TAXES-Continued.

XXXIV. Plaintiff's agreement in writing with a corporation
that it should have his "shop rights" on a certain
process in the weighting of silk, kept secret by him,
the process to remain his property, held to be a
license and not a sale, and the compensation re-
ceived therefor taxable income and not realization
upon capital. Kaltenbach, 570.

XXXV. The allowance for obsolescence among the deductions
provided for in section 214 (a) of the revenue act
of 1921, is in connection with property that is sub-
ject to exhaustion, wear, and tear, and where a
secret process is not so subject deduction for its
becoming obsolete is not proper. Kaltenbach, 581.

XXXVI. A corporation which had theretofore used the calendar
year as its accounting period and made its income-
tax returns accordingly was not under the law re-
quired to change its income-tax return to the fiscal
year used by the parent company in making a con-
solidated excess-profits tax return, viz, ending June
30, 1917, and having properly made a return of its
income for the calendar year ending December 31,
1917, was entitled to assessment upon that basis.
Clinchfield Navigation Co., 589.

XXXVII. A corporation organized in the United States, doing
business in Porto Rico, having properly paid its 2
per cent income tax for the year 1917, imposed by
sec. 10, revenue act of 1916, to the treasurer of Porto
Rico, was under no obligation to pay the same tax
to the Government of the United States (sec. 23,
ib.). The 4 per cent additional tax imposed by sec.
4, war revenue act of 1917, was payable by the cor-
poration to the United States Government, section
5 of the war revenue act of 1917 merely abolishing
the provisions of section 23 of the revenue act of
1916 with respect to administration of the law, the
collection of taxes, and payment of same into the
Porto Rican treasury. Ponce & Guayama R. R. Co.,
596.

XXXVIII. Social club; membership dues. Abbott, 603.
XXXIX. Contributions for religious, charitable, etc., purposes
are not deductible under the income-tax laws in the
returns of corporations, nor are such deductions al-
lowable under the guise of "ordinary and necessary
expenses," although the corporation was benefited by
such contributions. Sweet, Inc., 654.

TAXES Continued.

XL. Plaintiff, whose income was derived from rents and roy-
alties from coal leases, and profits and interest on
securities, and which assisted in the coal operations of
another company whose stockholders were identical
with it, held to be "carrying on or doing business
within the meaning of sec. 1000, revenue act of 1921,
and sec. 700, revenue act of 1924. Morrisdale Land
Co., 701.

XLI. No particular amount of business is required to bring
a party within the terms of the statutes imposing
a capital-stock tax on domestic corporations "carrying
on or doing business." Id.

XLII. The capital-stock tax, imposed by sec. 700 (a), revenue
act of 1924, is an excise tax assessed and collected
annually for the privilege of doing business in the
following year, and the tax is measured by the average
value in the preceding year. Where a corporation is in
existence during only a part of the previous year, and
the value of its capital stock during that time does
not fluctuate, the term "fair average value as used
in the statute has no importance, for it applies only where
there are increases or decreases. The average meant
is for the time the corporation is in existence, and does
not include the time when the corporation is not in
being. Alaska Consolidated Canneries, 713.

XLIII. A distilling company, prior to the revenue act of 1918,
made its inventories at cost, and its books reflected
no profit until sales were made, the difference be-
tween manufacturing cost and market value of unsold
product not appearing thereon. After making its tax
returns accordingly it changed its inventories for the
year 1918, substituting market for cost value, and used
the new basis in its tax return for 1918 without the
permission of the Commissioner of Internal Revenue,
and the commissioner assessed additional taxes on the
basis of cost value. Held, (1) that collection of the
additional taxes was not confiscation of capital, and
(2) that both the use and the basis of inventories
were matters of discretion with the commissioner.
Clark Distilling Co., 726.

See also Interest; Jurisdiction, III; Sovereignty; Statutory Con-
struction, I.

TELEGRAMS.
Telegrams sent by a Government contractor, made the agent of
the United States for that among other purposes, upon Gov-
ernment business, are subject to the reduced rates fixed by the
Postmaster General pursuant to section 2, act of July 24, 1866.
Western Union Telegraph Co., 38.

See also Settlement Contracts, II.
TENURE OF OFFICE.

Where an officer of the Marine Corps, dismissed from the serv-
ice in consequence of general court-martial proceedings in a
foreign jurisdiction, neglects to test the legality of his dis-
missal by application to the Secretary of the Navy or by suit
in a court of competent jurisdiction for a period of nearly
six years, the diligent prosecution of his claim for restoration
of duty before Congress does not prevent his claim for salary
from being barred in the Court of Claims by laches. Chamber-
lain, 317.

TRANSPORTATION.

See Contracts, VII; Jurisdiction, I; Pay, III; Postal Service, II;
Statute of Limitations, III.

TREATIES.

See Indians, I.

UNIFORM GRATUITY.

See Pay, VIII.

WAGE INCREASES.

See Contracts, VIII, XII.

WASTE.

See Leases.

O