1928 is mailed to a corporation, the suspension of the running of the statute of limitations, provided in section 277, shall apply in the case of corporations with which such corporation made a consolidated return for such taxable year.

(g) Allocation of income and deductions.-For allocation of income and deductions of related trades or businesses, see section 45.

ART. 731. Consolidated returns of affiliated corporations for 1928.Affiliated corporations as defined in section 142 (c) may for the taxable year 1928 make separate returns or make a consolidated return in which will be reported the consolidated net income of the affiliated corporations, except that if a return for the taxable year 1927 was properly made upon either of these bases, the return for the taxable year 1928 must be made upon the same basis unless permission to change is granted by the Commissioner. In applying for permission to change from one basis to the other there should be submitted a statement in the form of an affidavit executed by the persons qualified to sign the returns setting forth completely the reasons for making the request. If a consolidated return including all of the affiliated corporations is made, the tax shall be assessed upon the basis of such return, the total tax being computed in the first instance as a unit and assessed against the respective affiliated corporations in such proportions as may be agreed among them, or, in the absence of any such agreement, on the basis of the net income properly assignable to each. If a notice in respect of a deficiency in tax for the taxable year 1928 is mailed to any of the affiliated corporations which made a consolidated return for such taxable year, the running of the statute of limitations on assessment and collection shall be suspended in the case of all of such corporations. (See sections 272 (a) and 277 and articles 1171, 1201, and 1202.)

The consolidated return shall be filed on Form 1120 in the office of the collector of the district in which one of the affiliated corporations has its principal office, except, if the affiliated group of corporations has a parent corporation, the consolidated return shall be filed in the office of the collector of the district in which the parent corporation has its principal office. Each of the other affiliated corporations shall cause to be filed in the office of the collector of its district a statement to the effect that its net income has been reported in the consolidated return, which statement shall designate the district in which the consolidated return is filed. The consolidated return shall be executed by one of the affiliated corporations (in case the affiliated group of corporations has a parent corporation by the parent corporation) on behalf of all the affiliated corporations. It shall be sworn to by the president, vice president, or other principal officer and the

treasurer or assistant treasurer of such corporation. The consolidated return shall include therein a statement setting forth

(a) The name and address of each of the affiliated corporations; (3) The number of shares and the par value of each class of outstanding capital stock of each such corporation at the beginning of the taxable year, together with a detailed description of the rights attaching to each class of stock;

(c) The number of shares and the par value of each class of such capital stock owned by the corporation which owns at least 95 per cent of the stock of another corporation or other corporations or by the same interests during the taxable year 1928;

(d) In the case of affiliated corporations, the stock of which is owned by the same interests, a list of shareholders of each of such affiliated corporations, with the percentage of each class of the total outstanding stock of each affiliated corporation owned by each of such shareholders during all or any part of the taxable year 1928; and

(e) In the event the affiliated corporations agree as to the proportion of the total tax to be assessed upon each affiliated corporation, an agreement in writing showing such apportionment. Unless such agreement accompanies the return, the tax shall be assessed and collected on the basis of the net income properly assignable to each affiliated corporation.

If there are any changes of ownership during the taxable year 1928, the information required under paragraphs (b) and (c) of this article, should show the conditions existing immediately subsequent to such changes.

Foreign corporations, corporations entitled to the benefits of section 251, and corporations organized under the China Trade Act, 1922, may not make consolidated returns. It is not permissible to include the net income of any such corporation in a consolidated return. But see section 141 (h) and article 714 as to when a foreign corporation may be treated as a domestic corporation for the purpose of making a consolidated return. See section 45 regarding the allocation of income and deductions of related trades or businesses owned or controlled by the same interests. See section 131 (f) and article 698 regarding credit for taxes on account of ownership of stocks of foreign corporations and of corporations entitled to the benefits of

section 251 or 261.

ART. 732. When corporations are affiliated for 1928.-For the taxable year 1928 two or more domestic corporations will be deemed to be affiliated if one corporation owns at least 95 per cent of all the stock

of the other or others, exclusive of nonvoting stock which is limited and preferred as to dividends, or if at least 95 per cent of the stock of two or more corporations, exclusive of nonvoting stock limited and preferred as to dividends, is owned by the same interests.

ART. 733. Change in stock ownership during taxable year where consolidated return is made.—(a) Where corporations are affiliated at the beginning of a taxable year but due to a change in stock ownership during the year the affiliated status is terminated, or (b) where corporations are not affiliated at the beginning of the taxable year but through change of stock ownership during the year become affiliated, a full disclosure of the circumstances of such changes of stock ownership shall be submitted to the Commissioner.

