The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1918-01-12
WAR EXCESS PROFITS TAX.
Collector Hayward Tells How to Cal.
culatc Ii.

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Of internal revenue, Columbia, S. G..
as information to those who NAV te
interested:
Under title 2, Of the act of Octobe.
3, 1917, there is imposed upon cor
porations, joint stock companies, part
nerships and individuals a tax know
as the war excess profits tax.
1t is intended by this title, unde.
section 2O1, to impose a tax only upor
that portion Of the net earnings Of Z
corporation, joint stock company
partnership or individual for the yea,
1917 and subsequent years, as exceed
the average net earnings for the three
pre-war years, namely, 1911, 1912 ano
1913, upon like invested capital 81
up the same ratio as the average ne,
earnings bear to the invested capita
(but in no case to be less than per
cent nor more than 9 per cent upon
the capital invested), plus specific
deduction of $4,000 for corporation
or joint stock company, and the sum
or $4,000 for a domestic partnership y
or individual. This is to say, IL the
average net earnings for the three
pre-war years were less than per
cent upon the invested capital for
those years and the net earnings for
1917 were in excess of the average
earning for the three pre-war years
but were not in excess of z per cent
of the invested capital, there would
be no tax liability.
If the average net earnings for the
three pre-war years was per cent.
upon the invested capital and the net
earnings for 1917 do not exceed per
cent upon the invested capital, there
would be no tax liability. However.
VI the average net earnings for the
three pre-war years wer Is per cent.
upon the invested capital and the
net earnings for 1917 amounted to is
per cent. upon the invested capital,
there would be a tax liability upon the
graduated scale prescribed in the law
upon that portion Of the net earnings
exceeding per cent on the specific
reduction allowed by law. That is to
say, no tax will be imposed under this
section where the net earnings arc
less than per cent upon the invest
ed capital for that year, but will be
imposed in all cases where the net
earnings exceed per cent upon the
invested capital for 1917. In all cases
where the net earnings are between
per cent and 8 per cent in 1917 up
on the invested capital. the tax liabiI-
ity will depend upon the fact as to
whether the average net earnings for
the three pre-war years were in ex-
cess of the percentage shown in 1917.
or less than the percentages shown
If it is shown that the percentage OF
earnings on invested capital was
greater than the percentage shown for
1917 between and per cent on tho
invested capital, then there will be
no tax imposed. But, if it is shown
that the earnings for 1917 are between
Z per cent and per cent and great
er than the average per cent earned
on invested capital in the three pre-
war years. a tax will be imposed on
the excess for 1917, less the speciti..
deduction. Or. in case of a corpora
ton, joint stock company partnership
or individual may so select, they can
use per cent. on invested capital for
1917 as a basis for applying the ex-
cess profits tax instead Of arriving at
a comparative statement between the
three pre-war years and the calendar
year 1917.
Invested capital" is construed to
mean so much of the capital, surplus
and undivided profits (earned prior to
January 1, 1910 as are used or en-
ployed in the business in earning the
net income reported Tor 1917. There
may be decisions later from the Dc.
partment pertaining to this particular
question.
Section 201 Of the act of October 3
1917, imposes the following tax on ex-
cess profits:
Bracket Twenty per cent of the
amount Of the net income in excess OF
the deduction determined as herein
after provided) and not in excess o
Is per cent. of the invested capital fol
the taxable year.
Bracket 2.-Tweny- five per cent o
the amount of the net income in eX
cess Of Is per cent and not in cXces
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