tificates of deposit issued by banks and trust companies are not held to be taxable under this head.18

BONDS GIVEN IN A PENAL SUM. An instrument under seal conditioned in a penal amount for the payment of a sum of money, such as often accompanies mortgages, is a bond for stamp tax purposes.19 When a bond conditioned for the repayment or payment of money is given in a penal sum greater than the debt secured, the tax is based upon the amount secured and not upon the amount of the bond.20

ISSUE OF BONDS. It seems generally that the delivery of the bond establishes the date of issue. Thus, it was held under the 1914 Law that bonds certified and delivered by a trustee after the incidence of the tax were taxable although subscribed and paid for prior thereto. Under the 1898 Law it seems to have been held that a bond was issued when delivery was made and the corporation received a benefit or a consideration therefor.21 The date of renewal would be the date of issue for the purpose of the tax on a renewal of bonds.22 Bonds issued by a domestic corporation in this country for sale to purchasers in a foreign country have been held to be issued here for the purpose of the tax, but bonds issued and sold by a domestic corporation in a foreign country have not been required to be stamped on the ground that the Government had no means of enforcing the statute in such case.23

RENEWAL OF BONDS. Every renewal of a bond, debenture or certificate of indebtedness is taxed as a new issue.24 A renewal after the incidence of the tax of an instrument,

18 T. D. 2054; letter from Treasury Department dated November 16, 1917; W. T. S. 1918, 3568. Such certificates were not taxed under the 1914 Law.

19 T. D. 2713.

20 Revenue Act of 1918, § 1107, Schedule A-1.

21 Volume 1, Treasury Decisions No. 20156.

22 Every renewal is taxed as a new issue. Revenue Act of 1918, § 1107, Schedule A-1.

23 Letter from Treasury Department dated May 15, 1915.

24 Revenue Act of 1918, § 1107, Schedule A-1.

issued prior thereto, will require the necessary revenue stamps.25

TRANSFER OF BONDS. No tax is imposed upon the transfer of bonds, debentures or certificates of indebtedness from one holder to another.

Bonds of Indemnity and Surety. Bonds of indemnity and surety are taxed at the rate of 50 cents. Where a premium is charged for the issuance, execution, renewal or continuance of such bonds, the tax is one cent on each dollar or fractional part thereof of the premium charged. Bonds coming within this class are (a) bonds for indemnifying any person, corporation, or partnership, who shall have become bound or engaged as surety, (b) all bonds for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, (c) mortgage guarantee policies and policies guaranteeing title to real estate and (d) all other bonds of any description not otherwise provided for in Schedule A of Title XI. Policies of re-insurance are exempt from the tax imposed by this provision.26

BONDS DELIVERED PRIOR TO INCIDENCE OF TAX. Under the 1914 Law it was held that a bond executed and delivered prior to the date on which the tax was first imposed, whether or not taking effect immediately or subsequent to the enforcement of the taxing act, was not subject to the tax.27 Premiums on indemnity or surety bonds executed prior to December 1, 1917, are not the subject of the stamp tax when premiums due and payable subsequent to December 1, 1917, are not essential to the continuance in force of such bonds. Where bonds issued prior to December 1, 1917, are continued in force after December 1, 1917, by the

25 Letter from Treasury Department dated December 11, 1917; W. T. S. 1918, ¶ 3679.

26 Revenue Act of 1918, § 1107, Schedule A-2.

27 T. D. 2072.

execution of continuation certificates, the tax applies to the premium charged for the issuance of such certificates.28

BONDS ISSUED IN FOREIGN COUNTRIES. It was held under the 1914 Law that bonds issued by guarantee companies in foreign countries guaranteeing the fidelity of individuals or corporations in the United States, executed and delivered in the foreign country, were not taxable but if they were not valid until countersigned or delivered by the agent in the United States, they should be taxed.29 No ruling was issued upon this point under the 1917 Law.

