. The period of limitations for filing Received 10,835 $18,175, 269. 43 these claims, which originally expired on December 31, 1936, was Reopened 45,994 189,027,801.42 3,935 4,665,303. 75 extended by section 911 of the Social Security Act Amendments of Total 1939 to December 31, 1939. This extension resulted in the reopening 60,764 211,888,374. 60 Allowed of 1,000 claims and the filing of 1,022 claims during the year. Rejected 44,959 5, 088,847.75 Transferred to Incomecome Tar Unit 11, 415 23,272,813.87 (c) Claims under Title VII of the Revenue Act of 1936 for refund Dn hand July 1, 1940 72 171,979,840.89 of processing tax, floor stocks tax, and compensating tax paid under 3,672 11,146,872.09 Total the Agricultural Adjustment Act. There were reopened 1,467 of these 60,764 211,868,374.60 claims and 10,678 were filed during the fiscal year in pursuance of the provisions of section 405 of the Revenue Act of 1939, which extended Sugar tax claims received and disposed of the filing date to December 31, 1939. During the same period 723 during the fiscal year 1940 claims filed by persons who were also liable for the unjust enrichment Export tax imposed by Title III of the Revenue Act of 1936 were transferred Ove payment Livestock to the Unjust Enrichment Division of the Income Tax Unit. Number Amount Number Amount Number Amount (d) Claims for refund of taxes paid under the Bankhead Cotton On hand July 1, 1989 98 $67,773. 40 Act, the Kerr Tobacco Act, and the Potato Act of 1935. The period Received 3 $37.48 1, 614 2, 048, 22.77 34 148,977. 79 4 of limitations for filing these claims, which originally expired on June Reopened 7 249.43 $1,290.80 30, 1939, was extended by the Third Deficiency Appropriation Act, Total 1, 717 2, 116, 285.60 37 199, 015.27 4 1, 290.80 fiscal year 1939, to June 30, 1940. Allowed 1,621 2, 080,087. 79 20 13,398.84 2 Rejected 54 26,531. 17 903.73 Vn hand July 1, 1940 12 129, 134. 52 2 297.07 Claims for refund or payment received and disposed of during the fiscal year 1940 42 10,666.64 5 6,481.91 Total 1,717 2,116, 283.60 37 149,015. 27 4 1, 290. 80 Revenue Act of 1936

Abatement Grand total Section 601 Section 1302 Title vII

Number Amount Number Number Amount Number Amount Number Amount Amount On hand July 1, 1939 1 $280.07 102 $2,912, 967. 13 2, 708 $14,924, 283. 73 Received 100 $68, 090. 95 On hand July 1, 1939 2 $15,494. 33 Reopened 22 83,367.71 1,674 2,281,899.07 Received 7 2,958.33 1, 022 2,213,804. 80 10,678 185,383,354.87 9 31, 413.55 1,667,961.52 1,856 3,067,586. 24 11 31,662.98 Reopened 13 5,827. 20 1,406 Total 27 115, 051.33 6,694, 233.45 15,242 203,378 224.84 1,785 2,381,663.00 Total 22 29, 279. 86 2,530 Allowed Rejected 22 112,892.29 1,665 2, 237, 172.65 Allowed 16 14,852.62 1,251 2, 249, 794. 58 9,035 2,838, 521 94 5 2,869.04 2,841, 155.63 3,165 19,540,792. 18 DTI hand July 1, 1990 73 157,331.80 Rejected 6 9, 427.24 937 47 17,148. 55 Transferred to Income Tax Unit. 723 171, 479,840. 89 2, 319 9,616,111.83 Total On hand July 1, 1940 342 1, 603, 283.24 27 115,061.88 1,785 2,381,6$8.00 Total 22 24, 279.86 2, 530 6,694, 233.45 15,242 203, 375, 224. 84 REPORT OF COMMISSIONER OF INTERNAL REVENUE 33 INTERNAL REVENUE 32 REPORT OF COMMISSIONER OF Ethyl and denatured alcohol.—More ethyl alcohol was produced ALCOHOL TAX UNIT during the fiscal year 1940 than in any prior year. Production amounted to 243,727;756 proof gallons, which is 44,710,210 proof Collections of the liquor taxes amounted to $624,253,156 in the gallons more than the previous year's figure. Tax-paid withdrawals fiscal year 1940, as compared with $587,799,701 in 1939, an increase increased from 22,150,969 proof gallons in 1939 to 24,344,306 proof of $36,453,455, or 6.2 percent. In comparing the yield from the excise gallons in 1940: Of the denatured alcohol produced, 15,352,033 wine taxes on liquors (see table 1, pp. 54 to 61 for taxes grouped under gallons were completely denatured and 111,409,797 wine gallons were this heading), it is found that the largest increase was in distilled specially denatured. This compares with 17,179,433 wine gallons of spirits, for which collections increased 12 percent over the previous completely denatured and 83,561,077 wine gallons of specially de- year. The collections from the excise tax on wines increased 26 per- natured alcohol produced during the fiscal year 1939. cent, while the collections from the excise tax on fermented malt Distilled spirits.—The total production of whisky, rum, gin, brandy, liquors increased 1.9 percent. and other distilled spirits in 1940 was 143,455,192 tax gallons, a Of the total liquor taxes collected, $346,833,775 came from distilled decrease of 1,870,984 tax gallons, or 1.3 percent, from the production spirits, $9,643,194 came from wines, and $267,776,187 came from fer- in 1939. Compared with the previous year, whisky production in- mented malt liquors. Taxes collected from distilled spirits con- creased by 5,989,386 tax gallons, or 6.4 percent, while brandy produc- stituted 55.6 percent of the total in 1940, compared with 53.8 percent tion decreased by 9,019,471 tax gallons, or 32.9 percent. in the previous year. Tax-paid withdrawals of domestic distilled spirits, other than On June 30, 1940, the following producers and distributors of alcohol alcohol, increased from a total of 92,427,100 tax gallons in 1939 to and alcoholic beverages, and users of tax-free alcohol, were under the 103,981,635 tax gallons in 1940, or 12.5 percent. Each kind of spirits supervision of the Alcohol Tax Unit: except brandy shared in this increase. Tax-paid withdrawals of Number whisky increased 12.8 percent, and withdrawals of high-proof spirits Distilleries: 38 Alcohol used in rectification increased over 19 percent. The trend toward the 127 consumption of more mature whiskies continued, the withdrawals of Brandy 124 All other bottled-in-bond whisky, for example, being increased from 6,316,668 Bonded warehouses: 61 tax gallons to 13,569,728 tax gallons, or by approximately 115 percent. Alcohol 283 Withdrawals of distilled spirits for tax payment are permitted in Internal-revenue , 036 1, packages and tank cars direct from distillery cistern rooms. During 98 Bonded wine storerooms 580 the fiscal year, tax-paid withdrawals direct from distilleries were as Breweries 250 follows: In packages, 438,521 tax gallons;•in tank cars, 10,069,763 tail Rectifying plants Wholesale liquor dealers 5, 531 gallons. A total of 103,981,635 tax gallons were withdrawn on pay 0,1 597 ment of tax during the fiscal year (see table 58), of which 93,472,592 Wholesale malt liquor dealers 37 Denaturing plants 52 tax gallons were withdrawn from internal-revenue bonded warehouses Bonded dealers in specially denatured alcohol and 759 tax gallons from export storage warehouses. Withdrawals Bonded manufacturers using specially denatured alcohol 4, 193 Hospitals, laboratories, and educational institutions using tax-free alcohol_ 6, 482 from internal-revenue bonded warehouses consisted of 821,599 tax gallons from tanks, 11,981,487 tax gallons in cases, and 80,669,52( During the year a number of regulations were revised and several tax gallons (including 1,717,695 tax gallons for bottling in bond new regulations issued. A general revision of regulations of this Unit after tax payment) in packages. had not previously been accomplished since the repeal of the eighteenth Total stocks of spirits in internal-revenue bonded warehouses at the amendment. close of the fiscal year aggregated 525,394,924 tax gallons, of whict Dins's:mi.—This division is reponsible for planning PROCEDURE 480,937,609 tax gallons were whisky. and developing procedure for the headquarters and field offices of the Rectified spirits.—The production of rectified spirits increased front Alcohol Tax Unit; assists in drafting regulations, Treasury decisions, 43,401,295 proof gallons to 47,656,570 proof gallons, or an increase of mimeographs, and circulars; reviews for revision all forms prescribed 9.8 percent. The quantity of rectified whisky produced increased by the Alcohol Tax Unit; and is charged with the administration of from 33,593,409 proof gallons to 37,977,224 proof gallons, or an in regulations relating to traffic in containers of distilled spirits and the crease of 13 percent. The production of cordials and liqueurs in supervision of the Statistical Section. creased 11.2 percent, while the production of rectified gin decreases Regular monthly and annual statistical reports and releases con- cerning the activities of the Alcohol Tax Unit were prepared. Special 5.1 percent. Fermented malt liquors.—Tax-paid withdrawals of fermented mal statistical research work was performed relating to proposed legisla- liquors increased from 51,816,874 barrels to 53,014,230 barrels in the tion and inquiries from officials and the public. Statistical tables fiscal -year 1940, or an increase of 2.3 percent. The percentage o covering the operations relating to distilled spirits, fermented malt beer withdrawn by pipe line for bottling increased from 47.7 percen liquors and wines, and enforcement activities are contained in the of the total in 1939 to 50.9 percent during the current fiscal year. Appendix. Wines.—Production of still wine decreased from 231,959,287 gal Statistics.—The following data summarize operations of the legiti- Ions to 212,367,737 gallons. Tax-paid withdrawals of still win mate liquor industry under the supervision of the Alcohol Tax Unit: 34 REPQRT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 35 aggregated 82,176,586 gallons, or an increase of 22 percent over the previous fiscal year. The withdrawals of domestic sparkling wines spection of records, documents, etc., to determine whether law, increased by 32 percent, and tax-paid withdrawals of domestic ver- regulations, established policy and procedure are being followed; mouth produced at wineries increased from 187,288 gallons to 394,245 devise and recommend plans and methods for greater efficiency and gallons, or by 110 percent. economy in the conduct of the work; supervise the installation of ENFORCEMENT DIVISION.—The activities of the Enforcement Divi- new procedures which have been approved by the headquarters sion include the investigation, detection, and prevention of willful and office; coordinate and standardize the functions and work in the fraudulent violations of the internal revenue laws relating to distilled various units of the permissive divisions; determine the adequacy spirits, wines, and fermented malt liquors. and efficiency of the personnel and suitability of space and equip- During the fiscal year, 10,663 stills were seized, having an aggre- ment and the practicability of its reallocation for the proper handling gate mash capacity of 1,653,775 gallons,' and in connection therewith of the work; make recommendations relative to the judicious expendi- 6,480,240 gallons of mash were seized and destroyed. Investigators ture of public funds; and confer with district supervisors on problems also seized 264,594 gallons of spirits and 4,523 automobiles and trucks. of organization, management, and service. The total appraised value of the property seized amounted to $2,042,- The division maintains general supervision over the activities of 851. A total of 25,638 persons was arrested for Federal liquor law inspectors and storekeeper-gaugers in the field districts and provides violations. Compared with the previous fiscal year, still seizures de- for the general instruction of these groups. A total of 64,197 inspec- creased 11.6 percent, mash seizures decreased 19.8 percent, and arrests tions of plants and permittees was made during this period by general decreased 11.1 percent. These decreases applied generally throughout inspectors in the supervisory districts. All inspections of retail the country and are in contrast to the increases reported in the pre- dealers during the fiscal year 1940 were conducted by junior inspectors, vious year. Enforcement progress during the past five years may due to the fact that the W. P. A. inspection projects were discontinued be measured by mash seizures, which declined from 21,373,107 gallons prior to the beginning of the fiscal year. The following comparative in 1935 to 6,480,240 gallons in 1940, a reduction of 67 percent. statement shows the results accomplished by junior inspectors during The control of raw materials through enforcement of Regulations the fiscal years 1939 and 1940: No. 17 and Regulations No. 92 has continued to be effective as a pre- ventive measure. Reports from distributors of raw materials have Fiscal year Fiscal year supplied data leading to the apprehension and conviction of illicit 1939 1940

distillers who are being forced to secure materials in small quantities Number of inspections made ------204, 362 284, 081 at scattered points which require transportation over considerable Number of dealers violating ------21, 750 28, 057 Number of violations found ------23, 776 31,618 distances. This has been an important factor in reducing the number Percent of dealers found violating ------10. 6 9.9 and size of illicit distilleries. Information furnished by dealers under Amounts collected ------$366, 577.81 $542, 453.40 Regulations No. 17 has led to the seizure, during the year, of more than 500 illicit distilleries and 150 vehicles, and to more than 700 arrests. This division is also responsible for the final determination for the approval or disapproval of applications for the establishment of During the fiscal year, 193 automobiles were seized and 276 per- industrial alcohol plants, alcohol bonded warehouses and denaturing sons convicted for violations of the Liquor Enforcement Act of 1936. plants, distilleries, fruit distilleries, distillery denaturing bonded in connection with the importation of tax-paid liquors into the dry warehouses, internal revenue bonded warehouses, and rectifying States of Kansas and Oklahoma. These seizures and convictions plants. Final review of qualifying documents submitted in connection followed the passage by these States of enabling legislation as pro- with the establishment of bonded field warehouses, bonded storerooms, vided in the Act. Two major conspiracy cases under this Act were perfected, involving 140 and 169 defendants, respectively. bonded wineries, and breweries is handled by the division. Many changes were made in the premises, construction, and equip- During the past year 288 applications for pardon and 3,845 appli- ment of established plants during the fiscal year, requiring examina- cations for parole were examined and reports submitted. A total of 288 applications for pardon and 3,804 applications for parole were tion of applications, notices, bonds, consents of surety, plats, plans, and received. other documents submitted in connection with such changes. The FIELD total number of such examinations, including those covering 117 new INSPECTION DIVISION.—This division plans, coordinates, and plants and 218 plants discontinued, was 18,970. supervises the permissive functions in the field offices of the 15 field The schedule governing the return of master meters from the various districts. A group of technically trained field inspectors, who serve as representatives of the Alcohol Tax Unit in maintaining an efficient field districts to the National Bureau of Standards for recalibration was revised. Previously master meters were used for approximately permissive organization in the field offices, are assigned and directed by this division. They make frequent examinations by actual in- 50 tests of brewers' meters before return to the Bureau of Standards. The revised schedule, based upon the history of each meter, prescribes I Represents the cubic capacity of still pots and cookers. Column stills which operate without a still pot or cooker are not reflected in this total. The size of illicit stills is reflected more properly by the mash the extent of use in terms of barrels, and meters are returned to the facilities. The cubic measurement of the mash fermenters o fall the illicit stills seized during the fiscal Bureau of Standards at such time as the continuous counter reaches year was 9,252,833 gallons. the prescribed limit. The use of each meter is predetermined and assures that the meter will remain in use during the cycle of maximum 36 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 37 efficiency. This program will result in greater accuracy and longer During the year, 80,006 samples were received by the branch labora- use of individual meters, and will reduce the frequency of return of tories, which is an increase of 2,127 over the preceding year. The master meters to the Bureau of Standards, with corresponding laboratory in Washington, D. C., examined 8,893 samples, which is savings in transportation costs. — 1,863 more than during floe preceding year. LABORATORY DIVISION. The Laboratory Division comprises a AUDIT DIVISION.—This division is responsible for the tax account- central laboratory in Washington, D. C., and 15 branch laboratories ing, assessment, claim, and compromise work of the Alcohol Tax Unit. located throughout the country. It administers the provisions of internal revenue laws and regulations The division performs all the chemical work for the Bureau of pertaining to the manufacture, storage, tax payment, exportation, sale, Internal Revenue and Bureau of Narcotics; it frequently assists the and use of alcohol, denatured alcohol, distilled spirits, wines, and malt Bureau of Customs, Secret Service, Federal Bureau of Investigation, liquors. Coast Guard, Post Office Department, State alcoholic beverage control Assessments.—During the fiscal year, 18,886 reports of violations of boards, and police departments. The greater part of the work, the internal revenue laws pertaining to alcoholic liquors were received however, has to do with the permissive and enforcement features of from the field offices, reviewed and audited, and tax liabilities dis- internal revenue and narcotic laws. closed thereby were assessed, including ad valorem penalties. There The Washington Laboratory is primarily concerned with basic were certified to the Commissioner for assessment 13,808 items, total- problems, such as the development and modification of methods of ing $3,854,693, listed in the Bureau, and 155,793 items, aggregating analyses for the great variety of products submitted and the formula- $92,691,905, listed by collectors. tion of denatured alcohol. This necessitates intensive research as to the actual components for all alcoholic products; a knowledge of the Number of claims received and disposedear l 94 of by Audit Division during fiscal effect of diverse manufacturing processes on related products; abstract- year ing current technical publications; and the testing of proposed Redemp- Uncol- denaturants. Abate- lect- Total Amount tion of Refund ment Routine activities of the Washington laboratory include the exami- stamps ible nation of the formulas for all preparations and processes in which co oo .--i Cg 0 217 110 723 $2, 700, 733.65

79 vi.ci denatured alcohol is used before permits are - issued by the district On bend July 1, 1939_ ------Received during year ------2,371 cc 1, 627 12,657 22,482 9, 695, 320. 05

NN 1, 282 12, 506 21, 528 5, 456, 661.59 supervisors for the withdrawal of alcohol. Allowed ------2, 084 r? Rejected ------304 331 132 1, 006 2, 605, OK 22 Preparations manufactured with tax-paid alcohol and wine are On hand June 30, 1940 ------62 231 129 671 4, 334, 292.89 examined for the purpose of determining whether they are fit for use as a beverage and thus subject to the tax levied on rectified spirits. Processes used in distilleries, wineries, breweries, industrial alcohol Offers in compromise.—At the beginning of the fiscal year there and rectifying plants are reviewed by the laboratory. were on hand 580 offers, aggregating $40,487. During the year, For the Miscellaneous Tax Unit the laboratory examines such 11,010 offers, amounting to $344,765, were received, of which 226 commodities as oleomargarine, mixed flour, filled cheese, adulterated were forwarded to the Department of Justice and 319 were returned butter, lubricating oils, soaps, etc. to the field offices. During the year, 9,461 offers, aggregating Members of the laboratory staff frequently conferred with the Fed- $239,807, were accepted, and 1,001 offers, totaling $37,310, were eral Alcohol Administration concerning standards of identity and rejected, leaving 583 offers on hand at the end of the fiscal year. labeling of alcoholic beverages; they appeared as witnesses for the Number Amount Government in many cases involving the refund of taxes; they assisted Drawback claims in the revisions of regulations and the drafting of Treasury decisions. received allowed

Several members served as associate referees in revising "The Methods Alcohol used in flavoring extracts, and toilet and medicinal spirits exported - - - 530 $168, 333.49 of Analysis of the Association of Official Agricultural Chemists." Distilled spirits bottled for export ------91 9, 533.02 Except for the research features, the work of the field laboratories Stills exported ------5 100.00 parallels that of the Washington laboratory. The chemists act as Total 626 177, 966.51 advisors to the district supervisors on technical matters; they inspect breweries, distilleries, rectifying plants, and places seized by enforce- — ALCOHOL TAX DIVISION OF THE OFFICE OF THE CHIEF COUNSEL. ment officers. This division handles the legal work arising in connection with the The problem of finding or developing a compound which could be administration and enforcement of the internal revenue liquor laws. used to prevent the beverage use of bay rum, rubbing alcohol, and The work includes the preparation of opinions and briefs relating to similar preparations has been earnestly investigated. assessment, collection, abatement, and refund of liquor taxes and The methods for the detection of grape wine in blackberry wine penalties; compromise of civil and criminal liabilities; and the remis- have been greatly improved so that the chemists are now in a position sion or mitigation of forfeitures. This division prepares citations to to give positive evidence in such cases. revoke industrial and denatured alcohol permits, conducts permit A major portion of the whisky samples submitted every six months hearings, and reviews revocation records. It assists the Department by all distilleries have been analyzed and the data obtained are being of Justice in connection with civil and criminal cases arising under the studied for interpretation of its significance.

REPORT OF COMMISSIONER OF INTERNAL REVENUE 38 REPORT OF COMMISSIONER OF INTERNAL REVENUE 39 internal revenue liquor laws; gives legal advice to the Deputy Com- charge in overassessment and claim cases, the dispute may (except missioner of the Alcohol Tax Unit, district supervisors, and other where criminal prosecution is involved), at the election of the taxpayer, officials on questions involving interpretation or construction of said be referred to a Staff division for hearing. The procedure requires laws; and reviews all correspondence prepared in the Alcohol Tax that the internal revenue agent in charge will notify the taxpayer of Unit involving legal questions. his adverse conclusions and advise him that upon request the case will Work performed by this division, in Washington and in the field, be referred to the appropriate office of the Staff division for hearing, during the fiscal year included preparation of 6,818 memoranda, 413 but that in the absence of such a request the statutory notice of briefs, 5,242 opinions, 27 parole cases, 247 libels, and 48 indictments. deficiency will be mailed at the expiration of a specified time. This Review work included 7,450 case reports, 73 claims of over $5,000 notice to taxpayers is contained in the letter whereby the internal each, and 10,684 compromise cases. In addition, 6 revocation cases revenue agent in charge advises the taxpayer of his action on the were handled, and 912 petitions for remission or mitigation of forfeiture protest. In conferences held in the office of the agent in charge it is were examined and finally passed upon. regular procedure to submit to the taxpayer a form wherewith the latter may request that the case be referred to the Staff for hearing. TECHNICAL STAFF It is thus seen that the procedure for reference of cases to the field The Technical Staff is the appellate agency of the Bureau of In- divisions of the Technical Staff requires that the taxpayer be notified ternal Revenue in the determination of income, profits, estate, and of his rights in the premises and be given opportunity to elect to avail gift tax liability. In general, its work relates to the classes of tax- himself of that procedural right prior to the issuance of the statutory ation which fall within the jurisdiction of the United States Board of notice of deficiency. Tax Appeals. It is an independent organization in the Commission- Under date of September 14, 1939, there was issued by the Com- 'er's office and performs its work under the Commissioner's super- missioner of Internal Revenue, and approved by the Secretary of the vision. It consists of an administrative office in Washington and Treasury, a Commissioner's mimeograph governing the functions 10 field divisions comprising 37 local offices distributed throughout and jurisdiction of the field divisions of the Technical Staff. This the United States at points chosen with a view to taxpayers' conveni- mimeograph supersedes the separate orders theretofore issued respect- ence. The principal duties of these field divisions are (1) to determine ing such field divisions. The consolidated "charter" of September 14, for the Commissioner the liability of taxpayers who have protested 1939, is here given in its entirety. the revenue agents' preliminary findings in their cases but have not SEPTEMBER 14, 1939. yet filed with the United States Board of Tax Appeals petitions for Collectors of Internal Revenue, Internal Revenue Agents in Charge, Special Agents in Charge, Heads and Counsel of Field Divisions of the Technical Staff, and Other the redetermination of their liabilities, and (2) to consider proposals Officers and Employees of the Bureau of Internal Revenue Concerned: submitted by taxpayers for the settlement of cases docketed by the Board. In performing both of these functions the heads of the field 1. (a) There shall be 10 field divisions of the Technical Staff of the Commis- sioner's Office, herein referred to as Staff divisions, with designations and territorial divisions act as the exclusive representatives of the Commissioner in jurisdiction, respectively, as follows: cases coming within their territorial jurisdiction, subject to the con- dition that proposed settlements in cases docketed by the Board must Staff division be concurred in by representatives of the Chief Counsel for the Bureau Territorial jurisdiction who are attached to the field divisions as division counsel. New England Maine, New Hampshire, Vermont, Massachusetts, The formal procedure prescribed for the handling of income, profits, Connecticut, Rhode Island. estate, and gift tax cases under the plan of decentralization grants the New York New York State. taxpayer distinct procedural rights, within his election, respecting Eastern New Jersey, Pennsylvania. the reference of such cases to a Staff field division prior to the issuance Atlantic Maryland, Delaware, District of Columbia, Vir- of a statutory notice. In the case of deficiencies arising from returns ginia, West Virginia, North Carolina. Southern South Carolina, Georgia, Alabama, Tennessee, investigated by the collectors of internal revenue where the collector Florida. and the taxpayer are unable to agree, after protest, as to the amount Central Michigan, Ohio, Kentucky. of the deficiency, the letter of protest together with the return and Chicago Illinois, Indiana, Wisconsin, Minnesota, North complete file pertaining thereto will be forwarded by the collector to Dakota, South Dakota. Western Iowa, Missouri, Kansas, Nebraska, Wyoming, the appropriate internal revenue agent in charge for consideration. Colorado, New Mexico. Opportunity will then be granted the taxpayer to request a hearing Southwestern Mississippi, Louisiana, Arkansas, Oklahoma, Texas. before the internal revenue agent in charge, and from that time, as Pacific California, Oregon, Washington, Idaho, Montana, regards potential reference of the case to a Staff division, it is governed Nevada, Utah, Arizona, Alaska, Hawaii. by substantially the same procedure as is applicable to a dispute arising from a return investigated by the office of the internal revenue agent Except as otherwise provided herein, the Staff divisions will perform their in charge. duties under the Commissioner's supervision, through the Head of the Technical In the case of protested deficiencies found by the internal revenue Staff, Bureau of Internal Revenue, Washington, D. C. agents in charge, as well as protested decisions by such agents in 40 REPORT OF C'OMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 41

(b) Local and branch offices will be maintained at the following places, and at the immediate supervison of a technical advisor designated temporarily by the such other places as in the judgment of the Commissioner may appear advisable: head of the division as acting technical advisor in charge. Each branch office will be in the direct charge of a technical advisor designated by the Commissioner. - (f) The assistant division counsel will assist the division counsel as the latter Stan division Local and branch offices may direct, and, during the absence of the division counsel from duty within the division, will serve as acting division counsel, and as such will perform the duties New England ------Boston, Mass. of the division counsel in his own name. During the absence of the division New Haven, Conn. counsel from any local or branch office on official business within the division, the New York ------New York City, N. Y. assistant division counsel may perform at such local or branch office, in the name Buffalo, N. Y. of the division counsel, such of the duties of the division counsel as the latter may Eastern ------Newark, N. J. direct. Philadelphia, Pa. (g) There will be an assistant counsel in charge for each local office to which Pittsburgh, Pa. counsel may be permanently assigned, including all branches thereof, to be desig- Atlantic ------Baltimore, Md. nated by the Chief Counsel, except that the duties of assistant counsel in charge Wilmington, Del. (branch)• at one local office in each division will be performed by the assistant division Washington, D. C. counsel ex officio. During the absence of the assistant counsel in charge from any Richmond, Va. local office to which counsel may be permanently assigned, or during the absence Huntington, W. Va. (branch). of the assistant division counsel from the local office at which he performs the Greensboro, N. C. duties of assistant counsel in charge ex officio, the duties of the assistant counsel Southern ------Atlanta, Ga. in charge will, unless the division counsel or the assistant division counsel is there Jacksonville, Fla. present for duty, be performed by an attorney designated temporarily by the Birmingham, Ala. division counsel as acting assistant counsel in charge. Nashville, Tenn. (branch). 2. (a) The head of each Staff division will exclusively represent the Commis- Central ------Detroit, Mich. sioner in the determination of Federal income, profits, estate, and gift tax liability Cleveland, Ohio. (whether before or after the issuance of a statutory notice of deficiency) in all Cincinnati, Ohio. cases originating in the office of any internal revenue agent in charge situated Louisville, Ky. (branch). within the territorial jurisdiction of the division, in which the taxpayers have Chicago ------St. Paul. Minn. finally protested the preliminary determination of liability made by that officer, Chicago, Ill. excepting cases in the pre-90-day status in which the special agent in charge has Milwaukee, Wis. (branch). recommended criminal prosecution: Provided, That the Staff division shall not Indianapolis, Ind. eliminate the ad valorem fraud or negligence penalty in any case in the so-called Western ------St. Louis, Mo. 90-day status, or the pre-90-day status, except with the concurrence of the special Kansas City, Mo. agent in charge. Wichita, Kans. (branch). (b) The head of each Staff division will also have exclusive authority to settle Omaha, Nebr. by stipulation (1) all cases docketed by the United States Board of Tax Appeals Denver, Colo. and placed upon a calendar for hearing at any place, other than Washington, Southwestern ------Dallas, Tex. D. C., within the territory comprising the jurisdiction of the division, and (2) all Houston, Tex. cases originating in the office of any internal revenue agent in charge situated New Orleans, La. within the territorial jurisdiction of the division, which are placed on the Washing- Oklahoma City, Okla. ton calendar of said Board of Tax Appeals: Provided, That he shall not make or Pacific ------San Francisco, Calif. approve a stipulation for settlement in any docketed case except with the con- Los Angeles, Calif. currence of the division counsel: And provided further, That in the absence of the Seattle, Wash. head and the assistant head of the Staff division, the technical advisor in charge Portland, Ore. (branch). of any local office shall have authority to settle by stipulation any such docketed case, but only with the concurrence of the division counsel or of the assistant counsel in charge, in which the deficiency determined in the statutory notice does 1 The Wilmington (Del.) office has been discontinued. not exceed $500 and the basis of settlement does not involve an overassessment in excess of $500. (c) The personnel of each Staff division will consist of a head and an assistant 3. (a) The division counsel will perform his duties under the general supervision head, to be designated by the Commissioner, a division counsel and an assistant of the Chief Counsel. He will advise the head of the Staff division, upon request, division counsel, to be designated by the Chief Counsel, and such technical' upon legal questions arising in the determination of income, profits, estate, and advisors, attorneys, auditors, clerks, and other employees as may be necessary. gift tax liability. He will advise the head of the Staff division also with respect (d) The assistant head of each Staff division will assist the head of the division to any proposed settlement of a docketed case. He will prepare answers to peti- as the latter may direct, and, during the absence of the head from duty within the tions filed with the Board of Tax Appeals, copies of which wilI be furnished him division, will serve as acting head of the division and as such will perform the by the Chief Counsel, in cases originating in the offices of the internal revenue duties of the head in his own name. During the absence of the head from any agents in charge situated within the territorial jurisdiction of the division; and he local or branch office on official business within the division, the assistant head will have exclusive authority to represent the Commissioner in the defense before may perform at such local or branch office, in the name of the head, such of the the Board of (1) cases placed upon a calendar for hearing at any place, other than duties of the head as the latter may direct. Washington, D. C., within the territorial jurisdiction of the division, and (2) (e) Each local office, including all branches thereof, will be under the immediate cases originating in the office of any internal revenue agent in charge situated supervision of a technical advisor in charge, to be designated by the Commissioner, within the territorial jurisdiction of the division which are placed on the Washing- except that the duties of technical advisor in charge at one local office in each ton calendar of said Board of Tax Appeals, but he shall not stipulate before the division will be performed by the assistant head of the division ex officio. During Board for the settlement of any case except with the-approval of the head of the the absence of the technical advisor in charge from any local office, or during the Staff division. The division counsel will consider all memoranda prepared in the absence of the assistant head of the division from the local office at which he Staff division directing the issuance of statutory notices of deficiency prior to performs the duties of technical advisor in charge ex officio, such office will, unless their approval by the head of the division. the head or the assistant head of the division is there present for duty, be under - 269679-40-4 42 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 43

(b) In the absence of the division counsel and the assistant division counsel, the 10. The term "profits-tax liability" as used herein will be construed to include assistant counsel in charge at any local office will have authority to concur with (a) the liability of contracting parties for excess profits on Navy contracts arising the head of the staff division or with the technical advisor in charge of that office, under section 3 of the Act of March 27, 1934 (48 Stat. L. 505; U. S. C. Title 34, in a settlement by stipulation of any docketed case in which the deficiency de- section 496), and under that Act as amended by the Act of June 25, 1936 (49 Stat. termined in the statutory notice does not exceed $500 and the basis of settlement L. 1926; U. S. C. Sup. II, Title 34, section 496), and as further amended by section does not involve an overassessment in excess of $500. 14 of the Act of April 3, 1939 (Public, No. 18, Seventy-sixth Congress, first ses- sion), and (6) the liability of contracting parties for excess profits on contracts for aircraft for the Army arising under section 14 of the Act of April 3, 1939 (Public, PROCEDURE IN PRE-90-DAY CASES No. 18, Seventy-sixth Congress, first session). 11. Notwithstanding the provisions of paragraphs 2 and 3 hereof, the head of 4. Each Staff division will accord hearings upon protested cases referred to it in each Staff division will have exclusive authority to settle by c stipulation, subject accordance with prescribed procedure by the internal revenue agents in charge to the concurrence of the division counsel, all cases docketed by the United States situated within the territorial jurisdiction of the division. It will not, however, Board of Tax Appeals which originated in the office of any internal revenue agent consider before the issuance of the statutory notice of deficiency any case in which in charge situated within the territorial jurisdiction of such division, which may be no protest has been filed with the internal revenue agent in charge. In any case placed upon a calendar of said Board for hearing at a place within the in which protest has been filed with the internal revenue agent in charge, it will territorial jurisdiction of any Staff division adjoining such division; and the not be required to consider prior to the issuance of the statutory notice new con- division counsel for such division will have exclusive authority to represent the tentions or new evidence that may be decisive with respect to any major issue, but Commissioner in the defense of such cases before the Board, subject to the condi- upon the presentation of such contentions or evidence, may refer the issues in- tions contained in paragraph 3 hereof with respect to the approval of stipulations volved to the internal revenue agent in charge for further consideration and for for settlement by the head of the division. conference with the taxpayer if advisable 12. Notwithstanding any of the foregoing provisions, should the Commissioner 5. When the head of a Staff division has reached a final conclusion with respect determine that it would better serve the interests of the Government, he may, to any case, he will prepare a memorandum thereof setting forth the exact grounds by order in writing, withdraw any case not docketed before the United States upon which his conclusion rests. This memorandum will be transmitted with all Board of Tax Appeals from the jurisdiction of any Staff division, and provide for the papers in the case to the proper internal revenue agent in charge, who will— its disposition under his personal direction. Similarly, should the Commissioner (a) Certify a deficiency to the collector in accordance with Mimeograph and the Chief Counsel jointly determine that it would better serve the interests 3552; of the Government, they may, by order in writing, withdraw any case docketed (b) Issue a statutory notice of deficiency; or before the Board of Tax Appeals from the jurisdiction of any Staff division, and (c) Transmit the case to the Bureau for the preparation of a certificate of provide for its disposition under their joint direction. A copy of each order issued overassessment, or other appropriate action. under the provisions of this paragraph will be promptly furnished to the Secre- tary, with a statement of the reasons for the action taken. JURISDICTION AFTER STATUTORY NOTICE 13. The instructions contained in this mimeograph supersede prior instructions to the extent that such prior instructions are inconsistent herewith. 6. The Staff divisions will have complete jurisdiction of all cases after the 14. Correspondence from internal revenue agents in charge in regard to the issuance of the statutory notice. Upon the taxpayer's request, the head of a procedure described herein should refer to the number of this mimeograph and to Staff division may take up for settlement any case in which a statutory notice has the symbols IT:F. Correspondence from heads of field divisions of the Technical been issued, and may grant the taxpayer a hearing thereon. Except in unusual Staff should refer to the number of this mimeograph and to the symbols C-TS: circumstances, however, he will not rant a hearing in such a case prior to the ARM. Correspondence from counsel for field divisions of the Technical Staff filing of the petition if a hearing has been had in the office of the internal revenue should refer to the number of this mimeograph and to the symbols CC:A:OWS. agent in charge, or if the taxpayer has refused an opportunity to be heard there. 15. The instructions contained in this mimeograph will be effective October 1, 7. After the filing of the petition in any case, the head of the proper Staff 1939. division will continue to have sole authority, subject to the provisions of paragraph Gus T. HELVERING, Commissioner. 2 above, for the settlement of the case, and will have the custody of all files, Approved: September 14, 1939. papers, and documents relating to the case, which will, however, at all times be H. MORGENTHAU, Jr., available to the division counsel for the preparation of the answer to the petition Secretary of the Treasury. and for the defense before the Board of the Commissioner's determination. Field operations under decentralization.—The work of the 10 Staff HEARINGS field divisions is divided into two main classifications: (1) income, 8. At any hearing granted by a Staff division, whether at a local or branch office profits, estate, and gift tax cases not before the United States Board or on circuit, the internal revenue agent in charge will be represented if he so de- of Tax Appeals, including cases in the pre-90-day status, cases in the sires, or if the head of the Staff division, or the technical advisor in charge of a 90-day status, and cases involving overassessments and claims; and local office, as the case may be, deems it advisable; and at any such hearing on a case involving the ad valorem fraud or negligence penalty, the special agent in (2) cases docketed by the United States Board of Tax Appeals. This charge will be represented if he so desires. Except as may be otherwise directed work now includes the settlement activities heretofore conducted by by the Commissioner, through the Head of the Technical Staff, the conduct of various agencies of the Bureau in Washington, particularly the former hearings and other proceedings by the Staff division will be in accordance with the conference division of the Income Tax Unit. It also covers all procedure customarily followed by the Technical Staff. settlement work connected with docketed cases, which work was GENERAL previously handled by the Staff, by the Chief Counsel's office, or by the two agencies acting jointly. Under the new system all closings by 9. The intent of the arrangements and procedure above prescribed is to provide agreed stipulation of docketed cases require concurrence of division one single, unified agency, with office facilities at or near the taxpayers' residences counsel. or places of business, to exercise on the ground, for the Commissioner, all the authority which the Department or any of its branches may have under the law The fiscal year ended June 30, 1940, is the first complete fiscal year in the review of protested tax determinations made by the internal revenue agents in which the plan of decentralization has been in operation in all in charge. in the settlement of contested cases, and in the defense of such cases, respects. All 10 field divisions functioned throughout this period when necessary, before the Board of Tax Appeals. 44 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 45 with both docketed and nondocketed jurisdiction. (For statistical cents cases considered by the Staff prior to the filing of such petitions. data reflecting the work of the field divisions for the fiscal year 1940, According to the Staff records, 35.3 percent of the cases in which it see table 88 on page 173.) The Pacific Division, however, is the only directed the issuance of the statutory notice were not petitioned to division which has been operating under complete decentralization the Board. Furthermore, of the petitions filed with the Board, 64.3 for two entire fiscal years, it having been organized on July 1, 1938. percent thereof filed within the year were not previously considered For that reason the results of the Pacific Division for the past fiscal by the Staff. year are given separately. (See table 88 on page 175.) Similarly, Coordination of Staff field activities.—It is considered essential to since the New York Division is the largest Staff division both in the success of the decentralization of the appellate activities within number of personnel and volume of work handled, the results of that the Bureau that the operation of the 10 field divisions of the Technical division for the past fiscal year are given separately. (See table 88 Staff be subjected to careful examination and analysis by a central on page 175.) group in Washington. This control is deemed important in order to The statistical data of the Technical Staff are divided in general into insure consistent treatment of similar issues by all divisions, uniform two parts: (1) the record of the work on contested cases in a non- procedure in the handling of cases and keeping of records, and proper docketed status; and (2) the record of the handling of cases docketed distribution and utilization of personnel. Such a central group, op- before the United States Board of Tax Appeals. As to contested erating as the Washington headquarters office under the direction of income, profits, etc., tax cases not pending before the Board, the the Commissioner, through the Head of the Staff, is composed of Staff opened the year with 3,772 nondocketed cases awaiting Staff three coordinators, each with one technical advisor as chief assistant action, and had net receipts (less transfers and returns without action and a number of technical employees as general assistants. This to the agents in charge) of 9,892 cases. The dispositions during the group, in the exercise of their supervisory functions above outlined, fiscal period were 5,852 by settlement and 4,330 on which no agreement were called upon to (a) originate procedure in the handling and control was secured at that stage. Respecting the nonagreement cases, there of cases in field divisions, (b) coordinate the procedure of field di- were 3,572 cases in which statutory notices were directed or sustained visions with other units and divisions of the Bureau, (c) outline or by the Staff. On June 30, 1940, there were 3,487 nondocketed cases clarify Bureau policies as to questions not clearly covered by Bureau on hand awaiting Staff action, which represented a decrease in in- rulings or Board and court decisions, and (d) personally inspect ventory with respect to the beginning of the period of 285 such cases. various field divisions and the offices in such divisions for the purpose On the basis of the number of cases, the field divisions of the Technical of submitting a report to the Commissioner. Staff disposed of nondocketed cases, on the average, in about four The Washington headquarters office makes a careful post review of months from date of receipt. all decisions rendered by the field divisions of the Technical Staff With respect to docketed cases, there were on hand July 1, 1939, whether or not they constitute settlements of tax controversies. It 4,982 dockets. Net receipts during the fiscal year were 4,256. The is through this post review work that the group is enabled to analyze dispositions included 3,315 dockets stipulated, 267 dockets dismissed the work of the various field divisions and to suggest modifications or by the Board for various reasons, and 1,301 submitted to the Board on corrections for their guidance in the consideration of future cases, the merits. There were on hand June 30, 1940, 4,355 dockets, repre- with a view to securing uniformity in the administrative application senting a decrease in the inventory of such cases by 627 dockets. of the revenue laws. The year's work shows a decrease in pending balances in both During the fiscal year coordinators of the Washington office, in- classes of cases. cluding the Head of the Staff, made a total of 74 visits of inspection As to the nondocketed work, there were 380 cases on hand July 1, to the 37 field offices. In making these visits the coordinators have 1939, in which the statutory notice of deficiency had been sustained made a special effort to talk with all the technical men of each office by the Staff after consideration within the 90-day status or in which and the various trips have maintained the personal contact necessary the statutory notice was directed to be issued by the Staff, but no to a mutual understanding of the problems connected with the work. petition had as yet been filed with the Board nor had the 90-day Visits were also made in the course of these trips to offices of internal period for filing expired. During the year there were added 3,572 revenue agents in charge to discuss mutual problems and to ascertain cases in which the statutory notice issued by the agent in charge was prospective flow of work from these offices. sustained by the Staff upon consideration within the 90-day status or - The Washington headquarters office maintains records and gives in which the Staff had directed the statutory notice to be issued. In continuous study as to production and inventories of the various field the same period, 82 such cases were closed by agreement without offices and the personnel needs of each office in the light of existing petition being filed with the Board; there were 761 cases on which inventories and trends indicative of prospective receipts. Necessary the taxpayer defaulted, that is, did not file any petition with the details and transfers of personnel are arranged to meet the needs of Board; in 1,549 such cases petitions were filed with the Board; and the work. there remained on June 30, 1940, 1,556 such cases awaiting the actual General operating policies for the organization as a whole are de- issuance of the statutory notice or awaiting the taxpayers' action termined in the Washington office. These include technical matters thereon after issuance. of general interest to the entire organization and matters of admin- Of the total number of petitions filed with the United States Board istrative practice, including the amount of emphasis to be given to of Tax Appeals during the year, the number of 1,549 dockets repre- the various classes of work as conditions change from time to time. REPORT OF COMMISSIONER OF INTERNAL REVENUE 46 • REPORT OF COMMISSIONER OF INTERNAL REVENUE 47

