New-York tribune., 1909-12-13
CROSS INCOME
Aftsr giving the definition Of net IN
rorsr u. Sarrerarv -rrocee5s.


Aftsr giving the definition Of net IN
cone The Secretary proceeds:
~ rhe same manner the term gross in
come" includes gross profits. the expression
beng used because there can be no ques-
come raoeived ~ anv CORPORATION from
any source, while there might be some
q-es-oE as - whether gross p-o1rs' or
sr1ss ss--ings' would embrace such
A great amount Of adverse criticism OF
irls ~ ls Que - IlisappHe henson OF the
opinion vas advanced that because gross
income was rot gross pror-s' u must
way oeca.Se net income was n1- net
prc-'s r meant net receipts" n ex-
sT--s- -ol ~ The law. however. WI show
tssi z gtoss income meant gross receipts
would ro- lesvs net receipts. but would
eave merely an arbitrary sum II also
interpretations were given 70 the "a " from
mercantile and manufacturing companies
s-e1e re amount OF TAX received would be
many LL-es the sum which was estimated
70 be collected from all corporations. Joint
sock companies ana associations OF what
2 Is clear therefore. that the purpose Of
t-- -aW was not - put TAX on receipts.
~ TAX On prorts, and that rhe terms
gross income and met income" are used
.-cs-se. WnAe they s-e practica-ly tden-
t-s- VITA gross profits" and net PROFITS
l-~t are YET more enbraclNe and ccnse-
e--rtF permit 2 more comprehensive ad-
n--rist-s-o- q the law.
The law requires that the return from
gi- clfpcrarlOn, joint stock company
&c association liable 70 the tax shah
snow me gross amount Of the income
received during the year from all
s9-I-es ana authorizes certain deductions
- = lseirary snd necessary expenses
e--s-- paid out Z earnings IN the busi-
ness Elc property CT such corpora tons
80 N-tr'r The year; all losses sus-
q
- s-t-ly paid within the year; amount
la- r n wirh-r the year fCr taxes.
ello--- received within the year as diyi-
,S-tos -or stock q other corporations
hs9-e 20 tlis ra1 etc"
REPLY TO ACCOUNTANTS
Fr-r careful consideration has been given
!, t-ese expressions m order % determine
el8t evidence shall be required IN order
-- eelrrr-le lar stems ere 20 De consiG-
fe- 40 Income f. Calcula ting gross
-t-9Te srd what items should be allowed
crr ictons under the language OF The
.-N. An impression Eas obtained IN some
,--1f-FTF -lar NJ item should be considered
e I'd the account of the corpora
'H. e-r=r as income or & deduction. IN
--s receipt ~ disbursement was eTi-
l-.r- D.. a. acrga. cash rrarsacrlon- IL
80 oNl- ~ Jhis Interpretation placed on
met 2 great number ~ account
us '.rcu el0Ur the country declared that
f -rH vas impossible of acrllulsLrarlOn,
r thc-r Interpretation az the law had
-. correct there would indeed have been
ne D-e- serious dificultv.
11r f--r reading the law and studying
.e1 - would appear that tho words ad
tt NJ 20 Interpretation other than that
t-H must have been evidenced By the
-a --slgrseueut Of cash. or something
l m making ur the account 81 cor
u l- Interesting % note. how
htr-rE rle ernr son actually paid"
1-r rle marre- from th@ standpoint
-tcr and creditor, ana lot from the
f-.-.p.aL ~ The individual himself, CT. "a
ie case. trom within 4 corpora ton con-
It- solely with lts OWr accounts. from
-- alone thc law requires this return
-s-aftJr fo be made ard not taking
~. ."l--cerafion TIE standpoint Of Tire
lt BIS clear that 70 hold thar tie phrase
as PAD wiLlin tne Sear requires
lrl-- ~ acr-aI disbursement la casn
-s iae zeat would prohibt any hing
h- ec. Afait returns being made by any
ID alton and would render N imDosEi-
- ~ carry out what is the main purpose
of re law. oecause ~ subtract from the
tes income the deductions specified in
80 stature. calculated on cash baSi-
'-4 give mel income, on which Tie an
business rraHsacted by the corp0ra don Is
.-e ll cash and The transactions are com
,ed eFsr3 day. u is NOT believed tnat
l.f lt any elch corporation "a eIletenct-
.le return. Iredtcsted on gross income re-
,-fr1 in cash and deductiOns represented
~ rasn transactions. VIII vary from the
-.fr business transacted by the corporation
ei'f- frDnl Tie absolutely cash basis rms
tI-RlFg the matter ia its Simplest
a~E.rr
when we contemplate file complications
lliriDtclcs ot TIE business -fla-iia nl
kfcat Corporati don. with its many dealings
hlLh uf.er corporations and llolflllai =
.hcl ar never seIlltr ia cash. uhL ar
f-iftec ou ssrleWnaf the clearing house
i.-is lre -larv advances - FUNDS ara lpiS
ttierreG statements or accounts. purchases
~ supplies end materials al one Lnle'
licn are mixed wlfh supplies ana ma
irflals already on hand ann tnose puf-
t-a--o at ether tiues. auo "a hlfh aie ussa
eld G.e.Irlr~eG without any relation 20
'-lr time % DUrcna~r. any attenipt - 70
i.f tacl Cf these transactions cur INTO lh.
tahlDOOE aul 10 settle Lnc ACCOUNTS at
tsra complicated acf .Ous az "a cpfpof alloll
tn tle rashbC0k instead n on the lefkcl r.
'Ni1 result On ileNtI1cable c-nfusloh. uil-
QeI tatnty anc inaccgraeV, and Tue frleueh
ocCasiolci tie business Ncrid by E1cA an
ean1isued On IosrtL page