Tap any paragraph to write a margin note. Your notes collect in the Desk below the text and file under cases with @. The side-by-side margin rail opens on a larger screen.

§
Marginalia
Code · STATUTES-AT-LARGE · Vol. 43 STAT. · June 2, 1924 · Chapter 234

Chapter 234. To reduce and equalize taxation, to provide revenue, and for other purposes

68,997 words·~314 min read·/statutes-at-large/vol-43/chapter-234-1178121·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

CHAP. 234.— An Act To reduce and equalize taxation, to provide revenue, and for other purposes. June 2, 1924.[[H. R. 6715](/us/bill/68/hr/6715).][[Public, No. 176](/us/pl/68/176).] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, * Revenue Act of 1924. TITLE I.— GENERAL DEFINITIONS.General definitions. Section 1. This Act may be cited as the “Revenue Act of 1924.”Title of Act. Sec. 2.
(a)When used in this Act—Terms construed.
(1)The term “person” means an individual, a trust or estate,“Person.” a partnership, or a corporation.
(2)The term “corporation” includes associations, joint-stock companies, and insurance companies.“Corporation.”
(3)The term “domestic” when applied to a corporation or partnership“Domestic.” means created or organized in the United States or under the law of the United States or of any State or Territory.
(4)The term “foreign” when applied to a corporation or partnership“Foreign.” means a corporation or partnership which is not domestic.
(5)The term “United States ” when used in a geographical sense“United States.” includes only the States, the Territories of Alaska and Hawaii, and the District of Columbia.
(6)The term “Secretary” means the Secretary of the Treasury.“Secretary.”
(7)The term “Commissioner ” means the Commissioner of Internal“Commissioner.” Revenue. 254
(8)“Collector.” The term “collector ” means collector of internal revenue.
(9)“Taxpayer.” The term “taxpayer” means any person subject to a tax imposed by this Act.
(10)“Military and naval forces of the United Stales.” The term “military or naval forces of the United States” includes the Marine Corps, the Coast Guard, the Army Nurse Corps. Female, and the Navy Nurse Corps, Female.
(b)“Includes” and “including.” The terms “includes” and “including ” when used in a definition contained in this Act shall not be deemed to exclude other things otherwise within the meaning of the term defined. TITLE II— INCOME TAX.income tax. Part I.—General provisions. General Provisions. definitions.Definitions. Sec. 200. Meaning of terms.“Taxable year.” When used in this title—
(a)The term “taxable year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which “Fiscal year.”the net income is computed under section 212 or 232. The term “fiscal year” means an accounting period of twelve months ending Fractions included.on the last day of any month other than December. The term “taxable year” includes, in the case of a return made for a fractional part of a year under the provisions of this title or under regulations prescribed by the Commissioner with the approval of the Secretary, Taxable year 1924.the period for which such return is made. The first taxable year, to be called the taxable year 1924, shall be the calendar year 1924 or any fiscal year ending during the calendar year 1924.
(b)“Fiduciary.” The term “fiduciary ” means a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person.
(c)“Withholding agent.”*Post*, pp. 277, 285. The term “withholding agent ” means any person required to deduct and withhold any tax under the provisions of section 221 or 237.
(d)“Paid or incurred ”and“paid or accrued.” The terms “paid or incurred ” and “paid or accrued” shall be construed according to the method of accounting upon the basis Application to deductions or credits.of which the net income is computed under section 212 or 232. The deductions and credits provided for in this title shall be taken for the taxable year in which “paid or accrued” or “paid or incurred”, dependent upon the method of accounting upon the basis of which *Post*, pp. 267. 283.the net income is computed under section 212 or 232, unless in order to clearly reflect the income the deductions or credits should be taken as of a different period.
(e)“Stock.” The term “stock” includes the share in an association, joint-stock company, or insurance company.
(f)“Shareholders.” The term “shareholder” includes a member in an association, joint-stock company, or insurance company. distributions by corporations.Distributions by corporations. Sec. 201. From earnings, etc., after February 28, 1913, deemed dividends.
(a)The term “dividend” when used in this title (except in paragraph
(9)of subdivision
(a)of section 234 and To insurance reserve excepted.paragraph
(4)of subdivision
(a)of section 245) means any distribution made by a corporation to its shareholders, whether in money or in other property, out of its earnings or profits accumulated after February 28, 1913.
(b)Application. For the purposes of this Act every distribution is made out of earnings or profits to the extent thereof, and from the most Accumulations, etc., before March 1, 1913, exempt.recently accumulated earnings or profits. Any earnings or profits accumulated, or increase in value of property accrued, before March 1, 1913, may be distributed exempt from tax, after the 255earnings and profits accumulated after February 28, 1913, haveincome tax.Condition. been distributed, but any such tax-free distribution shall be applied against and reduce the basis of the stock provided in section 204.
(c)Amounts distributed in complete liquidation of a corporationDistribution in liquidation. shall be treated as in full payment in exchange for the stock, and amounts distributed in partial liquidation of a corporation shall be treated as in part or full payment in exchange for the stock. The gain or loss to the distributee resulting from such exchange shallDetermination of gain or loss. be determined under section 202, but shall be recognized only to the extent provided in section 203. In the case of amounts distributedPartial liquidation distribution. in partial liquidation (other than a distribution within the provisions of subdivision
(g)of section 203 of stock or securities in connection with a reorganization) the part of such distribution which is properly chargeable to capital account shall not be considered a distribution of earnings or profits within the meaning of subdivision
(b)of this section for the purpose of determining the taxability of subsequent distributions by the corporation.
(d)If any distribution (not in partial or complete liquidation)Distribution not from increase of value before March 1, 1913. nor out of earnings and profits. made by a corporation to its shareholders is not out of increase in value of property accrued before March 1, 1913, and is not out of earnings or profits, then the amount of such distribution shall be applied against and reduce the basis of the stock provided in section 204, and if in excess of such basis, such excess shall be taxable in the same manner as a gain from the sale or exchange of property. The provisions of this paragraph shall also apply to distributionsDepletion of mines. from depletion reserves based on the discovery value of mines.
(e)Any distribution made by a corporation, which was classifiedExemption of distributees of previously taxable earnings of personal service corporation.Vol. 40, p. 1070; Vol. 42, p. 245. as a personal service corporation under the provisions of the Revenue Act of 1918 or the Revenue Act of 1921, out of its earnings or profits which were taxable in accordance with the provisions of section 218 of the Revenue Act of 1918 or section 218 of the Revenue Act of 1921, shall be exempt from tax to the distributees.
(f)A stock dividend shall not be subject to tax, but if beforeStock dividends not taxable.Proceeds of redeemed stock treated as taxable dividends. or after the distribution of any such dividend the corporation proceeds to cancel or redeem its stock at such time and in such manner as to make the distribution and cancellation or redemption in whole or in part essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock, to the extent that it represents a distribution of earnings or profits accumulated after February 28, 1913, shall be treated as a taxable dividend.
(g)As used in this section the term “amounts distributed inMeaning of “amounts distributed in partial liquidation.” partial liquidation” means a distribution by a corporation in complete cancellation or redemption of a part of its stock, or one of a series of distributions in complete cancellation or redemption of all or a portion of its stock. determination of amount of gain or loss.Gain or loss. Sec. 202.
(a)Except as hereinafter provided in this section, theBasis of determining, on disposal of property. gain from the sale or other disposition of property shall he the excess of the amount realized therefrom over the basis provided in subdivision
(a)or
(b)of section 204, and the loss shall be the excess of such basis over the amount realized.
(b)In computing the amount of gain or loss under subdivisionAdjustment for capital expenditures, loss, depletion, etc., of property.
(a)proper adjustment shall be made for
(1)any expenditure properly chargeable to capital account, and
(2)any item of loss, exhaustion, wear and tear, obsolescence, amortization, or depletion, previously allowed with respect to such property. 256
(c)income tax.Computation of amount from sale, etc., of property. The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received.
(d)On sales or exchanges. In the case of a sale or exchange, the extent to which the gain or loss determined under this section shall be recognized for the *infra.*purposes of this title, shall be determined under the provisions of section 203.
(e)Installment payments taxable. >Nothing in this section shall be construed to prevent (in the case of property sold under contract providing for payment in installments) the taxation of that portion of any installment payment representing gain or profit in the year in which such payment is received. recognition of gain or loss from sales and exchanges.Gain or loss from sales or exchanges. Sec. 203. Entire amount recognized.
(a)Upon the sale or exchange of property the entire amount of the gain or loss, determined under section 202, shall be recognized, except as hereinafter provided in this section.
(b)No gain or loss.On exchanges for similar uses, etc.Exceptions.
(1)No gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or interest) is exchanged solely for property of a like kind to be held either for For similar stock in same corporation.productive use in trade or business or for investment, or if common stock in a corporation is exchanged solely for common stock in the same corporation, or if preferred stock in a corporation is exchanged solely for preferred stock in the same corporation.
(2)Stock received on reorganization. No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.
(3)Property for stock of party to reorganization. No gain or loss shall be recognized if a corporation a party to a reorganization exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation a party to the reorganization.
(4)Transfers for stock of corporation under same control. No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock or securities in such corporation, and immediately after the exchange Limitation.such person or persons are in control of the corporation; but in the case of an exchange by two or more persons this paragraph shall apply only if the amount of the stock and securities received by each is substantially in proportion to his interest in the property prior to the exchange.
(5)If involuntarily, etc., converted into similar property, etc. If property (as a result of its destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation, or the threat or imminence thereof) is compulsorily or involuntarily converted into property similar or related in service or use to the property so converted, or into money which is forthwith in good faith, under regulations prescribed by the Commissioner with the approval of the Secretary, expended in the acquisition of other property similar or related in service or use to the property so converted, or in the acquisition of control of a corporation owning such other property, or in the establishment of a Gain recognized on part not so used.replacement fund, no gain or loss shall be recognized. If any part of the money is not so expended, the gain, if any, shall be recognized, but in an amount not in excess of the money which is not so expended.
(c)Additional stock received on reorganization and holding not surrendered. If there is distributed, in pursuance of a plan of reorganization, to a shareholder in a corporation a party to the reorganization, stock or securities in such corporation or in another corporation a 257party to the reorganization, without the surrender by such shareholderincome tax. of stock or securities in such a corporation, no gain to the distributee from the receipt of such stock or securities shall be recognized.
(1)If an exchange would be within the provisions of paragraphRecognition of gain if property received additional to that on which none recognized. (1), (2), or
(4)of subdivision
(b)if it were not for the fact that the property received in exchange consists not only of property permitted by such paragraph to be received without the recognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.
(2)If a distribution made in pursuance of a plan of reorganizationReorganization distributions construed as taxable dividends. is within the provisions of paragraph
(1)but has the effect of the distribution of a taxable dividend, then there shall be taxed as a dividend to each distributee such an amount of the gain recognized under paragraph
(1)as is not in excess of his ratable share of the undistributed earnings and profits of the corporation accumulated after February 28, 1913. Tire remainder, if any, of the gain recognized under paragraph
(1)shall be taxed as a gain from the exchange of property.
(e)If an exchange would be within the provisions of paragraphReorganization with property and other stock received.
(3)of subdivision
(b)if it were not for the fact that the property-received in exchange consists not only of stock or securities permitted by such paragraph to be received without the recognition of gain, but also of other property or money, then—
(1)If the corporation receiving such other property or moneyNo gain if distributed. distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but
(2)If the corporation receiving such other property or moneyGain recognized if not distributed. does not distribute it in pursuance of the plan of reorganization, the gain, if any, to the corporation shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property so received, which is not so distributed.
(f)If an exchange would be within the provisions of paragraphNo loss recognized if property received besides that on which no gain or loss recognized. (1), (2), (3), or
(4)of subdivision
(b)if it were not for the fact that the property received in exchange consists not only of property permitted by such paragraph to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized.
(g)The distribution, in pursuance of a plan of reorganization, byStock distributed on reorganization not considered as of earnings, etc. or on behalf of a corporation a party to the reorganization, of its stock or securities or stock or securities in a corporation a party to the reorganization, shall not be considered a distribution of earnings or profits within the meaning of subdivision
(b)of section 201 for the purpose of determining the taxability of subsequent distributions by the corporation.
(h)As used in this section and sections 201 and 204—Reorganization.
(1)The term “reorganization” means
(A)a merger or consolidationCorporation act constituting. (including the acquisition by one corporation of at least a majority of the voting stock and at least a majority of the total number of shares of all other classes of stock of another corporation, or substantially all the properties of another corporation), or
(B)a transfer by a corporation of all or a part of its assets to another corporation if immediately after the transfer the transferor or its stockholders or both are in control of the corporation to which the assets are transferred, or
(C)a recapitalization, or
(D)a mere change in identity, form, or place of organization, however effected.
(2)The term “a party to a reorganization” includes a corporation Corporations included as “a party to a reorganization.resulting from a reorganization and includes both corporations in the case of an acquisition by one corporation of at least a ma258income tax.jority of the voting stock and at least a majority of the total number of shares of all other classes of stock of another corporation.
(i)Ownership constituting “control.” As used in this section the term “control” means the ownership of at least 80 per centum of the voting stock and at least 80 per centum of the total number of shares of all other classes of stock of the corporation. basis for determining gain or loss, depletion, and depreciation.Determining gain or loss. Sec. 204. On cost value on sales, etc., of property acquired after February 28, 1913.
(a)The basis for determining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such property; except that—
(1)Exceptions.Inventory value. If the property should have been included in the last inventory, the basis shall be the last inventory value thereof;
(2)Gifts after December 31, 1920, on value in hands of donor. If the property was acquired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by Ascertainment.gift. If the facts necessary to determine such basis are unknown to the donee, the Commissioner shall, if possible, obtain such facts from such donor or last preceding owner, or any other person cognizant Or on market value when acquired by donor, etc.thereof. If the Commissioner finds it impossible to obtain such facts, the basis shall be the fair market value of such property as found by the Commissioner as of the date or approximate date at which, according to the best information that the Commissioner is able to obtain, such property was acquired by such donor or last preceding owner;
(3)Trust property, acquired after December 31, 1920. If the property was acquired after December 31, 1920, by a transfer in trust (other than by a transfer in trust by bequest or devise) the basis shall be the same as it would be in the hands of the grantor, increased in the amount of gain or decreased in the amount of loss recognized to the grantor upon such transfer under the law Estates acquisitions excepted.applicable to the year in which the transfer was made. The provisions of this paragraph shall not apply to the acquisition or such Vol. 42, p. 278.property interests as are specified in subdivision
(c)or
(e)of *Post*, p. 304.section 402 of the Revenue Act of 1921 or in subdivision (c), (d), or
(f)of section 302 of this Act;
(4)Gifts before December 31, 1920. If the property was acquired by gift or transfer in trust on or before December 31, 1920, the basis shall be the fair market value of such property at the time of such acquisition;
(5)Bequests, etc. If the property was acquired by bequest, devise, or inheritance, the basis shall be the fair market value of such property at the Transfers in contemplation of death, etc.time of such acquisition. The provisions of this paragraph shall apply to the acquisition of such property interests as are specified in subdivision
(c)or
(e)of section 402 of the Revenue Act of 1921, or in subdivision (c), (d), or
(f)of section 302 of this Act;
(6)Acquired on an exchange, etc. If the property was acquired upon an exchange described in subdivision (b), (d), (e), or
(f)of section 203, the basis shall be the same as in the case of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized upon such exchange under the law applicable Partly by exchange and by other property.to the year in which the exchange was made. If the property so acquired consisted in part of the type of property permitted by paragraph (1), (2), (3), or
(4)of subdivision
(b)of section 203 to be received without the recognition of gain or loss, and in part of other property, the basis provided in this paragraph shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such other property an amount equivalent to its fair market value at the date Issues of stock excepted.of the exchange. This paragraph shall not apply to property ac259quired by a corporation by the issuance of its stock or securities asincome tax. the consideration in whole or in part for the transfer of the property to it;
(7)If the property (other than stock or securities in a corporationAcquired after December 31, 1917, on reorganization, with same party remaining in control. a party to the reorganization) was acquired after December 31, 1917, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 80 per centum or more remained in the same persons or any of them, then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made;
(8)If the property (other than stock or securities in a corporationAcquired after December 31, 1920, by issue of securities. a party to a reorganization) was acquired after December 31, 1920, by a corporation by the issuance of its stock or securities in connection with a transaction described in paragraph
(4)of subdivision
(b)of section 203 (including, also, cases where part of the consideration for the transfer of such property to the corporation was property or money in addition to such stock or securities), then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made;
(9)If the property consists of stock or securities distributed afterStocks, etc., distributed on reorganization after December 31, 1923. December 31, 1923, to a taxpayer in connection with a transaction described in subdivision
(c)of section 203, the basis in the case of the stock in respect of which the distribution was made shall be apportioned, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, between such stock and the stock or securities distributed;
(10)If the property was acquired as the result of a compulsoryAcquired by involuntary conversion. or involuntary conversion described in paragraph
(5)of subdivision
(b)of section 203, the basis shall be the same as in the case of the property so converted, decreased in the amount of any money received by the taxpayer which was not expended in accordance with the provisions of law (applicable to the year in which such conversion was made) determining the taxable status of the gain or loss upon such conversion, and increased in the amount of gain or decreased in the amount of loss to the taxpayer recognized upon such conversion under the law applicable to the year in which such conversion was made;
(11)If substantially identical property was acquired after DecemberAcquired for stock, etc., disposed of, on which no loss allowed. 31, 1920, in place of stock or securities which were sold or disposed of and in respect of which loss was not allowed as a deduction under paragraph
(5)of subdivision
(a)of section 214 or*Post*, pp. 270, 284. paragraph
(4)of subdivision
(a)of section 234 of this Act or the Revenue Act of 1921, the basis in the case of the property so acquired shall be the basis in the case of the stock or securities so sold or disposed of, except that if the repurchase price was in excess of the sale price such basis shall be increased in the amount of the difference, or if the repurchase price was less than the sale price such basis shall be decreased in the amount of the difference.
(b)The basis for determining the gain or loss from the sale orSale, etc., of property acquired before March l, 1913. on cost or market value. other disposition of property acquired before March 1, 1913, shall be
(A)the cost of such property (or, in the case of such property as is described in paragraph (1), (4), or (5), of subdivision (a), the basis as therein provided), or
(B)the fair market value of such property as of March 1, 1913, whichever is greater. In determiningDetermination of value. the fair market value of stock in a corporation as of March 1, 1913, 260income tax.due regard shall be given to the fair market value of the assets of the corporation as of that date.
(c)Depletion, exhaustion, etc., allowed. The basis upon which depletion, exhaustion, wear and tear, and obsolescence are to be allowed in respect of any property shall be the same as is provided in subdivision
(a)or
(b)for the purpose of determining the gain or loss upon the sale or other disposition of On mines, oil and gas wells discovered after February 28, 1913.such property, except that in the case of mines, oil and gas wells, discovered by the taxpayer after February 28, 1913, and not acquired as the result of purchase of a proven tract or lease, where the fair market value of the property is materially disproportionate to the cost, the basis for depletion shall be the fair market value of the property at the date of discovery or within thirty days thereafter; Limitation.but such depletion allowance based on discovery value shall not exceed 50 per centum of the net income (computed without allowance for depletion) from the property upon which the discovery was made, except that in no case shall the depletion allowance be less than it would be if computed without reference to discovery value. inventories.Inventories. Sec. 205. Use of, in determining incomes. Whenever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of the Secretary, may prescribe as conforming as nearly as may be to the best accounting practice in the trade or business and as most clearly reflecting the income. net losses.Net losses. Sec. 206. Determined by excess of deductions over gross income.
(a)As used in this section the term “net loss” means the excess of the deductions allowed by section 214 or 234 over the gross income, with the following exceptions and limitations:
(1)Losses not connected with the business. Deductions otherwise allowed by law not attributable to the operation of a trade or business regularly carried on by the taxpayer shall be allowed only to the extent of the amount of the gross income not derived from such trade or business;
(2)Capital losses, by other than corporations. In the case of a taxpayer other than a corporation, deductions for capital losses otherwise allowed by law shall be allowed only to the extent of the capital gains;
(3)Depletion. The deduction for depletion shall not exceed the amount which would be allowable if computed without reference to discovery value;
(4)On corporation dividends not allowed. The deduction provided for in paragraph
(6)of subdivision
(a)of section 234 of amounts received as dividends shall not be allowed;
(5)Interest to be induced in gross income. There shall be included in computing gross income the amount of interest received free from tax under this title, decreased by the amount of interest paid or accrued and losses sustained which is not allowed as a deduction by paragraph
(2)of subdivision
(a)of section 214 or by paragraph
(2)of subdivision
(a)of section 234.
(b)Net loss to be deducted from tax for succeeding taxable year. If, for any taxable year, it appears upon the production of evidence satisfactory to the Commissioner that any taxpayer has sustained a net loss, the amount thereof shall be allowed as a deduction in computing the net income of the taxpayer for the succeeding taxable year (hereinafter in this section called “second year”), and if such net loss is in excess of such net income (computed without such deduction), the amount of such excess shall be allowed as a deduction in computing the net income for the next succeeding taxable year (hereinafter in this section called “third year”); the deduction in all cases to be made under regulations prescribed by the Commissioner with the approval of the Secretary. 261
(1)If in the second year the taxpayer (other than a corporation)income tax.Application if capital loss sustained in second year. sustains a capital net loss, the deduction allowed by subdivision
(b)of this section shall first be applied as a deduction in computing the ordinary net income for such year. If the deduction is in excess of the ordinary net income (computed without such deduction) then the amount of such excess shall be allowed as a deduction in computing net income for the third year.
(2)If in the second year the taxpayer (other than a corporation)Application to capital gain for second year. has a capital net gain, the deduction allowed by subdivision
(b)of this section shall first be applied as a deduction in computing the ordinary net income for such year. If the deduction is in excess of the ordinary net income (computed without such deduction) the amount of such excess shall next be applied against the capital net gain for such year and if in excess of the capital net gain the amount of that excess shall be allowed as a deduction in computing net income for the third year.
(d)If any portion of a net loss is allowed as a deduction in computingApplication to third year. net income for the third year, under the provisions of either subdivision
(b)or (c), and the taxpayer (other than a corporation) has in such year a capital net gain or a capital net loss, then the method of allowing such deduction in such third year shall be the same as provided in subdivision (c).
(e)If for the taxable year 1922 a taxpayer sustained a net loss inApplication to income (or 1922, under Act of 1921. excess of his net income for the taxable year 1923 (such net loss and net income being computed under the Revenue Act of 1921), the amount of such excess shall be allowed as a deduction in computing net income for the taxable year 1924 in accordance with the method provided in subdivisions
(b)and
(c)of this section.
(f)If for the taxable year 1923 a taxpayer sustained a net lossAllowance for year 1923. within the provisions of the Revenue Act of 1921, the amount of such net loss shall be allowed as a deduction in computing net income for the two succeeding taxable years to the same extent and in the same manner as a net loss sustained for one taxable year is, under this Act, allowed as a deduction for the two succeeding taxable years.
(g)If a taxpayer makes return for a period beginning in one calendarApplication if loss in fiscal year differs from calendar year. year (hereinafter in this subdivision called “first calendar year”) and ending in the following calendar year (hereinafter in this subdivision called “second calendar year”) and the law applicable to the second calendar year is different from the law applicable to the first calendar year, then his net loss for the periodProportional allowance. ending during the second calendar year shall be the sum of:
(1)the same proportion of a net loss for the entire period, determined under the law applicable to the first calendar year, which the portion of such period falling within such calendar year is of the entire period: and
(2)the same proportion of a net loss for the entire period, determined under the law applicable to the second calendar year, which the portion of such period falling within such calendar year is of the entire period.
(h)The benefit of this section shall be allowed to the membersBenefits allowed partners, estates or trusts, and insurance companies. of a partnership, to an estate or trust, and to insurance companies subject to the tax imposed by section 243 or 246, under regulations prescribed by the Commissioner with the approval of the Secretary. fiscal years.Fiscal years. Sec. 207.
(a)If the taxpayer makes return for a period beginningReturns if period begins in first calendar year and ends in second. in one calendar year (Hereinafter in this subdivision called “first calendar year”) and ending in the following calendar year (hereinafter in this subdivision called “second calendar year”) 262income tax.and the law applicable to the second calendar year is different from the law applicable to the first calendar year, then his tax under this title for the period ending during the second calendar year shall be Proportion for different rates.the sum of:
(1)the same proportion of a tax for the entire period, determined under the law applicable to the first calendar year and at the rates for such year, which the portion of such period falling within the first calendar year is of the entire period; and
(2)the same proportion of a tax for the entire period, determined under the law applicable to the second calendar year and at the rates for such year, which the portion of such period falling within the second calendar year is of the entire period.
(b)Application to partnersnips If a fiscal year of a partnership begins in one calendar year and ends in another calendar year, and the law applicable to the second calendar year is different from the law applicable to the first calendar year, then (1). the rates for the calendar year during which such fiscal year begins shall apply to an amount of each partners share of such partnership net income (determined under the law applicable to such calendar year) equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year, and
(2)the. rates for the calendar year during which such fiscal year ends shall apply to an amount or each partner’s share of such partnership net income (determined under the law applicable to such calendar year) equal to the proportion which the part of such fiscal year falling within such calendar year bears Added to other income of taxpayers.to the full fiscal year. In such cases the part of such income subject to the rates in effect for the most recent calendar year shall be added to the other income of the taxpayer subject to such rates and the resulting amount shall be placed in the lower brackets of the rate schedule applicable to such year, and the part of such income subject to the rates in effect for the next preceding calendar year shall be placed in the next higher brackets of the rate schedule applicable to such year.
(c)Credit or refund for tax paid under former law. Any amount paid before or after the enactment of this Act on account of the tax imposed for a fiscal year beginning in 1923 and ending in 1924 by Title II of the Revenue Act of 1921 shall be credited toward the payment of the tax imposed for such fiscal year by this Act, and if the amount so paid exceeds the amount of such tax imposed by this Act, the excess shall be credited or refunded *Post*, p. 301.in accordance with the provisions of section 281. capital gains and losses.Capital gains and losses. Sec. 208. Meaning of terms.
(a)For the purposes of this title—
(1)“Capital gain.” The term “capital gain” means taxable gain from the sale or exchange of capital assets consummated after December 31, 1921;
(2)“Capital loss.” The term “capital loss” means deductible loss resulting from the sale or exchange of capital assets;
(3)“Capital deductions.” The term “capital deductions” means such deductions as are allowed by section 214 for the purpose of computing net income, and are properly allocable to or chargeable against capital assets sold or exchanged during the taxable year;
(4)“Ordinary deductions.” The term “ordinary deductions” means the deductions allowed by section 214 other than capital losses and capital deductions;
(5)“Capital net gain. The term “capital net gain” means the excess of the total amount of capital gain over the sum of
(A)the capital deductions and capital losses, plus
(B)the amount, if any, by which the ordinary deductions exceed the gross income computed without including capital gain; 263
(6)The term “capital net loss” means the excess of the sum ofincome tax.“Capital net loss.” the capital losses plus the capital deductions over the total amount of capital gain;
(7)The term “ordinary net income” means the net income, computed“Ordinary net income.” in accordance with the provisions of this title, after excluding all items of capital gain, capital loss, and capital deductions; and
(8)The term “capital assets” means property held by the taxpayer“Capital assets.” for more than two years (whether or not connected with his trade or business), but does not include stock in trade of the taxpayerProperty not included ns. or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale in the course of his trade or business.
(b)In the case of any taxpayer (other than a corporation) whoTax on capital net gain allowed in lieu of normal or surtax. for any taxable year derives a capital net gain, there shall (at the election of the taxpayer) be levied, collected and paid, in lieu of the taxes imposed by sections 210 and 211 of this title, a tax determined as follows: A partial tax shall first be computed upon the basis of the ordinaryComputation to determine. net income at the rates and in the manner provided in sections 210 and 211, and the total tax shall be this amount plus 12½ per centum of the capital net gain.
(c)In the case of any taxpayer (other than a corporation) whoOn capital net loss. for any taxable year sustains a capital net loss, there shall be levied, collected, and paid, in lieu of the taxes imposed by sections 210 and 211 of this title, a tax determined as follows: A partial tax shall first be computed upon the basis of the ordinaryComputation to determine. net income at the rates and in the manner provided in sections 210 and 211, and the total tax shall be this amount minus 12½ per centum of the capital net loss; but in no case shall the tax under this subdivision be less than the taxes imposed by sections 210 and 211 computed without regard to the provisions of this section.
(d)The total tax determined under subdivision
(b)or
(c)shallCollection and payment. be collected and paid in the same manner, at the same time, and subject to the same provisions of law, including penalties, as other taxes under this title.
(e)In the case of the members of a partnership, of an estate orApplication to partnerships, estates or trusts, etc. trust, or of the beneficiary of an estate or trust, the proper part of each share of the net income which consists, respectively, of ordinary net income, capital net gain, or capital net loss, shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary, and shall be separately shown in the return of the partnership or estate or trust,Returns and rates. and shall be taxed to the member or beneficiary or to the estate or trust as provided in sections 218 and 219, but at the rates and in the manner provided in subdivision
(b)or
(c)of this section. earned income.“Earned income.” Sec. 209.
(a)For the purposes of this section—Meaning of terms.
(1)The term “earned income” means wages, salaries, professional “Earned income.”fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. In the case of aAllowance for personal services if combined with capital in business. taxpayer engaged in a trade or business in which both personal services and capital are material income producing factors, a reasonable allowance as compensation for the personal services actually ren264income tax.dered by the taxpayer, not in excess of 20 per centum of his share of the net profits of such trade or business, shall be considered as earned income.
(2)“Earned income deductions.” The term “earned income deductions” means such deductions as are allowed by section 214 for the purpose of computing net income, and are properly allocable to or chargeable against earned income.
(3)“Earned net income.” The term “earned net income” means the excess of the amount of the earned income over the sum of the earned income deductions. If the taxpayer’s net income is not more than $5,000, his entire net income shall be considered to be earned net income, and if his net income is more than $5,000, his earned net income Maximum allowed.shall not be considered to be less than $5,000. In no case shall the earned net income be considered to be more than $10,000.
(b)Individual allowed credit on normal tax for earned income. In the case of an individual the tax shall, in addition to the credits provided in section 222, be credited with 25 per centum of the amount of tax which would be payable if his earned net income constituted his entire net income; but in no case shall the credit allowed under this subdivision exceed 25 per centum of his tax under section 210.
(c)Application to partners. In the case of the members of a partnership the proper part of each share of the net income which consists of earned income shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary and shall be separately shown in the return of the partnership and shall be *Post*, p. 275.taxed to the member as provided in section 218. Part II.—Individuals. Individuals. normal tax.Normal tax. Sec. 210. In lieu of former rates.
(a)In lieu of the tax imposed by section 210 of the Vol. 42, p. 233.Revenue Act of 1921, there shall be levied, collected, and paid for each taxable year upon the net income of every individual (except as provided in subdivision
(b)of this section) a normal tax of 6 per centum of the amount of the net income in excess of the credits *Post*, p. 272.Exception for citizens or residents.provided in section 216, except that in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 2 per centum, and upon the next $4,000 of such excess amount shall be 4 per centum;
(b)Alien residents in contiguous countries. In lieu of the tax imposed by subdivision (a), there shall be levied, collected, and paid for each taxable year upon the net income of every nonresident alien individual, a resident of a contiguous country, a normal tax equal to the sum of the following:
(1)On compensation for personal services in United States. 2 per centum of the amount by which the part of the net income attributable to wages, salaries, professional fees, or other amounts received as compensation for personal services actually performed in the United States, exceeds the credits provided in Limitation.subdivisions
(d)and
(e)of section 216: but the amount taxable at such 2 per centum rate shall not exceed $4,000;
(2)Additional, if exceeding family credits and $1,000. 4 per centum of the amount by which such part of the net income exceeds the sum of
(A)the credits provided in subdivisions
(d)and
(e)of section 216, plus
(B)$4,000; but the amount taxable at such 4 per centum rate shall not exceed $4,000; and
(3)Additional, If in excess thereof. 6 per centum of the amount of the net income in excess of the sum of
(A)the amount taxed under paragraphs
(1)and (2), plus
(B)the credits provided in section 216. 265 surtax.income tax.Surtax. Sec. 211.
(a)In lien of the tax imposed by section 211 of theAdditional to normal tax, on incomes exceeding *10,000. Revenue Act of 1921, but in addition to the normal tax imposed by section 210 of this Act, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a surtax as follows: Upon a net income of $10,000 there shall be no surtax; upon netRates.Vol. 42, p. 235 incomes in excess of $10,000 and not in excess of $14,000, 1 per centum of such excess. $40 upon net incomes of $14,000; and upon net incomes in excess of $14,000 and not in excess of $16,000, 2 per centum in addition of such excess. $80 upon net incomes of $16,000; and upon net incomes in excess of $16,000 and not in excess of $18,000, 3 per centum in addition of such excess. $140 upon net incomes of $18,000; and upon net incomes in excess of $18,000 and not in excess of $20,000, 4 per centum in addition of such excess. $220 upon net incomes of $20,000; and upon net incomes in excess of $20,000 and not in excess of $22,000, 5 per centum in addition of such excess. $320 upon net incomes of $22,000; and upon net incomes in excess of $22,000 and not in excess of $24,000, 6 per centum in addition of such excess. $440 upon net incomes of $24,000; and upon net incomes in excess of $24,000 and not in excess of $26,000, 7 per centum in addition of such excess. $580 upon net incomes of $26,000; and upon net incomes in excess of $26,000 and not in excess of $28,000, 8 per centum in addition of such excess. $740 upon net incomes of $28,000; and upon net incomes in excess of $28,000 and not in excess of $30,000, 9 per centum in addition of such excess. $920 upon net incomes of $30,000; and upon net incomes in excess of $30,000 and not in excess of $34,000, 10 per centum in addition of such excess. $1,320 upon net incomes of $34,000; and upon net incomes in excess of $34,000 and not in excess of $36,000, 11 per centum in addition of such excess. $1,540 upon net incomes of $36,000; and upon net incomes in excess of $36,000 and not in excess of $38,000, 12 per centum in addition of such excess. $1,780 upon net incomes of $38,000; and upon net incomes in excess of $38,000 and not in excess of $42,000, 13 per centum in addition of such excess. $2,300 upon net incomes of $42,000; and upon net incomes in excess of $42,000 and not in excess of $44,000, 14 per centum in addition of such excess. $2,580 upon net incomes of $44,000; and upon net incomes in excess of $44,000 and not in excess of $46,000, 15 per centum in addition of such excess. $2,880 upon net incomes of $46,000; and upon net incomes in excess of $46,000 and not in excess of $48,000, 16 per centum in addition of such excess. $3,200 upon net incomes of $48,000; and upon net incomes in excess of $48,000 and not in excess of $50,000, 17 per centum in addition of such excess. $3,540 upon net incomes of $50,000; and upon net incomes in excess of $50,000 and not in excess of $52,000, 18 per centum in addition of such excess.266 income tax.Surtax—Continued.$3,900 upon net incomes of $52,000; and upon net incomes in excess of $52,000 and not in excess of $56,000, 19 per centum in addition of such excess. $4,660 upon net incomes of $56,000; and upon net incomes in excess of $56,000 and not in excess of $58,000, 20 per centum in addition of such excess. $5,060 upon net incomes of $58,000; and upon net incomes in excess of $58,000 and not in excess of $62,000, 21 per centum in addition of such excess. $5,900 upon net incomes of $62,000; and upon net incomes in excess of $62,000 and not in excess of $64,000, 22 per centum in addition of such excess. $6,340 upon net incomes of $64,000: and upon net incomes in excess of $64,000 and not in excess of $66,000, 23 per centum in addition of such excess. $6,800 upon net incomes of $66,000; and upon net incomes in excess of $66,000 and not in excess of $68,000, 24 per centum in addition of such excess. $7,280 upon net incomes of $68,000; and upon net incomes in excess of $68,000 and not in excess of $70,000, 25 per centum in addition of such excess. $7,780 upon net incomes of 870,000; and upon net incomes in excess of $70,000 and not in excess of $74,000, 26 per centum in addition of such excess. $8,820 upon net incomes of $74,000: and upon net incomes in excess of $74,000 and not in excess of $76,000, 27 per centum in addition of such excess. $9,360 upon net incomes of $76,000: and upon net incomes in excess of $76,000 and not in excess of $80,000, 28 per centum in addition of such excess. $10,480 upon net incomes of $80,000; and upon net incomes in excess of $80,000 and not in excess of $82,000, 29 per centum in addition of such excess. $11,060 upon net incomes of $82,000; and upon net incomes in excess of $82,000 and not in excess of $84,000, 30 per centum in addition of such excess. $11,660 upon net incomes of $84,000; and upon net incomes in excess of $84,000 and not in excess of $88,000, 31 per centum in addition of such excess. $12,900 upon net incomes of $88,000; and upon net incomes in excess of $88,000 and not in excess of $90,000, 32 per centum in addition of such excess. $13,540 upon net incomes of $90,000; and upon net incomes in excess of $90,000 and not in excess of $92,000, 33 per centum in addition of such excess. $14,200 upon net incomes of $92,000; and upon net incomes in excess of $92,000 and not in excess of $94,000, 34 per centum in addition of such excess. $14,880 upon net incomes of $94,000; and upon net incomes in excess of $94,000 and not in excess of $96,000, 35 per centum in addition of such excess. $15,580 upon net incomes of $96,000; and upon net incomes in excess of $96,000 and not in excess of $100,000, 36 per centum in addition of such excess. $17,020 upon net incomes of $100,000; and upon net incomes in excess of $100,000 and not in excess of $200,000, 37 per centum in in addition of such excess. $54,020 upon net incomes of $200,000; and upon net incomes in excess of $200,000 and not in excess of $300,000. 38 per centum in addition of such excess.267 $92,020 upon net incomes of $300,000; and upon net incomes inincome tax.Surtax—Continued. excess of $300,000 and not in excess of $500,000, 39 per centum in addition of such excess. $170,020 upon net incomes of $500,000; and upon net incomes in excess of $500,000, in addition 40 per centum of such excess.
