ury Department : : Bureau of Internal Revenue
BULLETIN "C"
INCOME TAX
Comparison of Tides and Sections of the Revenue Acts ^ 19! 7
and 1918 applicable to Income and Profits Taxes
California
egional
acility
WASHINGTON
GOVERNMENT PRINTING OFFICB
1920
Treasury Department : : Bureau of Internal Revenue
BULLETIN "C"
INCOME TAX
Comparison of Titles and Sections of the Revenue Acts of 1917
and 1918 applicable to Income and Profits Taxes
WASHINGTON
GOVERNMENT PRINTING OFFICE
1920
PREFACE.
This comparison of the Revenue Acts of 1917 and 1918 is made on
the following general plan:
(a) Only those titles and sections applicable to income and
profits taxes are compared.
(6) The comparison is made in the order in which the various
sections appear in the Revenue Act of 1918.
(c) Difference in treatment of similar subjects in the two acts,
features of either act not contained in the other, and en-
tirely new features in the 1918 act are emphasized.
(d) In all cases, regardless of how the subject is treated, corre-
sponding sections of the two acts are placed opposite each
other. If the subject is treated similarly in both acts,
notation to that effect is made.
(e) Although it is intended to emphasize differences, in some
instances where a subject is entirely new in the 1918 act,
mere notation to that effect is made, since reference can
readily be made to the act itself for particulars.
(/) Reference is made in some instances either to Regulations
No. 33 revised or Regulations No. 45 where a subject may
be specifically covered in one act but mentioned only in
the regulations governing the other act.
(g) The term "Act of 1916 as amended" means the Revenue
Act of September 8, 1916, as amended by the Revenue Act
of October 3, 1917. "Act of 1917" means the Revenue
Act of October 3, 1917. Both acts were in effect for the
year 1917.
(3)
COMPARISON OF TITLES AND SECTIONS OF THE REVENUE
ACTS OF 1917 AND 1918 APPLICABLE TO INCOME
AND PROFITS TAXES.
1917.
The 1917 act contains no section cover-
ing general definitions. Sec. 200 of Title
II, War Excess Profits Tax, defines "cor-
poration," "domestic," "foreign,"
''United States," and "taxable year."
The meaning of the terms is the same as
when used in the 1918 Act.
Tke word "State" or "United States,"
when used in Title I, includes any Terri-
tory, the District of Columbia, Porto
Rico 4 and the Philippine Islands, when
such construction is necessary to carry
out the provisions of the title. (Sec. 15,
Act of 1916 as amended.)
Sec. 200:
/
The "first taxable year" means the
calendar year 1917, or in the case of part-
nerships and corporations which have
established fiscal years any fiscal year
ended in 1917. Individuals were not
allowed to file fiscal-year returns under
this act. Although this definition is
given under the "War Excess Profits"
title, it has the same meaning in applying
the other "Income Tax" titles. See also
Sec. 4, Act of 1917.
"Fiduciary" is defined in Art,. 29 of
Eeg. No. 33 revised.
A "personal service corporation" is
not defined under the 1917 act. Sec. 209
applies primarily to businesses, etc., en-
gaged principally in rendering "personal
services," but there is no exemption from
tax for personal service corporations simi-
lar to that provided in the 1918 act.
See Art. 126 of Reg. No. 33 revised for
"paid."
There was no distinction made in this
act in the case of dividends paid by cor-
porations which under the Revenue Act
of 1918 would be classed as personal-
service corporations. Sec. 31 (a).
Sec. 31 (a), Act of 1916 as amended.
1918.
TITLE I. GENERALDEFINITIONS.
SEC. 1. General definitions.
The terms "Government contract,"
"military or naval forces of the United
States, ""and "present war" are entirely
new in this act.
The terms "Secretary," "Commis-
sioner," "collector," "person," "tax-
payer," "Revenue Act of 1916," and
"Revenue Act of 1917 " are not denned in
the 1917 act, but when used in applying
that act have the same meaning as de-
fined in the 1918 act.
The term "United States" when used
in a geographical sense includes only the
States, the Territories of Alaska and
Hawaii, and the District of Columbia.
TITLE II. INCOME TAX.
Part I General Provisions.
SEC. 200. Definitions.
The "first taxable year" means the
calendar year 1918 or any fiscal year
ended in 1918.
The terms "fiduciary," "withholding
agent," "personal service corporation,"
and "paid" are not defined in the 1917
act.
SEC. 201 .Dividends.
The term dividend includes any dis-
tribution made by a personal service
corporation out of its earnings or profits
accumulated only between February 28,
1913, and January 1, 1918.
Stock dividends are taxed under both
acts.
(5)
BULLETIN C.
1917.
Dividends in general received by indi-
viduals were taxable at the rates in effect
for the years when the earnings were
accumulated. Sec. 31 (6), Act of 1916 as
amended.
Dividends received by corporations
were subject to income tax, but only at
the 2 per cent rate, or at 1 per cent only
if from earnings or profits accumulated
during 1913, 1914, or 1915.
Any dividend distribution (except
those made prior to Aug. 6, 1917, out of
earnings or profits accrued prior to Mar. 1,
1913) were deemed to have been made
from the most recently accumulated sur-
plus or undivided profits, even though
paid during the first 60 days of the taxable
year. This provision included stock divi-
dends and determined the rate at which
the dividend was taxed in the hands of
stockholders. Sec. 31(b), Act of 1916 as
amended.
In the case of sale of property acquired
prior to March 1, 1913, its fair market
price or value as at that date shall be the
basis for determining the gain or logs.
Sec". 2(c), 5(a), 4 and 10(a), Act of 1916 as
amended.
Prior to the date of T. D. 2609 (Dec. 19,
1917) inventories were computed on the
basis of cost. Sec also T. B. R. 48,
Bulletin No. 16, p. 3.
No rimilar provisions in the 1917 act.
1918.
Dividends in general received by indi-
viduals are taxed at the rates in effect for
the years in which the dividends were
received.
Stock dividends received by indi-
viduals between January 1, 1918, and
March 27, 1919, are taxable at the rates in
effect for the years in which the earnings
or profite distributed were accumulated.
Dividends received" by corporations
from corporations subject to tax and from
personal service corporations out of earn-
ings or profits upon which income tax has
been imposed are not subject to income or
profits taxes. See Sec. 234(a) 6.
Dividend distributions are deemed to
be made from the most recently accumu-
lated earnings or profits unless made
during the first 60 days of the taxable
year, in which case they are deemed as
made from earnings or profits of prior
years. This does not affect the taxability
of the dividends in the hands of stock-
holders.
SEC. 202. Basis for determining gain or
loss.
The same provisions effective under
the 1917 act apply frith the following ex-
ceptions:
If property acquired prior to March 1,
1913, is inventoried in accordance with
Sec. 203, its inventory value is the basis.
In the case of reorganizations, mergers,
or consolidations involving exchange of
stock for stock or securities of ao greater
aggregate par or face value, no gain or
loss is deemed to occur from the exchange.
SEC. 203. Inventories.
Inventories may be taken on any basis
prescribed by regulations as conforming
to the best accounting practice in the
trade or business and most clearly re-
flecting the income of the taxpayer.
The regulations (No. 45) prescribe that
the basis shall be either (a) cost, or (6) cost
or market whichever is lower. Art. 1582.
SEC. 204. Net losses.
Th'is section allows a taxpayer who sus-
tains a "net loss " as defined in (a) for any
taxable year beginning after October 31,
1918, ana ending prior to January 1, 1920,
to deduct such net loss from the net in-
come of his preceding taxable year and
have his taxes adjusted accordingly. If
the net loss exceeds the net income of the
preceding taxable year, the excess may
be deducted from the net income of the
succeeding taxable year.
BULLETIN C.
1917.
Under the revenue act of 1917 if a fiscal
year return covered portions of years with
different tax rates, the rates in effect for
each year were applied only to the same
proportionate part of the total net income
as the number of months falling within
such year bore to the entire period cov-
ered by the return. SEC. 10(a), Act of
1916 as amended.
Applicable to corporations and part-
nerships only since individuals were not
allowed to file returns on a fiscal-year
basis under the act of 1917.
No similar provision in this act. How-
ever, similar cases arising under this act
are to be treated in the same manner.
SEC. 1:
1918.
SEC. 205. Fiscal years with different rates.
Under the 1918 act, if a fiscal-year re-
turn covers parts of years subject to dif-
ferent tax rates, both the net income and
the tax are computed for the full fiscal
year under both acts in effect or under
both rates, and the same number of
twelfths of each result taken as the num-
ber of months falling within each year
subject to different rates.
The last paragraph of Sec. 8(e), Act of
1916 as amended, and Sec. 218(b), Act of
1918, appear to outline the same method
of taxing partners' shares of partnership
profits when the fiscal year of the partner-
ship covers parts of years with different
tax rates. However, Sec. 218(b) is modi-
fied by Sec. 205(c).
SEC. 206. Parts of income subject to rates
for different years.
This section provides that when parts
of a taxpayer's income are subject to rates
for different years, the parts subject to
the rates for the most recent calendar
year are placed in the lower brackets of
the tax-rate schedules, the part subject
to the rates for the next preceding calen-
dar year in the next higher brackets, etc.
Part II. Individuals.
SEC. 210. Normal tax.
NORMAL TAX CITIZENS AND RESIDENT
ALIENS.
Act of October 3, 1917, 2 per cent of
net income in excess of exemption.
Act of September 8, 1916, 2 per cent of
net income in excess of exemption.
NORMAL TAX NONRESIDENT ALIENS.
2 per cent of total net income from
sources within the United States.
CITIZENS AND RESIDENT ALIENS.
For 1918.
12 per cent of the amount of net in-
come in excess of the credits provided
in Sec. 216; provided, the rate upon the
first $4,000 of such amount shall be 6
per cent.
For subsequent years.
8 per cent of the amount of the net
income in excess of the credits provided
in Sec. 216; provided that the rate upon
the first $4,000 of such amount shall be 4
per cent.
NONRESIDENT ALIENS.
For 1918.
12 per cent of total net income from
sources within the United States. (Pos-
sible credits; see Sec. 217.)
BULLETIN C.
8
1917.
For excess profits tax rates see Sees.
201 and 209, Act of 1917.
Sec. 1 (6), Act of 1916 as amended.
Sec. 2, Act of 1917.
Under this act surtaxes were imposed
on income in excess of $5,000, as in the
Act of 1918, but income in excess of
$20,000 was subject also to the surtax
imposed by the Act of September 8, 1916.
