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Fixhibit D
Page 6 OF 20



Supplement A-Rata of Tus

[Supplementary to tubchapter B. Pert SEC. 101 DOTIONS NON TAS ON CORPORATIONS

The following organizations shall be esampt from weston undor this chapter

(OʻLhos primetter, or borticultural organizations;

19) Lutual wrings banlos Dol boring a capital stock represented by aberus;

(8) Friternal beneficiary societies, orders, or issociations, (4) operating under the lodge system or for the exclusivo benefit of iso member of baternity iteelt operating, ander the lodge system; and (B) providing for the payment of lite, sick, accident, or other benefits to the member of roch society, order, or association or their dependents;

(1) Domestic building and load associations substantially all the business of which u confined to making loans to members; und cooperative banks without capital stock organized and operated for mutual purposes and without profit;

(5) Cemetery companies owned od opented exclusively for the benefit of their members or which are not operated for profit; and any corporation chartered solely for burial purposes us i cemetery corporation and not permitied by its charter to engage in toy business DOC Docessarily incident to that purpose, no part of the net earnings of which inurus to the benefit of any private shareholder or individual;

(6) Corporations, and any community chest, fund, or foundation, organized and operated esclusirely for religious, chariuable, rientibc, licenz, or education purposes, or for the presention of cruelty to children or animals, do part of the pet eimings of **hich ipures to the benefit of any private shareholder or individ. al, and do substantial part of the activities of which is carrying on propagrode, or oberirise attempting, to influence legislation;

(7) Business leagues, chambers of commerce, real-estito boards, or boards of inde, not organized for profit and no part of the det earnings of which inures to the benefit of any private sbarebolder or individual;

(8) Ciric leagues or organizations not organized for profit but opented exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of designated person or persons in a particular municipality, and the Det earnings of which are deroied usclu. Rively io charitable, educational, or recreational purposes;

(9) Clubs organized and operated exclusively for pleasure, recreation, and other nonprobable purposes, Do part of tho pet warnings of which inures to the benefit ol any pririte sharebolder;

(10) Benevolent lifo insundco associations of a purely local character, mutual ditch or irrigation companies, mutual or cooperative telopboot compimies ar like organizations; but only is 85 per centum or mor of the incomt wonsists of amounts collected from members for the sole purpose of meeting losses and espensas:

(11) Farmers' or other mutua boil, cyclone, county, or fire insurance companies or associations (including interinsurers and reciprocal underwritens) the income of which is wed or beld for the purpose of paping losses or espenses;

that inmers, frut grovers, or Disergochuttons or quotzat ma openied op pooperativo besis" (s) for the purpose of marketing the products of members or other producers, and tuming back to then the proceeds of wlos, less the necessary marketing expenses,

Exhibit D
Page T of 20

1939, Cric



in this pangmpb all expenses incurred whicb are not allowed us
doductions by subsection (c) of this sction.

(c) DODOTIOXo Aulown. In computing the Det income of an
insunoco company subject to the tas imposed by this poction there
wball be allowed us deductions:

(1) Au ordinary and necessary expenses incurred, us provided
in poction 23 ();

(2) Au intarost u provided in section 23 (b);
(8) Taxes us provided in section 23 (c);

Losses incurred us defined in subsection (b) (6) of this

(5) Subject to the limiustion contained in section 117 (d), losses rustiined during the hublo your from the sale or other disposition of property;

(6) Bad debis in the nature of agency bakances and bills receiv. ablo escorrained to be worthless and charged off within the unblo yer;

(7) The amount of interest earned during the taxable year which under Section 22 (b) (4) is excluded from gross income;

(8) A reasonablo allowance for the exhaustion, wear and tear of

property, 18 provided in section 23 (1);

(0) Charitable, and so foreb, contributions, us provided in sec. tion 23 (9);

(10) Deuuctions (other than those specified in this subsection) as provided in section 23, but not'in eicess of the amount of the gross income included under subsection (b) (1) (C) of this section.

(d) DODACTIONS OF Formax CORPORATION. - In the case of a for.
eigo corponation tho deductions allowed in this section shell be
lowed to the errent provided in Supplement I in the case of .
foreign corporation engaged in indo or business within the United
States or having an ofico or place of business therein.

() Dora DocCTIONS. --Nothing in this section shall be con.
strued to permit the same item to be inico deducted.

The amount of income, ar probes, and excess-profits taxes ir posed
by foreign countries or possessions of the United States shall be
llowed is a credit against the tu of domestic insurance company
subject to the tas imposed by section 201, 204, or 207, to the errent
provided in the case of a domestic corporation in section 131, and in
ibo case of tho tus imposed by section 201 or 204 del income” as used
in section 131 means the Det income as defined in this Supplement.

The gross income of insunace companies subject to the tas im.
posed by section 201 or 204 shall not be determined in the manner
provided in section 119.

(1) IN WINERAL.-There shall be leried, collected, and paid for
each la tablo yeur upon the special class det income of every mutual
insurance company (other than a life insurance company) a w
equal to 1814 per cenium thereof.

(2) FORDON CORPORATIONS, -The las imposed by paragraph (1) ghall apply to foreigo corporations as well as domestic corporations; but foreign insurance companies not carrying on an insurance busi. ness within the United States shall be canable us orber foreign corpontions

(6) Gross INCOX-Mutual marine-insunoce companies aball include in gross income the gross premiums collected and received by the less amounu pud for reinsuranco.

