Sums paid in respect of life insurance, endowment or annuity contracts which are required to be included in gross income under articles 22 (b) (1)−1, 22(b) (2)−1, and 22(b) (2)−2 come within the meaning of the term "fixed or determinable income " and are required to be reported in returns of information as required by this article, except that payments in respect of policies surrendered before maturity and lapsed policies need not be reported.

For the purposes of a return of information, an amount is deemed to have been paid when it is credited or set apart to the taxpayer without any substantial limitation or restriction as to the time or manner of payment or condition upon which payment is to be made, and which is made available to him so that it may be drawn at any time, and its receipt brought within his own control and disposition. ART. 147-2. Return of information as to payments to employees.— The names of all employees to whom payments of $1,000 or over a year are made, whether such total sum is made up of wages, salaries, commissions, or compensation in any other form, must be reported. Heads of branch offices and subcontractors employing labor, who keep the only complete record of payments therefor, should file returns of information in regard to such payments directly with the Commissioner. When both main office and branch office have adequate records, the return should be filed by the main office. Amounts distributed or made available under an employees' trust governed by the provisions of section 165 to any beneficiary in any taxable year, equal to or in excess of his personal exemption, that have been contributed to the fund by the employer or represent earnings of the fund, must be reported by the trustee. But see article 147-3. (See also article 22(a)−3.)

In the case of payments made by the United States to persons in its service (civil or military) of wages, salaries, or compensation in any other form, the returns of information shall be made by the heads of the executive departments and other United States Government establishments.

ART. 147-3. Cases where no return of information required.-Payments of the following character, although over $1,000, need not be reported in returns of information on Form 1099:

(a) Payments of interest on obligations of the United States; (b) Payments by a broker to his customers;

(c) Payments of any type made to corporations;

(d) Bills paid for merchandise, telegrams, telephone, freight, storage, professional services, and similar charges;

(e) Payments of rent made to real estate agents (but the agent must report payments to the landlord if the amount paid during

the year was $1,000 or more to a single person, a partnership, or a fiduciary, or $2,500 or more to a married person);

(f) Payments made by branches of business houses located in foreign countries to alien employees serving in foreign countries; (g) Salaries and profits paid or distributed by a partnership to the individual partners;

(h) Payments of salaries, rents, royalties, interest (except bond interest required to be reported on ownership certificates), and other fixed or determinable income aggregating less than $2,500 made to a married individual; and

(i) Payments of commissions made by fire insurance companies, or other companies insuring property, to general agents, except when specifically directed by the Commissioner to be filed.

If the marital status of the payee is unknown to the payor, or if the marital status of the payee changed during the taxable year (see article 25-5), the payee will be considered a single person for the purpose of filing a return of information on Form 1099.

ART. 147-4. Return of information as to interest on corporate bonds.In the case of payments of interest, regardless of amount, upon bonds and similar obligations of corporations, the ownership certificates, when duly filed, shall constitute and be treated as returns of information. (See article 143-5.)

ART. 147-5. Return of information as to payments to other than citi zens or residents.-In the case of payments of fixed or determinable annual or periodical income to nonresident aliens (individual or fiduciary), to nonresident partnerships composed in whole or in part of nonresident aliens, or to nonresident foreign corporations (see article 801-8), the returns filed by withholding agents on Form 1042 shall constitute and be treated as returns of information. (See sections 143 and 144.)

ART. 147-6. Foreign items.-The term "foreign items," as used in these regulations, means any item of interest upon the bonds of a foreign country or of a nonresident foreign corporation not having a fiscal or paying agent in the United States, or any item of dividends upon the stock of such corporation.

ART. 147-7. Return of information as to foreign items.-In the case of foreign items, an information return on Form 1099 is required to be filed by the bank or collecting agent accepting the items for collection, if the foreign item is paid to a citizen or resident of the United States (individual or fiduciary), or a partnership any member of which is a citizen or resident, and if the amount of the foreign items paid in any taxable year to a single person, a partnership, or a fiduciary is $1,000 or more, or to a married person is $2,500 or more. Such forms accompanied by Form 1096 should be forwarded to the

Commissioner of Internal Revenue, Sorting Section, Washington, D. C., on or before February 15 of each year. The term "collection" includes the following: (a) The payment by the licensee of the foreign item, in cash; (b) the crediting by the licensee of the account of the person presenting the foreign item; (c) the tentative crediting by the licensee of the account of the person presenting the foreign item until the amount of the foreign item is received by the licensee from abroad; (d) the receipt of foreign items by the licensee for the purpose of transmitting them abroad for deposits. (See articles 147-1 and 147-3.)

ART. 147-8. Information as to actual owner.-When the person receiving a payment falling within the provisions of the Act for information at the source is not the actual owner of the income received, the name and address of the actual owner shall be furnished upon demand of the individual, corporation, or partnership paying the income, and in default of a compliance with such demand the payee becomes liable to the penalties provided. (See section 145.) Dividends on stock are prima facie the income of the record owner of the stock. Upon receipt of dividends by a record owner, he should immediately execute Form 1087 to disclose the name and address of the actual owner. Form 1087 should be filed with the Commissioner of Internal Revenue, Sorting Section, Washington, D. C. Unless such a disclosure is made, the record owner will be held liable for any tax based upon such dividends. (See article 148-1.)