Under the 1917 act the rates, increased
from 1 per cent on the amount by which
the total net income exceeded $5,000 but
did not exceed $7,500 to 50 per cent of
the net income in excess of $1,000,000.
Under the 1916 act the surtax ranged
from 1 per cent on the net income ex-
ceeding $20,000 and not exceeding $40,000
to 13 per cent on the amount exceeding
$2,000,000. The highest surtax rate was
thus 63 per cent on net income in excess
of $2,000,000.
Under the provisions of Sec. 31 (b),
Act of September 8, 1916, as amended,
dividends received are taxable at the
rates, surtax only (Sec. 5 (b), Act of 1916
as amended), in force for the year in which
the amounts distributed were accumu-
lated.
No similar provision in this act.
Sec. 2 (a), Act of 1916 as amended, de-
fines net income in the case of an indi-
vidual, and states in general the items to
be included in gross income. Gross in-
come is denned in separate sections in
the Act of 1918.
Individuals were permitted to make
returns on a basis other than actual
receipts and disbursements provided such
method correctly reflected their net
income, but all returns were required to
be on a calendar-year basis. (Sec. 8 (a)
and (g), Act of 1916 as amended).
Changes in accounting period under the
1917 act applied to partnerships [Sec.
8(e)] and corporations [Sec. 13(a)] only
which were allowed to establish a fiscal
year for the purpose of making returns by
designating the last day of any month as
1918.
For subsequent years.
8 per cent of total net income from
sources within the United States. (Pos-
sible credits; tee Sec. 217.)
Individuals not subject to profits tax.
SEC. 211. Surtax.
(a) The surtax begins with a tax of 1
per cent on net income over $5,000 and
not exceeding $6,000. The rates in-
crease gradually from this point to a
maximum of 65 per cent on the net in-
come in excess of $1,000,000.
All dividends received by individuals
(except stock dividends as explained in
Sec. 201) are subject to surtax rates for
years in which they were received.
(b) Surtax in the case of bona fide sale
of mines, oil or gas wells, or any interest
therein, where the taxpayer has demon-
strated principal value by prospecting or
exploration or discovery work is limited
to 20 per cent of the selling price of the
property or interest.
SEC. 212. Net income defined.
This section applies to all taxpayers,
(o) Net income is defined as gross in-
come less allowable deductions.
(6) Net income is to be computed on
the basis of the taxpayer's annual account-
ing period (calendar or fiscal as the case
may be) in accordance with the method
of accounting regularly employed in
keeping his books, unless such method
does not clearly reflect the income.
A change in accounting period for the
purpose of computing net income may be
made only upon approval by the Com-
missioner. Notice of such change, to-
gether with reasons therefor, must be
lied (1) at least 30 days before the due
BULLETIN C.
1917.
the close of the fiscal year, and giving
notice of such action to the collector for
the district in which their principal
offices were located. This notice was
required to be filed at least 30 days before
the due date of the return for the existing
taxable year. Provision was made in
Reg. 33 revised for changing from a fiscal
year to a calendar year (Art. 217) and
Irom one fiscal year to another (Art. 213).
See Sec. 2 (a), Act of 1916 as amended,
income defined, individuals. Gross in-
come of corporations is not specifically
defined.
Under this act the items mentioned in
Sec. 213 (b) 6, Act of 1918, were taxable.
See Sec. 4, Act of 1916 as amended.
Sec. 30, Act of 1916 as amended.
The items to be included in gross in-
come by nonresident alien individuals
are practically the same under both acts.
Sec. 5 (a), First.
163878 20 2
1918.
date of the return for the existing taxable
year, and (2) at least 30 days before the
due date of the return for the proposed
taxable year. Upon approval of a change
returns must be made in accordance with
Sec. 226.
A taxpayer who has an existing fiscal
year accounting period needs no per-
mission to file returns on such basis, but
is required to do so by the act regardless
of how prior returns were filed. See
Arts. 25 and 26 of Reg. No. 45.
SEC. 213. Gross income defined.
(a) Inclusions.
New in 1918 act:
The salaries of the President of the
United States a^d Judges of the Supreme
and inferior courts of the United States
and all other officers and employees,
whether elected or appointed, of the
United .States, Alaska, Hawaii, or any
political subdivision, or the District of
Columbia, must be included in gros
income.
(b) Exclusions.
New in 1918 act:
Proceeds of life insurance policies when
paid to the estate of the insured.
Interest on obligations of a territory or
of the District of Columbia.
Interest on bonfe issued by the War
Finance Corporation to the extent pro-
vided in the act authorizing their issue.
Amounts received through accident or
health insurance or under workmen's
compensation acts, as compensation for
personal injuries or sickness, plus the
amount of any damages received whether
by suit or agreement on account of such
injuries or sickness.
So much of the amount received during
the present war by a person in the military
or naval forces of the United States for
active service in such forces, as does not
exceed $3,500.
That part of (b) 5 reading as follows:
"or from any other source within the
United States."
(c) Nonresident alien individuals.
This part of Sec. 213 is new as the Act
of 1917 does not specifically define gross
income in the case of a nonresident alien
individual.
SEC. 214. Deductions allowed.
(a) 1. Business expenses.
The words "not including personal,
living, or family expenses" are omitted
from this section but are treated sepa-
rately under Sec. 215, Items not deducti-
ble. The effect is the same.
New in 1918 act:
"Including a reasonable allowance for
salaries or other compensation for personal .
BULLETIN C.
10
1917.
Sec. 5 (a), Second.
Sec. 5 (a), Third.
Taxes "paid" (Sec. 5a, Third and Sec.
12 (a), Fourth); but see also Arts. 126 and
127, Reg. 33 revised.
No taxes assessed againet local benefits
were deductible under this act.
Nonresident aliens were not allowed to
deduct foreign taxes under the 1917 act.
Sec. 6 (a) Third, act of 1916 as amended.
Sec. 5 (a), Fourth.
Sec. 5 (a), Fifth.
fiec. 5 (a), Fourth.
Sec. 5 (a), Sixth,
1918.
services actually rendered, and including
rentals or other payments required to be
made as a condition to the continued use
or possession for purposes of- the trade or
business of property to which the tax-
payer has not taken or is not taking title
or in which he has no equity. "
While the above clause is new in the
1918 act, similar deductions were allow-
able under the 1917 act.
(a) 2. Interest.
New in 1918 act:
"Accrued," in the first line. (This
makes no real change, since accrued
interest was permitted as a deduction
under the 1917 act if charged on the
books and if income is reported on an ac-
crual basis.)
The amount of interest paid on indebt-
edness incurred or continued in carrying
or purchasing obligations of the United
States issued after September 24, 1917,
the interest upon which is entirely
exempt from tax.
(a) (3). Taxes.
New in 1918 act:
"Or accrued " in first line.
That part of subdivision (c) reading as
follows: "of a kind tending to increase
the value of the property assessed."
Subdivision (e) is new in that it allows
a nonresident alien individual to deduct
foreign taxes, other than income, excess
profits, or local benefit taxes, but only to
the extent they are connected with in-
come arising from United States sources.
(a) (4), (5), (6). Losses.
(4) Same as 1917 act.
(5) Same as 1917 act except that the
restriction "not compensated by insur-
ance or otherwise" is added, and the
limitation of the deduction to "an amount
not exceeding the profits arising there-
from" is removed.
(6) Same as 1917 act, except for words
"but in the case of a nonresident alien
individual, only property within the
United States. ""
The net effect of the changes in this
subdivision (4, 5, 6) is to allow the de-
duction of all losses sustained during th-
year in transactions entered into for
profit, whether or not connected with the
regular business.
(a) 7. Bad debts.
Same as 1917 act.
Sec. 5 (a), Seventh.
(a) 8. Depreciation.
n
BULLETIN C.
1917.
No provision for obsolescence under
the 1917 act.
No similar provision in the 1917 act.
Sec. 5 (a), Eighth.
See Art. 173, Reg. 33 revised.
In the case of leased property, only the
bonus payment for the lease, not the
value as at March 1, 1913, was the basis
for depletion.
No similar provision in the 1917 act.
Sec. 5 (a), Ninth.
No similar provision.
1918.
New in 1918 act:
"Including a reasonable allowance for
qbsolescence. "
(a) 9. Amortization.
Entirely new in 1918 act.
(a) 10. Depletion.
Depletion is allowed in the same cases
as in the 1917 act.
"Other natural deposits" and ''tim-
ber" were not mentioned in the 1917 act,
although depletion was allowed in both
cases.
In the case of leased mines, depletion
is to be "equitably apportioned between
lessor and lessee."
In the case of mines, oil and gas wells
discovered after March 1, 1913, and not
acquired in purchasing a proven tract or
lease, the value at the time of discovery
or within 30 days thereafter is the basis
for depletion.
(a) 11. Charitable contributions.
New in 1918 act:
Contributions to the special fund for
vocational rehabilitation are deductible.
Nonresident aliens are allowed to de-
duct only contributions or gifts to domes-
tic corporations or to the vocational re-
habilitation fund.
(a) 12. Loss in inventory.
This subject is entirely new in the 1918
act.
Sec. 6 (,a), First to Seventh, inclusive. (b) Nonresident aliens.
In the case of nonresident aliens the
same differences in allowable deductions
as between the 1917 and 1918 acts apply
as in slibdi vision (a) 1 to 12 of this section,
except as to taxes and charitable contri-
butions. The differences in these items
are shown in (a) 3 and 11. As in the 1917
act, the deductions may be allowed only
to the extent they are connected with
income arising from sources within the
United States.
BLLLKT1N C.
12
1917.
No similar section under the 1917 act.
The several items raenti ,ned in the 1918
act are all provided for in the sections
covering deduct i:ns. Sees. 5 (a), First.
6 (a), First, and 32.
Sees. 1 (b) and 5 (b), Act of 1916 as
amended.
Pec. 7, Act of 1916 as amended.
$3,000 to a single person.
$4,000 to a married person living with
husband or wife.
These exemptions only for the 2 per
cent normal tax under this act.
Sec. 3, Act of 1917:
$1,000 to a single person.
$2,000 to a married person living with
husband or wife, or to the "head of a
family. "
These exemptions only for the 2 per
cent additional normal tax under this
Act.
$200 for each child * * *.
No personal exemption or credit for
dependents allowed to nonresident aliens
under the 1917 act.
Sec. 6 (a), Act of 1916 as amended.
Partnerships not subject to "income
tax."
Sec. 8 (e), Act of 1916 as amended.
Subject to excess profits tax if net in-
come exceeded $6,000.