(b)In the case of a bona fide sale of mines, oil or gas wells, orMines, oil or gas wells.Maximum tax on sales of, developed by taxpayer.Vol. 42, p. 237. any interest therein, where the principal value of the property has been demonstrated by prospecting or exploration and discovery work done by the taxpayer, the portion of the tax imposed by this section attributable to such sale shall not exceed 16 per centum of the selling price of such property or interest. net income of individuals defined.Individual net income. Sec. 212.
(a)In the case of an individual the term “net income”Deductions from cross income constituting. means the gross income as defined in section 213, less the deductions allowed by sections 214 and 206.
(b)The net income shall be computed upon the basis of the taxpayer’sBasis of computing. annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; but if no such method of accounting has been so employed, or if the method employed does not clearly reflect the income, the computation shall be made in accordance with such method as in the opinion of the Commissioner does clearly reflect the income. If the taxpayer’s annual accounting period is other than a fiscal year as defined in section 200 or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year.
(c)If a taxpayer changes his accounting period from fiscal yearIf taxpayer changes accounting period. to calendar year, from calendar year to fiscal year, or from one fiscal year to another, the net income shall, with the approval of the Commissioner, be computed on the basis of such new accounting period, subject to the provisions of section 226.*Post*, p. 281. gross income defined.Gross income.Vol. 42, p. 237. Sec. 213. For the purposes of this title, except as otherwise providedSources included. in section 233—*Post*, p. 283.
(a)The term “gross income” includes gains, profits, and incomeFrom personal salaries, etc. derived from salaries, wages, or compensation for personal service (including in the case of the President of the United States, theFederal officials, etc., included. 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 thereof, or the District of Columbia, the compensation received as such), of whatever kind and in whatever form paid, or from professions,Professions, trades, businesses, etc., vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest,Interest, rents, dividends, etc. rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. The amount of all such items shall be includedIncluded for taxable year when received. in the gross income for the taxable year in which received by the taxpayer, unless, under methods of accounting permitted under subdivision
(b)of section 212, any such amounts are to be properly accounted for as of a different period.
(b)The term “gross income” does not include the followingExempted items. items, which shall be exempt from taxation under this title:
(1)The proceeds of life insurance policies paid upon the deathLife insurance policies. of the insured; 268
(2)income tax.Returns under life, etc., insurance contracts. The amount received by the insured as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract;
(3)Gifts, bequests, etc., The value of property acquired by gift, bequest, devise, or descent (but the income from such property shall be included in gross income);
(4)Interest on State, etc., obligations. Interest upon
(A)the obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia: or Farm loan bonds.Vol. 39, p. 375.Federal, etc., obligations.Statement required in returns.(B) securities issued under the provisions of the Federal Farm Loan Act, or under the provisions of such Act as amended; or
(C)the obligations of the United States or its possessions. Every person owning any of the obligations or securities enumerated in clause (A), (B), or
(C)shall, in the return required by this title, submit a statement showing the number and amount of such obligations and securities owned by him and the income received therefrom, in such form and with such information as the Commissioner Limitation on Liberty bonds, etc.may require. In the case of obligations of the United States issued after September 1, 1917 (other than postal savings certificates of deposit), the interest shall be exempt only if and to the extent provided in the respective Acts authorizing the issue thereof as amended and supplemented, and shall be excluded from gross income only if and to the extent it is wholly exempt to the taxpayer from income taxes;
(5)Income from domestic securities, etc., owned by foreign governments. The income of foreign governments received from investments in the United States in stocks, bonds, or other domestic securities, owned by such foreign governments, or from interest on deposits in banks in the United States of moneys belonging to such foreign governments, or from any other source within the United States;
(6)Payments for personal injuries, etc. 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;
(7)States, etc., on receipts from public utilities. Income derived from any public utility or the exercise of any essential governmental function and accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, or income accruing to the Government of any possession of the United States, or any political subdivision thereof. Under prior contracts for operation thereof.Whenever any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, prior to September 8, 1916, entered in good faith into a contract with any person, the object and purpose of which is to acquire, construct, operate, or maintain a public utility—
(A)Tax levied on proceeds, prior to division thereof with State, etc. If by the terms of such contract the tax imposed by this title is to be paid out of the proceeds from the operation of such public utility, prior to any division of such proceeds between the person and the State, Territory, political subdivision, or the District of Columbia, and if, but for the imposition of the tax imposed by this title, a part of such proceeds for the taxable year would accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then a tax upon the net income from the operation of such public utility shall be levied, assessed, collected, and Refund to State, etc., of proportion of tax.paid in the manner and at the rates prescribed in this title, but there shall be refunded to such State, Territory, political subdivision, or the District of Columbia, (under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary) an amount which bears the same relation to the amount of the tax as the amount which (but for the imposition of the tax imposed by this title) would have accrued directly to or for the use of such State, 269Territory, political subdivision, or the District of Columbia, bears toincome tax. the amount of the net income from the operation of such public utility for such taxable year.
(B)If by the terms of such contract no part of the proceeds fromIf no part accrue to State, etc., the net inline of person taxable. the operation of the public utility for the taxable year would, irrespective of the tax imposed by this title, accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then the tax upon the net income of such person from the operation of such public utility shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this title;
(8)The income of a nonresident alien or foreign corporationEarnings from foreign ships by nonresident alien, etc.Conditions. which consists exclusively of earnings derived from the operation of a ship or ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States and to corporations organized in the United States;
(9)Amounts received as compensation, family allotments andWar risk and rehabilitation allowances, and allowances under the provisions of the War Risk insurance and the Vocational Rehabilitation Acts or the World War Veterans’ Act, 1924, or as pensions from the United States for service of the beneficiary or another in the military or naval forces of the United States in time of war, or as a State pension for services rendered by the beneficiary or another for which the State is paying a pension;
(10)The amount received by an individual before January 1,Dividends from domestic building associations before January 1, 1927. 1927, as dividends or interest from domestic building and loan associations, substantially all the business of which is confined to making loans to members, but the amount excluded from gross incomeLimit. under this paragraph in any taxable year shall not exceed $300;
(11)The rental value of a dwelling house and appurtenancesRent of ministers’ dwellings. thereof furnished to a minister of the gospel as part of his compensation;
(12)The receipts of shipowners’ mutual protection and indemnityReceipts of ship-owners’ mutual associations. associations, not organized for profit, and no part of the net earnings of which inures to the benefit of any private shareholder; butRestrictions. such corporations shall be subject as other persons to the tax upon their net income from interest, dividends, and rents;
(13)In the case of an individual, amounts distributed as dividendsSpecial dividends to Chinese residents from China Trade Act corporations.Vol. 42, p. 856.*Post*, p. 997. to or for his benefit by a corporation organized under the China Trade Act, 1922, if, at the time of such distribution, he is a citizen of China, resident therein, and the equitable right to the income of the shares of stock of the corporation is in good faith vested in him.
(c)In the case of a nonresident alien individual, gross incomeNonresident aliens. means only the gross income from sources within the United States,Gross income of, only from United States sources. determined under the provisions of section 217. deductions allowed individuals.Deductions allowed. Sec. 214.
(a)In computing net income there shall be allowed asItems specified. deductions:
(1)All the ordinary and necessary expenses paid or incurred duringBusiness expenses. the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including theTraveling, etc., included as. entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; and 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 taxpayer lias not taken or is not taking title or in which he has no equity; 270
(2)income tax.Interest on debts.Exception. All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title;
(3)Taxes paid. Taxes paid or accrued within the taxable year except
(A)Exceptions.income, war-profits, and excess-profits taxes imposed by the authority of the United States,
(B)so much of the income, war-profits and excess-profits taxes, imposed by the authority of any foreign country or possession of the United States, as is allowed as a credit under section 222,
(C)taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and
(D)taxes imposed upon the taxpayer upon his interest as shareholder of a corporation, which are paid by the corporation without Accrual of estate, etc., taxes.reimbursement from the taxpayer. For the purpose of this paragraph, estate, inheritance, legacy, and succession taxes accrue on the duo date thereof except as otherwise provided by the law of the jurisdiction imposing such taxes;
(4)Business losses. Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in trade or business;
(5)Losses not connected with trade or business. Losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in any transaction entered into for profit, though not connected with the trade or business; but in the case of a nonresident alien individual only if the profit, if such transaction had resulted in a profit, would be taxable under this title. Restriction as to sales of stock, etc.No deduction shall be allowed under this paragraph for any loss claimed to have been sustained in any sale or other disposition of shares of stock or securities where it appears that within thirty days before or after the date of such sale or other disposition the taxpayer has acquired (otherwise than by bequest or inheritance) or has entered into a contract or option to acquire substantially identical property, and the property so acquired is held by the taxpayer for Allowance for part of loss.any period after such sale or other disposition. If such acquisition or the contract or option to acquire is to the extent of part only of substantially identical property, then only a proportionate part of the loss shall be disallowed;
(6)Casualty losses not connected with the business. Losses sustained during the taxable year of property not connected with the trade or business (but in the case of a nonresident alien individual only property within the United States) if arising from fires, storms, shipwreck, or other casualty, or from Basis for determining deductions.theft, and if not compensated for by insurance or otherwise. The basis for determining the amount of the deduction under this paragraph, or paragraph
(4)or (5), shall be the same as is provided in *Ante*, p. 258.section 204 for determining the gain or loss from the sale or other disposition of property;
(7)Worthless debts. Debts ascertained to be worthless and charged off within the taxable year (or, in the discretion of the Commissioner, a reasonable addition to a reserve for bad debts); and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part;
(8)Exhaustion, etc., of business property. A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence;
(9)Mines, oil and gas wells, etc. In the case of mines, oil and gas wells, other natural deposits, Reasonable allowance for depletion, etc.and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case; such reasonable allowance in all cases to be made under rules and regulations to be prescribed by the Commissioner, with the Leases.approval of the Secretary. In the case of leases the deduction allowed 271by this paragraph shall be equitably apportioned between the lessorincome tax. and lessee;
(10)Contributions or gifts made within the taxable year to orGifts, etc. for the use of:
(A)The United States, any State, Territory, or anyFor public uses. political subdivision thereof, or the District of Columbia, for exclusively public purposes;
(B)any corporation, or trust, or communityCorporations, community chests, religious, scientific, etc., organizations. chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of anyCondition. private shareholder or individual;
(C)the special fund for vocationalVocational rehabilitation.Vol. 40, p. 619.War veterans’ organizations, etc. rehabilitation authorized by section 7 of the Vocational Rehabilitation Act;
(D)posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private shareholder or individual; or
(E)a fraternal society, order, or association, operatingFraternal lodges, etc.Conditions. under the lodge system, but only if such contributions or gifts are to be used exclusively for religious, charitable, scientific, literary, orPrevention of cruelty to children, etc.Limit. educational purposes, or for the prevention of cruelty to children or animals; to an amount which in all the above cases combined does not exceed 15 per centum of the taxpayer’s net income as computed without the benefit of this paragraph, except that if in the taxableAllowance of full amount in special cases.Conditions. year and in each of the ten preceding taxable years the amount in all the above cases combined exceeds 90 per centum of the taxpayer’s net income for each such year, as computed without the benefit of this paragraph, then to the full amount of such contributions and gifts made within the taxable year. In case of a nonresident alienBy nonresident aliens. individual this deduction shall be allowed only as to contributions or gifts made to domestic corporations, or to community chest’s, funds, or foundations, created in the United States, or to such vocational rehabilitation fund. Such contributions or gifts shall be allowableVerification required. as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary.
(b)In the case of a nonresident alien individual, the deductionsNonresident aliens.Allowances connected with income from United States sources. allowed in subdivision (a), except those allowed in paragraphs (5), (6), and (10), shall be allowed only if and to the extent that they are connected with income from sources within the United States; and the proper apportionment and allocation of the deductions with respect to sources of income within and without the United States shall be determined as provided in section 217 under rules and regulations prescribed by the Commissioner with the approval of the Secretary. In the case of a citizen entitled to the benefits of sectionApplicable to citizens from sources in United States possessions.*Post*, p. 294. 262 the deductions shall be the. same and shall be determined in the same manner as in the case of a nonresident alien individual. items not deductible.Items not deductible. Sec. 215.
(a)In computing net income no deduction shall in anyObjects specified. case be allowed in respect of—
(1)Personal, living, or family expenses;Personal, etc., expenses.
(2)Any amount paid out for new buildings or for permanentProperty improvements. improvements or betterments made to increase the value of any property or estate;
(3)Any amount expended in restoring property or in makingRestoring, etc., property. good the exhaustion thereof for which an allowance is or has been made; or 272
(4)income tax.Life insurance for employees. Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy.
(b)Deductions in income from life interests, etc., by gift, bequest, or inheritance. Amounts paid under the laws of any State, Territory, District of Columbia, possession of the United States, or foreign country as income to the holder of a life or terminable interest acquired by gift, bequest, or inheritance shall not be reduced or diminished by any deduction for shrinkage (by whatever name called) in the value of such interest due to the lapse of time, nor by any deduction allowed by this Act for the purpose of computing the net income of an estate or trust but not allowed under the laws of such State, Territory, District of Columbia, possession of the United States, or foreign country for the purpose of computing the income to which such holder is entitled. credits allowed individuals.Credits allowed.Vol. 42, p. 242. Sec. 216. Items for normal tax specified. For the purpose of the normal tax only there shall be allowed the following credits:
(a)Dividends from corporations.Domestic. The amount received as dividends
(1)from a domestic corporation other than a corporation entitled to the benefits of section 262, and other than a corporation organized under the China Trade Foreign, from United States sources.Act, 1922, or
(2)from a foreign corporation when it is shown to the satisfaction of the Commissioner that more than 50 per centum of the gross income of such foreign corporation for the three-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the *Post*, p. 273.corporation has been in existence) was derived from sources within the United States as determined under the provisions of section 217;
(b)Interest on Federal securities. The amount received as interest upon obligations of the United States which is included in gross income under section 213;
(c)Personal exemptions. In the case of a single person, a personal exemption of One exemption for husband and wife living together.$1,000; or in the case of the head of a family or a married person living with husband or wife, a personal exemption of $2,500. A husband and wife living together shall receive but one personal exemption. The amount of such personal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them.
(d)Allowance for dependents. $400 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is incapable of self-support because mentally or physically defective.
(e)Nonresident aliens. In the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262, the personal exemption shall For dependents limited to contiguous country residents.be only $1,000. The credit provided in subdivision
(d)shall not be allowed in the case of a nonresident alien individual unless he is a resident of a contiguous country, nor in the case of a citizen entitled to the benefits of section 262.
(f)Status of taxpayer for personal credits.
(1)The credits allowed by subdivisions
(d)and
(e)of this section shall be determined by the status of the taxpayer on the last day of his taxable year.
(2)Personal exemptions on change of taxable years. The credit allowed by subdivision
(c)of this section shall, in case the status of the taxpayer changes during his taxable year, be the sum of
(A)an amount which bears the same ratio to $1,000 as the number of months during which the taxpayer was single bears to 12 months, plus
(B)an amount which bears the same ratio to $2,500 as the number of months during which the taxpayer was a married person living with husband or wife or was the head of a family bears to 12 months. For the purposes of this paragraph 273a fractional part of a month shall be disregarded unless it amountsincome tax. to more than half a month, in which case it shall be considered as a month.
(3)In the case of an individual who dies during the taxableCredits allowed In case of death in taxable year. year, the credits allowed by subdivisions (c), (d), and
(e)shall be determined by his status at the time of his death, and in such case full credits shall be allowed to the surviving spouse, if any, according to his or her status at the close of the taxable year. net income of nonresident alien individuals.Nonresident aliens. Sec. 217.
(a)In the case of a nonresident alien individual or ofItems deemed gross income from United States sources. a citizen entitled to the benefits of section 262, the following items of gross income shall be treated as income from sources within the United States:
(1)Interest on bonds, notes, or other interest-bearing obligationsInterest on bonds, etc., of residents.Exceptions. of residents, corporate or otherwise, not including
(A)interest on deposits with persons carrying on the banking business paid to persons not engaged in business within the United States and not having an office or place of business therein, or
(B)interest received from a resident alien individual, a resident foreign corporation, or a domestic corporation, when it is shown to the satisfaction of the Commissioner that less than 20 per centum of the gross income of such resident payor or domestic corporation has been derived from sources within the United States, as determined under the provisions of this section, for the three-year period ending with the close of the taxable year of such payor preceding the payment of such interest, or for such part of such period as may be applicable;
(2)The amount received as dividends
(A)from a domesticDividends from corporations.Domestic, etc. corporation other than a corporation entitled to the benefits of section 262, and other than a corporation less than 20 per centumExceptions. of whose gross income is shown to the satisfaction of the Commissioner to have been derived from sources within the United States, as determined under the provisions of this section, for the three-year period ending with the close of the taxable year of such corporation preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence), or
(B)from a foreign corporation unless less than 50 per centum ofForeign. the gross income of such foreign corporation for the three-yearLimitation. period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the United States as determined under the provisions of this section;
(3)Compensation for labor or personal services performed in thePersonal services in United States. United States;
(4)Rentals or royalties from property located in the UnitedRents, royalties, etc., from property in United States. States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using in the United States, patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like property; and
(5)Gains, profits, and income from the sale of real propertyReal estate sales. located in the United States.
(b)From the items of gross income specified in subdivision (a)Deductions of designated expenses, etc., constitute net income in United States. there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto and a ratable part of any expenses, losses, or other deductions which can not definitely be allocated to some item or class of gross income. The remainder, 274income tax.if any, shall be included in full as net income from sources within the United States.
(c)Income from without United States. The following items of gross income shall be treated as income from sources without the United States:
(1)Other interest. Interest other than that derived from sources within the United States as provided in paragraph
(1)of subdivision (a);
(2)Other dividends. Dividends other than those derived from sources within the United States as provided in paragraph
(2)of subdivision (a);
(3)Labor, etc., without United Stales. Compensation for labor or personal services performed without the United States;
(4)Rents or royalties without United States. Rentals or royalties from property located without the United States or from any interest in such property, including rentals or royalties for the use of or for the privilege of using without the United States, patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, and other like property; and
(5)Expenses connected with excepted items to be deducted.Real estate sales without United States. Gains, profits, and income from the sale of real property located without the United States.
(d)From the items of gross income specified in subdivision
(c)there shall be deducted the expenses, losses, and other deductions properly apportioned or allocated thereto, and a ratable part of Remainder treated as net income.any expenses, losses, or other deductions which can not definitely be allocated to some item or class of gross income. The remainder, if any, shall be treated in full as net income from sources without the United States.
(e)Apportionment of items within and without United States. Items of gross income, expenses, losses and deductions, other than those specified in subdivisions
(a)and (c), shall be allocated or apportioned to sources within or without the United States under rules and regulations prescribed by the Commissioner with the From United States sources.approval of the Secretary. Where items of gross income are separately allocated to sources within the United States, there shall be deducted (for the purpose of computing the net income therefrom) the expenses, losses and other deductions properly apportioned or allocated thereto and a ratable part of other expenses, losses or other deductions which can not definitely be allocated to some item Partly within and partly without.or class of gross income. The remainder, if any, shall be included in full as net income from sources within the United States. In the case of gross income derived from sources partly within and partly without the United States, the net income may first be computed by deducting the expenses, Determination of United States income.losses or other deductions apportioned or allocated thereto and a ratable part of any expenses, losses or other deductions which can not definitely be allocated to some items or class of gross income; and the portion of such net income attributable to sources within the United States may be determined by processes or formulas of general apportionment prescribed by the Commissioner with the approval of the Secretary. From transportation services.Gains, profits and income from
(1)transportation or other services rendered partly within and partly without the United States, or Sale of property within and without.(2) from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the United States, or produced (in whole or in part) by the taxpayer without and sold within the United States, shall be treated as derived partly from sources within and partly from sources without the United States. Purchase and sale of personal property.Gains, profits and income derived from the purchase of personal property within and its sale without the United States or from the purchase of personal property without and its sale within the United States, shall be treated as derived entirely from sources within the country in which sold.
(f)Synonymous meaning of words. As used in this section the words “sale” or “sold” include “exchange” or “exchanged”; and the word “produced” includes 275“created,” “fabricated.” “manufactured,” “extracted,” “processed,”income tax. “cured,” or “aged.”
(1)Except as provided in paragraph
(2)a nonresident Returns to be made of total income from all United States sources.alien individual or a citizen entitled to the benefits of section 262 shall receive the benefit of the deductions and credits allowed in this titleOther information. only by filing or causing to be filed with the collector a true and accurate return of his total income received from all sources in the United States, in the manner prescribed in this title; including therein all the information which the Commissioner may deem necessary for the calculation of such deductions and credits.
(2)The benefit of the credits allowed in subdivisions
(d)andPersonal exemption credits, etc., allowed by filing claim with withholding agent.
(e)of section 216, and of the reduced rate of tax provided for in subdivision
(b)of section 210, may, in the. discretion of the Commissioner and under regulations prescribed by him with the approval of the Secretary, be received by a nonresident alien individual entitled thereto, by filing a claim therefor with the withholding agent. partnerships.Partnerships. Sec. 218.
(a)Individuals carrying on business in partnershipPartners taxed as individuals. shall be liable for income tax only in their individual capacity. There shall be included in computing the net income of each partnerComputation of income. his distributive share, whether distributed or not, of the net income of the partnership for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the partnership is computed, then his distributive share of the net income of the partnership for any accounting period of the partnership ending within the taxable year upon the basis of which the partner’s net income is computed.
(b)The partner shall, for the purpose of the normal tax, beAdditional credits from partnership exemptions. allowed as credits, in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions
(a)and
(b)of section 216 as are received by the partnership.
(c)The net income of the partnership shall be computed in theComputation of net income. same manner and on the same basis as provided in section 212 except that the deduction provided in paragraph
(10)of subdivision
(a)of section 214 shall not be allowed. estates and trusts.Estates and trusts. Sec. 219.
(a)The tax imposed by Parts I and II of this title shallIncome of, taxed. apply to the income of estates or of any kind of property held in trust, including—
(1)Income accumulated in trust for the benefit of unborn or unascertainedTrust accumulations. persons or persons with contingent interests, and income accumulated or held for future distribution under the terms of the will or trust;
(2)Income which is to be distributed currently by the fiduciaryPeriodically distributed. to the beneficiaries, and income collected by a guardian of an infant which is to be held or distributed as the court may direct;
(3)Income received by estates of deceased persons during theReceived during administration. period of administration or settlement of the estate; and
(4)Income which, in the discretion of the fiduciary, may be eitherDiscretionary distributions. distributed to the beneficiaries or accumulated.
(b)Except as otherwise provided in subdivisions
(g)and (h),Payment by fiduciary. the tax shall be computed upon the net income of the estate or trust, and shall be paid by the fiduciary. The net income of the estateComputation of net income.276income tax.or trust shall be computed in the same manner and on the same basis as provided in section 212, except that—
(1)Deduction of gifts, etc., under will or trust, without limitation. There shall be allowed as a deduction (in lieu of the deduction authorized by paragraph
(10)of subdivision
(a)of section 214) any part of the gross income, without limitation, which pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in *Ante*, p. 271.the manner specified in paragraph
(10)of subdivision
(a)of section 214, or is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals or for the establishment, acquisition, maintenance or operation of a public cemetery not operated for profit;
(2)Additional deduct ion for current distribution to beneficiaries. There shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is to be distributed currently by the fiduciary to the beneficiaries, and the amount of the income collected by a guardian of an infant which is to be held or distributed as the court may direct, but the amount so allowed as a deduction shall be included in computing the net income of the Restriction.beneficiaries whether distributed to them or not. Any amount allowed as a deduction under this paragraph shall not be allowed as a deduction under paragraph
(3)in the same or any succeeding taxable year;
(3)Additional deduction for payments made or credited to beneficiaries. In the case of income received by estates of deceased persons during the period of administration or settlement of the estate, and in the case of income which, in the discretion of the fiduciary, may be either distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is properly paid or credited during such year to any legatee, heir, or beneficiary, but the amount so allowed as a deduction shall be included in computing the net income of the legatee, heir, or beneficiary.
(c)Normal tax personal exemptions allowed. For the purpose of the normal tax the estate or trust shall be allowed the same credit as is allowed to a single person under subdivision
(c)of section 216, and, if no part of the income of the estate or trust is included in computing the net income of any legatee, heir, or beneficiary, then in addition the same credits as are allowed by subdivisions
(a)and
(b)of section 216.
(d)Credits allowed beneficiaries in computing income. If any part of the income of an estate or trust is included in computing the net income of any legatee, heir, or beneficiary, such legatee, heir, or beneficiary, shall, for the purpose of the normal tax, be allowed as credits, in addition to the credits allowed to him under section 216, his proportionate share of such amounts specified in subdivisions
(a)and
(b)of section 216 as are, under this section, required to be included in computing his net income. Any remaining portion of such amounts specified in subdivisions
(a)and
(b)of section 216 shall, for the purpose of the normal tax, be allowed as credits to the estate or trust.
(e)Computation if taxable years of estate and beneficiary differ. If the taxable year of a beneficiary is different from that of the estate or trust, the amount which he is required, under paragraph
(2)of subdivision
(b)of this section, to include in computing his net income, shall be based upon the income of the estate or trust, for its taxable year ending within his taxable year.
(f)Profit sharing trusts for employees not taxed. A trust created by an employer as a part of a stock bonus or profit-sharing plan for the exclusive benefit of some or all of his employees, to which contributions are made by such employer, or employees, or both, for the purpose of distributing to such employees the earnings and principal of the fund accumulated by the trust in accordance with such plan, shall not be taxable under this 277section, but the amount actually distributed or made available toincome tax.Distributees taxed on amount received. any distributee shall be taxable to him in the year in which so distributed or made available to the extent that it exceeds the amounts paid in by him. Such distributees shall for the purpose of the normal taxCredits allowed. be allowed as credits such part of the amount so distributed or made available as represents the items specified in subdivisions
(a)and
(b)of section 216.
(g)Where the grantor of a trust has, at any time during the taxableIncome of revocable trust included in that of grantor. year, either alone or in conjunction with any person not a beneficiary of the trust, the power to revest in himself title to any part of the corpus of the trust, then the income of such part of the trust for such taxable year shall be included in computing the net income of the grantor.
(h)Where any part of the income of a trust may, in the discretionDistributions from trust income to grantor, etc., included in income thereof. of the grantor of the trust, either alone or in conjunction with any person not a beneficiary of the trust, be distributed to the grantor or be held or accumulated for future distribution to him, or where any part of the income of a trust is or may be applied to the payment of premiums upon policies of insurance on the life of the grantor (except policies of insurance irrevocably payable for the purposes and in the manner specified in paragraph
(10)of subdivision
(a)of section 214), such part of the income of the trust shall be included in computing the net income of the grantor. evasion of surtaxes by incorporation.Evasion of surtaxes by incorporation. Sec. 220.
(a)If any corporation, however created or organized, isTax on income of corporations accumulating gains, etc., to avoid surtax on its shareholders. formed or availed of for the purpose of preventing the imposition of the surtax upon its shareholders through the medium of permitting its gains and profits to accumulate instead of being divided or distributed, there shall be levied, collected, and paid for each taxable year upon the net income of such corporation a tax equal to 50 per centum of the amount thereof, which shall be in addition to the taxAdditional to corporation tax. imposed by section 230 of this title and shall (except as provided in*Post*, p. 282. subdivision
(d)of this section) be computed, collected, and paid upon the same basis and in the same manner and subject to the same provisions of law, including penalties, as that tax.
(b)The fact that any corporation is a mere holding or investmentEvidence of purpose of corporation. company, or that the gains or profits are permitted to accumulate beyond the reasonable needs of the business, shall be prima facie evidence of a purpose to escape the surtax.
(c)When requested by the Commissioner, or any collector, everyStatement to be made of gains, names, etc. corporation shall forward to him a correct statement of such gains and profits and the names and addresses of the individuals or shareholders who would be entitled to the same if divided or distributed, and of the amounts that would be payable to each.
(d)As used in this section the term “net income” means the netMeaning of “net income” as used. income as defined in section 232, increased by the sum of the amount of the deduction allowed under paragraph
(6)of subdivision
(a)of section 234, and the amount of the interest on obligations of the United States issued after September 1, 1917, which would be subject to tax in whole or in part in the hands of an individual owner. payment of individual’s tax at source.Payment of tax at source. Sec. 221.
(a)All persons, in whatever capacity acting, includingNormal tax of non-resident aliens payable thereat. lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States having the control, receipt, custody, disposal, or payment of interest (except interest on deposits with persons carrying on the banking busi278income tax.ness paid to persons not engaged in business in the United States and not having an office or place of business therein), rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, of any nonresident alien individual, or of any partnership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, (other than income received as dividends of the class allowed as a credit by subdivision
(a)of section 216) shall (except in the cases provided for in subdivision
(b)and except as otherwise provided in regulations proscribed by the Commissioner under section 217) deduct and Rate.withhold from such annual or periodical gains, profits, and income a tax *Proviso*.Interest of unknown owners Included.equal to 6 per centum thereof: *Provided*, That the Commissioner may authorize such tax to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent.
(b)By corporations agreeing to pay interest free from tax. In any case where bonds, mortgages, or deeds of trust, or other similar obligations of a corporation contain a contract or provision by which the obligor agrees to pay any portion of the tax imposed by this title upon the obligee, or to reimburse the obligee for any portion of the tax, or to pay the interest without deduction for Tax to be withheld.any tax which the obligor may be required or permitted to pay thereon, or to retain therefrom under any law of the United States, the obligor shall deduct and withhold a tax equal to 2 per centum of the interest upon such bonds, mortgages, deeds of trust, or other obligations, whether such interest is payable annually or at shorter or longer periods and whether payable to a nonresident alien individual or to an individual citizen or resident of the United States or *Proviso*.Of unknown owners.to a partnership: *Provided*, That the Commissioner may authorize such tax to be deducted and withheld in the case of interest upon any such bonds, mortgages, deeds of trust, or other obligations, the Exception on notice of claims for credits withheld by individuals.owners of which are not known to the withholding agent. Such deduction and withholding shall not be required in the case of a citizen or resident entitled to receive such interest, if he files with the withholding agent on or before February 1 a signed notice in writing claiming the benefit of the credits provided in subdivisions
(c)and Nonresident aliens.(d) of section 216; nor in the case of a nonresident alien individual if so provided for in regulations prescribed by the Commissioner under subdivision
(g)of section 217.
(c)Returns, etc., by withholding agent required. Every person required to deduct and withhold any tax under this section shall make return thereof on or before March 15 of each year and shall on or before June 15 pay the tax to the official of the Indemnity for payment.United States Government authorized to receive it. Every such person is hereby made liable for such tax and is hereby indemnified against the claims and demands of any person for the amount of any payments made in accordance with the provisions of this section.
(d)Returns by recipient of tax withheld. Income upon which any tax is required to be withheld at the source under this section shall be included in the return of the recipient, of such income, but any amount of tax so withheld shall be credited against the amount of income tax as computed in such return.
(e)Tax paid by recipient not recollectible, etc. If any tax required under this section to be deducted and withheld is paid by the recipient of the income, it shall not be recollected from the withholding agent; nor in cases in which the tax is so paid shall any penalty be imposed upon or collected from the recipient of the income or the withholding agent for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment. 279 credit for taxes in case of individuals.income tax.Credit for taxes paid. Sec. 222.
(a)The tax computed under Parts I and II of thisAllowances. title shall be credited with:
(1)In the case of a citizen of the United States the amount ofTo citizens, of taxes to foreign countries. any income, war-profits and excess-profits taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States; and
(2)In the case of a resident of the United States, the amount ofResidents, to United States possessions. any such taxes paid or accrued during the taxable year to any possession of the United States; and
(3)In the case of an alien resident of the United States, the amount ofAlien residents, to foreign country allowing similar credit. any such taxes paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and
(4)In the case of any such individual who is a member of aPartners and trust beneficiaries, to foreign countries. partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the partnership or the estate or trust paid or accrued during the taxable year to a foreign country or to any possession of the United States, as the case may be.
(5)The above credits shall not be allowed in the case of aExceptions.Amount of credits limited.*Post*, p. 294. citizen entitled to the benefits of section 262; and in no other case shall the amount of credit taken under this subdivision exceed the same proportion of the tax (computed on the basis of the taxpayer’s net income without the deduction of any income, war-profits, or excess-profits tax any part of which may be allowed to him as a credit by this section), against which such credit is taken, which the taxpayer’s net income (computed without the deduction of any such income, war-profits, or excess-profits tax) from sources without the United States bears to his entire net income (computed without such deduction) for the same taxable year.
(b)If accrued taxes when paid differ from the amounts claimedRedetermination if tax paid differ from credits claimed. as credits by the taxpayer, or if any tax paid is refunded in whole or in part, the taxpayer shall notify the Commissioner, who shall redetermine the amount of the tax due under Parts I and II of this title for the year or years affected, and the amount of tax due upon such redetermination, if any, shall be paid by the taxpayer upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of section 281. In the case of such a tax accruedIf accrued but not paid.Bond required. but not paid, the Commissioner as a condition precedent to the allowance, of this credit may require the taxpayer to give a bond with sureties satisfactory to and to be approved by the Commissioner in such sum as the Commissioner may require, conditioned upon the payment by the taxpayer of any amount of tax found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require.
(c)The credits provided for in subdivision
(a)of this sectionCredits for foreign taxes may be taken in the year in which accrued. may, at the option of the taxpayer and irrespective of the method of accounting employed in keeping his books, be taken in the year in which the taxes of the foreign country or the possession of the United States accrued, subject, however, to the conditions prescribed in subdivision
(b)of this section. If the taxpayer electsOn same basis for subsequent years. to take such credits in the year in which the taxes of the foreign country or the possession of the United States accrued, the credits for all subsequent years shall be taken upon the same basis.
(d)These credits shall be allowed only if the taxpayer furnishesEvidence required of foreign income, etc. evidence satisfactory to the Commissioner showing the amount of 280income tax.income derived from sources without the United States, and all other information necessary for the verification and computation of such credits. individual returns.Individual returns. Sec. 223. Sworn statement of gross income, credits, etc.