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Exhibit D
Page 8 of 20


75 (c) DODECTION1-addition to the deductions lowed to corportions by gection 23 the following deductions to insurance companies shall also be allowed, unless otherwis allowed

(1) McTom DITRANCE COMPANIOTI TAX LOE DITOR Nicz-Lo the case of mutual insurance companies ochor thao lito ingurace companiet

(Al tho dut addition paquired by low to be made within the lazablo year to rurn funds (including in the case of Lee went insuring companies abo actual deposit of soms with Suato ar Territorial oficer pursuant to low w addition to guarraino ar rear funde); vad

(B) Ebo sums other two dividends paid within the taxablo yon policy and sanuity contracta

(8) Motome wa Brioca porum. In the case of mutual marino insurance companies, in addition to the deductions allowed is pargrapb (1) of this subsection, unless ocherwise allowed, amoudu repaid to policybolden op scoount of premiums previously paid by them, and interest paid upon such amounts between the ascertainment and the payment thorot;

(3) Moros duetzacz COXPAND OTHe ran Lor um wam-Lo the case of mutual insurance companies (including interinsuren und reciprocal underwriters, but not including mutual lito or mutua marine insurance companies moguiring their mom. bars to make premium deposius to provide for losses and expenses, the amount o? premium deposits returned to their policy boldens and the amouni of premium deposito retained for the payment of losses, expenses, wd reinsunina rerna.

Supplencat 8–Nonresident Allen Ladividuale SEC. 211. TA ON NO.RESIDENT ALIEN INDIVIDUALS (*) No CXTTDD Story Bowess on Oma(1) Gama Bora

SA) Lucrouton OP TAL-Then shall be logled, collected, and paid for each taxable jeus, in liep of the last posed by sections 11 and 12, upon the amount received, by er ty nonresident alien individual pot engaged ip trdo or business within the United Suatus and not having womca or place of business therein, from sources within the United

States is iny test (escepe interest on deposits with persons carrytog on the banking business), diri. deods, redis, salaries, wages, premium annuities, compensations, remunerations, emolumenis, or othephired or determinable annual or periodical grins profits, and income, # tax of 10 per centum of rach amount, except that such shall be reduced, in the case of a resident of a contiguous couetty, to such rato (not less than 8 per centum) us may be provided by treaty with auch country. (B) Chow

For iDelodon la compotapod of the amount pedded to aban boldur's conreal nee mculara (2) A OGREOST Tas 331,600:-The tar imposed by pan. mpb (1) shall not apply any individual if the aggregate amount received during the inside year from the sources therein specified is mon than $21,600.

(8) RESIDENTI Or cofnodoms couS pito the prorisions of pargrpb (8), the provisions of pengraph Yi) shall apply to

resident of contiguous country w long is gero is in efect * treaty with such covoury (natifed prior to August 26, 1837) under which the rate of ius under section 211 (1) of the Rerenue Act of 1938, 19 Stal 1714, prior to its imendment by section 501 («) of the Ravenue Act of 1937, 50 Stat. 830, ww reduced.

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EXTRACT FROM Sec. 101(11) Comu, Htee Reports 1942ACT


1942 (11) Hutuel beit, esetent, esvelty, lisbility, or are inrese companies of atrociation fineluding interinsurer and reciproest

Hoonlig undermpiters witing in sobre construet solely on a morvol besis. if the mean of the ledger assets held at the beginning and end of the tessobte gener does not caceed, wual insurance companies or wisociations acher than life of marine (including interinsurers and reciprocal undervriero) Coriting no insurance contracts other than mutual insurance contracto > if the gross amount receired during the lazadle year from interest, diridends, rends, and premiums (including deposits and assessmenti) does not exceed $15.000;

Committee Reports Report-Wort ud Mias Com. The memprion provided in section mitte (77th Cong , 30 Sens., H. Rept. 101 111 has been resined so tha: it 3).-The rregue derived from will be limited 10 mutual companies rautual insufice COD PADies is det or associations peluding interinsurers ligible. The reason lies in the brond and reciprocal underw nient' Think language of tbe exemption provision insurance contracts solely on mutual and in the ineffective looguage of the basis of the men of the ledger 192!! taxing prorisions. Section 144 of tbe held at the beginning and end of the bill make the exemption provision lanıble year does not exceed $100.000 explicit, limiting it to COD PADies of Practically all of the farmers' and designated vise (p. 71-23)

orber small and local mutual companies More mutual insurance companies bare ledger askets of less than $100.000 other than life, Large uren us , and accordingly will not be required ar pirea sa outright exemption from 6 BJe income tax returns of pay any taxation under retion 10) (11), J. income tun. It is ntimated that though ebet vection u originally over 80 percent of all companies will designed to aempi only_sou sod be exempt from fling returns under local mutual companies. The remain- this provision

lo addition, ered here in mutual companies, mitb let ledger iets meerd $100,000, id exceptions, ordinarily per DO an incorde ur retur Dust be Wed. vader the present bebod of computin it is provided under section 20 ( their income even tbougb Dot specifeilly that do income tax is payable volen niem pied from the war.

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