1918.
SE<\ 215. Items not deductible.
Same as 1917 act.
SEC. 216. Credits allowed.
(a) Sameasl9>17. except that dividends
distributed by personal service corpora-
tions from tax-paid earnings or profits are
included.
(6) New in 1918 act. but note that only
interest on United States obligations
issued after September 1, 1917, is required
to be included in gross income.
(c) $1,000 to a single person.
$2,000 to a married person living with
husband or wife or to the "head oi a
family."
(rf) $200 for each person * * *.
(e) Entirely new in 1918 act.
SEC. 217. Nonresident aliens.
ALLOWANCE OF DEDUCTIONS AND
CREDITS.
Practically same as 1917 act, except
that provision is made for claiming the
credits provided in Sec. 216 (c) and (d)
by filing a claim therefor with the with-
holding agent.
SEC. 218. Partnerships and personal-
serrice corporations.
(a) Same as 1917 act, but every part-
nership must file an income return re-
gardless of the amount of net income.
Sec. 224.
Not subject to war profits or excess-
profits tax.
13
BULLETIN C.
1917.
Sec. 8 (e), Act of 1916 as amended.
Partnerships not required to file re-
turns unless requested by Commissioner.
Sec. 8(e) and Art. 30, Reg. 33 revised.
The subject of personal service corpora-
tions is not covered in the 1917 act.
Sec. 2(b), act of 1916 as amended.
CHaritable contributions when allowed
to estates and trusts under the 1917 act
are limited to 15 per cent of the net in-
come as computed without such deduc-
tion.
Sec. 3, Act of 191fi as amended.
If this section is applied to any cor-
poration, it is not taxed as a corporation
but its entire net income, whether dis-
tributed or not, must be accounted for by
the shareholders.
Sec. 9 (b) and (c), Act of 1916 as
amended.
Highest rate on individuals 2 per cent.
Same principle is applicable under the
1917 act.
1918.
(6) This subdivision applies the same
principle as the 1917 act, but it must be
read and applied in connection with Sec.
205 (c) of the 1918 act. For further ex-
planation see Arts. 324 and 1621 of Reg.
No. 45.
(r) New in 1918 act.
(d) New in 1918 act.
(e) New in 1918 act: Personal service
corporations are treated in the same man-
ner as partnerships: that is, they are not
subject to income or profits taxes but
must file returns.
SEC. 219. Estates and trusts.
(a) Same as 1917 act.
(b), (c), and (d) are new in the 1918
act, but the same principles apply under
the 1917 act except that part of (6) cov-
ering the deduction allowed in fiduciary
returns in lieu of that allowed under Sec.
214 fa). 11. This deduction is limited
only to the amount paid or set aside pur-
suant to the terms of the will or deed
creating the trust.
SEC. 220. Profits of corporations taxable
to stockholders.
This section differs from Sec. 3 of the
1917 act as follows:
"Fraudulently" is omitted.
Mere holding companies are held to be
prima facie of the class described in this
section. When this section is applied to
a corporation it shall not be subject to
the taxes imposed by Sec. 230 but shall
be subject to the tax imposed by Title
III of the 1918 act, which tax shall be
deducted from the net income before the
computation of the proportionate share
of each stockholder.
SEC. 221. Payment of tax at source.
This subject is treated in essentially
the same manner as in the 1917 act ex-
cept for the difference in rates.
New in 1918 act:
The Commissioner may authorize with-
holding of tax at highest applicable rates
on interest upon securities the owners of
which are not known to the withholding
agent.
Highest rate on individuals 8 per cent.
(e) Not covered in the 1917 act.
BULLETIN C.
14
1917.
Not covered in 1917 act.
Under the 1917 act returns were re-
quired of every person of lawful age hav-
ing net income in excess of certain speci-
fied exemptions.
Sec. 8 (b) and (c). act of 1916 as
amended, and Sec. 3, Act of 1917.
Partnerships required to file returns
only when requested to do so by the
Commissioner or any collector. Sec.
8 (e), act of 1916 as amended. Excess
profits tax returns were required if the
net income for the taxable year was
$6,000 or more.
Sec. 8(c), act of 1916 as amended.
Individuals were not allowed to file
fiscal year returns under this act .
See arts. 211, 213, 214, 215, and 217,
Reg. No. 33 re vised.
Sees. 8 (b) and 13 (b), act of 1916 as
amended.
Calendar year returns were required
to be filed on or before March 1, of the
succeeding year and' fiscal year returns
within 60 days after the close of the
taxable year.
"The Commissioner shall have author-
ity to grant a reasonable extension of time
* * * ." Sec. 8 (b).
Not covered in the 1917 act.
Sec. 19, act of 1916 as amended.
Sec. 10 (a), Act of 1916 as amended.
2 per cent on net income.
Sec. 4, Act of 1917, 4 per Cent additional
on net income.
Credits were allowed against net income
as follows:
1918.
SEC. 222. Credit for taxes.
Entirely new in 1918 act.
SEC. 223. Individual returns.
This act requires returns ot every indi-
vidual having net income in excess of
certain specified exemptions.
SEC. 224. Partnership returns.
Every partnership required to file a
return regardless of the amount of income.
SEC. 225. Fiduciary returns.
Same as 1917 act.
SEC. 226. Returns when accounting period
changed.
Provisions for filing returns by taxpay-
ers when accounting period changes.
SEC. 227. Time and place for filing re-
turns.
Same as 1917 act, except as follows:
Returns must be filed on or before the
15th day of the third month following the
close of the fiscal year, or in the case of a
calendar-year return, on or before the
15th day of March of the succeeding year.
Except in the case of persons abroad,
no extension of time for filing returns may
be for more than six months.
The Commissioner shall keep a record
of the extensions of time granted and the
reasons therefor.
SEC. 228. Understatement in returns.
Same as 1917 act.
Part III. Corporations.
SEC. 230. Tax on corporations.
(a) For 1918, 12 per cent on net income
in excess of credits.
For subsequent years, 10 per cent on
net income in excess of credits.
15
BULLETIN C.
1917.
For the purpose of the 4 per cent
additional tax, dividends received from
taxable corporations and the amount of
any excess-profits tax assessed for the
same calendar or fiscal year. Sec. 29,
Act of 1916, as amended, and Sec. 4,
Act of 1917.
The amount of excess profits tax
assessed was a credit for the 2 per cent
tax also (Sec. 29) but dividends were
subject to tax at 2 per cent if from 1916 or
1917 earnings and at 1 per cent if from
earnings of 1913, 1914 or 1915.
Sec. 10 '(b). Tax on undistributed in-
come of corporations.
Sec. 11, Act of 1916 as amended.
See Sec. 12 (a), Act of 1916 as amended.
Gross income not defined.
Sec. 12 (a), Second, Act of 1916 as
amended.
Not specifically defined in the 1917 act.
See Sec. 12 (b), Act of 1916 as amended.
SEC. 12 (a). First, Expenses "paid."
Applied same as 1918 act. See Art. 126,
Reg. 33 revised.
SEC. 12 (a), First, Second, and Fourth,
Act of 1916 as amended.
SEC! 12 (a), Third.
Deduction of interest was limited to
the amount paid on its indebtedness
(except on indebtedness incurred for
the purchase of obligations or securities
the interest upon which was exempt
from tax) to an amount of such indebt-
edness not exceeding: (a) The entire
amount pf the paid-up capital stock out-
standing at the close of the year, or, if no
capital stock, the entire amount of capital
employed in the business at the close of
the year plus, (6) One-half of the interest-
bearing indebtedness then outstanding.
1918.
(For war and excess profits rates see
Sec. 301.)
No similar provision in 1918 act.
(b) New in 1918 act.
SEC. 231. Conditional and other exemp-
tions.
Same as 1917 act except as follows:
Additional exemptions:
(6) Organizations organized and oper-
ated exclusively for the prevention of
cruelty to children and animals.
(14) Persoaal-service corporations.
Exemptions eliminated:
Joint stock land banks.
SEC. 232. Net income defined.
See comparison under Sec. 212.
SEC. 233. Gross income defined.
(a) See comparison under sec. 213 (a),
(a) 1 and 2 same as 1917 act.
Practically the same items were re-
quired to be included in gross income of
foreign corporations under the 1917 act.
SEC. 234. Deductions allowed.
(a) 1. Expenses "paid" or "incurred"
(a) 1
See comparison under Sec.
1/_\ o c I oee ut
(a) 3-5 I 214 , }
(n\ 7 Q f* W-
X { 4 Same as 1917 act.
(a) 2. All interest paid or accrued on
indebtedness is deductible except on
indebtedness incurred or continued to
purchase or carry securities the interest
upon which is exempt from tax: but
interest on indebtedness incurred or
continued to purchase or carry obliga-
tions of the United States issued after
September 24, 1917, is deductible.
r.ri.LKTix C.
16
1917.
Interest on collateral indebtedness se-
cured by property the subject of sale in
the ordinary course of the business was
deductible as an expense of doing busi-
ness but was limited to the interest paid
on an amount of such indebtedness not
exceeding the actual value of the prop-
erty collateral.
Under the 1917 act dividends received
were subject to income tax, but only at
the 2 per cent rate, or at 1 per cent only
if from earnings of 1913, 1914, or 1915.
For the purpose of the 4 per cent addi-
tional tax, they were an allowable credit
against net income. Sec. 4, act of 1917.
Dividends from taxable corporations
were not subject to excess-profits tax.
Sec. 206 (c), Act of 1917.
SEC. 12 (a), Second (c).
SEC. 12 (a), Second (c).
SEC. 12 (a), Second (c).
SEC. 12 (b), Act of 1916 as amended.
The allowable interest deduction in the
case of a foreign corporation was the
interest paid on an amount of its indebt-
edness not exceeding the same proportion
of the sum of its paid up capital stock and
one half of its interest bearing indebted-
ness both outstanding at the close of the
year as its gross income from business
transacted and capital invested in the
United States bore to the gross income
from all sources within and without the
United States.
See Sees. 6, 12, and 32, Act of 1916
as amended.
Under the 1917 act interest from obli-
gations of the United States was not re-
quired to be included in gross income,
tnerefore no credit was required as to net
income. That part of such interest in-
come subject to excess-profits tax was
added to the net income for income-tax
purposes. See Form 1103, Schedule I,
item 2.
Bonds of the War Finance Corporation
are not mentioned in the 1917 act.
Sec. 29, act of 1916 as amended.
