the purely commercial formalities of a report of entry and clearance at a custom house, nor to light, harbor or other duties not imposed upon Newfoundland fishermen. Answer 4. It is decided and awarded that such restrictions are not permissible unless American fishermen entering such bays for any of the four purposes aforesaid and remaining more than forty-eight hours therein should Restrictions. be required, if thought necessary by Great Britain or the colonial government, to report either in person or by telegraph at a custom house or to a customs official, if reasonably convenient opportunity therefor is afforded, and it is so decided and awarded. The Three Answer 5. The tribunal decides and awards that in case of bays Mile Limit. the three marine miles are to be measured from a straight line drawn across the body of water at the place where it ceases to have the configuration and characteristics of a bay. At all other places the three marine miles are to be measured following the sinuosities of the coast. For the Now this tribunal hereby recommends for the consideration and acceptance of the high contracting parties the following rules and methods of procedure for determining the limits of the bays hereinbefore enumerated: (1) In Rules of every bay not hereinafter specifically provided for the limits of excluProcedure. sion shall be drawn three miles seaward from a straight line across the bay in the part nearest the entrance at the first point where the width does not exceed ten miles. (2) In the following bays where the configuration of the coast and the local climatic conditions are such that foreign fishermen when within the geographic headlands might reasonably and bona fide believe themselves on the high seas, the limits of exclusion shall be drawn in each case between the headlands hereinafter specified as being those at and within which such fishermen might be reasonably expected to recognize the bay under average conditions. Baie des Chaleurs the line from the light at Birch Point, on Miscou Island, to Macquereau Point Light; for the Bay of Miramichi, the line from the light at Point Escuminac to the light on the eastern point of Tabusintac Gully; for Egmont Bay, in Prince Edward Island, the line from the light at Cape Egmont to the light at West Point, and off St. Anne Bay, in the Province of Nova Scotia, the line from the light at Point Anconi to the nearest point on the opposite shore of the mainland. Fortune Bay, in Newfoundland, the line from Connaigre Head to the light on the southeasterly end of Brunet Island, thence to Fortune Head; for or near the following bays the limits of exclusion shall be three marine miles seaward from the following lines, namely: For or near Barrington Bay, in Nova Scotia, the line from the light on Stoddart Island to the light on the south point of Cape Sable, thence to the light at Baccaro Point, at Chedabucto and St. Peter's Bay; the line from Cranberry Island light to Green Island Light, thence to Point Rouge for Mira Bay; the line from the light on the east point of Scatarie Island to the northeasterly point of Cape Morien, and at Placentia Bay, in Newfoundland, the line between from Latine Point on the eastern mainland to the most southerly point of Red Island, thence by the most southerly point of Merasheen Island to the mainland. Long Island and Bryer Island, on St. Mary's Bay, in Nova Scotia, shall, for the purpose of delimination, be taken as the coasts of such bays. Bay of For It is understood that nothing in these rules refers either to the Bay of Fundy, considered as a whole apart from its bays and creeks, or as to the Innocent Passages through the Gut of Canso, which were excluded by the agreement made by exchange of notes between Mr. Bacon and Mr. Bryce, dated February 21, 1909, and March 4, 1909, or to Conception Bay, which was provided for by the decision of the Privy Council in the case of the Direct United States Cable Company agt. the AngloAmerican Telegraph Company, in which decision the United States have acquiesced. Answer 6.-This tribunal is of opinion that American inhabitants are entitled to fish in the bays, creeks and harbors of the treaty coasts of Newfoundland and the Magdalen Islands, and it is so decided and awarded. Answer 7.-For these reasons this tribunal is of the opinion that the inhabitants of the United States are so entitled in so far as concerns this treaty, there being nothing in its provisions to disentitle them, provided the treaty liberty of fishing and the cominercial privileges are not exercised concurrently, and it is so decided and awarded. The members of the International Tribunal who heard the case, which was opened on June 1, 1910, were Professor Lammasch, president; Judge George Gray, of Delaware; Mr. Fitzpatrick, of Great Britain; Dr. Drago, of Argentina, and Dr. Lohman, of the Netherlands. The representatives of the United States before the tribunal were Senator Elihu Root, of New York; ex-Senator George Turner, of Washington, and Samuel J. Elder, as counsel; James D. Scott and Charles D. Warren, associate counsel; Chandler P. Anderson, agent for the United States, and Robert Lansing, solicitor agent. THE FEDERAL CORPORATION TAX. The Payne Tariff law, passed at the extra session of the Sixty-first Congress in 1909, imposed an excise tax on corporations, joint stock companies, associations and insurance companies. The text of the corporation tax section of the law-Section 38-was as follows: First, That every corporation, joint stock company or association, organized