The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1909-12-13
CORPORATION TAX
LAW Is EXPLAINED
Continued from Page One.

in the same way. because net income
was not net profits it meant net re-
ceipts.' An examination OF the law, how
ever. will show that il gross income
meant gross receipts, tho statutory de.
ductIons thcrcfrom would not leave net
receipts but would leave merely an arnl-
trary sum. II also appeared from cacuIa-
tions that II these interpretations were
given 10 the law from mercantile ana
manufacturing companies alone the
amount OF tax received would be many
lilnes the sum which was estimated 10 he
collected from all corporations, JOINT stock
companies, and associations OF whatever
1T is clear. therefore, that the purpose
of the law was not to put tHN o" re-
ccipts. but tax on profits ana tiat
the terms gross income and net IN
come arc used because. while they arc
practically identical with gross profits
and net profits they are yet more em-
hrasIVc and consequently permit more
comprehensive administration OF the law
"The' law requires that the return from
every corporation. Joint stock company;
and association liable TO the tax shall
show the gross amount OF the income
received during the year from all
sources and authorizes certain dcdnc-
tions such as ordinary and necessary eN-
pcnses actually paid out OF earnings III
the business and property oi such, ,c9rpor-
ations within the year; all losses
sustained during the year; amount of In
tercst actually paid within the year
amount paid by Il within the year tor
y
as dividends upon stock OF other corpora
uons liable TO this tax, etc
When we contemplate the complications
and intrlcacies of the business affairs
OF a great corporations with Its many
dealings with other corporations ana IN
dividuas which are never settled I'm cash,
but are settled on somewhat the clearing
house plan: It's many advances OF FUNDS
and long deferred statements Of accounts
purchases of supplies and materials at
one time. which are mixed WIN suppnes
and materials already on hand th9sS Pur-
chased at other times, and which arc
used and disbursed without any relation
To their time OF purchase. any attempt
TO follow each OF these transactions out
into the cashbook and TO settle the ac-
counts Of such complicated actions OF a
corporation on the cashbook instead OF
on tho ledger would rcsuleln incNtricab!c
confusion. uncertainty. and maccuT5icS.
and the friction occasioncd the business
world by such an attempt would be a
very serious proposition.
Corporations Are DIVIDED.
As a result OF this reasoning. corpora
tions have been divided into six classes.
and the following definitions adopted:
l. (a) Banks and other financial insti-
tutions-Gross income consists OF the
gross revenue derived from tho operation
and management of the business ana
property of the corporation making the
return together with all amounts OF in
come (ncludlng dividends received on
stock of other corporations, Joint stock
companies, and aSSOC!dlipnS SUBJECT
this taxi derived from all other sources
as shown by the entries on its books from
January l to December 81 OF the year for
which return IS made.
OBJ Insurance companies-Samc as !
(a) above.
2 Transportation companies-Same as
(a) above.
3. Manufacturing companies-Gross in
come received during the year from all
sources will consist OF the total amount
ascertaiued through an accounting that
shows the difference between the price
received for the goods as sold during the
year and the cost of such goods as manu-
factured. The cost OF goods manufac-
tured shall be ascertained by an addition
Of a charge to the account OF the cost
OF goods as manufactured during the year.
and a credit 10 the account OF the sum
of the inventory at the end of the year.
10 this amount should be added all items
OF Income received during the year from
other sources. including dividends re-
ceived on stock OF other corporations.
joint stock companies and associations
subject to this tax. In the determination
OF the cost Of goods manufactured and
sold as above such cost shall comprehend
all charges for maintenance and operation
| OF manufacturing plants and properties
but shall not embrace any allowances for
depreciation or losses, which Items shall
be taken account Of under the proper
| heading as deduction.
A. Mercantile companics-Gross amount
| of income received during the year from
ascertancd through inventory, or its
equivalent, which shows the difference be-
tween the price received for goods sold
and the cost OF goods purchased during
the year. with an addition OF a charge tc
| the account OF the sum OF the inventory
at beginning of the year and a credit tC
| the account OF the sum OF the inventory
at the end OF the year. To this amount
should be added all items OF income re-
ceived during the year from other sources
| including dividends received on stock oi
other corporations. Joint stock companies
| and associations subject TO this tax. Ir
| determining this amount no account shall
| be taken OF any allowances for deprecia
| tion or losses, which items shall be taker
account of under the proper heading a.
a deduction.
| . Neutrality-suspicious. income consist!
Of the gross revenue derived from The
operation and management of the bust
ness and property Of the corporation max
ing the return. together with all amounts
of income (includlnG dividends received OF
stock OF other corporations. joint stool
| companies. and associations subject 4
thls taxi derived from all other sources
| as shown by the entries on its hooks
from January / 10 December 81 Of tn
year FOR which return Is made.
| FINISHED STEEL SUFFERS: