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of a subsequent year ending June 30 is not subject to the capital stock tax for such year. A corporation, the activities of which are confined to holding property, receiving income therefrom, and distributing such income, does not incur capital stock tax liability. However, if it should go beyond these limitations and engage in any business activities at any time, the tax will attach. No particular amount of business is required to incur tax liability.

ART. 86. “Not doing business” illustrated.—Holding companies (as defined in article 88); corporations whose business purposes and projects have been completed (as a subdivision fully developed, sold, and turned into cash), abandoned (as where prospective oil leaseholds have been tested and proven worthless), turned over to another (as under a long-term lease the terms of which impose no obligation to act on the part of, and no business act is performed by, the lessor company), or all of whose business and properties are operated by, or are in the hands of, a receiver, a Federal conservator, or a State officer with powers similar or analogous to those of a Federal conservator during the entire taxable year, are not doing business.

ART. 87. Return by a corporation not doing business. Whether a corporation is doing business within the meaning of the Act depends upon the activities engaged in during the particular year, and if a claim for exemption on that basis is sustained for one taxable year it does not necessarily follow that the corporation will be exempt in a subsequent year. Therefore, the collector will demand a return and the Commissioner will require detailed information disclosing all activities of such corporation each year regardless of the action on the claim for exemption for the previous year. See article 89.

If a corporation is dissolved within any taxable year its duly authorized representatives should file a return for that year, indicating that such return is its final filing and clearly disclosing thereon the pertinent facts relative to such dissolution to the end that the collector may remove the corporation from his list. However, if within any taxable year a corporation ceases to exist in contemplation of law but continues its business in a quasi-corporate form, it must continue to file returns and pay any tax due. See article 21.

ART. 88. Holding company defined.—A holding company is one whose corporate powers are limited to the mere owning and holding of property and distribution of its avails, or one which, although incorporated for the purpose of doing business, has retired from the business for which it was organized and has reduced its activities to the mere ownership and holding of property, distributing its avails, and doing only such acts as are necessary to the maintenance of its corporate existence and the private management of its purely internal affairs.

ART. 89. Claims for exemption. As corporations are generally organized to do business, every domestic corporation is presumed to be subject to the tax unless satisfactory evidence is submitted showing that it is exempt. Except as provided in article 95, organizations claiming exemption on the ground that they were not doing business during any part of the period from May 10, 1934, to June 30, 1934, both dates inclusive, or during any subsequent taxable year shall file Form 707, revised, complete as to items 1 to 9, inclusive, on the first page, accompanied by an affidavit disclosing the information required in (C) on the second page.

The collector, upon receipt of the affidavit and other papers, will forward them to the Commissioner for decision as to whether the organization is exempt. If after consideration by the Commissioner exemption is denied, the taxpayer will be notified that the Form 707, revised, as filed, will be accepted as the return required by the Act. Upon such notification the tax, based on the value declared therein (if not previously paid), and the interest due thereon will be assessed for collection. If exemption is denied, interest accrues at the rate of 1 per cent a month from the date the tax was due and not from the date when exemption was denied. See article 102. If after consideration by the Commissioner exemption is finally granted, the declaration of value shown in item 7, Form 707, revised, will not be binding upon the corporation for a subsequent year in which it may be found to be doing business and liable for the tax.

NOT DOING BUSINESS IN THE UNITED STATES-FOREIGN

CORPORATIONS

SECTION 701 (c) OF THE REVENUE ACT OF 1934

(c) The taxes imposed by this section shall not apply

(4) to any foreign corporation in respect of the year ending June 30, 1934, if it did not carry on or do business in the United States during a part of the period from the date of the enactment of this Act to June 30, 1934, both dates inclusive. Art. 90. Not doing business in the United States.-A foreign corporation not carrying on or doing any business in the United States during any part of the period from May 10, 1934, to June 30, 1934, both dates inclusive, is not subject to the capital stock tax for the year ended June 30, 1934. A foreign corporation not carrying on or doing any business in the United States during any part of a subsequent year ending June 30 is not subject to the capital stock tax for such year.

RETURNS

SECTION 701 (d) OF THE REVENUE ACT OF 1984

(d) Every corporation llable for tax under this section shall make a return under oath within one month after the close of the year with respect to which such tax is imposed to the collector for the district in which is located its principal place of business or, if it has no principal place of business in the United States, then to the collector at Baltimore, Maryland. Such return shall contain such information and be made in such manner as the Commissioner with the approval of the Secretary may by regulations prescribe. * * * All provisions of law (including penalties) applicable in respect of the taxes imposed by section 600 of the Revenue Act of 1926 shall, insofar as not inconsistent with this section, be applicable in respect of the taxes imposed by this section. The Commissioner may extend the time for making the returns and paying the taxes imposed by this section, under such rules and regulations as he may prescribe with the approval of the Secretary, but no such extension shall be for more than sixty days.

ART. 91. Tentative return.-In view of the finality of the value declared in the “ first return under this section ” as provided by section 701 (f), the filing of a tentative return of this tax by a corporation for the first year in which it is taxable under this Act is not permissible for any purpose. A tentative return may not be accepted by the collector under any circumstances.

ART. 92. Return by domestic corporation. The first return under the Act must cover the year ended June 30, 1934, and must contain a statement under oath setting forth the declared value of the corporation's capital stock (see article 42) and the other data indicated by Form 707, which form may be secured from collectors of internal revenue. This form must be filed in duplicate with the collector.

ART. 93. Return by affiliated corporations.-Although section 141 of the Revenue Act of 1934 provides for a consolidated return for affiliated railroad corporations for the purpose of income tax, each corporation whether a railroad corporation or other class of corporation must render a separate capital stock tax return in duplicate and in complete form. So-called subsidiary corporations, all or a part of the stock of which is owned by another corporation, must render separate returns, in duplicate, the same as every other corporation.

A parent corporation, that is, a company which owns the controlling interest in the capital stock of one or more subsidiary corporations, should submit with its return a list of all subsidiaries, indicating the districts in which they are required to file returns and the number of shares of stock held in each subsidiary. The return of each subsidiary corporation should, in addition to other information indicated, show the name of the parent company and the district in which the return of the parent company was filed.

The tax is imposed upon each corporation with respect to carrying on or doing business and not upon each business carried on. If more than one corporation is engaged in carrying on a single business each must pay the tax.

ART. 94. Return by foreign corporation.—Every foreign corporation carrying on or doing business in the United States shall file a return on Form 708, in duplicate, irrespective of the amount of capital employed in the United States in the transaction of its business. The value of the capital employed in the transaction of the business of a foreign corporation in the United States shall be declared, and the tax payable thereon shall be computed, in accordance with the instructions on the form.

ART. 95. Verification of return.—The return, as well as any separate statement submitted therewith, must be sworn to by one of the duly authorized executive officers of the corporation and also by the treasurer, assistant treasurer, or chief accounting officer.

If, during the entire taxable period and at the time the return is required to be filed, the property of a corporation is in the custody of the law, being administered by a receiver, Federal conservator, or a State officer with powers similar or analogous to those of such Federal conservator, such officer should execute and file Form 707, revised, complete as to items 1 to 6, inclusive, and items 8 and 9. The authority under which the officer is operating the business of the corporation and the date when he assumed charge should be shown. No such officer may, however, make the original declaration of value, but such declaration of value shall be made by the corporation in its first return when and if the business is returned to the corporation. If the Federal or State officer does not file the form referred to above, it shall be filed by the corporation and shall state that the business of the corporation is being operated by such Federal or State officer, the date when such officer assumed charge, and by whom authorized.

ART. 96. Time for making return.—It shall be the duty of every corporation to file a return for each taxable year during the month of July next following the end of such year, or later in case the time for filing is officially extended by the Commissioner.

Applications for extension of time should be filed with the collector of internal revenue. The collector will make proper record of the application and forward it immediately to the Commissioner,

with his recommendation as to whether the extension should be granted. The application should set forth under oath the specific reasons for desiring an extension and the time for which the extension is asked. No such application will be considered unless it is filed at or before the time for filing the return. The time for filing the return may not be extended beyond 60 days from the date the tax is due.

INSPECTION OF RETURNS

SECTION 701 (e) OF THE REVENUE ACT OF 1934

(e) Returns required to be filed for the purpose of the tax imposed by this section shall be open to inspection in the same manner, to the same extent, and subject to the same provisions of law, including penalties, as returns made under Title II of the Revenue Act of 1926.

RETURNS TO BE PUBLIC RECORDS

SECTION 257 OF THE REVENUE ACT OF 1926

SEC. 257. (a) Returns upon which the tax has been determined by the Commissioner shall constitute public records; but, except as here inafter provided in this section and section 1203, 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. Whenever a return is open to the inspection of any person a certified copy thereof shall, upon request, be furnished to such person under rules and regulations prescribed by the Commissioner with the approval of the Secretary. The Commissioner may prescribe a reasonable fee for furnishing such copy.

(b) (1) The Secretary and any officer or employee of the Treasury Department, upon request from the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, or a select committee of the Senate or House specially authorized to investigate returns by a resolution of the Senate or House, or a joint committee so authorized by concurrent resolution, shall furnish such committee sitting in executive session with any data of any character contained in or shown by any return.

(2) Any such committee shall have the right, acting directly as a committee, or by or through such examiners or agents as it may designate or appoint, to inspect any or all of the returns at such times and in such manner as it may determine.

(3) Any relevant or useful information thus obtained may be submitted by the committee obtaining it to the Senate or the House, or to both the Senate and the House, as the case may be.

(c) The proper officers 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.

(d) All bona fide shareholders of record owning 1 per centum or more of the outstanding stock of any corporation shall, upon making request of the Commissioner, be allowed to examine the annual income

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