The Connecticut labor news., 1921-02-18
TAXES ON COR-
 PORATE BUSINESS
Facts in Application of Internal Revenue Act-Corporations
 That Are Exempt.

The Bureau of Internal Revenue estimates that there will be filed on or before March Is, 1921, approximately 475000 corporation returns covering the calendar year l9zO.
 The revenue act of 1918 provides that every corporation, joint=stock company, association and insurance company not specifically exempt is liable to tax, and except where exempted and the ac- counting period ends other than on De- cember 3l the return must be filed by March Is with the collector of internal revenue for the district in which the corporations principal place of business is located Form 1120 is used by every corporation (except personal service corporatiosn) domestic and foreign subject to taxation for filing it's income and profits tax return. Form 1065 IS used by personal service corporations. The return must be sworn to by the president, vice-president or other prin- cipaI officer, and by the treasurer or assistant
 Certain corporations, such as labor, agricultural and horticultural organ1- cations, corporations organized and op- erated exclusively for religious, charit- able, scientific or educational purposes, business and civic leagues, farmers and fruit growers mutual associations, may, by establishing their exemption, be re- lieved of the duty of filing returns and paying the tax. No corporation IS ex- enpt from filing return until its status has been determined by the col lector and the corporation so informed.
 The corporation must file its return on the basis of its existing accounting period, which is established as the 12 month ending ending on Dec. 3l, or up- on the last day of some month other than December. The corporation can not change its accounting period with out permission of the commissioner of internal revenue. The commissioner will not approve a change of basis of IS given at least 30 days before the due date of the return on the existing basis. and at least 30 days prior to the due date of the return on the proposed basis
 In general the taxable net income of a corporation is its accounting net in come, but a corporation can not deduct donations and gratuities, nor can fed eral income and profits taxes be de- ducted.
 In place of the surtax imposed upon individuals, the law imposes upon cor porations, in addition to the normal tax, an excess profits tax. The com putation of the excess profits tax be- gins with the determination of the cor poration's invested capital. Invested capital, as defined by the law, is the amount of cash and tangible property paid into the corporation, together with the paid-in or earned surplus and un- divided profits at the beginning of the taxable year.
 The value of intangible property paid in for stock or shares, Ill an amount as limited by section 326 of the revenue act of 1918, may also be included i'll invested capital. The term intangible property" means patents, copyrights, secret processes and formulae, good will, trademarks, trade brands, fran chises and other like property: Borrow ed capital can not be included III 1n- vested capital. Adjustment must be made for inadmissible assets, which are defined as stocks, bonds and other ob- legations (other than obligations of the United States), the dividends or inter putting net income.
 The Bureau of Internal Revenue care fully examines and audits returns of makes a correction i'll the amount of tax due under the law. Severe penal ties may be imposed upon corporations for delinquency in filing returns, fraud or negligence in the understatement of any taxes, and it is important that the in filing its return follow closely the instructions printed on the return form.