Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1917-10-27

v
FirN fleet Interpretation Of the
incomeutax provisions of the new war
revenue bill has been given for the
businessmen of Hawaii by Claude /.
Parker, former collector of internal
grevenue for the Southern California
district, who arrived on the Maui last
Wednesday for a flying business trip
here. -.--..
Mr.. Parker, who has left official life
TO develop income tax handling for
large mainland corporations, and to
solve for them allied intricate ques-
lions, is a recognized expert along his
line His Offices In Los Angeles and
San Francisco keep abreast of every
Official ruling In washington and every
court decision. With the provisions
Of the new war revenue bill, now puz.
zling corporations throughout the
mainland, he is especially familiar.
Just before he left San Francisco he
received kilograms which shed light
ION some knotty problems.
From Mr.. Parker the Star-Bulletin
has secured a concise summary Of the
federal excise taxes which will be of
, direct assistance and Importance to
Hawaii corporations. The summary
Is statement by Mr.. Parker to a
Etar.Bulietin representative, given at
his hotel, the Seaside, supplemented
and amplihed by statement prepared
in his San Francisco Office.
Whist Business Means
Following his outline Of the four fed
eral taxes. as given in the boxed type
which heads this article, Mr.. Parker
continued: ..-.-s-
with individuals, the excess profits
tax applies only to those who are en-
gagged in business, but the word
Nsbusiness' when used In this connec-
ton Is given such a comprehensive
scope that II Is made to cover any per-
son who has q profession or occupa
ton, so that practically every one
who has an income OF any consequences
at all may find himself or herself re-
CURED to make returns under this
tax
"Quite great deal OF the confusion
thar n have found among corporation
taxI'.fers has been due to their un-
certainty as TO whether or not in their
reports under any of these taxes they
will be allowed any reduction OF the
amount Of taxes they may have paid
on another. The law specifies that
war income and excess profit taxes
are not deductible There Is specific
provision, however, which, while 1t
does not. permit corporation to make
its own deduction. provides that. af-
ter its returns have been made to the
lxy
checked and approved. before an as.
eessment Is levied on its income state
ment. credit will be given for the
amount which that corporation is to
be assessed on the excess profits tax.
Other Confusing Questions
"a number Of other confusing ques-
lions have arisen, and viii continue
to come up, as to the Interpretation
OF certain provisions of the law. For
instance, the one to which have just
referred. You viii notice that the
credit which has been given of the
amount of tax which has been found
due under the excess profits is to be
deducted from the amounts Of net In.
come as per the income tax statement
made by the corporation. There be.
ing two net income tax statements.
one at two per cent and the other at
four per cent, the question now arises
as to which statement such credit
/. should be given. All these problems,
as they arise, are being placed before
the commissioner Of internal revenues,
who is authorized under the law to
interpret the intent Of congress, and
whose ruling win be final unless re-
versed by the courts.
War Income Tax
But the greatest confusion which I
have found has been that in connec.
ton with questions which have come
up In regard as to the war income
tax. Almost as many different opin.
ions have been offered as there are
taxpayers who are in doubt as to the
intent of congress when the income
tax law was passed. Just before / left
the states on this trip question was
plahad before the commissioner OF in
teri revenues relative to that provi-
sion Of the law which permits COR
poration to deduct from its income the
dividends which ii has received from
the subsidiary corporation which were
taxable upon its own income. The
question arose concerning the second
holding company.
LET me illustrate: Corporation A
is the operating company, ali Of the
stock of which is owned by corpora
ton B. ALI of the stock of B is, in
turn, owned by corporation c. Under
this provision the dividends received
/. by corporation B. the first holding cor
! poration, are exempted from income
taxation, for the reason that corpora
ton A is taxable on its own income.
But the puzzle presents itself as to
what must be done about the dividends
received by corporation C from B,
corporation B not having paid the
hRx rpoR its own net income.