Evening journal., 1918-10-24
TAX BILL
REVISED Still MORE
Senate Finance Committee
Completes Changes in
Profits Sections
INVESTED CAPITAL
DEFINITION ALTERED

WASHINGTON, Oct. 24.-The Senate
Finance Committee has about completed
It's revision Of the war and excess prof
It's sections Of the Kitchin tax bin and
greatly enlarged the scope OF the so
called "rellef clause" This part OF tho
bill is designed TO relieve such corpo-
rations as do not conform with repre-
sentative concerns In the same line OF
business from the strict Interpretation
OF "lnvested capital TO arrive at the
proper tax"
In the corporations benefited by the
relief clause the invested capital Is
fixed at the figure which bears the same
ratio TO the net income for the taxable
year as the average Invested capital
and net Income OF a representative con-
cern IN the same business bear TO each
other.
The extension Of the relief clause
10 cover more ground and be falrer and
more equitable was phrased THUS;
"Al, Where the Commissioners is un-
able satisfactorily 10 determine HE In
vested capital as provided IN Section
32s
"ts). In case OF a foreign corpora
tlon.
"(3). Where a mixed aggregation OF
tangible property and intangible prop
erty has been paid In for stock or Tor
stock and bonds and the commissioner
IL unable satisfactorily 10 determine
the respective values or the several
classes OF property at the end OF pay
ment or to distinguish the classes Of
property paid In for stock and for bonds
respectively.
"Al. Where as compared with rep
resentatlye corporations engaged IN
like or similar trade or business the
corporation would lunder Section 320l
be placed IN a position OF substantial
ineqallty because Of the time or man
ner OF It's organization or because the
actual value OF It's assets on March 1,
1919, was substantially In excess OF the
amount al which such assets would be
valued for the purpose OF computing
It's invested capital under the provisions
of Section 326.
"(5). Where the invested capital Is
materially dlsproportlonate to the net
income as compared with representa-
tive corporations engaged In d Ike or
similar trade or business becausel
"A. The capital employed, although
a material income producing factor, Is
very small or ls IN large part bor-
rowed;
"B. There are excluded from the IN
vested capital as computed under the
provisions OF Section 326 intangible as
sets Of recognized and substantial value
built up or developed by the corpo-
ration;
&c. The net income for the taxable
year represents The earnings OF capl-
tel unproductlvely invested through a
period OF years.
-. Proper recognition or allowance
cannot be made for amortization, OBJ
solescence or exceptional depletion due
10 the present war OF providing for the
purpose OF the trade or business after
the termination OF the war"
Many changes were made IN the |
wording OF the definition Of invested |
capital in the Kitchin bill. The pro- |
vision that there should be included In |
Invested capital actual cash value of
angible property other than cash, bona
ide paid In for stock or shares, at the
line Of such payment, but In no case
O exceed the par value Of the original
tock or shares specifically issued
was 0AAbA0la W ohNAAS aAA
Exception that when IL is satisfactorily
10 the Commissioner OF
Internal Revenue that the actual cash
islue is above par value OF the stocks
)r shares.
Also instead OF defining "lnadmissi-
Die" assets the Finance Committee
wrote into the bill the provision that all /
assets except ordinary inadmlsslble as
sets should be included in invested cap
ltal for determining the proper amount
Of tax. The provision was added that
assets which were not so
accounted in the pre-war years but are
accounted 50 now may be included as
assets in the pre-war years /
for determining the war excess profits
taxes.
The provision that consolidated re- |