OFFICE OF THE CHIEF COUNSEL In 369 of the corporate reorganization cases closed during the year, claims were filed in the amount of $10,023,359.80, and were The activities of the office of the Chief Counsel for the Bureau of settled for $3,340,581.91. Internal Revenue include the defense of all Federal tax cases appealed In 272 of the arrangement cases closed during the year, claims to the United States Board of Tax Appeals; the review of refunds, were filed in the amount of $71,050.06, and were settled for $64,820.93. credits, and abatements in excess of $20,000; consideration of various In addition to these, there were 728 cases closed in which no tax administrative and internal-revenue tax matters referred to that office claims were filed. by the Secretary, the Under Secretary, an Assistant Secretary of the Treasury, the General Counsel for the Department of the Treasury, Number of bankruptcy and receivership eases dosed during the year the Commissioner, the assistant to the Commissioner, the heads of Cases pending July 1, 1939 6, 272 units of the Bureau, collectors of internal revenue, and other branches New eases received during the fiscal year 5, 327 of the Department. They include also the preparation, at the re- quest of the Department of Justice or of the United States attorneys, 11,599 of data for use in the prosecution or defense of tax cases (civil and Cases disposed of: criminal) in suit, and compliance with requests for assistance in such Cases closed 4, 277 cases; and the preparation, revision, and review of regulations, Cases transferred to reorganization 8 Treasury decisions, mimeographs, and rulings for the guidance of the 4, officers and employees of the Bureau of Internal Revenue and others 285 concerned. The office is divided into seven divisions, viz, Appeals, Cases pending June 30, 1940 7, 314 Civil, Interpretative, Penal, Review, Legislation and Regulations, and Alcohol Tax.' In the 4,277 cases closed relating to bankruptcy and receivership, The Chief Counsel's committee, consisting of three members, serves claims were filed in the amount of $6,950,061.06, and the sum of in an advisory capacity to the Chief Counsel, Assistant Chief Counsel, $1,642,845.91 was collected. general assistants, and special assistants, who refer to the committee During the fiscal year, 5,135 new bankruptcy and receivership cases cases from all divisions of the office. The committee considers these were received, and 192 cases in which tax was involved were added cases and makes written recommendations as to their proper disposi- in which the debtor companies were originally involved in reorganiza- tion. Since February, 1938, the committee has been charged with tion proceedings but later went into liquidation. The eight bank- the final review of cases involving compromises and closing agree- ruptcy or receivership cases which were eliminated were found to be ments, previous to their being sent to the Secretary of the Treasury involved in reorganization proceedings. for his approval. At the beginning of the fiscal year 1940 the com- There were pending during the year 15,782 reorganization, arrange- mittee had on hand 36 cases; during the year it received 1,905 and ment, bankruptcy, and receivership cases. Of these cases, 6,099 were closed 1,878, leaving 63 cases pending at the close of the fiscal year. closed with a total tax collected of $5,048,248.75. There are now The Reorganization Section is charged with the duty of protecting pending 9,687 cases. the interests and claims of the United States in bankruptcy and APPEALS DIVISION.—This division has charge of all cases involving receivership proceedings, including particularly proceedings instituted income, excess profits, unjust enrichment, estate, and gift taxes under sections 77, 77B, Chapters X and XV of the National Bank- pending before the United States Board of Tax Appeals. Counsel ruptcy Act, and arrangement proceedings under Chapters XI, XII assigned to the various field offices which were created under the and XIII of the Act. decentralization program of the Bureau of Internal Revenue prepare answers to petitions filed with the Board and advise the various Staff Number of corporate reorganization and arrangement eases handled during the fiscal. divisions upon legal questions arising in the determination of income, year 1940 profits, estate, and gift tax liability. All proposed settlements are Cases pending on July 1, 1939 2, 612 1, 571 concurred in by counsel prior to final approval by the head of a Staff New cases received during fiscal year division. Counsel also have exclusive authority to represent the 4, 183 Commissioner in the defense of all cases set for hearing before the United States Board of Tax Appeals. Cases disposed of: The division has immediate charge of all cases involving refunds of Cases closed 1, 369 Consolidated 4 amounts collected under the Agricultural Adjustment Act pending Changed to bankruptcy or receivership 423 before the United States Processing Tax Board of Review. It pre- Changed to arrangement • 16 pares all pleadings in such cases and appears for and represents the Changed to reorganization 2 Commissioner of Internal Revenue at the trial thereof. In addition, 1, 814 the division has the same jurisdiction, duties, and activities in matters involving Titles III, IV, and VII of the Revenue Act of 1936 as have Cases pending June 30, 1940 2, 369 the Civil, Interpretative, Legislation and Regulations, and Review Reported under Alcohol Tar Unit, D. 32. Divisions and the Reorganization, Bankruptcy, and Receivership 48 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 49 Section with respect to questions involving income, excess profits, capital stock, estate, gift, and miscellaneous taxes. Bureau of Internal Revenue. It also reviews closing agreements This division also has a general supervision of the preparation of the covering proposed transactions, and edits the material submitted for publication in the Internal Revenue Bulletin. contents of the records on review in all cases wherein are filed petitions — for review by the United States circuit courts of appeals of final deci- PENAL DIVISION. The Penal Division deals with practically all sions of either the United States Board of Tax Appeals or the Process- classes of internal revenue tax cases when criminal liability is alleged, ing Tax Board of Review. In such proceedings where the Commis- including among others income and profits tax cases, miscellaneous sioner of Internal Revenue is petitioner, this duty is performed in the tax cases, and social security tax cases; considers offers in compromise division subject to approval by the Department of Justice; in cases of liability where criminal proceedings have been instituted or recom- where a taxpayer is petitioner, the division has sole charge of the mendations for prosecution have been made to the Bureau or by the preparation of the record. Bureau to the Department of Justice, and prepares opinions constru- Tables showing the methods of closing cases appealed to the ing the criminal and percentage penalty statutes. It also prepares United States Board of Tax Appeals and the United States Processing opinions as to whether cases closed by agreement under section 606 Tax Board of Review will be found on pages 179-180. of the , and similar provisions of other Revenue — CIVIL DIVISION. The work of the Civil Division includes the Acts and the Internal Revenue Code, should be reopened because of preparation of statements of fact for the Department of Justice "fraud or malfeasance, or misrepresentation of a material fact" ; and in all actions brought by taxpayers to recover taxes and for injunctions considers claims for reward under section 3463 of the Revised Statutes in the Federal courts, which statements set forth the position of the or section 3792 of the Internal Revenue Code. Whenever requested Bureau on the issues involved and contain references to applicable by the Department of Justice, an attorney from this division assists sections of the Revenue Acts, regulations, and decisions of the courts. in the prosecution of criminal cases. The division also assembles the evidence, obtains witnesses, and assists At the beginning of the fiscal year, 1,254 cases were pending in the at the trial of cases when requested by the Department of Justice; Penal Division. New cases in the number of 1,049 were received and prepares recommendations for or against the institution of suits in 862 cases disposed of during the year, leaving 1,441 cases pending on connection with claims of the Government against taxpayers, trans- June 30, 1940, a net increase of 187. . ferees, bonding companies, and others; and, when suits are recom- Formal claims for reward for information relative to violations of mended, prepares statements for the Department of Justice similar internal revenue laws were filed and disposed of during the year ended to those in actions brought by taxpayers. Stipulations of facts for the June 30, 1940, as follows: Pending July 1, 1939, 416; presented or use of the Department of Justice and for submission to the courts in reopened during year, 322; disposed of during year, 205; pending actions in the district courts and in the Court of Claims are examined June 30, 1940, 533. Of the 205 claims disposed of, 143 were rejected, and approved, modified, disapproved, or new stipulations prepared; and 62 allowed in a total sum of $99,887, all of which were paid during and the division makes recommendations for or against an appeal the fiscal year. The 533 claims pending are awaiting the closing of from adverse judgments of district courts and for or against applica- the tax cases to which they relate, the receipt of reports from the tions to the Supreme Court for writs of certiorari in cases of adverse field officers of the Bureau who are investigating the claims, or adminis- decisions rendered by the circuit court of appeals and the Court of trative action in Washington. There were also 112 informal claims Claims. The division makes recommendations for or against accept- disposed of during the fiscal year, which left 111 informal claims ance of offers submitted for settlement or compromise of cases pending pending. — division reviews overassessments of in court. REVIEW DIVISION. This It also handles all cases in which liens for taxes are involved in income, excess profits, war profits, estate, gift, and miscellaneous mortgage foreclosure actions pending in Federal and State courts. taxes proposed for allowance (also deficiencies when coupled with The division also considers all applications for the release of Federal overassessments) where the amount of the overassessments in any tax liens and the discharge of property for such liens which are per- case exceeds $20,000, and proposed refunds or credits of any tax in missible under section 3186 of the Revised Statutes as amended by excess of $20,000. It prepares the reports to the Joint Committee on section 613 of the Revenue Act of 1928 and section 509 of the Revenue Internal Revenue Taxation required by section 3777 of the Internal Act of 1934. Revenue Code, where the overpayments of income, excess profits, war Compromise Section.—The prosecution of claims filed by collectors profits, estate, or gift taxes exceed $75,000, and prepares public (a) against the estates of deceased taxpayers, (b) against insolvent decisions where the overassessments exceed $20,000. It also examines banks, and (c) in liquidation proceedings, including assignments for and reviews special cases referred to it by the Chief Counsel for the Bureau. the benefit of creditors, is handled by the Compromise Section. At — the request of the Department of Justice, this section assists in trials LEGISLATION AND REGULATIONS DIVISION. The regulations issued involving the above types of claims. under the internal revenue laws, including tax conventions with — INTERPRETATIVE DIVISION. The Interpretative Division prepares foreign countries, and including the profit-limiting provisions of the legal opinions on questions arising under the internal revenue laws. Act of March 27, 1934, as amended, relating to certain Army and It reviews material submitted to it by other divisions of the General Navy construction contracts, and the reports on legislation introduced Counsel's office and by the administrative branches and units of the in Congress affecting the internal revenue, except as they relate to taxes on alcoholic beverages, are prepared or reviewed in the division.

50 REPORT OF COMMISSIONER OF INTERNAL REVENUE In addition, this division considers suggestions for amendments of and additions to the various internal revenue laws and prepares reports thereon for the consideration of the Commissioner and the General Counsel. It participates in the preparation of income tax forms and assists in the drafting of tax conventions. INTELLIGENCE UNIT The Intelligence Unit is principally concerned with the investiga- tion of cases involving alleged evasions of taxes in cooperation with revenue agents and deputy collectors ; investigation of charges of a serious nature against employees in the Internal Revenue Service; investigations of applications of attorneys and agents to practice before the Treasury Department; and investigations of prospective appointees to the Service. During the fiscal year, 1,014 investigations were made of alleged evasions of income and miscellaneous taxes, resulting in the recom- mendation for prosecution in 370 cases, involving 612 individuals. There were 160 individuals tried, of whom 147 were convicted and 13 acquitted. Investigations of these cases resulted in recommendation for assessment of additional taxes and penalties totaling $33,319,064. There were 2,845 investigations of applications of attorneys and agents to practice before the Treasury Department, and 79 investiga- tions of charges against enrolled agents and attorneys. These in- APPENDIX vestigations resulted in the disbarment of 10, reprimand of 2, sus- pension of 1, and the rejection of applications of 28. Six names were stricken from the rolls during the course of disbarment proceedings. During the fiscal year, 104 cases of charges against employees of STATISTICAL TABLES the Bureau of Internal Revenue were investigated, resulting in the separation from the Service of 63 employees and the prosecution of 28, all of whom were convicted. There were 1,050 cases of miscellaneous character investigated, including investigations of a number of cases for the Bureau of 51 Narcotics, the Customs Service, and investigations of persons under consideration for appointment to various positions in the Treasury Department. Included in this number were applications for appoint- ment to the positions of revenue agents, deputy collectors, and various other positions in the Internal Revenue Service. CONCLUSION I am pleased to report that I have continued to receive full coopera- tion fron every branch of the Internal Revenue Service in the adminis- tration of the internal-revenue laws. GUY T. HELVERING, Commissioner of Internal Revenue. HOG. HENRY MORGENTHAU, Jr., Secretary of the Treasury.

52 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COM M ER OF INTERNAL REVENUE 53

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S 83 88 ,

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•

REPORT OF COMMISSIONER OF INTERNAL REVENUE 59 58 REPORT OF COMMISSIONER OF INTERNAL REVENUE i-

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2g;22;;87-184.53;2g22;22;8g88;2 3g4&35?-1V-:•282; 888EMg;;;;;TS%;3;g 4; 35448282XAg 28gg4

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CT 22a128g4ng.lelM5WAS2WAVS .42 S'4 S 7Ufl. -8gt; 7. ggg,iaa.4ae

18 eee.32;:z%284 lgnl ialgagn glanglnaggnalgftg I .FAMOSOVJ.alggVi lI natigni ilWn MgVaagrilgag.. .. .... .,. , gIggigglg. . 776, 4 15galgggFagggVgalM 54T a Cl 4.5ala-g-^Qf -a aee rc e. eaaa ea . t.4. 267, N DISTRI

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74 ;8;8g8; 88 88 S 8 8 <0''' -1:, ;88 3 ° 4 4 425. 411106 thl 6 , 72:4 A 6,

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g, r Fe IISIll 88888 8882888838 8888; 828;5 66' 88888882482 8888 888888 92L '

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Ca 8 2 2 a° 80 ' 8 ; 8 0 ea .4e 59L' 8 g cl 1 g 9: g Ei E

88;28 29,1;83gg12812 128882 g8828 03 51212;2 42;4;2;1 g8ggg3128843822g8;g ;3=98 ' So 036. 8 URP. 01585 (015i7.4117W %Mg OME 'flan-Mt gragggg568ar; AND T

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ALS o m i fr

ts i TOT bia ip

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1.gfifignn14051:0; is 4EraPa'aaraleAnce. einiggilekhlgtt hio ,,,;.4.c.no41-gAill§21,4i14°333 Alas Ca D min Mary M Ne New O Pe Texas Was Puer .t.WA634t74otliptaa fe44;;;;XEAMW 42 c; TABL

REPORT OFCOMMISSIONERINTERNALREVENUE 0 Large cigars, classified by intended retail prices 8 cws,amco _.41

Collection districts glm Te 488 Q0 E imp 0A, ca a~ 0 CO db O 5 8

8 !

6S. 0 et. O g ti Mer.erM0.m.O.M.0 Wn...WWM../ di mOOMmerw.w QNNMODMO.Vm. Ncomw..w= 8nOgNMn8Mn0WWN‘1 gp 0000ACOW4wn0A.400.6..00n.WOWWWW.M.M. 0.00.0.0 NW0,5 tiN ee e oomn.n n=coco.. es. W4 noo co .. 6 U 4. 0N :18 .6 666 OD 1:8 2883 K4' 444A . i 00 CO =-on g 0. .. 17 , = CA gg,,,;46t 8

ae Q O 888 • 4 =0 4A' 8 CO CV ~Oi 888 ct.

o6 4 .00-0MNWNWmWNMOMVVO4000. Co CO 0 0.V.WNNMN.00.0..0..A.M.2 46.,6,,666.... 6...,4, 8838 gaVg.Mgg ON e-te 28'4282282344 4 n.g Cf .AU 8 8 4 O Co 2 AA 44

.. eggeeg , 40==0.=u0m.4.w.mNwnnvw t4e-t4teee el ...4a5. 282287. 4..6.... MN=np2cOW n 8

, . 8 Cg . NN. 0.000.N 0NM CO N-, AO .MM C SW4 SS 82 ON N . Mg „.,,,, 4. 4 6 1

8 n NN 4aw.ww4a 822824 W 8 gg5Igggg,4 r- 8 .. aee , V OW0W ggg 48 oc.n 46. .11 ti .... . A Am4 co MWM 2 .84 - n co 84 COO 6A Ecq 88 Og 88 0. WA W • N CM , 0 4 V 2 8 4

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N n o . .w . CO 23 aw 88 ..e a34 4gg F R4 .w...... 4tAAt.4AA Sg2!=18.=88.3 t4c66 4584. Sg224328 CO g a 32. .w. .NO a gg n8 .n 8n4A 222NA:128285 C0 S2t-Q: .onw. w.ww ee 4nw w4. 2F-te 46. . eeeee eeae eaeta .. 2 2 8 2382848284 m 2 , N. 2 4g

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nvi ww,. coac.co ,- 8'1223 2 2 de nco.0.t .46 000 4... jai mq.NN ,Ic . • REPORT OFCOMMISSIONERINTERNAL'REVENUE a nnm CO ..O w.,6. .e4 n go, 7. 6. A • •• m . 6 8 M , .a. 4 8 47 . .

mw . 6.i6 mw0 .00M R88 81, sws nsm 22 w W MC0.100 6A4 6A6A4r:A4 222 3t2AtZ222g oc2n 4g ,e.e.gg 32'4 g NO.O aa Mr w

gee g8R4;goc A4rZA66'6 '2 .4.- N00 T 00,NMMN.., " r.: w ... . co 3 2 ne8 . M ■ •

124 ., . g CO 2 2 • • 2 8:2....

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I

24 1 . A '888 1 a M N N . . 2 v <1. .o. . 4

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.

2, 663.79 1, 831.79

68 68 'T '699 89 'LZI 'OLE 89 '966'81 98'65 6L '989 'L6 'L6 '989 6L

, 2, 435, 020.80 378, 882.52 61, 820.09 533, 042, 544.34 16, 854.96 1, 252, 252.40 27, 255. 50

TOTALS FOR STATES AND TERRITORIES COMPRISING PART OF OR MORE THAN ONE COLLECTION DISTRICT U a M Mc0.4WW. n64000000n0.0 Yi 824842884:." n84gn A.Own4CANC000 8 c5.-r4g CO ege64.46eeee 422358'48884 69- 2 a 888822o-886g AA6AAAg406A nWW0.,0M00m= co g a M M NMMM.RM MCMC00.01:7> DOC 0M005M us4co.cmcvconow n4o60506c4-1-7ci4 00..,e0vncoow NM 0000=0 ..eeegedee. m. W.O.nn...ww 0 2t;':MAAg*A.?4

„. . WNM.Owm.O. t- M ..m.eymmW.Vm 8 co gOatT61gg M n ■ cr;o3' NMM.7.04Nnne0 O,MM=.1 - vigoiao6n'oi , St--7-706 4 n0 _e.; 06- 22 n. NN .n n B 0NNM coMx00 ; ,, , 0 C.. CO -r 8 8 4 O O g.4 0Z:

C ... ■ - e C. 8 aa MMCD co .■0 W t-:o6' N MZ r V" CA Co 6

63

64 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF commassromn OF =MEAL REVENUE 65

0 Regg85R525g488357RR854558555a.5'..5z 44RS2428222854R23422284$5888 88825258 828 e ggggAraLEERRggAgggigAnigaZRERF. g5455W5$555H5g5P1M1g5 WE:IMAM O s 4-ggvg--gg- '44 ,2, 45eRgA4Ap4 4'4 45 A 541' 2:!scigg2IS gUSg -rgSS agg-rofge4W sdiossgsg. F8

d a R458EIR528g4854AR22526524S54Reg8548P 488S4518252524 R25422285822. 82 ro ReESA4248R228 $6 lore

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d a- O 5888885428 P25222282P4P55828558A8 558258e4 82855288288 8888g782 ec

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8 8 288 8 5 8 888 8 a 8 8588 IC , ,. ING PART OF OR 8 ifil IS s ag s g iii7",i g ?3. °-", R g 4 . REEri, Um e. . . 0

a MPR -gP C g 85482448885842228425584I2g4g:158 44424A42252AV8ESS88225g28530285 CO 42445R54483 a d

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4 a0 . . % g7I TERRITOR az Ca tures ,Sd olM:; '' 8 g R

fac "ale 40 '' ND u

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2 3 ma i!teg I 28522IR5 g 584248525854 8228 8 5 ngsgrE2ssgggsingsg S*885582588 gas- 05MMuc54dmilON .A.S.-8 COMA g RaggrAF - nF.0 gni R 55gr8gIggrgqg 359. 84T - 02585T- bacco sla! 8 ,41 . plsia car i— 182,

To g8mgl'A: k 117:" 5e % g 4 gEAOR= . „,- . c .6 —7

0240= 61, .95igg FOR STATES

0 ts ic TOTALS tr . 1'4 ;ha dis .0e.3o A n mm EA' g o 5 g,44>"A-.0=Afeao,8 Am.0 ROBV.

tio . al..., '41r.g'12 .04 pla 4 v D, v C E.V ° Item ° 3 llec g 4 e A 0,,,WAl4' - 5 0 a e,55 zt Afeat.o4sio-E aeao° .FO ,-, 9-ri c, Co §02 09. ,, ot. _S•ga i 4,4 .. og oEa „: 00-g . 0 04 o 5 t, g 0.1.4 >am-4 5 t.4g. milTdc 'gg-clEhmitn. 0.4 4 m .. - - .ec.... AmW10 °W0 st'..M° 2. 6tg °' *4 e e mOOP7.40 il*Iri W 4 .zzzgr4 44mE-144E.FXZE=4E, WW001.4E.FWV24 4

REPORT OF COMMISSIONER OF INTERNAL REVENUE 66 REPORT OF COMMISSIONER OF INTERNAL REVENUE 67

• V" S S -4 4 741

0500 M

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nis Blig

cc 4. 4 014 cc 0 ION DISTRICT 4 0 8 8 cc 8 .e, 88 8 8 8 8 ,E211):84. g n n a cc A ci a 0 rt.ngg1154 flour E d i 8 8 8 8 8 8 A' ON

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o>. TOTAL >.■ 0 82 Er mai iv 2 -* 0Z.O 0 og Mm - g 44 P. Zg •'=c4 ZO giggg.g ° 4 Eg -es'9 .006 °J2 °Og 2 -gg O t m g4 ; ^ 0 0 "grflio.o:Ei g 0 011eg21 ,. m s4 Smeb'm 4 sm m2 4 s04g4 0 4 ;,466 4p, rap, . ° 2:2 C 2 ,Sa.8°O-§ g. 4,Ice gog . ass- amgg--°- 4 e ...glE r- S kW • g gaggAS gEligig a800_6840 024s;,,,,,,e1 Ailafro°P, 4§4W2.°011da4g/12; r0 Wi.g8t4,1g4MU0881PAVAa Z'''""73°Z2"-1°g.c64.gU0rOgcOOSW wa Q°SatScianZW44Z.AEW7 0.EEzz4 41R004E- , g002444045?..fl60 opmz,:q2E4

REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE .. ,-, Mr■ .v...... U,OC.., , , 040.C.0C1 , mt-t-,oNoc.Q..= e;.. t F 07 4 0, C- 4 0 0.41 ...0 . N...ip.=e4...... 0... .= ... = , 4 .4e4ei4c,ieod g oe66,-i6.60i.eDt4e4 6., : t ..5 6g goo.e.e.sw ...... , w. ,1 .. . .-0. el. i 2 ,..:I =MW0N0C-0,.4.=04C4C40 .4, NOM,,000, , - . 6- - rat,:- .i aa. -: .6 0 . c;c. 46.4,,ze e, FiT4lea

0■0■00000 ,0 0.D.= O . 00000000 ..J.>.D0Q00000 1,. 000MCONW u 0000•00M.0 MC-,..C4,,=00.7N0C-MW00,-,00,0 g M MO M M o6g M . .6 e.i - 6 e,:eo M M .. ,,NMM MI MC. M M C:75 .,.M WO M FA VMVP M NM ..e MI.

5, 310.90 0

o COO.D0.0.0 ,M 00 28 8 8S 8 8 8 88 o OCC■ OONWOM 8 sa 6.06.M.dc$ci 09 00 .. CO 1-: 6 d. CO .M ...... 4.25 1.00 7.15 3.05 2.00 5.00 2.25 1.00 1.00 8.75

7.00 . 2.00 11.75 $8.00 z 2 sf ommmmmopmw.mmQmopmmmmr-moommom ,

, toss 0 mmono 4. mmmommom o.mm.m.conmnmoDiammm na2maluis4m=. .. m m 306 4606 ,6 66 .6

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18 781 '91 0.011. 000,t004 8 888888A 888888288888888888888888 O 00C-0C-0C 400W 8888888888888128888888888888812 888 .eie.se40i .eo 1 .0.4.064,6600c 0NCOMQ0,.M.d,.MCOWsr.W. Sole7gt g,"= g2 7; ,.. ,VM0d,W0 ,1 0,, ON0,400DrAr 668 W4V1PwASOSSA868i5W65AR..„—. ...,_ — . 456. 1-4 .0. ,MC4 0, N . .-1 NMN N C. ,-, N ,-. Ot.tMN r Mv-IC . .. . 0 19 '160 `5 dealers, $12 Wholesale, o 0 888888 8 88 88 8 88 8 o 008888888 ...... 4 6440;06c6MM64 8 88 8 88 8888888 ?888 88 8 888 MMWNON cd C•i goo e4 cv g 4mr-mr.m.mcl gg oo g14 =6.666 6 r.. g g ..m.ummv 64tc,i r- , csi g gg SOWI.,-4, .0eqe '.' ...... w . RZm' . .a. s-, QI

8 8888 8128 888888 18888 8n82-8 ssnsasmnsn 8 88888 888888888888888882 8 8 g4g . 61. . g..i.g 4 ;44,g gclg.e4 lei .., ... c.o.o. ; o ..6.. g.6.e46.0,4ge46..g. 6 4 ...... 6. -4,06. ,o5 ...° 4 RR . msva--a ,r15sg.,..s 8 00 ..- NFalti 'F.5.7' 39, 230. 10 8 ,..T. .t 6. ■- ' 6 a m,:- F. OT 769 01 . - g.' a 0 OONW.0110000 0 NO 9. 8254 8gangIlig $ 0 r-mmmcommmcom.m. 88 2R88gS888, ,: 16 5 t6 4.6t6N.5 8n8888882-88888488488'488nn8,S948 gdgeOguigC6i4Wc6W.M.NI e C N g CO ss oomnmm..a.cmm . W N . . 1-.0, ,OWNW.ar Www,,ew .ao.ct. m co.mmmmw.v. .e,i..e4goo064..-14 .e4d 1 , . . NNN N... 3 ,4e4. .e gg=m 4""'w et .M..N . . o t '"4SS7."` ""m42A.'491--;M 8 .B. O

OZ '810 '011 00 W0 ■0.0. 0 E4 000..380=8 P82 2A8 coo=0 8?o... 8 0 8 S m 06 ∎4.4 OS CI CV CVO 8 sa gaszss IRE'S Mn ..=4 88.7 ..6.5,z . g el .N.e4 8 ,00,M * 48

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REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REV 73 2222828=1g2888S228888Seg sgess 92' 08 ' 9 00 I gL 09' LI 1 LZ 1Z P£ 9 00 0011 09' D9 91 /8 3 00' 301 SOP 111 10' IE 10 10' 10' )9' 9 0' 4 TS g,444t,; .ggg.41.4d,..:0;go.4ogagg4.; ' 11 PO V PG T Pt PZI LP 1 LI Z0 19 81 8 19 811 00t 3

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.

xes AA l ta Loaqq00 94 WO ' na

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t N Sp 8 Ac

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8 88 888 . 4g 4 cm 94E 8 1 ta 2 88 • 8 8 86

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REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 75

as ;4s C;A 09 NN :e as ;6F--am 4 SA- P SES $ ' - PEKE 2 $PPEM2A188 8 5 16

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.1 1 7 31 53 76 27 76 16 2 2 35 288 SPERERA2 8R8 01 23 96 53 63 14 87 05 68

gogE8SR 19 58 05 95 t 225ESSE228 84 47 ERRITORIES 67

86 63 24 lb 53 9 49 62 5 68 44 58

gRAERPES R8R.S2SPP8PP84RSPE8I 8 06

er 4 1. n 3. 2. s 41. 1 7. P 14. 78. 92. 176. 25. grA F. 688. 35. 978. 36 29. agqg 876. 251. 72S. 436. 33 589. 334. 384.

r:galg UgggEgggglgg 1 609. 7 679. 774.

ce 475. 306. 729. 253. 193. 3 055. 586. 1 197. 669. 5

ti gggggFOgg giggaggglggORP 251. 9 19 112. 069. 3 055. 8, 1, 2, 2, 2, 4, 54, 29, 42, 95, 12, 1 2, 8, 99 7 77, 10, ine, 9 12, ND T 1 3 4 25 20, 483, 78 348, 170, l ql 44g15 V 5 752 n, n, 811. 137, 4114 430.

471151 44414 298, 238, 661 129, 119, 159,

5 96 960, 841, 245, 756, 24

o 4 1441041 1444g5W1gg441414 186, A

599, 65 a 2, 5, 7, de 6, 1,

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REPORT OF COMMISSIONER OF INTERNAL REVENUE 77 76 REPORT OF 00AEMIESIONER OF INTERNAL REVENUE 2:Z8:Z234842-R8

82. 32P43R233.1R2nRPR222P4NR4231 49 rgt.taMWSM.6.flTiNrcr5ANO, 5i ,74 th6ZN:6 g gggItigg 32. 14g n5Fika7MflWigggggEggRWEglrigilgg i gelggfli 1,4iglRaggggna 6 tig§PlUggg qt 7, 0 2.02222.022e2gR32,--ot-222222c2t-Gc2.,.-222-: t- 222N,t-222t- ..,22, flfilWrigigglag5IMItIgalg 08 IMMIEW 334 -T.,,g...e. ,44 Re6wa44.i' k4-ceirsci or .4:4 eT „,,,,,:,, ,,,,s,gg g g " , .6- gi. Mg‘g 447, g-I 1 . a

nr.. ws t t 3 . .4 . Pe 04623 c n „ '" oe T C 1 8 6 ,S4 ce ro 24 2 232:': A 2 t- ,E-Anre r_ge, n R R 3 TRI 232322222R

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,40iesc;sd c-ite 1 turers . . I g g 3 N 23222 ri .. Rthtt4 ?A-ft P 2' 0e-c.i- -4. 4. a 61 o fac O n 2'7 g 's g"'"" furs, .. g ' N '-' g q U lt,

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3.2322242328333223334S222R38R3 96 rep the

R2831R2822222232223£422122R234533223S TEE

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m0.) ..-=04 Mary Missour O Pennsy Texas Was ■ Ala Ca Dis Illino New New -1.4-14aoPr=dza4o44WM4.gi1),0 20".='=-.° ..',;,2z SZP S).4444ZEP.4[408nPF-14.2c24 I4g1-.

78 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 79 Z6 SZ 8 90 ' 9819 t • 8 f B

1PRaa- I

t o 1 °.° E1341 . Ac l nue Zillii 88 S64 8 LT L9 ' £I ' 061 . 0.

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80 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 81

.8S8268 P., R 2-'r. 43 44PP1P8 A 4P CO 8::88P4411:4-3 4.44.-746 4 4 4e 6 4444464 4 64 ss 44 mg me o'., AgT.4 R 4 g4 P ne=4g.-2,s- RI 9.=t3 g6 Sei g 4sst-ssAmg g, -. g 4g ''Ig44 a cs-r N 0.4 s42 s . . 0 . gc4541Wg gclt -r .6 m ms5fls ce0 d i!",:g5AaW .7.i an 4g gagrAS8eg sm ICT f 1936 t 0, tes, t o , t- ct4 CO Sta Ac 110g5I 6 n.t4:ii,a8 74 69 ets, l .1WEie„ C.)7400= Aa,

Revenue 4 w oe ECTION DISTR .s it S i2g CO 02, IELT,flEsii." -4g Ci

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82 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 83

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92 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMM:SSD:MEM OF INTERNAL REVENUE 93

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94 REPORT OF COMMISSIONER _ OF INTERNAL RE NIJE REPORT OF COMMISSIONER OF INTERNAL REVENUE 95 Zt ' 00'

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d sp d sp TABLE d sp a sp ) l sp s l l ttes ttes -p s n (sma iner I, ( t e xc tax s idua dy or es toc ta ta ta ifie ta tax ille ille ly ff e n t me ar ars are are t tille t l or mp o nana taxes: cess l s tax ill or div il To To is tax To is is Ju a te tax Ta it Con Floor Cig Cig Snu Bra Rec Sta Fer Brewers, Cig Cig Corp Ex Unjus D D D St St Stamp In uor ome, bacc ta ift Inc Cap Es G Liq To

98 REPORT OF COMILSSIONER OF INTERNAL MITE= REPORT OF COMMISSIONER OF INTERNAL REVENUE 99 5 7 18 NTH ' 1 10 05 37 01 99 27 88

5 V.24y,g82714g, g.sigg .,,i2g8 50 47 87 R2 $$a 8 2.,z48Mg182 2 98 '168 6. 4. 8. 2. 91. 68. aun 49. 31 61 427. 272. 35 1 490. 1 gagEW12:1E1 =1RER 57

EURRIM 'WE ' 427. 8 064. M REERIPE I 295.

