latter having no connection with the case. Held, That none of such acts constituted “engaging in business" within the meaning of this act, and that such corporations were not subject to the excise tax imposed thereby. (Traction Co.'s v. Collectors of Int. Rev., 223 Fed. 984, 1915.)

29. A railroad corporation which had leased all its property to another, which operated and maintained it, paying a fixed rental to the lessor, is not carrying on or doing business within this act, though such corporation maintained its corporate existence and has an office where it receives the rental and distributes it among its stockholders, and though, as required by the lease, it has during the year made certain improvements on the property, paid for by the sale of old material or by certificates of indebtedness of the lessee, since the expression "doing business" in that statute is one in common use, which has the same meaning applied to a corporation as to a natural person, and does not include one who has retired from business and is merely maintaining property leased by him to another. E. Ry. Co. v. Walker, 238 Fed. 533, 1917.)

(Jasper &

30. Where a lessee corporation agrees with the lessor for the benefit of the latter's shareholders to pay such shareholders quarterly sums or dividends on dates stated each year during the terms of the lease to registered holders of such shares on the 10th day preceding each date for payment and the agreement was endorsed on certificates of the capital stock of the lessor corporation, Held, That lessor corporation was doing business within the meaning of the above act as the lessee company merely relieved lessor of the duty of distribution. (Blalock, Collector, v. Georgia Ry. & Elec. Co., 246 Fed. 387, 1917.) 31. A street railway corporation which leased its lines and property to another corporation in 1897 and had not since operated them was not in 1913 "engaged in business" within corporation tax law, August 5, 1909, so as to be subject to the tax imposed by such law. (West End Street Ry. Co. v. Malley, 246 Fed. 625, 1917.)

* * *

32. The plaintiff corporation to which payments were required to be made by the railroads using the terminal, and which granted concessions and licenses to others than the said stockholding railroads for the transaction of various kinds of business, and which operated facilities for supplying power, heat, light, gas, etc., manufactured by it, was engaged in business. (Boston Terminal Co. v. Gill, 246 Fed. 664, 1917, affirming the decision of the district court in T. D. 2428, 1916.)

33. A corporation which has not reduced its activities to owning and holding property and the distribution of its avails, but maintains its organization for continued efforts in pursuit of profit and for such activities as are therein essential, is carrying on business within the meaning of the act.

Respondent corporations, besides receiving and distributing among their shareholders the royalties from a number of outstanding longterm "mining leases," employed another company to inspect the lessee's operations and keep them to their contracts, made some mining explorations at expense on other parts of their properties, sold or leased other parcels and sold some timber, Held, That they were carrying on business within the meaning of this act. (Von Baumbach v. Sargent Land Co., 242 U. S. 503, 1917.)

34. A railroad corporation leased its property and franchises, for the full term of its charter and any renewal thereof, to another railroad company, the lease being approved by the State Legislaturo granting the original charter, and providing, not only that the lessor should thereafter maintain its corporate existence, but should issue to the lessee stock, bonds, or other obligations for the completion of a proje ted branch road and for the construction of any other railroads which the lessee might desire to construct and to cover expenses for the construction or purchase of locomotives, cars, and mahinery, the lessee binding itself to pay and discharge such obligations at maturity, Held, that the issuance of bonds by the lessor corporation under such provision did not amount to a resumption of business which the lease had transferred or an engaging in business within corporation tax act, August 5, 1909. (Anderson v. Morris & E. R. Co., 216 Fed. 83, 1914; followed in 219 Fed. 185, 1915; N. Y. Central & H. R. R. Co. v. Gill; 223 Fed. 989, 1915, Traction Co's. v. Colle tors of Int. Rev.; 229 Fed. 902, 1916, Pub. Service Ry. Co. v. Herold; 239 Fed. 739, 1917, Rensselaer & S. R. Co. v. Irwin.)

