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INTRODUCTORY

These regulations deal with the tax imposed on income by the Revenue Act of 1936. · Since these regulations deal only with the tax on income, certain parts of the Act, which are general in their nature, or which do not relate directly to the imposing and collecting of the tax, have not been printed in the body of these regulations, but have been inserted in the Appendix, where they are grouped and classified under proper headings. For this reason the main body of these regulations deals only with Titles I, IA, and VIII of the Act. Treasury Decision 4666, approved July 16, 1936, and Treasury Decision 4690, approved August 26, 1936, relating to the excess-profits tax imposed under Title I of the Revenue Act of 1935, as amended by Title II of the Revenue Act of 1936, have been printed in their entirety in the Appendix. The regulations under Title III of the Act, relating to the tax on unjust enrichment, have been promulgated as Regulations 95.

The numbering of the respective articles in the body of the regulations follows the plan adopted in Regulations 86 prescribed under the Revenue Act of 1934. In accordance with this plan the numbers of the sections of the Act are used as key numbers, followed by a dash (-), with the number of the article placed after the dash. By this means anyone who desires to learn how a given section or subsection of the Act has been interpreted by the Bureau can readily and quickly find that interpretation by using the key number. Thus, if one desires to learn what interpretation has been placed on section 21 of the Act, he should turn to article 21–1 of the regulations. In some cases several articles are necessary in the interpretation of different phases of one section or subsection or paragraph of the Act. For example, section 23(m), dealing with “Depletion,” requires many articles. Each of them, however, is designated by the key 23(m); for example, article 23(m)-1, article 23(m)-2. It is believed that by thus keying the numbers of the articles to the sections, subsections, and paragraphs of the Act, the material in the regulations is made more readily available.

The regulations proper have been divided into chapters. The material to be found in each respective chapter is shown in the “Contents.” The classification of the material by chapters follows the arrangement of the corresponding sections of the Act. .

Certain important provisions of prior Revenue Acts from 1924 to date, together with important sections of the Revised Statutes relating to income tax, will be found in the Appendix, classified and grouped under the proper headings. The material in the Appendix has also been made readily available by means of the General Index. This indexing of the material in the Appendix along with the material in the body of the regulations obviates the necessity of consulting two indexes.

REGULATIONS 94

RELATING TO THE

INCOME TAX

UNDER THE

REVENUE ACT OF 1936

Page vii-xxxi

1-3 4-182

Table of Contents.------
Chapter I. Introductory Provisions, Subtitle A of Title I.---
Chapters II-IX. General Provisions, Subtitle B of Title I.
Chapters X-XXXIII. Supplemental Provisions, Subtitle C of
Title I.-----

--------Chapter XXXIV. Surtax on Personal Holding Companies, Title

IA---------------
Chapter XXXV. General Provisions, Title VIII.--
Appendix

183-450

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451-463 464-470 471-511 513-566

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CONTENTS

CHAPTER I

SCOPE OF REGULATIONS
Title I-Income Tax, Subtitle A-Introductory Provisions

[The section numbers refer to the Revenue Act of 1936 and the article numbers to Regulations 94]

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Section 1. Application of title....

Article 1-1. Scope of regulations.---Section 2. Cross references.----------Section 3. Classification of provisions.-

Article 3-1. Division of regulations --Section 4. Special classes of taxpayers.-

Article 4-1. Application of regulations to special classes of taxpayers..

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CHAPTER II

RATES OF TAX

Subtitle B-General Provisions, Part I-Rates of Tax

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Section 11. Normal tax on individuals.---
Article 11-1. Income tax on individuals.-

11-2. Citizens or residents of the United States liable to

11-3. Who is a citizen ---Section 12. Surtax on individuals.-Article 12-1. Surtax.

12-2. Computation of surtax. Section 13. Normal tax on corporations.

Article 13–1. Normal income tax on corporations.
Section 14. Surtax on undistributed profits..
Article 14-1. Surtax on undistributed profits of corporations.---

14–2. Method of computation of surtax-Example----------
14–3. Specific credit if adjusted net income is less than $50,000.

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CHAPTER III

GROSS INCOME—NET INCOME

Part II-Computation of Net Income

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Section 21. Net income------

Article 21-1. Meaning of net income.---
Section 22(a). Gross income: General definition.--
Article 22(a)-1. What included in gross income...

22(a)-2. Compensation for personal services.-
22(a)-3. Compensation paid other than in cash---

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