SUPPLEMENT M-INTEREST AND ADDITIONS TO TAX Sec. 291. Failure to file return. Sec. 292. Interest on deficiencies. Sec. 293. Additions to the tax in case of deficiency. Sec. 294. Additions to the tax in case of nonpayment. Sec. 295. Time extended for payment of tax shown on return. Sec. 297. Interest in case of jeopardy assessments. Sec. 298. Bankruptcy and receiverships. Sec. 299. Removal of property or departure from United States. SUPPLEMENT N-CLAIMS AGAINST TRANSFEREES AND FIDUCIARIES Sec. 311. Claims against transfer assets. Sec. 312. Notice of fiduciary relationship. SUPPLEMENT O-OVERPAYMENTS Sec. 321. Overpayment of installment. SUBTITLE A-INTRODUCTORY PROVISIONS SEC. 1. CLASSIFICATION OF PROVISIONS. The provisions of this title are herein classified and designated as Subtitle A-Introductory provisions, Subtitle B-General provisions, divided into Parts and sections, Subtitle C-Supplemental provisions, divided into Supplements and sections. SEC. 2. SPECIAL CLASSES OF TAXPAYERS. The application of the General Provisions and of Supplements A to D, inclusive, to each of the following special classes of taxpayers, shall be subject to the exceptions and additional provisions found in the Supplement applicable to such class, as follows: (a) Estates and trusts and the beneficiaries thereof,-Supplement E. (b) Members of partnerships,-Supplement F. (c) Insurance companies, Supplement G. (d) Nonresident alien individuals, Supplement H. -- (e) Foreign corporations,-Supplement I. (f) Individual citizens of any possession of the United States who are not otherwise citizens of the United States and who are not residents of the United States, Supplement J. (g) Individual citizens of the United States or domestic corporations, satisfying the conditions of Supplement J by reason of deriving a large portion of their gross income from sources from within a possession of the United States, Supplement J. (h) China Trade Act corporations, Supplement K. SUBTITLE B-GENERAL PROVISIONS Part I-Rates of Tax SEC. 11. NORMAL TAX ON INDIVIDUALS. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax equal to the sum of the following: (a) 12 per centum of the first $4,000 of the amount of the net income in excess of the credits against net income provided in section 25; (b) 3 per centum of the next $4,000 of such excess amount; and (c) 5 per centum of the remainder of such excess amount. SEC. 12. SURTAX ON INDIVIDUALS. (a) Rates of surtax. 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 net 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 $28,000, 7 per centum in addition of such excess. $720 upon net incomes of $28,000; and upon net incomes in excess of $28,000 and not in excess of $32,000, 8 per centum in addition of such excess. $1,040 upon net incomes of $32,000; and upon net incomes in excess of $32,000 and not in excess of $36,000, 9 per centum in addition of such excess. $1,400 upon net incomes of $36,000; and upon net incomes in excess of $36,000 and not in excess of $40,000, 10 per centum in addition of such excess. $1,800 upon net incomes of $40,000; and upon net incomes in excess of $40,000 and not in excess of $44,000, 11 per centum in addition of such excess. $2,240 upon net incomes of $44,000; and upon net incomes in excess of $44,000 and not in excess of $48,000, 12 per centum in addition of such excess. $2,720 upon net incomes of $48,000; and upon net incomes in excess of $48,000 and not in excess of $52,000, 13 per centum in addition of such excess. $3,240 upon net incomes of $52,000; and upon net incomes in excess of $52,000 and not in excess of $56,000, 14 per centum in addition of such excess $3,800 upon net incomes of $56,000; and upon net incomes in excess of $56,000 and not in excess of $60,000, 15 per centum in addition of such excess. $4,400 upon net incomes of $60,000; and upon net incomes in excess of $60,000 and not in excess of $64,000, 16 per centum in addition of such excess. $5,040 upon net incomes of $64,000; and upon net incomes in excess of $64,000 and not in excess of $70,000, 17 per centum in addition of such excess. $6,060 upon net incomes of $70,000; and upon net incomes in excess of $70,000 and not in excess of $80,000, 18 per centum in addition of such excess. $7,860 upon net incomes of $80,000; and upon net incomes in excess of $80,000 and not in excess of $100,000, 19 per centum in addition of such excess. $11,660 upon net incomes of $100,000; and upon net incomes in excess of $100,000, in addition 20 per centum of such excess. (b) Sale of mines and oil or gas wells. For limitation of surtax, see section 102. (c) Capital net gains and losses. For rate and computation of tax in lieu of normal and surtax in case of net incomes of approximately $30,000, see section 101. (d) Evasion of surtaxes by incorporation.