35. The Old Colony Railroad Co., whose demised roads were operated by the New York, New Haven & Hartford Railroad Co. as lossee, and not as agent, Held not a corporation "engaged in business" during the years 1909-1912, inclusive, within the meaning of corporation tax law August 5, 1909, sec. 38, and therefore not subjet to the imposition of the tax authorized. (Old Colony R. Co. v. Gill, 257 Fed. 220, Aug. 6, 1919.)

36. A pipe-line company organized by, and doing business only for, two other pipe-line corporations, Held, not merely a convenient agent of these corporations, but to be doing business for profit within corporation tax law. (Associated Pipe Line Co. v. United States, 258 Fed. 800, 1919.)

Dissolved corporations.

A corporation which has continued in business through a calendar year can not evade liability for the special excise tax imposed by act August 5, 1909, by dissolving before the time when it is required to make a return of said business to the collector of internal revenue

and the assessment of the tax.

(United States v. General Inspection & Loading Co., 192 Fed. 223, 1911. Affirmed by C. C. A. 204 Fed. 657.)

The tax is one upon doing business in a corporate capacity, and receivers of an insolvent corporation, duly appointed by a court of equity, which corporation was not doing business when the act was passed, and has done no business since, are not within the act, nor required to make returns and pay taxes on the income realized by them while acting as officers of the court and under its direction. (Pennsylvania Steel Co. v. New York City Railway Co., 198 Fed. 774, 1912. C. C. A., affirming the decision of the District Court in 193 Fed. 286.)

Excepted corporations-Public utilities.

The fact that plaintiff was a public utilities corporation, which, under the laws of the State, was not the owner of the property, but merely intrusted with the use thereof, which it must devote to the public, does not entitle it to more favorable treatment than other corporations; it being a corporation organized for profit, having a capital stock represented by shares, and the act making no exceptions in favor of public utilities. (Union Hollywood Water Co. v. Carter, 238 Fed. 329, 1917.)

Excepted corporations Charitable organizations.

Corporations organized under the laws of Minnesota, not for charitable or eleemosynary purposes but for the pecuniary advantage of their shareholders, Held, "organized for profit" within the meaning of the corporation tax law of August 5, 1909, and not excepted from tax liability. (Von Baumbach v. Sargent Land Co., 242 U. S. 503, 1917.)

Excepted corporations

Domestic building and loan associations.

A building and loan association, organized under the laws of Washington (Pierce's Code, secs. 7128, 7130, 7131, 7149, 7154, 7160), which loaned funds to nonmembers, issued preferred or guaranteed interest-paying stock not borrowed upon, is not within the exception in the act subjecting corporations to an annual tax, except building and loan associations organized exclusively for the mutual benefit of members. (Pacific Building and Loan Assn. v. Hartson, 201 Fed. 1011.)

A building association is not excluded from the right to such exemption as not one "organized and operated exclusively for the mutual benefit of its members" because it issues both prepaid and installment stock; the prepaid stock being entitled to a fixed dividend, payable however, only out of earnings of the association, though under its plan of operation there might be inequality in the

returns to the prepaying stockholder, etc., since the word "mutual" is not to be construed as synonymous with "equal." (Parkview Building & Loan Assn. v. Herold, 203 Fed. 876, 1913. Affirmed in Herold v. Parkview Building & Loan Assn., 210 Fed. 577.)

Issuance of prepaid stock does not destroy mutuality. (Parkview Building and Loan Assn. v. Herold, 203 Fed. 876, 1913. Affirmed by Herold v. Parkview Building & Loan Assn., 210 Fed. 577, 1914.)

Held, that the final clause, "no part of the income of which," etc., applies only to the fourth group of corporations named, i. e., religious, etc., corporations, and has no application to building associations which are organized for the express purpose of benefiting their stockholders, but that all such associations, if they come within the terms of the proviso as to organization and operation, are exempted. (Herold v. Parkview Building & Loan Assn., 210 Fed. 577, 1914.)

