War-Profits and Excess- INCLUDING Stamp Taxes, Capital Stock Tax, of Child Labor BY GEORGE E. HOLMES of the New York Bar INDIANAPOLIS THE BOBBS-MERRILL COMPANY PREFACE A radical change in our system of income and excess-profits taxation seems imminent-for two reasons. The complexities of the present system involve too much administrative labor—simplification is necessary if the tax is to be collected promptly and at low cost. Attention should, and will be, directed towards the solution of this problem. There is also a widespread conviction that the tax burden must be lightened. The excess-profits tax is the particular subject of attack, but it is difficult to see how this tax can be completely abandoned for some time to come without increasing the income tax rates. The solution may perhaps be found in the adoption of some new form of income tax on corporate incomes-such, for instance, as taxing the undistributed incomes of corporations at very heavy rates (in order to increase the distribution of dividends) or a graduated tax, based on invested capital, with perhaps a single division of income to relieve the corporations with low, fixed incomes of too heavy a burden and to tax all others at the same rate. In the meantime development of the present law goes on apace. Many new regulations, rulings and decisions have appeared and are noted and commented upon in this the third edition of the author's work. Old rulings, and practice under the former statutes, have been retained and are stated in the foot notes or in separate paragraphs so that the book may be useful in answering questions arising on examination of old returns as well as in preparing new ones. The author's thanks are again extended to the many friends who have given him helpful suggestions and criticism, and particularly to Mr. Randolph E. Paul, of the New York Bar, and Mr. H. B. Spaulding for their assistance in preparing the manuscript. The author also acknowledges with gratitude the valuable help received. from Ross W. Lynn, Esq., of New York and Thomas G. Deering, Esq., of Chicago. The Income Tax Service and The War Tax Service issued by the Corporation Trust Company of New York have again been referred to as sources of information on Treasury Department rulings and regulations. These services are so generally recognized as the standard reporters that no explanation need be given for their use. They are cited "I. T. S." and "W. T. S.," respectively, in the footnotes. New York, January 2, 1920. GEORGE E. HOLMES. CONTENTS Preceding Federal Laws-Administration of the Laws-Advisory Board and Committee on Review and Appeal-Rulings and Regulations— United States and Possessions-Gross and Net Income-Individuals- Normal Tax-Surtax-Corporation Tax-Personal Service Corpora- tions-Partnerships-Collection at Source-Information at Source- INDIVIDUALS TO WHOM THE LAW IS APPLICABLE. Persons Exempt from Tax-Citizens of the United States-Aliens Residing in the United States-Non-Resident Aliens-Residents of Possessions of United States-Husband and Wife-Incompetents-Agents-Fiduciaries Extent to which Taxable-Income from Sources Within the United States RESIDENT AGENTS FOR NON-RESIDENT ALIENS AND FOREIGN CORPORATIONS Distinction Between Withholding and Resident Agents-Duties and Liabili- ties of Resident Agents-Procedure in Collecting Income-Making Re- turns for Non-Resident Principal-Paying the Tax-Nominal Stock- 40 |