In the case of return for a fiscal year
ended in 1917 the excess-profits tax for
the portion of the year falling within 1917
is deducted from the net income for the
full fiscal year before apportioning the net
income for the purpose of applying the
4 per cent additional tax.
1918.
(a) 6. Under the 1918 act, dividends
received from corporations subject to
taxation or from personal service corpo-
rations out of tax-paid earnings, are not
subject to tax. They must be included
in gross income but are deductible under
this subdivision.
Same as 1917 act.
(a) 10. Same as 1917 act.
(a) 11. Not covered in 1917 act
(a) 12. Same as 1917 act.
(a) 13. Same as 1917 act.
(6) See comparison under Sec. 214 (b).
Same general limitation as in 1917 act
except in the case of interest.
SEC. 235. Items not deductible.
See comparison under Sec. 215.
SBC. 236. Credits allowed.
(a) New in 1918 act.
(b) Same as 1917 act.
In the case of a return for a fiscal year
ended in 1918 this subdivision must be
applied in accordance with Sec. 205 (a).
17
BULLETIN C.
1917.
Sec. 13 (), act of 1916 as amended.
A tax of 2 per cent shall be withheld
on dividends upon the capital stock or
from the net earnings of domestic or other
resident corporation payable to nonresi-
dent alien companies not engaged in
business or trade within the United States
and not having any office or place of busi-
ness therein.
Sec. 13 (e), act of 1916 as amended.
Interest on bonds of domestic corpora-
tions payable to nonresident alien corpo-
rations is subject to withholding at the
rate of 6 per cent.
If such corporation has an office, agent,
or a place of business in the United States,
certificate Form 1001 shall be filed estab-
lishing such fact and relieving the cor-
poration from the deduction of tax at the
aource.
Sec. 13 (a) to (d), act of 1916 as amended.
No provision in the 1917 act for con-
solidated returns for income-tax purposes,
but they were required, or allowed under
certain conditions for excess-profits-tax
purposes. See Arts. 76 and 77 of Reg.
No. 41 and T. D. 2662 T. D. 2901 modi-
fied paragraph F of T. D. 2662.
Sec. 13, act of 1916 as amended.
Calendar-year returns were due March 1
of the succeeding year. (Time for filing
all 1917 fiscal and calendar year returns
was extended to April 1, 1918, by T. D.
2650.)
Fiscal year returns were due 60 days
after the close of the fiscal year.
163878 20 3
1918.
(c) New in 1918 act.
SEC. 237. Payment of tax at source.
A tax of 10 per cent shall be withheld
in the case of fixed or determinable annual
or periodical income (other than divi-
dends from corporations liable to the in-
come tax and interest upon corporate
bonds containing a tax-free covenant
clause) payable to a foreign corporation
not engaged in trade or business within
the United States and not having an
office or place of business therein, also a
tax of 2 per cent on tax-free covenant
bonds paid to a foreign corporation not
having an office or place of business
within the United States. Withholding
at 10 per cent is also required from interest
on bonds or other securities where the
owner of such securities is unknown to
the withholding agent.
SEC. 238. Credit for taxes.
New in 1918 act. See comparison un-
der Sec. 222.
SEC. 239. Corporation returns.
Same as 1917 act except the following:
Provision requiring an agent of a non-
resident foreign corporation to file a re-
turn for the corporation.
Returns of all corporations are subject
to the provisions of Sees. 226, 227>
and 228.
Provision for prorating the specific ex-
emption of $2,000 in the case of returns
under Sec. 226.
SEC. 240. Consolidated returns.
New in 1918 act for income-tax pur-
poses.
SEC. 241. Time and place for filing
returns.
(a) Calendar-year returns must be filed
on or before March 15 of the succeeding
year and fiscal year returns on the 15th
day of the third month following the close
of such fiscal year; otherwise same as in
1917 act.
BULLETIN C.
18
1917.
Sees. 9 (a> and 14 (a), act of 1916 as
amended.
Tax must he paid on or before June 15
of the succeeding year except in the case
of fiscal-year returns, when the tax must
be paid on or before the expiration of 105
days after the time fixed by law for filing
the return. The provision as to fiscal-
year returns does not apply to individuals.
Sec. 1009, act of 1917.
Provision is made in this section for
payment of tax in installments as follows:
At least one-fourth on or before 30 days
after the close of thp taxable year.
At least one-fourth within 2 months
after the close of the taxable year.
At least one-fourth within 4 months
after the close of the taxable year.
Remainder on or before the time fixed
by law I See Sees. 9 (a) and 14 (a)] for pay-
ment of the tax.
When paid in advance as outlined
credit is allowed against such advance
payments at not exceeding 3 per cent
per annum computed on the amount so
paid from the date paid to the time fixed
by law for payment of the tax.
No credit allowed on
(a) Amounts exceeding the taxes deter-
mined to be due.
months
year.
(6) Any payment made after 4$
following the close of the taxable
No similar provision in 1917 act.
Sec. 16. Act of 1916 as amended.
Sees. 9 (a) and 14 (a), Act of 1916 as
amended.
Sees. 9 (a) and 14 (a), Act of 1916 as
amended.
Three-year limitation under the 1917
act. The limitation is not necessarily on
the assessment, but upon the discovery
of delinquency or error within three
years.
Sees. 9 (a) and 14 (a) Act of 1916, as
amended.
Arts. 262 and 263, Reg. No. 33, revised.
1918.
Part IV. Administrative Provisions.
SEC. 250. Payment of tax.
(a) Payment of tax authorized in
installments as follows:
One-fourth at the time fixed by law for
filing the returns and equal payments in
three, six and nine months, respectively,
thereafter.
An extension of time for filing the
returns extends the time of payment of
first installment of tax only unless other-
wise provided in the extension.
Interest at J of 1 per cent a month is
added to any installment payment post-
poned at taxpayer's request.
Entire tax payable on notice and
demand if any installment is not paid
when due.
Entire tax may be paid in one install-
ment on or before the time fixed by law
for filing the return, or, if an extension haa
been granted, on or before the expiration
of the extension.
(6) Provides for prompt examination of
the return and determination of correct
amount of tax, recomputation of install-
ments, and adjustment of payments due
either by
(1) Crediting any overpayment against
subsequent installments or hy refund.
(2) Requiring payment upon notice and
demand of any deficiency in installments
due.
Provides penalties for understatements
due to negligence or willful fraud.
(r) Tax is due upon notice and demand
if return is made under Sec. 3176, R. 8.,
as amended.
(rf) Provides a five-year limitation for
determination and assessment of tax or
suit or proceeding for collection of tax
except in the case of false or fraudulent
returns with intent to evade the tax. in
which case there is no limit for collection
of the tax.
(The five-year limitation is on taxes
imposed by the Act of 1918 only. O-833).
(e.) Provides for 5 per cent penalty and
1 per cent per month interest on any un-
paid tax from the time due until paid,
except that such penalty and interest will
19
BULLETIN C.
1917.
Taxpayers shall be notified of the
amounts for which they are liable on or
before June 1 of each year.
Sees. 9 (a) and 14 (a), act of 1916, as
amended.
No similar provision in 1917 act.
No similar provision in 1917 act.
Sec. 16, Act of 1916 as amended; sec.
3176, R. S., as amended.
AD VALOREM PENALTIES.
Failure to file returns within prescribed
time, 50 per cent of tax.
If filed voluntarily and without notice
from collector, and delay is due to reason-
able cause, none.
False or fraudulent returns willfully
made, 100 per cent of tax.
Sec. 17, Act of 1916 as amended.
"It shall be the duty of every collector "
to give receipts for taxes paid.
Sec. 14 (a), Act of 1916 as amended.
Also Sees. 3220 and 3225, R. S.
Sec. 14 (d), Act of 1916 as amended
(Sec. 3225, R. S.).
"When a second assessment is made in
case of any list, statement, or return,
which in the opinion of the collector or
deputy collector was false or fraudulent,
or contained any understatement or
undervaluation, no tax collected under
euch assessment shall be recovered by
any suit unless it is proved that the said
list, statement, or return was not false
nor fraudulent and did not contain any
understatement or undervaluation; but
this section shall not apply to statements
or returns made or to be made in good
faith under the laws of the United States
regarding annual depreciation of oil or
gas wells and mines."
1918.
not apply to that part of such tax covered
by a bona fide claim for abatement.
Instructions on returns are considered
sufficient notice and demand in case of
first installment of tax.
(/) New in 1918 act. Five dollars
added to the tax when necessary to serve
a warrant of distraint.
(g) Procedure for collection of taxes
from taxpayers designing to leave the
United States or to remove their property
therefrom.
Sec. 3176, R. S., as amended by Sec.
1317, Act of 1918.
AD VALOREM PENALTIES.
Failure to file returns within prescribed
time, 25. per cent of tax.
If failure is due to "reasonable cause,"
none. See Com. Mim. 2200 for "what
constitutes reasonable cause."
False or fraudulent returns willfully
made, 50 per cent of tax.
SEC. 251. Receipts for taxes.
When requested by taxpayers, collectors
are required to give receipts for taxes
paid. Otherwise same as 1917 act.
SEC. 252. Refunds.
Also Sees. 3220 and 3225, R. S.
Generally same as 1917 act except as
follows:
New in 1918 act:
Provision for offsetting overpayments
of tax in one year against underpayments
in another.
Five-year limitation on such adjust-
ment either by credit or refund unless a
claim has been filed by the taxpayer be-
fore the expiration of the five years.
Sec. 3225, R. S., as amended by Sec.
1316, Act of 1918, reads as follows:
"When a second assessment is made in
case of any list, statement, or return,
which in the opinion of the collector or
deputy collector was false or fraudulent,
or contained any understatement or un-
dervaluation, such assessment shall not
be remitted, nor shall taxes collected
under such assessment be refunded, or
paid back, or recovered by any suit,
unless it is proved that such list, state-
ment, or return was not willfully false or
fraudulent and did not contain any will-
ful understatement or undervaluation."
BULLETIN C.
20
1917.
Sec. 18, Act of 1916 as amended.
Penalty is not less than $20 nor more
than $1,000 for refusal or neglect to pay
taxes, make returns, or supply informa-
tion required by the act.
Sc. 14 (c), Act of 1916 as amended.
Corporations, joint stock companies, or
associations, and insurance companies
that refuse or neglect to make returns as
required, or make false or fraudulent re-
turns are liable to a penalty of not, more
than $10,000.
Sec. 18, Act of 1916 as amended.
