Variety (January 1925)

VARIETY •1 tEGISLATIVE -— Wednesday, January 7, 1825 WINTHROP AMES, INC. NOT PERSONAL SERVICE CORP. >{ • '■ r. .i» I So Say* Tiuc Ruling—Board of Tax Appeal PaMot ' on Application—^MeeU Two Requirementt, but Misses on Remaining One ' *: 7 Variety Bureau, Washington, Jan. C The nawly created board of tax apDoal has ruled that the Theatrical Froducincr ComiMuir, known aa Wln- throp Ames, Inc., is not a pet-sonal ■ervice corporation. Tax expert* ber« believe that, although Indl- Tldual cases will have to be acted apon separately and upon their own merita, this decision will have a far r«acbins lailuence in winding up the nght made by theatrical pro- docvra to bare the classiOcatioh of v; •■ ■-"' • -^ orporatlons. If It were possible to secure such a clas- slflc^tion it would mean savlQgs of largo aums.to the producers. The ■ Ames' casa was heard by llesars.' James, Trammell, Trassell and Stemhageh of the l>oard, with Janes writlhg the (»t>lnl<>i>. -. J» piiB oj^lnioh U la sUted that WlBthrop AXaea, Ino« Memingly met the first two of the three "mateirial raquirements" constituting a per- aonal service cori>oratton. Tha three requirements^ under ~ aectftm i96 pt .the reyehue 'a!ct of Itll a>e, as pointed out by Mr, James, as follows: "1. That Its income shall "be as- eribed primarily to the activities of tha principal owners or stockhold- *^. That the stockholders shall bo themsolTes ragularly engaged In the active conduct ot tho affairs of the corporationT and "■ ■'■ **•. That eapttal (whether ta- t vevted or borrowoS) ahUl not be' la material Income producing fac- tor.'- As Wlnthrop Ames owned all the .stock of the corporation bearing bis name and as he actively directed its affairs the ilrst two requirements /wero met—but when It came to Wlnthrop Ames, luc, borrowing money from Wlnthrop Ames, the in- Individual, "it appears," .according to the opinion, "to us that capital borrowed from Wlnthrop Ames was a material Income producing fac- . tor." ' Tho case was brought before the board of appeals due to the commis- ■loaer of internal revenue having previously ruled that the AmM cor- poration was not a personal aervlce body. In his personal tax returns for the years of 1918 and 1919 Mr. Ames claimed as deductions on ac- count of bad debts the sums of |10S,072.80 and $61,894.99, these being tho sums shown as losses of eabh of the said years on the l>ooks of "Office of Wlnthrop Ames. Inc." It was upon«the disallowance of these deductions by tho e<»nmissioner that brought the Ames appeal to the board. Ames' Lo s se s From the year 191t. when Amea Incorporated, continuous losses were shown on the Ames, Inc. iMwks. From 1913 through 1920 these looses totaled $600,429.96. divided as fol- lows: Prior to 191S S27.ll8.0e 1918 •••••'••&..• 46,698.28 )914 ..•• ..•.•••••• 88,258.95 1916 >•« vji*** •••••••••• ••• S3,oo8.ov 191C ...•••••.••••••••••.• 84,189.02 1917 ••••••••••••••••••••• "9,139.42 1918 108.072.80 1919 •.•...•.••..«........ •l,8S4.»9 ■-^930 86,691.00 ^-The years from 1981 on showed a fr^t A^eo' primary object, according to tiLe opinion, in incorporating was to avoid any large personal dam- #fff% WILLIAM MORRIS AOkKCt IVO. ^m BMc, 14M Dr ea*< Sa y. Hew letk •^ tkiM** • •• «*Mte* LM«M HtMm ^ M TILLQt SCHOOIS ' OF DANCING, 14S Charirtg Cross Road LONDON SHfclor, JOHN TILLER |L Dir>cto8 ago suits following any calamity . a Llltle theatre. •"•.., bonrd . found that the oorporato body bad no legal oxlstehco Iqf reason (t^t t|>e fact that th« two directors wore not in fact owners of capital stock of ^the corporation. However,, due to the ^act tbat the Bute of New York recognised its existence and that Ames paid bis franchise taxes regularly throughout the period of its existence, coupled with the fact that from the. day of Its Inception regular booka wore kept, offices maintained .as well as employes, and that Atmes treated -it as a soporat.