Page:United States Statutes at Large Volume 68A.djvu/622

 582

INTERNAL REVENUE CODE OF 1954

the Secretary of Agriculture, to enable him to designate a t least five spot markets in accordance with section 4863(c), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different grades, in the markets selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to section 4863(a) and (b) shall be determined in compliance with such rules and regulations: Provided further, That it shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary of Agriculture or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other terms of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. SEC. 4863. BASIS GRADE CONTRACTS. (a) CONDITIONS.—No tax shall be imposed under this subchapter on any contract of sale mentioned in section 4851(a) if the contract comply with each of the following conditions: (1) CONFORMITY WITH SECTION 4853 (a) AND REGULATIONS.— Conform to the requirements in section 4853(a) and the rules and regulations made pursuant to this subchapter. (2) SPECIFICATION OF GRADE, PRICE, AND DATES OF SALE AND

SETTLEMENT.—Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary of Agriculture, except grades prohibited from being delivered on a contract made under this section by the fifth paragraph of this subsection, the price per pound a t which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled: Provided, That middling shall be deemed the basis grade incorporated into the contract if no other basis grade be specified either in the contract or in the memorandum evidencing the same. (3) PROVISION FOR DELIVERY OF STANDARD GRADES ONLY.—

Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary of Agriculture except grades prohibited from being delivered on a contract made under this section by paragraph (5) and no other grade or grades. (4) PROVISION FOR SETTLEMENT ON BASIS OF ACTUAL COMMERCIAL DIFFERENCES.—Provide that in case cotton of grade other

than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided. (5) PROHIBITION OP DELIVERY OF INFERIOR COTTON.—Provide

that cotton that, because of the presence of extraneous matter of § 4862(b)

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