(a)The following individuals shall each make under oath a return stating specifically the items of his gross income and the deductions and credits allowed under this title—
(1)If net income $1,000, or over, if single, etc. Every individual having a net income for the taxable year of $1,000 or over, if single, or if married and not living with husband or wife;
(2)Over $2,500, and married, etc. Every individual having a net income for the taxable year of $2,500 or over, if married and living with husband or wife; and
(3)Gross income $5,000 or over. Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income.
(b)Husband and wife living together. If a husband and wife living together have an aggregate net income for the taxable year of $2,500 or over, or an aggregate gross income for such year of $5,000 or over—
(1)Each shall make such a return, or
(2)The income of each shall be included in a single joint return, in which case the tax shall be computed on the aggregate income.
(c)By agents, etc. If the taxpayer is unable to make his own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer. partnership returns.Partnership returns. Sec. 224. Sworn statement of gross income, etc. Every partnership shall make a return for each taxable year, stating specifically the items of its gross income and the Details.deductions allowed by this title, and shall include in the return the names and addresses of the individuals who would be entitled to share in the net income if distributed and the amount of the distributive share of each individual. The return shall be sworn to by any one of the partners. fiduciary returns.Fiduciary returns. Sec. 225. Sworn statement of income, etc., of beneficiaries.
(a)Every fiduciary (except a receiver appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title—
(1)Individual with $1,000 net income, if single. Every individual having a net income for the taxable year of $1,000 or over, if single, or if married and not living with husband or wife;
(2)Married, etc., with $2,500 or over. Every individual having a net income for the taxable year of $2,500 or over, if married and living with husband or wife;
(3)Gross income $5,000 or over. Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income;
(4)Estates or trusts of $1,000 net income. Every estate or trust the net income of which for the taxable year is $1,000 or over;
(5)Gross income $5,000 or over. Every estate or trust the gross income of which for the taxable year is $5,000 or over, regardless of the amount of the net income; and
(6)Nonresident alien beneficiaries. Every estate or trust of which any beneficiary is a nonresident alien.
(b)By Joint fiduciaries. Under such regulations as the Commissioner with the approval of the Secretary may prescribe a return made by one of two or more joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be sufficient compliance Oath, etc., required.with the above requirement. Such fiduciary shall make oath
(1)that he has sufficient knowledge of the affairs of the individual, estate 281or trust for which the return is made, to enable him to make theincome tax. return, and
(2)that the return is, to the best of his knowledge and belief, true and correct. Any fiduciary required to make a return under this Act shall be subject to all the provisions of this Act which apply to individuals. returns for a period of less than twelve months.Returns for less than a year. Sec. 226.
(a)If a taxpayer, with the approval of the Commissioner,Basis for determining, when accounting period changed changes the basis of computing net income from fiscal year to calendar year a separate return shall be made for the period between the close of the last fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year.
(b)Where a separate return is so made, and in all other casesIncome based on period of return. where a separate return is required or permitted, by regulations prescribed by the Commissioner with the approval of the Secretary, to be made for a fractional part of a year, then the income shall be computed on the basis of the period for which separate return is made.
(c)If a separate return is made under subdivision
(a)the netComputation of taxable income. income, computed in accordance with the provisions of subdivision (b), shall be placed on an annual basis by multiplying the amount thereof by twelve and dividing by the number of months included in the period for which the separate return is made. The tax shall be such part of the tax computed on such annual basis as the number of months in such period is of twelve months.
(d)The Commissioner with the approval of the Secretary shallApplication to capital gain, loss, and earned income. by regulations prescribe the method of applying the provisions of subdivisions
(b)and
(c)to cases where the taxpayer makes a separate return under subdivision
(a)and it appears that for the period for which the return is so made he has derived a capital net gain, or sustained a capital net loss, or received earned income.
(e)In the case of a return made for a fractional part of a year,Reduction of personal exemption credits. except a return made under subdivision (a), the credits provided in subdivisions (c), (d), and
(e)of section 216 shall be reduced respectively to amounts which bear the same ratio to the full credits provided in such subdivisions as the number of months in the period for which return is made bears to twelve months. time and place for filing individual, partnership, and fiduciary returns.Filing returns. Sec. 227.
(a)Returns (except in the case of nonresident aliens)Time designated for citizens. shall be made on or before the fifteenth day of the third month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or beforeNonresident aliens the 15th day of March. In the case of a nonresident alien individual returns shall be made on or before the fifteenth day of the sixth month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or before the 15th day of June. The Commissioner may grantExtension permitted on application. a reasonable extension of time for filing returns, if application therefor is made before the date prescribed by law for filing the return, whenever in his judgment good cause exists, and shall keep a record 282income tax.of every such extension and the reason therefor. Except in the Limit.case of taxpayers who are abroad, no such extension shall be for more than six months.
(b)To collector of district. Returns shall be made to the collector for the district in which is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal At Baltimore, Md.place of business in the United States, then to the collector at Baltimore, Maryland. Part III.—Corporations. Corporations. tax on corporations.Tax imposed. Sec. 230. Rate on net income.Vol. 42, p. 252. In lieu of the tax imposed by section 230 of the Revenue Act of 1921 there shall be levied, collected, and paid for each taxable year upon the net income of every corporation a tax of 12½ per centum of the amount of the net income in excess of the credits provided in sections 236 and 263. conditional and other exemptions of corporations.Exemptions. Sec. 231. Designated organizations. The following organizations shall be exempt from taxation under this title—
(1)Labor, agricultural, etc. Labor, agricultural, or horticultural organizations;
(2)Mutual savings banks. Mutual savings banks not having a capital stock represented by shares;
(3)Fraternal beneficiary societies, lodges, etc. Fraternal beneficiary societies, orders, or associations,
(a)operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system; and
(b)providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents;
(4)Domestic building and loan associations, etc. Domestic building and loan associations substantially all the business of which is confined to making loans to members; and cooperative banks without capital stock organized and operated for mutual purposes and without profit;
(5)Mutual cemetery companies, etc. Cemetery companies owned and operated exclusively for the benefit of their members or which are not operated for profit; and any corporation chartered solely for burial purposes as a cemetery corporation and not permitted by its charter to engage in any business not necessarily incident to that purpose, no part of the net earnings of which inures to the benefit of any private shareholder or individual;
(6)Corporations, community chests, etc., for religious, scientific, etc., purposes. Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part or the net earnings of which inures to the benefit of any private shareholder or individual;
(7)Business leagues, etc. Business leagues, chambers of commerce, or boards of trade, not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual;
(8)Civic leagues, employees’ associations, etc. Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes;
(9)Pleasure clubs. Clubs organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net earnings of which inures to the benefit of any private shareholder; 283
(10)Benevolent life insurance associations of a purely local character,income tax.Local associations for life insurance, farmers’ mutual and cooperative associations.Conditions. farmers’ or other mutual hail, cyclone, casualty, or fire insurance companies, mutual ditch or irrigation companies, mutual or cooperative telephone companies, or like organizations; but only if 85 per centum or more of the income consists of amounts collected from members for the sole purpose of meeting losses and expenses;
(11)Farmers’, fruit growers’, or like associations, organized andAssociations for marketing farm products, etc. operated as sales agents for the purpose of marketing the products of members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quantity of produce furnished by them; or organized and operated as purchasing agentsAs purchasing agents for supplies, etc., for members. for the purpose of purchasing supplies and equipment for the use of members and turning over such supplies and equipment to such members at actual cost, plus necessary expenses;
(12)Corporations organized for the exclusive purpose of holdingAs trustees for exempted corporations. title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by this title; and
(13)Federal land banks, national farm-loan associations, andFederal land banks, farm-loan associations, etc.Vol. 39, p. 380. Federal intermediate credit banks, as provided in the. Federal Farm Loan Act, as amended. net income of corporations defined.Corporation net income. Sec. 232. In the case of a corporation subject to the tax imposedComputation of domestic. by section 230 the term “net income” means the gross income as defined in section 233 less the deductions allowed by sections 234 and 206, and the net income shall be computed on the same basis as is provided in subdivision
(b)of section 212 or in section 226. In theForeign. case of a foreign corporation or of a corporation entitled to the benefits of section 262 the computation shall also be made in the manner provided in section 217. gross income of corporations defined.Corporation gross income. Sec. 233.
(a)In the case of a corporation subject to the tax imposedSources of domestic. by section 230 the term “gross income” means the gross income as defined in sections 213 and 217, except that mutual marineException. insurance companies shall include in gross income the gross premiums collected and received by them less amounts paid for reinsurance.
(b)In the case of a foreign corporation, gross income means onlyForeign, from United States sources. gross income from sources within the United States, determined (except in the case of insurance companies subject to the tax imposed by sections 243 or 246) in the manner provided in section 217. deductions allowed corporations.Deductions. Sec. 234.
(a)In the net income of a corporation subjectAllowed in computing net income. to the tax imposed by section 230 there shall be allowed as deductions:
(1)All the ordinary and necessary expenses paid or incurred duringBusiness expenses. the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered, and including rentals or other payments required to be made as a condition to the continued use or possession of property to which the corporation has not taken or is not taking title, or in which it has no equity;
(2)All interest paid or accrued within the taxable year on itsInterest on debts. indebtedness, except on indebtedness incurred or continued to purchaseExceptions. or carry obligations or securities (other than obligations of the 284income tax.United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title;
(3)Domestic taxes.Exception. Taxes paid or accrued within the taxable year except
(A)income, war-profits, and excess-profits taxes imposed by the authority Foreign taxes.of the United States,
(B)so much of the income, war-profits and excess-profits taxes imposed by the authority of any foreign country or possession of the United States as is allowed as a credit under For local benefits.section 238, and
(C)taxes assessed against local benefits of a kind Not applicable to corporations guaranteeing interest free from taxes.tending to increase the value of the property assessed. In the case of obligors specified in subdivision
(b)of section 221 no deduction for the payment of the tax imposed by this title, or any other tax paid pursuant to the tax-free covenant clause, shall be allowed, nor Allowed if paid on interest of shareholder.shall such tax be included in the gross income of the obligee. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed upon a shareholder of a corporation upon his interest as shareholder, which are paid by the corporation without reimbursement from the shareholder, but in such cases no deduction shall Accrual of estate, etc., taxes.be allowed the shareholder for the amount of such taxes. For the purpose of this paragraph, estate, inheritance, legacy, and succession taxes accrue on the due date thereof except as otherwise provided by law of the jurisdiction imposing such taxes;
(4)Losses. Losses sustained during the taxable year and not compensated for Restriction of, on sales of securities, etc.by insurance or otherwise. No deduction shall be allowed under this paragraph for any loss claimed to have been sustained in any sale or other disposition of shares of stock or securities where it appears that within thirty days before or after the date of such sale or other disposition the taxpayer has acquired (otherwise than by bequest or inheritance) or has entered into a contract or option to acquire substantially identical property, and the property so acquired is held by the taxpayer for any period after such sale or other disposition, unless such claim is made by a dealer in stock or securities and with respect to a transaction made in the ordinary course of its business. If such acquisition or the contract or option to acquire is to the extent of part only of substantially identical property, then only a proportionate part of the loss shall be Basis for determining.*Ante*, p.25S.disallowed. The basis for determining the amount of the deduction for losses sustained shall be the same as is provided in section 204 for determining the gain or loss from the sale or other disposition of property;
(5)Worthless debts. Debts ascertained to be worthless and charged off within the taxable year (or in the discretion of the Commissioner, a reasonable addition to a reserve for bad debts); and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt to be charged off in part;
(6)Dividends from domestic corporations. The amount received as dividends
(A)from a domestic corporation other than a corporation entitled to the benefits of section 262, and other than a corporation organized under the China Trade From foreign, from United States sources.Act, 1922, or
(B)from any foreign corporation when it is shown to the satisfaction of the Commissioner that more than 50 per centum of the gross income of such foreign corporation for the three-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the foreign corporation has been in existence) was derived from sources within the United States as determined under section 217;
(7)Exhaustion, etc., of property. A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence;
(8)Mines, oil wells, timber, etc.Allowance for depletion, depreciation, etc. In the case of mines, oil and gas wells, other natural deposits, and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each 285case; such reasonable allowance in all cases to be made under rulesincome tax. and regulations to be prescribed by the Commissioner with the approval of the Secretary. In the case of leases the deductionsLeases. allowed by this paragraph shall be equitably apportioned between the lessor and lessee;
(9)In the case of insurance companiesInsurance companies. (other than life insurance companies), in addition to the above (unless otherwise allowed):Additional for reserve funds, etc., except life insurance.
(A)The net addition required by law to be made within the taxable year to reserve funds (including in the case of assessment insurance companies the actual deposit of sums with State or Territorial officers pursuant to law as additions to guarantee or reserve funds); and
(B)the sums other than dividends paid within the taxable year on policy and annuity contracts. This paragraph shall apply onlyRestriction. to mutual insurance companies other than life insurance companies;
(10)In the case of mutual marine insurance companies, thereMutual marine companies.Additional allowed for premium repayments. shall be allowed, in addition to the deductions allowed in paragraphs
(1)to (9), inclusive, unless otherwise allowed, amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment and the payment thereof;
(11)In the case of mutual insurance companies (including inter-insurersOther mutual companies.Additional for returned premium deposits, etc. and reciprocal underwriters, but not including mutual life or mutual marine insurance companies) requiring their members to make premium deposits to provide for losses and expenses, there shall be allowed, in addition to the deductions allowed in paragraphs
(1)to (9), inclusive, unless otherwise allowed, the amount of premium deposits returned to their policyholders and the amount of premium deposits retained for the payment of losses, expenses, and reinsurance reserves.
(b)In the case of a foreign corporation or of a corporation entitledForeign corporations.Allowances only on income from United States sources. to the benefits of section 262 the deductions allowed in subdivision
(a)shall be allowed only if and to the extent that they are connected with income from sources within the United States; andForeign corporations.Allowances only on income from United States sources. the proper apportionment and allocation of the deductions with respect to sources within and without the United States shall be determined as provided in section 217 under rules and regulations prescribed by the Commissioner with the approval of the Secretary. items not deductible by corporations.Items not deductible. Sec. 235. In computing net income no deduction shall in any caseSame as individuals.*Ante*, p. 271. be allowed in respect of any of the items specified in section 215. credits allowed corporations.Credits allowed. Sec. 236. For the purpose only of the tax imposed by sectionDesignation of. 230 there shall be allowed the following credits:
(a)The amount received as interest upon obligations of the UnitedInterest from Federal obligations. States which is included in gross income under section 233; and
(b)In the case of a domestic corporation the net income of whichDomestic corporations.Specific money credit. is $25,000 or less, a specific credit of $2,000; but if the net income is more than $25,000 the tax imposed by section 230 shall not exceed the tax which would be payable if the $2,000 credit were allowed, plus the amount of the net income in excess of $25,000. payment of corporation income tax at source.Payment at source. Sec. 237. In the case of foreign corporations subject to taxationFor foreign corporations not in business in United States. under this title not engaged in trade or business within the United States and not having any office or place of business therein, there 286income tax.*Ante*, p. 277.shall be deducted and withheld at the source in the same manner and upon the same items of income as is provided in section 221 a Rate.tax equal to 12½ per centum thereof, and such tax shall be returned and paid in the same manner and subject to the same conditions as *Proviso*.Interest tree from tax.provided in that section: *Provided*, That in the case of interest described in subdivision
(b)of that section the deduction and withholding shall be at the rate of 2 per centum. credit for taxes in case of corporations.Credit for taxes. Sec. 238. Domestic corporations.Paid to foreign countries.
(a)In the case of a domestic corporation the tax imposed by this title shall be credited with the amount of any income, war-profits, and excess-profits taxes paid or accrued during the same taxable year to any foreign country, or to any possession of the *Proviso*.Limitation.United States: *Provided*, That the amount of such credit shall in no case exceed the same proportion of the tax (computed on the basis of the taxpayer’s net income without the deduction of any income, war-profits, or excess-profits taxes imposed by any foreign country or possession of the United States), against which such credit is taken, which the taxpayer’s net income Net income of domestic insurance companies.(computed without the deduction of any such income, war-profits, or excess-profits tax) from sources without the United States bears to its entire net income (computed without such deduction) for the same taxable year. In the case of domestic insurance companies subject to the tax imposed by section 243 or 246, the term “net income” as used in this subdivision Redetermination if tax paid diner from credit claimed.means net income as defined in sections 245 and 246, respectively.
(b)If accrued taxes when paid differ from the amounts claimed as credits by the corporation, or if any tax paid is refunded in whole or in part, the corporation shall at once notify the Commissioner, who shall redetermine the amount of the taxes for the year or years affected, and the amount of taxes due upon such redetermination, if any, shall be paid by the corporation upon notice and demand by the collector, or the amount of taxes overpaid, if any, shall be Tax accrued but not paid.credited, or refunded to the corporation in accordance with the provisions of section 281. In the case of such a tax accrued but not paid, Bond required before allowance.the Commissioner as a condition precedent to the allowance of this credit may require the corporation to give a bond with sureties satisfactory to and to be approved by him in such sum as he may require, conditioned upon the payment by the taxpayer of any amount of taxes found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require.
(c)Credits for taxes, allowed in the year accrued. The credits provided for in subdivision
(a)of this section may, at the option of the taxpayer and irrespective of the method of accounting employed in keeping its books, be taken in the year in which the taxes of the foreign country or the possession of the Effect of.United States accrued, subject, however, to the conditions prescribed in subdivision
(b)of this section. If the taxpayer elects to take such credits in the year in which the taxes of the foreign country or the possession of the United States accrued, the credits for all subsequent years shall be taken upon the same basis.
(d)Evidence of foreign income required. These credits shall be allowed only if the taxpayer furnishes evidence satisfactory to the Commissioner showing the amount of income derived from sources without the United States, and all other information necessary for the verification and computation of such credit.
(e)Domestic corporations controlling foreign. For the purposes of this section a domestic corporation which owns a majority of the voting stock of a foreign corporation from which it receives dividends (not deductible under section 234) in 287any taxable year shall be deemed to have paid the same proportionincome tax.Proportion of foreign taxes on dividends received, deemed to have been paid by. of any income, war-profits, or excess-profits taxes paid by such foreign corporation to any foreign country or to any possession of the United States, upon or with respect to the accumulated profits of such foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits: *Provided*, That the credit allowed to any domestic*Proviso*.Limitation on credit allowed. corporation under this subdivision shall in no case exceed the same proportion of the taxes against which it is credited, which the amount of such dividends bears to the amount of the entire net income of the domestic corporation in which such dividends are included. The term “accumulated profits” when used in this subdivisionMeaning of “accumulated profits.” in reference to a foreign corporation, means the amount of its gains, profits, or income in excess of the income, war-profits, and excess-profits taxes imposed upon or with respect to such profits or income; and the Commissioner with the approval of the SecretaryDetermination by Commissioner. shall have full power to determine from the accumulated profits of what year or years such dividends were paid; treating dividends paid in the first sixty days of any year as having been paid from the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. In the case of a foreign corporation, theAccounting period of foreign corporations. income, war-profits, and excess-profits taxes of which are determined on the basis of an accounting period of less than one year, the word year ” as used in this subdivision shall be construed to mean such accounting period.
(f)For the purposes of this section a corporation entitled to theCorporations in United States possessions deemed foreign. benefits of section 262 or 263 shall be treated as a foreign corporation. corporation returns.Corporation returns. Sec. 239.
(a)Every corporation subject to taxation under thisSpecific requirements for making. title shall make a return, stating specifically the items of its gross income and the deductions and credits allowed by this title. The return shall be sworn to by the president, vice president, or other principal officer and by the treasurer or assistant treasurer. If any foreign corporationForeign, without American office. has no office or place of business in the United States but has an agent in the United States, the return shall be made by the agent. In cases where receivers, trustees in bankruptcy, or Receivers, trustees, etc. assignees are operating the property or business of corporations, such receivers, trustees, or assignees shall make returns for such corporations in the same manner and form as corporations are required to make returns. Any tax due on the basis of such returns made byCollections. receivers, trustees, or assignees shall be collected in the same manner as if collected from the corporations of whose business or property they have custody and control.
(b)Returns made under this section shall be subject to the provisions ofAccounting. section 226. In the case of a return made for a fractionalReduction for part of a year. part of a year, except a return made under subdivision
(a)of section 226, the credit provided in subdivision
(b)of section 236 shall be reduced to an amount which bears the same ratio to the full credit therein provided as the number of months in the period for which the return is made bears to twelve months.
(c)There shall be included in the return or appended thereto aDetailed statement to accompany returns. statement of such facts as will enable the Commissioner to determine the portion of the earnings or profits of the corporation (including gains, profits and income not taxed) accumulated during the taxable year for which the return is made, which have been distributed or 288income tax.ordered to be distributed, respectively, to its shareholders during such year. consolidated returns of corporations.Consolidated returns. Sec. 240. Affiliated corporations may make, or separate.
(a)Corporations which are affiliated within the meaning of this section may, for any taxable year, make separate returns or, under regulations prescribed by the Commissioner with the approval of the Secretary, make a consolidated return of net income for the purpose of this title, in which case the taxes thereunder shall be computed and determined upon the basis of such return. If return is made on either of such bases, all returns thereafter made shall be upon the same basis unless permission to change the basis is granted by the Commissioner.
(b)Computation of proportionate assessments. In any case in which a tax is assessed upon the basis of a consolidated return, the total tax shall be computed in the first instance as a unit and shall then be assessed upon the respective affiliated corporations in such proportions as may be agreed upon among them, or, in the absence of any such agreement, then on the Only one specific credit allowed.*Ante*, p. 285.basis of the net income properly assignable to each. There shall be allowed in computing the income tax only one specific credit computed as provided in subdivision
(b)of section 236.
(c)Corporations deemed affiliated.Stock ownership. For the purpose of this section two or more domestic corporations shall be deemed to be affiliated
(1)if one corporation owns at least 95 per centum of the voting stock of the other or others, or
(2)if at least 95 per centum of the voting stock of two or more China Trade corporations not affiliated.Vol. 42, p. 849.corporations is owned by the same interests. A corporation organized under the China Trade Act, 1922, shall not be deemed to be affiliated with any other corporation within the meaning of this section.
(d)Consolidation of accounts by Commissioner, of business controlled by same interests. In any case of two or more related trades or businesses (whether unincorporated or incorporated and whether organized in the United States or not) owned or controlled directly or indirectly by the same interests, the Commissioner may and at the request of the taxpayer shall, if necessary in order to make an accurate distribution or apportionment of gains, profits, income, deductions, or capital between or among such related trades or businesses, consolidate the accounts of such related trades or businesses.
(e)Corporations in United States possessions deemed foreign. For the purposes of this section a corporation entitled to the benefits of section 262 shall be treated as a foreign corporation. time and place for filing corporate returns.Corporation returns. Sec. 241. Time for filing.*Ante*, p. 281.
(a)Returns of corporations shall be made at the same time as is provided in subdivision
(a)of section 227, except that in the case of foreign corporations not having any office or place of business in the United States returns shall be made at the same time as provided in section 227 in the case of a nonresident alien individual.
(b)To collector of district. Returns shall be made to the collector of the district in which is located the principal place of business or principal office or agency of the corporation, or, if it has no principal place of business or principal office or agency in the United States, then to the collector At Baltimore, Md.at Baltimore, Maryland. taxes on insurance companies.Insurance companies. Sec. 242. Meaning of “life insurance company.” When used in this title the term “life insurance company ” means an insurance company engaged in the business of issuing life insurance and annuity contracts (including contracts of combined life, health, and accident insurance), the reserve funds of which held for the fulfillment of such contracts comprise more than 50 per centum of its total reserve funds. 289 Sec. 243. In lieu of the taxes imposed by sections 230 and 700,income tax.Tax on net income. there shall be levied, collected, and paid for each taxable year upon the net income of every life insurance company a tax as follows:
(1)In the case of a domestic life insurance company, the sameDomestic life. percentage of its net income as is imposed upon other corporations by section 230;
(2)In the case of a foreign life insurance company, the sameForeign life, from United States sources. percentage of its net income from sources within the United States as is imposed upon the net income of other corporations by section 230. Sec. 244.
(a)In the case of a life insurance company the term Sources of gross income.“gross income” means the gross amount of income received during the taxable year from interest, dividends, and rents.
(b)The term “reserve funds required by law ” includes, in theApplication of “reserve funds required by law” to assessment companies. case of assessment insurance, sums actually deposited by any company or association with State or Territorial officers pursuant to law as guaranty or reserve funds, and any funds maintained under the charter or articles of incorporation of the company or association exclusively for the payment of claims arising under certificates of membership or policies issued upon the assessment plan and not subject to any other use. Sec. 245.
(a)In the case of a life insurance company the termNet income.Deductions from gross income. “net income” means the gross income less—
(1)The amount of interest received during the taxable yearExempt interest. which under paragraph
(4)of subdivision
(b)of section 213 is exempt from taxation under this title;
(2)An amount equal to the excess, if any, over the deductionReserve funds (or weekly payment assessments. specified in paragraph
(1)of this subdivision, of 4 per centum of the mean of the reserve funds required by law and held at the beginning and end of the taxable year, phis (in case of life insurance companies issuing policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation) 4 per centum of the mean of such reserve funds (not required by law) held at the beginning and end of the taxable year, as the Commissioner finds to be necessary for the protection of the holders of such policies only;
(3)The amount received as dividends
(A)from a domestic corporationDividends from domestic corporations. other than a corporation entitled to the benefits of section 262, and other than a corporation organized under the China Trade Act, 1922, or
(B)from any foreign corporation when it is shownFrom foreign, from United States sources. to the satisfaction of the Commissioner that more than 50 per centum of the gross income of such foreign corporation for the three-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the foreign corporation has been in existence) was derived from sources within the United States as determined under section 217;*Ante*, p. 273.
(4)An amount equal to 2 per centum of any sums held at thePercentage of reserves for deferred dividends. end of the taxable year as a reserve for dividends (other than dividends payable during the year following the taxable year) the payment. of which is deferred for a period of not less than five years from the date of the policy contract;
(5)Investment expenses paid during the taxable year: *Provided*,Investment expenses. That if any general expenses are in part assigned to or included in*Proviso*.Limitation. the investment expenses, the total deduction under this paragraph shall not exceed one-fourth of 1 per centum of the book value of the mean of the invested assets held at the beginning and end of the taxable year;
(6)Taxes and other expenses paid during the taxable year exclusivelyReal estate taxes. upon or with respect to the real estate owned by the comExceptions.290income tax.pany, not including taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and not including any amount paid out for new buildings, or for permanent improvements or betterments made to increase the value For taxes paid on interests of shareholders.of any property. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed upon a shareholder of a company upon his interest as shareholder, which are paid by the company without reimbursement from the shareholder, but in such cases no deduction shall be allowed the shareholder for the amount of such taxes;
(7)Exhaustion, etc., of property. A reasonable allowance for the exhaustion, wear and tear of property, including a reasonable allowance for obsolescence;
(8)Interest on debts. All interest paid or accrued within the taxable year on its Exception.indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title; and
(9)Specific money credits. In the case of a domestic life insurance company, the net income of which (computed without the benefit of this paragraph) is $25,000 or less, the sum of $2,000; but if the net income is more than $25,000 the tax imposed by section 243 shall not exceed the tax which would be payable if the $2,000 credit were allowed, plus the amount of the net income in excess of $25,000.
(b)Real estate deductions limited. No deduction shall be made under paragraphs
(6)and
(7)of subdivision
(a)on account of any real estate owned and occupied in whole or in part by a life insurance company unless there is included in the return of gross income the rental value of the space so occupied. Such rental value shall be not less than a sum which in addition to any rents received from other tenants shall provide a net income (after deducting taxes, depreciation, and all other expenses) at the rate of 4 per centum per annum of the book value at the end of the taxable year of the real estate so owned or occupied.
(c)Foreign companies.Determination of income of, from United States sources. In the case of a foreign life insurance company the amount of its net income for any taxable year from sources within the United States shall be the same proportion of its net income for the taxable year from sources within and without the United States, which the reserve funds required by law and held by it at the end of the taxable year upon business transacted within the United States is of the reserve funds held by it at the end of the taxable year upon all business transacted. Sec. 246. Insurance companies other than life or mutual.
(a)In lieu of the taxes imposed by sections 230 and 700, there shall be levied, collected, and paid for each taxable year upon the net income of every insurance company (other than a life or mutual insurance company) a tax as follows:
(1)Domestic. In the case of such a domestic insurance company the same percentage of its net income as is imposed upon other corporations by section 230;
(2)Foreign. In the case of such a foreign insurance company the same percentage of its net income from sources within the United States as is imposed upon the net income of other corporations by section 230.
(b)Meaning of terms. In the case of an insurance company subject to the tax imposed by this section—
(1)“Gross income.” The term “gross income” means the combined gross amount, earned during the taxable year, from investment income and from underwriting income as provided in this subdivision, computed on the basis of the underwriting and investment exhibit of the annual statement approved by the National Convention of Insurance Commissioners; 291
(2)The term “net income” means the gross income as definedincome tax.“Net income.” in paragraph
(1)of this subdivision less the deductions allowed by sect ion 247;
(3)The term “investment income” means the gross amount of‘‘Investment income.” income earned during the taxable year from interest, dividends and rents, computed as follows: To all interest, dividends and rents received during the taxable Sources of.year, add interest, dividends and rents due and accrued at the end of the taxable year, and deduct all interest, dividends and rents due and accrued at the end of the preceding taxable year;
(4)The term “underwriting income” means the premiums earned“Underwriting income.” on insurance contracts during the taxable year less losses incurred and expenses incurred;
(5)The term “premiums earned on insurance contracts during“Premiums earned on contracts, etc.” the taxable year ” means an amount computed as follows: From the amount of gross premiums written on insurance contractsComputation of. during the taxable year, deduct return premiums and premiums paid for reinsurance. To the result so obtained add unearned premiums on outstanding business at the end of the preceding taxable year and deduct unearned premiums on outstanding business at the end of the taxable year;
(6)The term “losses incurred” means losses incurred during the“Losses incurred.” taxable year on insurance contracts, computed as follows: To losses paid during the taxable year, add salvage and reinsuranceComputation of. recoverable outstanding at the end of the preceding taxable year, and deduct salvage and reinsurance recoverable outstanding at the end of the taxable year. To the result so obtained add all unpaid losses outstanding at the end of the taxable year and deduct unpaid losses outstanding at the end of the preceding taxable year;
(7)The term “expenses incurred” means all expenses shown on“Expenses incurred.” the annual statement approved by the National Convention of Insurance Commissioners, and shall be computed as follows: To all expenses paid during the taxable year add expenses unpaidComputation of. at the end of the taxable year and deduct expenses unpaid at the end of the preceding taxable year. For the purpose of computing the net income subject to the tax imposed by this section there shall be deducted from expenses incurred as defined in this paragraph all expenses incurred which are not allowed as deductions by section 247. Sec. 247.
(a)In computing the net income of an insurance company Net income.subject to the tax imposed by section 246 there shall be allowedDeductions allowed. as deductions:
(1)All ordinary and necessary expenses incurred, as provided inBusiness expenses. paragraph
(1)of subdivision
(a)of section 234;
(2)All interest as provided in paragraph
(2)of subdivision (a)Interest on debts. of section 234;
(3)Taxes as provided in paragraph
(3)ofTaxes. subdivision
(a)of section 234;
(4)Losses incurred;Losses.
(5)Bad debts in the nature of agency balances and bills receivableWorthless debts. ascertained to be worthless and charged off within the taxable year;
(6)The amount received as dividends from corporations as providedDividends from domestic corporations. in paragraph
(6)of subdivision
(a)of section 234;
(7)The amount of interest earned during the taxable year whichExempt interest. under paragraph
(4)of subdivision
(b)of section 213 is exempt from taxation under this title, and the amount of interest allowed as a credit under section 236;
(8)A reasonable allowance for the exhaustion, wear and tear ofExhaustion, etc., of property. property, as provided in paragraph
(7)of subdivision
(a)of section 234; 292
(9)income tax.Specific money credits. In the case of such a domestic insurance company, the net income of which (computed without the benefit of this paragraph) is $25,000 or less, the sum of $2,000; but if the net income is more than $25,000 the tax imposed by section 246 shall not exceed the tax which would be payable if the $2,000 credit were allowed, plus the amount of the net income in excess of $25,000.
(b)Foreign corporations.Deductions for United States business.*Ante*, p. 285. In the case of a foreign corporation the deductions allowed in this section shall be allowed to the extent provided in subdivision
(b)of section 234.
(c)No duplications. Nothing in this section or in section 246 shall be construed to permit the same item to be twice deducted. Part IV.—Administrative provisions. Administrative Provisions. returns of payments of dividends.Dividend payments. Sec. 254. Corporations to make specific returns of. Every corporation subject to the tax imposed by this title shall, when required by the Commissioner, render a correct return, duly verified under oath, of its payments of dividends, stating the name and address of each shareholder, the number of shares owned by him, and the amount of dividends paid to him. returns of brokers.Brokers. Sec. 255. Sworn returns of all business transactions to be made by. Every person doing business as a broker shall, when required by the Commissioner, render a correct return duly verified under oath, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe, showing the names of customers for whom such person has transacted any business, with such details as to the profits, losses, or other information which the Commissioner may require, as to each of such customers, as will enable the Commissioner to determine whether all income tax due on profits or gains of such customers has been paid. information at source.Information at source. Sec. 256. Persons making fixed payments to others to render returns thereof. All persons, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, and employers, making payment to another person, of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, Exception.*Supra.*emoluments, or other fixed or determinable gains, profits, and income (other than payments described in sections 254 and 255), of $1,000 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Commissioner, under such regulations and in such form and manner and to such extent as may be prescribed by him with the approval of the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment. Interest on corporation obligations.Such returns may be required, regardless of amounts,
(1)in the case of payments of interest upon bonds, mortgages, deeds of trust, Collection of foreign coupons, etc.or other similar obligations of corporations, and
(2)in the case of collections of items (not payable in the United States) of interest upon the bonds of foreign countries and interest upon the bonds of and dividends from foreign corporations by persons undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange. 293 When necessary to make effective the provisions of this section theincome tax.Name and address on demand. name and address of the recipient of income shall be furnished upon demand of the person paying the income. The provisions of this section shall not apply to the payment of Not applicable to Federal securities.interest on obligations of the United States. returns to be public records.Publicity. Sec. 257.
(a)Returns upon which the tax has been determined byReturns to be public records.Inspection restricted. the Commissioner shall constitute public records; but they shall be open to inspection only upon order of the President and under rules and regulations prescribed by the Secretary and approved by the President: *Provided*, That the Committee on Ways and Means of*Provisos.*Data from, to be furnished committees of Congress. the House of Representatives, the Committee on Finance of the Senate, or a special committee of the Senate or House, shall have the right to call on the Secretary of the Treasury for, and it shall be his duty to furnish, any data of any character contained in or shown by the returns or any of them, that may be required by the committee;Inspection by committees, etc. and any such committee shall have the right, acting directly as a committee, or by and through such examiners or agents as it may designate or appoint, to inspect all or any of the returns at such times and in such manner as it may determine; and any relevant or usefull information thus obtained may be submitted by the committee obtaining it to the Senate or the House, or to both the Senate and House, as the case may be: *Provided further*, That the proper officersAccess allowed State officers to corporation returns. of any State may, upon the request of the governor thereof, have access to the returns of any corporation, or to an abstract thereof showing the name and income of the corporation, at such times and in such manner as the Secretary may prescribe: *Provided further*, That all bona fide shareholders of record owning 1 per centum or Shareholders allowed to examine income returns of their corporations.more of the outstanding stock of any corporation shall, upon making request of the Commissioner, be allowed to examine the annual income returns of such corporation and of its subsidiaries. AnyPunishment for unauthorized divulging of information from. shareholder who pursuant to the provisions of this section is allowed to examine the return of any corporation, and who makes known in any manner whatever not provided by law the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any such return, shall be guilty of a misdemeanor and be punished by a fine not exceeding $1,000 or by imprisonment not exceeding one year, or both.