-^ being:; there was left no course open. >to the board but to eonipider that the corporation really existed. In .this connection Mr. James, In his opinion, writes: "He (Wln- throp Ames) characterized the con- tinued carrying on of the business through the medium of tho cor- poratlop.fui a 1>ad habiV but .it.is: in fact a thoroughly stable and consistent ihabit" AiQos submitted inuch avldenfo to prove his contention that capi- tal was not a "material income pro- ducing factor," the third require- ment to get tho corporation under the personal service head. The evidence submitted tended to show that the expenses wliich procedadc the first production of a play did not ordinarily exceed a t0w thousand dollars. la this oonnectlon the opinion states: "But the business of tho office of Wlnthrop Ames, Inc., was not the producing of a play or rather ttie placing of a play in a posl- . tion to l>e produced in a theatre, but was the producing of playa U a play was unsuccesful and In- volved the assuming of losses In- cident to the continuance of the pay roll of a production in the Dace of onfavorable receipta at the box office, the oorporation aevertheless continued and the capital required for that purpose was a large 4uid very material fac- tor not only in keeping that par- ticular play alive, but in keeping aUve the going business itself. The business of producing plays was made succesful in the end only by reason of the large sums so .advanced and continued over u period of ten yeara Mr. Ames testified that be cbuld not have continued in business long bad such payments not boon made. The capital ao advanced totaled 1719.228.68. This was the eapttal loaned to and employed by the corporation over the entire period of its existence after full allow- ance had been made for all re- - payments. It can hardly be said of a business requiring such a sum to bring it to the point of pro- ducing net income that it is one In which capital (whether In- vested or borrowed) Is not a ma- terial Income producing factor L>, .^s the hearings Mr. Ames testified that the assets carried up to the end of 1918 such as plays, etc.. ware not worth in oxceas of $20,600. At tl^o end of 1911. U Is stated. In the oi^lon, that the en- tlro "item of playa wris the cost which subse- quently proved a total loss, and "Hana* when iMglnning. which be- came nSeggar on Horseback' and became a success." The board, however, sees wherein Mr. Ames does have a refund com- ing due to the operation of the Lit- tle theatre, inasmuch as the origi- nal corporation made to operate this theatre was dissolved. In this the board disagrees with the de- cision of the commissioner and states that from the data obtain- able Ames hak a claim amounting to $37,342.92. The evidence, how- ever, waa not sufficient for the fll'S time, tl^ey did, though, leave the matter open so that Ames could appeal tor tbls amount The decision of the board is as follows: *'A taxpayer owning an ot the stock of a corporation, not a por- Van Rov^. Im^ Van' HovMr lee Van Hoven, Ice, Van Hoven, Ice Van Hoven, Ice, Van Hoven, Ice Van Hoven, Ice, Van Hoven, Ice Van Hoven, Ice, Van Hoven, Ice FRANK VAN HOVEN Booked solid all over the world for years. Dlreotton, EDWABD a KELLER sonal service corporation, dtky ilot deduct undMi* the revenue act of 1918, as losses sustained in the business or as debts ascertained to t>o worthless, advance^ made to such corporation in the amount of tho losses actually sustained by the corporation dur- ing a year, so .lon^ as the corpo- ration has net assets from wblch_ recovery in part is possible. ' "Individual buMn^s expenses' cleared through the books of a corporation are dadu^ctible on tho part of the Individual to .whose business they relate." Burton SL E2ames apptered as oonnsol for Mr. Ames. R. n SUNDAY BILL- Providence, Jan. I. Showmen here have been assured that OQO of the first acts to be pre- sented in tho Qeneral Assembly, which convened today, will be a Sunday show bill. As the result of widespread agi- tation, stronger than ever before, by theatre managers, representatives of iMth parties have promised to back the bilL Nothing except benefit perforiol- ancea and "high-brow" concerts are allowed under the present law. It is oxpocted that a bill providing Sunday movlea at least, can bo put through tho new Assembly. ANNOYING LEGISLATION EXPECTED AT ALBANY Legislature Starts Grind This Week—Pictures and Prohi- ' bition Among Measures