for profit and having a capital stock represented by shares, and every insurance_company, now or hereafter organized under the laws of the United Corporation Tax. States or of any state or territory of the United States, or under the acts of Congress applicable to Alaska or the District of Columbia, or now or hereafter organized under the laws of any foreign country and engaged in business in any state or territory of the United States or in Alaska or in the District of Columbia, shall be subject to pay annually a special excise tax with respect to the carrying on or doing business by such corporation, joint stock company or association, or insurance company, equivalent to one per centum upon the entire net income over and above five thousand dollars received by it from all sources during such year, exclusive of amounts received by it as dividends upon stock of other corporations, joint stock companies or associations, or insurance companies, subject to the tax hereby imposed; or if organized under the laws of any foreign country, upon the amount of net income over and above five thousaned dollars received by it from business transacted and capital invested within the United States and its territories, Alaska and the District of Columbia during such year, exclusive of amounts so received by it as dividends upon stock of other corporations, joint stock companies or associations, or insurance companies, subject to the tax hereby imposed: Provided, however, That nothing in this section contained shall apply to labor, agricultural or horticultural organizations, or to fraternal beneficiary societies, orders or associations operating under the lodge system, and providing for the payment of life, sick, accident and other benefits to the members of such societies, orders or associations, and dependents of such members, nor to domestic building and loan associations, organized and operated exclusively for the mutual benefit of their members, nor to any corporation or association organized and operated exclusively for religious, charitable or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual. Fixing Net Income. year 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 received within the from all the company, (first) all sources, 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) or other indebtedness to an interest actually paid within the year on its bonded 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 olcse of the year, and in the case of a bank, banking association on deposits; or trust company, all interest actually paid by it within the year (fourth) all sums paid by it within the year for taxes imposed under the authority of the United States or of any state or territory thereof, or imposed by the government of any foreign country as a condition to carrying on business therein; (fifth) all amounts received by it within the year as dividends upon stock of other corporations, joint stock companies or associations, or insurance companies, subject to the tax hereby imposed: Provided, That in the case of a corporation, joint stock company or association, or insurance company, organized under the laws of a foreign country, such net income shall be ascertained by deducting from the gross amount of its income received within the year from business 'transacted and capital invested within the United States and any of its territories, Alaska, and the District of Columbia, (first) all the ordinary and necessary expenses actually paid within the year out of earnings in the maintenance and operation of its business and property within the United States and its territories, Alaska, and the District of Columbia, 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 actually sustained within the year in business conducted by it within the United States or its territories, Alaska, or the District of Columbia 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 proportion of its paid-up capital stock outstanding at the close of the year which the gross amount of its income for the year from business transacted and capital invested within the United States and any of its territories, Alaska, and the District of Columbia bears to the gross amount of its income derived from all sources within and without the United States; (fourth) the sums paid by it within the year for taxes imposed under the authority of the United States or of any state or territory thereof; (fifth) all amounts received by it within the year as dividends upon stock of other comporations. joint stock companies or associations. and insurance companies, subject to the tax hereby imposed. In the case of assessment insurance companies the actual deposit of sums with state or territorial officers, pursuant to law, as additions to guaranty or reserve funds. shall be treated as being payments required by law to reserve funds. losses Third. There shall be deducted from the amount of the net income of each of such corporations, joint stock companies or associations, or insurance companies, ascertained as provided in the foregoing paragraphs of this section, Deductions. the sum of five thousand dollars, and said tax shall be computed upon the remainder of said net income of such corporation, joint stock company or association, or insurance company, for the year ending December 31, 1909, and for each calendar year thereafter; and on or before the first day of March, 1910, and the first day of March in each year thereafter, a true and accurate return under oath or affirmation of its president, vice-president, or