The filing of Form 1087 is not required (a) if stocks are registered in the name of a nominee for a fiduciary required to file a return on Form 1041 in which the dividends from such stocks are reported, and (b) if they are owned by a nonresident alien and are registered in the name of a nominee designated by a bank or trust company which is required to file returns of income for such nonresident alien.

SEC. 148. INFORMATION BY CORPORATIONS.

(a) Dividend payments.-Every corporation subject to the tax imposed by this title shall, when required by the Commissioner, render a correct return, duly verified under oath, of its payments of dividends, stating the name and address of each shareholder, the number of shares owned by him, and the amount of dividends paid to him.

(b) Profits declared as dividends.-Every corporation shall, when required by the Commissioner, furnish him a statement of such facts as will enable him to determine the portion of the earnings or profits of the corporation (including gains, profits, and income not taxed) accumulated during such periods as the Commissioner may specify, which have been distributed or ordered to be distributed, respectively, to its shareholders during such taxable years as the Commissioner may specify.

(c) Accumulated gains and profits.-When requested by the Commissioner, or any collector, every corporation shall forward to him a cor94759-35--20

rect statement of accumulated gains and profits and the names and addresses of the individuals or shareholders who would be entitled to the same if divided or distributed, and of the amounts that would be payable to each.

(d) Compensation of officers and employees.—Under regulations prescribed by the Commissioner with the approval of the Secretary, every corporation subject to taxation under this title shall, in its return, submit a list of the names of all officers and employees of such corporation and the respective amounts paid to them during the taxable year of the corporation by the corporation as salary, commission, bonus, or other compensation for personal services rendered, if the aggregate amount so paid to the individual is in excess of $15,000. The Secretary of the Treasury shall submit an annual report to Congress compiled from the returns made containing the names of, and amounts paid to, each such officer and employee and the name of the paying corporation.

ART. 148–1. Return of information as to payments of dividends.— Section 148 provides that every corporation subject to income tax shall, when required by the Commissioner, render a correct return, duly verified under oath, of its payments of dividends, stating the name and address of each shareholder, the number of shares owned by him, and the amount of dividends paid to him. In accordance with that section, returns of information in respect of dividend payments shall be rendered for the calendar year 1934 and each calendar year thereafter as follows:

(a) Except as provided in paragraph (b) below, every domestic corporation or foreign corporation engaged in business in the United States or having an office or place of business or a fiscal or paying agent in the United States, not specifically exempt from taxation, making payments of dividends and distributions out of its earnings or profits accumulated since February 28, 1913 (not including stock dividends or distributions in liquidation), to any shareholder who is an individual (citizen, resident, or nonresident alien), a fiduciary, or a partnership, amounting to $300 or more during the calendar year, shall render an information return on Forms 1096 and 1099 for the calendar year 1934 and each calendar year thereafter. A separate Form 1099 must be prepared for each shareholder, upon which will be shown the name and address of the shareholder to whom such payment was made, and the amount paid. These forms, accompanied by letter of transmittal on Form 1096 showing the number of Forms 1099 filed therewith, shall be forwarded to the Commissioner of Internal Revenue, Sorting Section, Washington, D. C., on or before February 15 of the following year.

(b) In cases of distributions which are made from a depletion or depreciation reserve, or which for any other reason are deemed by the corporation to be nontaxable or partly nontaxable to its

shareholders, the corporation will first fill in the information on the reverse side of Form 1096 and forward this form to the Commissioner of Internal Revenue, Sorting Section, Washington, D. C., not later than February 1 of the following year. Upon receipt of this information the Commissioner will determine and advise the corporation by letter whether any portion of such distribution is subject to tax. The corporation after receiving this letter will then properly prepare for each shareholder a Form 1099, which shall be forwarded with Form 1096 to the Commissioner of Internal Revenue, Sorting Section, Washington, D. C., not later than 30 days after such letter is received.

In any case in which it is impossible to file the return within the time herein prescribed, the corporation may, upon a showing of such fact, obtain a reasonable extension of time for filing the return. The request for the extension of time must be forwarded to the Commissioner of Internal Revenue, Rules and Regulations Section, Washington, D. C., on or before the date prescribed for filing the return.

ART. 148-2. Information respecting compensation of officers and employees in excess of $15,000.-Every corporation subject to taxation under Title I which during any taxable year beginning on or after January 1, 1934, has paid to any officer or employee of the corporation, salary, commission, bonus, or other compensation for personal services rendered, in an aggregate amount in excess of $15,000 (in whatever form paid), shall in respect of each such taxable year, make and file, in duplicate, Schedule C-1, as a part of its income tax return, in accordance with the instructions contained in the prescribed return. Such schedule shall contain the following information: (1) Name and address of officer or employee, (2) position or title, (3) percentage of common stock of the corporation owned, (4) percentage of preferred stock of the corporation owned, (5) amount of salary paid, (6) amount of commission paid, (7) amount of bonus paid, (8) amount of other compensation paid, and (9) total compensation paid. If the full time of any such officer or employee is not devoted to the corporation's business, the percentage of time devoted to the corporation's business shall be stated in the schedule.

The term "paid " as used in this article means "paid or accrued " or "paid or incurred" which shall be construed according to the method of accounting upon the basis of which the net income of the corporation is computed.

Upon receipt of the returns by the collector, the duplicate schedules will be detached and forwarded by the collector to the Commissioner of Internal Revenue, Sorting Section, Washington, D. C.