6, 7, 2, 4 3, 9, 30 1 62, t $8 68 83 8 99, 387, 886, 1

8 6EIMEG45=4 'zig ' 680, 099,

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Po Stamp Manu H x w 100 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF C'OMMIS'SIONER OF INTERNAL REVENUE 101

TABLE 5.—Summary of internal-revenue collections, years ended June 30, 1939 TABLE 5. —Summary of internal-revenue collections, years ended June 30, 1939 and 1940, by sources and 1940, by sources—Continued

Increase or de- Source Increase or de- Source 1939 1940 crease (—) 1939 14190 crease (—)

Manufacturers' excise taxes—Continued. Income, excess-profits, and unjust enrichment Toilet preparations at 5 percent (dentifrices, taxes: toilet soap, etc.) (repealed July 1, 193 Corporation income taxes $1, 122, MO, 800.61 $1, 120, 581, 550.75 —$1, 959, 249.86 8)-1 $889, 347.40 $45, 242.33 —$844, 105.07 1, 028, 833, 796.49 982, 017, 376.17 —46, 816, 420.32 Matches 134, 273.32 21, 848.81 5 -112, 424.61 Individual income taxes Brewers' wort and malt (repealed Ally 1, 1938). 12, 388.60 4, 076.30 —8, 312.30 —48, 775, 670.18 Articles made of fur (repealed July 1, 1938)._ 368, 053.91 — Total income taxes 2,161,374, 597.10 2,102, 59$ ,926.92 159,810. 57 208, 243.34 27, 056, 372.81 18, 474, 201.83 —8, 582, 170. 98 Sporting goods (repealed July 1, 1938) 850, 546.85 143,095. 47 —707, 451.38 Excess-profits taxes Cameras and lenses (repealed July 1, 1938)._ 189, 296.89 6, 822.13 —182, 479.71 Unjust enrichment taxes (Title III, Revenue Chewing gum (repealed July 1, 1938) 110, 779.31 —108, 703.45 Act of 1938) 6,683, 334.64 8, 536, 178. 32 1, 852, 843.78 2,075. 86 —65, 504, 997.38 Total 396,891,003. 52 447,087, 632. 49 50, 196, 828.97 Total 2, 185, 114, 304.45 2,129, 609. 307.07 127, 203, 008.99 132, 738, 537. 17 5, 535, 528.18 Miscellaneous taxes: Capital stock tax —1, 393, 564.23 Bituminous Coal Act of 1937 (effective June Estate tax ast 279, 613.14 330, 888, 048.91 28, 435, 596.98 29, 185, 118.03 749, 521.05 21. 1937) 3, 317, 259.01 4, 161, 663. 92 844, 404. 91 Gift tax Sugar Act of 1937 (effective September 1, 1937). 65, 914,058. 42 68,145, 357.56 2, 731, 299.14 Telegraph, telephone, radio and cable facilities 24,093, 718.85 26, 387, 945.02 Liquor taxes: 2, 274, 226.17 25, 014, 597. 12 27, 874, 052. 19 r2, 859, 505.07 Transportation of oil by pipe line 10, 954, 732.60 11, 510. 846. 54 555, 913.94 Distilled spirits (imported), excise tax. __ Looses of safe deposit boxes 1, 980, 525.03 Distilled spirits (domestic), excise tax 258, 560, 244.87 289,857, 903.07 1 31, 297, 658.20 1, 983 933. 79 8. 408. 76 10, 677, 293.20 11, 854, 090.97 1, 176, 797. 77 Admissions to theaters, concerts, cabarets, Distilled spirits, rectification tax games, etc 19, 970, 801.85 21, 887, 916.00 2, 417, 114. 15 Still or sparkling wines, cordials, etc. (Im- Club dues 502, 738.14 649, 925.38 147, 187. 24 and initiation fees 6, 216, 900.29 6, 334, 008.82 118,008. 53 ported), excise tax Adulterated butter, including special taxes 6, 661.06 13, 275.31 6, 614.25 Still or sparkling wines, cordials, etc. (do- 1, 517, 929. 75 Renovated butter, including special taxes 8, 488.86 7, 002.89 —1, 485.97 mestic), excise tax 5, 892, 576. 96 7, 410, 006. 71 Filled cheese 1, 359, 431.98 1, 306, 774.20 —52, 657.78 155.24 155.24 Brandy used for fortifying sweet wines Mixed flour 6, 214.71 6, 241.83 27.12 Rectifiers, retail and wholesale liquor dealers, —885, 275.90 Oleomargarine: manufacturers of stills (special taxes) 7, 152, 386.36 6, 287, 110.46 Colored 182. 40 542.50 360.10 38, 657. 40 30, 758. 77 —7, 898. 63 Stamps for distilled spirits intended for export_ Uncolored 822, 417. 67 Stamps for .distilled spirits-bottled-in-bond.... 472, 872.71 1,089, 230.00 616,357. 29 759, 463. 51 —62, 954. 16 736, 271.00 Special taxes 1, 349, 310.98 1, 223, 377. 75 —125.933.23 Container stamps (Liquor Taxing Act of 1934). 9, 398, 861.99 10, 185, 132.99 Narcotics (opium, coca leaves, and special Floor taxes (levies on tax-paid stocks, inven- taxes) 567, 550. 40 tories of January 12, 1934, and July 1, 1938)_ 5,427, 570.63 12, 200.32 —5, 415, 370.31 605, 395. 66 37, 845. 26 264, 679, 036.03 4,875, 110. 27 Marihuana Tax Act of 1937 4, 537.53 4. 702. 60 165.07 Fermented malt liquors 259, 703,925. 76 Coconut, etc., oils processed (sec. 60254, Brewers, retail and wholesale dealers in fer- 3, 197, 151. 29 —439, 917.27 , as amended) 27, 661, 929. 62 22, 744, 354.47 —4, 920, 575. 15 mented malt liquors (special taxes) 3, 637, 068.56 Crude petroleum processed, etc. (repealed July 1. 3938) ' 687, 799, 700. 68 OM, 253, 156. 11 36, 953, 455. 43 106, 055. 32 555.39 —105,499.93 Total National Firearms Act 9, 079.08 12, 388. 68 3, 309.80 Receipts from other miscellaneous sources, Tobacco taxes: including repealed taxes on checks, candy, 12, 792, 550.49 12, 897, 763.57 105, 213.08 Cigars (large) jewelry, soft drinks, and dividends 147, 915. 92 166. 738. 83 18. 822. 91 Cigars (small) 120, 452. 82 97,885.79 —22, 767.03 19, 267. 94 16, 854.96 —2,41298 Cigarettes (large) 29, 005, 611. 88 Total 169, 179, 814. 60 165, 971, 782. 58 3 91, 967. 98 Cigarettes (small) 504,036, 932. 48 533,042, 544. 34 8, 932,019. 20 6, 708, 556.53 —133, 462.67 Snuff —373, 240.97 Employment taxes: Tobacco, chewing and smoking 54, 757,043. 76 54, 383,802. 79 Federal Insurance Contributions Act (2 per- 1, 493, 785.80 1, 279, 507.90 —214, 277.90 Cigarette papers and tubes —5, 425.51 cent of taxable wages) 529, 835, 533. 76 605, 350, 175. 64 75, 514, 641.88 Leaf dealer penalties, etc 7, 153. 25 1, 727. 71 Federal Unemployment Tax Act (employ- 28, 359, 937.85 ment of 8 or more) 101, 166, 703. 68 106, 123, 156. 21 4, 956, 452. 53 Total 580, 159, 205. 74 608, 518, 443. 59 Carriers taxes (old-age benefits, 536 percent of pay rolls) 109, 425, 627. 62 122, 047, 643.66 12, 621,016. 04 Stamp taxes (Title VIII, Revenue Act of 1926, as amended): Total 740, 428, 865.06 833, 520, 975. 51 Bonds of indebtedness, issues of capital stock, 93, 092, 110. 45 18,145, 227.94 —1, 221, 201.98 deeds of conveyance, etc 19, 366, 429.92 Grand total, all collections 5,181, 573, 952. 58 5, 390, 452, 346. 78 Capital stock and similar interest sales or 158, 878, 394. 20 transfers 17,084, 488.08 15, 527, 950.18 —1, 538, 637.89 Sales of produce (future delivery) (repealed —248, 982. 30 * The taxes on matches (except the 5 cents per thousand on colored wooden stem) were repealed as of close July 1, 1938) 248, 982.30 of business June 30, 1938. 4, 141, 166. 60 4,814,430.40 673, 263.80 Playing cards No- Silver bullion sales or transfers 261, 772. 52 193, 736. 79 —68, 035.78 sc.—Collections for credit to trust accounts, included in the table above, were as follows: —2, 401, 494.10 Total 91, 082, 839.42 38, 881, 395.32 1939 1940 Increase er Manufacturers' excise taxes: 735, 952 75 decrease (—) Lubricating oils 30, 496, 636.55 31, 232, 589.30 207, 018, 745. 34 226, 186,669.47 19, 167, 924. 13 Gasoline 8, 736, 281.24 Tires and inner tubes 34, 819, 207.57 91, 555, 988.81 Corporation income tax (Alaska railways) $9, 774.99 :32, 931.19 —$6, 843.80 6,007, 662.04 7,866, 070.51 1, 858, 408.47 Distilled spirits (domestic) Automobile trucks 18, 628, 410.82 174, 019.14 179, 315.37 5, 296. 21 Other automobiles and motorcycles 42, 722, 787.97 59, 251, 198. 09 Distilled spirits rectification tax 12, 962. 68 4, 666. 85 —8, 295.83 7, 935, 463.89 10, 629, 993.36 2, 694, 529.47 Wines (domestic) Parts or accessories for automobiles 2, 979, 328.36 1.65 52.78 51. 13 Electrical energy 39, 859, 173.55 42, 338, 501. 94 Fermented malt liquors 7, 771.24 4. 761.24 —3, 010.00 4, 834, 366.33 6,079, 914.50 2 1, 245, 548.15 Cigars (large) Radio sets, phonograph records, etc 2,996, 719. 69 368, 958. 25 443. 284. 26 74, 326. 01 Mechanical refrigerators 6,957, 679. 22 9, 954, 398.86 Cigarettes (large) 8.07 22.86 14.79 2 978, 019.80 3, 707, 843.88 731, 823.19 Cigarettes (small) Firearms, shells, and cartridges 22, 997.15 6, 064. 91 2, 356. 47 —3, 708. 44 Pistols and revolvers 66, 511.38 89, 508.54 Manufactured tobacco 100.44 9. 77 —90. 67 Toilet preparations at 10 percent (perfumes, Coconut oil 18, 640, 230. 48 17. 046, 520. 47 —1, 593, 710. 01 — 2,929,580.21 oncmatirs, ete.) 10,642,064.17 7, 712,483. 98 Playing cards 102.80 102.80 Brandy ' Tax rate on distilled spirits (except brandy) increased from $2 to $2.25 per tax gallon, effective July 1, 1938. 25.30 25.30 Tax on phonograph records repealed as of close of business June 30, 1938. (Collections from the tax on 2 Total trust fund collections (included above).. 19, 219, 891.85 17, 689, 040.36 radio components and phonograph records were not segregated.) —1, 535, 842.49

REPORT OF COMMISSIONER OF INTERNAL REVENUE 103 102 REPORT OF COMMISSIONER OF INTERNAL REVENUE internal-revenue collections, years ended line SO, 1863 to 1940 INCOME TAX AUDIT TABLE 6.- Total TABLE 9. - Additional income tax assessments on the Commissioner's and collectors' Amount Yew Amount Year Amount Year lists made during the fiscal year 1940 by tax years $142, 594,696. 57 1917 $809,303,690.44 1863 f $41,003, 192. 93 1890 3, flaw's. 820.9a (a) TOTAL REGULAR AND JEOPARDY ASSESSMENTS 116,965, 578. 26 1891 146,035,415. 97 1918 1884 153,857,544 35 1919______. 3.851, 150078. 56 1865 210,855,864. 53 1892 5,407,580,261.81 310, 120, 448. 13 1893 181,004,989. 67 1920 1866 147, 188,449 70 1921 4, 506 357,061. 96 Items Tax Interest Penalty Total 1867 265,064,938. 43 1894 1923_____---______607,451,083.00 190,374,925. 59 1895 143, 246,077. 75 1868 146,830, 615.66 1923 2795 , 745,227.57 1869 159, 124,126.-86 1896 2, 795, IA, 257.06 184,302,828.34 1897 146, 619, 593.47 1924 1917 57 $44,536 $14, 273 $565 $59,374 1870 170,866, 819.36 1925 2584,140,268. 24 143, 198,322. 10 1898 2,865,99019219 1918 85 417,033 203,549 1, 203 621,785 1871 273,489, 573.44 1919 89 641, 420 50,460 1,194 693,074 1872 130,890,096.90 1899 2,790 an% 12a sa 113, 504,012.80 1900 296, 316,107. 57 1927 537. 88 1920 97 321,259 193,546 10, 280 475,085 1873 306, 871,669. 42 2,794535, 1921 72 319,917 282,958 30, 573 833,448 1874 102, 191,016. 98 1901 2939154, 37393 110,071, 096.22 1902 271, 867, 990. 25 1929 1922 79 201,469 180,829 56,941 419,239 1875 230, 740,925. 22 1930 ______.____ 6 041, 145,733. 17 1923 • 100 537,933 481,813 15,040 I, 034, 776 1876 116, 768,096. 22 1903 2, 926 228,, 042.754. 69 22 118, 549, 230. 25 1904 232,903,781.08 1931 1924 94 393,767 333,003 12,303 739, 073 1877 234, 187,976.37 1932 1, 387,729 127 1, 526, 223 1,187, 870 182,010 2, 896,103 110, 864, 163. 37 1035 I. 619,839, TM. 30 1925 1878 249,102,738. 00 1933 1926 148 3, 674,107 2, 602,894 83, 160 6,360, 161 1879 113, 449,1121. Mt 1906 M9, 664,022. 85 198 4 2, 672.239.1%. 62 123, 981, 912.30 1907 7, 399, 435, 572 18 1927 174 1, 738, 702 1, 193, 313 118, 184 3,050,199 1880 251, 665,950. 04 1935 1928 195 3, 234,923 2, 006, 410 130, 737 5,372,070 OE 135, 229,912. 30 1908 18- 1936 4, 6195,316. 146, 523, 273. 72 1909 2;49, 212, 220. 195,316. 28 1929 286 5,025, 529 2, 798, 870 147,776 7,972, 175 1882 289,957, 220. 113 1987 4,6a 1930 357 5, 965,449 3, 165, 753 189,637 9. 320,839 144, 553,344.89 1910 6, 668,785,314.33 1883 1911 322, 526, 299. 73 1938 1931 335 2,893,349 1, 263, 850 / 83, 699 4,340,898 1884 121, 690,039. 83 1939 ______6, 181, 573,95 2. 58 112, 421, 121.07 1912 321,615,894.69 5, 340,452, 348.73 1932 483 3, 811, 533 1, 499, 475 323,170 5,634, 178 1886 344, 424,453. 95 1940 886 9, 415, 332 3,187, 902 779, 953 13, 383,187 1886 118, 902,869. 44 1913 1933 118,837, 301. 06 1914 380,008,893. 98 . 79 1934 2, 746 17, 917, 354 5, 035, 983 931, 550 23,884,887 1887 415, 681,023.86 Total__ 90,583,566,85 1 5, 670 20, 930, 299 4, 669, 613 813,985 26, 413,897 1888 124, 326, 475. 32 1965 1935 130, 894,434. 20 1916 512,723,287. 77 1936 30, 472 48, 659,695 7, 984, 985 1, 441, 268 58,085,948 1889 1937 68, 301 54, 720, 194 5, 562, 202 1, 247, 252 61, 529,648 Period of 10 months, from Sept. 1, 1882, the day on which the internal-revenue laws went into practical 1938 98, 751 46, 747, 312 I, 657, 117 1,052, 727 49,457,156 II 1939 5, 298 2, 010, 591 22, 489 28,667 2,061, 747 operation, to June 30, 1863. 1940 8 3, 786 3, 786 tax on manufactured produ cts from Philippine Islands, TABLE 7. - Internat- revenue Total 214,907 231, 151, 712 45, 509, 147 7,781,879 284, 442, 733 fiscal years 1939 and 1940, by objects of taxation Increase, or 1940 (b) TOTAL REGULAR ASSESSMENTS Articles taxed 1939 decrease (-) $165,458.57 $176,878.05 $11,419.48 $43, 152 $13, 186 $121 $56,459 Distilled spirits, excise tax 4.80 4. BO 905, 543 201,426 993 607,962 Brandy 6, 230.62 4,319.68 - 1,910.94 624, 222 45, 670 832 670, 724 Distilled spirits, rectification tax 1.13 1. 13 294, 897 125, 025 4, 277 424,199 Wines 7, 771. 24 4,761.24 - 3,010.00 316,569 282,958 28, 450 627, 977 Fermented malt liquors 153, 917 127, 752 33,834 315, 503 Cigars, large: 364,649. 84 438,833. 66 72,183.82 534, 018 481, 632 13,357 1, 029,005 Class A 247.49 346.79 98.30 391, 509 331, 010 11, 073 733, 592 Class B 1,409. 51 1,607.33 202. 82 1, 038, 005 788, 618 44,963 1, 871, 586 Class C 2, 250.74 2,863. 79 413. 05 ra 3, 566, 532 2, 520, 720 42, 843 6,130, 095 Class D 1,831. 88 1, 831.88 1, 553, 738 1,059, 186 112, 315 2, 725, 239 Class E 405.67 -905.87 3,140, 598 1, 946, 217 90, 371 5, 177, 186 Cigars, small 8.07 22.86 14.79 r 4, 771, 748 2,646, 112 68, 268 7, 484,128 Cigarettes, large 6,064. 91 2,356. 47 -3, 708.44 5, 734, 923 3,041, 718 99,238 8,875,879 Cigarettes, small 100, 44 9.77 -90.67 ral 2, 393, 852 1,008, 170 64, 964 3, 416,986 Manufactured tobacco 102.80 102.80 3, 265, 067 1, 272,319 128, 576 4,665,962 Playing cards 513, 465 11,977, 671 554, 812.10 631, 739. 25 77,147.15 cflo 8, 575, 235 2, 888,971 Total 15, 746, 905 4, 395, 517 493, 483 20, 635, 905 18, 949, 962 4, 209, 971 359, 482 23, 514, 416 Non.-Under sec. 3343 of the Internal Revenue Code, the above receipts are covered into the Treasury g or 44, 285. 535 7, 220, 800 552,099 52,058,434 c of the United States to credit to the treasurer of the Philippine Islands. qr 50, 387, 209 5, 075, 078 254, 357 55,716,642 93, 648,606 1, 498, 831 62,816 45,210,343

tax on manufactured products from Puerto Rico, fiscal _ 1, 701, 250 21, 186 8, 352 1, 730, 788 - Internal- revenue TABLE B. years 1939 and 1940, by objects of taxation 2, 290 2, 290 Increase, or 213, 339 211, 475, 370 41, 202, 071 2,981, 529 265,958, 970 1940 *alines taxed 1939 decrease (-) $1, 501,033. 87 $2, 512, 145. 56 $1,011, 111. 69 Distilled spirits, excise tax 146,026.84 251, 110.01 105,083. 17 Distilled spirits, rectification tax 1. 65 1. 65 .00 W11209 51.65 50.5 00 Fermented malt liquors Cigars, large: 2,017. 42 1,972.80 -44.62 Class A 460. 35 770.55 310.20 Class B 2,487. 50 2,41375 -73.75 Class C 39.90 23.10 -16.80 Class D Cigars, small 1, 701.08 1, 452.96 -248. 12 Cigarettes, large 14, 955. 81 12,416. 34 -2,539.47 Cigarettes. small 1,868, 724. 42 I 2, 782, 361. 72 1,113, 837.30 Total tobacco and liquor manufactures are deposited at San to the Stamp sales for Puerto Rican n Jun herein, creditNOTE. of- the treasurer of Puerto Rico, and consequently are not shown in other collectionat Sa s except that liquor taxes amounting to 615,299.28 in 1939 and $2,858.45 in 1940 were collected atPuerto the ports Rice, of entry and were covered into the Treasury of the United States to the credit of the treasurer of under the Act of March 2, 1917 (sec. 3380, Internal Revenue Code). REPORT OF COMMISSIONER OF INTERNAL REVENUE 105 104 REPORT OF COMMISSIONER OF INTERNAL REVENUE income tax assessments on the Commissioner's and collectors' TABLE 9. - Additional income tax assessments on the Commissioner's and collectors' TABLE 9. -Additional lists made during the fiscal year 1940, by tax years-Continued lists made during the fiscal year 1940, by tax years-C ontinued (e) ASSESSMENTS RASED UPON STIPULATION BEFORE THE BOARD OF TAX APPEALS ASSESSMENTS ON AGREEMENT WITHOUT 90-DAY LETTER (e) Total Items Tax Interest Penalty Total Items Tax Interest Penalty -- $121 $53,849 1917 $1,153 $57 $1, 210 46 $40, 644 $13, 084 831 257,188 1918 ______c 178, 272 192, 488 320, 760 1917 58 199,170 57, 187 44, 599 679 650,393 1919 1918 59 605,165 244, 798 1920 'ea 80,556 64,498 145,004 1919 193, 913 49, 356 1, 529 59 1, 816 208, 017 1921 175,155 143,955 $8,286 327,396 1920 48 103, 465 102, 736 55, 416 2,762 135,744 1922 32, 238 32, 317 10, 416 74, 971 1921 49 77, 566 158,402 1923 50,218 44,838 861 95,917 1922 85,201 69,468 3,733 60 1,352 134, 146 1924 172, 641 144, 229 169 317, 039 1923 59 71, 839 60, 955 213,583 7, 489 400,859 1925 572,279 419 202 20 991, 501 1924 85 269, 807 1, 287, 255 1926 536, 552 372, 650 118 909,320 1925 805,703 472, 118 9, 434 t” 94 40,460 1, 374,726 1927 382, 601 233, 914 2, 823 619, 338 1926 102 781, 838 552, 428 1,606, 562 11, 533 4, 185, 154 1928 444,335 258,790 9 551 703,676 1927 126 2,507,059 1,872,711 1929 ,24S 3, 197,106 1, 796, 593 5, 017,105 1928 1,221, 695 644.264 6,752 23, 406 148 57,169 4, 614,915 1930 471, 785 243, 667 6, 507 721, 959 1929 163 2,974, 754 1, 582, 992 659,448 21, 499 2, 265, 982 1931 538, 007 245, 065 4, 511 785, 583 1930 179 1,585,035 3,188,702 1932 4&5,802 192,585 5,972 684,359 1931 2,234, 518 858, 219 95,965 EEME't 256 125, 212 6, 670, 573 1933 2, 428, 413 802, 587 3, 156 3, 234, 156 1932 435 4,903, 576 1, 641, 785 1,819, 346 79,196 8, 335, 497 1934 6, 521, 695 1, 768, 372 11, 648 8, 301, 715 1933 1, 583 6,436,956 16, 283,010 583, 511 13,241, 974 2,939,20 101,836 1935 2, 623, 210 31, 736 3, 238, 457 1934 3, 843 42, 489, 488 1936 2, 436, 954 410, 784 13, 362 2, 861, 080 1935 36.242, 726 5,1940, 052 406, 710 25,850 218, 615 51, 190, 302 1937 551, 099 61, 643 371 613,113 1936 62, 880 46, 338, 776 4, 632,911 44, 633, 278 1938 1, 776 193 I, 919 1, 449, 580 56,113 1939 1937 97, 602 43, 127, 585 1,729,078 1,699,569 21,157 8, 352 1938 5, 254 2, 290 1940 1939 6 2, 290 1940_ 192, 456,357 165, 810, 821 25, 386,376 1, 259, 158 Total 2, 679 21, 879, 847 7, 959, 819 125, 913 29, 965, 578 Total 199,044 (f) ASSESSMENTS MADE AFTER DECISION BY THE BOARD OF TAX APPEALS ASSESSMENTS ON AGREEMENT AND DEFAULT AFTER ISSUANCE OF 90-DAY (d) LETTER 1920 2 $1, 692 $1, 370 $3, 062 1921 1 2,530 $633 3, 163 3 2,273 343 482 3,098 $45 I $1,400 1922 4 $1, 355 30,019 1923 5 345, 483 320, 143 784 668, 410 1917 28, 101 1,751 $162 17 153 2,331 1924 5 133,388 114,823 1,332 249,543 1918 18 19, 057 1,121 1925 8 134, 047 106, 595 2, 803 243, 495 9, 851 2, 748 31, 335 1919 19 18. 736 89, 401 1926 9 2,161, 784 1, 629, 901 609 3, 792, 294 1920 35, 419 36, 267 17,715 10 20,174 101, 690 1927 13 298, 952 208, 781 24, 516 530, 249 1921 13 41, 840 39, 676 1928 5 39, 743 25, 841 27, 774 93, 358 47,183 7, 979 108, 276 1922 88 53,114 32, 864 1929 31 183, 348 106, 229 6, 827 296, 404 1923 13, 641 11, 003 8, 220 16 34, 651 145, 781 1930 44 2, 236, 766 1, 187, 318 11,917 3, 936, 001 1924 15 61, 872 49, 258 1931 34 188,461 87,578 19,982 296,021 46, 051 32, 682 141, 226 1925 16 62, 493 200, 926 1930 66 463,378 188,454 5,120 6543,952 1926 92, 347 64, 063 44, 516 18 48, 513 194,998 1933 133 999,766 360,284 300,525 1, 660, 555 1927 22 89, 481 57, 024 1934 311 2, 191, 867 625,748 356, 381 3, 123,996 99, 026 29,283 297, 908 1928 25 169,509 103,004 1935 252 1,344, 606 309, 446 11,608 1, 665, 660 1929 51, 618 27, 741 23, 845 72 18,972 69, 400 1936 131 319, 305 57,909 1, 245 378,459 1930 30 34, 349 16, 079 1937 38 47,162 5,565 548 53,275 33, 061 21, 519 135, 949 1931 51 81, 369 412, 387 1938 3 27, 361 18,838 1, 491 47,690 1932 243,480 34,335 84, 572 71 46, 258 874, 697 1939 1933 248 646, 388 182, 051 377, 814 209,302 2, 327, 258 1940 1934 589 1, 790, 172 6, 329, 407 1935 5, 286, 550 912, 075 130,782 3, 524 39, 823 3, 859, 952 Total 1, 094 11, 069, 912 5, 355, 146 774, 577 17,199, 635 1936 4, 830 3, 450,172 374, 957 30, 270 5 212 527,456 1937 894 491,974 ' I 1, 710 1938 2 1,681 29 1939 1940 821,881 I 16, 037, 400 10,522 I 12, 714, 788 2, 500, 731 1 Total

269679-40--8 REPORT OF COMMISSIONER OF INTERNAL REVENUE 106 REPORT OF COMMLSSIONER OF INTERNAL REVENUE 107

9.-Additional income tax assessments on the Commissioner's and collectors' TABLE 9.-Additional income tax assessments on the Commissioner's and collectors' TABLE lists made during the fiscal year 1940, by tax years-Continued lists made during the fiscal year 1940, by tax years-Continued (i) FRAUD JEOPARDY ASSESSMENTS (g) TOTAL JEOPARDY ASSESSMENTS

Items Tax Interest Penalty Total Items Tax Interest Penalty Total °"°-'" $444 $2,915 1917 $1,384 $1,037 $444 $2,915 1917 $1, 384 $1, 087 1918 11,490 2, 123 210 11,490 2.123 210 13,823 ---- 13,823 1918 22, 350 1919 16,982 4,814 308 21,904 17,198 4,790 362 1920 1919 18, 521 8,003 50,888 19, 138 12,648 2, 391 34,175 1920 26,362 1921 2, 123 3, 348 2,123 5, 471 3, 393 5,471 1921 1922 47, 552 103,736 - 33, 077 23, 107 103, 736 47, 552 33,077 23,107 1923 1922 1,683 5,771 3, 917 171 1, 883 5, 771 3,917 171 1924 1923 1, 993 1, 230 5, 481 2, 258 1, 993 1, 230 5, 481 1924 2, 258 1925 488,218 399,252 137, 047 488, 218 399, 252 137,047 1, 024, 517 1,024, 517 1926 230,066 1926 69,897 53,427 40,302 183,826 107, 575 82, 174 40, 317 1927 1926 5,869 324,960 180,203 130, 675 5,888 316,746 1927 184,964 134,127 1928 92,921 60,193 90, 368 194,884 59,258 40,3138 192,545 1928 94, 325 1929 251,944 151,645 81,508 263,781 152, 758 81,508 488,047 485,097 1929 444,980 1930 228,954 123,177 90,399 442,530 230,526 124,035 90,399 1931

1930 "' 599,497 255, 680 549,497 255,680 118,735 923,912 118,735 923,912 1931 194,594 988,216 1932 548,331 227,111 194,560 968,002 1932 548,468 227, 156 1933 816, 561 1, 405, 518 SV 290, 731 258, 545 1,385,837 840,097 298,931. 266,488 1934 1933 438, 067 3,248,982 1,495, 567 441, 736 428,483 2, 365, 758 2,170, 449 640, 466 1935 1, 340, 008 1934 459,842 459, 503 2,899, 482 ZSR 309,552 445,794 2,095,359 1935 1, 980, 337 1936 3, 568, 875 825,713 862,068 4,374,180 764, 185 889,169 8, 027, 514 5, 056, 656 1936 5,813,006 1037 3, 502, 888 408, 342 981, 893 4,872, 923 4, 332,985 487,126 992,895 1938 1937 158,286 989,911 4,248,813 R" 2, 63S, 591 138, 981 983,185 3, 760, 687 1938 3, 098, 616 1939 255,286 573 1,965 309,341 1,303 20,315 330,959 257,774 1939 1,496 1940 1, 498 1, 496 1940 1,496 28, 783, 783 Total 1,108 16,133, 046 3, 871, 514 4,882,174 24, 488, 734 Total 1, 568 19, 678, 342 4, 307, 076 4, 800, 345

(h) JEOPARDY ASSESSMENTS UNDER 13ANKRUPTCY AND DISSOLUTION PROCEDURE TABLE 1 0.-Tax items appealed o the United States Board of Tax Appeals, fiscal year ended June SO, 1940 $216 $176 $54 $4449 7, 224 5,875 3,612 16,711 Items Tax Penalty Total

1917 $3, 210 $260 $3, 470 1918 351, 999 1,264 353,283 37,878 28,747 15 66,441 1919 73,621 304 73,925 4, 761 3, 452 1 8, 21, 1920 23, 297 4, 247 27, 544 1, 904 935 2,331 1921 38, 097 10,197 46, 294 1, 837 1, 113 2,951 1922 148, 774 44, 251 193, 025 1,572 868 2,434 1923 21, 697 1, 305 23, 002 1924 11,208 2, 461 13, 687 21 1925 66,056 135 45 34 '' 23,827 89,883 1926 23, 536 8,200 7,943 39, 67' .3 64, 925 4L 096 108, 021 883, 22 1927 " 82L 888 674,892 198,730 9,604 4 60, 091 381, 927 1928 640. 329 150,090 13,709 804, 12 n 481,551 192,056 673,807 805,285 138,472 27,101 970,86 1929 2, 313, 764 377, 417 2, 691, 181 &30, 297 78,784 31,002 940, OB 1930 433, 218 65,909 499,122 1931 460, 075 19,305 8, 746 486, 12 7 173, 730 34, 593 288, 323 1932 " 398,525 54, 055 780 18,350 73,18 g 35,310 431,835 1933 4i 1, 380, 061 362,181 1, 742, 242 1034 8, 751, 382 684,856 9,436, 238 1935 10, 433, 808 3, 543, 296 835, 582 118,171 4,297,02 i 538, 639 10,972, 447 1936 I 24, 866, 121 rA 1, 517, 116 a 383,237 1937 17, 378, 752 861,498 18, OM, 250

1938 ^I 1, 622, 840 224, 661 1,847, 301 1939 45, 687 45,887 1940 70,840 70,840

Total 5, 386 69, 970,847 4, 883, 484 74, 854, 331

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REPORT OF COMMISSIONER OF INTERNAL REVENUE 115 114 REPORT OF COMMISSIONER OF INTERNAL REVENUE 440.0„4-0--, 4 0.0 218M182282M98884888A5 5% gr.t0st4ota46,504.E0t.E,.... 218 t..1 1„g=g1=m1E6a.:OPEERnEEEzE:Egg, Ag gilei g nOgg42aECIE o. 5 ;a tg 4 gt Mtge egeggv ta c4171 Efifit: 045;fg-Wq. 3:,°-r a T. 1E1 c6. aa >I cs-

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qgstlizgtglgsgt COLLE EEHEREEPEEEMEERE66fi RE@EEEEE (Erg AE5 @M EIER is§tp[1,4 , wg,ggtg-ttg E,fg0;17,tg -r-iggrgriggg qa viEgg gga524 gRti gq agEagga a..g4€ .1.>1 ,, , e a ‘,- '' cleg" O-6cic a 4 .„ a az: ONE ggaga illillt6te '1' '' N E. h. 0Er iHrign § § ER SERE RI E@ ER @ER 6E: ?JAME 0 aa IgIE g54111"6 'El aims 5Elig'61g RP I g:7;1a5F0 1 "El g i of a MORE THA

MR §M§I.UMEREirdraMitraFigi AERMAREE166E6EEEER RE ISING 525 5 00 145 6E4E'gigEggEgggElEgg'61PEEi gg5174i=l5agggH417.1 06 WiRgggi6 -',TRI OS! ge44:: age- gt t ge .1'eia e440-6a al c Rg COMPR ilgx3Egt 44 M; AT S F TOTAL

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At 4t, me oz >44 rt,> g g Cu 2 I .-,B* 41 z-t-0 t't, -4- . dct,Z WI MP UP: p! " ;75. ;0 i-ig§n41.0a zx z, liV.2 0 c o s O .2 1305 2 nlAgEll 4 44 0gtegvA6zei ' golttszagvw a b04 01100121rrzlAPI .tArl 4g0Nr74g -412.20grx,S>333 wsE4Z2 REPORT OF COMMISSIONER OF INTERNAL REVENUE 117 REPORT OF ODAINIISSIONER OF INTERNAL REVENUE 20 ' 116 Il 29 76

R228C24888N UE9 CI M6

cat 17. 8 ' '

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id gUggEgEH 050 999 be 19 pa d m - 050, 658, 090,

lining g 535, n AL' ing 2, 2,

r 4 Nu Tax 8 152, 157, Egg du

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1 7„: Z Num Z.44 ou 836 929 56Z 016' 909' 3 p intfil

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a . co Num

Ma z ON . 156, 152, ST I spu A 2

to 9 ggi R -R R 356 RE 2 g 't tgi 1 n TH t'Et a a k, 18. 15,

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•

/1 REPORT OF COMMIESIOrNER OF INTERNAI/ 121 118 REPORT OF COMMISSIONER OF INTERNAL REVENUE ERSS4 8 SSA A 0 vac° and g42e4' ov-e flKA4 E .b08R - g ,a9 1! 0 Pnb;eft, 114Pi ggENE. g F R ArtiTs.i tE00 E;FIgEt a 'gg g s PQ 888 88 g tb,15,1Ag" a ?AU AA 8 gg g g56 5 a 55 to -t§d a 5 E7 &bid: Ets ci RemoE>mg g. DISTRICT a N wsis - 4g a .4- g tg.izA10 Or &pr. rA.4 § AA eg OLLECTIO ggg .g; a igtid • 0Sa OIW 5ggEE g ggg g 6 8 -0 :4554 1 15 5 g HAN ONE C 85St.Pj' 7105 S g " fir RE T

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■ 0 1,, s .11. 0 0 . 0 , .1 . •- .. 0 0 . 0 _0. 0 . . ,_, 0 TOTALS FOR STATES CO

ie Igz2" -

r 1 E t. , to erS 1 >.'tt (..) CI It) 0 fac

f ..0.000009NO. 0 000 0 0.0 ;10

o '-gq 8 r 2.82W E 8 be a m 0 OW 0 - .cace 0. to C.o. . k O. 0 Nu -pp !!!:;f:O

1 ri0,0 pmOPA. g , n, pg t 11 ElL g >. 5fliit o ■ t ig: .a.-11 is mal U, k. Qc•.>'5 i " t.)gi, 47,4tr.tige..t88 1 c E e' 4n te.gtgt.t g.to k>■ 4° t'-'S 1!!! I agaaM4PaFro4 C a4-1 Cal 120 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 121 0 EZ 89 EP 4' 77 ' ' 09

,12 '008 a9° SI 2 in i 2493 TABLE 93 39 19.-Leaf 605 ' tobacco used in manufacturing cigars, cigarettes, and tobacco and 1.