other principal officer, and its treasurer or assistant treasurer, shall be made by each of the corporations, joint stock companies or associations, and insurance companies, subject to the tax imposed by this section, to the collector of internal revenue for the district in which such corporation, joint stock company or association, or insurance company, has its principal place of business, or, in the case of a corporation, joint stock company or association, or insurance company, organized under the laws of a foreign country, in the place where its principal business is carried on within the United States, in such form as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, setting forth, (first) the total amount of the paid-up capital stock of such corporation, joint stock company or association, or insurance company, outstanding at the close of the year; (second) the total amount of the bonded and other indebtedness of such corporation, joint stock company or association, or insurance company at the close of the year; (third) the gross amount of the income of such corporations, joint stock company or association, or insurance company, received during such year from all sources, and if organized under the laws of a foreign country the gross amount of its income received within the year from business transacted and capital invested within the United States and any of its territories, Alaska, and the District of Columbia; also the amount received by such corporation, joint stock company or association, or insurance company, within the year by way of dividends upon stock of other corporations, joint stock companies or associations, or insurance companies, subject to the tax imposed by this section; (fourth) the total amount of all the ordinary and necessary expenses actually paid out of earnings in the maintenance and operation of the business and properties of such corporation, joint stock company or association, or insurance company, within the year, stating separately all charges such as rentals or franchise payments required to be made as a condition to the continued use or possession of property, and if organized under the laws of a foreign country the amount so paid in the maintenance and operation of its business within the United States and its territories, Alaska, and the District of Columbia; (fifth) the total amount of all losses actually sustained during the year and not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, 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; and in the case of a corporation, joint stock company or association, or insurance company, organized under the laws of a foreign country, all losses actually sustained by it during the year in business conducted by it within the United States or its territories, Alaska, and the District of Columbia, not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, 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 fund; (sixth) the amount of 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 company, stating separately all interest paid by it within the year on deposits; or in case of a corporation, joint stock company or association, or insurance company, organized under the laws of a foreign country, interest so paid on its bonded or other indebtedness to an amount of such bonded and other indebtedness not exceeding the proportion of its paid-up capital stock outstanding at the close of the year, which the gross amount of its income for the year from business transacted and capital invested within the United States and any of its territories, Alaska, and the District of Columbia, bears to the gross amount of its income derived from all sources within and without the United States; (seventh) the amount paid by it within the year for taxes imposed under the authority of the United States or any state or territory thereof, and separately the amount so paid by it for taxes imposed by the government of any foreign country as a condition to carrying on business therein; (eighth) the net income of such corporation, joint stock company or association, or insurance company, after making the deductions in this section authorized. All such returns shall as received be transmitted forthwith by the collector to the Commissioner of Internal Revenue. Fourth. Whenever evidence shall be produced before the Commissioner of Internal Revenue which in the opinion of the commissioner justifies the belief that the return made by any corporation, joint stock company or association. or insurance company, is incorrect, or whenever any collector shall report to the Commissioner of Internal Revenue that any corporation, joint stock company or association, or insurance company, has failed to make a return as required by law, the Commissioner of Internal Revenue may require from the corporation, joint stock company or association, or insurance company making such return. such further Information with reference to its capital, income, losses, and expenditures as he may deem expedient; and the Commissioner of Internal Revenue, for the purpose of ascertaining the correctness of such return or for the purpose of mak ing a return where none has been made, is hereby authorized, by any regularly appointed revenue agent specially designated by him for that purpose, to examine any books and papers bearing upon the matters required to be included in the return of such corporation, joint stock company or association, or insurance company, and to require the attendance of any officer or employe of such