-See section 104. SEC. 13. TAX ON CORPORATIONS. (a) Rate of tax.-There shall be levied, collected, and paid for each taxable year upon the net income of every corporation, a tax of 132 per centum of the amount of the net income in excess of the credits against net income provided in section 26. (b) Exempt corporations. See section 103. (c) Improper accumulation of surplus. For tax on corporations which accumulate surplus to evade surtax on stockholders, see section 104. SEC. 14. RETURNS EMBRACING YEARS WITH DIFFERENT LAWS. If a return embraces portions of two calendar years for which the laws are different, the tax shall be computed as provided in section 105. Part II-Computation of Net Income SEC. 21. NET INCOME. (a) General rule.-"Net income" means the gross income computed under section 22, less the deductions allowed by section 23. (b) Methods of accounting and accounting periods.-The accounting periods and method of accounting on the basis of which the net income shall be computed shall be as provided in Part IV of this title. (c) Installment sales. For method of computing and returning income in the case of installment sales, see section 44. SEC. 22. GROSS INCOME. (a) General definition.-"Gross income" includes gains, profits, and income derived from salaries, wages, or compensation for personal service (including in the case of the President of the United States, the 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, 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, 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. (b) Exclusions from gross income.-The following items shall not be included in gross income and shall be exempt from taxation under this title: (1) LIFE INSURANCE.-Amounts received under a life insurance contract paid by reason of the death of the insured, whether in a single sum or in installments (but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income); (2) ANNUITIES, ETC.-Amounts received (other than amounts paid by reason of the death of the insured and interest payments on such amounts) under a life insurance, endowment, or annuity contract, but if such amounts (when added to amounts received before the taxable year under such contract) exceed the aggregate premiums or consideration paid (whether or not paid during the taxable year) then the excess shall be included in gross income. In the case of a transfer for a valuable consideration, by assignment or otherwise, of a life insurance, endowment, or annuity contract, or any interest therein, only the actual value of such consideration and the amount of the premiums and other sums subsequently paid by the transferee shall be exempt from taxation under paragraph (1) or this paragraph; (3) GIFTS, BEQUESTS, AND DEVISES.-The value of property acquired by gift, bequest, devise, or inheritance (but the income from such property shall be included in gross income); (4) TAX-FREE INTEREST.-Interest upon (A) the obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia; or (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 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) COMPENSATION FOR INJURIES OR SICKNESS.-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; (6) PENSIONS AND WORLD WAR COMPENSATION PAYMENTS.Amounts received as compensation, family allotments 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; (7) BUILDING AND LOAN ASSOCIATIONS.-The amount received by an individual 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 income under this paragraph in any taxable year shall not exceed $300; (8) MINISTERS. The rental value of a dwelling house and appurtenances thereof furnished to a minister of the gospel as part of his compensation; (9) MISCELLANEOUS ITEMS.-The following items, to the extent provided in section 116: "Earned income" from sources without the United States; The income of foreign governments; Income of States, municipalities and other political subdivisions; Receipts of ship owners mutual protection and indemnity associations; Dividends from China Trade Act corporations. (c) Inventories.-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. (d) Distributions by corporations.-Distributions by corporations shall be taxable to the shareholders as provided in section 115. (e) Determination of gain or loss. In the case of a sale or other disposition of property, the gain or loss shall be computed as provided in sections 111, 112, and 113. (f) Gross income from sources within and without United States.For computation of gross income from sources within and without the United States, see section 119. |