° cht 8' snuff, calendar

lic4 4 5 :44ggg 02 years 1930 to 1939 l

F1 230. ef ri 5 31 li 5 g 17, 19, > '6; Cigars Cigarettes 006 0 Year Tobacco and r 60 40

id Total ' 750 0 940 snuff 1939 15 0 be a 906

d 4, Large 2 Small Large Small m 85_ 111, x-p

ing 7 36 670, d 2, Nu -7 2, Ta ve

dur Pounds Pounds Pounds Pounds I 1, Pounds Pounds housan 005 '

000' 005 ' cos 1930 t 136,749, 916 1, 151,057 65, 333 347, 849, 955 293,990, 441 779,806, 202

r- 1931 126, 611, 200 1,016, 997 93,171 toun 329,919, 304 o 294,812,985 752,403,657 er

n § § §

Remo S § '96

9E9 66 8 1932 103, 233, 757 1,059, 270 18,347 299, 010, 92,5 286,816, 510 p 690,133, 809 io 1 t 1933 103,953,997 745,245 17, 325 , N 326, 076, 032 exp 279,875, 778 ds ' ds. 710, 668,377

ta 1 1934 110, 203, 242 919,672 882,144 374,599,769374,500 289,024, 051 775, 529,878

,-,- un un 5 1935 For 113; 066, 319 675,899 14, 050 399, 944, 333 o o 262, 731, 965 775,932, 061 1936 125, 875, 214 702,567 12,479 006 052 me ' 453, 314, 812 267, 461, 957 897,367,024 3 p 1937 127, 879, 843 773, 417 72 p 18, 699 479,942,665 269, 309, 344 872, 923, 968 n 450 900 ' §§ T 1938 ' ber 118,161,858 589, 451 14,151 899 65 so 483,826, 114 262, 710, 323 865, 302, 097 5. 4, ha 1939 122,071,819 A'' ri IC 609,278 24,983 509,107, 672 253, 485,449 885, 299, 201 22 es, t

Ot Num I The quantities given are unstemmed equivalent of all kinds of tobacco used. Stemmed leaf and scraps more 01 etc., used in 0 DISTR manufacturing have been converted to un temmed equivalent at the ratio of 3 pounds stemmep 6

t 55 400 000 etc., to 4 pounds unstemmed.

'1 4 §.. g ?, § 460 ber 31 hing t- - 1, 2 Does not include tobacco used in bonded manufacturing warehouses. 58. ig ....: 59,

., 132, ri l Num we 0. TABLE 20.-Production

., of manufactured tobacco, snuff, cigars, and cigarettes, Oil 019 090 093

ttes calendar years 1930 to 1939 ..ta

6 90 30 quin

' are

§§§FiR§FICH '1 III 12 7 ..t2 5

TEL a

, TOBACCO AND SNUFF 961 COLLECTION N Cig ' 637, 368.

ti I 8

.- . 4, 2, 7 Soren NE Year Plug Twist Fine cut chewing Smoking Snuff Total 999 986 EZI 810 ' 901 0

epuno 8 '3 t;, m ,. N & 4" 3 Pounds Pounds Pounds Pounds Pounds Pounds Pounds c

i i 1930 86, 273, 517 7, 623, 716 5,089,410 ('11 232, 013, 383 40, 765, 883 371, 765, 999 13. THA 1931 76, 652,810 6, 377, 436 4, 170, 275 61, 235, 195 182, 947, 238 39, 854, 345

371, 237, 299 po 1932 61,945, 173 4,918,034 3,359,471 50, 080, 201 190, 986, 528 L 35,994, 337 347, 278, 744 909 t 91 I69 RE sn i 8111010 1933 61, 361, 495 5,041,990 3,120,427 44, 724, 472 191,766, 382 36,098, 394 t ' 342, 113, 160 ti c' “ 48E ts' 6 1934 62, 759,957 5,079,904 2,970, 421 44, 786, 387 °an 193,075,426 3 "ri 36, 893,903 345, 565, 998 . • MO a 1935 60, 568,460 5, 604, 226 4,683,060 49, 006, 896 191, 750,069 36,095,140 342.727, 851 ,t

n 1936 59, 164, 521 6,372,164 5, 068, 192 45. 342,496 C 199,006, 958 38,022, 225 347,976, 506 oy 1937 58, 330, 801 6, 774, 192 4,999, 260 45, 559,414 187, 774, 329 37, 191, 208 340, 579, 204 IN 1938 59 999,646 5,658,854 4, 572, 346 42, 775, 966 200. 693, 591 37, 173, 135 345, 368, 538 ZL 81 90z ' IE 1 1939 51, 262, 796 5.732, 777 4, 701,102 41, 350, 992 -,.., ....- 202, 289,113 37,969. 933 343, 306, 713 9' I 137 197 , F6' ds

ES-i'reiF: • 6 6 M 81 n El s <6 7, E Included under "Smoking" prior to 1931. 2 4. 4 Pou COMPR CIGARS AND CIGARETTES

TES 7 Cigars Cigarettes TA Weighing R S Year Weighing not more Weighing Weighing not more than 3 more than 3 more than 3 FO pounds per than 3 pounds per pounds per pounds per thousand thousand thousand LS thousand

Number Nunzber Number Number TOTA

bu 1930 5, 893,890,418 383,069,980 7,366,925 123, 802,186, 217 1231 in 5,347. 921, 293 338,996, 780 5,159,660 117,061, 214,494 1932 4, 382, 722,918 278, 748, 580 E 3, 373, 577 106,632, 433.834 ICT ies 1933 9, 300,044, 810 209, 519,620 r 2,845, 705 114,874, 217,470 TR 1934 4. 5E5, 780, 084 221,976, 561 to 88, 202,405 129,976, 333, 581 STAT c 1935 DIS 4,685, 309,674 177,822, 178 2, 504,490 139.966, 179,916 1936 5,172,278,612 180, 005, 714 2,457,940 f fa 158,893,958, 304 1937 5, o 303,368, 834 198, Rel, 972 3, 066,460 169,969, 319,880 r 1938 5, 014, 757,804 152,989, 705 2,637, 530 171,686, 382. 671 be 1939 5, 197, 627,088 156,939,932 4, 388, 790 180,666, 824, 480 ia m n ia k nu n lva k 9 Nom-Compiled from statements of accounts prepared

from manufacturers' inventories and monthly r ia ia 93 returns Hied under the

Yor United States internal -

lva revenue laws. For

1938 cigars produced in and removed

The for

tts Yo 1 ia ase lina rn nnsy

domestic consumption from

Jersey bonded manufacturing warehouses, see table 15. ase l, l, w n —

w k ta cre liforn w Pe ta lifo nnsy cre ia Ne lva ky huse Caro n h Ne ia Ca To To In De Ne Ca d Pe Yor h

d lft in sac tuc Num. t t t nsy h h t n lifor ix Firs Ca New Pen Firs S Ke Mas Filt Secon Thir Nor Twe Virg 122 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 123

:Man 1A2ZW4 2 l FUME ta a 4 e4' f to t o AA4RAA 8

O Percen 4 6 0. ag 4 o A E. 4 23

wz d eor4 gkga z ce c du C. ro No

g p w en co a bac

WZ d 0 o z N 14 N Oq 0 6 d

06 ) ds

) ds to oun (p

oun co

o (p w E bac

I P m to bacco Z 6 of t

6 f to u t o tp u WI Ou tp o 6 -.4 Ou 02 4 00 w O to

z z REPORT OF COMMISSIONER OF INTERNAL REVENUE 125 124 REPORT OF COMMISSIONER OF INTERNAL REVENUE TABLE 22.-Exportation in bond of manufactured tobacco, snuff, cigars, and cigarettes, 8F4A$8P4-'26P-re- ; etc., year ended June 80, 1940, by collection districts TOBACCO AND SNUFF

8ralge81.18V,gEtVc1i 8 Unaccounted Removed for Tax-paid Unaccounted CO District for July 1, exportation Exported or returned for July 1, 0) 1939 during year to factory 1940

Pounds Pounds Pounds Pounds Pounds UMAN'S" A First California 1, 270 1, 270 Delaware 2, 400 2, 400 First Illinois__ „.. ______-_ -- 356 11, 054 9,227 396 1, 787 Kentucky 88, 332 1,063, 918 976, 694 168 175, 388 30 %VI -1'1+71 +1+S , Massachusetts 527 497 n First Missouri 65,374 964,423 847,151 182,646 io

t Fifth New Jersey 24 384 408 c First New York 58 58

du Second New York 145 145

ro AMARFORE1 Third New York 4, 408 3, 831 577 p 40244 North Carolina 1, 031 217, 170 217, 317 360 624 ar iltlEgg7 First Ohio 737 8, 819 8, 970 586 ig First Pennsylvania 2,333 2,333 c glgriteriENUE Twelfth Pennsylvania 154 1,693 1,847 te

a Tennessee 338 2,373 2,114 597

eg Virginia 143, 519 1, 035, 933 1, 694, 797 1,817 82,838 r giNIEREflfa West Virginia 78 1, 125 1, 110 93 Agg IgtiggEgEVE:E--- Total 299, 943 3, 918, 033 3, 770, 169 2, 741 445, 066 aggsgr=E 2 iN PERIQUE TOBACCO, SCRAPS, CUTTINGS, CLIPPINGS, SIFTINGS, ETC.

1 Pounds Pounds Pounds Pounds Pounds A5cri+7+7TiT Florida 225 225

s ▪

r Louisiana 75,052 74, 736 316 Fifth New Jersey 34,635 34, 635

ture Second New York 43, 869 38, 511 5, 358 Third New York 117,925 117, 925 fac O 4,,

u Tenth Ohio 5, 942 17, 192 23,134 MISFASnAgt First Pennsylvania 81, 178 77, 060 4, 118

f man Total 5, 942 370, 075 366, 226 4,118 5, 674 o r

be CIGARS WEIGHING MORE THAN 3 POUNDS PER 1,000

m gEgIsnsE Q.; Nu Number Number Number Number Number First California 3,600 3,600 7,200 Sixth California 8,200 8, 200 Florida 93,200 1, 193, 710 1, 235, 080 25,000 26,250 Maryland 6,000 6.000 Massachusetts 11,301 11, 300 First New Jersey 7,701 125,050 126, 050 6,701 Fifth New Jersey 58, 600 771, 956 787, 056 1, 000 42, 5W Third New York 3, 500 1, COO 2, 500 Fourteenth New York ______41, 000 41, 000 North Carolina 10,000 10,000 Tenth Ohio 2, 000 132, 850 123, 100 H, 750 First Pennsylvania 36,000 661,500 612,300 200 85,000 Twelfth Pennsylvania 11,400 68,125 79, 525 Twenty-third Pennsylvania__ 10,000 15,000 20,000 5,000 South Carolina 17,000 416,200 405, 200 28, 000

2,000 41,000 43,000 s Virginia

ar 3, 516, 591 26, 200 207, 700 ig Total 241, 500 3, 508, 991 f c

t o CIGARS WEIGHING NOT MORE THAN 3 POUNDS PER 1,000 u tp

Ou Number Number Number Number Number Florida 500 1, 120 1, 620 Virginia 5,001 5,OW Total 500 6,120 6, 620

z

REPORT OF COMMISSIOrNER OF INTERNAL REVENUE 127 126 REPORT OF COMMISSIONER OF INTERNAL REVENUE Exportation in bond of manufactured obacco, snuff, cigars, and cigarettes, TABLE 24.-Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes from TABLE 22. - bonded internal revenue tobacco sea stores warehouses,' for shipment or delivery ended June 30, 1940, by collection districts - Continued etc., year as sea stores, fiscal year ended June 30, 1940 CIGARETTES WEIGHING MORE THAN 8 POUNDS PER 1,000 Withdrawn Removed for Tax-paid Unaccounted Unaccount from ware- Unaccounted Class of product ed for July District for July 1, exportation Exported or returned for July 1, houses during 1939 during year to factory 1940 1, 1939 year

Number Number Number Number Number Tobacco and snuff pounds_ 40,021 1,931,000 1,931,000 number 4, 250 Kentucky 500 Large cigars Second New York 3,800 3,300 Small cigarettes 10, 332,400 904,924, 740 North Carolina 33, 200 33, 200 Virginia 185,000 185,000 500 Total 2,163,000 2,152, 500 Delivered to vessels Tax-paid or Unaccounted CIGARETTES WEIGHING NOT MORE THAN 3 POUNDS PER 1,000 Class of product returned to for July 1, In foreign In inter- United States factory 1940 trade coastal trade Government Number Number Number Number Number 5, 590, 000 First California 9,650,000 225, 870,000 225, 820,000 4,110,000 848,366 748,366 100,000 2, 600 3,199 274 363 Florida 40,619,600 Tobacco and snuff pounds__ 34, 092 Kentucky 19,968,000 371, 156, 540 350, 144, 140 360,800 Large cigars number__ 4,060 250 First Missouri 7,361,700 7, 361, 700 Small cigarettes do_ _ _ 463, 715, 555 79, 254, 225 344, 108, 035 11,616,200 16, 563,125 2, 345, 200 80, 062, 500 77, 700,100 200 4,677, KO Fifth New Jersey 230,000 First New York 415,000 185,000 10, 000 900,750 234,100 790,000 operation. Second New York 14,180, 520 There are now 16 such warehouses in North Carolina 27, 939, 900 1, 785, 764,700 1, 790, 234, 140 4,038,440 71, 754,700 70,874, 700 4,980,000 4, 180, 000 First Pennsylvania 8, 280, 000 90, 000 1, 7,150 1,624, 200 TABLE 25. - Drawback of internal-revenue taxes allowed on tobacco, snuff, cigars, and Twelfth Pennsylvania 391,962,800 Virginia 271,668,660 5, 488, 700, 150 5,364,302, 410 2,003, 540 cigarettes exported, year ended June 30, 1940, by ports, and comparative totals for 467, 472, 320 Total 339, 761, 700 8, 032, 319,106 7, 899, 115, 506 15, 492, 980 the years ended June 30, 1935, to June 30, 1939

CIGARETTE PAPER BOOKS Cigars Cigarettes Draw- Tobacco back Exported from port of- Claims and snuff Number Number Number Number Number Large Small Large Small allowed Kentucky 2,900 2, 900 Second New York 5, 400 6,400 North Carolina 199, 680 199, 680 Number Pounds Number Number Number Number Newport News 1 241, 243 $716.44 Total 207,980 207,980 Norfolk 5 5,881 17, 900 8, 450 550,550 2, 784. 63 San Francisco 11 1,539 13,825 3 ®. 70 1 I ^ 1 b .

7,420 13, 825 17,900 8,450 791, 793 3, 823. 77 Total, 1940 r.M Withdrawal of manufactured tobacco, snuff, cigars, and cigarettes from Total, 1939 5, 926 10, 500 10,100 4, BOO 550, 948 2,781. 27 TABLE 23. - Total, 1938 10, 684 35, 000 21, 330 9, 880 1, 528, 511 6, 694.29 c factory in bond, for shipment or delivery as sea stores, fiscal year ended June 30, - 8, 086 106,425 14,400 7,700 7, 227, 518 23, 521.30 Total, 1937 g3S 1940 Total, 1936 8, 451 74, 000 16, 600 16, 900 7, 587, 964 24, 648. 74

Total, 1935 10, 324 138, 200 22, 936 19,100 8, 325, 104 21, 418. 00 Unaccounted Withdrawn Delivered to Claes of product for July 1, from factory sea stores 1939 during year warehouses TABLE 26. - Domestic and imported cigarette papers and tubes withdrawn and internal revenue receipts from taxes during the fiscal years ended June 30, 1931, to June 30, 1940, inclusive Tobacco and snuff pounds.. Large cigars number Small cigarettes 15, 477, 500 Cigarette papers

Fiscal year Tax-free packages, books, or sets Tax-paid packages, books, or sets Delivered to vessels Tax-paid or Unaccount- Domestic Imported Total Domestic Imported Total Class of product returned to ed for July ln inter-in r- United States factory 1, 1940 In foreign eoastal trade Government Number Number Number Number Number Number trade 1931 112, 462, 099 99, 030, 432 211,492, 481 1, 695, 537 122,697, 578 124, 393,115 1932 1, 018,676,818 242, 599, 233 1, 261, 276, 051 8,007.828 119, 845,072 127, 652, 898 78 888 48 619 1933 1, 458,996, 429 457, 074, 983 1, 915, 570, 912 9. 819, 889 57,894, 783 67, 714,672 Tobacco and snuff pounds 1,192 1934 1,930, 133,447 536, 625, 666 2, 469, 759, 1)3 9, 729, 959 59, 141, 230 68,871,189 Large cigars number 2, 500 11, 693, 440 59, 448,100 71, 141, 440 5,950,000 80, 553,000 286,790 6,216,000 1935 2,684, 928, 917 2,482, 499 2, 687, 409, 416 Small cigarettes do 27,499, 550 1936 2, KO, 219, 326 1, 333. 333 2, 861, 552,659 69,797, 387 21, 622, 890 91, 420, 277 1937 2, 713, 554, 987 800, 000 2, 712,354, 987 61, 571, 548 17, 797,240 79, 388, 788 1938 1. 952, 699,101 500, 000 1, 953, 199, 101 76, 475, 882 7,221. 550 83, 697, 932 1939 2,160, 3434, 855 I, 040, 000 2,161, 404, 855 100, 248, 660 5,798,065 106, 048, 725 1940 2, 276, 827,218 400,000 2, 277, 227, 218 84, 746,166 3,180, 970 87,927, 136

128 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 129

'0 TABLE and imported cigarette papers and tubes withdrawn and -. 8i a1,6 W..,,75g i-2 ga,Sac71ag, i--'11., 26.-Domestic ., .., , .. ,...... ,,.. ., .,,. .. internal revenue receipts from taxes during the fiscal years ended June 30, 1981, O 'ig ggargs.1 'd -,-- u, g to June 30, 1940, inclusive-Continued 1.6,- , CO...., _.....gg ....g'..-,=,',-fgg -.g414 . „.... 0 CO' 0- r: 0 C.- oo CO ea- CO ee Cti g . .0. .n.M• N g 4 . .NCD .

Cigarette papers-Continued •0.6 , § C 83Z I-; 3 .. i E E g Fiscal year Receipts Tax-free O E44 OS .. • q e4g4 g '4' F11 o0 0 0 4 Domestic Imported Total Domestic Imported Total E .-ARF, i Nuniber Number Number BC wa t -; a. t CV oo•a; M- 1931 ------$16, 955.37 $1, 421, 044. 60 $1, 437, 999.97 39, 416, 050 ------39, 416, 050 E5g'' 2, 1932 ------85, 332.63 1, 559, 909.32 1,045, 241.95 13, 865, 050 ------13, 865, 050 oC El.' 5, BC 1933 - - 134, 050.20 784, 502. 64 918, 552.84 20,893, 300 ------20, 893, 300 "4. V '''"" mn 6n f4q2 42 222228 2 2 F2 R 1934 ------134, 864. 73 822. 829. 85 957, 694.58 23, 251, 430 ------23, 251, 430 .4 aS, 1935 ------162, 116. 24 801, 641. 92 963, 758. 16 26, 170, 100 ------26, 170, 100 5- .- 8e. - r OM 4.4. tC,40 Co .N. OCA qv. N .4 t3 1936 ------982, 625. 68 286, 325.30 1, 268. 950. 98 19. 172, 450 ------19,172, 450 0 A; %,-- % cg, R gR .-2, g gsle RR -1,-.37,1 R .3: 5,- 0 1937 ------877, 204. 09 225, 910. 50 1, 103, 114. 59 20, 429, 660 ------20,429, 660 BC Leaf tobacco received from fume] gg g 1938 ------1, 070. 406. 53 100, 196.45 1, 170, 602. 98 18,495, 700 70, 000 18, 565, 700 . m 1939 ------1, 403, 092. 03 74, 839.73 1, 477, 931. 76 19,449, 400 20, 000 19, 469, 400 qa. 1940 ------1, 212, 121. 90 40, 130. 50 1, 252, 252.40 8, 324, 350 ------8, 324, 350 ...... = 11340,1, 6° 5a8 8 F1 0.0 t,. O 41 a.-. 0, C•S C- CO 0 05 2% cg 5> ..t.te -r R U -r-7..., CO-... aR a Cigarette tubes is .tea a ., 2 m . R CO w .• r-.:-..,5. g Fiscal year Tax-paid Receipts CO CO co .o . CO . ' F-1 . oo CO CO Domestic Imported Total Domestic Imported Total a otr a CO . g' ,7"; ,-. ., ,4 g O e„ .:• Number Number Number g 1931 ------18, 047, 700 972, 998 19, 020, 698 $3, 631. 84 $194. 60 $3, 526.44 . .M.. .. . 1932 ------135, 980, 500 140, 596, 150 276, 578, 650 27, 141. 67 28, 119. 23 55, 260. 90 .CO. NCO ... . M. 1933 ------25, 896, 200 171, 702, 500 197, 598, 700 5, 252. 00 34, 340. 50 39, 592. 50 a 4 .8' 1934 ------21, 214, 900 56, 048. 000 77, 262, 900 4, 150.00 11, 209. 60 15, 359. 60 g O co, .,. ,-,N N oM 1935 ------24, 827, 000 36, 613, 000 61, 440, 000 4, 987.40 7, 322.60 12, 310. 00 o cn 2'4 .-7 1936 ------64, 047, 900 814, 300 64, 662, 200 12, 950.00 122.86 13, 072.86 0 74

1937 ------65, 360.100 150, 000 65, 510, 100 13, 232. 40 30.00 13, 262.40 Cf 1938 ------coo r... m ..a., s -a. . 58, 179, 100 180, 000 58, 359, 100 11, 900. 00 36.00 11, 936.00 0 r... ,:t. .0 ) "c3;:i 8 Ec6 . 0 HI i 1939 ------75, 882, 700 526, 800 76, 409, 500 15, 748. 68 105. 36 15, 854.04 0 40 43 1940 ------137, 144, 300 342, 500 137, 486, 800 27, 187. 00 68.50 27, 255. 50 m M .N Vc % .mCD ,.M Leaf tobacco exported by dealers

B. Stemmed TABLE 27.- Tobacco products withdrawn for consumption, computed from collec- on MM. , N MN cAM .0 28 . Ci E tions from the sales of stamps, fiscal year 1940 -51;32 8 ,e. „, - e4 ,.0 . NM Ca CV ... Large cigars . . . a Unstesnmed lAMMIWM1011 I Class A Class B Class C Class D Class E Total imm.,T.Rg- ,,11 . 214 ..,4,,,.g2m..p.m..g...4,38,2c1

Number Number Number Number Number Number C Domestic manufacture - - - - - 4, 703, 290, 871 41, 140, 910 430, 357, 012 21, 337, 211 461, 341 5,190,587,345 • e. ,...,©-.m..,, ..R.-.0.t3 Bonded manufacturing ware- c.,R ,.....,;vo...tg. 1 ,,,. houseS - - 21, 597, 676 - 1, 016, 177 55, 474, 476 13, 953, 914 1, 334, 745 93, 376, 988 1 Imported-Cuba ------1, 515 - - - -4, 100 417, 617 536, 516 2, 639, 254 3, 599, 002 C Imported-Other countries_ __. 16,893 9,680 18,685 2,551 8.230 56, 039 • c. to..,..m..,m,....,M ,...... --..N.004g.g.0 Total ------4, 724, 906, 955 42, 170, 867 - - - 486, 267, 790 35, 830, 192 4, 443, 570 5,293,619,374 --' NC) . CO . . Philippine manufacture - -218, 417, 160 - - 115, 261 321, 466 253, 696 135, 691 219, 243, 274 0.1 ._._ F Puerto Rican manufacture - - - - 986, 400 - - 256, 850 482, 750 2, 200 - - 1, 728, 200 Opened Total ------4, 944, 310, 515 42, 542, 978 - - - 487, 072, 006 36. 086, 088 4, 579, 261 5,514, 590,848 bp,...1,.MWW.,008C-N..,OCO.COM ,3.02gNMO. 06,2N§ = . .N1 .. CAM . . $ • Large Chewing Total Small - - Small ciga- and C Classification ciga- Snuff tobacco • e. ; : cigars rettes smoking and snuff rettes tobacco .6-] 0 0. m ti,.., .55. Number Number Number Pounds Pounds Pounds ',5 1$ of q Domestic manufacture - -130, 204, 817 - 2, 188, 819 177, 676, 713, 193 301, 968, 797 37, 750.054 339, 718, 851 ''' Imported-Cuba ------4, 700 - - - -5, 806 751, 399 5, 767 209 5, 976 m Imported-Other countries - - - - - 38, 200 - - 138, 591 2, 089, 391 97, 636 19. 495 117, 131 r.. Iii 4 -0: 44 .24 0.. 00 4 Z`,§. 4o.'3, t - ,.., , z,,., .00 g.o.o0 Total 130, 247, 717 2, 333, 210 177, 679, 553, 983 302, 072, 200 37, 769, 758 339, 841, 958 CV R§ we,9 04,5,4t8.1 Philippine manufacture ------3, 175 785, 490 54 ------54 73.1-4 .1) ,, 18' •Q ' °Z V740-fj .0 .:4C.j"' Puerto Rican manufacture ------221, 800 4, 118, 780 ------C.) 0"V ..,..,., ...,,,ri ■110S ZZ,0 l'ei.-;410, ,0 SE," p• ::, bb" -.-= en „,-^ ....,t 000 -5„.0 Total . 130, 247, 717 2, 558. 185 177, 684, 458, 253 302, 072, 254 37, 769, 7581 339, 842.012 Vf? 0 .4 4.-r,-5 -,60-t-Aeeto.t-,,,00.4.63Et ...-.. .04-...,: -1=',4iou w.E.14-433334, ,.1:-..,-.,>011c&-4■FFZ4,E-..104+FFP4mFT.,.. 0 130 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 13]

em ' 97 00 147 8 426 284 -EA RRF085 @E REREERI 05 ?N

WW 1 EEERRE 199 l 2, 4, getga,- ‘r4- er ds - ta n

99 481, NR 5' g 5 6 1

325, 13 P EERE 3 by - nm 3,

To 4„ ^ g 20, 01, d Pou 4 -gag by 733, 5

te s I, 1, 1-7 ° or

0 goo sn 03 009

t 2 E §3.6

r E We

pun o 440 EER rmer 17 17 .m imp go

0 5 a N.. ,,:e

fa be '69

4 o l 6 6ri4 c'r 6 m c m '2.9g 3 0 i a 43 0 ee riF- 708, 977, E-r bacco fro Dece -og 9 L96 TOE Z to d ZL 41 I apuno slam ,e2

a

I in ' ' ive RERgREE@ ea ER tJE ' 1 EIRE 6L H 1/

m c e

10 e ea tleei a ,: qa 3 ce sis ber v e - ie

1 I Scrap -- a ; .1 ut g oa- c m 4- - re r g , 1

39 Nove a bacco 157 466 691 00 I in 4

RREE I

J,DIIIISI . ds l AAER MEURER HIER

.02 ugl i f to rs 41, bacco a .7; 349, 325, 897, ta

le 9 297, PEE 'ail§ a to ber a 3, rg 18 i gEG g Eriii.r; '4=1 I Lea f To 20, 00, Poun g c4gg to 732, 5 231, .,,t; .i.

De A lea I, 1, - Oc

- by 616' I 188

Ag D

1 s 4 d 00 fac 4

7 .g 2 ' l 14190 ---- g E g 08 te

99 949 g ber bacco ta ON or

i

4 g turers I

100, ' ... .3 627, To 0. To tem 26 manu 2, 5, g .- P4 imp

38 47 -40 f Sep

90t Tt lea 48R RR i 5AE 4' MEM! R REF A fac- 11 ar 13149 27 stuo d 4 022 T

R aZ ro 5 c'r r g f^t0.1 i Wigg 7., g COLLECT 99 E 20 Z Cig turers lers ro I a g ,1 .,- S 370, 705, F manu

A dea i Z 13, 31, 0 Stemme

ONE A in by 699 a 0 4ER R6i NA SpUll f d sd 625 E te lers 194 U U Ng.ef aAl o lea

L 6 627ri q 1 or w HAN O 58, O c 687, s Dea r 7 xp z o a 1, tiny e zF■-■

RE T g

80 g AP pi 4 O1 e t, ar8HE Va PAg nacingn P3233RE d spuno .1

bacco Ca l . 73 026 ot M

ER 4 @ E 2 a g4 S 74,1190

to r-rqg gm

f . a , e a ,...-

695, 090, a

d a '91

P - a n

Lea g ING Stemme 22, 49, by -au

g o.N oawer pa

d sacra RARE

616 g vro gmen

3 42 RR R Eg R s'ERA t te sputt

utt - g g r

147 d a . ' 55 io

709 W o .. 8 1 8 - - l MPRIS ,/

ra 9 CF)

, t lso o 4 C! 276, . 4.)

g A 143, 867, imp

CO o 0. f

ll g , 85, -m

326, 412, FWho

O lea 209 gra

in r

9 921 a .10§§in i

d 1i Er RAP REP fl a ay 0 11 E

R tr im ber 10 10 4 a 1:44ESF, ATES

u q m

Wg a(

g ST t.: Nu temme w 9 9 966 OL9

l UN 9 95' itg o OR k bacco t-cN44g g 5 lJne in

F 4 to EN E. E 4 §g3Vi g I 4FE RR@ 1 f

f 1 S V e eice Les e; lers

0 0 lea lea movir g g gg g

943' 9 zsa .0 0 r N es- -ref E5 in 0 Dea

5 i°°"w" a i I rs 1 . a w TOTALS le 0 0 avo 9E 6 89 _ . II It te4=c 08 E Dea s

1 4 a '3 m---;1. -

__ I Tg w

0 0g,....,p, __

tl s 0 P m .

TRICT TE 2 O0B

rd.00g ..g 1938 1939 se DIS

ia 2

se .,;>.z z 0 0 o.,1124

ia E '5

STA l, l, 11 in a eq k

ta P ta d oa A4 gti ., NEI;V, I3q4 2 r i 3 ,4§1 in ia irg lvan s F4 To n To Decrea rn Increa Ze t. i0a° «"C) Yo is sy SiaAIPP W QU i 4P1 mg4 t V ifo s

w tt Rwoti l E ilataontg$E.rge.E83WEP 4 Penn We Wisco Ca Illino Missour Ne Ohio F 17,g38Rge9Ow44,NAggWgRaEtRigg

132 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF CONMPERYNER OF IITIERNAL REVENUE 133 9811 7 1 3 TABLE 30.-Quasi

tobacco manufacturers classified. Number of factories operated 413 276 09

0 55 55 .,uS Wil ds l and tobacco material handled, calendar 441 year 1939 n 12, 19, 30, - ta 500, sa 059, g- " by 4, To Pou 0 1 10, d Number On hand Jan. I, 1939 te en 96Z in busi

- or 0 gt, guano Class. 69 ness Jan. 7

44 g,_ Tggi Unstem- fac rs 1, 1939 Stemmed Scraps In process Stems Siftings e imp ,---

med 42, bacco ,' 7 359,

' - F5 tur 03 t cco 7, To manu 11,

ba Pounds Pounds Pounds Pounds Pounds

928 Pounds

to 1 -

3 2 10

236, 036 176 53 07 2 26 r 651 62 11, 137 639 ds 382, 776 41 5 5 'L2 fac 125 89 a 3 . 2, 18 203,151

rers 17, 673. 1 19, 30,

Scrap 4 699, 47 719, 294 24, 009 2, 419, 119 5, 305 Cig 757, 22,932

tu 72, 458.

Poun 5 2, 2, 2 156, 865 manu 1, 129 43,095 10, 300 6 17 385, 523 91, 362 4, 652, 298 2, 735, 722 102, 808 8L6 69Z - rez 7 1, 608,197

1 1 928, 977 3 9 2

0 6,590,018 457, 705

315

23 2 8 43 614,831 12 89 1 79 538 9 6 085 ' ds ds

1 '988 47 29

310 Egg CT 0 3, 19, I 53, 19, un 66, 40, 31, Total 210 2,724, 151 639, 479 1 4, 418, 286 216, 9 302, 91 4 11, 248, 875 3 V 3, 259, 630 203, 643 ' '9 8 Po Poun 1, 8, 4, L I

.0 0 Opened - 918 ' 891 IOC Received

- DISTR SplI710

by V fac cco 921 d 9I 1 3, 321, 719 te ba

nu I, 804 ,1 r 2 5 86, 913 turers 1, 289, 217 1, 930, 167 17, 716 o - 6, 026 9, 189

To ma 3 1 8, 223 3, 069, 809 34, 589 1CTION 4 3 20, 312, 687 171, 755 7, 710, 526 231, 761 imp 18, 475

es9 zroo l 223,309 313 ' ' - 1 35, 459 spuno 5, 788, 540 694, 945 10,383 41

LL' 383 3 6, 186, 052 5, 932 2, 939, 674

5, 393 lea 102, 858,321 13, 297, 231 fac 66 ar

e/ 7 3 13, 19D, 851 18, 361 1, 381, 994 4,382,321 '0 d rers 3, 485,102

84, CO c 853, 26 488,565 i 5 Cig tu 3, 4, 2 483, 291 g manu sot ' LI9 Le ONE Total 39 39, 829,185 2, 457, 121 0 26,142, 429 4, 637,191 Stemme 107, 064, 673 13, 574, 698 x 44 in 24 is ' Pv 128 864 1 214 83 0 437 ds 643 4 f 960 033 /

aV 9, 1 un 39, 01, lers 0 Closed lea 136, 934,

HAN 213, 087, 9 Removed 0f 77

'6 'T 876, Po T 8, 2,

13, 0 Dea 22,

98 1 3, 143, 493

0 cgc.,„.

41 1 ' 2 8 72, 942 3 1, 286, 678 1, 790, 589 7, 526 28,895 383 8 755

389 4:P. ,40074.7“2

eQ ds 2 l 2 109 a 3, 071, 919 36,487 MORE 3, 6,

E .0 ta un 58, 61, IggIglaz: 4 6 531,661 26, 596 21, 293, 440 2, 877, 299 746, 501 163, 44 ' 5 G 5 4, 989 1 To t 5, 249, 013 252, 497 49, 682 3, 290 Po 3'0 i ic.i- ..: g 16, 57, 55, 6 5 505, 686 279 207,103 177, 815 1, 291, 929 48, 781 0 it - 4 5,410,626 3, 229 1, 919, 828 5, 666 122, 519, 101 420,662 .0 18e 800 94 by sPun 7 92, 327 5, 702 3, 660, 157 14, 297, 917 300, 952 r.0 o 8, 688 c- 1'

d ,R, ' AUF.R

s 4

'9E 8 171, 162 fa 36 38 01 te 5 723, 819 r

o g rer MPRISIN i

bacc ..: nu o V 0 cd tu 0. To Total

ma 21 6, 608, 231 2, 217, 465 40, 285, 542 g CO 14,733,895 127, 046, 989 1, 293, 391 imp f 2021 ZL9 CBE ' 396' - 6 epune lea Number s 824 ' r tz"

49 fats fac 996' d 89 486 a

ATES in bust. er ,,,, r arta' On hand Jan. g 5.7.' ,zg 1940

w ness Jan. ' 644, Cig 659, ST tu 8 1 1, 1940

manu 19, 17, temme OR 963 LZ2' 236 es 192 FC spuen 62 in es, Una 1 9 333, 717 1, 980

3 n.ilE ' -RE

9 618 59 f a 2 17, 270 424 551, 293 3,473 3, dre4gti a 17 g, lers g l 3 200,171 le ' 39 ALS s 'L '

Lg LE 4 44 1, 407, 510 4,995 2, 499, 662 27, 477 163, 806

g ,ded

245 na Dea 3 647, 833 5, 572 19,944 15, 695

6 17 655,116 83, 552 TOT 2, 196. 931 9, 046, 497 607, 004 7 14 2,120, 522 I, 330, 203 7, 269, 898 463,545 91 65 605,627

Total 228 4, 230, 663 700, 996 5, 646, 431 9,472,401 4,559,493 790, 0604 Loss 31, 744, 442 178, 139 11,694,968' .gs Gain 15,371,258 8,320,230 21, 281.629 _____ • cs T Description of classification Class 1, dea ers in impor ed scrap tobacco; class 2, dealers in domesticscrap' RIC

T tobacco; class 3, dealers Its imported and domestic scrap tobacco; class 4, producers of scrap S ler tohaect. STATE

class 5, reclaiming scraps from stems; class 6, manufacturers of fertilizer, insecticide, nicotine, etc.;.classi7, DIS

storage, scraps, etc.; class 8, growers of, and dealers In, perique tobacco.

se 2 Grown. 1939 1938 ia se

a 04 n Transferred to other registries. l, l, s a k 4 Used in production of nicotine, extract, and fertilizer. ta ta sey ia i in lv s n Exported. ia ur To To Increa Decre ig Jer Yor sy Texa

in 97 t io lifor llino Ca Misso New New Ob Penn I Firs Wiscon Virg

REPORT OF COAINUSEDYNER OF INTERNAL REVENUE 134 REPORT OE CONEAMSIONER OF INTERNAL REVENUE 135

t- t N4o gleigEgREgg PM FRE EA EE3EFfgg d ; . DEFA F OAR f pp

V n a g

cu p1-; g eeee e ..g. 4 iggRiggkg a ing '2 gigg 55" s, ..c, a... V s, - ts t s g 0040- a rap lipp ". rs 4 c ting Sc 00 ture 0 potumn ag.a mg t- gigEEEFF

fac Es- gi Eg E A EgiRf ee V 001-. -dz.; e SS:ei es S •s• 40 fAgeggeg = anu . 6-3 474 ^ L, 44 4 I g S

m a,

pa ,a.. a. 5555 F hl EF 00 bacco .REER55gE ttI graggg E F g fg E E.gtss %.3

MU To gOld gs g efl% ZS" OP =5. ISil ,1 _ aa ^ a; - g fl

CT gitEEyss

0 t- 5F2FEEgkliggggEggEiggg d s u .F.F.F5325EggEgEgERE5FEAR'ggERERFEARRIARE ek.ee eRaeg g4 gR21-

c 40 ing an --r^ h~glg '''', -r ggriggaiOtzg r44 - s, gg g ga g Eivi; s,

g ISTRI

lipp ai

c ting Scrap rs po ture :PAFPgrEFgEiggFARER ElkfFEREEFggIRE qr.iggRREEEFFF.FiclEgEF .ERfErigi in

fac girt-1st-7, t k Et' gfe

un i f.6. g a- --,,tr cg-r.srgi.4 ,6.01 iggaril 6.p kggggligg g - 44 I g 6 s ,; manu r a pan E COLLECTION D

Cig ggiEFARREAERREEf7Ifigg Rf ..228%R2R2

fula .FgglfggErEFFEIERgREER'EFFEFEENEFFREE 41 t ,a&g -7 tia Kgr:gcsr,,,Figgo, :,:g '4 ggg5gflwigl g5gg-:Oggg Fig: aagg ON figgEgRFF

gsti 2 a A s 4 o

a 8 % THAN 0 2 S t , - 5s E a a° Fg a 41 aa C a. a rap .6 g- e g 4 e 4 op- . mg „-. . C gr f sc 4 S g2 Lea SS NG MOR po PUMA EE .gEgERER RF F kA igi E Rfgl g RISI am .

ologe dg aa 0 p.mm a :44 OC V"FARREP lers 17's g eee46- ss ..r 'cl a 4 4 44 Eg Dea

a potatua ',35. nag rg ID gAgg gg IFFERlig EMMA' .8 Eg FR 3 :AcERUREE a g ig ro egg on 5'8 g g51 51 Of2SerEci gr6 gg !cm IggkEiRgg lst 1 aeag ee 4, of g ggggg . ?2: a

0 TALS FOR STATES COMP

ro TO

g A dp

O -.. 0-4

am , aBcF ZA.t4E-f.