Ordinarily in such cases, where only two corporations are involved, the corporations, under the conditions described in (a) of the preceding paragraph, should make a consolidated return including the income of both corporations to the date of the change of stock ownership, and each should make a separate return from the date of such change in stock ownership to the end of the taxable period, and, under the conditions described in (b) of the preceding paragraph, each corporation should make a separate return from the beginning of the taxable period to the date of the change in stock ownership, and a consolidated return should be made by the corporations from the date of change of stock ownership to the end of the taxable year, including therein the income of both corporations for such period.

Where there are more than two corporations affiliated at the beginning of the taxable year, and due to a change in stock ownership the affiliated status of one or more is terminated, but there remain at least two corporations affiliated during the entire year, the corporations should make a consolidated return for the entire year, excluding from the return the income of the corporations whose affiliated status is terminated, from the date of the change in stock ownership; or where two or more corporations are affiliated at the beginning of the taxable year, and through change in stock ownership additional corporations become affiliated, the corporations should make a consolidated return including the income of the additional corporations from the date of change of stock ownership. In either case, the corporations whose status is changed during the taxable year should make separate returns for that part of the taxable year during which they were not affiliated.

Where, in accordance with the procedure set forth in the preceding paragraphs, a return is made by a corporation for a period of less than a year, the tax shall be computed in accordance with section 47 and article 371. Where corporations become affiliated during the tax

able year, the separate returns of the corporations for the portion of the taxable year during which they were not affiliated will not be due until the fifteenth day of the third month following the close of the taxable year. For example, if two corporations become affiliated on July 1, 1928, and make a consolidated return for the period from July 1 to December 31, 1928, the separate returns of the corporations covering the period from January 1 to June 30, 1928, will be due on March 15, 1929. In any case in which the change of affiliated status is for a period so short as to be negligible, a consolidated return or separate returns for the entire period, as the case may be, may be made; in such cases, however, there should accompany the return a complete statement setting forth the changes in the affiliated. status occurring during the taxable year.

ART. 734. Consolidated net income of affiliated corporations for 1928.Subject to the provisions covering the determination of taxable net income of separate corporations, and subject further to the elimination of intercompany transactions (whether or not resulting in any profit or loss to the separate corporations), the consolidated taxable net income shall be the combined net income of the several affiliated corporations. Only one specific credit of $3,000 (see section 26 (b) and article 301) shall be allowed against the consolidated net income of the affiliated corporations, and this only in case the consolidated net income does not exceed $25,000; but if such net income is more than $25,000, the tax imposed by section 13, 201, or 204 shall not exceed the tax which would be payable if the $3,000 credit were allowed, plus the amount of the net income in excess of $25,000. In respect of the statement of gross income and deductions and the several schedules required in connection with a consolidated income tax return, the corporations making such return are required to prepare and file such statement and schedules in columnar form to the end that the details of the items of gross income and deductions for each corporation included in the consolidation may be readily audited. ART. 735. Taxable year of affiliated corporations making consolidated return. In the case of a consolidated return of affiliated corporations, the consolidated net income must be computed on the basis of the taxable year (calendar year or fiscal year) of any one of the affiliated corporations, except, if the affiliated group of corporations has a parent corporation, the consolidated net income must be computed upon the basis of the taxable year of the parent corporation. However, if the corporations properly made a consolidated return for the taxable year 1927, the consolidated net income for the taxable year 1928 must be computed on the basis of the same taxable year upon which the 1927 return was made, unless permission to change is

granted by the Commissioner. If pursuant to this article the taxable year of a group of corporations affiliated under the provisions of section 142 (c) (2) would be a fiscal year beginning in 1928, a consolidated return for a fractional part of a year may be filed by such affiliated corporations for the period between the close of the previous fiscal year of the group and December 31, 1928. In such cases the period beginning January 1, 1929, shall be included in the return or returns for the taxable year 1929.

SEC. 143. FIDUCIARY RETURNS.

(a) Requirement of return.-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) Every individual having a net income for the taxable year of $1,500 or over, if single, or if married and not living with husband or wife;

(2) Every individual having a net income for the taxable year of $3,500 or over, if married and living with husband or wife;

(3) Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income;

(4) Every estate or trust the net income of which for the taxable year is $1,500 or over;

(5) 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) Every estate or trust of which any beneficiary is a nonresident alien.

(b) 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 with the above requirement. Such fiduciary shall make oath (1) that he has sufficient knowledge of the affairs of the individual, estate or trust for which the return is made, to enable him to make the return, and (2) that the return is, to the best of his knowledge and belief, true and correct.

(c) Law applicable to fiduciaries.—Any fiduciary required to make a return under this title shall be subject to all the provisions of law which apply to individuals.

ART. 741. Fiduciary returns.-Every fiduciary, or at least one of joint fiduciaries, must make a return of income

(a) For the individual whose income is in his charge, if the gross income of such individual is $5,000 or over, or if the net income of such individual is $1,500 or over if single or if married and not living with husband or wife, or if such individual is married and