corporation, joint stock company or association, or insurance company, and to take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons; and the Commissioner of Internal Revenue may also invoke the aid of any court of the United States having jurisdiction to require the attendance of such officers or employes and the production of such books and papers. Upon the information so acquired the Commissioner of Internal Revenue may amend any return or make a return where none has been made. All proceedings taken by the Commissioner of Internal Revenue under the provisions of this section shall be subject to the approval of the secretary of the Treasury. Fifth. All returns shall be retained by the Commissioner of Internal Revenue, who shall make assessments thereon; and in case of any return made with false or fraudulent intent, he shall add one hundred per centum of such tax, Penalties. and in case of a refusal or neglect to make a return or to verify the same as aforesaid he shall add fifty per centum of such tax. In case of neglect occasioned by the sickness or absence of an officer of such corporation, joint stock company or association, or insurance company, required to make said return, or for other sufficient reason, the collector may allow such further time for making and delivering such return as he may deem necessary, not exceeding thirty days. The amount so added to the tax shall be collected at the same time and in the same manner as the tax originally assessed unless the refusal, neglect or falsity is discovered after the date for payment of said taxes, in which case the amount so added shall be paid by the delinquent corporation, joint stock company or association, or insurance company, immediately upon notice given by the collector. All assessments shall be made and the several corporations, joint stock companies or associations, or Insurance companies, shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and said assessments shall be paid on or before the thirtieth day of June, except in cases of refusal or neglect to make such return, and in cases of false or fraudulent returns, in which cases the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after said return is due, make a return upon information obtained as above provided for, and the assessment made by the Commissioner of Internal Revenue thereon shall be paid by such corporation, joint stock company or association, or insurance company, immediately upon notification of the amount of such assessment; and to any sum or sums due and unpaid after the thirtieth day of June in any year, and for ten days after notice and demand thereof by the collector, there shall be added the sum of five per centum on the amount of tax unpaid and interest at the rate of one per centum per month upon said tax from the time the same becomes due. Sixth. When the assessment shall be made, as provided in this section, the returns, together with any corrections thereof which may have been made by the commissioner, shall be filed in the office of the Commissioner of InPublicity, ternal Revenue and shall constitute public records and be open to inspection as such. Seventh. It shall be unlawful for any collector, deputy collector, agent, clerk, or other officer or employe of the United States to divulge or make known in any manner whatever not provided by law to any person any information obtained by him in the discharge of his official duty, or to divulge or make known in any manner not provided by law any document received, evidence taken, or report made under this section except upon the special direction of the President; and any offence against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding one thousand dollars, or by imprisonment not exceeding one year, or both, at the discretion of the court. Eighth. If any of the corporations, joint stock companies or associations, or Insurance companies, aforesaid, shall refuse or neglect to make a return at the time or times herein before specified in each year, or shall render a false or fraudulent return, such corporation, joint stock company or association, or insurance company. shall be liable to a penalty of not less than one thousand dollars and not exceeding ten thousand dollars. Any person authorized by law to make, render, sign, or verify any return who makes any false or fraudulent return, or statement, with intent to deleat or evade the assessment required by this section to be made, shall be guilty of a misdemeanor, and shall be fined not exceeding one thousand dollars or be imprisoned not exceeding one year, or both, at the discretion of the court, with the costs of prosecution. All laws relating to the collection, remission, and refund of internal revenue taxes, so far as applicable to and not inconsistent with the provisions of this section, are hereby extended and made applicable to the tax imposed by this section. Jurisdiction is hereby conferred upon the circuit and district courts of the United States for the district within which any person summoned under this section to appear to testify or to produce books, as aforesaid, shall reside, to compel such attendance, production of books, and testimony by appropriate process. REGULATIONS FOR COLLECTION. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, issued on December 3, 1909, regulations for the collection of the tax which among other things prescribed these definitions and 161 rules for determining the gross income of the various classes of corporations: Gross income consists of the gross revenue derived from the operation and management of the business and property of the corporation making the return, Banks and Other together with all amounts of income (Including dividends Financial Institutions. panies, associations, and insurance companies subject to received on stock of other corporations, joint stock comentries on its books from January 1 to December 31 of the year for which return this tax) derived from all other sources, as shown by the is made. For insurance companies and transportation companies the same definition applies. Gross income received during the year from all sources will consist of the total amount, ascertained through an accounting, that shows the difference be Manufacturing such goods as manufactured. The cost of goods manufactured tween the price received for the goods as sold and the cost of shall be ascertained by an addition of a charge to the account of the inventory at beginning of the year and a credit to the account of the sum of the cost of goods as manufactured during the year of the sum of the inventory at the end of the year. income received during the year from other sources, including dividends received on To this amount should be added all items of stock of other corporations, joint stock companies, associations and insurance companies subject to this tax. and sold as above such cost shall comprehend all charges for maintenance and operaIn the determination of the cost of goods manufactured tion of manufacturing plant, but shall not embrace allowances for depreciation of property nor for losses sustained which are to be taken account of in ascertaining the net Income subject to tax under the proper heading in the authorized deductions. Gross amount of Income received during the year from all sources consists of the total amount ascertained through inventory, or its equivalent, which shows the difference between the price received for goods sold and the cost Mercantile of goods purchased during the year, with an addition of a charge to Companies. the account of the sum of the inventory at beginning of the year and a credit to the account of the sum of the inventory at the end of the year. To this amount should be added all items of income received during the year from other sources inclusive of dividends received on stock of other corporations, Joint stock companies, associations and insurance companies subject to this tax. determining this amount no account shall be taken of allowances for depreciation of property, nor for losses sustained which are to be taken account of in ascertaining In the net income subject to tax under the proper heading in the authorized deductions. Gross income consists of the gross revenue derived from the operation and management of the business and property of the corporation making the return, Miscellaneous. ceived on stock of other corporations, joint-stock companies, astogether with all amounts of income (Including dividends resociations, and insurance companies from all other sources as shown by the entries on the bocks from January 1 to Desubject to cember 31 of the year for which return is made. this. tax) derived It will be noted from these definitions that gross income is practically the same as gross profits, the only difference being that gross income is more inclusive, embracing as it does not only gross profits of the corporation, joint stock company and association itself, but also all amounts of Income received from other sources. Immaterial whether any item of gross income is evidenced by cash receipts during the year or in such other manner as to entitle it to proper entry on the books of the It is corporation from January 1 to December 31 for the year in which return is made. In ascertaining income derived from the sale of capital assets, if the assets were acquirea subsequent to January 1, 1909, the difference between the selling Sale of Capital Assets, gross income to be added to or subtracted from gross inprice and the buying price shall constitute an item of or less than the buying price. come according to whether the selling price was greater 1900, the amount of increment or depreciation representing the difference between the If the capital assets were acquired prior to January 1, selling and buying price is to be adjusted so as to fairly determine the proportion of the loss or gain arising subsequent to January 1, 1909, and which proportion shall be deducted from or added to the gross income for the year in which the sale was made. But for the purpose of determining the selling price, as provided in this section, there shall be added to the price actually realized on sale any amount which has already been set aside and deducted from gross income by way of depreciation as defined in Article 4 and has not been paid out in making good such depreciation on the property sold. Where a corporation is engaged in carrying on more than one class of business, gross income derived from the different classes of business shall be ascertained according to the definitions above, applicable thereto. The Legislative, Executive and Judicial Appropriation Act, approved June 17, 1910, modified the publicity requirements of the corporaton tax section of the Payne tariff law. It contained this provision: Publicity $100,000. For classifying, Indexing, exhibiting and properly caring for the returns of all corporations, required by section 38 of an equalize duties, encourage the industries of the United States, and for other purposes,' act entitled "An act to provide revenue, |