(b)The Commissioner shall as soon as practicable in each yearList of income taxpayers to be prepared for inspection in office of collectors. cause to be prepared and made available to public inspection in such manner as he may determine, in the office of the collector in each internal-revenue district and in such other places as he may determine, lists containing the name and the post-office address of each person making an income-tax return in such district, together with the amount of the income tax paid by such person. publication of statistics.Statistics. Sec. 258. The Commissioner, with the approval of the Secretary,Annual publication directed of operation, etc., of income laws. shall prepare and publish annually statistics reasonably available with respect to the operation of the income, war-profits and excess-profits tax laws, including classifications of taxpayers and of income, the amounts allowed as deductions, exemptions, and credits, and any other facts deemed pertinent and valuable. collection of foreign items.Collection of foreign items. Sec. 259. All persons undertaking as a matter of business or for Licenses required for collecting foreign coupons, dividends, etc.profit the collection of foreign payments of interest or dividends by 294income tax.means of coupons, checks, or bills of exchange shall obtain a license from the Commissioner and shall be subject to such regulations enabling the Government to obtain the information required under this title as the Commissioner, with the approval of the Secretary, shall Punishment for collecting without license, etc.prescribe; and whoever knowingly undertakes to collect such payments without having obtained a license therefor, or without complying with such regulations, shall be guilty of a misdemeanor and shall be fined not more than $5,000, or imprisoned for not more than one year, or both. citizens of possessions of the united states.Citizens of United States possessions. Sec. 260. Nonresidents of United States, taxable only on income from United States sources. Any individual who is a citizen of any possession of the United States (but not otherwise a citizen of the United States) and who is not a resident of the United States, shall be subject to taxation under this title only as to income derived from sources within the United States, and in such case the tax shall be computed and paid in the same manner and subject to the same conditions as in the case of other persons who are taxable only as to income derived from such sources. Virgin Islands.Payment of taxes in, not affected.Vol. 42, p. 123.Nothing in this section shall be construed to alter or amend the provisions of the Act entitled “An Act making appropriations for the naval service for the fiscal year ending June 30, 1922, and for other purposes,” approved July 12, 1921, relating to the imposition of income taxes in the Virgin Islands of the United States. porto rico and the philippine islands.Porto Rico and Philippines. Sec. 261. Insular officials to collect tax.Vol. 38, p. 180; Vol. 39, p. 776; Vol. 40, p. 1087. In Porto Rico and the Philippine Islands the income tax shall be levied, assessed, collected, and paid as provided by law prior to the enactment of this Act. Authority of insular legislatures.The Porto Rican or the Philippine Legislature shall have power by due enactment to amend, alter, modify, or repeal the income tax laws in force in Porto Rico or the Philippine Islands, respectively. income from sources within the possessions of the united states.Income from United States possessions. Sec. 262. Gross income of citizens. etc., deemed from United States sources.
(a)In the case of citizens of the United States or domestic corporations, satisfying the following conditions, gross income means only gross income from sources within the United States—
(1)If 80 per cent derived from United States sources. If 80 per centum or more of the gross income of such citizen or domestic corporation (computed without the benefit of this section), for the three-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession of the United States; and
(2)Corporations deriving 50 per cent from active business therein. If, in the case of such corporation, 50 per centum or more of its gross income (computed without the benefit of this section) for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States; or
(3)Citizens deriving 50 per cent from active business therein. If, in the case of such citizen, 50 per centum or more of his gross income (computed without the benefit of this section) for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States either on his own account or as an employee or agent of another.
(b)All amounts received in United States included in gross income. Notwithstanding the provisions of subdivision
(a)there shall lie included in gross income all amounts received by such citizens or corporations within the United States, whether derived from sources within or without the United States. 295
(c)As used in this section the term “possession of the Unitedincome tax.Virgin Islands not included. States ” does not include the Virgin Islands of the United States. china trade act corporations.China Trade Corporations. Sec. 263.
(a)For the purpose only of the tax imposed by section Credit for proportion of income from China sources bears to shares of residents in China.Vol. 42, p. 855.*Post*, p. 996.230 there shall be allowed, in the case of a corporation organized under the China Trade Act, 1922, a credit of an amount equal to the proportion of the net income derived from sources within China (determined in a similar manner to that provided in section 217) which the par value of the shares of stock of the corporation owned on the last day of the taxable year by individual citizens of the United States or China, resident in China, bears to the par value of the whole number of shares of stock of the corporation outstanding on such date: *Provided*, That in no case shall the amount by which*Proviso*.Limitation. the tax imposed by section 230 is diminished by reason of such credit exceed the amount of the special dividend certified under subdivision
(b)of this section.
(b)Such credit shall not be allowed unless the Secretary of CommerceConditions. has certified to the Commissioner—
(1)The amount which, during the year ending on the date fixedCredit subject to special dividends to residents in China. by law for filing the return, the corporation has distributed as a special dividend to or for the benefit of such individuals as on the last day of the taxable year were citizens of the United States or China, resident in China, and owned shares of stock of the corporation;
(2)That such special dividend was in addition to all otherAdditional to other dividends. amounts, payable or to be payable to such individuals or for their benefit, by reason of their interest in the corporation; and
(3)That such distribution has been made to or for the benefit ofDividends in proportion to stock owned. such individuals in proportion to the par value of the shares of stock of the corporation owned by each; except that if the corporation has more than one class of stock, the certificate shall contain a statement that the articles of incorporation provide a method for the apportionment of such special dividend among such individuals, and that the amount certified has been distributed in accordance with the method so provided.
(c)For the purposes of this section shares of stock of a corporationOwnership of stock. shall be considered to be owned by the person in whom the equitable right to the income from such shares is in good faith vested.
(d)As used in this section the term “China” shall have the sameMeaning of “China.” meaning as when used in the China Trade Act, 1922. Part V.— Payment, Collection, and Refund of Tax and Penalties.Payment etc., of tax, etc. date on which tax shall be paid.Date of payment. Sec. 270.
(a)Except as provided in subdivisions (b), (c), andTime designated.
(d)of this section the total amount of tax imposed by this title shall be paid—
(1)In the case of a taxpayer, other than a nonresident alienFor taxpayers, other than nonresident aliens, etc. individual, and other than a foreign corporation not having an office or place of business in the United States, on or before the fifteenth day of March following the close of the calendar year, or, if the return should be made on the basis of a fiscal year, then on or before the fifteenth day of the third month following the close of the fiscal year; and 296
(2)income tax.Nonresident aliens, and foreign corporations without office in United States. In the case of a nonresident alien individual, and of a foreign corporation not having an office or place of business in the United States, on or before the fifteenth day of June following the close of the calendar year, or, if the return should be made on the basis of a fiscal year, then on or before the fifteenth day of the sixth month following the close of the fiscal year.
(b)Allowed in four installments.
(1)The taxpayer may elect to pay the tax in four equal installments, in which case the first installment shall be paid on or before the latest date prescribed in subdivision
(a)for the payment of the tax by the taxpayer, the second installment shall be paid on or before the fifteenth day of the third month, the third installment on or before the fifteenth day of the sixth month, and the fourth installment on or before the fifteenth day of the ninth month, after such date.
(2)Interest on extension.Whole amount on default. If any installment is not paid on the date fixed for its payment, the whole amount of the tax unpaid shall be paid upon notice and demand from the collector.
(c)Extension allowed on request.
(1)At the request of the taxpayer, the Commissioner may extend the time for payment of the amount determined as the tax by the taxpayer, or any installment thereof, for a period not to exceed six months from the date prescribed in subdivision
(a)or Payment on expiration of.(b) for the payment of the tax or an installment thereof. In such case the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension.
(2)If the time for payment is thus extended there shall be collected, as a part of such amount, interest thereon at the rate of 6 per centum per annum from the date when such payment should have been made if no extension had been granted, until the expiration of the period of the extension.
(d)Not applicable to payments at source.*Ante*, pp. 277, 285. The provisions of this section shall not apply to the payment of a tax required to be withheld at the source under section 221 or 237. examination of return and determination of tax.Examination of returns, etc. Sec. 271. To be as soon as practicable. As soon as practicable after the return is filed the Commissioner shall examine it and shall determine the correct amount of the tax. overpayments.Overpayments. Sec. 272. Credit if installment payment exceeds correct amount. If the taxpayer has paid as an installment of the tax more than the amount determined to be the correct amount of such installment, the excess shall be credited against the unpaid Credit or refund if paid.installments, if any. If the amount already paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, the excess shall be credited or refunded *Post*, p. 301.as provided in section 281. deficiency in tax.Deficiency in tax. Sec. 273. Meaning of term.If amount of tax exceeds return by tax-payer. As used in this title the term “deficiency ” means—
(1)The amount by which the tax imposed by this title exceeds the amount shown as the tax by the taxpayer upon his return; but the amount so shown on the return shall first be increased by Conditions.the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, credited, refunded, or otherwise repaid in respect of such tax; or
(2)Amount of tax exceeding previous assessment. If no amount is shown as the tax by the taxpayer upon his return, or if no return is made by the taxpayer, then the amount 297by which the tax exceeds the amounts previously assessed (or collectedincome tax. without assessment) as a deficiency; but such amounts previously assessed, or collected without assessment, shall first be decreased by the amounts previously abated, credited, refunded, or otherwise repaid in respect of such tax. Sec. 274.
(a)If, in the case of any taxpayer, the Commissioner Notice to taxpayer of deficiency.determines that there is a deficiency in respect of the tax imposed by this title, the taxpayer, except as provided in subdivision (d), shall be notified of such deficiency by registered mail, but such deficiency shall be assessed only as hereinafter provided. WithinAppeal to Board of Tax Appeals. 60 days after such notice is mailed the taxpayer may file an appeal with the Board of Tax Appeals established by section 900.*Post*, p. 336.
(b)If the Board determines that there is a deficiency, the amountPayment on determination of Board. so determined shall be assessed and shall be paid upon notice and demand from the collector. No part of the amount Suit by Commissioner for amount disallowed.determined as a deficiency by the Commissioner but disallowed as such by the Board shall be assessed, but a proceeding in court may be begun, without assessment, for the collection of any part of the amount so disallowed. The court shall include in its judgment interestInterest on judgment by court. upon the amount thereof at the rate of 6 per centum per annum from the date prescribed for the payment of the tax to the date of the judgment. Such proceeding shall be begun within one yearTime limit for proceedings. after the final decision of the Board, and may be begun within such year even though the period of limitation prescribed in section 277 has expired.
(c)If the taxpayer does not file an appeal with the BoardPayment on demand if no appeal filed. within the time prescribed in subdivision
(a)of this section, the deficiency of which the taxpayer has been notified shall be assessed, and shall be paid upon notice and demand from the collector.
(d)If the Commissioner believes that the assessment or collectionImmediate assessment, etc., if collection jeopardized by delay. of a deficiency will be jeopardized by delay such deficiency shall be assessed immediately and notice and demand shall be made by the collector for the payment thereof. In such case the assessment may be made
(1)without giving the notice provided in subdivision
(a)of this section, or
(2)before the expiration of the 60-day period provided in subdivision
(a)of this section even though such notice has been given, or
(3)at any time prior to the final decision by the Board upon such deficiency even though the taxpayer has filed an appeal. If the taxpayer does not file a claim in abatement as providedPayment on demand if no appeal filed. in section 279 the deficiency so assessed (or, if the claim so filed covers only a part of the deficiency, then the amount not covered by the claim) shall be paid upon notice and demand from the collector.
(e)If the taxpayer has elected to pay the tax in installments andProrating of deficiency to installment payments. a deficiency has been assessed, the deficiency shall be prorated to the four installments. Except as provided in subdivision
(d)of this section, that part of the deficiency so prorated to any installment the date for payment of which has not arrived, shall be collected at the same time as and as part of such installment. That part of the deficiency so prorated to any installment the date for payment of which has arrived, shall be paid upon notice and demand from the collector.
(f)Interest upon the amount determined as a deficiency, or, ifInterest authorized. the tax is paid in installments, upon the part of the deficiency prorated to each installment, shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax, at the rate of 6 per centum per annum from the date prescribed for the payment of the tax, or the payment of such installment, to the date the deficiency is assessed. 298
(g)income tax.Extension allowed to avoid undue hardship to taxpayer. Where it is shown to the satisfaction of the Commissioner that the payment of a deficiency upon the date prescribed for the payment thereof will result in undue hardship to the taxpayer the Commissioner, with the approval of the Secretary (except where the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax), may grant an extension for the payment of such deficiency or any part thereof for a Bond required.period not in excess of eighteen months. If an extension is granted, the Commissioner may require the taxpayer to furnish a bond in such amount, not exceeding double the amount of the deficiency, and with such sureties, as the Commissioner deems necessary, conditioned upon the payment of the deficiency in accordance with the Interest of deficiency.terms of the extension. In such case there shall be collected, as a part of the tax, interest on the part of the deficiency the time for payment of which is so extended, at the rate of 6 per centum per annum for the period of the extension, and no other interest shall be Additional interest if not paid on extension.collected on such part of the deficiency for such period. If the part of the deficiency the time for payment of which is so extended is not paid in accordance with the terms of the extension, there shall be collected, as a part of the tax, interest on such unpaid amount at the rate of 1 per centum a month for the period from the time fixed by the. terms of the extension for its payment until it is paid, and no other interest shall be collected on such unpaid amount for such period. additions to the tax in case of deficiency.Additions to tax. Sec. 275. If deficiency due to negligence, etc.
(a)If any part of any deficiency is due to negligence, or intentional disregard of rules and regulations but without intent to defraud, 5 per centum of the total amount of the deficiency (in addition to such deficiency) shall be assessed, collected, and paid in the same manner as if it were a deficiency, except that the provisions of subdivisions
(e)and
(f)of section 274 shall not be applicable.
(b)If from fraudulent evasion. If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid, in lieu of the 50 per centum addition to the tax provided in *Post*, p. 339.section 3176 of the Revised Statutes, as amended. additions to the tax in case of delinquency.Delinquencies. Sec. 276. Interest if tax not paid when due.
(1)Where the amount determined by the taxpayer as the tax imposed by this title, or any installment thereof, or any part of such amount or installment, is not paid at the time prescribed for its payment, there shall be collected as a part of the tax, interest upon such unpaid amount at the rate of 1 per centum a month from the date prescribed for its payment until it is paid.
(2)If tax and interest on extension not paid in full. Where an extension of time for payment of the amount so determined as the tax by the taxpayer, or any installment thereof, has been granted, and the amount the time for payment of which has been extended, and the interest thereon determined under paragraph
(2)of subdivision
(c)of section 270, is not paid in full prior to the expiration of the period of the extension, then, in lieu of the interest provided for in paragraph
(1)of this subdivision, interest at the rate of 1 per centum a month shall be collected on such unpaid amount from the date of the expiration of the period of the extension until it is paid.
(b)Interest, if deficiency, etc., not paid on notice and demand. Where a deficiency, or any interest or additional amounts assessed in connection therewith under subdivision
(f)of section 274, *Post*, p. 339.or under section 275, or any addition to the tax in case of delinquency provided for in section 3176 of the Revised Statutes, as 299amended, is not paid in full within ten days from the date of noticeincome tax. and demand from the collector, there shall be collected as part of the tax, interest upon the unpaid amount at the rate of 1 per centum a month from the date of such notice and demand until it is paid. If any part of a deficiency prorated to any unpaid installment underNonpayment of pro-rated installments. subdivision
(e)of section 274 is not paid in full on the date prescribed for the payment of such installment, there shall be collected as part of the tax interest upon the unpaid amount at the rate of 1 per centum a month from such date until it is paid.
(c)In the case of estates of incompetent, deceased, or insolventInterest rate on estates of incompetents and insolvents. persons, there shall be collected interest at the rate of 6 per centum per annum in lieu of the interest provided in subdivisions
(a)and
(b)of this section.
(d)If a claim in abatement is filed, as provided in section 279,Not applicable to claims in abatement.*Post*, p. 300. the provisions of subdivisions
(b)and
(c)of this section shall not apply to the amount covered by the claim in abatement. period of limitation upon assessment and collection of tax.Limitation on assessment and collection. Sec. 277.
(a)Except as provided in section 278 and in subdivisionPeriods designated.
(b)of section 274 and in subdivision
(b)of section 279—
(1)The amount of income, excess-profits, and war-profits taxesFor assessing income, etc., under Act of 1921, and this Act. imposed by the Revenue Act of 1921, and by such Act as amended, for the taxable year 1921 and succeeding taxable years, and the amount of income taxes imposed by this Act, shall be assessed within four years after the return was filed, and no proceeding inProceedings for collection restricted. court for the collection of such taxes shall be begun after the expiration of such period.
(2)The amount of income, excess-profits, and war-profits taxesFor taxes under prior Acts.Vol. 36, p. 112. imposed by the Act entitled “An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,” approved August 5, 1909, the Act entitled “AnVol. 38, p. 166. Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, the RevenueVol. 39, pp. 756, 1004; Vol. 40, pp. 300, 1057. Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, and by any such Act as amended, shall be assessed within five years after the return was filed, and no proceeding in court for the collectionProceedings for collection restricted. of such taxes shall be begun after the expiration of such period.
(3)In the case of income received during the lifetime of aIncome received during life of a decedent, on request of executor, etc. decedent, the tax shall be assessed, and any proceeding in court for the collection of such tax shall be begun, within one year after written request therefor (filed after the return is made) by the executor, administrator, or other fiduciary representing the estate of such decedent, but not after the expiration of the period prescribed for the assessment of the tax in paragraph
(1)or
(2)of this subdivision.
(b)The period within which an assessment is required to be madeTime extension on notice of deficiency. by subdivision
(a)of this section in respect of any deficiency shall be extended
(1)by 60 days if a notice of such deficiency has been mailed to the taxpayer under subdivision
(a)of section 274 and no appeal has been filed with the Board of Tax Appeals, or, (2)If appeal filed. if an appeal has been filed, then by the number of days between the date of the mailing of such notice and the date of the final decision by the Board. Sec. 278.
(a)In the case of a false or fraudulent return withAssessment, etc., at any time in case of fraud. intent to evade tax or of a failure to file a return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time. 300
(b)income tax.Assessment, etc., of deficiencies under prior Acts. Any deficiency attributable to a change in a deduction tentatively allowed under paragraph
(9)of subdivision
(a)of section 214, or paragraph
(8)of subdivision
(a)of section 234, of the Revenue Act of 1918 or the Revenue Act of 1921, may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
(c)With written consent of Commissioner and taxpayer. Where both the Commissioner and the taxpayer have consented in writing to the assessment of the tax after the time prescribed in section 277 for its assessment the tax may be assessed at any time prior to the expiration of the period agreed upon.
(d)Collection by distraint, etc. Where the assessment of the tax is made within the period prescribed in section 277 or in this section, such tax may be collected by distraint or by a proceeding in court, begun within six years Court proceedings without assessment, etc.after the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made.
(e)No assessment, etc., if barred by time limitations, etc. This section shall not
(1)authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then Prior assessments, etc., not affected.in existence, or
(2)affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act. claims in abatement.Claims in abatement. Sec. 279. Time for filing, with collector, after notice of deficiency, and demand for payment.
(a)If a deficiency has been assessed under subdivision
(d)of section 274, the taxpayer, within 10 days after notice and demand from the collector for the payment thereof, may file with the collector a claim for the abatement of such deficiency, or any part thereof, or of any interest or additional amounts assessed in connection therewith, or of any part of any such interest or additional Bond required.amounts. Such claim shall be accompanied by a bond, in such amount, not exceeding double the amount of the claim, and with such sureties, as the collector deems necessary, conditioned upon the payment of so much of the amount of the claim as is not abated, together with interest thereon as provided in subdivision
(c)of Collection to be stayed.this section. Upon the filing of such claim and bond, the collection of so much of the amount assessed as is covered by such claim and bond shall be stayed pending the final disposition of the claim.
(b)Notification of action by Commissioner. If a claim is filed as provided in subdivision
(a)of this section the collector shall transmit the claim immediately to the Commissioner who shall by registered mail notify the taxpayer of Appeal to Board.his decision on the claim. The taxpayer may within 60 days after such notice is mailed file an appeal with the Board of Tax Appeals. If the claim is denied in whole or in part by the Commissioner (or by the Board in case an appeal has been filed) the amount, the claim for which is denied, shall be collected as part of the tax upon notice and demand from the collector, and the amount, the claim Proceedings in court.for which is allowed, shall be abated. A proceeding in court may be begun for any part of the amount, claim for which is allowed by the Board. Such proceeding shall be begun within one year after the final decision of the Board, and may Time for.be begun within such year even though the period of limitation prescribed in section 277 has expired.
(c)Interest on amount of claim denied. If the claim in abatement is denied in whole or in part, there shall be collected, at the same time as the part of the claim denied, and as a part of the tax, interest at the rate of 6 per centum per annum upon the amount of the claim denied, from the date of notice 301and demand from the collector under subdivision
(d)of section 274income tax. to the date of the notice and demand under subdivision
(b)of this section. If the amount included in the notice and demand from theAdditional, if not paid on demand. collector under subdivision
(b)of this section is not paid in full within 10 days after such notice and demand, then there shall be collected, as part of the tax, interest upon the unpaid amount at the rate of 1 per centum a month (or, in the case of estates of incompetent, deceased, or insolvent persons, at the rate of 6 per centum per annum) from the date of such notice and demand until it is paid.
(d)Except as provided in this section, no claim in abatementNo other claim for abatement to be filed hereafter. shall be filed in respect of any assessment made after the enactment of this Act in respect of any income, war-profits, or excess-profits tax. taxes under prior acts.Taxes under prior Acts. Sec. 280. If after the enactment of this Act the Commissioner determinesAssessment and payment under provisions thereof.Vol. 39, pp. 756–777.Vol. 40, pp. 300–308; 1057–1096.Vol. 42, pp. 227–271. that any assessment should be made in respect of any income, war-profits, or excess-profits tax imposed by the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act of 1921, or by any such Act as amended, the amount which should be assessed (whether as deficiency or as interest, penalty, or other addition to the tax) shall be computed as if this Act had not been enacted, but the amount so computed shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including the provisions in case of delinquency in payment after notice and demand) as in the case of the taxes imposed by this title, except as otherwise provided in sectionException.*Ante*, p. 299. 277. credits and refunds.Credits and refunds. Sec. 281.
(a)Where there has been an overpayment of any income,Allowed for excess payments under this and former Acts.Vol. 34, p. 112. war-profits, or excess-profits tax imposed by this Act, the Act entitled “An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,” approved August 5, 1909, the Act entitled “An Act to reduce tariffVol. 38, p. 166.Vol. 39, pp. 756, 1004; Vol. 40, pp. 300, 1057. duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act Vol. 42, p. 227.of 1921, or any such Act as amended, the amount of such overpayment shall be credited against any income, war-profits, or excess-profits tax or installment thereof then due from the taxpayer, and any balance of such excess shall be refunded immediately to the taxpayer.
(b)Except as provided in subdivisions
(c)and
(e)of this section,Claims to be filed in four years.Exceptions.
(1)no such credit or refund shall be allowed or made after four years from the time the tax was paid, unless before the expiration of such four years a claim therefor is filed by the taxpayer, nor
(2)shall the amount of the credit or refund exceed the portion of the tax paid during the four years immediately preceding the filing of the claim or, if no claim was filed, then during the four years immediately preceding the allowance of the credit or refund.
(c)If the invested capital of a taxpayer is decreased by the Commissioner,Allowance without claim if invested capital decreased by Commissioner. and such decrease is due to the fact that the taxpayer failed to take adequate deductions in previous years, with the result that there has been an overpayment of income, war-profits, or excess-profits taxes in any previous year or years, then the amount of such overpayment shall be credited or refunded, without the filing of a claim therefor, notwithstanding the period of limitation provided for in subdivision
(b)has expired. 302
(d)income tax.Refund or credit to withholding agent. Where there has been an overpayment of tax under section 221 or 237 any refund or credit made under the provisions of this section shall be made to the withholding agent unless the amount of such tax was actually withheld by the withholding agent.
(e)Extension if waiver of right to have tax determined within five years has been filed.*Post*, p. 1115. If the taxpayer has, within five years from the time the return for the taxable year 1917 was due, filed a waiver of his right to have the taxes due for such taxable year determined and assessed within five years after the return was filed, or if he has, on or before June 15, 1924, filed such a waiver in respect of the taxes due for the taxable year 1918, then such credit or refund relating to the taxes for the year in respect of which the waiver was filed shall be allowed or made if claim therefor is filed either on or before April 1, 1925. or within four years from the time the tax was paid.
(f)Allowances of prior claims not barred. This section shall not
(1)bar from allowance a claim for credit or refund filed prior to the enactment of this Act which but for such enactment would have been allowable, or
(2)bar from allowance a claim in respect of a tax for the taxable year 1919 or 1920 if such claim is filed before the expiration of five years after the date the return was due. closing by commissioner of taxable year.Closing of taxable year. Sec. 282. Immediate payment if Commissioner find acts of taxpayer prejudice collection, etc.
(a)If the Commissioner finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the tax for the taxable year then last past or the taxable year then current unless such proceedings be brought without delay, the Commissioner shall declare the taxable period for such taxpayer immediately terminated and shall cause Notice to be given of finding, demand, etc.notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall thereupon become Finding of Commissioner, a presumption of intent.immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of the provisions of this section the finding of the Commissioner, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of the taxpayer’s design.
(b)Bond accepted if tax-payer not in default. A taxpayer who is not in default in making any return or paying income, war-profits, or excess-profits tax under any Act of Congress may furnish to the United States, under regulations to be prescribed by the Commissioner, with the approval of the Secretary, security approved by the Commissioner that he will duly make the return next thereafter required to be filed and pay the tax next Condition of acceptance.thereafter required to be paid. The Commissioner may approve and accept in like manner security for return and payment of taxes made due and payable by virtue of the provisions of this section, provided the tax-payer has paid in full all other income, war-profits, or excess-profits taxes due from him under any Act of Congress.
(c)Enforcement proceedings suspended, on approval of bond. If security is approved and accepted pursuant to the provisions of this section and such further or other security with respect to the tax or taxes covered thereby is given as the Commissioner shall from time to time find necessary and require, payment of such taxes shall not be enforced by any proceedings under the provisions of this section prior to the expiration of the time otherwise allowed for paying such respective taxes. 303
(d)In the case of a citizen of the United States about to departincome tax.Discretionary waiving of requirements of citizens. from the United States the Commissioner may, at his discretion, waive any or all of the requirements placed on the taxpayer by this section.
(e)No alien shall depart from the United States unless he firstAliens before going abroad must furnish certificate of taxes paid. procures from the collector or agent in charge a certificate that he has complied with ail the obligations imposed upon him by the income, war-profits, and excess-profits tax laws.
(f)If a taxpayer violates or attempts to violate this section thereAdditional tax for violations hereof. shall, in addition to all other penalties, be added as part of the tax 25 per centum of the total amount of the tax or deficiency in the tax, together with interest at the rate of 1 per centum a month from the time the tax became due. effective date of title.Effective date. Sec. 283. This title shall take effect as of January 1, 1924.As of January 1, 1924. TITLE III. Title III. Part I.—estate tax. Estate Tax. Sec. 300. When used in Part I of this title—Terms construed. The term “executor” means the executor or administrator of the“Executor.” decedent, or, if there is no executor or administrator appointed, qualified, and acting within the United States, then any person in actual or constructive possession of any property of the decedent; The term “net estate” means the net estate as determined under“Net estate.” the provisions of section 303; The term “month ” means calendar month; and“Month.” The term “collector” means the collector of internal revenue of“Collector.” the district in which was the domicile of the decedent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Commissioner. Sec. 301.
(a)In lieu of the tax imposed by Title IV of the RevenueTax levied on transfers of estates hereafter.Vol. 42, p. 277. Act of 1921, a tax equal to the sum of the following percentages of the value of the net estate (determined as provided in section 303) is hereby imposed upon the transfer of the net estate of every decedent dying after the enactment of this Act, whether a resident or nonresident of the United States:Rates. 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $100,000; 3 per centum of the amount by which the net estate exceeds $100,000 and does not exceed $150,000; 4 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 6 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 9 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 12 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 15 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000;304 estate tax.18 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 21 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000; 24 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 27 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 30 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 35 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; 40 per centum of the amount by which the net estate exceeds $10,000,000.
(b)Credit allowed for estate, etc., taxes of States, etc. The tax imposed by this section shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory or the District of Columbia, in Maximum.respect of any property included in the gross estate. The credit allowed by this subdivision shall not exceed 25 per centum of the tax imposed by this section. Sec. 302. Gross estate. The value of the gross estate of the decedent shall be Property included as.determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated—
(a)Subject to administration. To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate;
(b)Dower or curtesy interests. To the extent of any interest therein of the surviving spouse, existing at the time of the decedent’s death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy;
(c)Transfers in contemplation of death. To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for a fair consideration in money or money’s Transfers within two years included.worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of Part I of this title;
(d)Revocable transfers prior to death, etc. To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power in contemplation of his death, except in case of a bona fide sale for a fair consideration in money or money’s worth;
(e)Extent of joint interests, etc. To the extent of the interest therein held as joint tenants by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or Exception.the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than *Provisos.*If property acquired from a decedent, etc.a fair consideration in money or money’s worth: *Provided*, That where such property or any part thereof, or part of the consideration with which such property was acquired, is shown to have been at any time acquired by such other person from the decedent for 305less than a fair consideration in money or money’s worth, there shallestate tax. be excepted only such part of the value of such property as is proportionate to the consideration furnished by such other person: *Provided further*, That where any property has been acquired byIf acquired by gift, etc. gift, bequest, devise, or inheritance, as a tenancy by the entirety by the decedent and spouse, then to the extent of one-half of the value thereof, or, where so acquired by the decedent and any other person as joint tenants and their interests are not otherwise specified or fixed by law, then to the extent of the value of a fractional part to be determined by dividing the value of the property by the number of joint tenants;
(f)To the extent of any property passing under a general powerPassing under a general power of appointment. of appointment exercised by the decedent
(1)by will, or
(2)by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money’s worth; and
(g)To the extent of the amount receivable by the executor asReceived on insurance policy of decedent. insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life.
(h)Subdivisions (b), (c), (d), (e), (f), and
(g)of this sectionApplicable to prior trusts, etc. shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein, whether made, created, arising, existing, exercised, or relinquished before or after the enactment of this Act. Sec. 303. For the purpose of the tax the value of the net estateNet value determined. shall be determined—
(a)In the case of a resident, by deducting from the value ofDeductions from gross estate of residents. the gross estate—
(1)Such amounts for funeral expenses,Funeral and administration expenses, taxes, etc. administration expenses, claims against the estate, unpaid mortgages upon, or any indebtedness in respect to, property (except, in the case of a resident decedent, where such property is not situated in the United States), to the extent that such claims, mortgages, or indebtedness were incurred or contracted bona fide and for a fair consideration in money or money’s worth, losses incurred during the settlement of the estateCasualty losses during settlement. arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any incomeTaxes on income, etc., received after death, not included. taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes;
(2)An amount equal to the value of any property
(A)formingProperty received from prior decedent. a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent, or
(B)transferred to the decedent by gift within five years prior to his death, where such property can be identified as having been received by the decedent from such donor by gift or from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property so received. This deduction shall be allowed only where a gift tax orRestricted to property on which gift or estate tax paid. an estate tax under this or any prior act of Congress was paid by or on behalf of the donor or the estate of such prior decedent as the case may be, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gift or the gross estate of such prior decedent, and only to the extent thatLimit.306estate tax.the value of such property is included in the decedent’s gross estate and not deducted under paragraph
(1)or
(3)of this subdivision;
(3)Bequests, etc., for public, religious, etc., purposes. The amount of all bequests, legacies, devises, or transfers, except bona fide sales for a fair consideration in money or money’s worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent’s death, to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee Condition.or trustees, or a fraternal society, order, or association operating under the lodge system, but only if such contributions or gifts are to be used by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to If tax payable from deductible bequests, etc., exemption reduced by that amount.children or animals. If the tax imposed by section 301, or any estate, succession, legacy, or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this paragraph, then the amount deductible under this paragraph shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes; and
(4)Exemption of $50,000. An exemption of $50,000.
(b)Deductions from gross estate of non-residents. In the case of a nonresident, by deducting from the value of that part of his gross estate which at the time of his death is situated in the United States—
(1)Proportion of administration expenses, etc. That proportion of the deductions specified in paragraph
(1)of subdivision
(a)of this section which the value of such part bears to the value of his entire gross estate, wherever situated, but Limitation as to part in United States.in no case shall the amount so deducted exceed 10 per centum of tire value of that part of his gross estate which at the time of his death is situated in the United States;
(2)Property of estate in United States, received from prior decedents. An amount equal to the value of any property
(A)forming a part of the gross estate situated in the United States of any person who died within five years prior to the death of the decedent, or
(B)transferred to the decedent by gift within five years prior to his death, where such property can be identified as having been received by the decedent from such donor by gift or from such prior decedent by gift, bequest, devise, or inheritance, or which can be identified as having been acquired in exchange for property Restricted to property on which gift or estate tax paid, etc.so received. This deduction shall be allowed only where a gift tax or an estate tax under this or any prior act of Congress was paid by or on behalf of the donor or the estate of such prior decedent as the case may be, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gift or the gross estate of such prior decedent, and only to the extent that the value of such property is included in that part of the decedent’s gross estate which at the time of his death is situated in the United States and not deducted under paragraph
(1)or
(3)of this subdivision; and
(3)Bequests, etc., for public, religious, etc., purposes in the United States. The amount of all bequests, legacies, devises, or transfers, except bona fide sales for a fair consideration, in money or money’s worth, in contemplation of or intended to take effect in possession or enjoyment at or after the decedent’s death, to or for the use of the United States, any State, Territory, any political subdivision 307thereof, or the District of Columbia, for exclusively public purposes,estate tax. or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees, or a fraternal society, order, or association operating under the lodge system, but onlyConditions. if such contributions or gifts are to be used within the United States by such trustee or trustees, or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. If the tax imposed by section 301, or any estate, succession,If tax payable from deductible bequests, etc., exemption reduced by that amount. legacy or inheritance taxes, are, either by the terms of the will, by the law of the jurisdiction under which the estate is administered, or by the law of the jurisdiction imposing the particular tax, payable in whole or in part out of the bequests, legacies, or devises otherwise deductible under this paragraph, then the amount deductible under this paragraph shall be the amount of such bequests, legacies, or devises reduced by the amount of such taxes.
(c)No deduction shall be allowed in the case of a nonresidentNo deduction unless full return of nonresident’s gross estate filed. unless the executor includes in the return required to be filed under section 304 the value at the time of his death of that part of the gross estate of the nonresident not situated in the United States.
(d)For the purpose of Part I of this title, stock in a domesticProperty of nonresident included as within United States. corporation owned and held by a nonresident decedent shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision
(c)or
(d)of section 302, shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent’s death.
(e)The amount receivable as insurance upon the life of aInsurance and bank deposits of nonresidents not deemed properly in United States. nonresident decedent, and any moneys deposited with any person carrying on the banking business, by or for a nonresident decedent who was not engaged in business in the United States at the time of his death, shall not, for the purpose of Part I of this title, be. deemed property within the United States.
(f)Missionaries duly commissioned and serving under boardsStatus of missionaries dying abroad. of foreign missions of the various religious denominations in the United States, dying while in the foreign missionary service of such boards, shall not, by reason merely of their intention to permanently remain in such foreign service, be deemed nonresidents of the United States, but shall be presumed to be residents of the State, the District of Columbia, or the Territories of Alaska or Hawaii wherein they respectively resided at the time of their commission and their departure for such foreign service. Sec. 304.
(a)The executor, within two months after theNotice of authority to collector from executor.Returns to be filed. decedent’s death, or within a like period after qualifying as such, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by regulations made pursuant to law, file with the collector a return under oath in duplicate, setting forth
(1)the value of the grossContents. estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States:
(2)the deductions allowed under section 303;
(3)the value of the net estate of the decedent as defined in section 303; and
(4)the tax paid or pavable thereon; or such part of such information as may at the time be ascertainable and such supplemental data as may be necessary to establish the correct tax. 308
(b)estate tax.Returns required if estate exceeds $50,000; and of nonresident, all in United States.Partial returns. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he. shall include in his return a description of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. Sec. 305. Time of payment.
(a)The tax imposed by Part I of this title shall be due and payable one year after the decedent’s death, and shall be paid by the executor to the collector.