. M

a.i.14104 5,.>4

. .- ..M+t'sZA1z.'al m Wt!Ba.P ,S. A.,0,210-."-4-0.

24104ZZ0;1:2O sa2zzzawaigE.g.E-14 9" qPq- -q -Wegingttha --0). il t',

E! = K4,' ' 4, )54tgapcygri.a.. ''''g 4- -A4.co.Worla,k4-9.0t0.-:17:08 m3

136 REPORT OF COMMISSIONER OF INTERNAL REVENUE ItalORT OF COMMISSIONER OF INTERNAL REVENUE 137 981 9E1 EL £09 ELI Z99 663 711REIE TEO ' 481 099 C 660' 694' 916 916 916 Mt ' 692 6L 36L ' 6 Ogt ' 318' 961' 13L IOI 099 ' 204 ZEZ WA 369 82I 098' 921 LLL 180 110 ZO 92' ".6 I ' 1 , '

,11 ' ' ' 1 ' ' ' ' '9 g-° EM " 0£ .f„= ' '4 ' ' 6 3 2 9 PI 6 1 t 61 9I 9I 3 9 E 9

:i0EREtER 19 1 E 96 6 Et EZ 3 P6 6I

,„--,e, T

Sluaau00 mwr ciorat <3 .".

2 10nbff Jo gamy jje ploy 1286 669 Sit 666' £ 726' 86 98 LI8 0E9 LII 696 009 1£I 16 O `"

42 2 wmmmadtowsoluNd 0222A2 PIMP § 8 '1 ' ' P 8 iNE MU

E 1 T 1 6

1 .911131) SannbIf ism mean' -Joj le sweep Alen(!mkt El ET 96 II TT

-Fs m N eye 'gent le sion „

-bn lista Ts sealeop Belau

66 mg f 8 WE Li oil 966 ]. 1 966' 396 081 £9 8L6 390' 0115 691 L8L 9Z1 646' ZLS 936 ZL 690 999' 189' 06 LEE ' O 062 9 LE 1 63 , d Z L6 0' 9 ' 1 I lig 3' '

MIRE' K 290. 4%2E

' t: - 4 '

9

13 82 2 3 E 3

P5APg '9

c, 7.1 1 1 '3 6 I 8 lt 3 6 6

we 'snub!' Item

.!-ei! .0.4! ," Peluonuce til sgewaP Bolan I ma ! H

d I i 69 191 BIZ 989 zez 16£ P1 698 916 ZZ 691 L It

222A 1 A Re,=„qnsi g& 2422 3

Pe?,g gA4-.MEM!A HnElin

ege isionbll nem velum 1 -Joj uj asleep ojesajolue,

• I 61 9 LI 01 £I II 96 tg 61 OE 61 ,i,„,„ b.,„,..„ , ..... 00... .. N - .m., 4 .°224 2 2°"Del 2

erne 'Apeuf ammosjaaieqeog 'saosolja ,- 00siNnq „, N peg moil toll 4SleSeig TI 99 13 .. g

4,22 Et . ti q irs (A0310C111101) Z$

`rlg, N 80^ La 661 c x °' 3 1):: N :31 '4 'g m 0°$ 0 ge$ t- 'Ng I el 4. 1 • . 231 N VD -g n ngn 8 tm..."' 9g$ ' SOUP' 111 slolgeP leUell P- c EL cm . in : 2 - 001$ 'saonbn jpuu pue -, ,-, souls te slojeep op3solotte, EZ 2 9 16 LE LE , . . 6 .,...... - 001$ f1 "' 'souls te snjeop epsoloyek £91 6 Z.E tE 66 081 38 6 ttZ 961 BE 911V CO N . ....- 91 c., . R 93

N , cos -is, 2,1A ,

, ■■ N R42 , gee 'mute' - A A luu!NPom le 9101130P Hulett I z9L 69L , T22 . m 7E9 .. -

gee aliej . .10 le eugeop lonbjj palsy 819' 866 EOI 8 39 0 1-5:Erif £631 688 ' 4 960' £9 910 914' IIE 108 68E ' £1 9L8 910 t I L 63L 9L 199 ist' Itz ' L 9 141 21 646 39' 086 LIZ 99' 61 4 1 36 98 6 6 43 61 b 48 9' 1 '

' ' 3 ' '1 421 04 2

' EfliM §E ' '1 440 ' 6 6 Ep 5411R§§ 1 9 8 9 6 63 3 '63 1 I '06 'I 6 2 , st 9 LI 2, 2, 2,

" tot-4 1

„- ".

10. :10 ge$ 'wallop Joul' Hewn 17,

'4'1' -7°5°1 °I.

J.: ,

,i'! .. I OLE OC et 8 1 1 004 EE EE9 , 968 c, 9 29

2"'2F,§24 2 SRA' ng T A 2 .:44:22 2•• .rzg.q=a ;-,2242g22 I 4":41 tl 0... 00a a to' ,Fuoisep iOnbli °legator-I/A rl 31 LI CT Et 9 SI ...... „, .1.■ co . . . . 003 'AineA 910111 .

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OLEOMARGARINE, RENOVATED BUTTER, MIXED FLOUR, ETC. TABLE 35.-Production and withdrawals of oleomargarine (colored and uncolored), year ended June 30, 1940, by months TABLE 33.-Production and withdrawals of colored oleomargarine, year ended June 80, 1940, by collection districts Colored

With- Withdrawn drawn Month On hand With- With- On hand Withdrawn free of tax free of tax Lost or 30, Produced Wit hdrawn for use of Lost or de- Districts July 1, Produced drawn drawn June tax-paid for export stroyed 1939 Tax-paid for expor for use of destroyed ""194011 United UnitedUnite States States

1939 Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds Pounds July 103, 058 14,872 8,813 69,594 12 Georgia 3, 035 24,176 9, 036 17, 932 243 August no, 169 13, 584 14, 654 72,198 222 First Illinois 9,150 417,271 123,675 109,974 180, 845 108 11,819 September 107, 675 20,484 24,824 77,608 108 Indiana 342 2,532 2, 640 234 October 151,744 31,591 29,600 96,967 Kansas . ___ .. ______4,194 235,768 49, 100 4,031 182472 4,359 November 191, 164 29, 248 22, 974 74,800 Maryland 3, 730 399, 958 91, 727 271, 410 31, 770 24 8, 757 December 149,601 24,699 57,095 78,396 First Missouri 30 128, 670 9,104 118,466 1, 130 Sixth Missouri 32 587 619 1940 Fifth New Jersey 9, 479 213, 209 14, 712 118, 340 78,676 233 10,672 January 149,582 24,665 47, 964 68,294 First Ohio 303, 157 1, 536 38, 275 263, 346 February 168,789 29, 773 53, 206 85, 880 Tenth Ohio 108,649 107,459 1, 190 March 137,958 29, 269 49, 819 59,282 South Carolina 25,754 22,880 2,974 April 177,346 29, 955 68, 724 75,670 Second Texas 12 12 May 180, 537 28,171 65, 911 75,900 June 282,108 21, 838 207, 905 61, 798 Total 30, 009 1, 859, 731 302,149 649, 989 896, 387 666 41, 094 Total 1, 859, 731 302,149 649,489 896,357 666

TABLE 34, - Production and withdrawals of uncolored oleomargarine, year ended June 30, 1940, by collection districts Uncolored

Month Withdrawn With- free of tax Produced Withdrawn Withdrawn Lost or de- drawn tax-paid for export for use of stroyed On hand Withdrawn With- free of tax On hand Lost or United District July 1, Produced tax-paid drawn use of destroyed June 30,30 States 1939 for export Unitedunited 1940 States 1939 Pounds Thunds Pounds Pounds Pounds July 19, 163, 145 20, 106, 556 30 837 Pounds Pounds Pounds Pounds Pounds Pounds Pounds August 21, 480, 739 21, 223, 058 Alabama 4, 023 397, 283 396, 274 5, 032 September 27, 999, 112 27, 902, 481 1,800 3,649 First California 371, 659 26, 284, 918 26, 277, 376 3, 648 375,553 October 23,637, 566 23, 650, 902 Sixth California 274,564 12, 346, 335 12, 294, 035 326,884 November 27, 760, 714 27, 205,172 Georgia... ______32,587 2, 913, 156 2, 925, 292 20,451 December 25, 435, 888 25, 716, 775 First Illinois 1, 290, 593 89. 452, 733 89, 639, 391 330 6, 314 I, 102, 341 Indiana 43 33, 150, 156 33, 110, 321 48,878 1940 Kansas 271, 417 20, 632, 382 20, 669, 877 384 233, 538 January 29, 209, 438 29, 378, 643 Maryland 103,214 9, 926, 992 148,200 February 29, 313, 290 28, 946, 041 1,302 9, 382, 006 March 26, 523, 191 Michigan 338, 312 16, 573,084 16, 294, 920 616,476 26, SOO, 292 1, 653 April 27, 233, 829 27, 551, 584 2,284 Minnesota 18, 500 584,310 590,092 12, 718 May First Missouri ____ 49,400 6, 578, 978 6, 592, 326 36,052 21, 522, 727 24, 122, 195 948 Sixth Missouri 33, 059 1, 878, 313 1, 884, 354 27, 018 June 19, 597, 931 19, 405, 627 2, 503 Fifth New Jersey------303,657 19, 161,020 19, 162, 535 1,500 300,642 North Carolina 806 1,660 2,462 4 Total 301, 857, 570 301,599,496 1, 830 13, 176 First Ohio_. 297,162 23, 548, 793 23, 463, 898 382,057 Tenth Ohio 86,082 8, 190, 668 8, 222, 820 53,930 Eleventh Ohio 193,678 lg, 782, 672 18, 788,688 187,662 Oregon 27,964 1, 923, 6M 1, 433, 046 18, 583 South Carolina 453,920 436,148 17, 772 Second Texas 198, 743 10, 067, 533 10, 038,686 2,826 224.764 Total 3, 895, 463 301, 857, 570 301, 599, 496 I, 830 13, 176 4,138, 531

REPORT OF COMMISSIONER OF INTERNAL REVENUE 144 REPORT OF COMMISSIONER OF INTERNAL REVENUE 145 TABLE of production and withdrawals of oleomargarine (colored and 40.-Production and withdrawals of mixed flour, year ended June 30, 1940, TABLE 36. - Summary by collection districts uncolored), years ended June 30, 1931 to 1940 PRODUCED Colored Uncolored District Barrels Half Quarter Eighth Total With- With- barrels barrels barrels pounds drawn With- drawn Year With- With- free of free of Withdrawn drawn tax for Stock on hand July 1, 1939 15 2, 503 4, 625 3, 435 465, 338 Produced drawn drawn tax for Produced tax-paid for ex- for export use of use of tax-paid port United First California 17,127 89, 526 47,122 5, 414, 352 United Iowa States States 28, 927 1, 291, 314 Minnesota 16, 561 1, 621 978 Sixth Missouri Pounds Pounds Twenty-eighth New York 57 20, 126 I, 978, 048 Pounds Pounds Pounds Pounds Pounds Pounds Oregon 268, 926, 049 270, 394, 635 5, 372 40, 838 140, 465 28, 642 9, 700, 457 1931 8, 846, 975 5, 793, 325 1.915, 501 1, 338, 469 Utah 2, 728 2, 090, 578 1, 666, 182 910, 749 210, 706,042 210, 450,678 15 4, 140 465, 365 1932 4, 636, 218 215, 990, 086 180 Washington 393 35, 517 36, 527 9, 722 5, 063, 416 1933 2, 813, 198 MO, 021 1, 570, 811 768, 714 216, 229, 634 Wisconsin 631, 665 290, 497, 599 240, 410, 117 240 BO 22, 540 1934 2.689, 095 462,599 1, 594, 168 222 2, 909. 971 808,439 1, 408, 827 680, 921 350, 915, 555 350, 113, 863 1935 ----- Total 450 133, 127 2, 773, 194 527, 419 1, 471, 424 781, 292 368, 964, 422 368, 986, 799 330 299, 585 85, 486 25, 468, 470 1936 386, 775, 872 1937 1,967, 206 673, 307 583,610 740, 960 387, 297, 043 Grand total 624,362 200,401 837,588 413, 754, 759 413, 560, 893 465 135, 630 304, 210 88, 921 25, 933, 808 1938 1, 649, 356 300 3, 000 1939 I, 380, 891 354, 991 155, 748 867, 925 331, 591,928 331, 701, 894 1, 859, 731 302,149 649,489 896,387 301, 857, 570 301, 599, 496 1, 830 1940 WITHDRAWN TAX-PAID 8,489 3, 000 Total__ 31, 520, 835 2, 137, 181 11, 246, 161 8, 454, 670 3, 090, 740, 601 3, 089, 984, 333 First California 17, 222 91, 323 47, 861 5, 493, 018 Iowa 28, 810 1, 196, 507 Minnesota 16, 443 1, 611, 414 TABLE 37.-Mate als used in the manufacture of oleomargarine (colored and Sixth Missouri uncolored), year ended June 30, 1940 Twenty-eighth New York 57 20, 102 1, 975, 696 Pounds Oregon 41, 165 136, 233 27, 997 9, 567, 735 Pounds Utah 2, 584 4, 139 451, 934 11, 360, 570 Oleo stearine Z 178,037 Washington 408 35, 269 34, 995 10, 495 4, 978, 502 Babassu oil 88,000 Wisconsin Beef fat 31, 600 Oleo stearine oil 230 22, 540 188 Oleo stock 1,018, 790 Butter 9, 496 Total Butter flavor 1 Palm oil 965 133, 015 295, 450 86, 353 25, 297, 346 26, 270, 696 Peanut oil 2,137, 756 Lost or destroyed 25 1, 795 Coconut oil 12, 769, 339 Stock on hand June 30, 1940 Color 1,447 Salt 2, 590 8, 760 2, 568 639, 667 Soda (benzoate of) 118, 916 Corn oil 533,339 82, 331, 741 Grand total Cottonseed oil 102,056, 917 Soya bean oil 465 135, 630 304, 210 88, 921 25, 933, 808 Soya bean stearine 2,200 Cottonseed stearine 13,365 1.762 Derivative of glycerine 771, 679 Vegetable gum 83, 223 Vitamin concentrate 15, 638 Lecithin TABLE 41.-Production, Milk 58, 622, 534 316, 497, 875 importa ion and wi hdrawals of p aying cards, by months, Neutral lard 3,197,002 Total year ended June 30, 1940 Oleo oil 11, 889, 139

TABLE 38.-Production and withdrawals of renovated butter, year ended June 30, With- 1940, by collection districts drawn On h and With- With- free of Lost On hand Month Produced 9July 1,193 poI rtenj-d drawn drawn tax for or de- June 30, On hand ° tax-paid for export use of strayed 1940 On hand Withdrawn United • District July 1, Pi oduced tax-paid June 30 ' States 1939 139

1939 Packs Packs Packs Packs Packs Packs Packs Packs Pounds Pounds Pounds Pounds July 11, 858, 522 3, 016, 800 1, 540, 836 185 1, 744, 520 349, 066 116, 928 36 Alabama 7, 685 1, 533, 336 August 3, 534, 168 3, 101, 903 194, 048 432 346 16.460 812,172 813, 547 15.085 September 3, 920,141 Georzia 331,050 4.102 4,169, 095 400,110 1, 296 216 Maryland 23,308 361, 344 October 4, 714, 912 9, 630, 439 166, 625 2, 160 252 November 4,199, 514 2, 735.433 19, 372 3, 989, 816 214, 626 2, 160 288 Total 47,953 2, 706, 5.52 December 3, 968, 639 4, 256, 560 317, 826 8, 784 288 1940 y of production and tax-paid w thdrawals of renovated butter, January 4, 326, 418 4, 048, 089 414, 711 TABLE 39. - Summa 1, 296 210 years ended June 30, 1931 to 1940 February 4, 494, 474 4, 491, 508 600, 392 14, 976 220 March 4, 439, 505 3, 642, 791 259, 039 2, 676 21 April 3, 832, 882 3, 016, 378 325, 191 42, 444 84 May Withdrawn 3, 659, 664 2, 488, 246 290, 630 1, 296 214 Withdrawn Year Produced June 7, 560, 813 7, 396, 434 14, 210 3, 216 142 Year Produced tax-paid tax-paid Total 11, 858, 522 51, 667, 930 46, 970, 809 3, 546, 474 197, 664 2, 317 12, 809,188 Pounds Pounds Pounds Pounds 1, 499, 041 1, 507, 408 1937 2, 737, 181 2, 769, 853 1931 2, 435, 499 2, 331, 270 1932 1, 129, 299 1, 117, 784 1938 1,002, 131 1, 008, 327 1939 2, 906, 117 2, 925, 272 1933 2, 705, 852 2, 735, 433 1934 1, 219, 156 1, 205, 475 1940 1, 894, 561 1, 851, 245 1935 19, 727,767 19, 721, OIE 1936 2, 252, 920 2, 218, 951 Total 146 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 147

ALCOHOL, DISTILLED SPIRITS, BEER, ETC. TABLE 44.- Ethyl alcohol: Withdrawals, tax-paid and tax-free, by States, fiscal year • 1940 [Proof gallons] TABLE 42. - Ethyl alcohol: Production and withdrawals, by months, fiscal year 1940

[Proof gallons 1] Tax-free withdrawals

Withdrawals Tax-paid • Total with- For use State withdraw-withd For hos- of United drawals als For denatu- pital and For Tax-free Total ration scientific States export Month Production and sub- use divisions Total Tax-paid For denatur- For other ation purposes California ------5, 721, 586 776, 987 4, 944, 599 4, 674,187 194, 825 75, 587 - - - Colorado ------__ 53, 264 30, 926 22, 338 - - - 21, 632 706 - - - 15,910,094 I, 764, 837 13, 823, 100 322, 157 Delaware ------10, 618 - - 10, 618 10, 618 ------July ------17, 643, 960 District of Columbia_ 470, 459 12, 320 458, 139 422, 860 32, 309 2, 970 - - - August ------18, 539,035 18, 144, 438 I, 779, 901 16,050, 101 314, 436 25,0 68,163 2, 186, 728 22, 314, 699 566, 736 Hawaii ------200, 730 - - 200, 730 200, 430 300 - - - September ------18, 104, 177 ------20,962, 741 28, 531, 869 2 248,0 82 26,000, 138 283, 649 Idaho ------12, 141 - - 12, 141 12, 141 October ------Illinois ------14, 374, 382 6, 176, 300 8, 198, 082 7, 913, 223 283, 347 1, 512 - - - November ------21, 792, 563 25, 577, 618 2, 281, 924 22, 944, 215 351, 479 22,080, 272 21, 550, 400 1, 729, 301 19, 524,501 296, 598 Indiana ------32, 825,119 4, 182, 168 28, 642, 951 28, 497, 992 83, 961 60, 895 103 December ------Kentucky ------9, 058 2, 041 7, 017 - - - 7, 017 - - - January ------20, 652, 489 20, 229, 551 1, 503, 883 18, 386,0 57 339, 611 16, 592, 132 1, 640, 303 14, 696, 811 255,018 Louisiana ------15, 958, 233 797,108 15, 161, 125 14, 969, 988 112,396 78, 629 112 February ------20, 381, 278 Maryland 21, 050, 063 696, 477 20, 353, 586 20, 089, 079 257, 315 7, 192 - - - 20, 983, 159 19,014, 628 2,012, 136 16, 729, 801 272, 691 ------March ------Massachusetts - - - - 7, 543, 834 1, 037, 481 6, 506, 353 6, 278, 500 150, 966 76, 887 - - - April ------20, 217, 862 20,028, 927 2,035, 161 17, 610, 421 383, 345 19, 928, 998 1, 781, 556 17, 752,052 395, 390 Michigan ------361, 754 270, 193 91, 561 - - - 91, 453 108 - - - May ------20, 947, 639 575, 343 457, 833 117, 510 - - - 75, 462 42, 048 - - - 21, 422, 583 21, 243, 910 3, 380, 494 17, 489, 808 373, 608 Missouri ------June ------New Jersey ------46,108, 309 1, 865, 626 44, 242, 783 43, 693, 441 411, 729 91, 736 45, 877 Total ------243, 727, 756 251, 820, 728 24, 344, 30 6 2 223, 321, 704 4, 154, 718 New York ------631, 247 - - 631, 247 631, 247 ------Ohio ------1, 996, 512 1, 821, 611 174, 901 22, 769 151, 902 230 - - - Oregon ------30, 868 30, 868 - - - 1 The unit of measurement is the proof gallon, a legal standard prescribed for tax purposes. (See secs. Pennsylvania - - - - - 58, 094, 884 6, 167, 099 51, 927, 785 51, 116, 831 133, 285 646, 059 31, 610 2800 and 2809, Internal Revenue Code, 1039.) The proof of spir is is twice the percent of the content, by 1 volume, of ethyl alcohol. Spirits containing 50 percent ethyl alcohol by volume are, accordingly, 100 proof. Puerto Rico ------4, 150, 328 - - 4, 150, 328 3, 330, 768 951 - - - 118, 582 A standard proof gallon is a wine gallon ,231 cubic inches) of 100 proof spirits. The number of proof gallons Virginia ------166,366 - - 166,386 166,366 ------contained in a wine gallon of spirits of proof other than 100 is proportional to the alcoholic content. For West Virginia - - - - - 41, 291, 770 3, 283 41, 288, 487 41, 144, 945 3, 597 139, 945 - - - example, 1 wine gallon of 190-proof alcohol is equivalent to 1.9 proof gallons. (The units described are Wisconsin ------183,860 16,085 167, 775 146, 319 21,456 - - - based upon spirits at 60 degrees Fahrenheit, at which temperature ethyl alcohol has a specific gravity of Total ------251, 820, 728 24, 344, 306 1 227, 476, 422 2 223, 321, 704 2, 0y, 903 1, 224, 504 196, 284 .7939.) Percentage of total 2 Includes 728,923 proof gallons transferred to denaturing plants by alcohol plants not having bonded withdrawals - - - - 100.0 9. 7 90.3 88. 7 .8 .5 .1 warehouses. 1 Including tax-free withdrawals of 659,931 proof gallons for beverage purposes, 39,164 proof ga Ions for alcohol: Plants and bonded warehouses operated, production, medicinal use, and 932 proof gallons for industrial use. These amounts are not shown separately under TABLE 43. - Ethyl tax-free withdrawals. withdrawals, warehouse losses, and stocks remaining in bonded warehouses June 30, 2 See footnote 3, table 43. by States, fiscal year 1940 [Quantities in proof gallons] TABLE 45.-=Ethyl alcohol: Materials used in production, by kinds and by States, fiscal year 1940 Remaining Number Ware- in bonded Number Grain of ware- Production Withdrawals house ware- State of plants houses operated' losses houses State Molasses Other materials operated June 30 Corn Malt Other

00 Ci 5, 314, 335 5, 721, 586 13, 984 700, 585 Gallons Pounds Pounds Pounds Gallons Pounds California ------2 Colorado ------53, 264 310 4, 071 California ------7, 058,114 643, 030 75,376 5, 880 - - - 371, 823 Delaware ------10, 618 10, 618 ------District of Columbia - - - 654, 477 ------2, 445 2 3, 255, 920 - - - - - District of Columbia ------471, 977 470, 459 Hawaii ------4 Hawaii ------239, 555 200, 730 Z 127 44, 000 Idaho ------4,502 36, 893 - - - 703, 010 15, 563 12, 141 ------Illinois ------808, 119 90, 891, 279 6,533,316 2, 078. 312 - - - Idaho ------00 V... in .14 Illinois ------9, 929, 666 14, 374, 382 36, 077 I, 455, 108 Indiana ------18, 120, 144 2,007,488 526,120 0 14, 691, 900 - - - - - 22, 085, 412 32, 825, 119 124, 774 5, 511, 604 Louisiana ------37, 989, 916 ------Indiana ------4, 260 Kentucky ------9, 058 ------Maryland ------20, 871, 065 ------Louisiana ------32, 758, 744 15, 958, 233 37, 892 2, 807, 124 Massachusetts ------7, 856, 749 ------18, 035, 226 21, 050, 063 35, 261 931, 187 New Jersey ------56, 171, 228 ------7-1 Maryland - - - - - CO 8

CO er .01 200, 278 - - - - - Massachusetts ------6,555, 817 7, 543, 834 17, 885 New York ------444, 495 ------10, 379, 740 Michigan ------361, 754 ------7,959 Ohio ------10, 218, 096 1, 360, 800 1,525,104 - - - Missouri ------575, 343 9 17, 601 Pennsylvania ------56, 622, 970 12,672,995 I, 208, 397 352,270 - - - New Jersey ------46, 533, 090 46, 108, 309 38, 688 3, 468, 285 Puerto Rico ------5,673,458 ------441, 493 631, 247 6, 756 638. 578 Virginia ------7 10,124, 665 New York ------198, 087 Ohio ------1, 388, 346 1, 996, 512 3, 960 West Virginia ------g 34, 513, 687 - - - - - Oregon ------30, 868 ------1, 650 Wisconsin ------450, 790 4, 270, 126. 5, 661, 498 ------1, 205, 271 53, 989, 684 58, 094, 884 105, 276 2, 935, 127 Pennsylvania - CO Total 194, 601, 378 136,815,670 16,851,377 10 4, 524, 579 62, 841, 247 12, 404, 769 Puerto Rico ------4, 142, 705 4, 150, 328 20, 527 996, 499 Virginia ------166, 636 166, 366 - - - -• ------41, 491, 675 41, 291, 770 52, 291 1, 867, 290 7 For those plants in which ethyl alcohol is a by-product of the butyl process, only the estimated amounts West Virginia ------r. Wisconsin ■ 177, 214 183, 860 477 5, 807 of materials allocable to ethyl alcohol have been included. Figures do not include materials used at ex- 4 perimental plants. 2 820, 728 496, 294 5 21, 798, 554 Total 37 65 243, 727, 758 251, 2 Potato residue. 5 Pineapple juice. Potatoes. I Number operated during any part of the year. 5 2 One experimental plant in California and one in Delaware. Ethyl sulphate. Includes 728,923 proof gallons transferred to denaturing plants by alcohol plants not having bonded 6 Sulphite liquor. 7 warehouses. Cellulose pulp and chemical mixtures. In addition, 42,813 proof gallons lost in transit. 31,093,950 gallons of ethyl sulphate and 3,419,737 gallons of crude alcohols mixture. 5 Stocks in transit between bonded warehouses and quantities in receiving tanks of alcohol plants awaiting g A corn sugar by-product. 72 transfer to bonded warehouses not computed. Includes 4,460,927 pounds of rye, 27,262 pounds of barley, 21,759 pounds of diamalt, 14,194 pounds of wheat, and 437 pounds of bran.

148 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 149

TABLE 46. - Ethyl alcohol: Production, by kinds of materials used, fiscal year 1940 TABLE 48.- Denatured alcohol: Production, by months, fiscal year 1940 [Wine gallons] Quantity used Alcohol produced

Kind of material Completely Specially Proof Percent Month denatured denatured Total Amount Unit gallons of total

July 542,979 6, 893, 795 7,436, 774 339 68.56 Molasses I 194, 156,883 Gallons 167,108, August 580,681 8, 610, 026 9,190,707 45, 785, 850 do 61, 210, 110 25.12 September 2,101, 668 10, 523, 092 12,624, 6911 Ethyl sulphate 13, 976, 447 5.73 Grain 159, 346, 879 Pounds October 4,906,874 10, 273, 937 15, 180,811 3, 119, 737 Gallons 544 224 .22 9,943, 257 10, 221, 265 13,064, 522 Crude alcohols mixture . .10 November Pineapple juice 3, 255,920 do 239, 555 December 642, 408 10, 502, 388 11,144, 796 Mixtures: January 1, 303, 991 9, 093, 651 10, 397, 642 Sulphite liquor 10, 379, 740 do February 453,848 8, 005, 830 8,459,678 Cellulose pulp and chemical mixture 10, 124, 665 Pounds March 413,509 9,110, 799 9, 524, 308 Potatoes 703, 010 do April 267,688 9, 726, 136 9, 993, 824 444, 495 Gallons 789,965 9, 252, 972 10,037, 437 Molasses .27 May Potato residue 371, 823 Pounds 3 649, 081 June__ 510, 665 9, 195, 976 9, 706, 641 Barley 27, 262 do Wheat 14, 194 do Total 15, 352, 033 111,409, 797 126, 761, 830 Malt 8,125 do Bran 437 do 243,727,756 100.00 Total TABLE 49. - Completely denatured alcohol: Withdrawals, by formulas and by months, fiscal year 1940 I Additional amounts used in combination with other material included under "Mixtures." Includes 1,205,271 pounds of a corn sugar by-product. [Wine gallons] Includes 11,700 proof gallons produced at exper mental plants rom materials not shown.

and Formula I TABLE 47 -Denatured alcohol:I Plants operated, production, withdrawals, stocks on hand June 30, by States, fiscal year 1940 Month Total 13 14 12 11 10 [Quantities in wine gallons ]] July 69, 600 419,293 37,344 1,231 221 527,689 Completely denatured Specially denatured August 211,438 251, 002 18,854 168 1 481, 463 Number September 1, 496, 913 638,000 44,700 2,331 220 2, 182, 164 of plants 3, 939, 936 1, 181, 679 47,853 3,813 1,951 5, 175, 232 State October °Per] Produc- With- On hand Produc- With- On band November 1, 878, 470 961,685 58,416 3,490 731 2,902.792 ated ] tion drawals June 30 tion drawals June 30 December 414,082 247,768 29,436 721 707 692,714 January 629, 816 680,474 6,416 467 346 1,317, 519 February 182,933 218,113 10, 892 168 996 412,602 C.... 2, 674, 324 25, 079 140,920 255, 709 2,649 168 33 399,479 California 135, 405 134, 726 776 2, 656, 254 March 5, 994 28, 596 April 86,414 141, 168 2,133 212 3 229,930 Delaware 8, 152 224 1 704,490 District of Columbia 270 4, 074 8, 118 417, 292 418, 282 May 209,431 488, 614 6, 220 2, 204 2, 070 1, 650 34, 263 33, 819 444 June_ 86, 502 379, 531 2,958 224 1 469, 216 Hawaii ,--l 5, 358 6, 164 2, 052 2, 042 Idaho ene1.*N 3, 639, 837 28, 580 5, 863, 036 267,871 13,217 4, 711 15, 495, 290 Illinois 1, 389, 413 1, 396, 503 8,837 3, 651, 883 Total 9, 346, 455 3, 542, 888 3, 597, 995 12, 112, 552 12, 087, 861 54, 761 Indiana 674,452 663,987 19, 454 Kentucky 6, 840, 384 23, 617 as to the composition of these formulae will be found in Treasury Decisions Nos. 10 and Louisiana 1, 094, 384 1, 106, 100 5,005 6, 842, 007 Information 1,594,809 1,614,268 20,178 12, 296, 269 12, 317, 634 74, 233 4648 and the Appendix to Regulations No. 3, Formulae for Completely and Specially Denatured Alcohol, Maryland co 361, 562 459, 071 27, 460 3, 662, 043 3, 639, 3M 40, M5 Revised 1938, Treasury Department, Bureau of Internal Revenue. Massachusetts , 7.—Inacq.c I, 901, 527 1, 861, 667 54, 683 22, 137, 430 22, 191, 739 66, 737 New Jersey 326, 424 1, 026 New York 22, 593 26, 741 12, 216 325, 994 22, 950,054 43, 748 - denatured alcohol: Withdrawals, by formulas, fisca year 1940 Pennsylvania 4, 968, 559 4, 982, 767 357, 248 22, 908, 554 TABLE 50. Specially 284, 171 281, 664 3, 007 1, 578, 805 1,594,473 8,871 Puerto Rico Virginia 81,001 03,611 [Wine gallons]

. 766, 023 s.. 39, 577 39, 585 4 21,881, 004 21, 903, 624 West Virginia 2, 220 3, 328 3, 299 140, 942 139, 089 Wisconsin Formula I Amount Formula I Amount Formula I Amount Formula I Amount 1, 163, 400 Total 40 15, 352, 033 15, 495, 290 498,982 III, 409, 797 III, 509, 432 1 e' VA

31, 019, 934 1, 289, 253 4, 531 39-A 17, 251 2 -46 1, 026, 642 39-B 194, 982 I Included in denatured alcohol are 1,758, 711 tax gallons of rum and 80 377 tax gallons of other spirits trans- 972 2r 25, 415, 813 3,682 4,484 39-C ...... 715, 929 ferred from distilleries for denaturation. The number of wine gallons is not reported. ,. 39-D______4,666 Standard United State gallons o 231 cubic inches. 1, 239, 333 465,397 ) .4 8,902 2 .'

4, 177, 429 40 2, 613, 935 ] Number operated during any pert of the year. 3, 152 2, 576, 995 2U Includes one denaturing plant operated in conjunction with an experimental plant. 1, 789, 079 771 7, 508 42 18, 212 ,- 44 109 55,485 18,879 ,1 .4 638, 512 :-I 78, 981 66, 684 ,nk 1, 856 45 5, 898 33, 211 46 1,160 400,125 38,274 - 44:i 703,697 5,421 , , 250 47 6,152 565, 715 59,975 ya 2, 139, 947 nk

5, 964, 592 373, 874 , 15, 029 Total III, 509, 432 a ,

10,943 r 26, 252 62,324 gg' il

1, 854 27, 418, 710 , 344 255 209,019 , 7,139

I Information as to the composition and authorized uses of these ormulae will be found in the 1931 and 1938 editions of the Appendix o Regulations No.3, Formulae for Completely and Specially Denatured Alcohol, Treasury Department, as amended by Treasury Decision No. 4967. 2 Represents an excess of returns over withdrawks...

150 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 151

TABLE 52.-Specially denatured alcohol: Operations of bonded dealers, by States, TABLE 51. -Specially denatured alcohol: Withdrawals, by leading' formulas and by months, fiscal year 1940 fiscal year 1940 [Wine gallons] [Quantities in wine gallons]

October November December Number of Formula July August September State dealers Received Removed On hand operating I Rine 30 1 1, 857, 270 3, 053, 486 4,076, 634 3, 464, 655 3, 078, 045 3, 575, 271 1, 928, 856 2, 227, 359 oT 29 1, 705, 374 1, 766, 596 1, 788, 207 2, 021, 009 13, 134 13,407 California tz gg 2-B 1, 551, 012 1, 673, 352 2, 172, 084 2, 302, 873 2, 328, 418 2, 184, 440 317, 052 440, 023 425, 330 562, 878 570, 874 Connecticut 33,340 33,222 t 18 279, 277 9,048 9,966 , 159, 408 371, 588 371, 524 246,851 441, 567 487, 561 Georgia g -r 35-A Illinois 772, 497 774, 611 R§ 40__ 193, 368 247, 025 247, 829 253,177 202, 855 213, 977 359,058 402, 615 359, 912 Indiana 972 1,134 23-H 183, 360 251, 527 281, 887 Kentucky 35, 214 35, 538 193,960 160,732 :e 17 135, 689 144, 051 165, 414 194, 664 Maryland 169,434 160, 938 133, 181 162,022 162,880 g g§ 4 141, 823 155, 150 189,839 257,375 265,788 130,638 120, 989 Massachusetts r 23-A 72, 487 117, 255 135, 785 137, 065 98,626 96,816 .: 130, 808 Michigan CO 7 97, 580 47 3-A 56, 028 92, 552 152, 421 129, 873 81,957 79,323 Minnesota 55 g1FRAt 32 82, 607 79, 962 112, 373 116, 899 99, 529 93, 704

Missouri 134,292 136,382 4g29:<4 39-C 47, 747 36, 634 81, 853 62, 058 79, 050 76, 966 427 70, 938 86, 903 64, 019 New Jersey 1, 291, 002 1, 288, 073 13-A 38,854 58, 495 82, New York 261, 264 258, 487 37 61, 529 53, 936 47, 518 57, 627 92, 995 85, 656 44, 723 69,892 Ohio 241, 099 243, 224 38-B 50, 853 39, 861 63, 450 49, 395 39,537 38, 117 125, 087 107, 133 117, 457 38,818 20, 613 12, 862 Pennsylvania - 23-0 Tennessee 6,966 6,426 - -r i 12-A 22, 198 29, 954 26, 456 17, 360 48, 801 42, 560

Texas 12, 937 13, 305 -ta ,.0 28 24,100 32, 150 16,150 513, 800 24, 450 40, 559 20, 693 13, 263 21, 723 Utah 9, 372 7, 612 30 19, 915 24, 596 22, 920 Washington 4,796 4,082 39-8 17, 312 11, 249 16, 452 31, 564 21, 901 14, 922 46, 608 49, 653 All others . 34, 109 54, 295 57,192 86, 697 Total 52 3, 472, 762 3. 466,461 381, 655 Total 6, 859, 407 8, 717, 897 10, 665, 895 10, 276, 485 10,168, 270 10, 757, 319 Number operating during any part of the year.

