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ASSETS,
Capital,

Loss, 742

Sale of, 802-806
Assignees (See also "Receivers")

Returns by, 97
AssocIATIONS,

Are corporations, 93, 94
Distinguished from trust, 856
Farmers', 885

Gifts to (See “Gifts")
AUTOMOBILES,

Expense, 547
Farmers',

Cost not deductible, 886

Up-keep may be deductible, 886
License fees, deductible, 609
Loss, 540
Use of, as compensation for services, 285
Used partly in business and partly for

pleasure, 286
AVERAGES AS Basis of Taxation, 18, 19
AVOCATION, DEFINITION, 667

B
BAD DEBTS (See “Debts, bad")
BALDWIN LOCOMOTIVE Co. v. McCoach, 660
BANKRUPTCY,

Claims, not paid, 672
Receivers (See "Receivers”)

Test of bad debts, 675
BANKS,

Assessments for insuring deposits, 572
Balances,
Interest on foreign corporations, non-

resident, 842
Non-resident alien, 829
Certificates of indebtedness, interest de-

ductible, 587
Deposits, interest,

Accrued, to be reported, 405
Discount, how reported, 405
Federal land, dividends exempt, 46, 56
Federal reserve, dividends exempt, 46
Foreign items collected by, license re.

quired, 234
Interest collected by, substitute certifi-

cates used, 227
Interest on deposits deductible, 587
Mutual savings, exempt, 52
BANK STOCK, Taxes on. 606-608
BENEFICIARIES (See also “Estates"; "Fi.

duciaries")
Aliens, non-residents, 836, 838
Deductions for depreciation, 701
Exemptions, 35
For non-resident aliens, 836
Insurance (See "Insurance")
Liberty bonds held by trust, taxed on, 434
Non-resident alien, 867
Not permitted to inspect returns of ex.

ecutor, 121
Payments to, trust and estates, 858
Returns, 873
Share of net income of estate, 857

BENEFITS, SOCIETIES PROVIDING, EXEMPT,

52, 880
BENZIGER V. UNITED STATES, 198
BERTHS, TAXES ON, DEDUCTIBLE, 612
BETS, TAXABLE, 291
BETTERMENTS, 578

Deductions, 684, 692
Expenditures, 691, 692
Permanent, 684

By lessees, 441, 573
Rates, 710
BILL IN EQUITY, 190
BOARD AS COMPENSATION FOR SERVICES, 223,

283
BOARD OF TRADE, EXEMPT, 54
"Bona FIDE CLAIM" DEFINED, 202
BONDS (See "Securities")
BONUS
Deductible as compensation paid, if rea-

sonable, 551
Distinguished from compensation, 275-

281, 551
Stock, common, 325
Books, DEPRECIATION OF, 712

Obsolescence of professional man's, 543
BOOKS OF ACCOUNT, 257-266

Accrual basis (See "Accrual basis")
None kept, deductions from income on

cash basis, 529 (See also “Cash basis")
Production of, in examination of accuracy

of returns, 116
Reconcilement with returns, 145
Reconciliation of taxable income with

suggested draft statements, 1063-1072
BRADY V. ANDERSON, 182, 869, 870
British PRACTICE (See "Great Iritain")
BROKERS (See "Stock-brokers")
BRUSHABER V. UNION PACIFIC R. R. Co..