Individuals, and any officers of any
corporations, partnerships, associations,
or insurance companies required by law
to make, sign, or verify any return or
supply any information, who make false
or fraudulent returns or statements with
intent to defeat or evade the tax shall be
guilty of a misdemeanor and be fined not
exceeding $2,000 or be imprisoned for not
more than one year, or both, with the
costs of prosecution.
Sec. 1004, Act of 1917.
Whoever fails to make any return re-
quired by this act or the regulations,
makes any false or fradulent returns,
evades or attempts to evade the tax im-
posed, or fails to collect or pay over any
such tax, is subject to a penalty of not
more than $1,000 or to imprisonment for
not more than a year, or both, at the
discretion of the court, and in addition
theretoapenaltyofdoublethe tax evaded
or not paid.
Sec. 26, Act of 1916 as amended.
Sec. 27, Act of 1916 as amended.
Sec. 28, Act of 1916 as amended.
Returns were required in cases of pay-
ments of $800 or more.
1918.
SEC. 253. Penalties.
This section prescribes specific penal-
ties. See Sec. '250 for ad valorem penal-
ties.
Under the 1918 act any individual,
corporation, or partnership" that fails to
pay or collect any tax, make any returns,
or supply any information required by
the act is liable to a penalty of not more
than $1,000.
Any individual, corporation, or part-
nership, or any officer or employee of any
corporation or member or employee of &
partnership, who willfully refuses to pay
or collect such tax, to make such return,
or to supply such information at the time
or times required under this title, or who
willfully attempts in any manner to de-
feat or evade the tax imposed by this
title, shall be guilty of a misdemeanor
and shall be fined not more than $10,000
or imprisoned for not more than one year,
or both, together with the costs of prose-
cution.
SEC. 254.-
-Returns of payments of divi-
dendf.
Same as 1917, except that the corpora-
tion need not state in the return the years
when the amounts distributed were
earned.
Personal service corporations also are
subject to the provisions of this section.
SEC. 255. Returns of brokers.
Same as 1917 act.
SEC. 256. Information at source.
Practically same as 1917 act, except
that returns are required in case of pay-
ments of $1,000 or more and returns are
required only to the extent that the Com-
missioner with the pproval f the Sec-
retar., may pre cribe.
21
BULLETIN C.
1917.
Sec. 14 (b), Act of 1916 as amended.
Sec. 21, Act of 1916 as amended.
Sec. 9 (f), Act of 1916 as amended.
Not covered in 1917 act.
Sec. 23, Act of 1916 as amended.
Sec. 5, Act of 1917.
The war income tax does not apply to
Porto Rico or the Philippine Islands.
Sec. 200, Definitions.
In general, same as for 1918.
"Trade and business" includes pro-
fessions and occupations. (Not applic-
able in 1918.) Net income in the case
of a foreign corporation or partnership or
a nonresident alien individual means the
net income from sources within the
United States.
1918.
SEC. 257. Kc turns to be public records.
Practically same as 1.917 act, except as
follows:
Stockholders of rerord owning 1 per
cent or more of the stock of a corporation
shall be allowed to examine the corpora-
tion's return, but a penalty is provided for
improper disclosures of any information
so obtained.
The Commissioner is required to make
public in such manner as he shall de-
termine lists containing names and ad-
dresses of all individuals making income-
tax returns.
SEC. 258. Publication of statistics.
Same as 1917 act.
SEC. 259. Collection oj 'foreign items.
Same as 1917 act.
SEC. 260. Citizens of United States
possessions.
Citizens of United States possessions
not residents of the United States are sub-
ject to income tax only on income de-
rived from sources within the United
States.
SEC. 261. Porto Rico and Philippine
Islands.
In Porto Rico and the Philippine
Islands the Act of 1916 as amended is in
force, but not the Act of 1918. See also
sec. 1400.
TITLE III. WAR-PROFITS AND
EXCESS-PROFITS TAX.
Part I. General Definitions.
SEC. 300. General definitions.
Taxable year, fiscal year, personal-
service corporation, paid or accrued, and
dividends have same meaning as in Sees.
200 and 201.
BULLETIN C.
22
1917.
Sec. 201.
(Tax applies to corporations, partner-
ships, ana individuals.)
Rate of tax (1917 only).
Rate
Bracket. Amount of net income. per cent.
1. Net income in excess of de-
duction but not over 15
per cent of invested capi-
tal 20
2. Net income between 15 and
20 per cent of invested
capital 25
3. Net income between 20 and
25 per cent of invested
capital 35
4. Net income between 25 and
33 per cent of invested
capital 45
5. Net income in excess of 33
per cent of invested capi-
tal 60
The total tax will be the sum of the tax
in the five brackets.
Every partnership and corporation not
exempt shall be deemed to be engaged
in trade or business.
Sec. 209.
In case of a trade or business haying
no invested capital or only a nominal
capital, tax is 8 per cent of net income in
excess of
(a) $3,000 in case of a domestic corpora-
tion:
(6) $6,000 in case of a domestic partner-
ship or a citizen or resident of the United
States.
No deduction allowed in any other
cases.
No similar provision.
No similar provision.
Not covered in the act. See Art. 17,
Reg. 41.
No similar provision.
1918.
Part II. Imposition of Tax.
SEC. 301. Imposition of tax.
(On corporations only.)
(a) For 1918.
Rate
Bracket. Amount of net income. per cent.
1. Net income in excess of ex-
cess-profits credit and not
in excess of 20 per cent
of invested capital 30
2. Net income in excess of 20
per cent of invested capi-
tal 65
3. Net income in excess of war-
profits credit 80
The total tax will be the sum of the tax
in brackets 1 and 2 plus the amount by
which the tax in bracket 3 exceeds the
tax in brackets 1 and 2. The total tax
will be the sum of the tax in brackets 1
and 2 if such total exceeds the tax in
brackets. The total tax under this sec-
tion is subject to the provisions of Sec.
302.
No similar provision.
Personal service corporations not sub-
ject to the tax. See Sec. 303 for partial
personal service corporation.
(6) For 1919 and subsequent years only
the first and second brackets are used
and the rates of tax are 20 per cent and
40 per cent, respectively. The total tax
ia subject to the provisions of Sec. 302.
(c) New in 1918 act.
Taxability of income in 1919 and sub-
sequent years from Government con-
tracts made between April 6, 1917, and
November 11, 1918.
(d) If excess-profits credit is not ex-
hausted under first bracket of subdivi-
sions (a) or (6) the excess is to be ap-
plied to the second bracket.
() For the purpose of the act of March
21, 1918, placing transportation systems
under Feaeral control, excess and war-
profits tax is deemed as levied by an act
in amendment of Title II, Revenue Act
of 1917.
23
BULLETIN C.
1917.
No similar provision.
Sec. 201.
All trades or businesses in which a part-
nership or a corporation is engaged are
deemed a single trade or business and all
income from whatever source received is
treated as received from such trade or
business. See also Sec. 209.
Sec. 201.
The tax applies to income from all trades
or businesses except:
(a) Compensation or fees received by
officers and employees of the United
States, or any State, Territory, or the Dis-
trict of Columbia, or any local subdivision
thereof, for their services as such.
(6) Corporations exempt under Sec. 11,
Title I, Act of September 8, 1916, as
amended; also partnerships and individ-
uals to the extent that they are carrying
on the same trade or business, or come
within the same descriptions.
(c) Incomes derived from the business
of life, health, and accident insurance
combined in one policy issued on the
weekly premium payment plan.
Sec. 202.
The tax shall not be imposed in the case
of the trade or business of a foreign corpo-
ration or a foreign partnership, or a non-
resident alien individual, the net income
of which trade or business during the
taxable year is less than $3,000.
1918.
SEC. 302. Limitation of tax.
Tax in subdivision (a) of Sec. 301, shall
not exceed
30 per cent of net income between
$3,000 and $20,000, plus 80 per cent
of net income over $20,000.
Tax in subdivision (6) of Sec. 301 shall
not exceed
20 per cent of net income between
$3,000 and $20,000, plus 40 per cent
of net income over $20,000.
Tax in (a) and (6), Sec. 301, when used
in (c), Sec. 301, shall not exceed limita-
tion as stated.
For limitation in case of return for less
than 12 months, see Art. 732 of Reg. No.
45.
SEC. 303. Tax when partly personal-
service business.
If not less than 30 per cent of total net
income is derived from personal service
phase of business, the part of net income
derived from nonpersonal service phase
of business is taxed separately, using pro-
portionate parts of excess and war profits
credits.
The tax on personal service income will
be the same percentage of such income as
the tax on the nonpersonal service income
is of such income, but not less than 20 per
cent of the personal service income.
If tax on entire net income disregarding
this section is less than 20 per cent of the
income, this section will not apply.
Total tax under this section subject to
limitation of Sec. 302.
SEC. 304. Exemptions.
(a) Those listed in Sec. 231 to the ex-
tent they are exempt under Title II.
(6) Those having less than $3,000 net
income.
(c) Net income derived from mining
gold.
BULLETIN C.
24
1517.
Not specifically provided in the act.
Set Art. 20, Reg. No. 41.
Sec. 200.
Same.
No similar provision.
1918.
SBC. 305. Apportionment of Specific
Exemption.
If the return is for leas than 12 months,
the specific exemption of $3,000 must be
reduced to the' same proportion of $3,000
that the period coverea by the return
bears to 12 months.
Part III. Credits.
SEC. 310. Prewar period.
Means calendar years 1911, 1912, 1913,
or as many of such years during the whole
of which the corporation was in existence.
SEC. 311. War profits credit.
Conditions.
Spe-
cific
ex-
emp-
tion.
Credit.
(a) In general...
13,000
Plus average net income
prewar period plus or
minus as case may be,
10 per cent of the dif-
ference between aver-
age invested capital for
prewar period and in-
vested capital for tax-
able year. Prorate if
return is for less than
12 months.
(6) No net in-
3,000
Plus 10 per cent of in-
come during
vested capital for tax-
prewar period
able year.
or if credit in
(a) is less than
10 per cent of
invested capi-
tal for tax year.
[e) Not in exist-
3,000
Plus credit based on that
ence during all
or at least one
of corporations en-
gaged in same general
year of prewar
period except
as in (d).
class of business; but
not less than 10 per
cent of invested capi-
tal for taxable year.
Until average percentage
of net income to in-
vested capital is de-
termined, 10 per cent
of invested capital for
taxable year should be
used.
(d) If corpora-
tion was not in
Compute credit under (6)
instead of (e).
existence dur-
ing all of at
least one pre-
war year, and
(1) if majority
of its stock is
owned or con-
trolled by a
corporation
which had a
prewar exist-
ence, or (2) if
50 per cent or
more of its
gross income
was derived
Irom a Govern-
ment contract
made between
Apr. 6, 1917,
and Nov. 11,
1918.