CHILD LABOR] LAW TO BE DECIDED KK-Mimite Picture of llieatre Building Chicago, Jan. •. A BOW Innovation in keeping a check-up on the demolishing and construction of a theatre and later developing it for entertalpment and educational purposes is being di- rected by the Orpbeum Circuit. With tha demolishment of the BIsmark hotel, pict-'^-es are being taken daily. The aamo method will bo employed when the work on the new Orpheunt theatre t") be erected In Its place v^^ll commence. The films wBl later ue developed show- ing the destruction and erection of the building In the form of a 10- mlnute news real to go over tho en - tiro elrcait. INBATHS ABROAD 2>arls, Jan. C. Loon Bakol, Russian produoer, died near here Doc. 87 f<^owing a long siege of lung trouble. His age was 17. Henri Tronchin, 71, Swiss author, died at Geneva where he was bom. Ernest Bertrand, known i.3 Bert- rand Vigne, French author, died at Nyons, Drome, France, aged 70. Qonovieve Maindron, French opera singer. She was the daughter of HIppolyte Maindron, sculptor. M. Clisson, Journalist and erltic, died here following an operation. Decker, French illusionist, aged 63. J»mn Francois Fonson, Belgian actor, author and manager of The- atre des Galeries St. Hubert, Brus- sels, died here Dec. 17, aged 64. Casimlr Sylvian Monie, formerly actor ait the Paris, died in Paris, aged 68. Bernard Joseph Vidal, SVench mu- sician and composer, died last week. Maurice Courant, French painter. Eugene Lorraine, professor at Paris conservatoire #f music, for- merly of Opera Conkque, aged 88. Joseph Basse, secretary of the Paramount Flhns spHete (French) la Paris, aged 44. "^rmerly direc- tor ot tho Bdlpoe Film Oa Albany. N. T., Jan. 1. The New York State ^legislature convening in annual session to- morrow and biUed to give daily performances five days aaoh week with evening shows Mcmday, rain or shine, regardless of holidays, un- til about April 18. Is expected to play "hockey-pockey" with a num- ber of measures relating to pro' hibltlon enforcement, censorship and the like, without any Idea of effecting real accomplishment. The Legislature is Republican and the Governor is Democratic, but the Legislature has not enough Re- publican votes to pass a measure over executive veto. A prohibition enforcement meas- ure Witt be introduced and is al- most oertoin of passage; this will bo done with the idea of putting Oovernoi- Smith in a bole so to speak, ^t the Legislature If it thought the Qovemor would algn any such measure would Itesitate a long time before it would i>ass such a law, as the bar and businesii peo- ple in general hold the opinion pro- hibition enforcement should be left to Federal authorities. Eariy reintroductlon of the book censorship measure is anticipated, with an exception taking care of the "public press." This measure will receive ciistomary publicity, hearings will be held on it. but -it Is doubtful If it will get anywhece. Assemblyman Frederick L. Hack- enbuxg 6f New York City will re- introduce bis bill for repeal of the motion picture censorship law. His measure will call for the gradual winding up of the affairs of the department and turning over of their records for deposit where they will not become, public property. Whether or not the Davison or the Walker picture censorship ten pealers, introduced at the close of the 1924 session of the New York State Legislature will make their appearance early in the session has not yet been announced. Both of these bills contain the obJecUopnable padlocking provision fashioned after the Volstead Law and are ob- jectionable because they lessen the security value of the property used for theatricaT purposes. William W. Farley, Albany lawyer, former excise commissioner and former chairman of the Democratic State Committee, recently named chairman of the Legislative Com- mittee of the State Association of Motion Picture Theatre Owners in a recenl interview stated that the newly created committee had not started to function and had not considered any plan of action. It Is the intention of this association to create sentiment amongst patrons of the theatre for censorship re- peal. 96 for Censor Film The Motion Picture