807, 870
BUILDING AND LOAN AssoCIATIONS,

Exempt, 52

Interest from shares of, 408
BUILDINGS,
Depreciation, 712

Accounting, 689
Farm,

Cost not deductible, 886

Depreciation, 886
Improvements, 578

Deductions, 684, 692
Expenditures, 691, 692
Permanent, 441, 573, 684

Rates, 710
Leased (See also “Leases")

Depreciation, 574
New, cost of, not deductible, 535
Old, cost of demolishing not deductible,

657
BUREAU OF INTERNAL REVENUE, 158
Disclosure of information by officials and

employees, forbidden, 124
Over-centralization, 164
Rulings and advice, policy regarding te.

quests for, 167-169
BURGLARY (See "Theft")

[blocks in formation]

ESS, DEFINED, 666
Ess ExpenSES (See also "Expenses")
inguished,
'om capital outlay, 574
om personal, 536
iod of ascertaining, 537
ESS INCOME, 290-333 (See also “In.
me")
bunting procedure, 292-295
vrtization, when included, 332
ssments, voluntary, paid by stock.
lders, not taxable, 324
in taxable, 291
us in common stock, 325
imissions, to foreign corporations on
merican goods sold abroad, not taxa.
able, 329
tractors, 293
iages, 321
e as of which returns to be made, 321
ts,
ad, charged off as, and later recovered,

321
orgiven, 323, 653
counts,
llowed customers, 294, 295
aken, by paying cash, not taxable, 327
tinguished from income from govern.
ient contracts, 330
sort business, 328-330
cal year, 292
atures,” speculation in, 292
ts,
keceived by corporations, 322
vernment contracts, 330-333
SS,
Amortization, when included, 332
Defined, 290, 291
talment plan sales, 308-318 (See also
'Instalment plan sales”)
urance,
'Business," how deductible, 325
rentories, 295-308 (See also "Inven-
ories")
nd as compensation, income for what
rear, 321
wful, need not be, 291
tent, infringement of, 321
operty,
Destroyed, profit from insurance, how

determined. 318-321
Requisitioned, profits from, how deter.

mined, 318-321
Leplacement funds," 318-321
eculation in futures, 292
camship companies, foreign, 329
ock,
As bonus with other securities, 325
Corporation purchasing its own, 325
Treasury, accounting practice for, 326
ixable and non-taxable, 321
ixes paid by vendee for vendor are in.
come to vendor, 324
nlawful, taxable, 291
ear for which items to be returned, 321

Calendar Year (See "Fiscal year")

Information returns cover, 235
Suggested draft statement for (See Com-

putation of tax")
CALIFORNIA SPECIAL PARTNERSHIP, 512, 896
CAMPAIGN CONTRIBUTIONS, Not DEDUCTIBLE,

581
CAPITAL,
Assets,

Losses on sale of, 648

Sale of. 802-806
Corporations,
Personal service, may have, if negli-

gible, 517, 518
Differentiated from income, 16
Gains and profits subject to tax, 253
Interest on (imputed) not deductible,

592
Invested,

Depletion basis, 776-8
Outlay,
Distinguished from business expenses,

574
Not deductible except as depreciation

allowance, 533
Tax on, unconstitutional, 16
CAPITAL STOCK (See “Stock")
CAPITAL STOCK TAX, 891.917
Alien property custodian, corporation in

hands of, is not doing business, 898
Associations subject to, 895
“Book value," 905
Business,

Beginning in course of year, 893, 894
Ceasing to do, in course of year, 894

"Doing business," 897-899
Capital,
Invested outside U. S., no deduction

for, to domestic corporations, 900
Not employed in business, not deduct.

ible, 900
Computation, 900-909
Constitutional, 7
Corporations,

Affiliated, returns of, 910
Domestic, 894, 900
Exempt, 892
Foreign, 915-917

Personal service, specifically exempt, 894
Credit, payments under former law, 914
“Doing business," 897-899
Period in which corporation is active

determines tax liability, 899
Due in advance, 892
Exemption,
Corporations exempt from income tax,

892, 900
Corporations “not doing business," 899

Capital Stock Tax-(Continued)
Exemption (Continued)

Corporations, personal service, 894

Partnership, limited, 895
“Fair value"