Formula January February March April May June Total TABLE 53. - Specially denatured alcohol: Operations of manufacturers, by States, fiscal year 1940 1 2,039, 196 1, 628, 511 2, 007, 813 2, 071, 487 2, 100, 812 2, 016, 754 31, 019, 934 29 2, 375, 211 2, 468, 699 2, 756,019 2, 863, 331 2,689, 661 2, 828, 388 27, 418, 710 [Quantities in wine gallons] 2-B 2, 176,659 2,011, 928 2, 186, 431 2, 249, 966 2, 341, 031 2,238,620 25, 415, 813 18 • 568,336 597,845 653, 832 580, 713 545,071 423, 361 5,964, 592 35-A , 431,915 309, 918 260, 672 477, 362 312, 196 306, 869 4, 177,429 Number of 40 173,325 171, 602 225,645 217, 152 206,506 201,504 2, 613, 965 Recovered Used in man- On band 104, 397 137, 485 2, 576, 995 State manilla°. Received 23-H 141, 348 103, 006 129, 865 122, 535 turers after use 5 ufacturing June 30 17 173, 112 155, 844 178,867 178,954 218, 717 239, 943 2, 139, 947 operating! 4 118, 653 112,346 137,178 160, 835 151, 492 143,680 1, 789, 079 23-4 107, 063 79, 006 92, 518 105, 110 100, 474 90,863 1, 289, 253 3-A 71,421 93,971 91,215 122,013 111. 271 90,180 1, 239, 333 Alabama 38 75, 203 24, 210 98, 589 6, 317 32 88,887 55,213 63,901 66,748 78,635 88,184 1,026,642 Arizona 3 47 39 11 39-C 53, 634 42, 787 61, 695 55, 312 45, 135 73, 058 715, 929 Arkansas 17 51,084 47, 432 11,873 13-A 14,143 24,700 78,517 59,663 74,366 50,602 703,627 California 297 2, 829, 422 1, 383, 461 4,184, 940 165, 360 37 15,576 28,881 43,097 68,869 47,595 46,334 638,512 Colorado 28 45,723 41,834 4,485 38-B 34, 114 63,114 37, 818 35, 178 44, 347 42, 970 565, 715 Connecticut 75 735,860 380,644 1, 071, 776 81,125 23-0 9, 699 10, 969 5, 778 6, 350 5, 325 5, 306 461, 397 Delaware__. 12 08,117 312,337 376,617 15, 182 12-A 39, 791 32, 491 27, 361 39,180 45, 688 28, 285 400,125 District of Columbia 33 449, 814 459 119 6, 267 28 73,898 24,467 24,410 32,450 24,450 373,874 Florida 29 9,823 5,508 14,708 2,119 18,051 19, 221 10, 430 15, 579 9, 549 12, 479 209,019 30 194, 982 Georgia 50 49, 084 21, 008 71, 168 1, 454 39-B 8, 374 10, 661 14, 261 12, 360 17, 329 18, 597 Hawaii 8 20, 158 20, 047 141 All others_ _ _ 45, 429 27,108 32,341 38, 461 50,074 48,593 570,560 Idaho 7 2, 085 1, 394 702 Illinois 467 5, 856, 716 443, 279 6, 292,144 238, 096 Total 8, 828, 435 8, 092, 287 9, 094, 254 9, 581, 557 9, 332,121 9,155, 505 111, 509, 432 Indiana 106 5, 926, 846 3, 307, 631 8, 004, 443 1,288, 442 Iowa 51 175,101 ___ 186,015 6,796 Kansas 33 54,890 30 53, 270 3,327 Withdrawals for the year exceeding 100,000 gallons ranked in order of total withdrawals. Kentucky 49 392, 770 394, 514 22, 039 Louisiana 77 6, 272, 273 5, 308, 997 66,198 Maine ______s a-1, 385 175 271 64 Maryland 87 10, 203, 974 303, 375 10, 437, 013 180, 475 Massachusetts 289 3, 850, 935 3, 513, 103 7, 310, 057 212,543 Michigan 149 2, 244, 071 1, 673, 242 3, 911, 478 141, 330 Minnesota 67 210, 841 93 209, 836 8, 059 Mississippi 26 79,796 4, 090,044 4, 170, 991 6,111 Missouri 163 1, 808, 931 2, 649, 546 4, 445, 505 180. 551 Montana 3 13 13 3 Nebraska 24 14,412 67,368 81,170 1,408 New Hampshire 8 12, 079 12, 118 268 New Jersey__ 266 19, 336, 937 19,002, 792 38, 308, 245 670, 667 New Mexico 1 54 7 47 New York 814 4 8 224 258 2_ 826 499 k OM_ 928 315.253 Number operating during any part of the year. r In some industries where the denatured alcohol does not become a part of the product, a portion is recov- ered and reused. 8 Represents an excess of returns over receipts. • Includes 149,020 wine gallons recovered from solutions received containing specially denatured alcohol. 152 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF • INTERNAL REVENUE 153 TABLE 55.-Distilled spirits: Production by kinds and by months, fiscal year 1940 TABLE 53.-Specially denatured alcohol: Operations of manufacturers, by States, fiscal year 1940-Continued [Tax gallons [Quantities in wine gallons] Month Other Whisky Rum Gin 5 Brand y 5 spirits Total Number of manilla°. Received Recovered Used in man- On hand State after use ufacturing June 30 July Curers 3, 711, 149 153, 435 511,253 42, 367 962,596 5, 380, 800 operating August 4, 391, 956 175, 537 415,091 324,178 September 1,083,896 6,390,658 4, 915, 491 223,963 607, 099 3, 240, 237 1,188, 202 10,174, 992 October 7,084,085 261,503 552,101 2, 786, 604 103, 095 8, 415, 140 1, 743, 021 18, 055, 850 North Carolina 44 2, 581, 953 197, 480 November 9, 017, 606 281,505 571,097 3, 709, 450 I, 444, 010 6 47 43 25 December 8, 060, 053 15,023, 668 North Dakota 60,993 222, 402 429,927 1,113, 978 1, 759, 210 11, 585, 570 Ohio 271 997, 465 423, 278 1, 435, 485 January 10, 434, 685 194,815 354,317 472, 051 41, 390 46, 906 3, 393 February 1, 552, 865 12, 954, 733 Oklahoma 41 9, 878, 334 170, 398 209, 383 278, 070 1, 588, 527 12,124, 712 Oregon 16 15,382 17,990 2,773 March 10, 587, 747 223, 547 662,648 247,402 2, 775, 987 10, 493, 257 142,468 April 1, 510, 434 13,231, 778 Pennsylvania 320 7, 714, 356 11, 233, 223 188, 027 837,055 225,152 1, 465, 136 13, 948, 593 Puerto Rico 20 1, 570, 617 __ 1, 571, 033 1,436 May 11, 491,570 213,358 502,079 50, 482 172, 208 5, 553 226,572 1, 492,175 13, 925, 754 Rhode Island 34 120, 334 Tune 8,187, 404 223, 212 611, 521 132, 228 1, 503, 719 10, 658,089 South Carolina 12 1, 088 1,135 166 6 277 238 73 Total South Dakota 98, 993, 303 4 2, 477, 702 6, 263, 571 18, 426, 825 5 17, 293, 791 143, 455,192 Tennessee 72 9, 986, 502 9, 425 8, 466, 872 1, 830, 861 Texas 111 314,519 3,839 323,966 25,190 Utah 13 7, 873 7,686 501 Figures are in tax gallons. The tax on distilled spin s is collected on the basis of proof gallons for spirits Vermont 7 6, 023 6, 156 168 of 100 proof or over and on the basis of wine gallons for spirits of less than 100 proof. (See secs. 2800 and 2809, Virginia 62 586,443 795, 125 1, 362, 637 55, 927 Internal Revenue Code, 1939.) The proof of spirits is twice the percent of the content, by volume, of ethyl Washington 42 7, 392 ____ _ 7, 257 1, 594 alcohol. Spirits containing 50 percent ethyl alcohol by volume are, accordingly, 100 proof. A standard West Virginia 18 21, 194, 020 24, 786, 222 45, 975, 615 90,703 proof gallon is a wine gallon (231 cubic inches) of 100 proof spirits. The number of proof gallons contained Wisconsin 101 197, 232 18 197, 995 12, 620 in a wine gallon of spirits of proof other than 100 is proportional to the alcoholic content. (The units Wyoming 2 3 2 described are based upon spirits at 60 degrees Fahrenheit, at which temperature ethyl alcohol has a specific gravity of .7939.) Total 4, 283 III, 342, 945 69, 046, 201 177, 333, 764 5, 974,138 I For additional production of gin at rectifying plants, see table 67. 3 See table 57 for kinds of brandy produced. Includes 1,758,711 gallons produced at distilleries for denaturation. TABLE 54.-Distilled spirits: Number of distilleries and internal-revenue bonded All high-proof spirits produced at distilleries except 80,377 gallons of spirits produced for denaturation, warehouses operated,' by States, fiscal year 1940 1,331 gallons of okolehao, and 946 gallons of arak. TABLE 56.-Distilled spirits: Production, by kinds and by States, fiscal year 1940 Distilleries Internal- revenue [Tax gallons] State bonded Whisky Rum Gin Brandy Other 5 Total 5 ;Samuel State Whisky Rum Gin I Other Brandy i spirits Total 4-4 2 4- 4.

Arizona 4t N 4 Arkansas d N. -e.Me Arizona 155,788 79 Arkansas 155, 788 California 2 3, 936 3, 936 Colorado California 250,181 251, 184 17, 682, 761 5 Colorado 24, 742 18, 208, 868 Connecticut 1 8, 239 8, 234 .4.4 Connecticut Georgia 2 18, 769 1, 256 3, M5 856 24,106 Hawaii No, 12 Georgia 34, 941 34, 441 4 Illinois :14 Hawaii 7, 456 9 2, 708 10,169 R Illinois Indiana 72 18, 462, 996 2, 001, 053 1, 721, 654 22,185, 703 Kentucky 1 3 Indiana 16, 725, 898 1, 443, 932 10, 588, 822 28, 758, 652 Louisiana Kentucky 42, 073, 690 I, 105,113 Maryland 19 Maryland 93, 178, 803 8 8, 434, 955 633, 731 4,118 3,127, 835 12, 21)0, 637 Massachusetts 3 Massachusetts 66, 503 1, 295, 394 Michigan 2 Missouri 1,361 , 897 368,064 368, 064 Minnesota MOCC4N 3 New Jersey 8 New York 375, 792 375, 792 Missouri 12 886, 697 76, 078 45, 487 1,008, 262 444 Ohio New Jersey 7 4, 613, 068 16, 737 802, 393 5, 432, 198 4-1

eMN Oregon New York 18, 501 18, 501 7 5 Ohio_ Pennsylvania 7, 080, 788 69, 739 1, 045, 718 979, 294 9, 175, 539 NN . 4-41 Tennessee Oregon 23 259,780 18,943 278,223 Pennsylvania 1 Virginia 471, 290 79, 892 1 Washington 551, 182 Tennessee 1 112,903 112,903 mM Wisconsin Vermont 8 3, 299 3, 299 Virginia Y. 3 Washington Total 98, 993, 303 5 2, 477, 702 6, 263, 571 18, 426, 825 17, 293, 791 Wisconsin 1 143, 955,192 120 14 221 295 Total 92 5 12 For additional production of gin at recti ying plants, see table 68. See table 57 for kinds of brandy produced. 5 Includes 1,758,711 gallons p oduced at distilleries for denaturation. I Number operated during any part of the year. All high-proof spirits produced at distilleries except 80,377 gallons of spirits produced for denaturation, Except as otherwise noted represents distilleries producing high-proof spirits. 1,331 gallons of okolehao, and 946 gallons of arak. 3 Exclusive of duplications whichresulted from plants producing more than one kind of spirits. 5 Okolebao and arak.

269679-40--11

REPORT OF COMMISSIONER OF INTERNAL REVENUE 155 154 REPORT OF COMMISSIONER OF INTERNAL REVENUE uced, by kinds and by States, fiscal year TABLE 59.-Distilled spirits: Total withdrawals, tax-paid,' by kinds and by States, TABLE 57.- Distilled spirits: Brandy 194prod 0 fiscal year 1940 [Tax gallons] [Tax gallons]

Ohio Oregon Washington Total Other Kind California New Jersey State Whisky Rum Gin Brandy spiritsspi Total

7, 642 38, 548 115, 124, 784 Grape 15, 074, 979 2, 507, 491 Arizona 32,039 32,039 Raisin 2, 607, 491 4, 201, 448 18, 881 284, 234 382,119 34, 472 4,901, 154 81, 038 355, 396 4, 553 6, 746 60, 285 2 687, 790 California Apple ' 68, 201 1, 708 253 36, 891 Colorado 68, 201 Peach 19, 202 3, 574 6,886 1 30,756 Connecticut 217, 756 7, 320 357 14, 417 172 240,022 Blackberry 11, 441 Georgia 4,379 4,379 Apricot 10,566 941 2,120 4,322 7, 045 4, 330 11,376 Hawaii 364 1,838 Prune 6,946 6,946 Illinois 16, 395, 660 90, 809 2, 020, 230 242,888 1, 245,306 19, 991, 983 Plum 4, 809 4 5, 207 Indiana 11,093,866 32, 429 1, 138, 688 60, 273 7, 512, 010 20,137, 266 Pear 543 2,855 3,398 Kentucky 26, 980, 450 13, 921 724 10, 291 225,814 27, 231,190 Cherry 426 425 Louisiana 278, 028 25, 661 43 303, 732 Elderberry Maryland 7, 552, 703 2, 257 668, 529 27,124 3, 498, 091 11,748,704 375, 792 16, 737 18, 501 112, 903 4 18, 426, 825 Massachusetts 1, 258, 786 272,671 3,489 31,787 50 1, 566, 783 Total 17, 882, 761 Michigan 82, 535 82, 535 Minnesota 321, 373 294 2,157 41, 420 366, 244 Missouri 643, 777 1, 021 30 9,375 654, 203 Includes 3,615 gallons in Arkansas. 1 Includes 3,225 gallons in Connecticut, 4,116 gallons in Maryland, 76,078 gallons in New York, 17,556 New Jersey I, 305, 194 19,876 3, 316 399, 594 1,727,979 New York 123, 038 886,698 262,116 41 1, 261, 898 gallons in Tennessee, and 78,797 gallons in Virginia. Ohio 3, 647, 801 1, 432 35, 771 132, 853 3, 817, 857 1 Includes 34,441 gallons in Georgia and 489 gallons in Tennessee. Oregon 2,937 2,937 Includes 1,095 gallons in Virginia. Pennsylvania 6,835, 428 136, 681 I, 022,216 65, 031 1, 530, 429 9, 589, 785 Includes 398 gallons in Tennessee. Tennessee 7,486 1,814 9,300 Includes 321 gallons of raspberry brandy produced in Arkansas. Vermont 107 107 Virginia 181,579 15,515 197,004 spirits: Total withdrawals, tax-paid? by kinds and by months, Washington 39, 581 70 39, 651 TABLE 58. - Distilled fiscal year 1940 Wisconsin 275 276 Total 81, 267,368 625, 372 6,330, 711 1, 576, 911 14, 181,273 103,981,635 [Tax gallons] l These figures refer to spirit withdrawn subject to tax at the rate of $2.25per taz gallon, with the exception Other Brandy Total of brandy, for which the rate was $2 per tax gallon. Effective July 1, 1940, the rate was incr ased 76 cents Month Whisky Rum Gin spirits per tax gallon on all distilled spirits. In addition, 14,469,514 tax gallons of brandy were transferred from brandy distilleries and 3,137,2 0 tax gallons of brandy were withdrawn from internal-revenue bonded ware- houses for the fortification of wine, subject to tax at the rate of 10 cents per proof gallon. 4, 334,371 35,217 487,615 65,473 693, 751 5, 596, 427 July 46,645 515,374 83,714 919, 216 6,630,607 August 5,065,658 8, 766,663 6, 786, 763 53, 095 570,141 125, 054 1, 231, 810 TABLE 60.- Distilled spirits: Bottled-in-bond 1 withdrawals, tax-paid, by kinds and September 189,497 1, 813, 914 11,092,287 October 8, 533, 535 74,789 480,552 by months, fiscal year 1940 10, 389,954 88, 025 623,831 246, 863 2,143, 784 13, 470, 948 November 200,514 1,084, 146 9, 379, 512 December 7,682,693 60,450 351,709 [Tax gallons] 5, 486, 664 47, 681 289, 570 146, 747 570, 621 8, 541,283 January 107,070 861, 706 7, 928,485 February 6, 616, 175 42, 652 300, 982 6, 461,332 45, 731 719,220 121,616 1,050, 466 8,398,365 March 110, 665 1,000, 505 7, 7, 462 Month Whisky Rum Gin Brandy riders Total Ap 5, 772, 509 41, 159 868, 624 5, 826, 749 43, 602 495,653 96, 101 1,059, 454 7, 521, 559 May 84,608 1,762,100 10, 862,039 June 8,330,966 46,426 647,940 14, 181, 273 103, 981,635 July 538,458 1,614 2, 703 542,805 Total 81, 267,368 625,372 6, 330, 711 1, 576,911 August 658, 723 2, 386 18 3, 887 665, 014 September 930,033 2,347 35 6,698 302 939,415 October 1,175,938 2,819 105 7, 151 198 1,188,006 1 These figures refer to spirits withdrawn subject to tax at the rate of $2.25 per ax gallon, w th the excep- November 1, 885, 579 3,384 15,428 1,704,389 tion of brandy, for which the rate was $2 per tax gallon. Effective July 1, 1940, the rate was increased 78 December I, 791, 532 5, 694 183 14,932 1,812,341 cents per tax gallon on all distilled spirits. In addition, 14,469,514 tax gallons of brandy were transferredbonded January 1, 060,627 2, 898 24 12, 611 1, 076,060 from brandy distilleries and 3,137,270 tax gallons of brandy were withdrawn from intematrevenue February 1, 111,148 1,999 15 3,282 1, 116,444 warehouses for the fortification of wine, subject to tax at the rate of 10 cents per proof gallon. March 1,156 879 2, 282 5, 774 1,184, 715 AurIl 973,776 2,480 105 8,827 985,188 May 995,507 5,661 237 3,943 1,005,848 June 1,491,708 3,053 1,373 6,087 1,502,218 Total 13, 569, 728 36,397 2,096 91,221 I 600 13,699,941

1 These spirits were bottled in bond prior to the payment of tax, with the exception of 1,713,957 gallons of whisky and a lag gallons of brandy battled in hand after payment of tax. The figures in this table are included in total wit drawals as sho n in table58. Okolehao.

156 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 157

TABLE 61.-Distilled spirits: Bottled-in-bond I withdrawals, tax-paid, by kinds and TABLE 63.-Distilled spirits: Stocks remaining in internal-revenue bonded ware- by States, fiscal year 1940 houses, by kinds and by years and seasons of production, June 30, 1940 [Tax gallons] [Tax gallons]

Other Total State Whisky Rum Gin Brandy spirits Year Season Whisky Rum Gin Brandy s°ptikerints Total

487,534 325 34 38,963 526,856 1911 Spring 89 89 California 6,782 Colorado 6,782 Fall 135 135 16, 207 16, 207 1912 Spring 689 889 Connecticut 603 Hawaii 89 14 500 Fall 30 162 192 Illinois 1, 473,353 259 1 4, 872 1,478,485 1913 Spring 2,739 137 2, 876 Indiana 1,166,621 300 10,342 1,177, 263 Fall 1, 553 1, 553 Kentucky 6, 268,480 18 114 4, 442 6, 273,054 1914 Spring 2,497 2,497 743,723 1, 177 744,900 Fall 318 279 597 Maryland 132, 424 Massachusetts 104, 872 27, 460 53 39 1915 Spring 2,193 58 6 2,267 Minnesota 27, 761 27, 761 Fall 1,428 131 1,559 Missouri 193,376 9 30 6 193,421 1916 Suring 18, 757 18,757 190, 577 1, 740 6,815 198,132 Fall 11, 915 300 12,388 New Jersey 82,486 New York 80,315 1,671 1917 Spring 7, 898 297 1, 644 96 7, 082 17, 017 604,111 604, Ill Fall 12, 338 449 25, 639 11 18, 757 57,194 Ohio 2,224,316 Pennsylvania 2, 192, 287 8,012 123 23,894 1919 Fall 87 179 266 Washington 13, 140 13, 140 1920 Spring 286 I 98 384 Fall 2,502 2,502 Total 13, 569, 728 36,397 2, 095 91, 221 2 500 13,699, 941 1921 Spring 2,074 2,074 Fall 52, 080 959 53,034 1922 Spring 351 351 of tax wi h the excep ion of 1,713,957 gallons of 1 These spirits were bottled in bond prior to the payment Fall 357 357 whisky and 3,738 gallons of brandy bottled in bond after payment o tax. The figures in this table are in- 1928 Spring 666 666 cluded in total withdrawals, as shown in table 59. 1932 Fall 15,435 12, 229 10, 356 38, 020 Okolehao. 1933 Spring 163, 344 3, 760 167,104 Fail 270, 753 80, 410 12,138 363, 301 1934 Spring 2, 066, 861 13, 314 441 75, 595 2,156, 211 TABLE 62.-Distilled spirits: Stocks remaining in internal-revenue bonded ware- Fall 3,193, 701 332, 517 417 52, 225 3, 578, 880 houses, by kinds and by States, June 30, 1940 1935 Spring 7, 277, 272 879, 148 821 45, 784 8, 203, 025 Fall 14, 115, 263 99,619 12,598 224,645 14,452,125 [Tax gal tins] 1936 Spring 44, 894, 096 136,132 5,232 185,542 45, 171,002 Fall 73, 459, 8IXI 185, 338 3,222 480,878 334,816 74,964, 153 1937 Spring 72,106, 709 326, 629 15, 589 304, 478 734, 248 73, 987, 648 35, 854, 657 241, 871 13, 646 1, 768, 833 820,646 38,699,553 Other • Total Fall State Whisky Rum Gin Brandy spirits 1938 Spring 42,188,904 92,188, 70, 632 2, 744 480,319 2, 317, 400 45,059, 999 Fall 39, 792,505 304,449 1, 985 11,261, 468 1, 909,947 53,270,334 1939 Spring 48,262, 530 273,476 1,315, 877 5,049,079 59,900,957 426,893 36, 096, 829 335, 872 20,179 2,169, 313 3,900,897 42,523,090 Arizona 426,893 Fall 4,520, 652 22,423 57,243 15, 878, 121 4,964 20,483,403 1940 Spring 61, 109, 178 328, 034 106,699 818, 570 6, 321, 629 68,682, 110 California 137,357 Colorado 137,357 120,455 6,4457 898 53,582 684 182,076 Total 480, 937, 609 3, 618, 640 210, 736 19, 213, 345 21,419, 594 5 525,394,924 Connecticut 43,801 Georgia 43,601 8,157 9, 180 17, 203 34, 540 Hawaii 1, 353,582 80, 052, 585 Due to error, no figure was reported as of June 30, 1939. Illinois 78,118, 642 110, 365 41,395 430, 581 75, 783,610 31, 979 48, 050 339, 351 12, 703,346 88, 906,336 In addition, there were 7,461 gallons of unclassified spirits in export storage warehouses. Indiana 32, 223 198, 236, 727 Kentucky 197, 823, 912 393, 522 7, 572 29, 498 115, 305 358,102 12, 393 485,800 Louisiana 3,229,444 51, 302, 906 Maryland 48, 001,473 480 8,811 62, 698 2, 921, 756 1, 336,136 51 91, 850 4, 349, 793 Massachusetts 567, 196 Michigan 567,196 430 2, 822 17, 200 205,889 Minnesota 185, 437 1,046, 720 Missouri 1, 039, 767 494 491 5,968 1, 341, 641 8, 425 498 959, 990 2, 310, 054 New Jersey 284 675,127 New York 77, 510 597.333 15,070, 117 766 44,099 3, 164, 537 18, 279, 619 Ohio 51, 203 51, 203 Oregon 55, 152,051 Pennsylvania 52, 450, 215 1, 390, 612 26, 797 398,800 885, 827 296,058 16, 595 312, 653 Tennessee 22, 500 22, 500 Vermont 1, 742, 836 Virginia 1, 587,151 155,685 280, 391 3, 715 28, 710 312, 816 Washington 74, 363 Wisconsin 74,071 292 _ r 525, 394, 924 Total 480, 937, 609 3, 618, 690 210, 736 19, 213, 345 21, 414, 594 1

la addition, there were 7,461 gallons of unclassified spirits in export storage warehouses. 158 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 159

TABLE 66. - Distilled spirits: Materials used in the production of brandy, by kinds TABLE 64.-Distilled spirits: Losses in internal-revenue bonded warehouses from leakage and evaporation, by kinds of spirits and by States, and other losses, by and by States, fiscal year 1940 kinds of spirits, fiscal year 1940 FRUIT I [Tax gallons] Kind California Tennessee Watinl g] Total - Other Total State Whisky Rum Gin Brandy spirits Pounds Pounds Pounds Pounds Raisins 9, 658,421 9, 658,421 Losses from leakage and evaporation: I 4, 771 Grapes 7,891,997 7,841,947 Arizona 4, 771 Apples 1, 737,000 1,479, 157 1, 224,610 4,440, 767 780, 755 2, 661 837 50, 510 1, 319 836,082 California 10,235 Apricots 1, 200,000 1,270,000 Colorado 10,235 235,000 103,957 338,957 24,756 623 1 1,663 31,043 Peaches Connecticut 230 230 Pears 49,998 49,998 Georgia 50 96 466 148 760 Hawaii 2, 565, 490 Total 20, 672, 368 1, 633, 112 1, 224, 610 23, 530, 090 Illinois 2, 507, 34D 8,442 842 22,595 26,262 2, 137, 200 1, 426 758 6,863 292, 719 2, 438,768 Indiana 23,003 5,393, 020 Kentucky 5, 365, 492 2,238 1,166 2,121 28,175 2, 300 9 30,484 FRUIT WINE, CIDER, AND JUICE ' Louisiana I, 777, 050 Maryland 1, 585, 778 357 4,887 186,028 191, 969 36, 788 3, 108 231, 865 Massachusetts 14,675 Michigan 14, 675 Washing- 65,411 36 1 4,327 69,775 Kind California New Jersey Ohio Oregon ton Total Minnesota 109,879 Missouri 108, 517 240 1,020 102 209,165 1,824 1 53,778 264,758 New Jersey 1 62, 511 New York 26,804 30 35, 676 Gallons Gallons G allow Gallons Gallons Gallons 677, 707 193 2, 158 6,380 686, 438 Grape 101,045, 478 68, 347 276,995 1 101,411, 710 Ohio 388 Oregon 388 Raisin 18, 124, 015 18, 124, 015 1, 561, 019 23, 775 382 9, 329 75, 982 1,670, 487 Apple 235, 000 34, 395 56, 971 472, 329 3 4, 956,875 Pennsylvania 485 3, 016,668 Tennessee 451 34 Blackberry 93,187 27,424 37,994 $ 166, 945 23 23 Peach 1,500 6 142,924 Vermont 27,649 Virginia 24,988 2,661 Prune 83,050 33,373 115,423 7,822 1,897 9, 719 Pear 47, 852 47, 852 Washington 25 Wisconsin 25 Plum 40,285 40,285 Cherry 3, 095 15,843 18, 938 15, 337,104 80,999 5, 513 202,127 610,865 16,236,608 Apricot 10, 500 10, 500 Total 14,767 Losses from other causes I 5,682 54 1,777 6,287 967 Elderberry 3, 149 3, 149 16,251,375 Total losses 15, 342, 786 81, 053 7, 290 208,414 611,832 Total 119, 986, 543 3, 121, 055 136, 410 145, 108 836, 034 7 125, 091, 983

1 Difference between entry and withdrawal gauge of all spirits withdrawn from bonded warehouses. I In addition, the following amounts of fruit residuums were used: ,744 gallons of lees in Arkansas, 864,802 Losses from fire, theft, casualty, etc gallons in California, and 21, 26 gallons in Ohio; and 4,669,562 gallons of grape pomace in California. 3 Not included are 12,471,506 gallons of grape wash in California. Includes 20,890 gallons in Arkansas. TABLE 65.-Distilled spirits: Grains and molasses used in production,' by States, Includes 40,214 gallons in Connecticut, 37,800 gallons in Maryland, 589,504 gallons in New York, 111,652 fiscal year 1940 gallons in Tennessee, and 462,392 gallons In Virginia. 6 Includes 9,640 gallons in Virginia. 6 Includes 141,424 gallons in Georgia. Grains Includes 3,367 gallons of raspberry wine in Arkansas. State Molasses' Malt Wheat Total TABLE 67.-Rectified spirits and wines: Production, by kinds and by months, fiscal Corn Rye year 1940 Pounds Pounds Pounds Pounds Pounds Gallons [Proof gallons fl 486,666 300,246 1,963,206 Arizona 1, 176, 294 190, 397 California % 607, 873 398, 665 445,286 4,451, 704 Colorado 94,080 11, 760 11, 760 117,600 Cordials 86,427 25, 520 230, 713 Miscellane- Connecticut 174,766 16,400 Month Whisky Gin and Ii- Total Hawaii queurs ous Illinois 163,191,4% 64,250,812 29,857, 599 252,299,839 246,905, 380 44,900,668 3% 013,424 326,819,462 Indiana 1,435, 394 Kentucky 339, 197, 602 83, 906, 5® 63,917,886 1, 603,280 • 489, 161, 058 July 2, 013, 707 773,516 119,123 24,958 2, 930, 302 61, 233, 092 64,020,991 22,004, 797 147, 258, 880 Maryland 744, 439 1, 598,750 August 2, 332, 435 672,674 150, 711 33,093 3,188,913 Massachusetts 582,800 80, 479 81, 160 September 3,257,988 493,444 223,737 30, 793 4,004,962 Missouri 3,423,814 671,077 607, 349 4,70%240 October 4,329,109 544, 966 296, 249 31,393 5,201, 714 New York 9, 570, 174 76,038 1, 315, 788 10,962,000 November 5,533,073 447,938 318, 362 42,905 6, 341, 278 Ohio 48, 697, 392 8, 246, 224 7, 308,784 71, 4130 6%323,800 December 3,7A9, 488 411, 595 296,209 44,992 4, 002, 284 40, 127,851 41, 321, 712 12, 649, 356 109, 338 94,208, 257 1,087,060 Pennsylvania 3, 253, 600 January 2, 077, 502 357, 737 211, 364 32, 117 2,678, 720 Tennessee % 609, 712 289, 408 354,480 February 3, 838, 870 360, 627 177, 856 24,430 3, 401, 783 Virginia 3,603, 768 1, 184, 400 713, 606 5, 601, 774 March 2,663 386 599,538 179,550 31,715 3, 480, 189 Wisconsin 7, 358 34,016 9, 688 51, 062 April 2, 764,123 772,980 156,127 27,804 3, 721, 034 4,328,001 May 2, 694,226 590, 808 157,449 23,203 3, 466, 286 Total 922,203,384 309, 909, 733 169,616,709 1, 784, 018 1, 404, 049, 632 Tune 4, 218, 320 842, 274 150, 969 27, 642 5, 239, 105

Total 37, 977, 224 6, 866,097 2,437, 706 2 375, 543 47, 656, 570 For materials used in the production of brandy see table 66. In addition to the grain and molasses shown above, 10000 pounds of sake lees, 800 pounds of coconut juice, and 1,780 gallons of guava and cane juice used in 8Wall, and 206,939 pounds of diamalt used in Illinois. 1 The figures are in proof gallons. Except for compounds containing sweet wine fortified with grape 1 All used in the production of ruin with the exception of 190,397 gallons in California and 1,002,585 gallons brandy, the tax on rectified products is collected on the basis of proof gallons. (See sec. 2801, Internal Reve- in Pennsylvania used for gin, 2,400 gallons in Hawaii used for okolehao, and 800 gallons in Hawaii used for nue Code 1939.) For a definition of a proof gallon see footnote 1, table 42. spirits. 'Includes 110,809 proof gallons of rum, 78,9% proof gallons of alcohol, 74,372 proof gallons of brandy, 31,440 Includes 535,788 pounds of barley. proof gallons of wine, 3,496 proof gallons of vermouth, 177 proof gallons of high-proof spirits, and 76,316 proof gallons of other unclassified spirits.

160 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 161

TABLE 68.-Rectified spirits and wines: Number of plants operated and production TABLE 70.-Rectified spirits and wines: Alcoholic liquors I used in rectification, by by kinds, by States, fiscal year 1940 kinds and by States, fiscal year 1940 [Quantities In proof gallons] rpm( gallons]

Number Miscel- Cordials Miscalls- State Alcohol Whisky Hispiritsgh-proof 2 Wine Total State of plants Whisky Gin and Total laneous operated i liqueurs nexus Arkansas 5,848 24 6,872 California 1, 076, 955 Arkansas 1 3, 287 2,442 5,729 163, 789 12, 598 57, 495 1,310,837 California 32 467, 899 698, 226 Colorado 3.056 3. 056 94, 676 38,611 1, 299, 412 Connecticut 521, 215 156, 397 11, 336 1, 580 19, 919 710, 447 Colorado 1 2, 433 593 3, 026 Connecticut 15 278, 290 Hawaii 375 295 468 2, 572 3, 710 300, 558 90, 939 41, 608 711, 395 Illinois 1, 086, 458 Hawaii 1 168 356 509 2, 763 3, 796 757, 670 I, 099,203 81, 952 143, 558 3,168, 839 Illinois 26 2, 056, 700 342, 411 Indiana 642, 639 2, 366, 703 5, 270, 206 13, 084 49, 019 8, 341, 651 717, 524 43, 935 3, 160, 570 Kentucky 231, 469 Indiana 12 8,157, 610 189, 034 40, 000 17, 002 8, 403, 646 2, 716, 142 1, 127. 189 1, 729 4, 425 1, 080, 954 Kentucky 10 4, 028, 648 30, 852 Louisiana 203, 241 4,108 110 1, 745 209, 204 8, 966 75 4, 068, 21 Maine 21, 604 1,147 Louisiana 7 782 183, 928 25, 116 1,168 210, 994 22, 751 Maine 1 3, 819 Maryland 1, 037, 131 4, 437.684 4, 707, 892 6, 713 22. 367 10, 211, 787 17, 542 1,222 22,593 Massachusetts 1, 685, 747 401,490 Maryland 19 9, 965, 761 197, 237 25,117 5, 894 10,194, 009 42,330 54,806 2, 184, 373 Massachusetts 29 1, 189, 153 558, 098 Michigan 145, 795 14, 562 4,833 39,530 204,720 408, 571 23, 531 2, 179,351 Minnesota 66,493 5,312 463 897 44,651 117,816 Michigan 3 7, 222 85 182, 278 9, 501 199,086 Minnesota 4 12, 803 6, 450 Missouri 162, 371 8,538 49 2. 421 10, 774 182,153 59, 324 38, 732 117, 309 New Jersey 3, 500, 824 519.246 549 33,044 4,059, 954 Missouri 8 4, 651 83, 861 92, 777 105 181, 394 6, 291 New Jersey 14 1,82, 015 New Mexico 1, 199 325 2, 733 342 4, 599 2, 093, 598 112, 405 4, 907 4, 033, 925 New York 881, 259 318, 506 3, 966 83, 922 1, 244, 512 New Mexico 1 311 73 1, 193 2, 854 4, 431 16, 859 New York 19 830, 018 349, 234 Ohio 1, 652, 415 570, 960 346 10, 244 23,169 2. 257, 134 64, 584 37, 426 1, 281, 262 Oregon 208 18 17 243 Ohio 11 1, 333, 224 721, 669 230, 398 47, 475 2, 332, 766 Oregon 1 Pennsylvania 4, 462, 067 2, 834, 661 1, 679. 635 22, 487 102, 788 9,101, 638 260 64 324 Rhode Island 17, 340 6, 955 76 24, 371 Pennsylvania 29 7, 758, 754 1, 087, 676 243, 932 57, 703 9, 128, 065 Rhode Island 1 23, 258 Tennessee 1, 642 76 595 2, 313 1, 087 24, 345. Vermont I, 335 654 7 35 Tennessee 1 71 2, 213 2, 284 2, 031 Vermont 1 2,041 Washington 35,263 8.239 66 26 43,594 33 2,074 Wisconsin 32,009 4,349 1,583 4,888 42,829 Washington 3 31, 690 10, 879 649 43, 218 Wisconsin 5 1, 336 8, 610 30, 898 2, 189 43,033 Total 17, 475.958 15, 295, 513 13, 901, 129 229,079 3 679, 709 47, 581, 388 Total 255 37, 977, 224 6, 866,097 2, 437, 706 1 375, 543 47, 656, 579 1 Includes imported as well as domestic liquors. 2 The number operated during any part of the year. 2 Represents high -proof spiri s produced at distilleries. 'Includes 110, 809 proof gallons of rum, 78,933 proof gallons of alcoho , 74,372 proo gallons of brandy, 31,440 Includes 321,911 proof gallons of brandy, 135,690 proof gallons of rum, 127,276 proof gallons of gin, 56,947 proof gallons of wine, 3,496 proof gallons of vermouth, 177 proof gallons of high-proof spirits, and 76,318 proof proof gallons of cordials and liqueurs, 12,104 proof gallons of vermouth, and 25,781 proof gallons of other gallons of other unclassified spirits. unclassified spirits.