Censorship Commission, it Is stated, ha's made up a reel of several hundred feet of objectionable sections it has clipped from various pictures submitted to It, and at the crucial hour as a jTistlfication of Its position would parade a showing of this reel for the oaification of the Legislators. Some wag suggested that It be shown in the Assembly chamber at f6 per head. , Unless some compromise agree- ment bo reached In a legislative trade, there is very little chance that the censorship law will be re- pealed in New York State In 1926. Tho right sort of a campaign to insure such action has not as yet been undertaken and the repeal movement lacks a sufficiency of the right kind of influential backing. Jimmy Waiker for Theatre Senator James J. Walker, who is to be minority leader of the State Senate is looked upon on "the Hill" as the champion of the theatre forces. He is one of the ablest legislators who has ever sat in the Senate and the theatre is well blessed with having the popular "Jimmy" to fight lU battles in the legislative halls. Senator Walker was the majority leader of the Upper House last year, Forty or Moire States PaM« ing Upon Proposed Con- stitutional Amendment v.: —:— m —. Washihgton, Jan. 1 A large number of the States of the Union will tbls month decide as to what their respective attitudes on J^ie proposed constitutional aniondraent bannlnp; child labor will be. Forty--'• '"^tes hav(^' thelr^'^ Loglslatarcs meeting during JaiiU'*^ ary. It is expected those responsi* hie for the measure here In Con- grees will know pretty definitely' the fate of the 'proposal within a' short time. ' - That the adoption of the amend- ment, which allows Congress to enact leglidation on child labor, would affect stage children from many angles, is conceded here. The House and Senate passed the amendment last June following anij adverse decision of the United Statea Supreme Court to the effect CongrMs did not have the right to regulate the employment of chU>~. dren within thb States. Another measure which was passed by the Senate during the week was the Capper bill, making school attendance by children com- pulsory. Although Senator Capper (R.), Kansas,, has made his bill apply only to the children of tho District of Columbia, the thought. has been expressed here that such ' a law may be enacted by every State. This opinion is Itased upon,' the methods of the "reformers," with, their Sunday closing bill for the,^ District, which body has statjBd that'' close the entire nation on Stinday.**' to "close the District will mean to- . VIENNA HALLS REOPENING Foreign Capital Reported Behind Renacher's and Apollo Vienna, Dec. 28. Ronacher's and the Apollo, lead- ing vaudeville theatres here, are opening for the holiday season, backed by foreign capital. Clifford Fishe-, from New York,, is to manage tho Xpollo, listed for Inauguration Christmas eve with a vaudeville bill. An English com* pany is said to be Interested in tho famous Ronacher'a which .Is to* start operations New Year's day. DOLLYS FOR BED HILL Paris, Dec. 80. Negotiations are in hind for 'th# Dolly Sisters to appear In a second edition of the Moulin Rougo revue, "New York to Montmartro," ««xt spring. SAILINGS ■■' Jan. 17 (Now York to Ziondoa)^ Arthur Hopkins (Mauretania). - Jan. 8 (New York to San Fra»4 eisob). Roland West (Kroonlaod). Jan. S (Havre to Now York) Nlkita BaUeff (France). Jan. I (New York to London) Vladimer Qolschman. Jan Vgbert. Hattie Carnegie, Max Marcln. D. K. Weiskoff (Aquitanla). JAi. 8 (New York to Paris) John Skelly and wife (America). Jan. 8 (Cherbourg to New York^ Mr. and Mrs. Vivian Moses (Maure* tbnia). ARRIVALS (New York from London) BilUe Reeves ("The Druuk"), DoUy Lewis. but owing to the Republican vic- tory at the polls in November, he will be relegated to the helm of the Democratic minority when the 1925 Legislature convenes tomorrow. It is the second time Senator Walker has filled the minority role, as he was the leader of the smaller group in 1920 and 1921. A Ke88age from Shore or Ship will guarantee a Soom THE PICCApiLtY WHERE ALL THE SHOW FOLT^ STOP ' "^ i^auw JMiifii - ^iidiiMiiiaiiiilMtti mniuk Cable Addreas: PIQUDILLO, LX>NDO T