Adjustments permitted, 904
Difficult to assess without reference to

income, 891
Income enters into, 891
Method of ascertaining, 902-909
Preceding year is basis, 892
Profit or loss does not immediately

affect, 903
Surplus included, 903
Fiscal year, 892
Foreign corporations, 915

Form of return, (708), 1088, 1089
Former law, payments under, credit for,

914
Holding companies, whether exempt, 898
Income, 907
Income tax, 7
Individuals, does not apply to, 892
Information not yet available, incomplete

return, 912
Insurance companies, 896

Foreign, mutual, 915
Mutual, how taxable, 900, 901
Reserves required by law not included,

900
Law of August 5, 1909, 6
Limited to corporation, 892
Liquidation, return not required, in case

of, 899
Market value, 906
1909 law held constitutional, 7
Not doing business,

Illustrated, 898

Returns to be made, 897
Partnership bank, whether subject to, 895
Partnership, limited, whether subject to,

895, 896
Partnerships, does not apply to, 892
Payment, time of, 913
Penalties, 914, 915
Railroad corporation under government

control, 899
Rate, 891, 900-909
Receiver, corporation in hands of, is not

doing business, 898
Refund, business, ceasing to do, 894
Returns,
Additional for year ended June 30,

1919, 912
Corporations, affiliated, 910
Corporations, foreign, required of,
Incomplete, when permitted, 912
Instructions, 905-909
Liquidating company need not make,

899
Required, though exempt, 909

Time of making, 909
Stock,

Common, 902
Preferred, 901

Capital Stock Tax-- (Continued)
Surplus included in the value, 903
Taxable period, 893
Trusts, whether associations subject to,

895
CAPITAL SURPLUS, DIVIDENDS FROM, 470
CARFARE,

Expense, 538

Taxes on deductible, 612
CARRYING CHARGES, REAL ESTATE, 579
Cash Basis (See also "Accrual basis")
Bad debts not deductible if corresponding

accrued income not reported, 671
Deductions determined on, when, 529
Suggested draft statement, 1042-1044,

1051
Casa REGISTERS, DEPRECIATION, 714
CASUALTIES,

Farm products, not deductible, 887
Losses from, 540, 649, 653
Non-resident aliens, 833
Personal expenses, whether deductible,

540
CATCH-ALL PROVISION IN LAW, 252
CEMETERY COMPANIES, EXEMPT, 53
CERTIFICATES (See "Ownership certifi-

cates")
CERTIFICATES OF INDEBTEDNESS, 187-190

Interest deductible, 586
1917 Act, wholly exempt, 420
Payment of tax in, 187
Deposit in local federal reserve bank

permitted upon request, 189
CHAMBERS OF COMMERCE, EXEMPT, 54
CHARGES, DEFERRED, 578
CHARITABLE INSTITUTIONS, INCORPORATED OR

NOT INCORPORATED, GIFTS TO DEDUCT-

IBLE, 558, 559
CHARITABLE SOCIETIES, EXEMPT, 53
CHARITIES (See "Gifts")
CHEMICAL INDUSTRY, DEPRECIATION, 714
CHEQUES,
Cancelled, or collector's receipt, sent with

claim for refund, 205
Uncertified, permitted for payment of

tax, 186
CheseBROUGH v. UNITED STATES, 216
CHILDREN, WAGES Paid To, 542
Chose IN Action,
Appreciation, when realized, is income,

372
Defined, 373
CHRISTMAS GIFTS (See “Gifts")
CHURCHES, GIFTS TO (See “Gifts")
CITIZENS OF A Possession Not OTHERWISE

CITIZEN, 808
Civic LEAGUES, EXEMPT, 55
CLAIMS,

Bankruptcy, not paid, 672
Estate, not paid, 672
For abatement (See “Abatement, claims

for")
For refund (See “Refunds")

Forms,

Aliens, non-resident individuals, 837

CLAIMS (Continued)
Value, reduction in, may be made be.