Borrowing money from or loaning money to nonmembers does not deprive domestic building and loan associations of exemption as organized and operated for the mutual benefit of members. (Central Building, Loan and Savings Co. v. Bowland and Bellefontaine Building & Loan Co. v. McMaken, 216 Fed. 526, 1914. U. S. D. C.)

Excepted corporations Fraternal beneficiary societies.

Fraternal beneficiary associations, not operating under the lodge system, are not included in the exemption from tax set forth in the proviso of subdivision 1 of section 38.

The absence of profit in the operation of such an association is not the criterion as to whether it is within the exemption as a fraternal beneficiary society, but the want of a fraternal side and object which it is in some measure organized to promote. (Commercial Traveler's Life & Accident Assn. v. Rodway, 235 Fed. 370, 1913.)

Foreign corporations.

Where a foreign corporation owned timber lands in a State and operated a match factory, but sold such timber lands to another company, as well as its plant, the payments to be made in installments, the foreign company to retain title until paid in full, although retaining an attorney in the State to look after its interests and an agent for service of process, as required by State statute, such corporation was not thereafter "doing business" in the State, so as to render the property sold taxable to it under Corporation Tax Act, August 5, 1909. * * * (Bryant & May, Ltd., v. Scott, 226 Fed. 875, 1914.) Where a Canadian corporation, making newspaper paper, sent agents into the United States to solicit purchasers for its product, paying their expenses, hiring desk room in the United States, empowering the salesmen to make written contracts, in part in the United States, subject to the corporation's approval in Canada, and, when

approved, to deliver the contracts, paying rent, storage charges on paper shipped into the United States, and also for work done by checks drawn on a bank in the United States, where the company kept its funds received for goods delivered in the United States to purchasers, and then, to perform its written contracts, shipped paper consigned to itself in the United States to different points, where it hired storage rooms, and had the paper delivered to itself at such rooms, where it stored it in its own name and at its own risk pending delivery, doing so for its own convenience and to insure delivery according to contract, also shipping into the United States and storing in such manner paper to meet anticipated demands, such Canadian company "did business" in the United States and "engaged in business" therein, and also "transacted business" in the United States, so that it was liable to taxation under act of August 5, 1909, and under income-tax law October 3, 1913, chapter 16, section 2, A, subdivision 1, and G (a). (Laurentide Co. v. Durey, 231 Fed. 223, 1916.)

Receivers.

The tax imposed by section 38, act August 5, 1909, is one upon doing business in a corporate capacity, and receivers of an insolvent corporation, duly appointed by a court of equity, which corporation was not doing business when the act was passed, and has done no business since, are not within the act, nor required to make returns and pay taxes on the income realized by them while acting as officers of the court and under its direction, notwithstanding the property seized did not include the corporate franchise to be a corporation, and its organization was maintained. (Pennsylvania Steel Co. v. Now York City Ry. Co., 176 Fed. 472, 1910; 193 Fed. 286, 1912; 198 Fed. 774, 1912; and United States v. Whitridge and United States v. Joline & Robinson, 231 U. S. 144, 1913.)

SUBDIVISION II, SECTION 38.

Second. Such net income shall be ascertained by deducting from the gross amount of the income of such corporation, joint-stock company or association, or insurance company, received within the year from all sources, (first) all the ordinary and necessary expenses actually paid within the year out of income in the maintenance and operation of its business and properties, including all charges such as rentals or franchise payments, required to be made as a condition to the continued use or possession of property; (second) all losses actually sustained within the year and not compensated by insurance or otherwise, including a reasonable allowance for depreciation of property, if any, and in the case of insurance companies the sums other than dividends, paid within the year on policy and annuity contracts and the net addition, if any, required by law to be made within the year to reserve funds; (third) interest actually paid within the year on its bonded or other indebtedness to an amount of such bonded and other indebtedness not exceeding the paid-up capital stock of such corporation, joint-stock company, or association or insurance company, outstanding at the close of the year, and in the case of a bank, banking association, or trust com