TABLE 69.-Rectified spirits and wines: Alcoholic liquors I used in rectification, by TABLE 71.-Fermented malt liquors: Production and tax-paid withdrawals, by kinds and by months, fiscal year 1940 months, fiscal year 1940 [Proof gallons] [Barrels of 31 gallon ]

Tax-paid withdrawals Month Alcohol Whisky High-proof Wine Miscalls- spirits 2 nexus Total Month Production in barrels By pipe line Total and kegs for bottling July 1, 285, 046 780, 812 796, 390 9, 510 29, 877 2, 881, 635 August 1, 299,644 938,359 848,257 13, 396 52,567 3, 152, 223 September 1, 442, 235 1, 340, 959 1, 259, 660 12, 749 48,016 4,103, 619 July 5, 641, 326 5, 538, 668 2, 808, 837 2,729, 831 October 1, 717, 551 1, 831, 021 1, 742, 568 22, 581 81, 114 5, 394, 835 August 5, 458,477 5, 718, 641 2, 843, 335 2,875, 3013 November 1, 773, 719 2, 320, 026 2,175, 415 28, 793 94, 343 6, 392, 296 September 4, 395, 461 4,922, 997 2,474,851 2,448, 146 December 1, 392, 737 1, 381, 656 1,015, 987 28, 930 87, 429 3, 936, 739 October 4,237, 570 4, 169. 153 2,115,990 2, 053,163 January 1, 050, 926 915, 564 544, 007 21, 749 52, 906 2, 585, 152 November 3, 692, 728 3, 826, 964 1, 944, 131 1, 882, 833 February 1,196, 854 1, 085, 389 910, 565 15, 868 52, 568 3, 261, 244 December 3, 611, 695 3.933, 519 1, 994, 862 1, 938,657 March 1, 504, 973 1,112,689 934, 585 17, 465 48, 701 3, 618, 413 January 3, 788, 276 2, 928, 330 1, 440, 558 1, 487, 772 April 1,663, 121 1, 075, 211 963, 561 20, 009 44, 738 3, 766, 640 February 3,477, 429 3, 238, 193 1, 621, 088 1, 617,105 May 1, 300, 963 1, 051, 577 1, 026, 195 18, 106 38,633 3, 435, 474 March 4, 384, 648 3, 811, 295 1, 847, 533 1, 983, 782 June I, 848,189 1, 482, 250 1, 683, 939 19, 923 48, 817 5, 083,118 April 5, 124,256 4,180, 697 1, 998, 831 2,187, 866 May 5, 484, 811 4, 883, 602 2, 308, 703 2, 576, 899 Total 17, 475, 958 15, 295, 513 13, 901, 129 229, 079 5 679, 709 47, 581, 383, June 5, 597,062 5, 858.171 2, 613, 446 3, 242, 725 Total 54, 891, 737 53,014, 230 26,010,106 27, 004,085 1 Includes imported as well as domestic liquors. 2 Represents high-proof spirt s produced at distilleries. Includes 321,911 proof gallons of brandy, 135,690 proof gallons of rum, 127,276 proof gallons of gin, 56,947 proof gallons of cordials and liqueurs, 12,104 proof gallons of vermouth, and 25,781 proof gallons of other unclassified spirits. 162 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 163

TABLE 72.-Fermented malt liquors: Breweries operated, production, withdrawals, TABLE 73.-Fermented malt liquors: Withdrawals, tax-paid and tax-free, by States, losses, and stocks on hand June 30, by States, fiscal year 1940 fiscal year 1940 [Quantities in barrels of 31 gallons] [Barrels of 31 gallons]

Number Withdrawals Tax-paid withdrawals Tax-free withdrawals °f brew- Production Losses On hand Total with- State cries June 30 State drawals operated 1 Tax-paid Tax-free I In barrels By pipe line Consumed For cereal For export and kegs for bottling on premises beverages

Alaska el.. 1,330 1,444 105 380 96 Arizona 26,427 27, 136 157 1,072 4, 716 Alaska 1, 444 106 1,549 M 5, 518 21, 618 167 27, 293 California 2, 687, 680 2, 548, 649 10,876 77,205 361, 175 Arizona Colorado W.F 258, 992 253,987 1,811 5,703 66,558 California 367,139 2,181,510 9,196 323 1,357 Z 559, 626 Connecticut 417, 967 400, 060 3,808 24, 813 57, 118 Colorado 107,072 146,915 1,811 255,798 Delaware 49, 362 50,019 581 1, 764 6, 076 Connecticut 238, 562 161, 498 % 808 903,388 District of Columbia 89,665 88,467 888 3,345 19,844 Delaware 30,016 20,003 581 50,600 Florida 218, 417 212, 506 1, 485 7,653 40,155 District of Columbia 18,975 69,992 888 89,365 Georgia 66,552 63,175 370 2,158 16,030 Florida 20,497 192,009 1,485 213,991 370 63,545 Hawaii .CNO. 81,994 79,079 915 1, 521 15, 371 Georgia 7,947 55,228 Idhoa 3,638 34, 978 574 1, 993 7, 830 Hawaii 11, 721 67, 358 915 79, 494 Elinois C 3, 747, 516 3,656,689 32,445 123,139 588, Idaho 18, 242 18, 736 574 35.552 ,- 10, 232 3,689. 134 1 1, 661, 967 1,994, 722 22, 213 Indiana 1,699,364 1,667, 696 7,679 46,486 294,219 Illinois Iowa SC 136, 575 136, 748 765 4, 927 25, 694 Indiana 362 350 1, 306, 348 7, 679 1,675, 375 Kentucky 811,163 775, 912 5, 943 21, 396 122,102 Iowa 61,600 85,148 766 137, 518 Louisiana 909, 818 883, 316 5, 989 39 435 80,356 Kentucky 239,086 536,826 3,990 1,453 781,355 Maryland 1, 295, 609 1,265,323 7, 784 36, 383 164, 006 Louisiana 88,027 795, 289 9, 632 857 388, 805 11,190 76,288 170, 888 Maryland 558,283 707,040 7, 551 233 1, 27$107

Massachusetts aNI 1, 287, 934 1, 217, 571 Michigan 2, 739, 981 2, 669, 393 12, 670 87, 837 465959 Massachusetts 828, 334 389, 237 11, 190 1, 228, 761 Minnesota m.. 2, MO, 240 2, 512, 190 58, 633 97,445 845,025 Michigan 1,001,646 1, 667, 747 12 670 2, 682083 ■ 1,371,643 1,140, 547 10,100 48, 570, 823 157, 235 751,087 Minnesota 533 2,

Missouri Mcc4 4, 302, 715 4,086, 357 30,013 Montana 191, 269 189. 175 1,556 4,037 31, 252 Missouri 1,831, 876 2 454, 481 19, 330 4, 584 8,099 4,118, 370 Nebraska 338, 796 329, 536 2,106 11, 997 59, 503 Montana 125, 408 63, 787 1, 556 190, 731 Nebraska 93,002 236, 474 $106 331, 642

Nevada .- 16.906 16, 981 93 279 3, 805

New Hampshire im 39,037 35, 782 328 2, 211 6,139 Nevada 12,606 4,975 93 17,074 .-

New Jersey 1 C 3, 452, 623 3, 391, 285 18, 745 145, 380 487, 380 New Hamsphire 22, 836 12, 946 328 34110 New Jersey 1,951, 376 1,389,910 15,715 3,030 8, aeo, oao

New Mexico ,-“-lo 801 New York D C 4867, 803 8, 547, 827 97, 313 294, 203 1, 532, 059 New York 4 995, 274 Z 552, 553 45,893 1,420 8, 595,140 North Carolina 101,061 95,715 152 4,471 18, 103 North Carolina 3, 212 92, 503 152 95,887 pMC 2,033, 719 19, 458 5, 818 3, 620, 905 Ohio 3, 712, 656 3, 595,129 25, 276 111,328 646,978 Ohio 1, 561, 415 Oklahoma 76, 466 77, 706 669 4, 665 13,281 Oklahoma 10, 278 67, 430 869 74 375 129,987 113,823 946 3,630 35,144 Oregon 56. 227 57, 596 946 114, 769 Oregon gM Pennsylvania 6, 195,236 5,934,996 39,874 227,006 920,229 Pennsylvania 3, 338.480 Z 598, 516 39, 302 253 319 5,974, 870 Rhode Island 847,187 603, 396 3, 736 40, 904 94,945 Rhode Island 418, 419 184, 977 3, 736 607,132 South Dakota ..MWM 2.562 2,826 57 95 488 South Dakota_ 1, 668 1,158 57 Z 883 Tennessee 139,291 124, 950 1, 798 5,900 28, 759 Tennessee 11,375 113,575 1, 798 126,798 Texas 805,134 770,320 4,474 29,833 162.452 Texas 83,305 837,015 4,974 774,794 124,173 118,308 632 6.834 21,317 Utah 43,744 69,562 632 118,938 Utah ai 123, 451 115,348 1,073 3,431 25,753 Virginia 4,886 110,483 1,073 116,421

Virginia nM Washington 759,383 749,697 3,869 19,708 169,445 Washington 365,513 384,084 3,869 753,968 34,144 32,842 780 1, 395 4,660 West Virginia 1, 911 30, 931 780 33, 622 West Virginia gM Wisconsin 5, 701, 887 5, 530, 144 52,053 179,156 1, 154, 288 Wisconsin 3, 259,744 2, 270, 400 24,127 3,973 23, 953 5, 582,197 Wyoming 57, 046 57, 851 475 2, 950 11, 516 Wyoming 24085 32,786 475 5%326 Total 611 54,891, 737 53, 019, 230 399,186 1,911, 340 9, 019,354 Total 28,010, 185 27,094,066 286,749 64,937 47,500 53,413,918

Number operated during any part of the year. s Including amounts consumed on brewery premises. REPORT OF COMMISSIONER OF INTERNAL REVENUE . 165 164 REPORT OF COMMISSIONER OF INTERNAL REVENUE TABLE 75.-Cereal beverages:I Plants operated, production, and withdrawals, by TABLE 74.-Fermented malt liquors: Materials used in production, by kinds and by States, fiscal year 1940 States, fiscal year 1940 [Quantities in gallons 2] Grain and grain products t Sugar and Hops and hop extract Number of Rate scups State plants Production Withdraw- On hand Malt Corn Rice operated 3 als June 30

Pounds Pounds Pounds Pounds Pounds California 10, 017 1,117 N... 10, 017 Alaska 58,596 8,500 5,200 Kentucky 29, 977 30, 504 3,100 248, 59 1,210 11,637 Arizona 958,937 1, 528, 295 Minnesota 1, 167, 925 1, 131, 570 56, 606 93, 408,191 14,034,387 14,103, 487 4, 566,696 Missouri 114, 762 California . 121, 613 15, 310

20,396 150,168 .~ Colorado 9,335,930 707, 514 2,218, 800 Ohio 149, 017 140, 515 5, 580 15,420, 538 3,968,042 84,000 2,518,161 328,067 Pennsylvania Connecticut 2,722 32,751 3,038 1,550 Delaware 1,946,309 617,640 46,080 Wisconsin 98,394 88,567 11,718 I , 67,500 41,960 District of Columbia 3,033,100 1,455, 503 7,708,882 744,300 1,801,144 599,247 19,134 Total 17 Florida 379,600 43,841 1, 573,130 1, 524, 336 92, 314 Georgia 2, 179,875 782,300 1,884,932 195, 500 9, 536,309 236,377 24,040 Hawaii 5,655 21,742 Idaho 1,399,558 205,297 198,882 1 Containing less than one-half of 1 percent of alcohol by volume. 120,672,833 40,852,045 11,936,345 5, 824, 93 1,959, 753 'Standard United States gallons of 231 cubic inches. Illinois 4,6 16,688 90,3 106 Indiana 62,190,299 14, 638,600 673,000 3 Number operated during any part of the year. 4,538,418 1,829,340 "I 22,840 79,144 Iowa 811,555 471,970 Kentucky 27, 817,004 2,921, 620 7, 259, 940 29,595, 478 7,726,400 6,370, 469 454,386 TABLE 76.-Still wine: Production and withdrawals, by months, fiscal year 1940 Louisiana 5,996, 726 797,147 Maryland 47, 573,628 8,665, 475 2,926,194 51, 729, 876 7, 206, 045 1,548,292 11, 882, 866 1, 95,024 [Wine gallons i] Massachusetts 2,363,482 1,486, 651 Michigan 98, 749, 555 28, 496, 725 8,043,045 89, 461,426 14,779,272 13,890,026 1,435,137 Minnesota 1,695, 611 2,283,254 Missouri 144, 793,331 11, 209,834 51, 676, 249 Tax-paid Withdrawals 7, 533, 367 317,420 1,398,900 463,069 102,345 Montana 368,568 159,938 Nebraska 10,988, 584 2,666,062 1,457, 800 582,813 192,100 36,500 200 9, 220 Tax-free Over 14 Over 21 Nevada 537, 210 31,980 Month Production 2 New Hampshire 1, 282,740 254,120 withdrawals , Not over and not and not 131,49, 619 32, 458,686 1, 131,932 14, 579,018 2,193,220 Total 14 percent over 21 over 24 New Jersey 19,901,940 5,399, 517 New York 329, 492, 533 86,092,043 17,431,453 alcohol percent percent 3, 381,930 1,152,200 638, 400 59, 598 alcohol alcolfol North Carolina 7,328,773 2, 128,634 Ohio 127, 793, 254 34, 500, 831 10,648,170 2,366, 895 429,900 574,800 2,220 36,870 Oklahoma 29,853 77,832 July 918, 003 470, 662 4, 242, 830 Oregon 4, 725, 595 45, 850 1, 413,100 1, 442, 246 2, 796,469 4,115 227,074, 105 54, 649,871 10, 721,041 23,258, 520 3,858,826 August 5, 220, 604 2, 543, 697 5, 053, 337 1, 677, 078 3, 372, 391 3, 868 Pennsylvania 5,895,819 591, 265 September 44, 350, 639 25, 927,936 6, Rhode Island 23,417, 396 4, 563,500 1,799,367 208, 901 1,992, 285 4, 212, 396 4, 220 116, 294 1, 234 October 105, 453, 497 63, 821, 384 8, 011,143 2, 451, 580 5, 553, 022 6, 541 South Dakota 326,650 60,887 November 35,909, 761 26, 089, 614 8,623,177 Tennessee 4,407,680 639,720 1,062,140 2, 775,397 5, 838, 561 9, 219 28,261, 830 324,000 10,952,807 606, 327 433,189 December 8,133, 062 7, 718,048 9,117, 717 2, 754, 532 6, 355, 027 8,158 Texas 67,376 January 2,822, 212 2, 747, 275 5, 913, 734 1,812, 561 Utah 4, 329,922 446, 190 650,200 4, 095, 585 5, 588 4, 429,279 1,301,930 110,400 177,775 70,948 February 2, 066,030 1, 775, 538 6, 392, 989 2, 056, 248 4, 328,960 7, 781 Virginia 430,79 March I, 93Z 142 1,497, 713 6,331,570 Washington 27,976,363 1, 789,382 6, 530,927 582,132 I, 983, 575 4,340,969 7,026 2,699 19,807 Arr II 1, 830, 620 1, 536,896 6, 070, 519 2, 016, 417 4, 045, 540 West Virginia 1, 268, 570 406,544 May 8, 562 200,961, 604 66,326,915 6, 596, 721 8, 276, 619 2,739,452 1, 712, 462 1, 222, 651 5, 781, 859 1, 731, 786 4, 038, 784 11,589 Wisconsin 29,855 34,951 June 2, 018, 705 1,114, 874 10,4%, 810 1, 979, 310 8, 439, 005 Wyoming 2,088,656 433,315 188,750 10,495 31, 926,866 Total 212, 367, 737 136, 466, 288 82,176, 586 24, 673, 015 TotaL 1,958.419, 675 441, 101, 545 188,943,875 144,877,697 57, 416, 709 88,862

Standard United State gallons of 231 cubic inches. 1 In addition, 3,987 pounds of rye and 3,535,908 pounds of wheat and wheat flakes. 2 Production represents the amount removed from fermenters, including wine to be used as distilling ma- terial in the production of brandy. Increases by amelioration and fortification occurring after removal from fermenters are shown in table 79. Includes: 135,134,639 gallons removed for use as distilling material, of which 122,323,519 gallons were "substandard" wine (i. e., produced with excessive water or residue materials); 503,416 gallons removed for the manufacture of chat/mar/Bey artificially carbonated wine; 856429 gallonaremoved for the manufacture of vermouth; 168,549 gallons -removed for the manufacture of vinegar; 158,78A gallons removed for export; 44,132 gallons removed for family use; and 638 gallons removed for the use of United States.

166 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 167 TABLE 78.-Still wine: Tax-paid withdrawals and stocks on hand June 30, by TABLE 77.-Still wine: Bonded wineries and bonded storerooms operated, production, withdrawals, losses, and stocks on hand June 30, by States, fiscal year 1940 alcoholic grades and by States, fiscal year 1940 [Wale gallons] [Quantities In w ne gallons] Tax-paid withdrawals On hand June 30 Number of pram- Withdrawals Lees operated 1 State Over 14 Over 21 Over 14 Over 21 LossesLoss On hand over and not and not Not over and not and not State Bonded Production! June 30 14 percent over 21 over 24 14 percent over 21 over 29 alcohol percent percent alcohol percent percent Bonded store- Tax-free Tax-paid wineries rooms alcohol alcohol alcohol alcohol only I Alabama 1,935 1,043 2, 455 4,927 190 1,935 36 3, 498 Arkansas 94, 350 200, 829 56, 559 195, 229 61, 820 24,698 Alabama -- 10, 840, 128 33, 558, 379 16,493 28, 483, 628 Arkansas 8 360, 843 40, 207 301, 738 29.802 281, 747 California 47, 050, 616 1, 697, 003 California 47 199, 582, 378 134,202, 679 44, 415, 000 3, 041,132 77, 231,247 Colorado 76,860 376,586 38,912 90,121 55,084 453,446 9, 159 79,033 Connecticut 153, D40 374, 534 11, 718 31, 947 297 Colorado " 10,941 43,962 Florida 36, 639 6,958 67,222 1,084 6,191 527, 574 Connecticut 63, 123 Florida 34,231 261 43,697 14,903 68,306 Georgia 282,904 82,640 32,763 534, 503 152, 624 346, 027 9, 761 115, 403 Hawaii 14, 358 4, 417 9, 393 Georgia 80 491 509 700 Hawaii. 10, 347 1, 780 14,358 240 8, 810 Idaho 557 571 147 1, 209 Illinois 1, 246, 727 3, 312, 571 208,187 287,127 Idaho 2, 782 84, 053 4, 533 Illinois 2 . 21,088 1,089 4, 559, 298 37, 547 495,314 Iowa 19, 730 15,046 135 88,835 2, 083 24,263 Kentucky 566 1,146 Iowa Louisiana 464,606 288,940 28,580 54,536 Kentucky 750 566 42 1, 146 274, 701 753, 546 16,188 83, 116 Maryland 140,826 164,159 52,666 17, 458 Louisiana 304,337 1, 385, 331 28,986 35,378 Maryland 78, 463 2,700 304, 985 3,015 70,124 Massachusetts - 1, 814 1, 669, 668 22,907 64,364 Michigan 108,428 1, 099,933 926, 495 668,730 Massachusetts ---- 3,897 21, 899 6,060 34,061 Michigan 1 1, 599,171 10, 941 1, 208, 361 114,155 1, 595, 225 Minnesota 25, 796 1, 018 40,121 Missouri 26, 446 25, 771 99, 631 19, 219 Minnesota 22, 750 Nevada 26,866 12,529 9,527 9,216 Missouri 1 25, 884 30, 940 52, 217 5, 415 118, 850 556 39,395 1,035 18, 743 New Jersey 1, 545, 218 2, 392, 806 1, 204 719,686 408, 334 11, 136 Nevada en 633,458 310, 131 3,939, 228 81, 922 1, 134, 156 New Mexico 10,602 13,260 7,657 4,189 New Jersey 4 tm New York 6, 935,152 9, 471, 977 2,165 3, 232, 660 3, 748, 730 New Mexico 7, 699 296 23, 862 950 11, 846 178, 282 -eacee North Carolina 48,070 329,348 188, 005 3, 310 New York 11 4, 520, 839 520, 783 16, 409, 294 493, 888 7,159, 672 126,108 877 377,418 3, 338 191,315 Ohio 976,318 1, 162, 391 2, 121, 331 638,177 North Carolina 1 1-1 2,128, 008 183, 948 2,138, 709 139,127 2, 759, 508 Oregon 120, 501 85,226 150, 537 149, 223 Ohio 14 1-1e1 na..a 268, 546 146,876 205, 727 27, 813 299, 760 Pennsylvania 419,605 1, 295, 299 93,633 135, 234 Oregon 30 4 11,668 49 1, 714, 904 14,182 228,867 Rhode Island 28,127 19, 911 Pennsylvania 1 48, 038 11, 534 South Carolina 2,657 1,968 1,301 1,070 Rhode Island 3 3,429 21 4,625 2,546 2,371 Tennessee 90 2, 175 South Carolina ■ 1 .MCLO 90 2, 175 Texas 13, 239 3, 083 11,910 3, 761 Tennessee 675 Virginia 206,452 895,858 10, 441 35, 889 68,284 2,220 Texas 12 14,333 201 16,322 19,327 15,671 10 137, 727 22,472 1, 112, 751 71,747 940,399 -Washington 545,887 658,620 224,911 712,726 2,682 Virginia -West Virginia 11, 204 64, 018 2, 969 6, 908 Washington 35 1,890, 603 827,483 1, 104, 507 71,747 940,359 75,222 2135 8,192 Wisconsin 48, 476 152, 500 25, 515 12, 677 West Virghiut. 3 260,976 38.192 Wisconsin 3, 300 8.720 2, 225 Total 24, 673,015 57, 916, 709 86,862 37, 054, 308 54, 263, 977 1,916, 318 Total 1.090 98 212,367, 737 8 136, 466,288 82, 176, 5813 5,112, 181 93,244, 603 TABLE 79.-Still wine: Ameliora ion and fortification occurring after fermentation, Number operated during any part of the year. by States, fiscal year 1940 1 Production represents the amount removed from fermenters, including wine to be used as distilling material in the product on of brandy. Increases by amelioration and fortification occurring after removal [Wine gallons] from fermenters are shown in table 79. See footnote 3 of table 76. Wine ameli- Resulting Wine fort!. Resulting State orated product fled product Alabama 1.308 1,401 Arkansas 442,592 512,641 273,829 312,812 California 6,516, 849 7, 588, 812 50, 470, 931 59, 340,168 Colorado 58,162 62,890 6,370 7,316 Florida 32,500 33.312 Georgia 519,293 663,590 3.058 3,816 Hawaii O 704 7,126 13, aso 14, 773 Illinois 3,600 3, 812 Maryland 80, 499 87, 896 2,603 3, 253 Michigan 1, 475,124 1, 645, 224 726,468 778, 286 Missouri 28,622 34,071 7,626 8,077 New Jersey 377, 694 397, 745 190,020 251,047 WewAKWaoo 141 150 New York 3,253,404 3,597,307 1,018, 968 1,133, 806 North Carolina 29, 421 31, 957 Ohio 815, 690 876, 354 561, 235 631, 551 Oregon 98,255 106,508 5,414 6,745 Pennsylvania 150 156 South Carolina 2, 585 2, 663 Texas 13, 353 13, 837 Virginia 93,418 98,523 102,179 135,577 -Washington 947,519 1,004, 391 406, 816 476,946 Wisconsin 2, 217 2,380

Total 14, 823,100 16, 652, 740 53, 788, 977 1 63, 103, 862 I In producing fortified wine a total of 17,789,697 proof gallons of brandy were used. REPORT OF COMMISSIONER OF INTERNAL REVENUE 169 168 REPORT OF COMMISSIONER OF INTERNAL REVENUE 80.-Still wine: Materials used in production,' by kinds and by States, TABLE 81.-Sparkling wine: 1 Production and tax-paid withdrawals, by months, TABLE fiscal year 1940 fiscal year 1940 [Number of half-pint units a] Kind Arkansas California New Jersey New York Tax-paid withdrawals Month Production A. Fruits, berries, etc. (pounds): 973,553 9, 594,890 2, 960, 581 1, 395, 894, 319 In half In other Grapes 32, 593, 534 28, 900 8, 350 Total In pints In quarts sizes Raisins 285, 844 837, 139 5, 292,347 pints Blackberries 96, 719 4,250 Apple 13, 887 7, 440 17, 250 Loganberries 168,203 July 387,098 402,937 96,089 127,004 175,028 4, 836 Cherries 40,933 29, 050 August 328,062 423,854 93, 647 67, 882 257,508 4,817 Pears September 412, 698. 684, 488 123,388 110,792 445, 524 4,779 Prunes October 538,798 1,009, 596 158, 762 152, 216 688, 804 9,819 Grapefruit 59,925 42, 724 November 755,196 1, 166, 718 186, 884 160,320 803,780 15, 734 Peaches 16, 700 December 959, 471 2,025, 752 301, 235 272,824 1, 431, 512 20, 181 Oranges January 622, 181 497, 394 7Z 604 92, 290 329, 152 3, 348 Currants February 35%653 286, 684 66, 809 40,806 174, 648 4,421 Plums 1, 545 March 922, 345 342, 735 72, 340 51,052 211, 708 7, 635 Elderberries 2, 860 April 889, 705 369, 511 82, 595 72, 398 204, 416 5,102 Youngbrie 23, 179 27, 650 May 1, 800, 958 483, 50 1 93, 919 89, 862 298,608 6, 612 Apricot er June 1, 665, 126 688, 425 159,888 94, 472 425, 244 8, 841 Raspberries 30 048 44,628 Other 11,491 3,140 597 Total 9, 634, 791 8, 376, 590 1,507, 620 1, 326, 918 5, 445, 932 96,120 B.Juices. including concentrates (gallons): 76, 732 3, 231 1, 103, 988 Grape 18, 170 301,879 37,926 Apple 130,628 165,230 Includes champagne, other sparkling Woe, and artifically carbonated wine. Blackberry IL 600 Reported figures have been converted to one-half pin units. Data on sparkling wine are reported to the Currant Bureau in bottles and other containers of varying sizes, according to the number of taxable units contained. Peach 9,350 The tax is payable "on each one-half pint or fraction th reof" of "each bottle or other container," except in Cherry 11, 250 the ease of artificially carbonated wine. From the passage of the Liquor Tax Administration Act of June 26, Loganberry 1936, through June 30, 1940, the tax on artifically carbonated wine was payable "on each one-pint or fraction Other 37 thereof" of "each bottle or other container." 3 Represents 35,808 half-pint units in three-fourths quarts; and 00,312 half-pint units in magnums. Washing- All other Total Kind Ohio Oregon ton States 1 T kBLE 82 -Sparkling wine: 1 Number of producers, production, withdrawals, losses, and stocks on hand June 30, by States, fiscal year 1940 A.Fruits, berries, etc. (pounds): 3 17, 312, 640 I, 444, 585, 302 [Quantities in half pint units 2) Grapes 9, 622, 153 416,007 7, 811, 159 +465,250 33,096,039 Raisins 789, 407 134, 019 596, 075 5 2, 269,130 10,300,6811 Withdrawals Blackberries 703, 337 403, 935 3, 088, 984 120, 011 4, 341, 844 Number of On hand Apples 225,598 1,051,628 11,925 1,306,401 State producers Production Losses June 30 Loganberries 923, 873 operating 2 Cherries 144, 39,070 298,165 209, 383 816,87: Tax-paid Other 250 I Pears 609, 570 207,052 960,091 Prunes 460,091 426,384 Grapefruit 3 426, 384 Arkansas 10, 503 8,472 67 2,252 2,500 299,373 411,22: California 2, 393, 549 1, 753, 656 98, 455 170, 283 3, 245, 432 Peaches 379, 38, 5, 512 2,888

379, 384 234,978 242,394

Florida Oranges 21,937 208,960 67, 334 298, 231 Georgia Currants ' 703 1, 645 247, 891 Illinois 84, 732 138 36, 766 Plums 6, 290 260 76,434 . 8.5,8A Massachusetts 1,126 178 3,528 Elderberries 72,40: 198, 337 157, 404 5, 819 54, 428 Youngberries 45, 155 4,067 50, 50( Michigan Apricots 32,621 Missouri 592, 600 714, 208 201, 417 75. 209 1, 710,111 580 126 1, 875 New Jersey 1, 848, 816 1, 697, 592 130, 851 15, 739 832,602 Raspberries 7, 385 14, 990 37, 166 8, 339 127, 731 New York 3, 975, 161 3, 390, 462 9,019 171, 872 6, 296, 591 Other Ohio 327,062 267,318 51,440 1,0 13, 877 B. Juices, including concentrates (gal- Oregon 1,070 lons): 91, 896 29, 312 1,938, 70 Pennsylvania 168 1,980 798 1,032 Grape 615, 371 I- 7 140, 673 1, 640, 81 I 6, 560 7, 306 1, 764 80, 381 28, 810 920, 518 Rhode Island .4 Cq Apple 226,08 401 3,352 Blackberry 23,956 564 401 24,330 61,45 Washington 2,057 1,392 2,912 L 500 5% 950 Wisconsin 51,728 45,594 _ 710 6,460 Currant 49,24 Peach 49, 249 12,127 413 2,000 2317, 89 Total i 118 9, 634, 791 8, 376, 590 b 446,940 497, 286 13, 207, 501 Cherry 4,728 1, 307 . 28 Loganberry 2,902 438 7, 221 10,59 One Includes artificially carbonated wine as follows: Production. 1,453,629; tax-paid withdrawals, 1,487,407; other withdrawals, 39,263; losses, 16,136; and on hand June 30, 282,936 half-pint units. Exclusive of sugar and other sweetening material. Represents fermenting material erushed or presse s, See footnote 2 of table 81. and deposited in tormenters for the production of wine, including wine used in the production of brandy. Number operated during any part of the year. States in which more than 250,000 pounds or 100,000 gallons of a given material were used, are footnoted. In addition, 6 bonded storerooms in California, 1 in New Jersey, 2 in New York, and 1 in Pennsylvania. 2 I Includes 259,386 pounds used in Maryland, 14,936,987 pounds in Michigan, 282,776 pounds in Missouri, 2 All converted into still wine with the exception of 3,880 half-pint units removed for export in California, and 609,005 pounds in North Carolina. Missouri, and New York, and 48 half-pint units removed for use of United States. Includes 441,000 pounds used in Louisiana. Includes 1,444,858 pounds used in Georgia and 272,205 pounds In Maryland. Used in Florida. Includes 104,565 gallons used in Virginia.

269679-40-12

REPORT OF COMMISSIONER OF INTERNAL REVENUE 171 170 REPORT OF COMMISSIDONER OF INTERNAL REVENUE

Tax-paid withdrawals and stocks on hand June 30, TABLE 85.- Vermouth: I Number of premises operated, production, withdrawals, TABLE 83. -Sparkling wine: 1 by size of container and by States, fiscal year 1940 losses, and stocks on hand June 30, by States, fiscal year 1940 [Number of half-pint units [Quantities in wine gallons]

On hand June 30 Withdrawals Tax-paid withdrawals Number of Produc- On hand State premises Losses June 30 operated tion State In other In half In other 1 Tax-paid For export In half In pints In quarts In pints In quarts sizes pints sizes pints 156,181 76,840 845 5,484 71,189 California *1. 680 Connecticut 970 18 293 5,281 2,496 p42 1,030 11 696 C". 101 Arkansas 31, 133 64, 440 713,892 2, 447, 380 19, 720 Illinois 636 6,936 2,269 California 69, 795 282, 260 1,390, 468 Maryland 386 10D 12 5, 500 " 4,167 198 880

Florida Massachusetts : 71 1,778 22,386 220,008 Georgia 960 10, 494 25,312 New Jersey 81, 937 94,185 407 1, 287 15, 485 Illinois 240 16, 532 67,960 . 237, 978 209, 037 987 7, 313 84, 465 246 880 840 2,688 New York Massachusetts 9, 768 40,836 Ohio 564 1,703 177 1,688 65,8156 20,708 70,840 3,824 15 227 Michigan 500,112 3,632 11,953 238, 578 I, 440,180 19,400 Virginia Missouri . 81, 028 123,436 548,880 12, 016 796, 620 103, 940 770, 288 26,744 57,584 214, 122 New Jersey 27, 330 55,139 1, 220, 302 5, 018, 192 2,958 Total 126 479,074 394, 245 2,239 14, 578 176,576 New York 465, 618 526, 378 2, 371, 136 45, 424 210, 528 5,985 7,535 294, 628 701, 020 10, 694 Ohio 5, 381 788 282 Oregon 120 336 576 I For production of vermouth at rectifying plants, see table X. Pennsylvania 24 144 Number operated during any part of the year. 72 6, 488 Rhode Island 1,462 1, 890 Washington 96 1,296 2, 502 43,092 6,460 Wisconsin TABLE 86. -Enforcement, Alcohol Tax Unit: I Seizures and persons arrested, by 202,097 2, 706, 240 10, 232, 204 4 66, 960 months, fiscal year 1940 Total 1,507,620 1, 326,918 5, 445, 932 3 96,120

Seizures 1 Includes artificially carbonated wine as follows: Tax-paid wihdrawals-in half pints, 344,914; in pints, 394,410; in quarts, 694,620; and n other sizes, 53,463 half pint units stocks on hand June 30-in half pints, 25,495; Persons in pints,91, 682; in quarts, 151,848; and in other sizes, 13,911 half-pint units. Month Property arrested See footnote 2 of table 81. Distilled Auto- Represents 35,808 half-pin units in three-fourths quarts and 60,312 half-pint units in magnums. Stills spirits Mash mobiles Trucks (appraised 8 Represents 18,861 half-pin units in three-fourths quarts; 48,008 half-pint units in magnums; 52 half-pint value) 4 units in maximums; and 39 half-pint units in jeroboams. Gallons Gallons I Production and tax-paid withdrawals, by months, fiscal 859 19,867 449,004 342 32 $138,700 2, 157 TABLE 84. - Vermouth: Augusustt 983 23, 210 559, 061 335 37 174, 421 2, 279 year 1940 September 872 23, 548 667, 358 347 43 165, 132 2, 205 October 898 22,338 528, 059 362 28 177, 597 2, 205 [Wine gallons] November 885 28, 354 537,465 350 . 41 192, 838 2,087 December 978 21, 755 694,727 304 44 185, 880 2, 110 Tax-paid withdrawals January 719 17, 019 423,361 267 26 161, 997 1, 889 February 786 22, 607 542, 718 371 32 173, 505 2, 069 March 924 22, 856 490, 926 339 47 167, 199 2, 288 April 864 19, 309 452,554 317 42 144, 940 2,038 Produc- May 984 30, 455 646 136 363 43 189, 032 2, 259 Month tion Not over 911 21, 278 488, 872 368 44 171,610 2, 072 Total 14 percent June alcohol Total 10, 663 264, 594 6, 480,240 4,065 458 2, 042, 851 25, 638

I Includes seizures and arrests in cases adopted as well as eases originated by the Alcohol Tax Unit. 13,312 13, 312 22,077 ' Not including stills set ed at cleaning and cracking plants. July 16,111 16,111 August 13,019 3 Nat including 2,014gallons of denatured alcohol seized at cleaning and cracking plants. 35, 449 22,858 22, 580 278 September 66,806 38, 233 38.030 203 October 32, 616 39, 921 39,766 155 November 28,942 51,105 50, 838 269 December 28,333 135 January 54, 785 24, 468 37, 595 25,878 89 25, 569 225 February 33, 710 8 45,012 33, 718 March 50, 408 30,311 30, 259 April 24, 026 29, 595 44 29, 476 May 50 64, 562 June 68, 339 64, 735 178 392, 544 1, 523 Total 479, 074 394, 245

I For production of vermouth at rectifying plants, see table 67.