(e) Foreign cor-
None
Se Sec. BT.
porations.
25
BULLETIN C.
1917.
Sec. 203. Deduction.
(a) Domestic corporation: An amount
equal to the same percentage of the invest-
ed capital for the taxable year which the
average net income of the trade or busi-
ness during the prewar period was of the
invested capital tor the prewar period (not
less than 7 nor more than 9 per cent of
invested capital for taxable year) plus
$3,000.
(6) Domestic partnership and citizen
or resident of United States. Same as in
(a) plus $6,000.
(c) Foreign corporation or partnership
or a nonresident alien individual. Same
as in (a) plus none.
(d) If prewar average net income can-
not be determined, deduction shall be
computed under Sec. 205. (See following
Sec. 204, below.)
Sec. 204. Deduction ("continued).
If corporation or partnership was not in
existence r individual not in business
during all of at least one prewar year:
8 per cent of invested capital for taxable
year plus $3,000 for corporation; $6,000
for partnership or individual.
Foreign corporation or partnership or
nonresident alien individual: 8 per cent
of invested capital for taxable year plus
none.
Sec. 205 (a). Deduction (continued).
If taxpayer had no net income during
the prewar period, or if during the prewar
period the percentage of the taxpayer's
net income to invested capital was low as
compared with similar data of representa-
tive taxpayers engaged in a like or similar
business, the deduction shall be:
(1) For domestic corporation. An
amount equal to the same percentage of
its invested capital for the taxable year
which the average deduction (determined
as in Sec. 203 but excluding the $3,000 or
$6,000 mentioned therein) for such year
of representative corporations is of their
average invested capital for such year-
ping $3,000.
(2) For domestic partnership or citizen
or resident of United States: Amount com-
puted on same principle as in (1) plus
$6,000.
(3) For foreign corporation or partner-
ship or for nonresident alien individual:
Amount computed on same principle as
in (1) plus none.
Average percentage of net income to'
invested capital of representative tax-
payers shall be determined by the Com-
missioner.
In case of taxpayers having fiscal years,
the percentage determined by the calen-
dar year ending during such fiscal year
shall be used.
1918.
SEC. 312. Excess-profits credit.
$3,000 plus 8 per cent of invested capital
for taxable year.
No specific exemption of $3,000 to a
foreign corporation. See Sec. 327.
Somewhat similar provision in Sec-
328 (b).
BULLETIN
26
1917.
(6) In cases coming under this section
(205). the tax is computed on the basis of
a deduction determined under Sec. 203,
but the taxpayer may file a claim for
abatement of amount by which tax so
assessed exceeds tax if assessed under
this section (205).
Collection of tax covered by claim may
be withheld till claim is decided but bond
may be required of taxpayer.
Sec. 210.
When invested capital can not be deter-
mined by the Secretary of the Treasury,
the deduction shall be:
An amount ecjual to the same propor-
tion of the net income from the trade or
business received during the taxable year
as the proportion which the average de-
duction (as per Sec. 203 excluding $3,000
and $6,000) for the same calendar year of
representative taxpayers engaged in a
similar trade or business, bears to the total
net income of the trade or business re-
ceived by such taxpayers plus $3.000 in
the case of a domestic corporation; $6,000
in the case of a domestic partnership or a
citizen or resident of the United States.
Proportion between deduction and net
income in each trade or business to be
determined by Commissioner. If tax-
payers have fixed fiscal years the propor-
tion determined for the calendar year
ending during such fiscal year shall be
used.
Sec. 206. Net income of corporations,
(a) 1911 and 1912. Same as 1918.
(6) 1913. Same as 1918.
(c) Taxable year. Net income com-
puted as provided in Title I, Act of Sep-
tember 8. 1916, as amended by this act
(Oct. 3. 1917) less dividends on stock of
other corporations subject to the tax.
Not specifically covered in the act.
Determined in same manner as for 1918.
1918.
Set Sec. 327 (a).
Tax is determined on basis of ratio of
average tax to average net income of
representative taxpayers.
Somewhat similar provision in Sec.
328 (b).
PART IT. Net Income.
SEC. 320. Net income.
(a) 1911: Net income as computed
under act of August 5, 1909, plus taxea
imposed by that act and paid during the
year.
1912: Same as 1911.
1913: Net income as computed under
act of October 3, 1913, plus taxes imposed
by the act of August 5, 1909. and paid
during the year, minus dividends on
stock or from earnings of corporations tax-
able under that act.
Taxable year Net income as computed
for income-tax purposes.
(6) Average net income for prewar
period determined by dividing number of
years of prewar existence into net income
for such years, no deduction to be made
for years in which there was a net loss.
27
BULLETIN C.
1917.
Net income, partnerships and individ-'
uals.
Not income for 1911, 1912, 1913, and
taxable year, computed as provided in
Title I, Act of September 8, 1916, as
amended by this act (Oct. 3, 1917), except
as follows:
(1) Credit allowed by Sec. 5 (b), act of
September 8, 1916, as amended (divi-
dends on stock of corporations subject to
the tax) shall be deducted. t
Deductions allowed partnerships:
Taxpayer. Period. Deductions.
Domestic 1911, 1912, 1913, Same as individ-
partnership. and taxable uals. See Sec. 5
year. (a), Act of Sep-
tember 8, 1916, as
amended.
Foreign part- Same. Same as individ-
nership uals. See Sec. 6
(a), Act of Sep-
tember 8, 1916, as
amended. '
Not specifically denned in the act.
See Art. 47 of Reg. No. 41.
Not specifically defined in the act.
Set Art. 47 of Reg. No. 41.
Not specifically defined in the act.
See Art. 44, Reg. 41, par. 100.
Sec. 207, Par. 2.
As used in this title (II), invested capi-
tal does not include stocks, bonds (other
than obligations of the United States) or
other assets, the income from which is not
subject to the tax imposed by this title.
1918.
No similar provision; partnerships and
individuals not subject to the tax.
No similar provision; partnerships not
subject to the tax.
Part T. Invested Capital.
SEC. 325. Terms relating to Invested
Capital.
(a) Definitions:
Intangible property
Patents.
Copyrights.
Secret processes and formulae.
Good will.
Trade-marks.
Trade Brands.
Franchises.
Other like property.
Tangible property
Stocks.
Bonds.
Notes.
Other evidences of indebtedness.
Bills and accounts receivable.
Leaseholds.
Property other than intangibles.
Borrowed Capital
Money or other property bor-
rowed.
Inadmissible assets
Stocks, bonds, and other obliga-
tions (except obligations of the
United States) the dividends
or interest from which are not
included in net income except
where income from such assets
consists in part of gains or
profits from the sale or other
disposition thereof, or interest
from such assets is in effect in-
cluded in net income by reason
of Sec. 234 (a) 2, a correspond-
ing part of the capital invested
in such assets shall not be
deemed inadmissible.
BULLETIN C.
1917.
Not specifically defined in the act. See
Par. 129, Art. 53, Reg. No. 41.
Not specifically defined in the act.
INVESTED CAPITAL.
Sec. 207 (a). In the case of a corpora-
tion or a partnership means
(1) Actual cash paid in.
(2) Actual cash value of tangible
property paid in other than cash for
stock or shares at the time of such pay-
ment (but if paid in prior to Jan. 1, 1914,
the actual cash value of the tangible
property as at Jan. 1, 1914, but in no
case to exceed the par value of the original
stock or shares specifically issued there-
for.)
Actual cash value of patents and copy-
rights paid in for stock or shares at the
time of such payment may be included
in invested capital, but not in an amount
exceeding the par value of the stock
specifically issued therefor.
Actual cash value of good will, trade-
marks, trade brands, and like intangible
property acquired for cash or tangible
property at time acquired but not in ex-
cess of actual cash paid for same or cash
value of tangible property specifically
paid for same.
(3) Same as 1918, except the term
"used or employed in the business,"
modifies surplus and undivided profits.
Good will, trade-marks, trade brands,
and like intangible property acquired
bona fide prior to March 3, 1917, for stock
or shares in a corporation or interest or
shares in a partnership may be included
in invested capital at a value not ex*
ceeding
(a) Actual cash value of intangibles
at time paid in.
(6) Par value of stock specifically
issued for same.
(c) Twenty per cent of the total
interest or shares in the part-
nership or 20 per cent of the
total par value of the stock out-
standing as at March 3, 1917.
1918.
Admissible Assets
All assets other than inadmia-
sibles valued in accordance
with Sees. 326, 330, and 331.
(6) Par value in case of stock or shares
issued at a nominal value or having no
par value is the fair market value of such
stock or shares as at the date of issue.
SEC. 326. Invested capital.
(a) Invested capital means
(1) Actual cash bona fide paid in for
stock or shares.
< (2) Actual cash value of tangible prop-
erty other than cash, bona fide paid in for
stock or shares at the time of such pay-
ment, but not in excess of par value of
stock or shares specifically issued therefor
unless cash value of property when paid
in can be proved greater than par value
of stock or shares issued therefor, in
which case excess may be treated as paid
in surplus.
Commissioner shall keep a record of
cases coming within the above exception
and upon request furnish a copy to Con-
gress notwithstanding Sec. 257.
Patents and copyrights are classed as
intangibles in Revenue Act of 1918 and
subject to 25 per cent limitation if
acquired for stock or shares.
Not specifically covered in 1918 act.
(3) Paid in or earned surplus and un-
divided profits, but not including surplus
and undivided profits earned during the
taxable year.
(4) Intangible property bona fide paid
in for stock or shares prior to March 3,
1917, but not exceeding
(a) Actual cash value of property
when paid in.
(6) Par value of stock issued therefor.
(c) In the aggregate 25 per cent of par
value of total outstanding stock
or shares of the corporation
March 3, 1917.
29
BULLETIN C.
1917.
Not specifically covered in 1917 Act.
See Tax Reviewers' Minutes No. 34.
" Invested capital " as used in this title
<loes not include money or other property
borrowed .
"Invested capital " as used in this title
(II) does not include stocks, bonds (other
than obligations of the United States) or
other assets, the income from which is not
object to the tax imposed by this title
(IT). See also Art. 53, para. 129 of Reg.
No. 41.
Same as 1918, except that "averaged
monthly" is added.
Not specifically denned in the act.
Sec. 207 (b).
INVESTED CAPITAL, INDIVIDUALS.
(1) Actual cash paid into the trade or
business.
