Broadcasting (Jan - June 1942)

Station in Mexico Avoids U. S. Tax U. S. Appellate Ruling Finds Income Levy Not Applicable MEXICAN border stations sellingtime primarily to American advertisers are not required to pay income taxes to the United States, under an opinion handed down April 3 by the U. S. Circuit Court of Appeals for the Fifth Circuit, sitting in New Orleans. Affirming a split decision of the Board of Tax Appeals in a case involving the former XEPN, at Piedras Negras, Mexico, across from Eagle Pass, Tex., two of the three circuit judges held that none of the former station's income "was derived from sources within the United States". The amount of tax sought to be recovered by the Commissioner of Internal Revenue was approximately $90,000, for the years 1936 and 1937. Operated by Branch XEPN was operated by a Mexican company, but W. E. Branch, an American, was the actual operator. Mr. Branch, identified with several border stations, now is authorized to locate a new 150,000watt transmitter at Juarez, across from El Paso, on 800 kc. The State Department protested the assignment [Broadcasting, March 30]. The litigation was initiated in 1939 with Robert Ash, Washington tax attorney, representing the Piedras Negras Broadcasting Co., operating the former XEPN. After the Board of Tax Appeals opinion in favor of the Texas station had been rendered, the Commissioner of Internal Revenue took an appeal to the Circuit Court. Circuit Judges Hutcheson and Holmes concluded that even though 95% of the station's income was derived from advertisers within the United States and bank accounts were maintained both in Texas and Mexico, the books and records of the station were in Mexico and its only studio was across the border. It concluded, therefore, that all of the services rendered by the station in connection with its business were performed in Mexico. Circuit Judge McCord, in his dis Gadget Chance RAPID growth of electronic gadgeteering for the duration is the prediction of Charley Golenpaul, in charge of jobber sales for Aerovox condensers. Although many hams are and will be engaged in wartime activities Golenpaul nevertheless asserts that those remaining at home will be busy with electronic gadgeteering possibilities. He foresees the possibility of such developments as light-beam telephones for conversing over long distances, various applications of the photoelectric principle, and the like. H. L. Wilson in Army HERBERT L. WILSON, consulting radio engineer and head of Allied Research Laboratories, New York, has been called to duty as a captain in the Army Signal Corps. For the duration his firm will be carried on by associate engineers Edward J. Daubaras and Raymond Fuleihan. Wilson is in the general development division of the Signal Corps. Dr. Wilson HARRY BRIGHT, for two years program imiductioii iiiaiiayer of W(;HR. Coldi^bni-,), X. ('.. has been named ]ir()f;rain director of \\'K'I]M. Fitelil>uri;'. Mass. sent, held that the income should have been taxed since the programs of XEPN were primarily designed for listeners in the United States and since 90% of listener response came from this country and 95%. of its income came from American advertisers. Agents of the station solicited advertisers in this country and the Eagle Pass mailing address used was "most beneficial to the company, if not absolutely essential to the success of the operation." The original deficiency in tax was approximately $60,000, but this was increased to a claim for $90,000 on the appeal. WIAC 580 Kc. • 5000 Watts "First on all Puerto Rico Dials" Box 4504 San Juan, P. R. Treasury Defers 'Wake Up America' PLANS of the Treasury's Defense Savings Stalf to dramatize the now famous Scripps-Howard editorial "Wake Up America — It's Late" were dropped a week ago because of the swiftly changing national scenes, it was learned in authoritative quarters. The postponement order, announced April 2 after a dramatized version of the editorial had been recorded, came from "high Treasury oificials." The cancellation was ordered on 718 stations carrying the Treasury Star Parade, but too late to prevent its broadcast on a number of the stations. Labor Offended The editorial, first published in the Pittsburgh P)-ess, was widely reprinted and dealt with alleged impediments to the country's war effort. Labor organizations, it is understood, took umbrage and this reaction resulted in the cancellation order. Treasury attaches said the broadcast had only been postponed, but the general feeling is that it has been killed. Officially, it was stated that the whole picture changed between the time orders were issued for transcribing the program and the scheduled broadcast date. Consequently, it became "untimely". The dramatization, transcribed by World Broadcasting System, starred Frederic March and Janet Gaynor, among others. 'Lutheran Hour' Rests USUAL summer hiatus of The Lutheran Hon) on Mutual will start after the April 19 broadcast, with the series to return to that network early this fall. Featuring talks by Dr. Walter A. Maier, the program is sponsored by the Lutheran Laymen's League, St. Louis, and heard Sundays 1:30-2 p.m. on 58 MBS stations. Agency is Kelly, Stuhlman & Zahrndt, St. Louis. Kathryn Cravens Honored KATHRYX CRAVKXS, who coiitlucts yews Throuqh a Womuivs El/en. on WNEW. New York, has been awarded first prize l)y the Assn. of American Pen Women for the best ])ublished magazine article to be written by a woman. Her prize-winning article --Helen Keller l'iti(!S the Real T'nseeinu". was pnblished in the magazine section of the New York Times June li.-?. l'.)40. ROCHESTER STATION With Both LOCAL and NATIONAL Program Sponsors ,, There must be a reason V lor such Preference . . Investigate Yoursell! OC H f iiiiiifciiiiai BROADCASTING • Broadcast Advertising April 13, 1942 • Page 49