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REGULATIONS 45.
(1920 EDITION)
RELATING TO THE
INCOME TAX
AND
WAR PROFITS AND EXCESS PROFITS TAX
UNDER
TITLES II AND III OF THE REVENUE ACT OF 1918.
*[40 U. S. Statutes at Large, 1057.]
Page.
4
19
Table of Contents ---
Part I. Income Tax on Individuals (Sections 210–228).
II. Income Tax and War Profits and Excess Profits Tax on Cor-
porations:
A. Income Tax (Sections 230-241)----
B. War Profits and Excess Profits Tax (Sections 300-337)-
III. Administrative Provisions (Sections 250–261)------
IV. Definitions and General Provisions (Sections 1–206; 1301-1408)-
Index
3
152
183
229
257
293
PART I.
INCOME TAX ON INDIVIDUALS.
20
30
31
[The section numbers refer to the statute and the article numbers to the regulations.)
Section 210. Normal tax---
Article 1. Income tax on individuals.
2. Normal tax_-----
3. Persons liable to tax-
4. Who is a citizen.
Section 211. Surtax.--.
Article 11. Surtax_-
23
12. Computation of surtax..
13. Surtax on sale of mineral deposits---
24
Section 212. Net income defined ----
25
Article 21. Meaning of net income
22. Computation of net income..
26
23. Bases of computation.----
24. Methods of accounting---
28
25. Accounting period ---
26. Change in accounting period.-
29
Section 213(a). Gross income defined: inclusions.
Article 31. What included in gross income ---
32. Compensation for personal services.
33. Compensation paid other than in cash_
34. Compensation paid in notes-----
35. Gross income from business---
36. Long-term contracts
32
37. State contracts----
38. Gross income of farmers.
39. Sale of stock and rights--
34
40. Sale of patents and copyrights---
41. Sale of good will.------
42. Sale of personal property on installment plan..
35
43. Sale of real estate in lots-----
36
44. Sale of real estate involving deferred payments.
45. Sale of real estate on installment plan.-----
37
46. Deferred payment sales of real estate not on installment
plan.-----
47. Annuities and insurance policies--
38
48. Improvements by lessees
49. Compensation for loss.---
50. Replacement fund for loss--
39
51. Forgiveness of indebtedness.
40
52. When included in gross income-
53. Income not reduced to possession--
54. Examples of constructive receipt---
41
Section 213(b). Gross income defined: exclusions.--
Article 71. What excluded from gross income -
72. Proceeds of insurance.-
73. Gifts and bequests.
74. Interest upon State obligations---
75. Dividends and interest from Federal land bank and
national farm loan association ----
76. Dividends from Federal reserve bank..
77. Interest upon United States obligations_
78. Liberty bond exemption under Second, Third, and Fourth
Liberty Bond Acts_-
79. Liberty bond exemption under Supplement to Second
Liberty Bond Act ----
80. Liberty bond exemption after December 31, 1918--
80(a). Summary of tax exemptions of Liberty bonds and
Victory notes ---
81. Liberty bond exemption in the case of trusts_
82. Liberty bond exemption in the case of partnerships and
personal-service corporations
83. Income of foreign governments_
84. Income of States ----
85. Compensation of State officers--
86. Compensation of soldiers and sailors...
87. Income accruing prior to March 1, 1913.
88. Subtraction for redemption of trading stamps.
Section 213(c). Gross income defined: nonresident alien individual..
Article 91. Gross income of nonresident alien individuals -----
92. Income of nonresident alien individuals not subject to tax-
92(a). When the wages of a nonresident alien seaman are
derived from sources within the United States ----
93. Income of nonresident aliens from United States bonds..
Section 214(a) 1. Deductions allowed: business expenses---
Article 101. Business expenses..
102. Cost of materials_-
103. Repairs ---
104. Professional expenses.
105. Compensation for personal services_
106. Treatment of excessive compensation -
107. Bonuses to employees ---
108. Pensions
109. Rentals
110. Expenses of farmers_
111. When charges deductible---
Section 214(a) 2. Deductions allowed: interest.
Article 121. Interest
122. Interest on capital --
Section 214(a) 3. Deductions allowed: taxes..
Article 131. Taxes ----
132. Federal duties and excise taxes..
133. Taxes for local benefits.--
134. Inheritance taxes..
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
Section 214(a) 4, 5, and 6. Deductions allowed: losses
Article 141, Losses -
142. Voluntary removal of buildings.--
143. Loss of useful value------
144. Shrinkage in securities and stocks_
145. Losses of farmers...
Section 214(a) 7. Deductions allowed: bad debts..
Article 151. Bad debts----
152. Examples of bad debts_-
153. Worthless mortgage debt.
154. Worthless securities
Section 214(a) 8. Deductions allowed: depreciation...
Article 161. Depreciation
162. Depreciable property-
163. Depreciation of intangible property-----
164. Capital sum recoverable through depreciation allowances-
165. Method of computing depreciation allowance --
166. Modification of method of computing depreciation..
167. Depreciation of patent or copyright----
168. Depreciation of drawings and models ---
169. Charging off depreciation ----
170. Closing depreciation account..
171. Depreciation in the case of farmers.
Section 214(a) 9. Deductions allowed: amortization
Article 181. Scope of provision for amortization.-
182. Depreciation of amortized property-
183. Property cost of which may be amortized.
184. Cost which may be amortized ---
185. Amortization period -----
186. Additional requirements for amortization.--
187. Redetermination of amortization allowance-
188. Sale of amortized property-----
189. Information to be furnished by the taxpayer.
Section 214(a) 10. Deductions allowed: depletion.----
Article 201. Depletion of mines, oil and gas wells; depreciation of im-
provements.
202. Capital recoverable through depletion deduction in the
case of an operating owner-----
203. Capital recoverable through depletion deductions in the
case of lessee
204. Capital recoverable through depletion in case of lessor.-
205. Determination of cost of deposits----
206. Determination of fair market value of mineral property-
207. Revaluation of mineral deposits not allowed----
208. Determination of mineral contents of mine.--
209. Determination of quantity of oil in ground.
210. Computation of deduction for depletion of mineral de
posits ---
211. Computation of allowance for depletion of gas wells----
212. Gas-well pressure records to be kept------
213. Computation of allowance where quantity of oil or gas
uncertain
71
72
73
74
75
76
77
78
79
81
82
83
84
89
Section 214(a) 10. Deductions allowed: depletion-Continued.
Article 214. Computation of depletion allowance for combined hold- Page.
ings of oil and gas wells.-----
215. Depletion-Adjustments of accounts based on bonus or
advanced royalty
216. Depletion and depreciation accounts on books_----
85
217. Statement to be attached to return when depletion or de-
preciation of mineral property is claimed ----
86
218. Statement to be attached to return where depletion of
oil or gas claimed ----
219. Discovery of mines
88
220. Oil and gas wells ----
220(a). Discovery-Proven tract or lease Property dispro-
portionate value ---
221. Proof of discovery of oil and gas wells.---
90
222. Allowable capital additions in case of mines_-
91
223. Charges to capital and to expense in the case of oil and
gas wells ----
224. Depreciation in the case of mines---
92
225. Deprecation of improvements in the case of oil and
gas wells
93
226. Depletion and depreciation of oil and gas wells in years
before 1916_----
227. Depletion of timber---
94
228. Capital recoverable through depletion allowance in the
case of timber------
229. Computation of allowance for depletion of timber for
given year
230. Revaluation of timber not allowed. -----
95
231. Charges to capital and to expenses in the case of timber--
232. Depreciation of improvements in the case of timber------ 96
233. Information to be furnished by taxpayer claiming deple-
tion of timber------
96
234. Determination of fair market value of timber---
97
235. Determination of quantity of timber -
98
236. Aggregating timber and land for purposes of valuation
and accounting------
237. Timber depletion and depreciation accounts on books--- 99
Section 214(a) 11. Deductions allowed: charitable contributions - 100
Article 251. Charitable contributions.----
100
Section 214(a) 12. Deductions allowed: loss in inventory-
101
Article 261. Losses in inventory and from rebates-
102
262. Loss from rebates
263. Loss in inventory-
264. Loss where goods have been sold.---
265. Loss where goods have not been sold.
266. Claims ---
103
267. Disposition of claims --
268. Effect of claim in abatement---
Section 214(b). Deductions allowed: nonresident alien individual.. 105
Article 271. Deductions allowed nonresident alien individuals.--
105
Section 215. Items not deductible-----
106
Article 291. Personal and family expenses.
292. Traveling expenses