(2) Actual cash value of tangible prop-
erty paid into the trade or business at the
time of such payment but if paid in prior
to January 1, 1914, only cash value of
property as at that date may be included.
(3) Actual cash value of patents, copy-
rights, good will, trade-marks, trade
brands, franchises or other intangible
property paid into the tr*ade or business,
at the time of such payment, if payment
was made therefor specifically in cash or
tangible property, but not to exceed the
actual cash paid or the actual cash value
at the time paid of the tangible property
specifically paid for the intangibles.
In case of foreign corporations and-
partnerships and nonresident alien indi-
viduals the invested capital means that
proportion of the entire invested capital
as defined in this title which the net in-
come from sources within the United
States bears to the entire net income.
1918.
(5) Intangible property bona fide paid
in for stock or shares on or after March 3,
1917, but not exceeding:
(a) Same as in (4).
(6) Same as in (4).
(c) In the aggregate 25 per cent of par
value of capital stock of cor-
poration outstanding at begin-
ning of taxable year.
(6) " Invested capital " does not include
' ' borrowed capi tal . "
(c) Invested capital as defined above
must be reduced by a percentage thereof
equal to the percentage which the amount
of inadmissible assets is of the amount of
admissible and inadmissible assets held
during the year.
((/) Invested capital for any period
means the average invested capital. In
a return for a fractional part of a year, in-
vested capital (except for purpose of Sec.
311 (a) 2), shall be the same fractional
part of such average invested capital.
Average invested capital for prewar
Eeriod is determined by dividing the num-
er of years within that period into the
sum of the average invested capital for
such years.
Not covered in 1918 act.
not subject to the tax.
Individu?ls
See Sees. 327, 328.
SEC. 327. Special cases.
War-protits and excess-profits tax shall
be computed under Sec. 328 in the fol-
lowing cases:
BULLETIN C.
30
1917.
When invested capital can not be de-
termined by the Secretary. (See Sec.
210, under "Deduction.")
Foreign corporations were taxed on
their ret income from sources within the
United States at the rates prescribed
for domestic corporations but invested
capital for the purpose of computing the
deduction was determined as provided in
Sec. 207 (b).
No similar provision in 1917 act. Com-
pare with Art. 59, Reg. 41. Under the
15)17 act, cases cf this land were adjusted
under Sec. 210 only when the Secretary
of the Treasury was unable to determine
satisfactorily the respective values of the
several classes of property at the time of
payment.
No similar provision.
No similar provision.
Under Sec. 210 the adjustment is made
on the basis of similar deductions instead
of ratio between net income and tax..
SeeSec. 210, par. 2.
No similar provision.
No similar provision.
1918.
(a) When invested capital (Sec. 326)
can not be determined by the Commis-
sioner.
(b) In the case of foreign corporations.
(c) Where a mixed aggregate of tangi-
ble and intangible property was paid in
for stock or for stock and bonds and
respective values as at time of payment,
or classes of property paid in for the stocks
or bonds can not be determined.
(</) Where the Commissioner declares
of record that the tax if determined
without the benefit of this section would
owing to abnormal conditions affecting
capital or income work exceptional hard-
ship on a corporation.
This subdivision (rf) will not apply to
any case
(1) In which tax is high merely because
a high rate of income was earned during
the taxable year on a normal invented
capital.
(2) In which 50 per cent or more of
the gross income (computed under So--.
233) consists of gains, etc., derived on a
cost-plus basis from Government con-
tracts made between April 6, 1917, and
November 11, 1918.
SEC. 328. Computation of tax in special
cases.
(a) Tax in cases under Sec. 327 shall
be the amount which bears the same
ratio to the net income of the taxpayer
(in excess of $3,000) for the taxable year
as the average tax of representative cor-
porations engaged in a like or similar
trade or business bears to their average
net income (in excess of $3,000). In
case of foreign corporations tax will be
computed disregarding the exemption of
$3,000.
"Representative corporations'" will in-
clude only those whose invested capital
under Sec. 32(i can be determined and
are similarly circumstanced to the tax-
payer.
(6) Computation of first installment of
tax under Sec. 327. Tax shall be on
basis of 50 per cent of net income pend-
ing final adjustment.
(c) Commissioner shall keep record of
cases roming under this section and upon
request furnish list to Congress not-
withstanding Sec. 257.
31
BULLETIN C.
1917.
SEC. 204, par. 2.
Same as 1918, except that date is
January 2, 1913.
No similar provision.
No similar provision.
No similar provision.
SEC. 208.
Same as 1918 act, extept that 1918 act
adds "change in ownership of property"
to the conditions under which the respec-
tive sections apply.
SEC. 200. Tax on fiscal-year returns
ended in 1917.
The same fractional part of the tax
computed under the Revenue Act of 1917
for the entire period as the time from
January 1, 1917, to the end of the fiscal
year, is of the full fiscal year.
1918.
Part VI. Reorganizations.
SEC. 330. Reorganizations.
Reorganization, consolidation, or change
of ownership after January 1, 1911. Pre-
war history of successor taxpayer shall be
deemed to be that of the predecessor
taxpayer.
A tra^e or business in which capital is
a material income producing factor, which
was previouslv owned by a partnership
or an individual, and is incorporated
prior to July 1, 1919, may elect to have
its net income from January 1, 1918, to
date of incorporation taxed as that of a
corporation.
Paragraph 3 of this section is not ap-
plicable in any case where net income for
1918 was less than 20 per cent of invested
capital for 1918.
Adjustment of values of assets in exist-
ence during both prewar period and tax-
able year.
SEC. 331. Valuation of assets
reorganization.
upon
Reorganization, etc., or change in own-
ership of property after March 3, 1917.
If interest or control in trade or business
or property of 50 per cent or more remains
in the same persons or any of them, no
asset transferred may be valued for in-
vested capital purposes at value greater
than would have been allowed previous
owner.
Part VII. Miscellaneous.
SEC. 335. Fiscal years ending in 1918
or 1919.
(a) Fiscal year ending in 1918.
(1) Compute tax for entire period ac-
cording to Revenue Act of 1917 and take
same fractional part of tax as number of
months of period falling in 1917 is of the
whole period .
(2) Compute tax for entire period ac-
cording to Revenue Act of 1918 and take
same fractional part of tax as number of
months of period falling within 1918 is of
the whole period.
(3) The tax will be the sum of (1) and
(2) less any tax already paid for same
period under Revenue Act of 1917.
(6) Fiscal year ended in 1919.
(1) Compute tax for entire period under
Sec. 301 (a) and take same fractional part
of tax as number of months of period fall-
ing within 1918 is of whole period.
(2) Compute tax for entire period under
Sec. 301 (b) or (c), as the case may be r
IU l.LKTIN C.
32
1917.
See Arts. 10, 11, 12, and 13 of
:No. 41.
No similar provision.
1918.
and take same fractional part of tax as
number of months of period falling within
1919 is of entire perioa.
(3) The tax will be the sum of (1)
and (2).
(c) Fiscal year of partnership or per-
sonal service corporation endea in 1918.
Tax will be same fractional part of tax
for entire period computed under Reve-
nue Act of 1917 as the number of months
of the period falling within 1917 is of the
entire period. Any excess paid to be
refunded.
SEC. 336. Returns.
All corporations except those exempt
under Sec. 304 must malce returns. Re-
turns to be made and taxes paid as pro-
vided for purposes of Title II. See alto
Form 1120, page 2, of Instructions, pars.
2 and 3.
SEC. 337. Sale of mineral deposits.
Tax in case of bona fide sale of mines,
oil or gas wells, or any interest therein
where principal value has been demon-
strated by prospecting or exploration or
discovery work done by the taxpayer
shall not exceed 20 per cent of the selling
price of such property or interest.
SEC. 211.
Income return required of every
(a) Foreign partnership with net in-
come of $3.000 or more.
(6) Domestic partnership with net in-
come of $6,000 or more.
Return to be rendered in same manner
and same time as prescribed under Title
I, act of September 8, 1916, as amended.
Partnerships not subject to the tax.
No excess or war profits return required.
For income return, see SEC. 224.
SEC. 212.
Administrative, special, and general
provisions of law relating to internal reve-
nue taxation not heretofore repealed and
not inconsistent with provisions of this
title, and all provisions of Title I. Reve-
nue Act of 1916 as amended relating to
returns and payment of tax are made
applicable to tax imposed by this title.
Covered in Sec. 1305.
SEC. 213.
Commissioner may make necessary
regulations and require taxpayers to fur-
nish information necessary to collect the
tax.
Covered in Sec. 1305.
33
BULLETIN C.
1917.
Sec. 214. Excess-profits tax law, Act
of March 3, 1917, repealed.
Provision made for credit of taxes paid
under said act against tax due under this
title.
1918.
No similar provision.
TITLE XIII. GENERAL ADMIN-
ISTRATIVE PROVISIONS.
Not covered in 1917 act.
Sec. 22, act of 1916 as amended.
Sec. 1001, act of 1917.
Sec. 16, act of 1916 as amended.
Sec. 1005, act of 1917.
Sec. 1008, act of 1917.
Sec. 1010, act of 1917.
Sec. 20, act of 1916 as amended.
Not covered in 1917 act.
Sec. 24, act of 1916 as amended.
Sec. 1300, act of 1917.
SEC. 1301. Advisory Tax Board.
Creation of Advisory Tax Board and
procedure in submitting questions to the
board. New in 1918 act.
SEC. 1305. Extension of existing statutes.
Par.l. Same as 1917 act.
Pars. 2 and 3. Practically same as 1917
act.
SEC., 1309. Authority for regulations.
Same as 1917 act.
SEC. 1313. Fractional part of cent.
Same as 1917 act.
SEC. 1314. Medium of payment of tax.
Same as 1917 act.
SEC. 1318. Jurisdiction of district court.
Practically same as 1917 act.
SEC. 1^20. Deposit of United States bonds
as security.
New in 1918 act.
TITLE XIV. GENERAL PROVI-
SIONS.
SEC. 1400. Repeal of former acts.
New in 1918 act.
SEC. 1402. Validating provisions.
Same as 1917 act.
SEC. 1405. Citation of act.
New in 1918 act.
SEC. 1408. Inspection of Government con-
tracts.
New in 1918 act.
INDEX BY SECTIONS.
,
ACT OF 1916, AS AMENDED.
TITLE I. INCOME TAX.
PART I. ON INDIVIDUALS.
Sec. Page.
