principal office or agency in the United States, then to the collector at Baltimore, Maryland." PAR. F. Section 56 (Title I-Income Tax) of the Revenue Act of 1934 provides, in part, as follows: 66 SEC. 56. PAYMENT OF TAX. "(a) TIME OF PAYMENT.—The total amount of tax imposed by this title shall be paid on 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 the fifteenth day of the third month following the close of the fiscal year. "(c) EXTENSION OF TIME FOR PAYMENT.-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 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." PAR. G. Section 145 (Title I-Income Tax) of the Revenue Act of 1934 provides: "(a) Any person required under this title to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any tax imposed by this title, who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time 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) Any person required under this title to collect, account for, and pay over any tax imposed by this title, 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 tax imposed by this title 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) 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.' PAR. H. Section 61 (Title I-Income Tax) of the Revenue Act of 1934 provides: "SEC. 61. LAWS MADE APPLICABLE. "All administrative, special, or stamp provisions of law, including the law relating to the assessment of taxes, so far as applicable, are hereby extended to and made a part of this title." PAR I. Section 62 (Title I-Income Tax) of the Revenue Act of 1934 provides : "SEC. 62. RULES AND REGULATIONS. "The Commissioner, with the approval of the Secretary, shall prescribe and publish all needful rules and regulations for the enforcement of this title." Pursuant to the above-quoted provisions and other provisions of the internal revenue laws, the following regulations are hereby prescribed with respect to the excess-profits tax imposed by the Revenue Act of 1934: ARTICLE 1. Definitions.-As used in these regulations, the term (a) “Adjusted declared value" means in the case of a domestic corporation the adjusted declared value of its capital stock as determined under section 701 of the Revenue Act of 1934 and the regulations issued respecting the capital stock tax imposed by that section and in the case of a foreign corporation the adjusted declared value of capital employed in the transaction of its business in the United States as determined under such section and regulations. (b) "Tax," except as otherwise indicated, means the excess-profits tax imposed by section 702 of the Revenue Act of 1934. (c) "Income-tax taxable year" means the calendar year, the fiscal year ending during such calendar year, or the fractional part of a year, upon the basis of which the corporation's net income is computed and for which its income tax returns are made for Federal income tax purposes. (d) "Net income" means (1) in the case of an income-tax taxable year governed by the Revenue Act of 1932, as amended by section 218 of the National Industrial Recovery Act, "net income" within the contemplation of section 21 of the Revenue Act of 1932, and (2) in the case of an income-tax taxable year governed by the Revenue Act of 1934, "net income" within the contemplation of section 21 of the Revenue Act of 1934. The credits allowed corporations against net income (for example, the credit allowed by section 26 of the Revenue Act of 1934) are not applicable. ART. 2. Scope of tax.-The excess-profits tax, imposed by section 702 of the Revenue Act of 1934, is imposed upon a certain portion of the net income of every corporation for each income-tax taxable year ending after the close of the first year in respect of which the corporation is subject to the capital stock tax imposed by section 701 of that Act. ART. 3. Measure and rate of tax.-(a) Domestic and foreign corporations.— The tax is imposed in an amount equivalent to 5 per cent of such portion of the corporation's net income for the income-tax taxable year as is in excess of 121⁄2 per cent of the adjusted declared value as of the close of the last preceding income-tax taxable year (or as of the date of organization if the corporation had no preceding income-tax taxable year). (b) Adjusted declared value.-No variation is permitted between the adjusted declared value set forth in the corporation's capital stock tax return and the adjusted declared value set forth in its excess-profits tax return, except that in the case of an excess-profits tax return for an income-tax taxable year which is a period of less than 12 months the adjusted declared value set forth in its capital stock tax return shall be reduced to an amount which bears the same ratio thereto as the number of months in the period bears to 12 months. ART. 4. Method of computation, examples.-The application of the provisions of article 3 of these regulations may be illustrated generally by the following examples: Example (1): The M Corporation, the income-tax taxable year of which is the calendar year, is subject to the capital stock tax imposed by section 701 of the Revenue Act of 1934 for the year ended June 30, 1934. The value declared in its capital stock tax return for the year ended June 30, 1934, of its capital stock as of the close of its preceding income-tax taxable year (the calendar year 1933) is $100,000. The net income of the corporation for the calendar year 1934 is $24,500. The excess-profits tax for the calendar year 1934 is $600, computed as follows: Net income for calendar year 1934 Less: $24,500 122 per cent of the value declared in the capital stock tax return 12, 500 Amount subject to excess-profits tax under section 702 of the Revenue Excess-profits tax, 5 per cent of $12,000__ 12, 000 600 Example (2): The O Corporation, the income-tax taxable year of which is the fiscal year ending July 31, is subject to the capital stock tax imposed by section 701 of the Revenue Act of 1934 for the year ended June 30, 1934. The value declared in its capital stock tax return for the year ended June 30, 1934, of its capital stock as of the close of its preceding income-tax taxable year (the fiscal year ended July 31, 1933) is $108,000. The net income of the corporation for the fiscal year ended July 31, 1934, computed under Title I of the Revenue Act of 1932, as amended by section 218 of the National Industrial Recovery Act, is $24,500. (The net income for income-tax taxable years beginning after December 31, 1933, shall be computed under Title I of the Revenue Act of 1934.) The excess-profits tax for the fiscal year ended July 31, 1934, is $550, computed as follows: Net income for fiscal year ended July 31, 1934. 122 per cent of the value declared in the capital stock tax return $24,500 13, 500 Amount subject to excess-profits tax under section 702 of the Revenue Excess-profits tax, 5 per cent of $11,000–. 11, 000 550 ART. 5. Return.-Every corporation which is subject to the capital stock tax imposed by section 701 of the Revenue Act of 1934 shall make an excess-profits tax return for each income-tax taxable year which ends after the close of the first year in respect of which it is subject to such capital stock tax. There is no provision in the Revenue Act of 1934 which authorizes the making of a consolidated return by any affiliated group of corporations for the purpose of the excess-profits tax imposed by section 702 of that Act. Accordingly, every corporation which is liable for the making of an excess-profits tax return under section 702 of the Revenue Act of 1934 (for any income-tax taxable year ending after June 30, 1934), whether or not such corporation is a member of an affiliated group of corporations, must make its excess-profits tax return and compute its net income separately, without regard to the provisions of section 141 of the Revenue Act of 1932, as amended by section 218(e) of the National Industrial Recovery Act, or section 141 of the Revenue Act of 1934. The excess-profits tax return shall be made within the time prescribed for making the corporation's Federal income tax return for the income-tax taxable year, and shall be made to the collector of internal revenue with whom such income tax return is required to be made. ART. 6. Payment of tax.-The excess-profits tax for any income-tax taxable year shall be paid within the time prescribed for paying the Federal income tax for such taxable year. See paragraph F, above. ART. 7. Credits against tax prohibited.-Foreign income and profits taxes may not be credited against the excess-profits tax imposed by section 702 of the Revenue Act of 1934. ART. 8. Determination of tax, assessment, collection. The determination, assessment, and collection of the tax, and the examination of returns and claims in connection therewith, will be made under such procedure as may be prescribed from time to time by the Commissioner. WRIGHT MATTHEWS, Acting Commissioner. Approved September 6, 1934. H. MORGENTHAU, Jr., Secretary of the Treasury. |