Norwich bulletin., 1918-03-13
IMPORTANT OPINION BY
 THE ATTORNEY GENERAL
Is of Utmost importance to All Corp
 orations. in the State.

Norwich corporations will be inter ested in the following opinion by Att torney General George Fl Hinman in answer to an inquiry from Tax Com missioner William H. Corbin which is of utmost importance to all corpora ticns in the state.
 You ask my advice as to whether the amount of the United States excess profits tax and the amount of diyi- dends received out of earnings of 1913, 1914 and 1915, which arc deducted from the total net income in computing the normal tax under the United States corporation income tax law should likewise be deducted from said total net income (itern 5 of the tax returnl in assessing the Connecticut corpora ton income tax imposed by section 20 of chapter 292, public acts of 1915, as amended by section of chapter 2sS public acts of 1911.
 In said section 20 as amended 1t is provided that each corporation subject thereto shall pay a tax to the state computed upon the net income for it's fiscal or calendar year next pre- ceding upon which income such company is required to pay a tax to the United States Succeeding pro- visions as to details of the return re-
 
 this tax call for such other informa- ton as may be requested by the Unit ed States treasury department for the purpose of ascertaining the total amount of net income taxable under the United States income tax act, the net income of such company after making the deductions authorized' etc. The general provisions of the fed e-a1 income tax law of September 8. f916, were contained in the prior act of October 3, 1913. which was the law in effect when the Connecticut act was passed in 1915, and said 1916 federal law was in effect when the Connecti- cut law was amended in 1917. The amendments to the federal act of 1s16 effected by the act of October 3, 1917, did not change the general provisions of the law or the nature of the tax imposed thereby; the specific deduc- ticns from gross income in ascertain ing net income provided by section F Of the 1916 act were not changed in substance except that 1t was provided that income and excess profits taxes paid during the year covered by the return are not to be included in the
 deductions for taxes paid; under para
 graph fourth of said section, but by i Section 20 (added by the act of Octo- l
 assessing income tax the net income
 embraced in the return shall also be | credited with the amount of any ex- cess profits taxes imposed by the Act of Congress and assessed for the same calender or fiscal year upon the tax payer. Also in section 31, paragraph (b). ft was provided that dividends received shall constitute a part of the annual income for the year in which
 received, and shall be taxed to the distributes at the rate prescribed by law for the years in which the profits
 or surplus from which such dividends are distributed were accumulated.
 The so-caIled excess profits tax fal- so imposed by Act of October 5, 1917) is stated in said act to be in addition Ito the tax imposed by subdivision (a) of section 10 of the act of. 1916 as Iamended. and 1t is provided that said tax shall be computed upon the same incomes and in the same manner as said tax imposed under said act ot 1918, except that for the purposes o1 the excess proits tax the income en1-
 braced in the return shall be credited with the amount received as dividends jupon the stock or from the net earn itrlgs of any other corporation which lis taxable upon it's net income.
 l HI ouiSr WOroSs LneTe are now, IT effect, two federal corporation tax laws. one (the so-calied excess profits tax faw1 allowing deduction of divi- idsnds. the other (the 1916 income tax llaw) taxing such dividends at the rate prescribed for the year In which the , profits or surplus from which suct dividend Is distributed were aceumu lated; one (tae 1916 law) allowing the , tnet income to be credited with tht lamouni of the excess profits tax, tft l other (the excess profits tax. law no Ealiowing such credit.
 sI As above suggested the United ] States income tax act referred to il the Connecticut income tax law wa. , the federal law of 1913 and its sue , lcessor, the federal act of 1916, and tn, , tsnet income upon which such compan, l Is required to pay & tax to the Unitet States" referred to in the Connection
 law is the net income computed un lder said federal law. The so-caile, ]. Iexcess profits tax law had not bee, passed or even proposed when tn < tConnecticut law was passed, or Ehe, 4 the 1917 amendments thereto wer s adopted. and so cannot be regarded a
 having been contemplated or referre h Ito by the general assembly in connee iticn herewith. It follows, therefore