fore sale, 636
CLERGYMEN,

Fees of, taxable, 276

Parsonages, how taxable, 283
CLOSED TRANSACTIONS,

Exchanges which are, 371
Exchanges which are not, 387-389
Instalment sales as, 365
Mergers, when, 366
Reorganization, control remaining in for.

mer owner, 377
Stock, same issue, bought and sold in

different lots, 364
Stock received for property, when, 375,

376

What constitutes, 359-365
CLOTHING, BUSINESS EXPENSE, 547
CLUBS,

Business engaged in by, 55
Dues, taxes on, deductible, 612
Expenses of membership, 538

Social, exempt, 55
COAL Co. v. ROGERS, 513
COAL LANDS, ROYALTIES, 391
COLLATERAL INHERITANCE Tax Not Deduct-

IBLE, 620
COLLATERAL SECURITY,

Depreciation, 675

Interest paid on borrowings, 590
COLLECTION DISTRICTS, 158
COLLECTION OF Tax (See also "Payment of

tax")
At source (See “Payment of tax at

source")
Distraint, 190
COLLECTOR OF INTERNAL REVENUE,

Duties, 158
Extensions of time, power to grant, 65
Powers, 158
Procedure of, in claims for refund or

abatement, 217-219
Suits against (See "Suits for recovery of

tax paid")
COLLEGES,

"Land-grant," salaries in, 272
COLUMBIA. DISTRICT OF,

Not a "state," 269

Salaries of officials of, not exempt, 270
COMBINED HOLDINGS, DEPLETION DEDUC-

TIONS FOR, 784
COMMISSIONER OF INTERNAL REVENUE,

Claims for refund may be filed with, 205
Discretionary power of, in imposing pen.

alties, 132
Duties, 159
Examinations by, to ascertain correctness

of returns, 116
Extensions granted by, other than first 30

days, 65, 66
May require any returns, 61

Powers, limited, 199
COMMISSIONS,

Agents, 556

COMMISSIONS-(Continued)
As compensation, 288
Foreign corporation on American goods

sold abroad, 329
Insurance premiums, 555
Salesmen, 555
Stock-brokers, 556
Taxable, 276

Trust companies, 556
COMMITTEE OF Review AND APPEAL, 161-

164, 196
Acts after claim for abatement or re-

fund is filed, 164
Appointed in place of Advisory Tax

Board, 161
Talbert, P. S., chairman of, 161
COMMON STOCK, 801 (See also "Stock")
COMPENSATION (See “Personal services,

compensation for")
COMPOSITIONS, WHETHER DEDUCTIBLE, 676
COM PROMISES, 132

Of penalties, 132
Offers in,

Affidavit, 192

Procedure, 191-193
Taxes and Penalties, 191-193
Whether deductible as bad debt, 677
COMPUTATION OF Tax, 144-157 (See also

“Rates")
Corporations,
Excess profits tax credit, suggested

draft statement, 1070
Reconcilement of book net income with

income subject to income and excess
profits taxes, suggested draft state-

ment, 1071, 1072
Schedule A suggested draft statement,

1061-1062, 1065-1067
Schedule M (old schedule B), sug.

gested draft statement, 1063-1064,

1068-1069
Specific credit prorated, 157
Fiscal year 1918-1919, 149
Form 1120 A, 146, 147
Gifts, deductions for, all income to be

included in calculating, 144
Individuals,

Fiscal years, 151
Income from "tax-free" bond interest,

suggested draft statement, 1058
Interest from tax-free bonds, suggested

draft statement, 1058
Liable to surtax, suggested draft state.

ment, 1042-1057
Not liable for surtax, suggested draft

statement, 1040-1041
Partner, liberty bond interest, suggested

draft statement, 1059-1060
Partnership fiscal year, 154

Ending in 1919, 152, 155, 156
Period for which tax is computed, 260
Personal service corporation, fiscal year

ending in 1919, 152
Stockholders, 155

COMPUTATION OF Tax (Continued)
Rates of previous years, application of,

151
Reconcilement of returns with books, 145
Stock dividends, when taxed at rates of

prior years, 153
CONNECTICUT INCOME TAX, 4
CONSERVATOR (See "Fiduciaries")
CONSOLIDATIONS, 96, 365-369