(b)Extension permitted to avoid hardship. Where the Commissioner finds that the payment on the due date of any part of the amount determined by the executor as the tax would impose undue hardship upon the estate, the Commissioner may extend the time for payment of any such part not to exceed five years from the due date. In such case the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension.
(c)Interest from extended time. If the time for the payment is thus extended there shall be collected, as a part of such amount, interest thereon at the rate of 6 per centum per annum from the expiration of six months after the due date of the tax to the expiration of the period of the extension.
(d)Extension under Act of 1921.Vol. 42, p. 277, amended. The time for which the Commissioner may extend the time for payment of the estate tax imposed by Title IV of the Revenue Act of 1921 is hereby increased from three years to five years. Sec. 306. Early determination of tax. As soon as practicable after the return is filed the Commissioner shall examine it and shall determine the correct amount of the tax. Sec. 307. Meaning of “deficiency.” As used in Part I of this title the term “deficiency” means—
(1)When tax imposed exceeds return of executor. The amount by which the tax imposed by Part I of this title exceeds the amount shown as the tax by the executor upon his return; Condition.but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such tax; or
(2)Exceeds previous assessment if no amount shown, etc. If no amount is shown as the tax by the executor upon his return, or if no return is made by the executor, then the amount by Condition.which the tax exceeds the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed, or collected without assessment, shall first be decreased by the amounts previously abated, refunded, or otherwise repaid in respect of such tax. Sec. 308. Notice to executor of deficiency.
(a)If the Commissioner determines that there is a deficiency in respect of the tax imposed by Part I of this title, the executor, except as provided in subdivision (d), shall be notified of Appeal to Board of Appeals.*Post*, p. 336.such deficiency by registered mail, but such deficiency shall be assessed only as hereinafter provided. Within 60 days after such notice is mailed the. executor may file an appeal with the Board of Tax Appeals established by section 900.
(b)Payment on determination of Board. If the Board determines that there is a deficiency, the amount Suit by Commissioner for amount disallowed.so determined shall be assessed and shall be paid upon notice and demand from the collector. No part of the amount determined as a deficiency by the Commissioner but disallowed as such by the Board shall be assessed, but a proceeding in court may be begun, without assessment, for the collection of any part of the amount so Interest on judgment of court.disallowed. The court shall include in its judgment interest upon the amount thereof at the rate of 6 per centum per annum from the date prescribed for the payment of the tax to the date of the judgment. 309 Such proceeding shall be begun within one year after the final decisionestate tax.Time limit for proceedings. of the Board, and may be begun within such year even though the period of limitation prescribed in section 310 has expired.
(c)If the executor does not file an appeal with the Board withinPayment on demand if no appeal filed. the time prescribed in subdivision
(a)of this section, the deficiency of which the executor has been notified shall be assessed, and shall be paid upon notice, and demand from the collector.
(d)If the Commissioner believes that the assessment or collectionImmediate assessment, etc., if collection jeopardized by delay. of a deficiency will be jeopardized by delay, such deficiency shall be assessed immediately and notice and demand shall be made by the collector for the payment thereof. In such case the assessment may be made
(1)without giving the notice provided in subdivision
(a)of this section, or
(2)before the expiration of the 60-day period provided in subdivision
(a)of this section even though such notice has been given, or
(3)at any time prior to the final decision by the Board upon such deficiency even though the executor has filed an appeal. If the executor does not file a claim in abatement as provided in sectionPayment on demand, if no appeal filed. 312, the deficiency so assessed (or, if the claim so filed covers only a part of the deficiency, then the amount not covered by the claim) shall be paid upon notice and demand from the collector.
(e)Interest upon the amount determined as a deficiency shall beInterest authorized. assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax, at the rate of 6 per centum per annum from the due date of the tax to the date the deficiency is assessed.
(f)Where it is shown to the satisfaction of the Commissioner thatExtension allowed to avoid undue hardship to estate. the payment of a deficiency upon the date prescribed for the payment thereof will result in undue hardship to the estate, the Commissioner with the approval of the Secretary (except where the deficiency is due to negligence, to intentional disregard of rules and regulations, or to fraud with intent to evade tax) may grant an extension for the payment of such deficiency or any part thereof for a period not in excess of two years. If an extension is granted, the CommissionerBond required. may require the executor to furnish a bond in such amount, not exceeding double the amount of the deficiency, and with such sureties, as the Commissioner deems necessary, conditioned upon the payment of the deficiency in accordance with the terms of the extension. InInterest on deficiency. such case there shall be collected, as a part of the tax, interest on the part of the deficiency the time for payment of which is so extended, at the rate of 6 per centum per annum for the period of the extension, and no other interest shall be collected on such part of the deficiency for such period. If the part of the deficiency the time for paymentAdditional interest if not paid on extension. of which is so extended is not paid in accordance with the terms of the extension, there shall be collected, as a part of the tax, interest on such unpaid amount at the rate of 1 per centum a month for the period from the time fixed by the terms of the extension for its payment until it is paid, and no other interest shall be collected on such unpaid amount for such period.
(g)The 50 per centum addition to the tax provided by sectionAddition for fraudulent evasions.*Post*, p. 339. 3176 of the Revised Statutes, as amended, shall, when assessed after the enactment of this Act in connection with an estate tax, be assessed, collected, and paid in the same manner as if it were a deficiency, except that the provisions of subdivision
(e)of this sectionException. shall not be applicable. Sec. 309.
(1)Where the amount determined by the executor asInterest on unpaid tax determined by executor. the tax imposed by Part I of this title, or any part of such amount, is not paid on the due date of the tax, there shall be collected as a part of the tax, interest upon such unpaid amount at the rate of 1 per centum a month from the due date until it is paid. 310
(2)estate tax.Interest if tax and interest on extension not paid in full. Where an extension of time for payment of the amount so determined as the tax by the executor has been granted, and the amount the time for payment of which has been extended, and the interest thereon determined under subdivision
(c)of section 305, is not paid in full prior to the expiration of the period of the extension, then, in lieu of the interest provided for in paragraph
(1)of this subdivision, interest at the rate of 1 per centum a month shall be collected on such unpaid amount from the date of the expiration of the period of the extension until it is paid.
(b)Interest if deficiency, etc., not paid on notice and demand.*Post*, p. 339. Where a deficiency, or any interest assessed in connection therewith under subdivision
(e)of section 308, or any addition to the tax provided for in section 3176 of the Revised Statutes, as amended, is not paid in full within 30 days from the date of notice and demand from the collector, there shall be collected as part of the tax, interest upon the unpaid amount at the rate of 1 per centum a month from the date of such notice and demand until it is paid.
(c)Not applicable to claims in abatement. If a claim in abatement is filed, as provided in section 312, the provisions of subdivision
(b)of this section shall not apply to the amount covered by the. claim in abatement. Sec. 310. Assessment in four years after returns are filed.Exception.
(a)Except as provided in section 311 and in subdivision
(b)of section 308 and in subdivision
(b)of section 312, the amount of the estate taxes imposed by Part I of this title shall be assessed within four years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of five years after the return was filed.
(b)Extension allowed on notice of deficiency. The period within which an assessment is required to be made by subdivision
(a)of this section in respect of any deficiency shall be extended
(1)by 60 days if a notice of such deficiency has been mailed to the executor under subdivision
(a)of section 308 and no appeal has been filed with the Board of Tax Appeals, or
(2)if an appeal has been filed, then by the number of days between the date of the mailing of such notice and the date of the final decision by the Board. Sec. 311. Assessment, etc., at any time in case of fraud.
(a)In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
(b)Collection by distraint, etc. Where the assessment of the tax is made within the period prescribed in section 310 or in this section, such tax may be collected by distraint or by a proceeding in court, begun within six years after Court proceedings without assessment, etc.the assessment of the tax. Nothing in this Act shall be construed as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period within which an assessment may be made.
(c)No assessment, etc., if barred by time limitations, etc. This section shall not
(1)authorize the assessment of a tax or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then Prior assessments, etc., not affected.in existence, or
(2)affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act. Sec. 312. Claims for abatement to be filed with collector in thirty days after notice of deficiency, etc.
(a)If a deficiency has been assessed under subdivision
(d)of section 308, the executor, within 30 days after notice and demand from the collector for the payment thereof, may file with the collector a claim for the abatement of such deficiency, or any part thereof, or of any interest or additional amounts assessed in connection therewith, or of any part of any such interest or additional Bond required.amounts. Such claim shall be accompanied by a bond, in such amount, not exceeding double the amount of the. claim, and with such sureties, as the collector deems necessary, conditioned upon the payment of so much of the amount of the claim as is not abated, to311gether with interest thereon as provided in subdivision
(c)of this section.estate tax.Collection to be stayed. Upon the tiling of such claim and bond, the collection of so much of the amount assessed as is covered by such claim and bond shall be stayed pending the final disposition of the claim.
(b)If a claim is filed as provided in subdivision
(a)of thisNotice of action by Commissioner. section the collector shall transmit the claim immediately to the Commissioner who shall by registered mail notify the executor of his decision on the claim. The executor may within 60 days afterAppeal to Board. such notice is mailed file an appeal with the Board of Tax Appeals. If the claim is denied in whole or in part by the Commissioner (or by the Board in case an appeal has been filed) the amount, the claim for which is denied, shall be collected as part of the tax upon notice and demand from the collector, and the amount, the claim for which is allowed, shall be abated. A proceeding in court may be begunProceedings in court. for any part of the amount, claim for which is allowed by the Board. Such proceeding shall be begun within one year after the finalTime for. decision of the Board, and may be begun within such year even though the period of limitation prescribed in section 310 has expired.
(c)If the claim in abatement is denied in whole or in part, thereInterest on amount of claim denied. shall be collected, at the same time as the part of the claim denied, and as a part of the tax, interest at the rate of 6 per centum per annum upon the amount of the claim denied, from the date of notice and demand from the collector under subdivision
(d)of section 308 to the date of the notice and demand under subdivision
(b)ofAdditional, if not paid on demand. this section. If the amount included in the notice and demand from the collector under subdivision
(b)of this section is not paid in full within 30 days after such notice and demand, then there shall be collected, as part of the tax, interest upon the unpaid amount at the rate of 1 per centum a month from the date of such notice and demand until it is paid.
(d)Except as provided in this section, no claim in abatementNo other claim for abatement to be filed hereafter. shall be filed in respect of any assessment made after the enactment of this Act in respect of any estate tax. Sec. 313.
(a)The collector shall grant to the person paying theDuplicate receipts to taxpayer. tax duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having jurisdiction to audit or settle his accounts.
(b)If the executor makes written application to the CommissionerPersonal liability of executor discharged on payment of determined tax. etc. for determination of the amount of the tax and discharge from personal liability therefor, the Commissioner (as soon as possible, and in any event within one year after the making of such application, or, if the application is made before the return is filed, then within one year after the return is filed, but not after the expiration of the period prescribed for the assessment of the tax in section 310) shall notify the executor of the amount of the tax. The executor, upon payment of the amount of which he is notified, shall be discharged from personal liability for any deficiency in tax thereafter found to be due and shall be entitled to a receipt or writing showing such discharge.
(c)The provisions of subdivision
(b)shall not operate as aGross estate liable for additional tax thereafter found due. release of any part of the gross estate from the lien tor any deficiency that may thereafter be determined to be due, unless the title to such part of the gross estate has passed to a bona fide purchaser for value, in which case such part shall not be subject to a lien or to any claim or demand for any such deficiency, but the lien shall attach to the consideration received from such purchaser by the heirs, legatees, devisees, or distributees. Sec. 314.
(a)If the tax herein imposed is not paid on or beforeCollection of unpaid tax by sale of property, etc. the due date thereof the collector shall, upon instruction from the 312estate tax.Commissioner, proceed to collect the tax under the provisions of general law, or commence appropriate proceedings in any court of the United States having jurisdiction, in the name of the United States, to subject the property of the decedent to be sold under the Use of proceeds.judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto.
(b)Reimbursement from estate if tax paid by other than executor. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the purpose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the From life insurance policies.estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. Sec. 315. Unpaid tax a lien for ten years.Part excepted.
(a)Unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any Release on payment.court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations prescribed by him with the approval of the Secretary, issue his certificate, releasing any or all property of such estate from the lien herein imposed.
(b)Lien on transfers in contemplation of death. If
(1)the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money’s Life insurance.worth) or
(2)if insurance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the Persons liable.tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent’s interest therein at the time of such transfer, or to the extent of such beneficiary’s interest under such contract of insurance, shall be subject to a like lien equal Innocent purchaser for value at sale protected.to the amount of such tax. Any part of such property sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money’s worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money’s worth. Sec. 316. Computation of tax due under former laws.Vol. 39, p. 1002; Vol. 40, pp. 324, 1006; Vol. 42, p. 277. If after the enactment of this Act the Commissioner determines that any assessment should be made in respect of any estate tax imposed by the Revenue Act of 1917, the Revenue Act of 1918, or the Revenue Act of 1921, or by any such Act as amended, the amount which should be assessed (whether as deficiency or additional tax or as interest, penalty, or other addition to the tax) shall 313be computed as if this Act had not been enacted, but the amount soestate tax. computed shall be assessed, collected, and paid in the same manner and subject to the same provisions and limitations (including the provisions in case of delinquency in payment after notice and demand) as in the case of the taxes imposed by Part I of this title, except that the period of limitation prescribed in section 1009 shallLimitation.*Post*, p. 341.*Ante*, p. 310. be applied in lieu of the period prescribed in subdivision
(a)of section 310. Sec. 317.
(a)Whoever knowingly makes any false statement inPunishment for false statements, etc. any notice or return required to be filed under Part I of this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both.
(b)Whoever fails to comply with any duty imposed upon himPenalty for not making returns, concealing information, etc. by section 304, or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under Part I of this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. Sec. 318.
(a)The term “resident” as used in this title includes aAdministration proceedings in United States court for China. citizen of the United States with respect to whose property any probate or administration proceedings are had in the United States Court for China. Where no part of the gross estate of such decedent isTax payable to clerk if no estate in United States. situated in the United States at the time of his death, the total amount of tax due under Part I of this title shall be paid to or collected by the clerk of such court, but where any part of the grossFor part in United States, to collector of district. estate of such decedent is situated in the United States at the time of his death, the tax due under Part I of this title shall be paid to or collected by the collector of the district in which is situated the part of the gross estate in the United States, or, if such part is situated in more than one district, then the collector of such district as may be designated by the Commissioner.
(b)For the purpose, of this section the clerk of the United StatesClerk of court to act as collector. Court for China shall be a collector for the territorial jurisdiction of such court, and taxes shall be collected by and paid to him in the same manner and subject to the same provisions of law, including penalties, as the taxes collected by and paid to a collector in the United States. Part II.— Gift Tax.gift tax. Sec. 319. For the calendar year 1924 and each calendar year thereafter,Tax on transfers of property by gift. a tax equal to the sum of the following is hereby imposed upon the transfer by a resident by gift during such calendar year of any property wherever situated, whether made directly or indirectly, and upon the transfer by a nonresident by gift during suchBy nonresidents, of property in United States.Rates. calendar year of any property situated within the United States, whether made directly or indirectly: 1 per centum of the amount of the taxable gifts not in excess of $50,000; 2 per centum of the amount by which the taxable gifts exceed $50,000 and do not exceed $100,000; 3 per centum of the amount by which the taxable gifts exceed $100,000 and do not exceed $150,000; 4 per centum of the amount by which the taxable gifts exceed $150,000 and do not exceed $250,000;314 gift tax.6 per centum of the amount by which the taxable gifts exceed $250,000 and do not exceed $450,000; 9 per centum of the amount by which the taxable gifts exceed $450,000 and do not exceed $750,000; 12 per centum of the amount by which the taxable gifts exceed $750,000 and do not exceed $1,000,000; 15 per centum of the amount by which the taxable gifts exceed $1,000,000 and do not exceed $1,500,000; 18 per centum of the amount by which the taxable gifts exceed $1,500,000 and do not exceed $2,000,000; 21 per centum of the amount by which the taxable gifts exceed $2,000,000 and do not exceed $3,000,000; 24 per centum of the amount by which the taxable gifts exceed $3,000,000 and do not exceed $4,000,000; 27 per centum of the amount by which the taxable gifts exceed $4.000,000 and do not exceed $5,000,000; 30 per centum of the amount by which the taxable gifts exceed $5,000,000 and do not exceed $8,000,000; 35 per centum of the amount by which the taxable gifts exceed $8,000,000 and do not exceed $10,000,000; 40 per centum of the amount by which the taxable gifts exceed $10,000,000. Sec. 320. Value of property gifts. If the gift is made in property, the fair market value thereof at the date of the gift shall be considered the amount of Sold, etc., for less than fair consideration deemed taxable gift.the gift. Where property is sold or exchanged for less than a fair consideration in money or money’s worth, then the amount by which the fair market value of the property exceeded the consideration received shall, for the purpose of the tax imposed by section 319, be deemed a gift, and shall be included in computing the amount of gifts made during the calendar year. Sec. 321. Deductions in determining amounts. In computing the amount of the gifts subject to the tax imposed by section 319, there shall be allowed as deductions:
(a)By residents. In the case of a resident—
(1)Exemption of $50,000. An exemption of $50,000;
(2)For public, religious, etc., purposes in United States. The amount of all gifts or contributions made within the calendar year to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees, or fraternal society, order, or association, operating under the Conditions.lodge system, but only if such gifts or contributions are to be used by such trustee or trustees or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, and the amount of all gifts or contributions made within the calendar year by such corporation, trustee, or fraternal society, order, or association for a religious, charitable, scientific, literary, or educational purpose, or for the prevention of cruelty Vocational rehabilitation fund.to children or animals, and the amount of all gifts or contributions made within the calendar year to the special fund for vocational Vol. 40, p. 619.rehabilitation authorized by section 7 of the Vocational Rehabilitation Act;
(3)Not exceeding $500 to one person. Gifts the aggregate amount of which to any one person does not exceed $500; 315
(4)An amount equal to the value of any property transferred bygift tax.Value of gift received by donor within five years by gifts, etc., from another person. gift within the calendar year, which can be identified
(A)as having been received by the donor within five years prior to the time of his making such gift, either from another person by gift or from a decedent by gift, bequest, devise, or inheritance, or
(B)as having been acquired in exchange for property so received. This deductionAllowed only if tax thereon had been previously paid. shall be allowed only where a gift tax or an estate tax under this or any prior act of Congress was paid by or on behalf of the donor or the estate of such decedent, as the case may be, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gift or the gross estate of such decedent, and only to the extent that the value of suchLimitation. property is included in the total amount of gifts made within the calendar year and not deducted under paragraph
(2)or
(3)of this subdivision.
(b)In the case of a nonresident—Nonresidents.
(1)The amount of all gifts or contributions made within theFor public, religious, etc., purposes in United States. calendar year to or for the use of the United States, any State, Territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees, or fraternal society, order, or association, operating under the lodge system, but only if such gifts or contributions are to beConditions. used within the United States by such trustee or trustees or by such fraternal society, order, or association, exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, and the amount of all gifts or contributions made within the calendar year by such corporation, trustee, or fraternal society, order, or association for a religious, charitable, scientific, literary, or educational purpose, or for the prevention of cruelty to children or animals, and the amount of all gifts or contributions made within the calendar year to theVocational rehabilitation fund.Vol. 40, p. 619. special fund for vocational rehabilitation authorized by section 7 of the Vocational Rehabilitation Act;
(2)Gifts the aggregate amount of which to any one person doesNot exceeding $500 to one person. not exceed $500;
(3)An amount equal to the value of any property situated in theValue of gift received by donor within five years by gift, etc., from another person. United States transferred by gift within the calendar year, which can be identified
(A)as having been received by the donor within five years prior to the time of his making such gift, either from another person by gift or from a decedent by gift, bequest, devise, or inheritance, or
(B)as having been acquired in exchange for property so received. This deduction shall be allowed only whereAllowed only if tax thereon had been previously paid. a gift tax or an estate tax under this or any prior act of Congress was paid by or on behalf of the donor or the estate of such decedent, as the case may be, and only in the amount of the value placed by the Commissioner on such property in determining the value of the gift or the gross estate of such decedent, and only to the extent that the value of such property is included within the total amount of gifts made within the calendar year of property situated in the United States and not deducted under paragraph
(1)or
(2)of this subdivision. Sec. 322. In case a tax has been imposed under section 319 uponTax imposed to be credited against the estate, etc., upon death of donor. any gift, and thereafter upon the death of the donor the amount thereof is required by any provision of Part I of this title to be included in the gross estate of the decedent then there shall be 316gift tax.credited against and applied in reduction of the estate tax, which would otherwise be chargeable against the estate of the decedent under the provisions of section 301, an amount equal to the tax Division of taxable and nontaxable gifts.paid with respect to such gift: and in the event the donor has in any year paid the tax imposed by section 319 with respect to a gift or gifts which upon the death of the donor must be included in his gross estate and a gift or gifts not required to be so included, then the amount of the tax which shall be deemed to have been paid with respect to the gift or gifts required to be so included shall be that proportion of the entire tax paid on account of all such gifts which the amount of the gift or gifts required to be so included bears to the total amount of gifts in that year. Sec. 323. Returns to be made yearly of all gifts, etc., in excess of deductions. Any person who within the year 1924 or any calendar year thereafter makes any gift or gifts in excess of the deductions allowed by section 321 shall, on or before the 15th day of March, file with the collector a return under oath in duplicate, listing and Details required.setting forth therein all gifts and contributions made by him during such calendar year (other than the gifts specified in paragraph
(3)of subdivision
(a)and in paragraph
(2)of subdivision
(b)of section 321), and the fair market value thereof when made, and also all sales and exchanges of property owned by him made within such year for less than a fair consideration in money or money’s worth, stating therein the fair market value of the property so sold or exchanged and that of the consideration received by him, both as of the date of such sale or exchange. Sec. 324. Time of payment by donor. The tax imposed by section 319 shall be paid by the donor on or before the 15th day of March, and shall be assessed, collected, and paid in the same manner and subject, in so far as applicable, to the same provisions of law as the tax imposed by section 301. TITLE IV.—tax on cigars and tobacco. TAX ON CIGARS, TOBACCO, AND MANUFACTURES THEREOF. Sec. 400. Payable on sales by manufacturer or importer.
(a)Upon cigars and cigarettes manufactured in or imported into the United States, and hereafter sold by the [R. S., sec. 3394, p. 686](/us/rs/s3394/p686), amended.manufacturer or importer, or removed for consumption or sale, there shall be levied, collected, and paid under the provisions of existing law, in lieu of the internal-revenue taxes now imposed thereon by section Vol. 42, p. 286.700 of the Revenue Act of 1921, the following taxes, to be paid by Rates.the manufacturer or importer thereof— Cigars.On cigars of all descriptions made of tobacco, or any substitute Small.therefor, and weighing not more than three pounds per thousand, $1.50 per thousand; Basis, on retail price.On cigars made of tobacco, or any substitute therefor, and weighing more than three pounds per thousand, if manufactured or imported to retail at not more than 5 cents each, $4 per thousand; If manufactured or imported to retail at more than 5 cents each and not more than 8 cents each, $6 per thousand; If manufactured or imported to retail at more than 8 cents each and not more than 15 cents each, $9 per thousand; If manufactured or imported to retail at more than 15 cents each and not more than 20 cents each, $12 per thousand; If manufactured or imported to retail at more than 20 cents each, $15 per thousand; Cigarettes, on weight.On cigarettes made of tobacco, or any substitute therefor, and weighing not more than three pounds per thousand. $3 per thousand; Weighing more than three pounds per thousand. $7.20 per thousand.
(b)Retail price defined. Whenever in this section reference is made to cigars manufactured or imported to retail at not over a certain price each, then in 317determining the tax to be paid regard shall be had to the ordinarytax on cigars and tobacco. retail price of a single cigar.
(c)The Commissioner may, by regulation, require the manufacturerLabel required. or importer to affix to each box, package, or container a conspicuous label indicating the clause of this section under which the cigars therein contained have been tax-paid, which must correspond with the tax-paid stamp on such box or container.
(d)Every manufacturer of cigarettes (including small cigarsPackages authorized for cigarettes, etc.Domestic. weighing not more than three pounds per thousand) shall put up all the cigarettes and such small cigars that he manufactures or has Vol. 40, p. 1117.manufactured for him, and sells or removes for consumption or sale, in packages or parcels containing five, eight, ten, twelve, fifteen sixteen, twenty, twenty-four, forty, fifty, eighty, or one hundred cigarettes each, and shall securely affix to each of such packagesStamps. or parcels a suitable stamp denoting the tax thereon and shall properly cancel the same prior to such sale or removal for consumption or sale under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe; and all cigarettes imported fromImported. a foreign country shall be packed, stamped, and the stamps canceled in a like manner, in addition to the import stamp indicating inspection of the customhouse before they are withdrawn therefrom.
(e)Section 3392 of the Revised Statutes, as amended, is amendedCigars. to read as follows: " “Sec. 3392. All cigars weighing more than three pounds perPackages required.[R. S., sec. 3392, p. 606](/us/rs/s3392/p606), amended.Vol. 37, p. 664, amended. thousand shall be packed in boxes not before used for that purpose containing, respectively, three, five, seven, ten, twelve, thirteen, twenty-five, fifty, one hundred, two hundred, two hundred and fifty, or five hundred cigars each; and every person who sells, or offers for sale, or delivers, or offersPunishment for sale in other than new boxes, etc. to deliver, any cigars in any other form than in new boxes as above described, or who packs in any box any cigars in excess of or less than the number provided by law to be put in each box, respectively, or who falsely brands any box, or affixes a stamp on any box denoting a less amount of tax than that required by law, shall be fined for each offense not more than $1,000 and be imprisoned not more than two years: *Provided*,*Provisos.*Retail sales. That nothing in this section shall be construed as preventing the sale of cigars at retail by retail dealers from boxes packed, stamped, and branded in the manner prescribed by law: *Provided further*, ThatNumber allowed each employee without stamps, etc. each employee of a manufacturer of cigars shall be permitted to use, for personal consumption and for experimental purposes, not to exceed twenty-one cigars per week without the manufacturer of cigars being required to pack the same in boxes or to stamp or pay any internal-revenue tax thereon, such exemption to be allowed under such rules and regulations as the Secretary of the Treasury may prescribe.” " Sec. 401.
(a)Upon all tobacco and snuff manufactured in orManufactured tobacco and snuff.Tax payable on sales by manufacturer or importer.[R. S., sec. 3368, p. 658](/us/rs/s3368/p658), amended.Vol. 42, p. 287. imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale, there shall be levied, collected, and paid, in lieu of the internal-revenue taxes now imposed thereon by section 701 of the Revenue Act of 1921, a tax of 18 cents per pound, to be paid by the manufacturer or importer thereof.
(b)Section 3362 of the Revised Statutes, as amended by sectionPackages. 701 of the Revenue Act of 1918, is reenacted without change, as follows: " “Sec. 3362. All manufactured tobacco shall be put up and preparedRequirements.[R. S., sec. 3362, p. 657](/us/rs/s3362/p657), amended.Vol. 42. p. 287. by the manufacturer for sale, or removal for sale or consumption. in packages of the following description and in no other manner: “All smoking tobacco, snuff, fine-cut chewing tobacco, all cut andSizes allowed.Vol. 40, p. 1117. granulated tobacco, all shorts, the refuse of fine-cut chewing, which 318tax on cigars and tobacco.has passed through a riddle of thirty-six meshes to the square inch, and all refuse scraps, clippings, cuttings, and sweepings of tobacco, and all other kinds of tobacco not otherwise provided for, in packages containing one-eighth of an ounce, three-eighths of an ounce, and further packages with a difference between each package and the one next smaller of one-eighth of an ounce up to and including two ounces, and further packages with a difference between each package and the one next smaller of one-fourth of an ounce up to and including four ounces, and packages of five ounces, six ounces, seven ounces, eight ounces, ten ounces, twelve ounces, fourteen ounces, and *Proviso*.Additional for snuff.sixteen ounces: *Provided*, That snuff may, at the option of the manufacturer, be put up in bladders and in jars containing not exceeding twenty pounds. Wooden packages.“All cavendish, plug, and twist tobacco, in wooden packages not exceeding two hundred pounds net weight. Marking, etc.“And every such wooden package shall have printed or marked thereon the manufacturer’s name and place of manufacture, the registered number of the manufactory, and the gross weight, the *Provisos*.Exports excepted.tare, and the net weight of the tobacco in each package: *Provided*, That these limitations and descriptions of packages shall not apply to tobacco and snuff transported in bond for exportation and Bulk sales of perique, etc., to manufacturers, without tax.actually exported: *And provided further*, That perique tobacco, snuff flour, line-cut shorts, the refuse of fine-cut chewing tobacco, refuse scraps, clippings, cuttings, and sweepings of tobacco, may be sold in bulk as material, and without the payment of tax, by one manufacturer directly to another manufacturer, or for export, under such restrictions, rules, and regulations as the Commissioner of Internal Materials for containers.Revenue may prescribe: *And provided further*, That wood, metal, paper, or other materials may be used separately or in combination for packing tobacco, snuff, and cigars, under such regulations as the Commissioner of Internal Revenue may establish.” " Sec. 402. Cigarette papers and tubes.Tax on sales to other than manufacturers.Vol. 42, p. 288, amended. There shall be levied, collected, and paid, in lieu of the taxes imposed by section 703 of the Revenue Act of 1921, upon cigarette paper made up into packages, books, sets, or tubes, made up in or imported into the United States and hereafter sold by the manufacturer or importer to any person (other than to a manufacturer of cigarettes for use by him in the manufacture of cigarettes), the following taxes, to be paid by the manufacturer or importer: Rates.On each package, book, or set containing more than twenty-five but not more than fifty papers, ½ cent; containing more than fifty but not more than one hundred papers, 1 cent; containing more than one hundred papers, ½ cent for each fifty papers or fractional part thereof; and upon tubes, 1 cent for each fifty tubes or fractional part thereof. Use of tubes by manufacturers.Bond, etc., required.Every manufacturer of cigarettes purchasing any cigarette paper made up into tubes
(a)shall give bond in an amount and with sureties satisfactory to the Commissioner that he will use such tubes in the manufacture of cigarettes or pay thereon a tax equivalent to the tax imposed by this section, and
(b)shall keep such records and render under oath such returns as the Commissioner finds necessary to show the disposition of all tubes purchased or imported by such manufacturer of cigarettes. Sec. 403. Leaf tobacco. Section 3360 of the Revised Statutes, as amended by [R. S., sec. 3360, p. 657](/us/rs/s3360/p657), amended.section 704 of the Revenue Act of 1918, is amended to read as Dealers.follows: " “Sec. 3360. Notice of business to be filed with collector.Vol. 40, p. 1118.Vol. 42, p. 288.
(a)Every dealer in leaf tobacco shall file with the collector of the district in which his business is carried on a statement in duplicate, subscribed under oath, setting forth the place, and, if in a city, the street and number of the street, where his business is to be carried on, and the exact location of each place where 319leaf tobacco is held by him on storage, and, whenever he adds to ortax on cigars and tobacco. discontinues any of his leaf tobacco storage places, he shall give immediate notice to the collector of the district in which he is registered. “Every such dealer shall give a bond with surety, satisfactory to,Bond required. and to be approved by, the collector of the district, in such penal sum as the collector may require, not less than $500; and a new bond may be required in the discretion of the collector, or under instructions of the Commissioner. “Every such dealer shall be assigned a number by the collector ofDistrict number to be assigned, etc. the district, which number shall appear in every inventory, invoice and report rendered by the dealer, who shall also obtain certificatesCertificates. from the collector of the district setting forth the place where his business is carried on and the places designated by the dealer as the places of storage of his tobacco, which certificates shall be posted conspicuously within the dealer’s registered place of business, and within each designated place of storage. “(b) Every dealer in leaf tobacco shall make and deliver to theAnnual inventory to be filed. collector of the district a true inventory of the quantity of the different kinds of tobacco held or owned, and where stored by him, on the 1st day of January of each year, or at the time of commencing and at the time of concluding business, if before or after the 1st day of January, such inventory to be made under oath and rendered in such form as may be prescribed by the Commissioner. “Every dealer in leaf tobacco shall render such invoices and keepDaily records of business, etc., to be kept. such records as shall be prescribed by the Commissioner, and shall enter therein, day by day, and upon the same day on which the circumstance, thing or act to be recorded is done or occurs, an accurateDetails. account of the number of hogsheads, tierces, cases and bales, and quantity of leaf tobacco contained therein, purchased or received by him, on assignment, consignment, for storage, by transfer or otherwise, and of whom purchased or received, and the number of hogs-heads, tierces, cases and bales, and the quantity of leaf tobacco contained therein, sold by him, with the name and residence in each instance of the person to whom sold, and if shipped, to whom shipped, and to what district; such records shall be kept at his place of business at all times and preserved for a period of two years, and the same shall be open at all hours for the inspection of any internal-revenue officer or agent. “Every dealer in leaf tobacco on or before the tenth day of eachMonthly reports of transactions. month, shall furnish to the collector of the district a true and complete report of all purchases, receipts, sales and shipments of leaf tobacco made by him during the month next preceding, which report shall be verified and rendered in such form as the Commissioner, with the approval of the Secretary, shall prescribe. “(c) Sales or shipments of leaf tobacco by a dealer in leaf tobaccoRestriction on sales or shipments. shall be in quantities of not less than a hogshead, tierce, case, or bale, except loose leaf tobacco comprising the breaks on warehouse floors, and except to a duly registered manufacturer of cigars for use in his own manufactory exclusively. “Dealers in leaf tobacco shall make shipments of leaf tobacco onlyShipments limited. to other dealers in leaf tobacco, to registered manufacturers of tobacco, snuff, cigars or cigarettes, or for export. “(d) Upon all leaf tobacco sold, removed or shipped by any dealerPenalty tax for violations. in leaf tobacco in violation of the provisions of subdivision (c), or in respect to which no report has been made by such dealer in accordance with the provisions of subdivision (b), there shall be levied, assessed, collected and paid a tax equal to the tax then in force upon manufactured tobacco, such tax to be assessed and collected in the same manner as the tax on manufactured tobacco. 320 “(e) tax on cigars and tobacco.Designated offenses.Failure to give bond, make returns, etc. Every dealer in leaf tobacco— “(1) who neglects or refuses to furnish the statement, to give bond, to keep books, to file inventory or to render the invoices, returns or reports required by the Commissioner, or to notify the collector of the district of additions to his places of storage; or “(2) Illegal shipments. who ships or delivers leaf tobacco, except as herein provided; or “(3) Fraudulent omissions. who fraudulently omits to account for tobacco purchased, received, sold, or shipped; Punishment for.shall be fined not less than $100 or more than $500, or imprisoned not more than one year, or both. “(f) Farmers, growers, etc., not included.Vol. 42. p. 289, amended. For the purpose of this section a farmer or grower of tobacco or a tobacco growers’ cooperative association shall not be regarded as a dealer in leaf tobacco in respect to the leaf tobacco *Provisos*.Records required of growers, associations.produced by him or handled by such association: *Provided*, That such cooperative associations shall be required to keep available records of all purchases and sales of tobacco, such records to be Purpose of growers’ associations defined.open to inspection by the agents of the Government. As used in this section the term ‘tobacco growers’ cooperative association ’ means an association of farmers or growers of tobacco organized and operated as sales agent for the purpose of marketing the tobacco produced by its members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quantity and quality of tobacco furnished by them.” " TITLE V.—admissions and dues. TAX ON ADMISSIONS AND DUES. Sec. 500. Tax on admissions.Vol. 42, p. 290.
