New-York tribune., 1919-02-16

since the pre-war period or corpo IA
1lon which was IN existence during the
pre-war period but had no me orne, or
an abnormally low income during such
period. In such cases the increase of
the credit due to increase of capital is
limited to ID per cent, or where there is
no income, or abnormally low income.
the credit is limited to 10 per cent CT the
invested capital. In the case of a cor
poratlon not in existence during the
pre-war period. however. The exemption
shall not be less than 10 per cent and
may be higher than 10 per cent, pro
vlded the percentage of representative
corporations is higher than 10 per cent.
Limitation Important
to Small Corporations
The new bill protects small corpora
tions from excessive assessments by
placing a limitation on the amount Of
tax which may be collected. This limi-
tation provides that the tax for 1918
shall, in no case, exceed 80 per cent Of
the net income in excess of $1,000 and
not in excess of $4,000, plus 50 per
cent OF the net income in excess OF
$4,000. For the year 1919 and there
after such tax shall not exceed the
sum of 20 per cent of the net income
in excess Of $4,000 and not in excess of
$4,000, plus 40 per cent of the net
income in excess of $4,000 This limi-
tation is of special Importance to cor
porations having small income and
small invested capital. For example. A
corporation with net income for the
taxable year of $4,000, pre-war net
income of S3,400 and invested capital Of
$4,000 for botn the pre-war period and
the taxable year, is subject to tax
$ol
follows:
Net income $4,000
Credit
Net income pre-war period s3.4oo
Specific income $1,000 6,4oo
Income taxable at SOC sf3.6oo
War-profits and excess-profts tax 1o.7ao
The limitation. however. confines this tax
to 80 per cent of $4,000, or $500.
A special method of assessment is
also made applicable to corporation
which derives income both from bust
ness with invested capital and from a
business without Invested capital. the
net income of which latter business
institutes not less than 80 per cent
OF the entire net income of such cor
poration and which, II transacted alone.
would class it as a personal service
corporation. In such cases the tax
upon the net income from the business
with invested capital is computed sep
arately, and the tax upon the net in
come Of the other business is the same
percentage thereof as the tax upo the
income fl the business with invested
capital is of the income from such busi-
ness without invested capital. For ex-
ample. if the corporation derives
$4,000 per year from business with
invested capital, upon which the war
protts and eXcessprofits tax separately
computed amounts to $4,000. and in
addition thereto derives $50,00o income
from business in which capital is not
employed, the tax on such $4,000
would be at the rate of 40 per cent.
or the same percentage as $4,000 is
of $4,000. The tax thus computed d
shall not be less than 20 per cent of
the net income, unless the tax com
putcd regularly on the entire income
and invested capitar is less than 20
pev cent
The income from gold mining is ex-
empt from war-excess profits tax. but
any other income accruing to a corpo-
ration so engaged is taxable The tax
on profits from the sale of mines or
OH or gas wells, the principal value of
which was demonstrated by prospecting
and exploration or discovery work by
the taxpayer, is also limited to 20 per
cent of the selling price of the prop
erty.