The daily banner. (Cambridge, Md.) 1897-2008, 1921-02-08

The Bureau OF Internal Revenue
estimates that there will be filed on
OF before March Is, 1920, approxi-
mately $4,000 corporation returns
covering the calendar year 1920.
The revenue act OF 1918 provides
that every corporation, joint-stoek
company association. and insurance
company not specifically exempt Is
liable TO tax, and except Where eA-
,npt and the accounting period ends
other than on December 81 the re-
turn must be filed by March 10 with
the collector of internal revenue Iol
the district in which the corpora
lions principal place of business IS
located. Form 1920 is used by every
corporation Except personal service
.,orporationsD domestic and foreign
subject to taxation for filing Its IN
come and profits tax returns. fothi
1905 is used by personal service
,orporations The return must De
sworn to by the president, vice
president Oh other principal oflcef
and by the treasurer or assistant
treasurer.
Exempt Corporations
Certain corporations. such as
labor AGRICULTURAL and horticultur-
a organizations corporations or
.-anized and operated exclusively Tor
religious charitable, scientlnc, OF
educational purposes, business ahu
civic leagues, farmers and run
by establishing their rXempuon' De
bvestablishing their exemption, De
relieved of the duty of filing re-
turns and paying the tax. NO cor
poration is exempt from filing re
turn until its status has been deter
mined by the collector and the cor
poration so informed.
The corporation must lille IT'S re-
turn on the basis Of its existing ac-
counting period which is estaollsheu
os the IL month period ending on
December 81 or upon the last day Oh
some month other than December
The corporation can not change It's
accounting period without permis-
sion of the Commissioner of Inter
nal Revenue The Commissioner
will not approve a change of basis OF
.omputing net income unless the
notice is given at least 80 days before
the due date of the return on the
existing basis, and at least 30 days
DllOI 10 lllC obS NSNN -
on the proposed basis.
In general, the taxable net income
OF corporation is its accounting
net income. but corporation can
not deduct donations and gratultes..
nor can Federal income ana pFontst
taxes be deducted.
Excess Profits Tax
In place Of the surtaX imposed up
on individuals, the law imposes up
on corporations, in addition 10 the
normal tax an excess prohts TAX.
The computation of the excess pro-
fits tax begins with the determination
of the corporations invested capltal.
Invested capital, as defined by tue
law is the amount of cash ana tan
gible property paid into the corpora
Gion together with the paid-ln or
earned surplus and undivided pronts
at the beginning Of the taxable year.
The value of Intangible property
paid in for stock or shares, IN an
amount as limited by section 326 OF
the revenue act Of 1918. may also
he included in invested capital. me
term Intangible property" means
patents, copyrights, secret processes
and formulae, good will, trade
marks. trade brands, franchises, ana
other like property. Borrowed cap
ital cannot be included in invested
capital. Adjustment must be maze
for inadmissible assets, which are
defined as stocks, bonds, and other
obligations lother than obligations
of the United States), the DIVIDENDS
or interest from which is not lnciud-
ed in computing net income,
Examination OF Returns
The Bureau OF Internal Revenue
carefully examines and audits re-
turns of corporations, and whenever
necessary makes a correction IN the
amount of tax due under the law.
Severe penalties may be imposed up
on corporations for delinquency IN
filing returns, fraud or negligence In
the understatement OF any taxes
and 1t is important that the corpora
ton in filing its return follows close
ly the instructions printed on the re-
turn form