Evening star., 1919-04-27

normal federal income TAX diiu ioH' e'i
other federal state and local taxa ton.
except (a) estate or inheritance .a1es'
and Cb) federal surtaxes and excess
pofts and war-profits taxes They also
enjoy limited exemptions from feoefai
surtaxes, excess-profits and war
profits taxes. in respect OF certain pos-
sible holdings. as follows:
s5 900 In the aggregate of first IS. hrst
AZ. tissues of May Q. 1918. and oc-
tobcr ~ 1879. second IS and 4As.
third -4Is. fourth 4i.s. Treasury
certificates and war savings certin
70 ono Of first 41.s tissue of October -.
1915 only. until the expiration "f
.'' Two years after the termination or
10 900 Of fourth AIS. until the expiration
Of two years after the term!na tion OF
the war.
Ss.ooo in the aggregate Of arst IS. frst
a.. tissue OF May 9. 1918. only,
b second ~ and Alas and third 4As.
as TO the interest received after
January J. 1915. until the expiration
Of two years after the termina ton
af the war-ths exemption cond-
tional on original subscription TO, and
continued holding al date OF tax
return Of, two-thirds as many bonds
Of the fourth liberty loan.
$4,000 Total possible exemption. subject to
conditions above summarized
Under the terms Of section 2 Tar OF
the victory liberty loan act the FOL
IOWlnK aOOll1Ondl eAcIuptioH ocSOiSS
Immediately effective. and is 1nde-
pendent of any subscription to the
victory liberty. loan:
' n n. i..a.. rs'sf'sH ef NAY ., D. M leis. and os
tober "a. 1919. second As and 4i4s,
third 4i.s and fourth 4l.s. as to
the interest received on and after
January J.. 1919. until the expira-
tion Of hve years after the termina-
tion Of the war.
of
the victory liberty loan act. the fol-
lowing additional exemption is pro-
vided, conditional upon original sub
soription to, and continued holding at
the date of the tax return OF. one
third as many notes Of the victory
liberty loan, and extending through
the life of the notes of the victory
liberty loan instead Of expiring five
years after the termination OF the
war:
10000 in the aggregate of FIRST Is. frs, 4l.s
tissues Of MAY o. 1918. and October
II. 1918. second "a and 4i.s. third
4Lp and fourth AIS. the in
terest received on and after January
l. 1919.
An Example
The above amounts may be held by
one person. Suppose. for example,
bondholder who has $4,000 worth of
liberty bonds. distributed as follows:
$fv,VVV OIL tnS l0uTtn fOdH " ~. VI
which at least $4,000 were originally
subscribed for by him and are still
held At the date of his tax return.
$4,000 OF the third loan. and $4,000
of the second loan. $4,000 of the first
converted 4As and $4,000 Of the first
would be abba TO old-the interest
from the following principal amounts
exempt from income, surraxes. excess
proaits and war-pro5ts taxes for tho
hA0 fn~ TnD
~ Any loan tsay secondJ. .......... 5000
tcl First liberty loan second con-
vefted lhs ....-..f-...- 90, Oo0
t rS: uH .osn -..... $50 -, o"VV"
Frat converted 4l........... 5000
s11o zoo
The following amounts would be
liable to income surfaces. excess
profits and war-profits tax es,s but not
10 the normal income tax:
deducted from the taxpayers income,
ng FOURTH loan -. ..--.--..--.s...,. $4,000
e, Second loan ...!...-........... asOO0
Vt First converted 4lAs............. 5000
$50 1000
For the year beginning January l.
1919, taxpayer continuing to hold
these bonds would be entitled to hold
exempt, in addition to the interest on
the $11o.oo0 of liberty bonds described
above. the interest received during
the year on further principal
amount of $4,000; and IL he originally
suoscribes for and still holds al the
date OF his tax return at least So
$685., Of the victory liberty loan
notes. a further principal amount of
10000 OF his previous holding of 4
and ~ per cont liberty bonds would
be exempt. making his entire hold
ing OF $4,000 exempt from all tax
alton. except estate or inheritance
taxes.
Special Notes.
Where husband and wife are each
bona hde holders OF liberty bonds.
each Is entitled to the exemptions
above stated in respect to the bonds
30 owned without reference to the
holdings of the other.
bonds owned by partnerships are
considered as owned proportionately
ny the individual partners. and each
partners share will be added to the
bonds held by him as an individual
for the purpose of determining his
exemptions from taxation.
Corporations texcept personal serv-
zee corporattons) may hold the full
amount OF liberty bonds exempt from
taxation, without reference to the
holdings of the stockholders
PERSONAL service corporations are in
this respect, treated as partne rships
TX the income Of a trust estate is
taxable to benefictaries. as in the case
where the income is distributed to
the beneaciaries periodically. liberty
bonds held by the trust estate are
treated as belonging to the benefi
carries proportionately, az in the case
OF, f,partnerships. II the income is tax
aole to the trustee. as in a case where
the income IL. by the terms of the
trust. accumulated for unascertaine ed
oenehciaries, or persons with a con-
tingent interest. the trust estate NAV
hold exem the full amount indie.
pendent OF the holdings of the ex-
pectant benedciaries.
Since the income received from Nb.
:. Nty bonds IL exempt from normal in.
como taxes, persons whose net income
does not exceed $4,000 pay no income
TAX at all upon interest from liberty
bonds.
Interest paid on indebtedness in.
Cured to purchase or carry per cen,
and A per cent liberty bonds NAV bt
deducted from the Taxpayers income
even though the interest received or
the bonds IL not taxable as income.
"nere part OF the invested capita
OF corporation Is expended for lib
srty bonds. IT Is not. by reason o,
such investment. excluded from tn,
invested capital upon which excess
prohts and war-profts taxes are de
,ermined. the bonds not being mad
m,ssiole assets. even though all tn,
ponds held by the corporation ar,
within the amountto which exemp
tfon applies. so that interest received
from such bonds does not affect tax.
able income.
High Money to Continue.
Bankers and other students Of eco.