172 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE. 173 TABLE 87.-Enforcement, Alcohol Tax Unit: 1 Seizures and persons arrested, by TECHNICAL STAFF States, fiscal year 1940 TABLE 88.-Analysis of the work of the Technical Staff during the fiscal year 1940- Seizures Income, profits, estate, and gift tax cases FIELD OPERATIONS- State Persons ALL DIVISIONS, CONSOLIDATED Distilled Wine Auto- Property arrested Stills Mash Trucks (appraised PART I- CASES NOT BEFORE THE BOARD OF TAX APPEALS spirits mobiles alue) (A) PROGRESS OF WORK

Gallons Gallons Gallons 2 Alabama 1, 227 20, 590 426, 625 406 $146, 920 2, 316 Arizona 3 28 180 55 1 .-"CN 449 13 Revenue agent's finding or statutory notice Arkansas 205 2,097 78,815 1 61 41,676. 416 Number

California 100 2, 628 40, 702 30, 070 17 g". 7, 482 221 of cases Deficiency in Overassess- Colorado 6 25 360 1 366 17 tax Penalty Connecticut 25 1, 800 17, 195 62 30 12, 907 98 meat

Delaware 17 73 1, 855 10 460 46 District of Columbia _ 3 725 750 15 1, 365 48 Pending at beginning of year: Florida 14,807 346,534 181 273 527 146,674 1, 260 Awaiting Staff action 3,772 $55, 121, 232 $1, 173, 647 Georgia 1, 501 40, 739 1, 002, 750 343 204, 674 2, 912 Awaiting taxpayer's action on statutory $1, 907, 371 Hawaii 3 87 602 29 1 321 103 notice directed or sustained 380 3,176, 772 1 8, 657 2 30, 797 Idaho 4 109 11 Received during year (net-transfers, etc., Illinois 99 11,384 256,014 3 72 69,313 357 deducted) 9,892 123, 741, 971 Indiana 85 3,593 54, 922 ss 25,286 251 1, 995, 959 4, 709,191 Iowa 3 714 350 51 28 4,993 103 Total 14, 049 182, 039, 975 Kansas 10 910 1, 910 151 73 28, 342 123 3,178, 263 6, 638, 609 Kentucky 596 10, 260 145, 709 159 61, 157 1, 555 Disposed of: Louisiana 66 75 1,799 535 3 2,811 115 Closed 7, 452 65, 087, 482 Maine 1 286 25 250 3 1,860 139 Petitioned to Board 1,046, 745 4, 040, 973 mt 1, 549 I 19, 798,260 442, 829 Maryland 202 4, 167 89, 917 7, 103 50 ,ON 39,016 380 127,972 Massachusetts 41 3,303 62,235 47 14 10, 045 101 Total disposed of 9, 001 74, 885, 742 Michigan 74 1, 855 6, 233 2, 210 21 11, 618 134 1, 489, 574 4, 168, 945 Minnesota 21 516 677 2, 580 12 6, 918 165 Pending at end of year: Mississippi - 451 6, 941 173, 488 134 74, 988 1, 192 Awaiting Staff action 3, 487 70,993, 697 1, 183, 933 Missouri 34 1, 329 3, 521 123 82, 859 512 Awaiting taxpayer's action on statutory 2, 329, 463 Montana 4 13 53 400 122 8 notice directed or sustained 1,556 I 36,160, 536 I 504, 756 Nebraska 9 3 547 420 1 994 39 140, 201 Nevada 2 4 1,711 12 Total 5, 043 107, 154, 233 New Hampshire 1 83 200 256 2 1, 047 83 1, 888, 889 2, 469. 664 '''

New Jersey 48 7, 769 707, 259 33 30.605 258 New Mexico 8 5 161 6 2 415 27 2 44 ?4 Denotes amount of statutory notices directed or sustained by Staff divisions. New York 934 27, 520 711, 454 11, 285 267 271, 480 1, 538 North Carolina 1,113 28,189 680, 551 468 174, 672 2, 456 North Dakota 12 43 68 1 325 22 (B) RESULTS OBTAINED IN CASES CLOSED Ohio 322 10, 133 91, 277 210 133 91, 030 700 ,2 i Oklahoma 321 3, 268 74, 310 19 131 65, 962 884 Oregon 11 111 710 27 7 4,345 45 Staff decision Pennsylvania 280 6, 119 165, 181 17,983 128 89,851 1, 317 Number Rhode Island 17 965 8, 931 701 11 2, 715 55 of cases South Carolina 612 11, 410 291,285 216 85, 981 914 Deficiency in Overassess- South Dakota 1 2 900 7 tax Penalty ment Tennessee 761 15, 755 929,481 274 113, 773 1,356 Texas 484 3,053 88, 798 142 52,021 1, 084 Utah 1,065 7 Agreements on original consideration (including Vermont 2 180 34 agreed overassessments and agreed claim rejec- 48 ______a- tions) Virginia 683 18, 989 472, 117 3, 987 292 100, 509 1, 551 5, 852 $19, 497, 875 $150,342 $1, 594, 257 Washington 22 107 608 1, 284 7 3, 028 52 Agreements on reconsideration after statutory West Virginia 210 1, 141 24,201 ______26 -- 12,087 685 notice directed by Staff 82 414, 492 Defaults after consideration by Staff in pre-90- 1, 814 Wisconsin 9 2, 132 20, 050 941 4 13, 330 16 Wyoming day or 90-day status (no petition filed) 761 2,409, 465 82,134 0,058 Unagreed overassessments and claim rejections 757 944 1, 339, 124 Total 2 10, 663 3 264, 594 6, 980, 240 83, 732 4, 065 458 2, 042, 851 25, 638 Total 7, 452 22, 322, 576 232,476 2, 975, 253 ' Includes seizures and arrests in cases adopted as w 11 as in cases originated by the Alcohol Tax Unit. Not including still seized at cleaning and cracking plants. Percent of deficiency in tax sustained, 90.5. Not including 2,014 gallons of denatured alcohol seized at cleaning and cracking plants. (C) RESULTS ON STATUTORY NOTICES SUSTAINED BY STAFF OR ISSUED AT DIREC - TION OF STAFF On hand July 1, 1939. Statutory notices directed, issued, or sustained, and pending ex- piration of 90-day period 380 Add statutory notices directed, issued, or sustained by Staff: Income tax 3, 335 Estate tax 177 Gift tax 60 3, 572 174 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INFERNAL REVENUE 175

TABLE 88.-Analwas of the work of the Technical Staff during the fiscal year 1940- PACIFIC DIVISION ONLY-FISCAL YEAR 1940 Income, profits, estate, and gift tax cases-Continued CASES NOT BEFORE BOARD OF TAX APPEALS (C) RESULTS ON STATUTORY NOTICES SUSTAINED BY STAFF OR ISSUED AT DIREC- TION OF STAFF-Continued On hand July 1, 1939. Number of cases Disposed of: Received: 374 By settlement, after statutory notice directed by Staff action: Number of cases 82 Number of cases (net-transfers, etc. deducted) 888 Deficiency and penalty-Staff decision $528, 600 Deficiency and penalty, prior finding $5, 896, 921 Deficiency and penalty-Staff decision on reconsideration $414, 492 Overassessment, prior finding Overassessment-Staff decision $1, 018 $346, 558 Overassessment-Staff decision on reconsideration $1, 814 Disposed of by agreement: Number of cases Defaulted by taxpayer, after statutory notice issued or sustained: 672 Number of cases 761 Deficiency and penalty, prior finding Deficiency and penalty $2,491,699 $3, 801, 295 Overassessment $40,058 Deficiency and penalty, Staff decision Overassessment, prior finding $1, 839, 841 By petition to Board, from statutory notice sustained, or issued by Staff direction: $229, 525 Number of cases 1, 549 Overassessment, allowed by Staff Deficiency and penalty-Agent's finding 822 241, 089 $202, 065 Deficiency and penalty-Staff decision $20, 059, 922 Disposed of without agreement: Overassessment-Agent's finding $127, 972 Number of cases (net-transfers, etc., deducted) 410 Overassessment-Staff decision $115, 211 Deficiency and penalty, prior finding Transfers and adjustments 4 $3, 712, 890 On hand June 30, 1940. Statutory notices directed, issued, or sustained, and pending ex- Deficiency and penalty, Staff decision $3, 492, 409 piration of 90-day period 1,556. Overassessment, prior finding $162, 493 Overassessment, allowed by Staff $19, 040 PART II-CASES DOCKETED BY BOARD OF TAX APPEALS On hand June 30, 1940: Number of cases (A) PROGRESS OF WORK 180 Deficiency and penalty, prior finding $1, 690, 977 Overassessment, prior finding $48, 600 Amount stated in statutory notice Number PACIFIC DIVISION ONLY-FISCAL YEAR 1940 of cases Deficiency in Overassess- tartax lt merit CASES DOCKETED BY BOARD OF TAX APPEALS On hand July 1, 1939. Number of cases 710 Pending at beginning of year 4,982 $176,842,312 811, 772, 622 $103,005. Received: Number of cases (net-transfers, etc., deducted) Received during year (net-transfers, etc., Deficiency and penalty, asserted 592 deducted): $9, 542, 305 Cases considered before petition 1, 497 Overassessment, prior finding Cases not considered before petition X 694 Disposed of by stipulation: $30, 695 Cases reopened after trial 65 Number of cases 452 Total receipts 4, 266 76, 307, 548 3, 680, 045 259, 684 Deficiency and penalty, asserted $10, 101, 370 Deficiency and penalty, as stipulated Total to be accounted for 9,268 253, 149,880 15,332,667 362,689 Overassessment, prior finding $2, 323, 974 $878 Disposed of during year: Overassessment, by agreement $124, 711 Closed by stipulation-agreed settlement_ 3,285 83, 890,007 3, 809,016 39, 343 Disposed of by dismissal and default: Closed by stipulation filed pursuant to offer Number of cases in compromise 30 6,350,884 1,466,607 42 Closed by dismissal or default 287 3, 518,986 828, 872 4,044 Deficiency and penalty, asserted $647, 125 Tried before Board on merits 1, 301 33,948, 388 1,055,060 22,764 Disposed of by trial before Board: Number of cases Total disposed of 9,883 127, 728,265 7, 159,465 68,161 267 Deficiency and penalty, asserted $8, 922, 810 Pending at end of year: Overassessment, prior finding In bands of technical advisors 2,077 80, ON 067 5,181,260 138, 773 $22 In hands of the division counsel 2, 278 45,391,538 2.691, 962 157, 785 On hand June 30, 1940: Number of cases Total 4,355 125,441,595 X 173,212 296, 538 541 Deficiency and penalty, asserted $12, 702, 158 Overassessment, prior finding $30, 560 (B) RESULTS OBTAINED IN STIPULATED CASES NEW YORK DIVISION ONLY-FISCAL YEAR 1940

Number Stipulated Percentage CASES NOT BEFORE BOARD OF TAX APPEALS of cases amount sustained On hand July 1, 1939. Number of cases Received: 432 Stipulations filed: Percent Agreed settlements 3.285 Number of cases (net-transfers, etc., deducted) $24,169, 327 29 1 1,897 Deficiency in tax Deficiency and penalty, prior finding $25, 661, 577 Penalty 276,397 7 Overassessment, prior finding Overassessment 884, 606 $2, 133, 637 Pursuant to accepted offer in compromise 30 1, 559, 761 22 Disposed of by agreement: Number of cases Total 3,315 1, 151 Deficiency and penalty, prior finding $13, 221, 105 Deficiency and penalty, Staff decision $4, 759, 626 No7E-The above figures are compiled on the basis of considenng that a ease referred to the Staff is Overassessment, prior finding still pending, unless and until it is closed by no petition being filed with the Board, by agreement or stipula- $920, 474 tion by dismissal or default, or by trial before the Board on the merits. However, the pertinent data at the Overassessment, allowed by Staff $631, 666 distinctive stages in procedural status are readily recognizable. 'About one-halt of these receipts occurred in last 4 months of fiscal year. 176 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 177 NEW YORK DIVISION ONLY-FISCAL YEAR 1940-Continued OFFICE OF CHIEF COUNSEL CASES NOT BEFORE BOARD OF TAX APPEALS-Conti/Med TABLE 90.-Cases appealed to the United States Board of Tax Appeals, including those appealed from Board decisions to appellate courts, for fiscal year 1940 Disposed of without agreement: Number of cases (net-transfers, etc., deducted) 547 APPEALS DIVISION-WASHINGTON OFFICE Deficiency and penalty, prior finding $11, 736, 530 Deficiency and penalty, Staff decision $11, 900, 163 Pending beginning of fiscal year 1, 267 Overassessment, prior finding $776, 566 Filed-new cases 39 Overassessment, allowed by Staff $755, 978 Received from field for appeal to Circuit Courts of Appeals 318 On hand June 30, 1940: Number of cases_ 631 1, 624 Deficiency and penalty, prior finding $13, 179, 627 Closed: Overassessment, prior finding $653, 152 By default, dismissal, etc 19 By decision on merits 755 NEW YORK DIVISION ONLY-FISCAL YEAR 1940 By agreed settlement 32 CASES DOCKETED BY BOARD OF TAX APPEALS Total closed 806 Transferred to field-remanded for further hearing 9 On hand July 1, 1939. Number of cases 1, 164 Received: Total 815 Number of cases (net-transfers, etc., deducted) 802 Deficiency and penalty, asserted $21, 044, 013 Pending end of fiscal year 809 Overassessment, prior finding $87, 319 Disposed of by stipulation: TABLE 9L-Number, and amounts, of cases shown in table 90 for the fiscal year 1940 Number of cases 703 only, by class of tax and amounts involved Deficiency and penalty, asserted $32, 531, 153 Deficiency and penalty, as stipulated $6, 249, 507 Filed, reopened, Overassessment, prior finding $13, 799 Closed and trans- $351, 591 Pending July I, 1939 and received 'erred to field, Os- Pending Tune 30, Overassessment, by agreement tram Held, fiscal cal year 1940 1940 Disposed of by dismissal and default: Class of tax year 1940 Number of cases 48 Deficiency and penalty, asserted $195, 129 Num- Amount in Num- Amount in Num- Amount in Num- Amount in Disposed of by trial before Board: ber dispute ber dispute ber dispute ber dispute Number of cases 272 Deficiency and penalty, asserted $9, 844, 889 Income 1,140 $111, 519, 851 296 $12, 491, 972 741 $61, 816, 914 695 $62, 194, 909 On hand, June 30 1940: Estate 84 15,133, 245 29 10, 571, 673 48 1, 733, 582 65 23, 971, 336 943 Gift 41 1, 578, 338 32 470, 977 24 1,122, 465 49 926, 850 Number of cases Unjust enrichment - 2 751 2 751 Deficiency and penalty, asserted $39, 492, 486 Overassessment, prior finding $102, 987 Total 1, 267 128, 232, 185 357 23, 534, 622 815 64, 673, 712 809 87, 093, 095 of work on compromise, extension of time, and final closing TABLE 89.-Analysis TABLE 92.-Circuit and Supreme Court cases pending June 30, 1940 agreement cases, fiscal year 1940

Extension Final dos- New appeals to comm. Pending July 1, Circuit Courts of Closed during fiscal Pending June 30, Cases Elise eases of time mg agree- cases went cases 1940 Appeals and re- year 1940 1940 Class of tax opened 62 452 24 On hand July 1, 1939 946 148 261 Num- Amount in Num- Amount in Num- Amount in Num- Amount in Received (net) ber dispute ber dispute her dispute ber dispute Total to be disposed of 1,398 172 323 Income 552 $39, 153, 141 392 $30,072,202 $18,869,620 262 $9, 788,681 ?2 Accepted, granted, or approved 235 14 374 157 1 Estate 28 3,863,852 5,435,602 23 323,853 8,975, 601 Rejected Gift 18 1,298, 012 490,067 15 1,060,856 727,223 104 Withdrawn 76 Transferred Total 598 44,315,005 451 15,714,350 430 31,456,911 619 28, 572, 444 263 Total disposed of 789 171 60 On hand June 30, 1940 609 1 TABLE 93.-Status of cases pending before United States Board of Tax Appeals June 30, 1940 Unanswered 16 On reserve calendar 1 Inactive for other reasons 72 In process of preparation: On field calendar . 4 Ready for trial but not set: On Washington calendar Tried by Board of Tax Appeals: Awaiting decision 36 Awaiting expiration of appeal period 60 Total 190

178 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 179

TABLE 94.-Progress of cases in appella e courts on appeals from decisions of the TABLE 98.-Disposition of cases by United States Board of Tax Appeals during United States Board of Tax Appeals for the fiscal year ended June 30, 1940 fiscal year 1940

In cir- In Su- In cir- In Su- Amount in dispute preme Amount approved Cases cult preme Cease cuit N-u Per c courts Court courts Court Character ofof dosing ber mfo Net result age enfo awes Deficiency Deficiency Over- recovery payment Payment

Closed during fiscal year: ,-i M 00 N Pending beginning of fiscal year: co M 166 Favorable to Commissioner _ 200 Appealed by Commissioner_ 139 Appealed by taxpayers 392 Favorable to taxpayers _ .. _ _ _ Default 271 $4, 658, 695 $13, 881 $4, PA 617 $4,382,498 93.8 Appealed by both 29 Modified 62 Decision on merits I, 035 16, 301, 994 667, 572 8, 629, 231 $334, 649 8,962,154 52.8 Agreed settlement 3,315 95, 516,414 29 8, 421, 201 26,005, 485 923,637 33, 503, 099 32.2 Total 587 11 Total 401 Total 4,621 116, 477, 103 9, 102, 659 39, 003, 333 1, 258, 286 46, 847, 701 37.3 Appealed during fiscal year: Pending end of fiscal year: Transferred to Washing- 153 27 Appealed by Commissioner_ 181 11 ton 2 6,281, 206 By Commissioner 9 37, 825 By taxpayers 291 11 Appealed by taxpayers 398 By both 7 Appealed by both 20 Total 4,623 122, 758, 309 9,140, 479 20 Total 451 38 Total 599 PROCESSING TAX SECTION

TABLE 95.-Results obtained in cases closed before the United States Board of Tax TABLE 99.-Cases appealed to United States Processing Tax Board of Review, Appeals during the fiscal year 1940 including those appealed to appellate courts, fiscal years 1938, 1939, and 1940

Percentage Amount I Amount won Character of closing Number of cases dispute n of 1938 1939 1940

Pending beginning of fiscal year 19 $66,578 $66,578 100.00 4 52 83 Default Filed during year 54 107 120 Decision on merits 755 19, 135, 688 866 38.90 32 45, 100, 339 8, 828, 279 19. 57 Agreed settlement Total 58 159 203 Total 806 64, 302, 605 16, 330, 718 25.40 Closed: By dismissal 6 76 V' By agreed settlement :1

By decision on merits 1 TABLE 98.-Disposition of cases by Uni ed States Board of Tax Appeals during the fiscal year 1940 Total 6 76 110

Amount approved Amount In dispute TABLE 100.-Number and amounts of cases shown in table 99 for the fiscal year 1940 Number Percent- Character of closing of eases Net result age only, by class of tax and amounts involved Overpay- Overpaym ent - Deficiency meat Deficiency Pending July 1, Filed during fiscal Closed fiscal year Pending June 30, 1939 year 1940 1940 1940 $66.578 100.00 Default 19 $66,578 $66,578 Class of tax 17, 903, 654 $1, 232, 035 7, 226, 034 $1,022, 203 7, 435.866 38.90 Decision on merits- _ _ 755 19.57 Agreed settlement 32 93, 539, 804 1, 560, 535 7, 267, 739 8,828, 274 Num- Amount in Num- Amount In Num- Amount in Num- Amount in ber dispute 25.40 ber dispute ber dispute ber dispute Total 806 61, 510, 036 2, 792, 570 14, 560, 351 1, 022, 203 16, 330, 718 Processing 83 $5, 294, 362 120 $5, 619, 074 110 $3, 016, 215 93 67, 897, 221 FIELD OFFICES TABLE TABLE 97.-Number, and amounts, of cases pending in field divisions by class of tax 101.-Status of cases pending before United States Processing Tax Board of and amounts involved Review June 30, 1940 Imperfect appeals 7 Unanswered 23 Filed and reopened, Closed, fiscal year Pend ng June 30, Set for trial: Pending Tune 30, 1939 1990 fiscal year 1940 1940 On Washington calendar 3 Class of tax On field calendar 10 Num- Amount in Num- Amount in Num- Amount in Num- Amount In dispute Motions to dismiss submitted to Board of Review: ber dispute ber dispute ber dispute ber Awaiting decision 14 Awaiting expiration of appeal period 22 Income 5, 106 $167, 667, 666 3, 853 $76,105, 886 I 4, 079 496, 457, 564 4, 880 $147, 315, 998 Circuit court of appeals: Estate 354 25, 674, 317 260 16, 308, 513 312 20, 258, 402 302 21, 724, 428 Awaiting decision 25, 731, 765 110 3, 242, 274 5 232 5 15,182, 832 206 13, 791,207 11 Gift 328 Awaiting expiration of appeal period 3 Total 5,788 219, 073, 748 4, 223 95, 656, 673 4,623 131, 898, 788 5,388 182, 831,633 Total 93 Includes one case with an asserted deficiency of $984,950 which was transferred to the Bureau in Wash- ington for considers ion. Includes one case with an asserted deficiency of $5,296,256 and a claimed overpayment of $37,825 which was transferred to the Bureau in Washington for consideration.

REPORT OF C'OMMISSIONER OF INTERNAL REVENUE 181 180 REPORT OF COMMIS'SIO'NER OF INTERNAL REVENUE CIVIL DIVISION TABLE 102.—Results obtained in cases closed before the United States Processing Tar Board of Review during fiscal year 1940 TABLE 106.—Cases received and disposed of during the fiscal year 1.940 3 Pending July 1, 1939: Amount of Percentage Number Amount of claims of claims In court (exclusive of lien cases) 188 Number recovered Character of closing claims in recovered Not pending in court 585 of °°°°° dispute by tax- by tax- Cases in court involving liens payers payers 623 Cases not in court involving liens 48 89 $1, 811, 145 0 Total Dismissals 9 323, 657 $12, 668 3. 90 3, 444 Agreed settlement 12 881, 413 71 .01 By decision on merits Received during the year: 3,016, 215 12, 739 .42 Total 110 Suits by taxpayers 1, 352 Suits involving liens 959 Cases for suit by the United States 235 103.—Number of civil cases in Processing Tax Section, Appeals Division, Lien cases not in court 345 TABLEpending June 30, 1939, and June 30, 1940, and number decided by courts during- fiscal year 1940. Total 2, 891

Cases pending Cases decided Total to be disposed of 6, 335 Closed during the year: For Against Courts June 30, June 30, Govern- Govern- Total Cases (exclusive of lien cases) 1,402 1939 1940 ment ment Cases involving liens 1,273

20 97 3 3 6 Total 2, 675 District courts 1 2 Circuit courts of appeals 12 13 4 3 7 Pending June 30, 1940 Court of Claims 0 4 3, 660 Supreme Court 33 116 7 Pending July 1, 1939 Total $203, 802, 941. 45 Received during fiscal year 44, 723, 455. 46 104. Interpretative, corporate reorganizalon, and bankruptcy and receiver- Total 248, 526, 396. 91 TABLEship cases disposed of by Processing Tax Section, Appeals Division, during Closed during fiscal year 43, 862, 197. 70 Pending June 30, 1940 204, 664, 199. 21 Corporate Bankrupt- I Excludes bankruptcy, receivership, insolvency, compromise, and liquor cases. Interpre- reorgani- cy and re- cationzation eeivershiP TABLE 107.—Results obtained in cases closed during the fiscal year 1940 I

22 1 12 Cases pending July 1, 1939 30 14 59 Recovered Cases receiviid during fiscal year Number Amount Amount of cases claimed (tour tax- refunded 52 15 71 PaYet3 Total 41 4 38 Cases disposed of during fiscal year 11 33 Snits instituted by taxpayers 1,152 $31, 015, 356. 87 $10, 11 287, 890. 17 Cases pending June 30, 1940 Suits and claims by the United States 115 8,181, 289. 98 $4, 708, 666.31 Injunctions—Processing taxes 113 4, 297, 946. 24 Injunctions—Social security taxes 22 18, 639.09 105.—Review cases received and disposed of by the Processing Tax Section, Total 1, 402 43, 513, 232.18 4, 708, 666. 31 10, 287, TABLE Appeals Division, for the fiscal year 1940 890. 17 I Excludes bankruptcy, receivership, insolvency, compromise, lien, and liquor cases. Cases Claims Amount TABLE 108.—Results obtained in lien cases closed during the fiscal year 1940 $9,879, 485. 65 On band beginning of fiscal year 147, 436i 359. 76 Received during the year Number Amount 157, 315, 845.31 of cases collected Total 129, 505, 632.27 Disposed of during the year 27, 810, 213.04 Lien cases pending in court $350, 945.20 On hand end of fiscal year Lien cases not pending in court 137, 149. 30 1, 273 488, 094. 50 182 REPORT OF COMMISSIONER OF INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 183

TABLE 109.-Civil cases pending at the beginning and end of the fiscal year 1940 1 INTERPRETATIVE DIVISION

Pending Pending TABLE 113.-Number of cases received and disposed of during the fiscal year 1940 July 1, June 30, 1939 1940 Cases on hand July 1, 1939 ------335 Cases received during the year ------2, 314 For suit by the United States ------247 234 • Pending in district courts ------1, 700 1, 951 Total ------2, 649 Involving liens ------671 702' Pending in circuit court of appeals ------97 113 Pending in Court of Claims ------538 56z Cases disposed of during the year ------2, 351 Pending in Supreme Court ------2 Pending payment of judgment claims ------119 89. Cases awaiting action June 30, 1940 ------298 State courts and miscellaneous ------70 8 Total ------3, 444 3, 660 REVIEW DIVISION

1 Excludes bankruptcy, receivership, insolvency, compromise, and liquor cases. TABLE 114.-Number of cases received and disposed during the fiscal year 1940 TABLE 110.-The number of Civil Division cases tried by the Department of Justice Estate and and the number decided by the courts during the fiscal year 1940 other miscel- Income tax Total laneous taxes

Cases decided On hand July 1, 1939 ------11 101 112 Received to July 1, 1940 ------80 504 584 Courts Partly for Cases tried For the Against and partly Total ------91 605 696 Govern- Govern- against Total Disposed of during year ------70 492 562 ment ment Govern- ment On hand July 1, 1940 ------21 113 134 Amounts involved: District courts ------220 222 118 22 362: Claimed by taxpayer ------$4, 237, 144. 15 $127, 274, 100. 14 $131, 511, 244.29 Circuit court of appeals ------67 67 47 4 118 Approved by Review Division ------3, 034, 039.78 91, 428, 318.19 94, 462, 357.97 Court of Claims ------32 38 17 1 56. ■ Supreme Court ------4 5 0 2 7 Total ------323 332 182 29 543• TABLE 115.-Public decisions, promulgated under Treasury Decisions 4264 and 4583, during the fiscal year 1940

COMPROMISE SECTION Estate and other mis- Income tax cases cellaneous taxes TABLE 111.-Number of cases received and, disposed of during the fiscal year ending Decisions June 30, 1940 Month numbered Pending July 1, 1939 ------2, 858- Number Amount Number Amount Received during year ------1, 959 approved approved Total ------4, 817 July 1939 ------6195-6230 35 $3, 665, 987.91 1 $500, 000. 00 August 1939 ------6231-6259 27 56, 454, 781.31 2 148, 651. 42 Closed or in process of closing ------1, 884 September 1939 ------8260-6285 24 3, 796, 335.69 2 62, 153. 23 October 1939 ------6286-6305 13 582, 549. 13 7 408, 308. 79 Pending June 30, 1940 ------2, 933. November 1939 ------6306-6333 27 2, 392, 862.88 43, 105. 01 December 1939 ------6334-6358 24 1, 972, 192. 16 33, 140. 23 January 1940 ------6359-6375 17 1, 597, 181. 16 ------TABLES 112.-Classification and tax liability involved in cases pending June 30, February 1940 ------6376-6397 19 1, 395, 693.56 a 355, 621.22 March 1940 ------6398- 6448 50 12, 038, 920.29 1 52, 498.00 1940 April 1940 ------6449-6480 31 1, 640, 325.69 1 56, 51& 88 May 1940 ------6481-6508 26 3, 465, 554.96 2 347, 298.61 June 1940 ------6509-6544 36 2, 913, 439.44 ------Pending In process of closing Class Total for fiscal year ------329 91, 915, 824.18 21 2, 007, 295.39 Abatements ------75, 171, 507.89 ------180, 500.42 Number Liability Number Liability Credits_ ------4, 248, 666. 08 ------Refunds ------12, 476, 622.30 ------1, 826, 794.97 Unadjusted ------19, 027.91 ------Decedent estates ------1, 427 $23, 151, 654 ------Insolvent banks ------31 76, 579 ------Miscellaneous cases ------1,396 2, 666, 834 ------Nom-The difference between the total of $94,462,357.97 approved in all cases reviewed and the above Cash offers in compromise ------50 1, 140, 207 69 $1, 549, 31E total of $93,923,119.57, as shown in the public decisions, is attributable in part to delayed application of Installment offers in compromise ------29 1, 085, 901 24 368, 311 credits, cases in which no public decisions are required, cases pending before the Joint Committee during the 30-day period not yet expired on June 30, and to uncompleted final scheduling of allowances. Total ------2,933 28, 121, 175 93 1,915,824

REPORT OF commissioNsa OF INTERNAL REVENUE 184 REPORT OF COMMISSIONER OF INTERNAL REVENUE 185 222 221:X8883R 8822288208288 288882 Atg MISCELLANEOUS STATISTICS Og hIggagg0 gntinalgO EOM cii4 TABLE 116.— Moneys paid to collectors as proCeeds of In rem actions, judgments ggeci recovered in civil suits, fines and penalties imposed in criminal actions, and costs, g. - R45.405 i1521$VAggt4 Kg5ggi gag as reported by clerks of United States courts (Form 158), year ended June 30, 1940 288 .7,1wawe8n 82882t2882888 888222 885 2 Judgments 2 8'0282323c40.--d-oi,e 220328t11228,,,, g2228z7 2V In rem .4ca a a a. a - - - Internal-revenue collection Interest Costs Total aei districts ewe' MlsuRs Fines and proceeds suits on ' bonds, etc. penalties V,M 488238828 212W428:--t88t 222REW 23E

Alabama $9, 690. 00 $352.56 $10, 042. 56 m gg°. lies 1131012 gge Arizona gaa es.aaa cs gIUM.Iin Anfgg Fkti uip Jei.aw aa‘,:ocaaa aaaa a Arkansas e: eq

California: Supp 47, 035.00 1, 126. 84 48, 161. 84 First district 244.01 11, 256. 67 Sixth district 11, 012. 68 228 2 82222422 32 Colorado 500.00 40.25 540.25 RA228222t82 882282 282 Connecticut 4, 636.00 4, 636.00 56g ggf1. 1 Delaware $1, 164.40 $5.82 23.60 1, 193. 82 . 5Wil gitaggalg5g.... .. MUM 50 Florida $400.00 3, 241.51 533.00 4, 174. 51 .; Georgia 1, 351. 06 11, 647. 27 545. 76 13. 844. 09 Hawaii 1, 850. 00 102.83 1,952. 83 Idaho 823 2232 Illinois: 23 8 RS88222888282 t2 2 558.94 2E 978.27 clod csicte8 civ •6 2 First district 20, 419. 33 .40i ,4 'eLdGid.sLJGzzG ' .6 cd ,c: Eighth district 20, 480. 00 260.98 20, 740. 98 Indiana 130.55 I 1, 733. 00 302.05 2, 165. 60 Iowa 1, 870.00 553. 05 2, 423.05 Kansas 57.22 57. 22 Kentucky 8, 944.78 192. 50 408. 65 9, 545.93 2 8 3 8 8 1, 501. 00 347. 02 1, 848. 02 8' 8 2 8 8 Louisiana g 8 • Maine a, 250.00 5, 200.00 i g g g Maryland 14, 131. 90 719.25 14, 851. 15 .3. 5 Massachusetts . 80 25, 602.00 64. 85 25, 667.65 11, 487. 22 64. 28 11, 551.50 ...- Michigan 7, 136. 94 Minnesota 7, 058. 00 78.94 Mississippi 1, 200.00 26 00 1, 220.00 l Missouri: First district 2, 899. 62 172. 03 3, 021. 85 enses 30, 154. 00 30, 154. 00 Trave Sixth district exp Montana 290.00 290.00 1, 260.00 1, 260. 00 Nebraska 460.00 460. 00 l-

Nevada tc. 2, 685. 00 2, 685. 00 u- New Hampshire e f co

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51, 879. 40 100.00

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16 248.33 diec First district 16 047. 75 200. 58 tr Twelfth district 1, 825. 00 1, 825. 00 .c Twenty-third district 1, 867. 91 2, 459. 46 4, 327. 37 Dis •u. Rhode Island 1, 839.00 62.06 I, 901.06 South Carolina 50.00 1, 735.00 545. 19 2, 330. 19 850.00 850.00

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F c ies 1936,

F d re Ag Sup Chie Co Chie Co Tec f lle lar an o 7o Sa 9, 10, ▪ 192 REPORT OF GOM MISSIONER OE INTERNAL REVENUE REPORT OF COMMISSIONER OF INTERNAL REVENUE 193

TABLE 118. - Summary of internal. revenue stamps issued to collectors of internal revenue and the Postmaster General during the fiscal years 1939 and 1940

Quantity Value Kind 1939 1940 1939 1940

Distilled spirits and wines: Brandy 57, 150 38, 400 $5, 895, 570. 00 $3, 889, 320. 00 Other domestic distilled spirits 2,101, 500 2,140, 830 228, 423, 037. 50 231,085, 102. 50 Certificate of tax payment, dis- tilled spirits, for shipment in tank cars 1,800 2260 (n (4) Export (secs. 2878 and 2885 I R CO 1, 200 18,800 120.00 1,290. 00 Bottled-in-bond, export (blue strips) 3,080 I, 113, 820 369.60 9,011.40 Bottled-in-bond, domestic (green strips) 79, 235, 000 128,610, 000 746, 187. 50 1, 268, 100. 00 Container or bottle stamps, red strips 987, 811, 242 1, 070, 689, 700 9, 445, 162. 42 10, 474, 409. 56 Rectified, class B I, 052, 200 1,616, 000 540, 700.00 584, 320.00 Rectified, class A 22, 500 20, GOO ( 4) ( I ) Industrial alcohol transfer 6, 800 60, 800 (r) ( I ) Alcohol warehousing 116,000 164,300 ( 4) (5) Wholesale liquor dealer's pack- ages 8, 800 800 ( 4) 0) Wine 16, 432, 040 17,981, 684 6, 145, 702. 73 7,685, 050. 97 Fermented malt liquor 57, 341, 300 53, 875, 500 258, 903, 125. 00 263,948, 125. 00 Tobacco: Manufactured tobacco 2, 448, 997, 360 2, 489, 379, 540 55, 216, 950.80 55, 335, 074. 50 Snuff 392, 686, 722 302, 482, 989 6, 817, 699. 16 6, 984, 833. 04 Tinfoil wrappers. 1, 422,180 1, 398, 048 15, 921. 39 15, 657. 17 Cigars, large 173, 479, 880 183, 736, 400 13, 378, 718. 03 14, 248, 752. 35 Cigars, small 16, 253,000 14,144, 000 122, 808.67 108, 768.45 Cigarettes, class A 8, 341, 324, 400 8, 918, 083, 400 501, 427, 506. 30 536, 577, 877.50 Cigarettes, class B 509,200 422,600 48, 791. 52 60, 310. 80 Cigarette tubes 1, 003, 800 2 102, 100 14, 066.00 30, 541.00 Oleomergine: Domestic, colored 19, 350 17, 975 37, 540. 00 28, 590.00 Domestic, uncolored 16, 625, 825 16, 416, BE 815, 671. 37 793, 855.50 Process or renovated butter 211,031 163,000 7, 457. 50 4, 930. 00 Mixed flour 671,060 581, COO 8, 745. 00 6, 470.00 Playing card 44, 682, 510 42, 308, 370 4, 466, 251.(0 4, 230, 837. CC Documentary 11, 167, 792 11, 344, 828 18, 918, 108. 00 17,306, 267. 03 Stock transfer 15, 857, 426 17, 146, 280 16,646, 203.00 18, 098, 391. 00 Silver transfer 7, 612 2,688 33, 792.00 65,650. 00 Narcotic 3, 447, 350 3, 525, 400 170,809. 25 195, 455. 06 11.) Order forms for opium I, 038, 000 1, 090, 000 10, 380.00 10, 900.00 Marihuana 100 100. 01 190 3.I0 0 Order forms for marihuana National Firearms Act (sec. 2720

0 I. R. C.): Machine guns, silencers, etc 20 20 4, 000.00 4, 000.00 Certain short 2-barrel guns 900 450 901.00 450.00 Special, or occupational, stamps 1, 000, 340 959,040 15, 740, 750.00 15,054,860.3

Total 12, 594, 476, 279 13, 351, 512, 052 1, 144,003, 042. 34 1, 188, 107, 281.41

at Value inserted when purchased. 3 Have no money value.

TABLE 119.-Cost of printing and binding for the Internal Revenue Bureau and Service, fiscal years 1939 and 1940 a 1939 1940 Class of work t8 Quantity Cost Quantity Cost

qo Publications, regulations, decisions, etc 921,500 $104, 297. 45 1, 814, 000 $119,870. 28 Blank forms 240, 230,000 381, 891. 57 251, 604, 000 371, 137.78 Pig Letterheads 10, 676, COO 15, 011. 26 13, 763, 000 16, 484.41 Miscellaneous: Binding, memorandum sheets, analysis paper, etc 19, 057.78 15, 469.29 Total 251, 827, 500 520, 258.06 267, 181, 00) 522,962.66

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