New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-09-04
Rules for Establishing
Net Income and Amount
OF Deductions Allowed

Net income is defined, first by estab-
| fishing gross income and then defining
the credits and deductions allowed in
computing net income therefrom. Gross
income is made to include every sort of
gain, profit or income except that from
the proceeds of life insurance policies
a, paid at death, the return OF life in
surance premiums, the principal of be-
quests, the interest upon any state or
other political subdivision obligation.
issued heretofore or within six months
after the passage of the bill; the in.
terest on investments up to $4,000 in
non-eXempt securities of the foregoing
class Chose that shall be issued after
SIX months), farm loan act interest
and, IN case of United States obiga-
/ tons issued after September /, 1917. to
| the extent authorized in the acts issu-
ing them the incomes of foreign gov
ernments derived from stocks or bonds
or from interest on funds deposited in
American banks, amounts received
from health or accident insurance and
income derived by any political sub
division from public utilities In the
case Of nonresident aliens, gross in
come includes only income arising with
IN the United States.
comes other than those above mention
ed chat is, the fiat $1,000 and $4,000
and $500 for dependents), all the ordi-
! nary and necessary business expenses
interest on debts, losses sustained and
charged off in connection with the
business and losses not so sustained
If due to casualties. worthless debts
and reasonable allowance for depre-
ciation
nct
following credits are allowed: The
dividends on the common stock of cor
| poratlons taxable under the act and the
! interest on the obligations of political
suoolvlslons included in gross income.
IN the case of partnership business
1t IS proposed that the income of each
member of the business shall be com
puted tor purposes Of taxation of him
as person, whether such earnings are
actually distributed Or not. Partner
shlps are individuals are relieved of
taxation under the excess profits and
war profits parts of the bill.
Estates and Trusts -
The income of estates and trusts,
whether distributed or not, is made
subject to the personal income taxes,
and the fiduciay is held responsible for
the return and payment.
Payment of Tax at Source
All individuals or corporations dis
trbutlng or crediting annual or other
periodical salaries, interest, dividends
except OF taxable corporation common
stock)' emoluments, etc. to non-res-
oeht aliens are required to withhold
the IL per cent normal tax and pay the
same over to the government
1t is important to note in this con-
nectlon that only interest bearing OBJ
legations or bonds-not all debts-may
be treated on the same basis as dis
tributed dividends and get the 12 per
cent. instead of the Is per cent rate
Returns
All returns of income under this act
are required to be made by March
Is or on the fifteenth day of the
| third month of the fiscal year if it does
rot coincide with the calendar year.
Corporation Taxes
The normal corporation tax is fixed
at l8 per cent on the amount of the
net income in excess of the defined
credits to the extent that it is not dis
trlbuted, and II per cent if distributed.
If subsidiary corporations are formed
or awaited of for evadng the higher
tax on nondistributed profits an add-
tlonal tax of 10 per cent will be i'm
posed. Labor, agricultural, fraternal,
scientific, charitable, etc, associations
are excluded from the operation of this
! tax.
Gross and net incomes are defined
at length, as also credits, these pro-
visions being in general similar to
those governing individuals, insofar as
they are applicable. Corporations
whose fiscal year falls partly under the
old law and partly under the new will
pay under the old and new taxes in
proportion to the periods involved
Provision is made for paying corpora
ton taxes in one instalment at the
time of return, or in three instalments,
the first at such time and the others
at intervals of two months. Very full
administrative provisions are made.
| Corporations, partnerships. individuals