(a)On and after the date this title takes effect, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by section 800 of the Revenue Act of 1921—
(1)Rates.Vol. 42, p. 290, amended. A tax of 1 cent for each 10 cents or fraction thereof of the amount paid for admission to any place on or after such date, including admission by season ticket or subscription, to be paid by the person paying for such admission; but where the amount paid for admission is 50 cents or less, no tax shall be imposed;
(2)Additional, on sales at advanced price at other than ticket offices. Upon tickets or cards of admission to theaters, operas, and other places of amusement, sold at news stands, hotels, and places other than the ticket offices of such theaters, operas, or other places of amusement, at not to exceed 50 cents in excess of the sum of the established price therefor at such ticket offices plus the amount of any tax imposed under paragraph (1), a tax equivalent to 5 per centum of the amount of such excess; and if sold for more than 50 cents in excess of the sum of such established price plus the amount of any tax imposed under paragraph (1), a tax equivalent to 50 per centum *Post*, p. 324.of the whole amount of such excess, such taxes to be returned and paid, in the manner and subject to the interest provided in section 603, by the person selling such tickets;
(3)Sales by proprietors, etc., in excess of regular prices. A tax equivalent to 50 per centum of the amount for which the proprietors, managers, or employees of any opera house, theater, or other place of amusement sell or dispose of tickets or cards of admission in excess of the regular or established price or charge therefor, such tax to be returned and paid, in the manner and subject to the interest provided in section 603, by the person selling such tickets:
(4)Payable by box holders, etc. In the case of persons having the permanent use of boxes or seats in an opera house or any place of amusement or a lease for the use of such box or seat in such opera house or place of amusement (in lieu of the tax imposed by paragraph (1)), a tax equivalent to 10 per centum of the amount for which a similar box or seat is sold for each performance or exhibition at which the box or seat is used or 321reserved by or for the lessee or holder, such tax to be paid by theadmissions and dues. lessee or holder; and
(5)A tax of 1½ cents for each 10 cents or fraction thereof of theRoof gardens, cabarets, etc.Vol. 42, p. 290, amended. amount paid for admission to any public performance for profit at any roof garden, cabaret, or other similar entertainment, to which the charge for admission is wholly or in part included in the price paid for refreshment, service, or merchandise; the amount paid for such admission to be deemed to be 20 per centum of the amount paid for refreshment, service, and merchandise; such tax to be paid by the person paying for such refreshment, service, or merchandise. Where the amount paid for admission is 50 cents or less, no tax shallExemptions. be imposed.
(b)No tax shall be levied under this title in respect of
(1)anyExempt entertainments.Religious, educational, etc. admissions all the proceeds of which inure
(A)exclusively to the benefit of religious, educational, or charitable institutions, societies, or organizations, societies for the prevention of cruelty to children or animals, or societies or organizations conducted for the sole purpose of maintaining symphony orchestras and receiving substantial support from voluntary contributions, or of improving any city, town, village, or other municipality, or of maintaining a cooperative or community center moving-picture theater—if no part of the net earningsConditions. thereof inures to the benefit of any private stockholder or individual; or
(B)exclusively to the benefit of persons in the militaryAdditional exemptions.For veterans, etc. or naval forces of the United States; or
(C)exclusively to the benefit of persons who have served in such forces and are in need; or
(D)exclusively to the benefit of National Guard organizations, Reserve Officers’ associations or organizations, posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private stockholder or individual; or
(E)exclusively to the benefit of members of the police orMunicipal police and firemen. fire department of any city, town, village, or other municipality, or the dependents or heirs of such members; or
(2)any admissions toAgricultural fairs, etc. agricultural fairs if no part of the net earnings thereof inures to the benefit of any stockholders or members of the association conducting the same, or admissions to any exhibit, entertainment, or other pay feature conducted by such association as part of any such fair,—if the proceedsConditions. therefrom are used exclusively for the improvement, maintenance and operation of such agricultural fairs.
(c)The term “admission” as used in this title includes seats andCharges included in admissions. tables, reserved or otherwise, and other similar accommodations, and the charges made therefor.
(d)The price (exclusive of the tax to be paid by the person payingPrice, etc., to be printed on tickets. for admission) at which every admission ticket or card is sold shall be conspicuously and indelibly printed, stamped, or written on the face or back of that part of the ticket which is to be taken up by the management of the theater, opera, or other place of amusement, together with the name of the vendor if sold other than at the ticket office of the theater, opera, or other place of amusement. Whoever sells anPenalty for failure. admission ticket or card on which the name of the vendor and price is not so printed, stamped, or written, or at a price in excess of the price so printed, stamped, or written thereon, is guilty of a misdemeanor, and upon conviction thereof shall be fined not more than $100. Sec. 501. On and after the date this title takes effect there shall beTax on club dues, etc. levied, assessed, collected, and paid, in lieu of the taxes imposed byVol. 42, p. 291. section 801 of the Revenue Act of 1921, a tax equivalent to 10 per centum of any amount paid on or after such date, for any period after such date,
(a)as dues or membership fees (where the dues or 322admissions and dues.Initiation fees.fees of an active resident annual member are in excess of $10 per year) to any social, athletic, or sporting club or organization; or
(b)as initiation fees to such a club or organization, if such fees amount to more than $10, or if the dues or membership fees (not including initiation fees) of an active resident annual member are in excess of $10 per year; such taxes to be paid by the person paying such dues or *Proviso*.Fraternal lodges, etc., exempt.fees: *Provided*, That there shall be exempted from the provisions of this section all amounts paid as dues or fees to a fraternal society, order, or association, operating under the lodge system, or to any local fraternal organization among the students of a college or university. Life membership payments.In the case of life memberships a life member shall pay annually, at the time for the payment of dues by active resident annual members, a tax equivalent to the tax upon the amount paid by such a member, but shall pay no tax upon the amount paid for life membership. Sec. 502. Collection by receivers.Vol. 42, p. 291, amended.
(a)Every person receiving any payments for such admission, dues or fees shall collect the amount of the tax imposed by section 500 or 501 from the person making such payments. Monthly returns and payments.Every club or organization having life members shall collect from such members the amount of the tax imposed by section 501. Such persons shall make monthly returns under oath, in duplicate, and pay the taxes so collected to the collector of the district in which the principal office or place of business is located.
(b)Refunds may be included in subsequent returns. Any person making a refund of any payment upon which tax is collected under this section may repay therewith the amount of the tax collected on such payment; and the amount so repaid may be credited against amounts included in any subsequent monthly return.
(c)Information in returns, etc. The returns required under this section shall contain such information, and be made at such times and in such manner, as the Commissioner, with the approval of the Secretary, may by regulation prescribe.
(d)Time of payment. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at Penalty for failure.the time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax interest at the rate of 1 per centum a month from the time when the tax became due until paid. Sec. 503. Effective in 30 days. This title shall take effect on the expiration of thirty days after the enactment of this Act. TITLE VI.—excise taxes. EXCISE TAXES. Sec. 600. Levied after thirty days on sale by manufacturer, etc.Vol. 42, p. 291, amended. On and after the expiration of thirty days after the enactment of this Act there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentage of the price for which so sold or leased—
(1)Chassis of automobile trucks and wagons. Automobile truck chassis and automobile wagon chassis sold or leased for an amount in excess of $1,000, and automobile truck bodies and automobile wagon bodies sold or leased for an amount Accessories included.in excess of $200 (including in both cases tires, inner tubes, parts, and accessories therefor sold on or in connection therewith or with the sale thereof), 3 per centum. A sale or lease of an automobile truck or of an automobile wagon shall, for the purposes of this subdivision, be considered to be a sale of the chassis and of the body;
(2)Other chassis, motorcycle, etc. Other automobile chassis and bodies and motor cycles (including tires, inner tubes, parts, and accessories therefor sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum. A sale or lease of an automobile shall, for the pur323poses of this subdivision, be considered to be a sale of the chassisexcise taxes. and of the body;
(3)Tires, inner tubes, parts, or accessories for any of the articlesAccessories, to other than manufacturer, etc. enumerated in subdivision
(1)or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision
(1)or (2), 2½ per centum. This subdivision shallChassis not included. not apply to chassis or bodies for automobile trucks, automobile wagons, or other automobiles;
(4)Cameras, weighing not more than 100 pounds, and lensesCameras. for such cameras, 10 per centum;
(5)Photographic films and plates (other than moving-picturePhotographic films. films and other than X-ray films or plates), 5 per centum;
(6)Firearms, shells, and cartridges, except those sold for theFirearms, etc. use of the United States, any State, Territory, or possession of the United States, any political subdivision thereof, or the District of Columbia, 10 per centum;
(7)Cigar or cigarette holders and pipes, composed wholly or inSmokers’ articles. part of meerschaum or amber, and humidors, 10 per centum;
(8)Coinoperated devices, coinoperated machines, and devicesCoin operated machines, etc. and machines operated by any substitute for a coin, 5 per centum; if the manufacturer, producer, or importer of any such device orOperated by manufacturer, etc. machine operates it for profit, he shall pay a tax in respect of each such device or machine put into operation equivalent to 5 per centum of its fair market value;
(9)Mahjongg, pung chow, and similar tile sets, and the componentMahjongg, and similar sots. parts thereof, 10 per centum. If any manufacturer, producer, or importer of any of the articlesComputation on retail sales by manufacturer, etc. enumerated in this section customarily sells such articles both at wholesale and at retail, the tax in the case of any article sold by him at retail shall be computed on the price for which like articles are sold by him at wholesale. The taxes imposed by this section shall, in the case of any articleIn lieu of prior tax.Vol. 42, pp. 291, 292. in respect of which a corresponding tax is imposed by section 900 of the Revenue Act of 1921, be in lieu of such tax. Sec. 601.
(a)If any person who manufactures, produces, or importsComputation if sold nt less than market price, to affiliated corporation, etc. any article enumerated in section 600, sells or leases such article to a corporation affiliated with such person within the meaning of section 240 of this Act, at less than the fair market price obtainableVol. 42, p. 292, amended. therefor, the tax thereon shall be computed on the basis of the price at which such article is sold or leased by such affiliated corporation.
(b)If any such person sells or leases such article whether throughSales to benefit interest of manufacturer. any agreement, arrangement, or understanding, or otherwise, at less than the fair market price obtainable therefor, either
(1)in such manner as directly or indirectly to benefit such person or any person directly or indirectly interested in the business of such person, or
(2)with intent to cause such benefit, the amount for which such article is sold or leased shall be taken to be the amount which would have been received from the sale or lease of such article if sold or leased at the fair market price. Sec. 602. There shall be levied, assessed, collected, and paid, inWorks of art sold by person other than the artist.Vol. 42, p. 292, amended. lieu of the tax imposed by section 902 of the Revenue Act of 1921, upon sculpture, paintings, statuary, art porcelains, and bronzes, sold by any person other than the artist, a tax equivalent to 5 per centum of the price for which so sold. This section shall not applySales excepted. to the sale of any such article
(1)to an educational or religious institution or public art museum, or
(2)by any dealer in such articles to another dealer in such articles for resale. 324 Sec. 603. excise taxes. Every person liable for any tax imposed by section 600 Monthly returns and payments.or 602 shall make monthly returns under oath in duplicate and pay the taxes imposed by such sections to the collector for the district in which is located the principal place of business. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulations prescribe. Time for payment.The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at the time so Penalty for failure.fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax interest at the rate of 1 per centum a month from the time when the tax became due until paid. Sec. 604. Sales by dealers.
(a)On and after the expiration of thirty days after the Jewelry, precious stones, timepieces, glasses, etc.Vol. 42, p. 293, amended.enactment of this Act there shall be levied, assessed, collected, and paid (in lieu of the tax imposed by section 905 of the Revenue Act of 1921) upon all articles commonly or commercially known as jewelry, whether real or imitation; pearls, precious and semiprecious stones, and imitations thereof; articles made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory; watches; clocks; opera glasses; lorgnettes; marine glasses; field glasses; and binoculars; upon any of the above when sold or leased by or for a dealer or his estate for consumption or use, a tax equivalent to 5 per centum of the price for which so sold or leased.
(b)Articles exempt. The tax imposed by subdivision
(a)shall not apply to
(1)surgical instruments, musical instruments, eyeglasses, spectacles, or silver-plated flat tableware, or articles used for religious purposes;
(2)articles sold or leased for an amount not in excess of $30; or
(3)watches sold or leased for an amount not in excess of $60.
(c)Returns, payment, etc. Every person selling any of the articles enumerated in this section shall make returns under oath in duplicate (monthly or quarterly as the Commissioner, with the approval of the Secretary, may prescribe) and pay the taxes imposed in respect to such articles by this section to the collector for the district in which is located the principal place of business. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulations prescribe.
(d)Time of payment. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the collector at the Penalty for failure.time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax interest at the rate of 1 per centum a month from the time when the tax became due until paid. Sec. 605. Contracts for sales of articles not taxed before.
(a)If
(1)any person has, prior to January 1, 1924, made a bona fide contract with a dealer tor the sale or lease, after Vendee to pay, if addition to price not permitted by contract.Vol. 42, p. 293, amended.the tax takes effect, of any article in respect of which a tax is imposed by section 600, or by this subdivision, and in respect of which no corresponding tax was imposed by section 900 of the Revenue Act of 1921, and
(2)such contract does not permit the adding, to the amount to be paid thereunder, of the whole of the tax imposed by section 600 of this Act or by this subdivision; then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of the tax imposed by section 600 of this Act or by this subdivision as is not so To other than dealer not taxed.permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, no tax shall be collected under this Act.
(b)If former tax greater than herein imposed. If
(1)any person has, prior to January 1, 1924, made a bona fide contract with any other person for the sale or lease, after the tax takes effect, of any article in respect of which a tax is imposed by section 600 of this Act, and in respect of which a corresponding but greater tax was imposed by section 900 of the Revenue Act of 3251921;
(2)the contract price includes the amount of the tax imposedexcise taxes. by section 900 of the Revenue Act of 1921, and
(3)such contract does not permit the deduction, from the amount to be paid thereunder, of the whole of the difference between the corresponding tax imposed by section 900 of the Revenue Act of 1921 and the tax imposed by section 600 of this Act; then the vendor or lessor shallVendor to refund difference, if deduction from price not permitted. refund to the vendee or lessee so much of the amount of such difference as is not so permitted to be deducted from the contract price.
(c)If
(1)any person has, prior to January 1, 1924, made a bonaPreviously taxed and not hereby. fide contract with any other person for the sale or lease, after the date of the enactment of this Act, of any article in respect of which a tax was imposed by section 900 or 904 of the Revenue Act of 1921, and in respect of which no corresponding tax is imposed by section 600 of this Act,
(2)the contract price includes the amount of the tax imposed by section 900 or 904 of the Revenue Act of 1921, and
(3)such contract does not permit deduction, from the amount to be paid thereunder, of the tax imposed by section 900 or 904 of the Revenue Act of 1921; then the vendor or lessor shall refund to the vendee orVendor to refund tax paid, if deduction not permitted. lessee so much of the amount of such tax as is not so permitted to be deducted from the contract price.
(d)The taxes payable by the vendee or lessee under subdivisionTax payable to vendor when sale consummated. (a), shall be paid to the vendor or lessor at the time the sale or lease is consummated, and collected, returned, and paid to the United States by such vendor or lessor in the same manner and subject to the same interest as provided by section 603.
(e)Any refund by the vendor or lessor under subdivision
(b)orRefund to vendor when sales consummated.Treble damages on failure.
(c)shall be made at the time the sale or lease is consummated. Upon the failure of the vendor or lessor so to refund, he shall be liable to the vendee or lessee for damages in the amount of three times the amount of such refund, and the court shall include in any judgment in favor of the vendee or lessee in any suit for the recovery of such damages, costs of the suit and a reasonable attorney’s fee to be fixed by the court.
(f)A vendee who purchases any article with intent to use it inPurchaser intending to manufacture articles, deemed a “dealer.” the manufacture or production of another article intended for sale shall be included in the term “dealer,” as used in this section. TITLE VII.—special taxes. SPECIAL TAXES. capital stock tax.Capital stock tax. Sec. 700.
(a)On and after July 1, 1924, in lieu of the tax imposedLevied after July 1, 1924.Vol. 42, p. 294, amended.Domestic corporations. by section 1000 of the Revenue Act of 1921—
(1)Every domestic corporation shall pay annually a special excise tax with respect to carrying on or doing business, equivalent to $1 for each $1,000 of so much of the fair average value of its capital stock for the preceding year ending June 30 as is in excess of $5,000. In estimating the value of capital stock the surplus and undivided profits shall be included;
(2)Every foreign corporation shall pay annually a special exciseForeign corporations, on capital employed in United States. tax with respect to carrying on or doing business in the United States, equivalent to $1 for each $1,000 of the average amount of capital employed in the transaction of its business in the United States during the preceding year ending June 30.
(b)The taxes imposed by this section shall not apply in any yearIf not in business exempt. to any corporation which was not engaged in business (or, in the case of a foreign corporation, not engaged in business in the United States) during the preceding year ending June 30, nor to any corporation Other exemptions.*Ante*, pp. 282, 289, 290.enumerated in section 231, nor to any insurance company subject to the tax imposed by section 243 or 246. 326
(c)special taxes.Publicity, etc.*Ante*, p. 293. Section 257 shall apply to all returns filed with the Commissioner for purposes of the tax imposed by this section. miscellaneous occupational taxes.Occupational taxes. Sec. 701. Designated businesses. On and after July 1, 1924, there shall be levied, collected, and paid annually the following special taxes—
(1)Brokers, not of produce or merchandise.Business defined. Brokers, except brokers exclusively negotiating purchases or sales of produce or merchandise, shall pay $50. Every person whose business it is to negotiate purchases or sales of stock, bonds, exchange, bullion, coined money, bank notes, promissory notes, other securities, produce or merchandise, for others, shall be regarded Exchange members.as a broker. If any broker is a member of a stock exchange, or if he is a member of any produce exchange, board of trade, or similar organization, where produce or merchandise is sold, he shall (whether or not he is liable to any tax under the first sentence of this paragraph, and in addition to such tax, if any) pay an amount as follows: If the average value, during the preceding year ending June 30, of a seat or membership in such exchange or organization was $2,000 or more but not more than $5,000, $100; if such value was more than $5,000 but not more than $10,000, $150; if such value was more than $10,000, $250.
(2)Pawnbrokers.Business defined. Pawnbrokers shall pay $100. Every person whose business or occupation it is to take or receive, by way of pledge, pawn, or exchange, any goods, wares, or merchandise, or any kind of personal property whatever, as security for the repayment of money loaned thereon, shall be regarded as a pawnbroker.
(3)Ship brokers.Business defined. Ship brokers shall pay $50. Every person whose business it is as a broker to negotiate freights and other business for the owners of vessels or for the shippers or consignors or consignees of freight carried by vessels, shall be regarded as a ship broker.
(4)Customhouse brokers.Business defined. Customhouse brokers shall pay $50. Every person whose occupation it is, as the agent of others, to arrange entries and other customhouse papers, or transact business at any port of entry relating to the importation or exportation of goods, wares, or merchandise, shall be regarded as a customhouse broker.
(5)Bowling alleys.Description. Proprietors of bowling alleys and billiard rooms shall pay $10 for each alley or table. Every building or place where bowls are thrown or where games of billiards or pool are played, shall be regarded as a bowling alley or a billiard room, respectively, unless no charge is made for the use of the alleys or tables.
(6)Shooting galleries.Description. Proprietors of shooting galleries shall pay $20. Every building, space, tent, or area, where a charge is made for the discharge of firearms at any form of target shall be regarded as a shooting gallery.
(7)Riding academies.Description. Proprietors of riding academies shall pay $100. Every building, space, tent, or area, where a charge is made for instruction in horsemanship or for facilities for the practice of horsemanship shall be regarded as a riding academy: *Provided*, That this tax *Proviso*.Associations exempt.shall not be collected from associations composed exclusively of members of units of the Federalized National Guard or the Organized Reserve and whose receipts are used exclusively for the benefit of such units.
(8)Automobile passenger hiring. Persons carrying on the business of operating or renting passenger automobiles for hire shall pay $10 for each such auto-mobile having a seating capacity of more than two and not more than seven, and $20 for each such automobile having a seating Exempt, if used for school children.capacity of more than seven. The tax imposed by this subdivision shall not be collected in respect of automobiles used exclusively for conveying school children to and from school. 327
(9)Every person carrying on the business of a brewer, distiller,special taxes.Brewers, distillers, liquor dealers, etc.[R. S., secs. 3244, 3247, pp. 622, 626](/us/rs/s3244/3247/pp622/626).Additional tax, if business prohibited by State. wholesale liquor dealer, retail liquor dealer, wholesale dealer in malt liquor, retail dealer in malt liquor, or manufacturer of stills, as defined in section 3244 as amended and section 3247 of the Revised Statutes, in any State, Territory, or District of the United States contrary to the laws of such State, Territory, or District, or in any place therein in which carrying on such business is prohibited by local or municipal law, shall pay, in addition to all other taxes, special or otherwise, imposed by existing law or by this Act, $1,000. The payment of the tax imposed by this subdivision shallPayment no exemption from punishment under State, etc., laws. not be held to exempt any person from any penalty or punishment provided for by the laws of any State, Territory, or District for carrying on such business in such State, Territory, or District, or in any manner to authorize the commencement or continuance of such business contrary to the laws of such State, Territory, or District, or in places prohibited by local or municipal law. The taxes imposed by this section shall, in the case of persons Tax in lieu of prior.Vol. 42, pp. 295–297.upon whom a corresponding tax is imposed by section 1001 of the Revenue Act of 1921, be in lieu of such tax. special tobacco manufacturers’ tax.Tobacco. Sec. 702. On and after July 1, 1924, there shall be levied, collected,Tax on sales by manufacturers.Vol. 42, p. 297. and paid annually, in lieu of the taxes imposed by section 1002 of the Revenue Act of 1921, the following special taxes, the amount of such taxes to be computed on the basis of the sales lor the preceding year ending June 30— Manufacturers of tobacco whose annual sales do not exceedTobacco.[R. S. sec., 3244, p. 624](/us/rs/s3244/p624), amended. fifty thousand pounds shall each pay $6; Manufacturers of tobacco whose annual sales exceed fifty thousand and do not exceed one hundred thousand pounds shall each pay $12; Manufacturers of tobacco whose annual sales exceed one hundred thousand and do not exceed two hundred thousand pounds shall each pay $24; Manufacturers of tobacco whose annual sales exceed two hundred thousand pounds shall each pay $24, and at the rate of 16 cents per thousand pounds, or fraction thereof, in respect to the excess over two hundred thousand pounds; Manufacturers of cigars whose annual sales do not exceed fiftyCigars. thousand cigars shall each pay $4; Manufacturers of cigars whose annual sales exceed fifty thousand and do not exceed one hundred thousand cigars shall each pay $6; Manufacturers of cigars whose annual sales exceed one hundred thousand and do not exceed two hundred thousand cigars shall each pay $12; Manufacturers of cigars whose annual sales exceed two hundred thousand and do not exceed four hundred thousand cigars shall each pay $24; Manufacturers of cigars whose annual sales exceed four hundred thousand cigars shall each pay $24, and at the rate of 10 cents per thousand cigars, or fraction thereof, in respect to the excess over four hundred thousand cigars; Manufacturers of cigarettes, including small cigars weighing not Cigarettes.more than three pounds per thousand, shall each pay at the rate of 6 cents for every ten thousand cigarettes, or fraction thereof. In arriving at the amount of special tax to be paid under thisEach class separately. section, and in the levy and collection of such tax, each person engaged in the manufacture of more than one of the classes of articles specified in this section shall be considered and deemed a manufacturer of each class separately. 328 special taxes.Export sales exempt.In computing under this section the amount of annual sales no account shall be taken of tobacco, cigars, or cigarettes sold for export and in due course so exported. special tax on use of boats.Boats. Sec. 703. Annual tax on use of specified pleasure boats, etc.Vol. 42, p. 297. On and after July 1, 1924, and thereafter on July 1 in each year, and also at the time of the original purchase of a new boat by a user, if on any other date than July 1, there shall be levied, assessed, collected, and paid, in lieu of the tax imposed by section 1003 of the Revenue Act of 1921, upon the use of yachts, pleasure boats, power boats, sailing boats, and motor boats with fixed engines, of over five net tons and over thirty-two feet in length, not used exclusively for trade, fishing, or national defense, or not built according to plans and specifications approved by the Navy Department, a special excise tax to be based on each yacht or boat, Rates.at rates as follows: Yachts, pleasure boats, power boats, motor boats with fixed engines, and sailing boats, of over five net tons, length over thirty-two feet and not over fifty feet, $1 for each foot; length over fifty feet, and not over one hundred feet, $2 for each foot; length over one hundred feet, $4 for each foot. Measurement.In determining the length of such yachts, pleasure boats, power boats, motor boats with fixed engines, and sailing boats, the measurement of over-all length shall govern. On a new purchase, for part of a year.In the case of a tax imposed at the time of the original purchase of a new boat on any other date than July 1, the amount to be paid shall be the same number of twelfths of the amount of the tax as the number of calendar months (including the month of sale) remaining prior to the following July 1. Exempt, if used for aid, etc., to seamen.This section shall not apply to vessels or boats used without profit by any benevolent, charitable, or religious organizations, exclusively for furnishing aid, comfort, or relief to seamen. penalty for nonpayment of special taxes.Penalty. Sec. 704. Punishment for conducting business without paying tax. Any person who carries on any business or occupation for which a special tax is imposed by section 700, 701, or 702, without having paid the special tax therein provided, shall, besides being liable for the payment of such special tax, be subject to a penalty of not more than $1,000 or to imprisonment for not more than one year, or both. tax on narcotics.Tax on narcotics. Sec. 705. Reenactment of former legislation.Vol. 38, p. 785. Section 1 of the Act entitled “An Act to provide for the registration of, with collectors of internal revenue, and to impose a special tax upon all persons who produce, import, manufacture, compound, deal in, dispense, sell, distribute, or give away opium or coca leaves, their salts, derivatives, or preparations, and for other purposes,” approved December 17, 1914, as amended by Vol. 40, p. 1130.Vol. 42, p. 298.section 1006 of the Revenue Act of 1918, is reenacted without change, as follows: " “Section 1. Opium, coca leaves, etc.Importers, manufacturers, dealers, etc., required to register. That on or before July 1 of each year every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, or gives away opium or coca leaves, or any compound, manufacture, salt, derivative, or preparation thereof, shall register with the collector of internal revenue of the district his name or style, place of business and place or places where such business is to be carried on, and pay the special taxes hereinafter provided; Registration of persons in business January 1, 1919.“Every person who on January 1, 1919, is engaged in any of the activities above enumerated, or who between such date and the 329passage of this Act first engaged in any of such activities, shallspecial taxes. within thirty days after the passage of this Act make like registration; and shall pay the proportionate part of the tax for the period ending June 30, 1919; and “Every person who first engages in any of such activities afterEngaging In business hereafter. the passage of this Act shall immediately make like registration and pay the proportionate part of the tax for the period ending on the following June 30th; “Importers, manufacturers, producers, or compounders, $24 perRates of taxes. annum; wholesale dealers, $12 per annum; retail dealers, $6 per annum; physicians, dentists, veterinary surgeons, and other practitioners lawfully entitled to distribute, dispense, give away, or administer any of the aforesaid drugs to patients upon whom they in the course of their professional practice are in attendance, shall pay $3 per annum. “Every person who imports, manufactures, compounds, or otherwiseClassification.Importers, manufacturers, and producers. produces for sale or distribution any of the aforesaid drugs shall be deemed to be an importer, manufacturer, or producer. “Every person who sells or offers for sale any of said drugs inWholesale dealers. the original stamped packages, as hereinafter provided, shall be deemed a wholesale dealer. “Every person who sells or dispenses from original stamped packages,Retail dealers. as hereinafter provided, shall be deemed a retail dealer: *Provided*, That the office, or if none, the residence, of any person*Provisos.*Place of business. shall be considered for the purpose of this Act his place of business; but no employee of any person who has registered and paid specialEmployees exempt. tax as herein required, acting within the scope of his employment, shall be required to register and pay special tax provided by this section: *Provided further*, That officials of the United States, Territorial,Officials not taxed. District of Columbia, or insular possessions, State or municipal governments, who in the exercise of their official duties engage in any of the business herein described, shall not be required to register, nor pay special tax, nor stamp the aforesaid drugs as hereinafter prescribed, but their right to this exemption shall be evidencedEvidence of right required. in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations prescribe. “It shall be unlawful for any person required to register under theImporting, selling, etc. without registration, etc., unlawful. provisions of this Act to import, manufacture, produce, compound, sell, deal in, dispense, distribute, administer, or give away any of the aforesaid drugs without having registered and paid the special tax as imposed by this section. “That the word ‘person’ as used in this Act shall be construedMeaning of “person.” to mean and include a partnership, association, company, or corporation, as well as a natural person; and all provisions of existing law relating to special taxes, as far as necessary, are hereby extended and made applicable to this section. “That there shall be levied, assessed, collected, and paid uponInternal revenue stamp on product. opium, coca leaves, any compound, salt, derivative, or preparation thereof, produced in or imported into the United States, and sold, or removed for consumption or sale, an internal-revenue tax at the rate of 1 cent per ounce, and any fraction of an ounce in a package shall be taxed as an ounce, such tax to be paid by the importer, manufacturer, producer, or compounder thereof, and to be represented by appropriate stamps, to be provided by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury; and the stampsAffixing. herein provided shall be so affixed to the bottle or other container as to securely seal the stopper, covering, or wrapper thereof. “The tax imposed by this section shall be in addition to any importAdditional to import duty. duty imposed on the aforesaid drugs. 330 special taxes.Disposal of any drug unstamped, etc., unlawful.“It shall be unlawful for any person to purchase, sell, dispense, or distribute any of the aforesaid drugs except in the original stamped package or from the original stamped package; and the absence of appropriate tax-paid stamps from any of the aforesaid drugs shall be prima facie evidence of a violation of this section by Unlawful possession.the person in whose possession same may be found; and the possession of any original stamped package containing any of the aforesaid drugs by any person who has not registered and paid special *Proviso*.Not applicable to valid prescriptions.taxes as required by this section shall be prima facie evidence of liability to such special tax: *Provided*, That the provisions of this paragraph shall not apply to any person having in his or her possession any of the aforesaid drugs which have been obtained from a registered dealer in pursuance of a prescription, written for legitimate medical uses, issued by a physician, dentist, veterinary surgeon, Container requirements.or other practitioner registered under this Act; and where the bottle or other container in which such drug may be put up by the dealer upon said prescription bears the name and registry number of the druggist, serial number of prescription, name and address of the patient, and name, address, and registry number of the person Professional administration, etc.writing said prescription; or to the dispensing, or administration, or giving away of any of the aforesaid drugs to a patient by a registered physician, dentist, veterinary surgeon, or other practitioner in the course of his professional practice, and where said drugs are dispensed or administered to the patient for legitimate medical purposes, and the record kept as required by this Act of the drugs so dispensed, administered, distributed, or given away. All stamp regulations applicable.“And all the provisions of existing laws relating to the engraving, issuance, sale, accountability, cancellation, and destruction of tax-paid stamps provided for in the internal-revenue laws are, in so far as necessary, hereby extended and made to apply to stamps provided by this section. Seizure of unstamped packages.“That all unstamped packages of the aforesaid drugs found in the possession of any person, except as herein provided, shall be subject to seizure and forfeiture, and all the provisions of existing internal-revenue laws relating to searches, seizures, and forfeitures of unstamped articles are hereby extended to and made to apply to the articles taxed under this Act and the persons upon whom these taxes are imposed. Records, returns, etc., required.“Importers, manufacturers, and wholesale, dealers shall keep such books and records and render such monthly returns in relation to the transactions in the aforesaid drugs as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations require. Regulations to be made.“The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make all needful rules and regulations for carrying the provisions of this Act into effect.” " Sec. 706. Text reenacted.Vol. 42, p. 300. Section 6 of such Act of December 17, 1914, as amended by section 1007 of the Revenue Act of 1918, is reenacted without change, as follows: " “Sec. 6. Drugs not affected by Act. That the provisions of this Act shall not be construed to apply to the manufacture, sale, distribution, giving away, dispensing, or possession of preparations and remedies which do not contain more than two grains of opium, or more than one-fourth of a grain of morphine, or more than one-eighth of a grain of heroin, or more than one grain of codeine, or any salt or derivative of any of them in one fluid ounce, or, if a solid or semisolid preparation, in one avoirdupois ounce; or to liniments, ointments, or other preparations which are prepared for external use, only, except liniments, ointments, and other preparations which contain cocaine or any of its salts or alpha or beta eucaine or any of their salts or any synthetic substitute for 331them: *Provided*, That such remedies and preparations are manufactured,special taxes.*Provisos*.If used as medicines. sold, distributed, given away, dispensed, or possessed as medicines and not for the purpose of evading the intentions and provisions of this Act: *Provided further*, That any manufacturer,Records of sales, etc., to be kept. producer, compounder, or vendor (including dispensing physicians) of the preparations and remedies mentioned in this section shall keep a record of all sales, exchanges, or gifts of such preparations and remedies in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall direct. Such record shall be preserved for a period of two years in suchPreservation for inspection. a way as to be readily accessible to inspection by any officer, agent or employee of the Treasury Department duly authorized for that purpose, and the State, Territorial, District, municipal, and insular officers named in section 5 of this Act, and every such person soVol. 38, p. 788.Registration and payment of special tax required. possessing or disposing of such preparations and remedies shall register as required in section 1 of this Act and, if he is not paying a tax under this Act, he shall pay a special tax of $1 for each year, or fractional part thereof, in which he is engaged in such occupation, to the collector of internal revenue of the district in which he carries on such occupation as provided in this Act. The provisions of this ActDecocainized preparations, etc., not affected. as amended shall not apply to decocainized coca leaves or preparations made therefrom, or to other preparations of coca leaves which do not contain cocaine.” " Sec. 707. All opium, its salts, derivatives, and compounds, andConfiscation of seized narcotics.Vol. 42, p. 301. coca leaves, salts, derivatives, and compounds thereof, which may now be under seizure or which may hereafter be seized by the United States Government from any person or persons charged with any violation of the Act of October 1, 1890, as amended by the Acts ofVol. 26, p. 621.Vol. 29, p. 695; Vol. 35, p. 614; Vol. 38, pp. 275, 785; Vol. 40, p. 1130; Vol. 42, p. 298. March 3, 1897, February 9, 1909, and January 17, 1914, or the Act of December 17, 1914, as amended, shall upon conviction of the person or persons from whom seized be confiscated by and forfeited to the United States; and the Secretary is hereby authorized toDelivery for Government use, etc. deliver for medical or scientific purposes to any department, bureau, or other agency of the United States Government, upon proper application therefor under such regulation as may be prescribed by the Commissioner, with the approval of the Secretary, any of the drugs so seized, confiscated, and forfeited to the United States. The provisions of this section shall also apply to any of the aforesaidApplicable to seizures from unknown owners. drugs seized or coming into the possession of the United States in the enforcement of any of the above-mentioned Acts where the owner or owners thereof are unknown. None of the aforesaid drugsDestruction restricted. coming into possession of the United States under the operation of said Acts, or the provisions of this section, shall be destroyed without certification by a committee appointed by the Commissioner, with the approval of the Secretary, that they are of no value for medical or scientific purposes. TITLE VIII.— STAMP TAXES.stamp taxes. Sec. 800. On and after the expiration of thirty days after theLevied on bonds, documents, etc., in Schedule A. enactment of this Act there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this title, or for or*Post*, p. 333. in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, are written or printed, by any person who makes, signs, issues, sells, removes, consigns, or snips the same, or for whose use or benefit the same are made, signed, issued, sold, removed, consigned, or shipped, the several taxes specified in such schedule. The taxes imposed by this section shall, in the case 332stamp taxes.In lieu of present tax.of any article upon which a corresponding stamp tax is now imposed by law, be in lieu of such tax. Sec. 801. Exceptions.Government, State, etc., securities. There shall not be taxed under this title any bond, note, or other instrument, issued by the United States, or by any foreign Government, or by any State, Territory, or the District of Columbia, or local subdivision thereof, or municipal or other corporation Bonds of indemnity to United States.exercising the taxing power; or any bond of indemnity required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-savings certificate, warrant or check, issued by the United Of domestic building and loan associations.States; or stocks and bonds issued by domestic building and loan associations substantially all the business of which is confined to making loans to members, or by mutual ditch or irrigation companies. Sec. 802. Offenses designated. Whoever—
(a)Issuing unstamped papers, etc. Makes, signs, issues, or accepts, or causes to be made, signed, issued, or accepted, any instrument, document, or paper of any kind or description whatsoever without the full amount of tax thereon being duly paid;
(b)Dealing in articles not fully stamped. Manufactures or imports and sells, or offers for sale, or causes to be manufactured or imported and sold, or offered for sale, any playing cards, package, or other article without the full amount of tax being duly paid;
(c)Using uncanceled, etc., stamps. Makes use of any adhesive stamp to denote any tax imposed by this title without canceling or obliterating such stamp as prescribed in section 804; Penalty.Is guilty of a misdemeanor and upon conviction thereof shall pay a fine of not more than $100 for each offense. Sec. 803. Other offenses. Whoever—
(a)Fraudulently removing, etc., stamps. Fraudulently cuts, tears, or removes from any vellum, parchment, paper, instrument, writing, package, or article, upon which any tax is imposed by this title, any adhesive stamp or the impression of any stamp, die, plate, or other article provided, made, or used in pursuance of this title;
(b)Reusing stamps. Fraudulently uses, joins, fixes, or places to, with, or upon any vellum, parchment, paper, instrument, writing, package, or article, upon which Using insufficient stamps.any tax is imposed by this title,
(1)any adhesive stamp, or the impression of any stamp, die, plate, or other article, which has been cut, torn, or removed from any other vellum, parchment, paper, instrument, writing, package, dr article, upon which any tax is imposed by this title; or
(2)any adhesive stamp or the impression of any stamp, die, plate, or other article of insufficient Counterfeits, etc.value; or
(3)any forged or counterfeited stamp, or the impression of any forged or counterfeited stamp, die, plate, or other article;
(c)Removing, etc., stamps for unlawful uses. Willfully removes, or alters the cancellation, or defacing marks of, or otherwise prepares, any adhesive stamp, with intent to use, or cause the same to be used, after it has been already used, or knowingly or willfully buys, sells, offers for sale, or gives away; any such washed or restored stamp to any person for use, or knowingly uses the same;
(d)Possessing washed, etc., stamps knowingly. Knowingly and without lawful excuse (the burden of proof of such excuse being on the accused) has in possession any washed, restored, or altered stamp, which has been removed from any vellum, parchment, paper, instrument, writing, package, or article; Punishment for.Is guilty of a misdemeanor, and upon conviction shall be punished by a fine of not more than $1,000, or by imprisonment for not more Forfeiture of articles, etc.than five years, or both, and any such reused, canceled, or counterfeit stamp and the vellum, parchment, document, paper, package, or article upon which it is placed or impressed shall be forfeited to the United States. 333 Sec. 804. Whenever an adhesive stamp is used for denoting any taxstamp taxes.Method of cancellation. imposed by this title, except as hereinafter provided, the person using or affixing the same shall write or stamp or cause to be written or stamped thereupon the initials of his or its name and the date upon which the same is attached or used, so that the same may not again be used: *Provided*, That the Commissioner may prescribe such other*Proviso*.Other, may be prescribed.Preparation, etc., of stamps. method for the cancellation of such stamps as he may deem expedient. Sec. 805.
