The Birmingham age-herald., 1917-11-25

of s25,o00 paid to each of the three ex- ecutive officers
 4. Black, Thompson & Wilson, incor- porated Incorporated prior to March 3. ls10 Preferred stock, s5oo,eoo Represent ing tangible assets and s1oo.ooO common stock issued for good wilD; net tangi- ble assets s5oooo0; profits, s25o,ooo; an- nual salaries of s25,ooo paid to each of the three executive officers
 HOW TAXES VARY
 The above concerns, having the same and the same profits, would, under the recently enacted law, it is claimed, pay varying taxes, as follows.
 Q.) John Smith--From 1917 net income subtract 15 per cent of 1917 invested capital, which 15 per cent would be s75, 900: from which amount deduct g per cent of 1917 invested capital and seooo to-wit, $51,oOo leaving s24,ooO, which taxes at 20 per cent, equals s4soo. From this balance of 1917 net income subtract 5 per cent of 1917 invested capital, $25, o0o which taxed at a5 per cent, equals $625o From this balance of 1917 net in come sub tract per cent of 1917 invested capital. s250Oo, which taxed at % per cent equals ss75o. From this balance of 1917 net income subtract per cent of 1917 invested capital, $4o,eoo, which taxed at 45 per cent equals s1sCo. Leaving a balance of net income $S5,Ooo, which taxed at 60 per cent equals Sl00o. Total war excess profits, $Ss,00
 PAYS PERSONAL TAX
 In addition to the foregoing John Smith. as an individual, would pay his personal income tax upon income for the year of $25o, ,o00, less excess profits tax of sss, viz. $1s1,2o tax being $35,152 Total tax of John Smith, $123,952
 2. Jones, Brown & Gray--This part nership would pay the same excess profits tax on an income of $250,00o as in the case of the above named indi- vidual. namely, $sS,00o. Each partner would also pay his individual income tax on his one-third share of the un- divided profits of the firm for the year, less excess profits tax, namely. $161,20o, being a tax on $53.733 to each; in the case of each partner being tax of ap ! proximately s5627.9s in each instance, $16,SS3.SS, a total of $105,6S3.SS
 3, Johnson, White & Little CInc.)--ln this case, inasmuch as the three ex- ecutive officers constitute close cor poration, and in reality a partnership in corporate form and each draws a salary of s25,000, the net income of the corporation would be reduced to S17b,- 900, which, computed in the manner above described, the excess profits tax would be $45.s00; in addition to the above. the corporation would pay war income and federal income taxes of 6 per cent. namely, $7764; assuming that the surplus income is used in the business and not paid out as dividends, the individual stockholders would each pay an excess profits tax of 8 per cent on the the salaries drawn by each in excess of a statutory exemption of $6o0o namely. per cent on s1s.0oo-- $1520 each, or for all three persons, $4560. In addition thereto, each of them would pay an individual income tax based on the salaries so received, after deducting the amount of excess profits tax paid. namely, a tax on $24,4S0 for each. the amount of which tax would be approximately $500 for each, or a total of $500, total tax paid by cor poration and stockholders. ss2.4e4. PRIOR TO MARCH 3
 |. Black. Thompson & Wilson Unc) In the case of this corporation, which vas incorporated prior to March 3, ltsi7, and therefore. under the statute, entitled to include as part of its in vested capital the sum representing Ixfa value of its good will. namely, ! &i00, 900, the tax would be reduced be- caase of computation on the basis of M enlarged invested capital, namely, ssV0, 900, instead of 450O,000. This en- liafged invested capital, based purely of the occidental fact of date of in. would reduce the amount Tor the excess profits tax. so that the same in the case of this corporation would be only $ss,400. as compared with stSs600 in tho ease of the corporation npwered by the preceding illustration And the total taxes payable by the cor porA tion and stockholders in this in- RsAnce would be reduced accordingly.
 Card of Thanks
 Nr. Joe Levy and family of Pratt City