Cash, part payment in, effect of, 384
Corporation, dissolved, with surplus, 367
Credit, one of $2,000, only, 105
Market value of new securities lacking,

366

“No-par-value stock,” 380-384
Limitation on aggregate par value

wrongly held applicable, 381, 382
Partnership, dissolved, 368
Par value of new securities, 366, 379
Suggested draft statement, schedules A

and M (old schedule B), 1065-1069
Surplus, disposition of, 367, 368

When closed transaction, 365
CONSTITUTIONALITY,
Income tax, federal, suits to determine,

203
CONSTRUCTIVE Receipt, 264
CONTAINERS, DEPRECIATION, 714
CONTRACTORS,

Amortization allowance, 332
Computation of business income, 293
Government, 270, 330-333

Adjustment of contract, 332
Warrants issued to, 271
CONTRACTS,

Depreciation, 714

Government, 270, 330-333
CONTRIBUTIONS (See "Gifts")

Campaign not deductible, 581
CONVERSION, U. S. OBLIGATIONS, 431, 432
CONVEYANCES OF REAL ESTATE, TAXES ON

DEDUCTIBLE, 612
CO-OPERATIVE SOCIETIES, EXEMPT, 56
COPYRIGHT,

Cost not deductible, 579
Depreciation, 715
Great Britain, 394

Royalties from, 394
CORE Boxes, DEPRECIATION, 717
CORPORATIONS,

Advertising Liberty bonds, 566
Affiliated (See also subhead “Subsidi-

aries") .
Consolidated returns, 98-102
Defined, ror
Disclosure of affiliations, when re.

quired, 102
Fiscal year different, 105
Government contract, 331
Information returns, Form (1122), 1184
Liberty bonds, 437-439
Public service corporations, 104
Return, form of, 100

Forms (1120, 1122), 1160-1167, 1184

CORPORATIONS- (Continued)
Affiliated (Continued)
Taxable year, when fiscal years are dif-

ferent, 105
With foreign, credit for taxes paid

abroad, 606
Agricultural,

Donations to fairs, etc., 567
Exempt, 51
Non-exempt, 51
Alien Property Custodian in charge, 898
Assets sold by, 386
Assignees, returns, 97
Associations, 93, 94
Capital stock tax (See “Capital stock

tax")
Computation of tax (See "Computation

of tax")
Consolidated returns, 98

Net income, 99
Consolidations, 96, 365-369

Cash, part payment in, effect of, 384
Credit, one of $2,000 only, 105
Dissolved, with surplus, 367
Market value of new securities lacking,

366
“No-par-value stock," 380-384
Partnership, dissolved, 368
Par value of new securities, 366, 379
Suggested draft statement for filling in

schedules A and M (old schedule

B), 1065-1069
Surplus, disposition of, 367, 368

When closed transaction, 365
Credit for taxes paid foreign countries,

601
Credits. specific, 36

Prorated, 157
Deductions (See "Deductions")
Defined, 93
Depreciation (See “Depreciation")
Dissolved, surplus, disposition of, 367
Dividends received, 479, 980
Domestic,

Capital stock tax, 893-896
Defined, 93
Owning foreign, consolidated returns,

103
Excess profits tax (See “Excess profits

tax")
Excise tax of 1909, 6, 7 (See also “Cap-

ital stock tax")
Exempt,

Income tax, 51-57
Must furnish information, 58
Must withhold tax, 58

Right to exemption must be shown, 57
Expenses, 534 (See "Expenses")
Extension of time, 64
Fiscal year basis,

Discrimination against, 146-149
Ending in 1918, amended returns to

claim exemptions, 432
Used in 1917, amended returns, 115

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