(a)The Commissioner shall cause to be prepared and distributed for the payment of the taxes prescribed in this title suitable stamps denoting the tax on the document, articles, or thing to which the same may be affixed, and shall prescribe such method forMethod of affixing. the affixing of said stamps in substitution for or in addition to the method provided in this title, as he may deem expedient.
(b)All internal revenue laws relating to the assessment and collectionGeneral revenue laws applicable for mistakes, etc. of taxes are hereby extended to and made a part of this title, so far as applicable, for the purpose of collecting stamp taxes omitted through mistake or fraud from any instrument, document, paper, writing, parcel, package, or article named herein. Sec. 806. The Commissioner shall furnish to the Postmaster GeneralSales of stamps by postmasters. without prepayment a suitable quantity of adhesive stamps to be distributed to and kept on sale by the various postmasters in the United States. The Postmaster General may require each such postmasterAccountability. to give additional or increased bond as postmaster for the value of the stamps so furnished, and each such postmaster shall deposit the receipts from the sale of such stamps to the credit of and render accounts to the Postmaster GeneralTransfer of collections monthly. at such times and in such form as he may by regulations prescribe. The Postmaster General shall at least once monthly transfer all collections from this source to the Treasury as internal-revenue collections. Sec. 807.
(a)Each collector shall furnish, without prepayment,Sales by designated depositaries. to any assistant treasurer or designated depositary of the United States, located in the district of such collector, a suitable quantity of adhesive stamps to be kept on sale by such assistant treasurer or designated depositary.
(b)Each collector shall furnish, without prepayment, to anySales by designated State agents for stock transfers. person who is
(1)located in the district of such collector,
(2)duly appointed and acting as agent of any State for the sale of stock transfer stamps of such State, and
(3)designated by the Commissioner for the purpose, a suitable quantity of such adhesive stamps as are required by subdivisions 2, 3, and 4 of Schedule A of this*Post*, p. 334. title, to be kept on sale by such person.
(c)In such cases the collector may require a bond, with sufficientSurety bonds may be required. sureties, in a sum to be fixed by the Commissioner, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of, and for the payment monthly of all quantities or amounts sold or not remaining on hand. The Secretary may fromRegulations for safe keeping, etc. time to time make such regulations as he may find necessary to insure the safe-keeping or prevent the illegal use of all such adhesive stamps. Schedule A.—Stamp Taxes.Schedule A. 1. Bonds of indebtedness: On all bonds, debentures, or certificatesBonds of indebtedness. of indebtedness issued by any person, and all instruments, however termed, issued by any corporation with interest coupons or in registered form, known generally as corporate securities, on each $100 of face value or fraction thereof, 5 cents: *Provided*, That every*Provisos.*Renewals. renewal of the foregoing shall be taxed as a new issue: *Provided further*, That when a bond conditioned for the repayment or payment of money Basis of tax.is given in a penal sum greater than the debt secured, the tax shall be based upon the amount secured. 334 2. stamp taxes.Capital stock.Original issues. Capital stock, issued; On each original issue, whether on organization or reorganization, of certificates of stock, or of profits, or of interest in property or accumulations, by any corporation, on *Proviso*.Without face value.each $100 of face value or fraction thereof, 5 cents: *Provided*, That where a certificate is issued without face value, the tax shall be 5 cents per share, unless the actual value is in excess of $100 per share, in which case the tax shall be 5 cents on each $100 of actual value or fraction thereof, or unless the actual value is less than $100 per share, in which case the tax shall be 1 cent on each $20 of actual value, or fraction thereof. Attached to stock books.The stamps representing the tax imposed by this subdivision shall be attached to the stock books and not to the certificates issued. 3. Sales or transfers of stock, etc. Capital stock, sales or transfers: On all sales, or agreements to sell, or memoranda of sales or deliveries of, or transfers of legal title to shares or certificates of stock or of profits or of interest in property or accumulations in any corporation, or to rights to subscribe for or to receive such shares or certificates, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, interest, or rights, or not, on each $100 of face value or fraction thereof, 2 cents, and where such shares are without par or face value, the tax shall be 2 cents on *Provisos.*Deposits as collateral exempt.the transfer or sale or agreement to sell on each share: *Provided*, That it is not intended by this title to impose a tax upon an agreement evidencing a deposit of certificates as collateral security for money loaned thereon, which certificates are not actually sold, nor upon the delivery or transfer for such purpose of certificates so deposited, nor upon mere loans of stock nor upon Brokers’ deliveries, etc., exempt.the return of stock so loaned: *Provided further*, That the tax shall not be imposed upon deliveries or transfers to a broker for sale, nor upon deliveries or transfers by a broker to a customer for whom and upon whose order he has purchased same, but such deliveries or transfers shall be accompanied by a certificate setting forth Placing stamps on books of corporation.the facts: *Provided further*, That in case of sale where the evidence of transfer is shown only by the books of the corporation the stamp On certificates.shall be placed upon such books; and where the change of ownership is by transfer of the certificate the stamp shall be placed upon On bills of sale.the certificate: and in cases of an agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or Details required.memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the Punishment for sales without stamps, etc.sale, and the matter or thing to which it refers. Any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale, or who m pursuance of any such sale delivers any certificate or evidence of the sale of any stock, interest or right, or bill or memorandum thereof, as herein required, without having the proper stamps affixed thereto with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000, or be imprisoned not more than six months, or both. 4. Exchange sales, etc., of produce for future delivery. Produce, sales of, on exchange: Upon each sale, agreement of sale, or agreement to sell (not including so-called transferred or scratch sales), any products or merchandise at, or under the rules or usages of, any exchange, or board of trade, or other similar place, for future delivery, for each $100 in value of the merchandise covered by said sale or agreement of sale or agreement to sell, 1 cent, 335and for each additional $100 or fractional part thereof in excessstamp taxes.*Provisos.*Stamped bill of sale required. of $100, 1 cent: *Provided*, That on every sale or agreement of sale or agreement to sell as aforesaid there shall be made and delivered by the seller to the buyer a bill, memorandum, agreement, or other evidence of such sale, agreement of sale, or agreement to sell, to which there shall be affixed a lawful stamp or stamps in value equal to the amount of the tax on such sale: *Provided further*, ThatClearing-house transfers not again stamped. sellers of commodities described herein, having paid the tax provided by this subdivision, may transfer such contracts to a clearing-house corporation or association, and such transfer shall not be deemed to be a sale, or agreement of sale, or an agreement to sell within the provisions of this Act, provided that such transfer shallCondition. not vest any beneficial interest in such clearing-house association but shall be made for the sole purpose of enabling such clearing-house association to adjust and balance the accounts of the members of such clearing-house association on their several contracts. EveryContents of bills of sales. such bill, memorandum, or other evidence of sale or agreement to sell shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers; and any personPunishment for delivery without stamped bill, etc. liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale or agreement of sale, or agreement to sell, or who, in pursuance of any such sale, agreement of sale, or agreement to sell, delivers any such products or merchandise without a bill, memorandum, or other evidence thereof as herein required, or who delivers such bill, memorandum, or other evidence of sale, or agreement to sell, without having the proper stamps affixed thereto, with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000 or be imprisoned not more than six months, or both. No bill, memorandum, agreement, or other evidence of such sale,Cash sales for immediate delivery not taxable. or agreement of sale, or agreement to sell, in case of cash sales of products of merchandise for immedate or prompt delivery which in good faith are actually intended to be delivered shall be subject to this tax. This subdivision shall not affect but shall be in addition to theAdditional to specified taxes:Vol. 39, p. 476.Vol. 42, p. 187. provisions of the “United States cotton futures Act,” approved August 11, 1916, as amended, and “The Future Trading Act,” approved August 24, 1921. 5. Conveyances: Deed, instrument, or writing, whereby any lands,Conveyances of real estate. tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her, or their direction, when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds $100 and does not exceed $500, 50 cents; and for each additional $500 or fractional part thereof, 50 cents. This subdivision shall not apply to any instrument or writing givenTrust deeds exempt. to secure a debt. 6. Entry of any goods, wares, or merchandise at any customhouse,Customhouse entries. either for consumption or warehousing, not exceeding $100 in value, 25 cents; exceeding $100 and not exceeding $500 in value, 50 cents; exceeding $500 in value, $1. 7. Entry for the withdrawal of any goods or merchandise fromWarehouse withdrawals. customs bonded warehouse, 50 cents. 8. Passage ticket, one way or round trip, for each passenger, soldForeign passage tickets. or issued in the United States for passage by any vessel to a port or place not in the United States, Canada, or Mexico, if costing not exceeding $30, $1; costing more than $30 and not exceeding $60, $3; 336stamp taxes.Exemption.costing more than $60, $5. This subdivision shall not apply to passage tickets costing $10 or less. 9. Proxies. Proxy for voting at any election for officers, or meeting for Exceptions.the transaction of business, of any corporation, except religious, educational, charitable, fraternal, or literary societies, or public cemeteries, 10 cents. 10. Powers of attorney. Power of attorney granting authority to do or perform some act for or in behalf of the grantor, which authority is not otherwise Pension claims, bankruptcy, etc., exempt.vested in the grantee, 25 cents. This subdivision shall not apply to any papers necessary to be used for the collection of claims from the United States or from any State for pensions, back pay, bounty, or for property lost in the military or naval service, nor to powers of attorney required in bankruptcy cases nor to powers of attorney contained in the application of those who become members of or policyholders in mutual insurance companies doing business on the interinsurance or reciprocal indemnity plan through an attorney in fact. 11. Playing cards.Vol.42, p. 306, amended. Playing cards: Upon every pack of playing cards containing not more than fifty-four cards, manufactured or imported, and sold, or removed for consumption or sale, a tax of 10 cents per pack. 12. Insurance policies on property. On each policy of insurance, or certificate, binder, covering note, memorandum, cablegram, letter, or other instrument by whatever name called whereby insurance is made or renewed upon property within the United States (including rents and profits) against peril by sea or on inland waters or in transit on land (including transshipments and storage at termini or way points) or by fire, lightning, tornado, windstorm, bombardment, invasion, insurrection or riot, issued to or for or in the name of a domestic corporation or partnership or an individual resident of the United States by any foreign corporation or partnership or any individual not a resident of the United States, when such policy or other instrument is not signed or countersigned by an officer or agent of the insurer in a State, Territory, or District of the United States within which such insurer is authorized to do business, a tax of 3 cents on each dollar, *Proviso*.Reinsurance exempt.or fractional part thereof of the premium charged: *Provided*, That policies of reinsurance shall be exempt from the tax imposed by this subdivision. Affixing stamps required.Any person to or for whom or in whose name any such policy or other instrument is issued, or any solicitor or broker acting for or on behalf of such person in the procurement of any such policy or other instrument, shall affix the proper stamps to such policy or Penalty for failure.other instrument, and for failure to affix such stamps with intent to evade the tax shall, in addition to other penalties provided therefor, pay a fine of double the amount of the tax. TITLE IX.—board of tax appeals. BOARD OF TAX APPEALS. Sec. 900. Established.
(a)There is hereby established a board to be known as the Board of Tax Appeals (hereinafter referred to as the “Board”). Composition, and additional number for two years.The Board shall be composed of seven members, except that for a period of two years after the enactment of this Act the Board shall be composed of such number of members, not more than twenty-eight, as the President determines to be necessary.
(b)Appointments based on fitness. Each member of the Board shall be appointed by the *Post*, p. 669.Tenure for first two years.President, by and with the advice and consent of the Senate, solely on the grounds of fitness to perform the duties of the office. The term of office of all members who are to compose the Board during the period of two years after the enactment of this Act, shall expire at Subsequent.the end of such period. The terms of office of the first seven members who are thereafter to compose the Board shall expire, two at the 337end of the fourth year, two at theboard of tax appeals. end of the sixth year, two at the end of the eighth year, and one at the end of the tenth year, after the expiration of such two-year period. The term of office of each suchDesignation by the President.Tenure of successors. member shall be designated by the President, and the terms of office of their successors shall expire ten years after the expiration of their predecessors’ terms, except that any individual appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the unexpired term of his predecessor, and a member in office at the expiration of the term for which he was appointed may continue in office until his successor is qualified. Any member of the Board may be removed byRemoval restricted. the President for inefficiency, neglect of duty, or malfeasance in office, but for no other reason. Each member shall receive a salarySalary. at the rate of $7,500 per annum.
(c)No member of the Board appointed for a term beginningPractice of exmembers before Board, etc., restricted. after the expiration of two years after the enactment of this Act shall be permitted to practice before the Board or any official of the Bureau of Internal Revenue for a period of two years after leaving office.
(d)The Board shall at least biennially designate a member to actChairman and seal. as chairman. The Board shall have a seal which shall be judicially noticed.
(e)The Board and its divisions shall hear and determine appealsDuties of Board.*Ante*, pp. 297 , 300, 308, 310. filed under sections 274, 279, 308, and 312. A majority of the members of the Board or of any division thereof shall constitute a quorum for the transaction of the business of the Board or of the division, respectively. A vacancy in the Board or in any division thereof shall not impair the powers nor affect the duties of the Board or division, nor of the remaining members of the Board or division, respectively.
(f)The chairman may from time to time divide the Board intoDivisions, etc., of Board authorized. divisions and assign the members thereto, and designate a chief thereof. If a division, as a result of a vacancy or the absence or inability of a member assigned thereto to serve thereon, is composed of less than three members, the chairman may assign other members thereto, or he may direct the division to proceed with the transaction of business. A division shall hear and determine appeals filed withDetermination of appeals.Finality of decisions by divisions, etc. the Board and assigned to such division by the chairman. Upon the expiration of thirty days after a decision by a division, such decision, and the findings of fact made in connection therewith, shall become the final decision and findings of the Board, unless within such period the chairman has directed that such decision shall be reviewed by the Board.
(g)In any proceeding in court under sections 274, 279, 308,Findings of facts, evidence in court proceedings. or 312, and in any suit or proceeding by a taxpayer to recover any amounts paid in pursuance of a decision of the Board, the findings of the Board shall be prima facie evidence of the facts therein stated.
(h)Notice and an opportunity to be heard shall be given to theHearings and procedure. taxpayer and the Commissioner and a decision shall be made as quickly as practicable. Hearings before the Board and its divisions shall be open to the public. The proceedings of the Board and its divisions shall be conducted in accordance with such rules of evidence and procedure as the Board may prescribe. It shall be the dutyReports of decisions, etc. of the Board and of each division to make a report in writing of its findings of fact and decision in each case, and a copy of its report shall be entered of record and a copy furnished the taxpayer. IfOral testimony reduced to writing, etc. the amount of tax in controversy is more than $10,000 the oral testimony taken at the hearing shall be reduced to writing and the report shall contain an opinion in writing in addition to the findings of fact and decision. All reports of the Board and its divisions andReports, etc., open to public Inspection. 338board of tax appeals.all evidence received by the Board and its divisions (including, in cases where the oral testimony is reduced to writing, the transcript thereof) shall be public records open to the inspection of the Publication.public. The Board shall provide for the publication of its reports at the Government Printing Office in such form and manner as may Effect as evidence.be best adapted for public information and use, and such authorized publication shall be competent evidence of the reports of the Board therein contained in all courts of the United States and of the several Sale.States without any further proof or authentication thereof. Such reports shall be subject to sale in the same manner and upon the Principal office and meetings.same terms as other public documents. The principal office of the Board shall be in the District of Columbia, but the Board or any of its divisions may sit at any place within the United States. The times and places of the meetings of the Board, and of its divisions, shall be prescribed by the chairman with a view to securing reasonable opportunity to taxpayers to appear before the Board or any of its divisions, with as little inconvenience and expense to taxpayers as is practicable.
(i)Authority to secure testimony, etc. For the efficient administration of the functions vested in the Board or any division thereof, any member of the Board may administer oaths, examine witnesses, and require, by subpoena ordered by the Board or any division thereof and signed by the member,
(1)the attendance and testimony of witnesses, and the production of all necessary returns, books, papers, documents, correspondence, and other evidence, from any place in the United States at any designated place of hearing,
(2)the taking of a deposition before any designated individual competent to administer oaths under this Act, and
(3)the answer in writing under oath to any question of fact submitted. Depositions.In the case of a deposition the testimony shall be reduced to writing by the individual taking the deposition or under his direction and shall then be subscribed by the deponent. Any witnesses summoned or whose deposition is taken under this subdivision shall be paid the same fees and mileage as are paid witnesses in the courts of the United States.
(j)Clerical assistance, office supplies, etc., to be furnished. The Secretary shall furnish the Board with such clerical assistance, quarters, stationery, furniture, office equipment, and other supplies as may be necessary for the efficient execution of the functions vested in it by this section.
(k)Traveling, etc., expenses allowed. The members and employees of the Board and employees assigned thereto shall receive their necessary traveling expenses, and their actual expenses incurred for subsistence while traveling on duty and away from their designated stations in an amount not to exceed $7 per day in the case of members, and $4 per day in the Authority for personal services, supplies, etc.Vol. 42, p. 1488.case of employees. The Board is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1923 to fix the compensation of, such employees, and to make such expenditures, including expenditures for personal services and rent at the seat of the government and elsewhere, and for law books, books of reference, and periodicals, as may be necessary efficiently to execute the functions vested in the Board, in case such assistants and such expenditures are not suitably provided for by Approval of expenditures.the Secretary under subdivision (j). All expenditures of the Board shall be allowed and paid upon the presentation of itemized vouchers Moneys available.*Post*, p. 1200.therefor, signed by the chairman, out of any moneys appropriated for the collection of internal-revenue taxes and allotted to the Board, or out of any moneys specifically appropriated for the purposes of To be an independent executive agency.the Board. The Board shall be an independent agency in the executive branch of the Government. 339 TITLE X.—revenue act of 1924. GENERAL ADMINISTRATIVE PROVISIONS. laws made applicable.Administrative provisions.Laws made applicable. Sec. 1000. All administrative, special, or stamp provisions of law,General internal revenue laws.Vol. 42, p. 308. including the law relating to the assessment of taxes, so far as applicable, are hereby extended to and made a part of this Act. rules and regulations.Rules and regulations. Sec. 1001. The Commissioner, with the approval of the Secretary,Authorized for enforcement. is authorized to prescribe all needful rides and regulations for the enforcement of this Act. records, statements, and special returns.Records, etc. Sec. 1002.
(a)Every person liable to any tax imposed by thisTaxpayers to keep prescribed records, etc. Act, or for the collection thereof, shall keep such records, render under oath such statements, make such returns, and comply with such rules and regulations, as the Commissioner, with the approval of the Secretary, may from time to time prescribe.
(b)Whenever in the judgment of the Commissioner necessaryAny person may be required to make returns, etc. he may require any person, by notice served upon him, to make a return, render under oath such statements, or keep such records as the Commissioner deems sufficient to show whether or not such person is liable to tax.
(c)The Commissioner, with the approval of the Secretary, may byReturns without oath if tax under $10. regulation prescribe that any return required by Titles IV, V, VI, or VII to be under oath may, if the amount of the tax covered thereby is not in excess of $10, be signed or acknowledged before two witnesses instead of under oath.
(d)Any oath or affirmation required by the provisions of this ActOfficers authorized to administer oaths, etc. or regulations made under authority thereof, may be administered by any officer authorized to administer oaths for general purposes by the law of the United States or of any State, Territory, or possession of the United States, wherein such oath or affirmation is administered, or by any consular officer of the United States. Sec. 1003. Section 3176 of the Revised Statutes, as amended, isReturns.[R. S., sec. 3176, p. 610](/us/rs/s3176/p610), amended. amended to read as follows: " “Sec. 3176. If any person, corporation, company, or associationReturns by collector if none or false ones made by taxpayer. fails to make and file a return or list at the time prescribed by law or by regulation made under authority of law, or makes, willfully or otherwise, a false or fraudulent return or list, the collector or deputy collector shall make the return or list from his own knowledge and from such information as he can obtain through testimony or otherwise.By Commissioner. In any such case the Commissioner of Internal Revenue may, from his own knowledge and from such information as he can obtain through testimony or otherwise, make a return or amend any return made by a collector or deputy collector. Any return or list so madeLegal effect. and subscribed by the Commissioner, or by a collector or deputy collector and approved by the Commissioner, shall be prima facie good and sufficient for all legal purposes. “If the failure to file a return (other than a return under TitleExtension allowed of returns, except income, for sickness, etc. II of the Revenue Act of 1924) or a list is due to sickness or absence, the collector may allow such further time, not exceeding thirty days, for making and filing the return or list as he deems proper. “The Commissioner of Internal Revenue shall determine and Assessment of tax by Commissioner.assess all taxes, other than stamp taxes, as to which returns or lists are so made under the provisions of this section. In case of any failureAdditional tax imposed. to make and file a return or list within the time prescribed by law, 340revenue act of 1924.or prescribed by the Commissioner of Internal Revenue or the Exception, if failure not willful.collector in pursuance of law, the Commissioner shall add to the tax 25 per centum of its amount, except that when a return is filed after such time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall Increased rate for fraudulent returns.be made to the tax. In case a false or fraudulent return or list is willfully made, the Commissioner shall add to the tax 50 per centum of its amount. Collection, etc., of added tax.“The amount so added to any tax shall be collected at the same time and in the same manner and as a part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax.” " examination of books and witnesses.Examination of books and witnesses. Sec. 1004. Powers conferred to secure information by revenue officers.Vol. 42, p. 310. The Commissioner, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, is hereby authorized, by any revenue agent or inspector designated by him for that purpose, to examine any books, papers, records, or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons. unnecessary examinations.Unnecessary examinations. Sec. 1005. Restriction on making. No taxpayer shall be subjected to unnecessary examinations or investigations, and only one inspection of a taxpayer’s books of account shall be made for each taxable year unless the taxpayer requests otherwise or unless the Commissioner, after investigation, notifies the taxpayer in writing that an additional inspection is necessary. final determinations and assessments.Final determinations and assessments. Sec. 1006. Cases settled without protest not to be reopened. If after a determination and assessment in any case the taxpayer has paid in whole any tax or penalty, or accepted any abatement, credit, or refund based on such determination and assessment, and an agreement is made in writing between the taxpayer and the Commissioner, with the approval of the Secretary, that such determination and assessment shall be Fraud, etc., excepted.final and conclusive, then (except upon a showing of fraud or malfeasance or misrepresentation of fact materially affecting the determination or assessment thus made)
(1)the case shall not be reopened or the determination and assessment modified by any No suit to be entertained by United States court.officer, employee, or agent of the United States, and
(2)no suit, action, or proceeding to annul, modify, or set aside such determination or assessment shall be entertained by any court of the United States. administrative review.Administrative review. Sec. 1007. Findings of fact and decisions of Commissioner not subject to review by any other officer.Board of Appeals excepted.*Ante*, p. 336. In the absence of fraud or mistake in mathematical calculation, the findings of facts in and the decision of the Commissioner upon (or in case the Secretary is authorized to approve the same, then after such approval) the merits of any claim presented under or authorized by the internal-revenue laws shall not, except as 341 provided in section 900, be subject to review by any other administrativerevenue act of 1924. or accounting officer, employee, or agent of the United States. retroactive regulations.Retroactive regulations. Sec. 1008.
(a)In case a regulation or Treasury decision relating toReversed Treasury decisions not retroactive, except by order of court. the internal-revenue laws, made by the Commissioner or the Secretary, or by the Commissioner with the approval of the Secretary, is reversed by a subsequent regulation or Treasury decision, and such reversal is not immediately occasioned or required by a decision of a court of competent jurisdiction, such subsequent regulation or Treasury decision may, in the discretion of the Commissioner, with the approval of the Secretary, be applied without retroactive effect.
(b)No tax shall be levied, assessed, or collected under the provisionsNo excise tax levied on articles if not taxable under Treasury ruling, etc. of Title VI of this Act on any article sold or leased by the manufacturer, producer, or importer, if at the time of the sale or lease there was an existing ruling, regulation, or Treasury decision holding that the sale or lease of such article was not taxable, and the manufacturer, producer, or importer parted with possession or ownership of such article, relying upon the ruling, regulation, or Treasury decision. limitation on assessments and suits by the united states.Assessments.Vol. 42, p. 315, amended. Sec. 1009.
(a)Except as provided in sections 277, 278, 310, andLimited to four years, except income and estate taxes. 311, and subdivisions
(b)and
(c)of this section, all internal-revenue taxes shall, notwithstanding the provisions of section 3182 of the[R. S., sec. 3182, p. 611](/us/rs/s3182/p611), amended. Revised Statutes or any other provision of law, be assessed within four years after such taxes became due, and no proceeding in courtNo court proceeding for collection after five years. for the collection of such taxes shall be begun after the expiration of five years after such taxes became due.
(b)In case of a false or fraudulent return with intent to evade tax,Fraudulent returns, etc., excepted. of a failure to file a required return, or of a willful attempt in any manner to defeat or evade tax, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
(c)Where the assessment of the tax is made within the periodCollection by distraint, etc., within six years after assessment. prescribed in subdivisions
(a)and
(b)such tax may be collected by distraint or by a proceeding in court, begun within six years after the assessment of the tax. Nothing in this Act shall be construedBeginning, without assessment, allowed. as preventing the beginning, without assessment, of a proceeding in court for the collection of the tax at any time before the expiration of the period provided in subdivision
(a)for the beginning of such proceeding.
(d)This section shall not
(1)authorize the assessment of a taxSubject to statutory limitations, etc. or the collection thereof by distraint or by a proceeding in court if at the time of the enactment of this Act such assessment, distraint, or proceeding was barred by the period of limitation then in existence, or
(2)affect any assessment made, or distraint or proceeding in court begun, before the enactment of this Act. limitation on prosecutions by the united states.Prosecutions. Sec. 1010.
(a)The Act entitled “An Act to limit the time withinLimit of time for.Vol. 23, p. 122, amended. which prosecutions may be instituted against persons charged with violating internal-revenue laws,” approved July 5, 1884, as amended, is amended to read as follows: " “That no person shall be prosecuted, tried, or punished for anyProsecutions to be instituted within three years after offense committed. of the various offenses arising under the internal-revenue laws of the United States unless the indictment is found or the information 342revenue act of 1924.instituted within three years next after the commission of the offense: *Provisos.*Six years, of offenses to defraud the Government, etc.*Provided*, That for offenses involving the defrauding or attempting to defraud the United States or any agency thereof, whether by conspiracy or not, and in any manner, the period of limitation shall Barred by limitation excepted.be six years, but this proviso shall not apply to acts, offenses, or transactions which were barred by law at the time of the enactment Absence from district not included.of the Revenue Act of 1924: Not applicable to prior offenses.Extended, if before a commissioner.*Provided further*, That the time during which the person committing the offense is absent from the district wherein the same is committed shall not be taken as any part of the time limited by law for the commencement of such proceedings: *Provided further*, That the provisions of this Act shall not apply to offenses committed prior to its passage: *Provided further*, That where a complaint shall be instituted before a commissioner of the United States within the period above limited, the time shall be Government officers not affected.extended until the discharge of the grand jury at its next session within the district: *And provided further*, That this Act shall not apply to offenses committed by officers of the United States.” "
(b)Prior proceedings not affected.Vol. 42, p. 315. Any prosecution or proceeding under an indictment found or information instituted prior to the enactment of the Revenue Act of 1921 shall not be affected in any manner by this section, nor by the amendment by the Revenue Act of 1921 of such Act of July 5, 1884, but such prosecution or proceeding shall be subject to the Limitations imposed by law prior to the enactment of the Revenue Act of 1921. refunds.Refunds. Sec. 1011. Law reenacted.Vol. 42, p. 314. Section 3220 of the Revised Statutes, as amended, is reenacted without change, as follows: " “Sec. 3220. Erroneously collected taxes, penalties, etc., to be refunded.[R. S., sec. 3220, p. 618](/us/rs/s3220/p618). The Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, is authorized to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or Repayment of judgment against collectors.in any manner wrongfully collected; also to repay to any collector or deputy collector the full amount of such sums of money as may be recovered against him in any court, for any internal revenue Damages against officials.taxes collected by him, with the cost and expenses of suit; also all damages and costs recovered against any assessor, assistant assessor, collector, deputy collector, agent, or inspector, in any suit brought against him by reason of anything done in the due performance of Report to Congress.his official duty, and shall make report to Congress at the beginning of each regular session of Congress of all transactions under this section.” " Sec. 1012. Erroneously collected taxes.[R. S., sec. 3228, p. 620](/us/rs/s3228/p620), amended.Time limit for presenting claims for. Section 3228 of the Revised Statutes, as amended, is amended to read as follows: " “Sec. 3228.
(a)All claims for the refunding or crediting of any internal-revenue tax alleged to have been erroneously or illegally Vol. 42, p. 314, amended.assessed or collected, or of any penalty alleged to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected must, except as provided in Exception.*Ante*, p. 301.section 281 of the Revenue Act of 1924, be presented to the Commissioner of Internal Revenue within four years next after the payment of such tax, penalty, or sum. “(b) Claims barred by limitation. Except as provided in section 281 of the Revenue Act of 1924, claims for credit or refund (other than claims in respect of Vol. 39, p. 756; Vol. 40, pp. 300, 1057.taxes imposed by the Revenue Act of 1916. the Revenue Act of 1917, or the Revenue Act of 1918) which at the time of the enactment of the Revenue Act of 1921 were barred from allowance by the period of limitation then in existence, shall not be allowed.” " 343 Sec. 1013.
(a)The second proviso of the first section of the Act entitledrevenue act of 1924.Redemption of stamps.Vol. 31, p. 178.Vol. 32, p. 500, amended.Claims to be made in four years. “An Act Authorizing the Commissioner of Internal Revenue to redeem or make allowance for internal-revenue stamps,” approved May 12, 1900, as amended, is amended to read as follows: “*Provided further*, That no claim for the redemption of or allowance for stamps shall be allowed unless presented within four years after the purchase of such stamps from the Government.”
(b)The exemption provided in paragraph
(10)of subdivisionRefund or abatement to farmers mutual insurance companies, etc.
(a)of section 11 of the Revenue Act of 1916, and in subdivision
(10)of section 231 of the Revenue Act of 1918, and in subdivisionVol. 39, pp. 767, 1001; Vol. 40, p. 1076; Vol. 42, p. 253.
(10)of section 231 of the Revenue Act of 1921, shall be granted to farmers’ or other mutual hail, cyclone, or fire insurance companies (if otherwise exempt under such paragraphs), whether or not such organizations were of a purely local character. Any taxes assessed against such organizations shall, subject to the statutory period of limitations properly applicable thereto, be abated, credited or refunded. limitations upon suits and proceedings by the taxpayer.Suits, etc., by taxpayers. Sec. 1014.
(a)Section 3226 of the Revised Statutes, as amended,[R. S., sec. 3226, p. 619](/us/rs/s3226/p619), amended. is amended to read as follows: " “Sec. 3226. No suit or proceeding shall be maintained in anySuits for recovery of erroneously collected taxes, etc., not allowed until claim therefor filed. court for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sumVol. 42, p. 315, amended. alleged to have been excessive or in any manner wrongfully collected until a claim for refund or credit has been duly filed with the Commissioner of Internal Revenue, according to the provisions of law in that regard, and the regulations of the Secretary of the Treasury established in pursuance thereof; but such suit or proceedingIf paid under protest, etc., allowed. may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. No such suit or proceedingTime limitation extended. shall be begun before the expiration of six months from the date of filing such claim unless the Commissioner renders a decision thereon within that time, nor after the expiration of five years from the date of the payment of such tax, penalty, or sum, unless such suit or proceeding is begun within two years after the disallowance of the part of such claim to which such suit or proceeding relates. The Commissioner shall within 90 days after anyNotification of disallowance. such disallowance notify the taxpayer thereof by mail.” "
(b)This section shall not affect any proceeding in court institutedPrior proceedings not affected. prior to the enactment of this Act. Sec. 1015. Section 3225 of the Revised Statutes, as amended, isSecond assessment recoveries repealed.[R. S., sec. 3225, p. 619](/us/rs/s3225/p619), repealed.Claims for refunds may be reopened.Vol. 39, pp. 756, 1000;Vol. 40. pp. 300, 1057;Vol. 42, p. 227. repealed and any claim for credit or refund of taxes imposed by the Revenue Act of 1916, the Revenue Act of 1917, the Revenue Act of 1918, the Revenue Act of 1921, or any such Act as amended, heretofore denied in whole or in part because of the provisions of such section may be reopened and decided without reference to its provisions. distraint of bank accounts.Distraint of bank accounts. Sec. 1016. Section 3187 of the Revised Statutes is amended byCollection of tax by.[R. S., sec. 3187, p. 612](/us/rs/s3187/p612), amended. inserting after “securities” the words “bank accounts” and a comma. penalties.Penalties. Sec. 1017.
(a)Any person required under this Act to pay any tax,For willful failure to pay tax, make returns.Vol.42, p. 309, amended. or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the 344revenue act of 1924.purposes of the computation, assessment, or collection of any tax imposed by this Act, who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time Additional punishment.or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution.
(b)For willful failure to collect tax, evading payment, etc. Any person required under this Act to collect, account for and pay over any tax imposed by this Act, who willfully fails to collect or truthfully account for and pay over such tax and any person who willfully attempts in any manner to evade or defeat any Additional punishment.tax imposed by this Act or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.
(c)Assisting in preparation of fraudulent returns, etc. Any person who willfully
(1)aids or assists in the preparation or presentation of a false or fraudulent return, affidavit, claim, or document, authorized or required by the internal revenue laws, or
(2)procures, counsels, or advises the preparation or presentation of such return, affidavit, claim, Punishment foror document, shall (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document) be guilty of a felony and, upon conviction thereof, be lined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.