1 Normal tax; additional tax 7. 8, 12
2 Income defined 6, 8, 9, 13
3 Additional tax includes undistributed profits 13
4 Income exempt from law 6,9
5 (a) Deductions allowed 6, 9, 10, 11, 12
(6) Credits allowed 8, 12, 27
6 Nonresident aliens 10, 11, 12, 16
7 Personal exemption 12
8 Returns 8, 12, 13, 14
9 Assessment and administration 13, 18, 19, 21
PART IT. ON CORPORATIONS.
10 Income tax on corporations 6, 7, 14, 15
11 Conditional and other exemptions 15
12 Deductions 15, 16
13 Returns >V * --- 8, 14, 17
14 Assessment and administration 18, 19, 20. 21
PART III. GENERAL ADMINISTRATIVE PROVISIONS.
15 Definitions 5
16 Amending sections 3167, R. S., 3172, R. S., 3173, R. S., 3176, R. S... 18, 19,33
17 Receipt for payment of taxes J 19
18 Penalties 20
19 Verification of returns 14
20 Jurisdiction of United States District Court 33
21 Publication of statistics 21
22 Extension of existing statutes 33
23 Porto Rico and Philippine Islands 21
24 Repeal of former act .33
25 Income assessed under act of 1913 (not compared).
26 Returns of payments of dividends 20
27 Returns of brokers 20
28 Information at the source 20
29 Credit for excess-profits tax 15, 16
30 Income of foreign Governments 9
31 Dividends 5, 6, 8
32 Premiums on life insurance policies 12, 16
ACT OF 1917.
TITLE I. WAR INCOME TAX.
1 Normal war income tax 7
2 War surtax 8
3 Income exempt from the tax 1.2, 14
4 War Tax on Corporations. 5. 14, 15, 16
5 Porto Rico and Philippine Islands 21
(35)
36
TITLE IT. WAR EXCESS PROFITS TAT.
Sec. Page.
200 Definitions 5. 21, 24, 31
201 Rate of tax and incomes subject to tax 8, 22, 23
202 Foreign corporation, partnership or nonresident alien individual, net
income less than $3,000 23
203 Deduction 25,26
204 Deduction (continued) ' 25, 31
205 Do 25
206 Net income 16,26
207 Invested capital '-'7. 28, 29, 30
208 Reorganizations 31
209 Tax on trade or business having no invested or only a nominal capital. . . 5, 22
210 When invested capital can not be satisfactorily determined 26, 30
211 Partnership returns 32
212 Extension of existing statutes 32
213 Authority for regulations 32
214 Repeal Excess-Profits Tax Act of March 3, 1917 33
TITLE X. ADMINISTRATIVE PROVISIONS.
1001 Extension of existing statutes 33
1003 Collection of tax (not compared).
1004 Penalties 20
1005 Authority for regulations 33
1008 Fractional part of cent 33
1009 Advance payments. 18
1010 Medium of payment of tax 33
GENERAL PROVISIONS.
1212 Release of tax withheld against citizen or resident (not compared).
1300 Validating provisions. 33
INDEX BY SUBJECTS.
Page.
Act, citation of 33
Admissible assets 28
Advisory tax board 33
Aliens, nonresident:
Allowable deductions and credits 12
Deductions allowed from gross income 11
Gross income 9
Normal tax .' 7
Aliens, resident 7
Amortization, deductions allowed from gross income 11
Assets:
Admissible 28
Inadmissible 27
Valuation of, upon reorganization 31
Bad debts, deductions allowed from gross income 10
Basis for determining gain or loss 6
Borrowed capital 27
Brokers, returns of 20
Business expenses, deductions for , 9
Capital:
Borrowed 27
Invested
Corporation or partnership 28
Individuals 29
Terms relating to 27
Cent, fractional part of 33
Charitable contributions, deductions allowed from gross income 11
Citation of act 33
Citizens, or residents of United States, deduction (excess profits tax) 25
Normal tax 7
Of United States possessions 21
Pre-war period 25
Computation of tax in special cases 30
Conditional and other exemptions, corporations 15
Consolidated returns 17
Contracts, Government, inspection of 33
Corporations:
Consolidated returns 17
Credits allowed 16
Credit for taxes 17
Deductions 15
Domestic (excess-profits tax) 25
Foreign, or partnership (excess-profits tax) 25
Exemptions, conditional and other 15
Income : 15
Gross 15
Net 15
Items not deductible 16
Payment of tax at source 17
Place for filing returti 17
Profits of, taxable to stockholders 13
Returns 17
Tax on 14
Time and place for filing return 17
Court, jurisdiction of district. 33
(37)
38
Credits allowed:
Corporations ' Hi
Corporations, for taxes 17
Excess profits 25
Individuals 12
Individuals, for taxo.-* 14
Nonresident aliens 12
Pre-war 24
War profits 24
Deductions allowed :
Corporations 15
Individuals 9
Nonresident aliens 12
Deductions from gross income 9
Amortization 11
Bad debts 10
Business expenses 9
Charitable contributions. : 11
Depletion 11
Depreciation 10
Interest 10
Losses 10
Loss in inventory 11
Nonresident aliens 11
Obsolescence 11
Taxes 10
Deduction (excess-profits tax):
( 'itizens or residents of United States -25
Domestic corporations 25
Domestic partnership 25
Foreign corporations or partnerships, or nonresident alien individuals 25
Prewar period 25
Definitions, general 5
Excess profits and war profits 21
Terms relating to invested capital 27
Depletion, deduction allowed from gross income 11
Deposits, mineral, sale of 32
Deposits of United States bonds as security 33
Depreciation, deduction allowed from gross income 10
Dividends 5
Returns of payments of 20
Domestic corporations, deduction (excess-profite tax) 25
Estates and trusts 13
Excess profits and war profits tax 21
Apportionment of specific exemption 24
Exemptions 23
General definitions '_' I
Imposition of tax 22
Limitation of tax 23
When partly personal service business 23
Excess profits creait 25
Exclusions, gross income 9
Exemptions, conditional and other 15
Extension of existing statutes 33
Fiduciary returns 14
Fiscal years ending in 1918 or 1919 (war profits and excess 'profits) 31
Fiscal years with different rates
Foreign corporations or partnerships, deduction (excess profits) 25
Foreign items, collection of 21
Fractional part of cent 33
Gain or loss, basis for determining '. 6
General administrative provisions 33
General definitions 5
War profits and excess profits tax 21
Government contracts, inspection of 33
39
Gross income, defined: Pa s e -
Corporations ', 15
Individuals
Imposition of war profits and excess profits tax 22
Inadmissible assets 27
Income, parts of, subject to rates for different years 7
Income, gross, defined:
Corporations 15
Exclusions 9
Inclusions 9
Individuals 9
Nonresident aliens 9
Income, net:
Corporations 15
Denned
How computed 8
War profits and excess profits 26
Income tax:
Administrative provisions 18
Corporations 14
General provisions , 5
Individuals : 7
Individual returns 14
^Individuals:
Invested capital
Nonresident alien deduction (excess profits tax)
Normal tax
Information at source
Inspection of Government contracts
Intangible property
Interest, deduction allowed from gross income
Inventories
Invested capital (corporation or partnership)
Individuals
Terms relating to
Items, not deductible:
Corporations 16
Individuals , 12
Jurisdiction of district court (United States) 33
Limitation of war profits and excess profits tax 23
Loss in inventory, deduction allowed from gross income 11
Losses, deductions allowed from gross income 10
Losses, net 6
Medium of payment of tax 33
Mineral deposits, sale of 32
Miscellaneous 31
Net income:
Corporations 15
Defined 8
Individuals 8
How computed 8
War profits and excess profits 26
Net losses 6
Nonresident aliens:
Allowance of deductions and credits 12
Deductions allowed from gross income 11
Deduction (excess profits tax) 25
Gross income 9
Normal tax 7
Normal tax:
Citizens ; 7
Corporations 14
Individuals , 7
Nonresident aliens 7
Resident aliens 7
Obsolescence, deduction allowed from gross income 11
Partnership, returns 14
Partnerships, domestic, deductions 25
40
Page.
Partnerships and personal service corporations 12
Partnerships or corporations, foreign, deduction (excess-profits tax > 25
Parts of income subject to rates for different years 7
Payment of tax 18
" Medium of 33
Payment of tax at source 1 3, 17
Penalties 20
Ad valorem 19
Personal service business, war profits and excess profits tax on 23
Personal service corporations and partnerships 12
Philippine and Porto Rico, Islands 21
Place and time for filing returns:
Corporations 17
Individuals 14
Porto Rico and Philippine Islands 21
Possessions, United States, citizens of 21
Prewar period :
Credits 24
Deduction .- 25
Prewar period, deduction, citizen or resident, United States 25
Profits of corporation taxable to stockholders 13
Property:
Intangible 27
Tangible 27
Publication of statistics 21
Receipts, for taxes 19
Refunds 19
Regulations, authority for 33
Reorganizations 31
Valuation of assets upon 31
Repeal of former acts 33
Resident aliens, normal tax 7
Resident or citizen of United States, deduction 25
Returns:
Consolidated 17
Corporation 17
Fiduciary 14
Individuals 14
Partnership 14
Time and place for filing 14, 17
Understatement in 14
War profits and excess profits 32
Returns of brokers ' 20
Returns of payment of dividends 20
Returns to be public records 21
Sale of mineral deposits 32
Security, deposit of United States bonds as 33
Source:
Information at 20
Payment of tax at
Corporations 17
Individuals 13
Special cases 29
Computation of tax in 30
Statistics, publication of 21
Stockholders, profits of corporations taxable to 13
Surtax 8
Tangible property 27
Tax:
Computation of, in special cases 30
Limitation of war profits and excess profits 23
Medium of payment of : 33
Normal, individuals 7
On corporations 14
Payment of 18
Payment of, at source 13, 17
War profits and excess profits 21
War profits and excess profits, when partly personal service business 23
41
Page.
Tax board , advisory 33
Taxes:
Credits for
Corporations 17
Individuals 14
Deduction allowed from gross income 10
Receipts for 19
Terms relating to invested capital 27
Time and place for filing returns:
Corporations 17
Individuals 14
Trusts and estates 13
Understatement in returns 14
United States bonds, deposit of, as security 33
United States possessions, citizens of 21
Valuation of assets, upon reorganization 31
Validating provisions 33
War profits and excess profits tax 21
Applies to corporations only (1918) 22
Apportionment of specific exemption 24
Exemptions 2$
General definitions 21
Imposition of tax 22
Limitation of tax 23
When partly personal service business 23
War profits credit 24
o
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