The Bridgeport evening farmer., 1910-01-20
CORPORATE INCOME TAX.
Corporations to Render Returns fOl the Calendar Year 1909 and Each Calendar Year Thereafter-Ac- tual Inventories Required Only
 When Taxable Net Income
 Can Not Be Stated
Otherwise,

Office Commissioner Internal Revenue
 Washington, D. C., Jan. 4, 1910. To Collectors of Internal Revenue and
 others interested:
 Many inquiries have been made at this office concerning the require ments of section 38, act of August 5, 1909, levying an excise tax of 1 per cent. of the total net income over $5,- 900 of corporations, as to the time that must be covered by the returns of such corporations.
 In order that the position of this office may be known to all interested in this subject, attention is invited to the language of the act bearing on this point. Subdivision reads, in part, as follows:
 and said tax shall be com puted upon the remainder of said net income of such corporation, joint stock company or association, or in- surance company, for the year ending December thirty-frst, nineteen hun ,dred and nine, and for each calendar year thereafter.
 From this it will be seen that the law fixes the calendar year as the period to be covered by these returns, and no one is vested with discretion ary power to change it.
 Many inquiries have been submit ted as to the manner of arriving at
 
 none was taken on that date and where the fiscal year of the corpora ion ends with a date other than De- cember 31.
 In article 5 of Regulations No. 31 it is stated that an inventory of it's equivalent of materials, supplies and merchandise on hand for use or sale at the close of each calendar year is essential in the case of certain cor porations in order to determine the gross income, and in case of other corporations to determine their eX- penses of operation. Where such in- ventory or it's equivalent was not taken at the close of the year 1908, a supplemental statement showing such inventory approximately must be submitted with the return on the regular form. Such supplemental statement shall be verified under oath, etc.
 Under the statute no return for a period other than the calendar year can be accepted. The primary object to be kept in view is the preparation of a statement or return which shall correctly set forth the net income taxable under the law. If this can be accomplished without the neces- sity of an inventory, either at the be- ginning or the close of the calendar year, actual inventories are not neces-
 
 as may be verified by oath of the officers of the corporation, showing the net taxable income, can not be made without an inventory, then the same is necessarily required.
 It is believed that corporations whose business is of sufficient volume to produce a taxable income under this law would ordinarily keep such books as would enable them to arrive at book inventory or what might be termed the "equivalent'' of an in- ventory, for the period between the 1st of January and the end of their fiscal years. While the office is un- able to set forth any rule in this con- nection for arriving at inventories or their equivalents, the corporations will readily see the necessity of re- sorting to the best means at their hands to show in their sworn returns their net taxable income.
 ROYAL E. CABELL,
 Commissioner