(d)Additional penalty for refusal to pay, etc., other than income, estate. and gift tax. Any person who willfully fails to pay, collect, or truthfully account for and pay over, any tax imposed by Titles IV, V, VI, VII, and VIII, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty of the amount of the tax evaded, or not paid, collected or accounted for and paid over, to be assessed and collected in the same manner as taxes are Exceptions.assessed and collected. No penalty shall be assessed under this *Ante*, p. 339.Distilled spirits.subdivision for any offense for which a penalty may be assessed under authority of section 3176 of the Revised Statutes, as amended, or for any offense for which a penalty has been recovered under [R. S., sec. 3256, p. 627](/us/rs/s3256/p627).section 3256 of the Revised Statutes.
(e)“Person” liable for acts. The term “person” as used in this section includes an officer or employee of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs. revised statutes.Revised Statutes. Sec. 1018. Amendments in Act of 1918 reenacted. Sections 3164, 3165, 3167, 3172, and 3173 of the Revised Statutes, as amended, are reenacted without change, as follows: " “Sec. 3164. Collectors to report violations of internal revenue laws to district attorney in 30 days.[R. S., sec. 3164, p. 606](/us/rs/s3164/p606).Vol. 42, p. 311. It shall be the duty of every collector of internal revenue having knowledge of any willful violation of any law of the United States relating to the revenue, within thirty days after coming into possession of such knowledge, to file with the district attorney of the district in which any fine, penalty, or forfeiture may be in incurred, a statement of all the facts and circumstances of the case within his knowledge, together with the names of the witnesses, setting forth the provisions of law believed to be so violated on which reliance may be had for condemnation or conviction. “Sec. 3165. Revenue officials authorized to administer oaths, etc.[R. S., sec. 3165, p. 606](/us/rs/s3165/p606).Vol. 42, p. 311. Every collector, deputy collector, internal-revenue agent, and internal-revenue officer assigned to duty under an internal-revenue agent, is authorized to administer oaths and to take evidence 345touching any part of the administration of the internal-revenue lawsrevenue act of 1924. with which he is charged, or where such oaths and evidence are authorized by law or regulation authorized by law to be taken. “Sec. 3167. It shall be unlawful for any collector, deputy collector,Divulging information received by revenue officials, unlawful.[R. S., sec. 3167, p. 606](/us/rs/s3167/p606).Vol. 42, p. 311. agent, clerk, or other officer or employee of the United States to divulge or to make known in any manner whatever not provided by law to any person the operations, style of work, or apparatus of any manufacturer or producer visited by him in the discharge of his official duties, or the amount or source of income, profits, losses, expenditures,From income returns. or any particular thereof, set forth or disclosed in any income return, or to permit any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; and it shall be unlawful for any person to print or publish in any manner whateverUnauthorized publication of income returns, etc. not provided by law any income return, or any part thereof or source of income, profits, losses, or expenditures appearing in any income return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding $1,000 orPunishment for. by imprisonment not exceeding one year, or both, at the discretion of the court; and if the offender be an officer or employee of theDismissal of offender. United States he shall be dismissed from office or discharged from employment. “Sec. 3172. Every collector shall, from time to time, cause hisInquiries by deputy collectors.[R. S., sec. 3172, p. 608](/us/rs/s3172/p608).Vol. 42, p. 311. deputies to proceed through every part of his district and inquire after and concerning all persons therein who are liable to pay any internal-revenue tax, and all persons owning or having the care and management of any objects liable to pay any tax, and to make a list of such persons and enumerate said objects. “Sec. 3173. It shall be the duty of any person, partnership, firm,Taxpayers to make yearly returns.[R. S., sec. 3173, p. 609](/us/rs/s3173/p609).Vol. 42, p. 312. association, or corporation, made liable to any duty, special tax, or other tax imposed by law, when not otherwise provided for,
(1)in case of a special tax, on or before the thirty-first day of July in each year, and
(2)in other cases before the day on which the taxes accrue, to make a list or return, verified by oath, to the collector or a deputy collector of the district where located, of the articles or objects, includingDetails specified. the quantity of goods, wares, and merchandise, made or sold and charged with a tax, the several rates and aggregate amount, according to the forms and regulations to be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, for which such person, partnership, firm, association, or corporation is liable: *Provided*, That if any person liable to pay any*Provisos.*By revenue officers with consent of party in default. duty or tax, or owning, possessing, or having the care or management of property, goods, wares, and merchandise, article or objects liable to pay any duty, tax, or license, shall fail to make and exhibit a list or return required by law, but shall consent to disclose the particulars of any and all the property, goods, wares, and merchandise, articles, and objects liable to pay any duty or tax, or any business or occupation liable to pay any tax as aforesaid, then, and in that case, it shall be the duty of the collector or deputy collector to make such list or return, which, being distinctly read, consented to, and signed and verified by oath by the person so owning, possessing, or having the care and management as aforesaid, may be received as the list of such person: *Provided further*, That in case no annual listNotice to taxpayer not making returns, etc. or return has been rendered by such person to the collector or deputy collector as required by law, and the person shall be absent from his or her residence or place of business at the time the collector or a deputy collector shall call for the annual list or return, it shall be the duty of such collector or deputy collector to leave at such place of residence or business, with some one of suitable age and discretion, if such be present, otherwise to deposit in the nearest post 346revenue act of 1924.office, a note or memorandum addressed to such person, requiring him or her to render to such collector or deputy collector the list or return required by law within ten days from the date of such note Summons on refusal, not making returns, etc.or memorandum, verified by oath. And if any person, on being notified or required as aforesaid, shall refuse or neglect to render such list or return within the time required as aforesaid, or whenever any person who is required to deliver a monthly or other return of objects subject to tax fails to do so at the time required, or delivers any return which, in the opinion of the collector, is erroneous, false, or fraudulent, or contains any undervaluation or understatement, or refuses to allow any regularly authorized Government officer to Testimony to be procured.examine the books of such person, firm, or corporation, it shall be lawful for the collector to summon such person, or any other person having possession, custody, or care of books of account containing entries relating to the business of such person or any other person he may deem proper, to appear before him and produce such books at a time and place named in the summons, and to give testimony or answer interrogatories, under oath, respecting any objects or income Authority of district collector.liable to tax or the returns thereof. The collector may summon any person residing or found within the State or Territory in which his district lies; and when the person intended to be summoned does not reside and can not be found within such State or Territory, he may enter any collection district where such person may be found and there make the examination herein authorized. And to this end he may there exercise all the authority which he might lawfully exercise in *Proviso*.Corporations included in “person.”the district for which he was commissioned: *Provided*, That ‘person,’ as used in this section, shall be construed to include any corporation, joint-stock company or association, or insurance company when such construction is necessary to carry out its provisions.” " interest on refunds and credits.Interest allowances. Sec. 1019. Rate on claims for credits or refunds. Upon the allowance of a credit or refund of any internal-revenue tax erroneously or illegally assessed or collected, or of any penalty collected without authority, or of any sum which was excessive or in any manner wrongfully collected, interest shall be Date allowed.allowed and paid on the amount of such credit or refund at the rate of 6 per centum per annum from the date such tax, penalty, or sum was paid to the date of the allowance of the refund, or in case of a credit, to the due date of the amount against which the credit is taken, but if the amount against which the credit is taken is an Meaning of “additional assessment.”additional assessment, then to the date of the assessment of that amount. The term “additional assessment” as used in this section means a further assessment for a tax of the same character previously paid in part. interest on judgments.On judgments. Sec. 1020. Judicial Code.Vol. 36, p. 1141. Section 177 of the Judicial Code, as amended is reenacted without change, as follows: " “Sec. 177. Allowance restricted on Court of Claims judgments.Vol. 42, p. 316. No interest shall be allowed on any claim up to the time of the rendition of judgment by the Court of Claims, unless upon a contract expressly stipulating for the payment of interest, except that interest may be allowed in any judgment of any court Allowed for erroneous internal revenue collections, etc., by judgment in any court.rendered after the passage of the Revenue Act of 1921 against the United States for any internal-revenue tax erroneously or illegally assessed or collected, or for any penalty collected without authority or any sum which was excessive or in any maimer wrongfully collected, under the internal-revenue laws.” " 347 payment of and receipts for taxes.revenue act of 1924.Payment of taxes. Sec. 1021.
(a)Collectors may receive, at par with an adjustmentFederal notes and certificates, and uncertified checks accepted for other than stamp taxes.Vol. 42, p. 316. for accrued interest, notes or certificates of indebtedness issued by the United States and uncertified checks in payment of income, war-profits, and excess-profits taxes and any other taxes payable other than by stamp, during such time and under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe; but if a check so received is not paid by the bank onLiability for checks. which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions to the same extent as if such check had not been tendered.
(b)Every collector to whom any payment of any income tax isReceipts for taxes to be given by collector on request.Vol. 42, p. 267, amended.To debtor for separate creditors. made shall upon request give to the person making such payment a full written or printed receipt, stating the amount paid and the particular account for which such payment was made; and whenever any debtor pays taxes on account of payments made or to be made by him to separate creditors the collector shall, if requested by such debtor, give a separate receipt for the tax paid on account of each creditor in such form that the debtor can conveniently produce such receipts separately to his several creditors in satisfaction of their respective demands up to the amounts stated in the receipts; and such receipt shall be sufficient evidence in favor of such debtorEvidence of tax paid. to justify him in withholding from his next payment to his creditor the amount therein stated; but the creditor may, upon giving to hisSurrender to creditor as payment on debt. debtor a full written receipt acknowledging the payment to him of any sum actually paid and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfaction of the debt to that amount, require the surrender to him of such collector’s receipt.
(c)In the payment of any tax under this Act not payable byFractions of a cent. stamp a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent.
(d)Section 37 of the Act of August 27, 1894, entitled “An Act ToFormer provision for receipts repeated.Vol. 28, p. 560, repealed. reduce taxation, to provide revenue for the Government, and for other purposes,” is hereby repealed. method of collecting tax.Collecting taxes. Sec. 1022. Whether or not the method of collecting any taxDiscretionary methods allowed for ether than income, estate, gift, and stamp taxes.Vol. 42, p. 308, amended. imposed by Titles IV, V, VI, or VII is specifically provided therein, any such tax may, under regulations prescribed by the Commissioner with the approval of the Secretary, be collected by stamp, coupon, serial-numbered ticket, or such other reasonable device or method as may be necessary or helpful in securing a complete and prompt collection of the tax. All administrative and penalty provisionsPenalties applicable.*Ante*, pp. 331–336. of Title VIII, in so far as applicable, shall apply to the collection of any tax which the Commissioner determines or prescribes shall be collected in such manner. overpayments and overcollections.Overpayments and collections. Sec. 1023. In the case of any overpayment or overcollection ofCredits and refunds allowed for, of admission and excise taxes.*Ante*, pp. 320–325.Vol. 42, p. 309. any tax imposed by Title V or VI, the person making such overpayment or overcollection may take credit therefor against taxes due upon any monthly return, and shall make refund of any excessive amount collected by him upon proper application by the person entitled thereto. 348 articles exported.revenue act of 1924.Articles exported. Sec. 1024. Tobacco and excise taxes not applicable to exports.*Ante*, pp. 316–320, 322–325. Under such rules and regulations as the Commissioner with the approval of the Secretary may prescribe, the taxes imposed under the provisions of Title IV or VI shall not apply in respect of articles sold or leased for export and in due course so exported. Refund to exporter.Under such rules and regulations the amount of any internal-revenue tax erroneously or illegally collected in respect of exported articles may be refunded to the exporter of the article, instead of to the manufacturer, if the manufacturer waives any claim for the amount so to be refunded. jurisdiction of courts.Jurisdiction of courts. Sec. 1025. Powers conferred to secure testimony, etc.Vol. 42, p. 310.
(a)If any person is summoned under this Act to appear, to testify, or to produce books, papers, or other data, the district court of the United States for the district in which such person resides shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data.
(b)District courts to issue orders, process, judgments, etc. The district courts of the United States at the instance of the United States are hereby invested with such jurisdiction to make and issue, both in actions at law and suits in equity, writs and orders of injunction, and of ne exeat republica, orders appointing receivers, and such other orders and process, and to render such judgments and decrees, granting in proper cases both legal and equitable relief together, as may be necessary or appropriate for the enforcement of the provisions of this Act. The remedies hereby provided Additional to other remedies.are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such provisions.
(c)District courts.Vol. 42, p. 311.Vol. 36, p. 1093. The paragraph added by section 1310 of the Revenue Act of 1921 at the end of paragraph Twentieth of section 24 of the Judicial Code, relating to the jurisdiction of district courts, is reenacted without change, as follows: " Concurrent jurisdiction of, with Court of Claims, for recovery of erroneously collected taxes, etc., if collector dead.*Post*, p. 972.“Concurrent with the Court of Claims, of any suit or proceeding, commenced after the passage of the Revenue Act of 1921, for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected, under the internal-revenue laws, even if the claim exceeds $10,000, if the collector of internal-revenue by whom such tax, penalty, or sum was collected is dead at the time such suit or proceeding is commenced.” " frauds on purchasers.Frauds on purchasers. Sec. 1026. False statements as to effect of tax on price of article sold, etc., a misdemeanor.Vol. 42, p. 316. Whoever in connection with the sale or lease, or offer for sale or lease, of any article, or for the purpose of making such sale or lease, makes any statement, written or oral,
(1)intended or calculated to lead any person to believe that any part of the price at which such article is sold or leased, or offered for sale or lease, consists of a tax imposed under the authority of the United States, or
(2)ascribing a particular part of such price to a tax imposed under the authority of the United States, knowing that such statement is false or that the tax is not so great as the portion of such price Punishment for.ascribed to such tax, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than $1,000 or by imprisonment not exceeding one year, or both. 349 lost stamps for tobacco, cigars, and so forth.revenue act of 1924.Lost stamps. Sec. 1027. Section 3315 of the Revised Statutes, as amended, isRestamping packages, etc. reenacted without change, as follows: " “Sec. 3315. The Commissioner of Internal Revenue may, underIssue authorized to replace stamps unavoidably lost, etc.[R. S., sec. 3315, p. 643](/us/rs/s3315/p643).Vol. 42, p. 319. regulations prescribed by him with the approval of the Secretary of the Treasury, issue stamps for restamping packages of distilled spirits, tobacco, cigars, snuff, cigarettes, fermented liquors, and wines which have been duly stamped but from which the stamps have been lost or destroyed by unavoidable accident.” " consolidation of liberty bond tax exemptions.Liberty bonds, etc. Sec. 1028. The various Acts authorizing the issues of Liberty bonds are amended and supplemented as follows:
(a)On and after January 1, 1921, 4 per centum and 4¼ per centum LibertyConsolidation of tax exemptions.Vol. 42, p. 317, amended.Modification of allowance from graduated income taxes. bonds shall be exempt from graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States upon the income or profits of individuals, partnerships, corporations, or associations, in respect to the interest on aggregate principal amounts thereof as follows: Until the expiration of two years after the date of the terminationUntil two years after end of World War. of the war between the United States and the German Government, as fixed by proclamation of the President, on $125,000 aggregate principal amount; and for three years more on $50,000 aggregateFor three years more. principal amount.
(b)The exemptions provided in subdivision
(a)shall be in additionAdditional to prior exemptions.Vol. 40, p. 291. to the exemptions provided in section 7 of the Second Liberty Bond Act, and in addition to the exemption provided in subdivision
(3)of section 1 of the Supplement to the Second Liberty BondVol. 40. p. 966. Act in respect to bonds issued upon conversion of 3½ per centum bonds, but shall be in lieu of the exemptions provided and free from the In lieu of exemptions during the war.Vol. 40, pp. 965, 1310.conditions and limitations imposed in subdivisions
(1)and
(2)of section 1 of the Supplement to the Second Liberty Bond Act and in section 2 of the Victory Liberty Loan Act. deposit of united states bonds or notes in lieu of surety.Federal bonds or notes. Sec. 1029. Wherever by the laws of the United States or regulationsAccepted as penal bond in lieu of personal sureties.Vol. 42, p. 318. made pursuant thereto, any person is required to furnish any recognizance, stipulation, bond, guaranty, or undertaking, hereinafter called “penal bond,” with surety or sureties, such person may, in lieu of such surety or sureties, deposit as security with the official having authority to approve such penal bond, United States Liberty bonds or other bonds or notes of the United States in a sum equal at their par value to the amount of such penal bond required to be furnished, together with an agreement authorizing such official to collect or sell such bonds or notesLegal effect. so deposited in case of any default in the performance of any of the conditions or stipulations of such penal bond. The acceptance of such United States bonds or notes in lieu of surety or sureties required by law shall have the. same force and effect as individual or corporate sureties, or certified checks, bank drafts, post-office money orders, or cash, for the penalty or amount of such penal bond. The bonds or notes deposited hereunderDepositaries for. and such other United States bonds or notes as may be substituted therefor from time to time as such security, may be deposited with the Treasurer of the United States, a Federal reserve bank, or other depositary duly designated for that purpose by the Secretary, which shall issue receipt therefor, describing such bonds or notes so 350revenue act of 1924.Return to depositor.deposited. As soon as security for the performance of such penal bond is no longer necessary, such bonds or notes so deposited shall *Provisos*.Retention on default of contractor for public works.Vol. 33, p. 811.Vol. 28, p. 278.be returned to the depositor: *Provided*, That in case a person or persons supplying a contractor with labor or material as provided by the Act of Congress, approved February 24, 1905 (33 Stat. 811), entitled “An Act to amend an Act approved August thirteenth, eighteen hundred and ninety-four, entitled ‘An Act for the protection of persons furnishing materials and labor for the construction of public works,’” shall file with the obligee, at any time after a Application to subcontractor, etc.default in the performance of any contract subject to said Acts, the application and affidavit therein provided, the obligee shall not deliver to the obligor the deposited bonds or notes nor any surplus proceeds thereof until the expiration of the time limited by said Acts for the institution of suit by such person or persons, and, in case suit shall be instituted within such time, shall hold said bonds or notes or proceeds subject to the order of the court having Priority of United States not affected.jurisdiction thereof: *Provided further*, That nothing herein contained shall affect or impair the priority of the claim of the United States against the bonds or notes deposited or any right or remedy granted by said Acts or by this section to the United States for default Inconsistent laws modified.upon any obligation of said penal bond: *Provided further*, That all laws inconsistent with this section are hereby so modified as to Judicial authority not affected.conform to the provisions hereof: *And provided further*, That nothing contained herein shall affect the authority of courts over the security, where such bonds are taken as security in judicial proceedings, or the authority of any administrative officer of the United States to receive United States bonds for security in cases authorized by existing laws. The Secretary may prescribe rules and regulations necessary and proper for carrying this section into effect. enforcement of tax liens.Enforcement of tax liens. Sec. 1030. [R. S., sec. 3207, p. 616](/us/rs/s3207/p616), amended. Section 3207 of the Revised Statutes is amended to read as follows: " “Sec. 3207. Bill in chancery authorized to enforce lien on real estate for unpaid taxes.
(a)In any case where there has been a refusal or neglect to pay any tax, and it has become necessary to seize and sell real estate to satisfy the same, the Commissioner of Internal Revenue may direct a bill in chancery to be filed, in a district court of the United States, to enforce the lien of the United States for tax upon any real estate, or to subject any real estate owned by the delinquent, or in which he has any right, title, or interest, to the payment of such tax. Persons claiming interest made parties.All persons having liens upon or claiming any interest in the real estate sought to be subjected as aforesaid, shall be made parties to such proceedings, and be brought into court as provided in other suits Determination of merits by court.in chancery therein. And the said court shall, at the term next after the parties have been duly notified of the proceedings, unless otherwise ordered by the court, proceed to adjudicate all matters involved therein, and Anally determine the merits of all claims to and liens Sale and distribution of proceeds if United States claim established.upon the real estate in question, and, in all cases where a claim or interest of the United States therein is established, shall decree a sale of such real estate, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States. “(b) Persons having lien, etc., on such real estate may request Commissioner to file bill.[R. S., sec. 3186, p. 612](/us/rs/s3186/p612).Vol. 24, p. 331. Any person having a lien upon or any interest in such real estate, notice of which has been duly filed of record in the jurisdiction in which the real estate is located, prior to the filing of notice of the lien of the United States as provided by section 3186 of the Revised Statutes as amended, or any person purchasing the real estate at a sale to satisfy such prior lien or interest, may make written 351request to the Commissioner of Internal Revenue to direct the filingrevenue act of 1924.On failure of Commissioner, may petition leave of court to file bill to determine all claims, etc. of a bill in chancery as provided in subdivision (a), and if the Commissioner fails to direct the filing of such bill within six months after receipt of such written request, such person or purchaser may, after giving notice to the Commissioner, file a petition in the district court of the United States for the district in which the real estate is located, praying leave to file a bill for a final determination of all claims to or liens upon the real estate in question. After a full hearingUnited States, etc., made parties if petition granted. in open court, the district court may in its discretion enter an order granting leave to file such bill, in which the United States and all persons having liens upon or claiming any interest in the real estate shall be made parties. Service on the United States shallService on United States.Vol. 24, p. 500. be had in the manner provided by sections 5 and 6 of the Act of March 3, 1887, entitled ‘An Act to provide for the bringing of suits against the Government of the United States.’ Upon the filing ofAdjudication by court. such bill the district court shall proceed to adjudicate the matters involved therein, in the same manner as in the case of bills filed under subdivision
(a)of this section. For the purpose of such adjudication,Tax conclusively presumed valid, etc. the assessment of the tax upon which the lien of the United States is based shall be conclusively presumed to be valid, and all costs of the proceedings on the petition and the bill shall be borne by the person filing the bill.” " special deposits.Special deposits. Sec. 1031.
(a)Section 3195 of the Revised Statutes is amended[R. S., sec. 3195, p. 614](/us/rs/s3195/p614), amended. to read as follows: " “Sec. 3195. When any property liable to distraint for taxesWhole of property, if not divisible, to be sold to pay tax. is not divisible, so as to enable the collector by sale of a part thereof to raise the whole amount of the tax, with all costs and charges, the whole of such property shall be sold, and the surplus of the proceeds of the sale, after making allowance for the amount of theSpecial deposit of balance of proceeds. tax, interest, penalties, and additions thereto, and for the costs and charges of the distraint and sale, shall be deposited with the Treasurer of the United States as provided in subdivision
(b)of section *Infra.*3210.” "
(b)Section 3210 of the Revised Statutes is amended to read as[R. S., sec. 3210, p. 616](/us/rs/s3210/p616), amended. follows: " “Sec. 3210.
(a)Except as provided in subdivision
(b)the grossAll internal revenue tax collections, etc., to be deposited daily in Treasury. amount of all taxes and revenues received under the provisions of this Act, and collections of whatever nature received or collected by authority of any internal-revenue law, shall be paid daily intoExcept sums in compromise, etc.*Infra.* the Treasury of the United States under instructions of the Secretary of the Treasury as internal-revenue collections, by the officer receiving or collecting the same, without any abatement or deduction on account of salary, compensation, fees, costs, charges, expenses, or claims of any description. A certificate of such payment, statingDetailed certificate of, transmitted to Commissioner. the name of the depositor and the specific account on which the deposit was made, signed by the treasurer, assistant treasurer, designated depositary, or proper officer of a deposit bank, shall be transmitted to the Commissioner of Internal Revenue. “(b) Sums offered in compromise under the provisions of sectionSpecial deposit account of collector for sums offered in compromise, for purchase of real estate, etc.[R. S., sec. 3229, p. 620](/us/rs/s3229/p620).Vol. 41, p. 318.Vol. 20, p. 332. 3229 of the Revised Statutes and section 35 of Title II of the National Prohibition Act, sums offered for the purchase of real estate under the provisions of section 3208 of the Revised Statutes, and surplus proceeds in any distraint sale, after making allowance for the amount of the tax, interest, penalties, and additions thereto, and for costs and charges of the distraint and sale, shall be deposited with the Treasurer of the United States in a special deposit account in the name of the collector making the deposit. UponWithdrawals from if offers accepted.352revenue act of 1924.acceptance of such offer in compromise or offer for the purchase of such real estate, the amount so accepted shall he withdrawn by the collector from his special deposit account with the Treasurer of the United States and deposited in the Treasury of the United Refunds.States as internal-revenue collections. Upon the rejection of any such offer, the Commissioner shall authorize the collector, through whom the amount of such offer was submitted, to refund to the maker of such offer the amount thereof. In the case of surplus proceeds from distraint sales the Commissioner shall, upon application and satisfactory proof in support thereof, authorize the collector through whom the amount was received to refund the same to the person or persons legally entitled thereto.” " TITLE XI.—General provisions. GENERAL PROVISIONS. repeals.Repeals. Sec. 1100. Parts of Revenue Act of 1921, at specified dates.
(a)The following parts of the Revenue Act of 1921 are repealed, to take effect (except as otherwise provided in this Act) upon the enactment of this Act, subject to the limitations provided in subdivisions
(b)and (c): Income tax.Vol. 42, pp. 227–271.Title II (called “Income Tax”) as of January 1, 1924; Estate tax.Vol. 42, pp. 277–284.Title IV (called “Estate Tax ”); Telegraph and telephone messages.Vol. 42, pp. 284, 285.Title V (called “Tax on Telegraph and Telephone Messages”) except subdivision
(d)of section 500, effective on the expiration of thirty days after the enactment of this Act; Soft drinks, etc.Vol. 42, pp. 285, 286.Sections 602 and 603 of Title VI (being the taxes on certain beverages and constituent parts thereof); Cigars, etc.Vol. 42, pp. 286–289.Title VII (called “Tax on Cigars, Tobacco, and Manufactures Thereof ”); Admissions and dues.Vol. 42, pp. 289–291.Title VIII (called “Tax on Admissions and Dues”), effective on the expiration of thirty days after the enactment of this Act; Excise taxes.Vol. 42, pp. 291–293.Sections 901, 902, 903, and 904 of Title IX (being certain excise taxes); Jewelry, etc., sales.Vol. 42, p. 293.Section 900 of Title IX (being certain excise taxes) and section 905 of Title IX (being the tax on jewelry and similar articles), effective on the expiration of thirty days after the enactment of this Act; Special taxes.Vol. 42, pp. 294–301.Title X (called “Special Taxes”) effective on June 30, 1924; Stamp taxes.Vol. 42, pp. 301–305.Title XI (called “Stamp Taxes ”) effective on the expiration of thirty days after the enactment of this Act; Child labor tax.Vol. 42, pp. 306–308.Title XII (called “Tax on Employment of Child Labor”); Certain administrative provisions.Vol. 42, pp. 310–319.Sections 1307, 1308, 1309, subdivision
(c)of section 1310, sections 1311, 1312, 1313, 1314, 1315, 1316, 1318, 1320, 1321, 1322, 1323, 1324, 1325, 1326, 1328, 1329, and 1330 (being certain administrative provisions).
(b)Repealed provisions continued for collecting accrued taxes, enforcing penalties, etc. The parts of the Revenue Act of 1921 which are repealed by this Act shall (except as provided in sections 280 and 316 and except as otherwise specifically provided in this Act) remain in force for the assessment and collection of all taxes imposed by such Act, and for the assessment, imposition, and collection of all interest, penalties, or forfeitures which have accrued or may accrue in relation to any such taxes, and for the assessment and collection, to the extent provided in the Revenue Act of 1921, of all taxes imposed by prior income, war-profits, or excess-profits tax acts, and for the assessment, imposition, and collection of all interest, penalties, or forfeitures which have accrued or may accrue in relation to any such taxes. In the case of any tax imposed by any part of the 353Revenue Act of 1921 repealed by this Act, if there is a tax imposedrevenue act of 1924. by this Act in lieu thereof, the provision imposing such tax shall remain in force until the corresponding tax under this Act takes effect under the provisions of this Act.
(c)The repeal of Title II and Title IV of the Revenue Act ofRepeal of income and estate taxes not to effect benefits under Act of 1921.Vol. 42, pp. 241, 257, 277, 279. 1921 shall not be construed to take away the retroactive benefits allowed by paragraph
(12)of subdivision
(a)of section 214 or paragraph
(14)of subdivision
(a)of section 234, of the Revenue Act of 1921, or by section 401 or 403 of such Act. legislative drafting service.Legislative drafting service. Sec. 1101. Section 1303 of the Revenue Act of 1918 is amended byChange of name, etc.Vol. 40, p. 1142, amended.Made office of legislative counsel. adding at the end thereof a new subdivision to read as follows: " “(d) After this subdivision takes effect the legislative drafting service shall be known as the office of the legislative counsel, and the two draftsmen shall be known as legislative counsel. The positionsAllocated to professional grade in Classification Act.Vol. 42, p. 1491. of legislative counsel shall be allocated from time to time by the President of the Senate and the Speaker of the House of Representatives, jointly, to the appropriate grade in the compensation schedules of section 13 of the Classification Act of 1923. The rate of compensationPay, etc.*Post*, p. 586. of each of the two legislative counsel shall be fixed from time to time, within the limits of such grade, by the President of the Senate and the Speaker of the House of Representatives, respectively. The increased compensation provided for in this subdivisionIn lieu of present pay.Vol. 40, p. 1141. shall, when fixed, lie in lieu of the salary specified in subdivision (a). The legislative counsel shall have the same privilege of free transmissionFree transmission of mail. of official mail matter as other officers of the United States Government.” " government actuary.Government Actuary. Sec. 1102. The salary of the Government Actuary, so long as theSalary increased for present incumbent. position is held by the present incumbent, shall be at the rate of $7,500 a year. saving clause in event of unconstitutionality.Saving clause. Sec. 1103. If any provision of this Act, or the application thereofInvalidity of any provision, etc., not to affect remainder of Act, etc. to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provision to other persons or circumstances, shall not be affected thereby. effective date of act.Effective date. Sec. 1104. Except as otherwise provided, this Act shall take effectUpon enactment. upon its enactment. TITLE XII.—Reduction of income tax payable in 1924. REDUCTION OF INCOME TAX PAYABLE IN 1924. Sec. 1200.
(a)Any taxpayer making return, for the calendar yearAllowance on returns for 1923.Vol. 42, p. 227–271.*Post*, p. 693. 1923, of the taxes imposed by Parts I and II of Title II of the Revenue Act of 1921 shall be entitled to an allowance by credit or refund of 25 per centum of the amount shown as the tax upon his return.
(b)If the amount shown as the tax upon the return has been paidCredit or refund if tax already paid. in full on or before the time of the enactment of this Act, the amount of the allowance provided in subdivision
(a)shall be credited or refunded as provided in section 281 of this Act.
(c)If the taxpayer has elected to pay the tax in installments and,Prorating of allowance on installment payments. at the time of the enactment of this Act, the date prescribed for the 354revenue act of 1924.payment of the last installment has not yet arrived, the amount of the allowance provided in subdivision
(a)shall be prorated to the four installments. The amount so prorated to any installment, the date for payment of which has not arrived, shall be applied in reduction of such installment. The amount so prorated to any installment, the date for payment of which has arrived, shall be credited against the installment next falling due after the enactment of this Act.
(d)Application to extended time payments. If the taxpayer has been granted an extension of time for payment of the tax or any installment thereof to a date subsequent to the enactment of this Act, the amount of the allowance provided in subdivision
(a)shall be applied in reduction of the amount of tax shown upon the return, or, if the tax is to be paid in installments, shall be prorated to the four installments. The amount so prorated to any installment, the date for payment of which has not arrived, shall be applied in reduction thereof. The amount so prorated to any installment, the date for payment of which has arrived, shall be credited against the installment next falling due after the enactment of this Act.
(e)Credit or refund for part payments. Where the taxpayer at the time of the enactment of this Act has not paid in full that part of the amount shown as the tax upon the return which should have been paid on or before the time of the enactment of this Act, then 25 per centum of any amount already paid shall be applied in reduction of the amount unpaid (such unpaid amount being first reduced by 25 per centum thereof) and any excess shall be credited or refunded as provided in section 281 of this Act.
(f)Allowance deducted from previously assessed deficiencies. If the correct amount of the tax is determined to be in excess of the amount shown as the tax upon the return, and a deficiency has been assessed before the enactment of this Act, then 25 per centum of any amount of such deficiency which has been paid shall be applied in reduction of the amount unpaid (such unpaid amount being first reduced by 25 per centum thereof) and any excess shall Deficiency subsequently assessed.be credited or refunded as provided in section 281 of this Act. Any deficiency assessed after the enactment of this Act shall be reduced by 25 per centum of the amount which would have been assessed as a deficiency if this title had not been enacted.
(g)Deduction of allowance from tax or deficiency. The allowance provided in subdivision
(a)shall be deducted from the tax or deficiency for the purpose of determining the amount on which any interest, penalties or additions to the tax shall be based. Sec. 1201. Allowances for fiscal year ending in 1923.
(a)Any taxpayer making return, for a period beginning in 1922 and ending in 1923, of the taxes imposed by Parts I and II of Title II of the Revenue Act of 1921, shall be entitled to an allowance by credit or refund of 25 per centum of the same proportion of his tax for such period (determined under the law applicable to the calendar year 1923 and at the rates for such year) which the portion of such period falling within the calendar year 1923 is of the entire period.
(b)For fiscal year ending in 1924, on tax for 1923. Any taxpayer making return, for a period beginning in 1923 and ending in 1924, of the taxes imposed by Parts I and II of Title II of this Act, shall be entitled to an allowance by credit or refund of 25 per centum of the same proportion of a tax for such period (determined under the law applicable to the calendar year 1923 and at the rates for such year) which the portion of such period falling within the calendar year 1923 is of the entire period.
(c)Allowance for deficiencies ending in 1923 or 1924. In the case of a deficiency assessed upon a taxpayer entitled to the benefits of subdivision
(a)or
(b)in respect of the tax for a period beginning in 1922 and ending in 1923 or beginning in 1923 and ending in 1924, the allowance provided for in subdivisions
(a)and
(b)shall be made in respect of such deficiency in a similar manner to that provided in subdivision
(f)of section 1200. 355 Sec. 1202. Any taxpayer who has made return of the taxes imposedrevenue act of 1924.Allowance for less than a year in 1923. by Parts I and II of Title II of the Revenue Act of 1921, for a period of less than a year and beginning and ending within the calendar year 1923, shall be entitled to an allowance by credit or refund of 25 per centum of the amount shown as the tax upon his return. If the correct amount of the tax for such period is determined to be in excess of the amount shown as the tax upon the return, the taxpayer shall be entitled to the benefits of subdivision
(f)of section 1200 of this Act. Sec. 1203. The allowance provided in sections 1201 and 1202Rules, etc., for credits and refunds to be prescribed. shall, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, be made in a similar manner to that provided in section 1200. Sec. 1204. The interest provided in section 1019 of this Act shallNo interest allowed.*Ante*, p. 346. not be allowed in respect of the allowance provided for in this title. Sec. 1205. The benefits of the allowance provided for in this titleRules, etc., for granting benefits to be prescribed. shall be granted to the taxpayer under rules and regulations prescribed by the Commissioner with the approval of the Secretary. Sec. 1206. Terms defined in the Revenue Act of 1921 shall, whenDefinitions in former Act continued. used in this title, have the meaning assigned to such terms in that Act. Approved, June 2, 1924 at 4 o’clock and 1 minute P. M.
Connectionstraces to 1
Citation graph
cites case law
Chapter 234
To reduce and equalize taxation, to provide revenue, and for other purposes
Stat.Chapter 778
Cites 1Cited by 0 across 0 sources
★   the supreme law of the land   ★
Don't Tread on Me
E Pluribus Unum — out of many, one

"If you don't know your rights, you don't have any."

Marginalia · a citizen's law index
A research desk, not legal advice. Always read the cited source before relying on a summary.
Questions or an issue? support@self-law.org
disclaimerMarginalia is a research index, not a law firm. Nothing on this site is legal, tax, or financial advice and no attorney–client relationship is formed by using it. Statutes, regulations, and case law change; summaries, search results, AI output, and member posts may be incomplete, out of date, or wrong. Any interpretation drawn from material on this site should be validated by a licensed attorney in your jurisdiction before you act on it.