The sun., 1919-02-07

tai of the taxpayer for the taxable year.
Such average percentage shall be de-
termined by the Commissioner on the
basis OF data contained in returns made
under Title II OF the revenue act of
| 1917. and the average known as the
median shall be used. II such average
percentage has not been determined and
published at least thirty days prior to
| the time when the return OF the tax
payer is due. then for purposes OF such
return 10 per cent. shall be used in
lieu thereof; but such average percent
age when determined shall be used for
the purposes Of section ESQ in deter
mining the correct amount OF the tax.
(D) The war profits credit shall be
! determined In the manner provided in
subdivision OBJ instead of in the man.
| ner provided In subdivision (C), in the
| case of any corporation which was not
| In existence during the whole of at leas t
one calendar year during the pre-war
| period, II % a majority OF It's stock
ut any time during the taxable year Is
| owned or controlled. directly or indi-
| rectly, by a corporation which was in
| existence during the whole of at lea at
one calendar year during the pre-war
period, or " (2) 50 per cent or more Of
section 233 for income tax purposes)
consists OF gains. profits. commissions,
or other income, derived from a Govern
ment contract or contracts made be-
tween April 6, 1917. and November IL.
1918. both dates inclusive.
(E) A foreign corporation shall not be-
entitled to a specific exemption of SO, 900.
Sec. 3l2. That the excess profits credit
shall consist of specific exemption of
$4,000 plus an amount equal to 8 per
&C mt. of the invested capital for tho
taxable rear.
=. foreign corporation shall not be
entitled TO the specific exemption Of
$4,000.
PART IV.-NET INCOME.
Sec. 3o0. (a) That for the purpose OF
this title the net income OF corpora
ton shall be ascertained and returned
% For the calendar years 1911 and
1912 upon the same basis and in the
same manner Is provided in Section SO
of the act entitled AN act to provide
revenue. equalize duties. and encourage
the industries of the United States, and
for other purposes" approved August g.,
1909, except that taxes imposed by such
section and paid by the corporation
within the year shall be included
(2) For the calendar year 1918 upon
the same basis and in the same man
ner g provided in Section Il OF the ac.
entitled AN act to reduce tariff duties
and TO provide revenue Tor the Govern
ment, and for other purposes" approved
October 3, 1913. except tina. taxes i'm.
posed by Section 3S of such act Of
August .. 1909, and paid by the corpora
ton within the year shall be included
q r1O ~,
ii as dividends upon the stock or from
the net earnings OF other corpora ions
subject to the tax imposed by Section H.
of such act OF October }, 1913 shall
be deducted and
(3) For the taxable year upon the
same basis and in the same manner as
provided for income tax purposes in Title
II. of this act.
CD The average net income for the
pre-war period shall be determined BY
dividing the number of years within that
period during the whole OF which the
corporation was in existence into the sum
of the net income for such years even
though there may have been no net in
come for one or more OF such years
PART V.-INVEsTED CAPITAL.
Sec. 325. Ca) That as used in this
title
The term intangible property" means
patents. copyrights secret processes and
formulse, good will. trade marks trade
brands franchises. and other like Prop
erty:
the term tangible property" means
stocks. bonds. notes and other evidences
OF Indebtedness. bills and accounts re-
ceirable. leaseholds and other property
other than intangible property;
The term borrowed capital" means
money or other property borrowed.
whether represented b. points. iivtc,,
open accounts or otherwise:
The term "inad4nissible assets" means
stocks. bonds and other obligations
tother than obligations Of the United
States). the dividends or interest from
which is not included in computing net
income. but where the income derived
from such assets consist in part OF
gain or profit derived from the sale or
other disposition thereof. or where all
or part of the interest derived from such
assets is in effect included in the net
income because OF the limitation on the
deduction of interest under paragraph
CD of subdivision ta) of Section 234, n
corresponding part OF the capital invested
in such assets shall not be deemed TO he
inadmssible assets; The term "adms-
sible assets" means all assets othss than
inadmissible assets valued in accordance
with the provision Of subdivision (a)
of Section 326. Section $50 and Section
ISL.
CD For the purposes OF this title the
par value os stock or shares shall, in
the case OF stock or shares issued at a
nominal value or having 10 par value,
be deemed 20 be the fair market value
as of the date or dates of issue Of such
stock or shares
Sec. 326. ca That az used in this
title the term invested capital for any
year means Except as provided in sub
divisions tb) and (c) Of this section)
% Actual cash bona ide paid in
for stock or shares;
CD Actual cash value OF tangible
property. other than cash, bona flde paid
in for stock or shares. at the time OF
such payment, but in no case to eX-
coed the par value of the original stock
or shares specifically issued there
for. unless the actus. cash value OF
such tangible property at the time paid
In is shown to the satisfaction of the
Commissioner to have been clearly and
substantially In excess of such par value
in which case such excess shall be
treated as paid In surplus Provided.
that the Commissioner shall keep a rec
ord of all cases in which tangible prop
erty is included in invested capital at
value in excess of the stock or shares
issued therefor, containing the name and
address of each taxpayer. the business
in which engaged. the amount OF in
vested capital and net income shown
ny the return. the value of the tangible