BONDS REQUIRED IN LEGAL PROCEEDINGS. Bonds of this class are not subject to tax although they may be bonds of indemnity. They include: (1) Bonds filed by order of court to obtain a decree or order for the sale of real estate; (2) bonds given by court officers under direction or authority of the court, to give proper effect to court proceedings, which bonds are practically a part of the record of a suit or proceeding in court; (3) bonds given in cases of appeal; (4) bonds given by executors, administrators, guardians and receivers appointed by the court; 30 and (5) indemnity or surety bonds given by trustees in bankruptcy for the purpose of qualifying as such.31

FIDELITY AND SURETY BONDS. Fidelity and surety bonds are subject to the stamp tax.32

MORTGAGE GUARANTEE POLICIES AND POLICIES GUARANTEEING TITLES TO REAL ESTATE. These policies are made expressly taxable by the 1918 Law. Under the 1917 Law, which was silent, it was held that, in common with policies of guarantee and fidelity insurance, mortgage guarantee policies and policies guaranteeing titles to real estate were

28 T. D. 2782.

29 T. D. 2051.

30 T. D. 2091. (Act of October 22, 1914.)

31 T. D. 2647.

32 Fidelity and surety bonds subject to tax levied with respect to insurance policies were exempt from the stamp tax under the Senate draft of the Revenue Act of 1918, but this exemption was stricken out by the Conference Committee.

subject to the stamp tax on bonds and not to the tax on insurance.33

BONDS GIVEN TO STATES AND POLITICAL SUBDIVISIONS THEREOF. It is held on the broad ground that the sovereign states and subdivisions thereof are constitutionally free from taxation by the Federal Government, that bonds given by officials of a state, township, county or village for the faithful performance of duties, are not taxable.34 Bonds given to a state, township, county or village for the performance of contracts, such as the construction of state or municipal buildings, or the discharge of other duties strictly for or in behalf of the state, when necessary to protect the state's interest, are held not subject to taxation.35 A bond given as a condition to the granting of a license by a state or political subdivision is not taxable if the license is issued in the exercise of the governmental powers of the state or political subdivision.36 Under the 1898 Law a dramshop keeper's bond, given pursuant to the laws of Missouri, as a condition precedent to the grant of a license, was not subject to tax since such bond was required under the police power of the state-a power belonging exclusively within the state's jurisdiction-and was a means or instrumentality employed by the state in the exercise of one of its most important functions.37 It was also held under the 1898 Law that neither the separate states nor the United States have power to impose a tax which will interfere with the sovereignty of the others within their own sphere, either by taxing their functions or the means by which they are exercised; that a power in the federal government to tax the right to qualify for the performance of duties of a state office is inconsistent with the existence of any supreme governmental authority in the state; and that therefore a bond required by a state from a notary public (who was

33 T. D. 2704, modifying T. D. 2588. 34 T. D. 2624. See T. D. 2111.

35 T. D. 2624; T. D. 2072.

36 Ambrosini v. U. S., 187 U. S. 1. 37 U. S. v. Owens, 100 Fed. 70.

held to be an officer of the state) as a prerequisite to the exercise of his official duties is, in necessary legal effect, a tax on the officer's right to qualify and upon the exercise by the state of its governmental functions.38

BONDS GIVEN TO THE FEDERAL GOVERNMENT. Generally speaking bonds given to the federal government are taxable.3 39 But the statute expressly provides that no bond of indemnity required to be filed by any person to secure pay. ment of any pension, allowance, allotment, relief, or insurance by the United States shall be taxed.40 Bonds of a private corporation delivered by it to the United States Housing Corporation as collateral security for a loan to aid the borrower in performing its contract with the United States Housing Corporation are subject to stamp tax.41

BONDS GIVEN BY UNITED STATES, FOREIGN GOVERNMENTS AND POLITICAL SUBDIVISIONS. All bonds given by the United States, or by any Foreign Government, or by any state, territory, or the District of Columbia,. or local subdivision thereof, or municipal or other corporation exercising the taxing power are exempt from taxation.42

Building and Loan Associations. Stocks and bonds. issued by co-operative building and loan associations which are organized and operated exclusively for the benefit of their members and make loans only to their shareholders, are not subject to the tax.43 This provision of the law seems to exempt stock of such associations from the tax on original issue and also from the tax on sales or transfers. Any instruments other than certificates of stock and bonds are not exempt.44

38 Bettman v. Warwick, 108 Fed. 46. It was also held in this case that the fact that the tax was required to be paid before the officer qualified was unimportant.

39 T. D. 2624; T. D. 2111.

40 Revenue Act of 1918, § 1101.

41 T. D. 2782.

42 Revenue Act of 1918, § 1101; See T. D. 2072.

43 Revenue Act of 1918, § 1101.

44 Under the 1914 Law it was held that notes given to or by such associations were taxable (T. D. 2112).