Evening star., 1941-09-22
Tax Law Provisions
Vital TO Banking
Shown in Digest
Higher Rate on Safe
Deposit Boxes Among
Host of Advances
BY EDWARD c. STONE.

dent Roosevelt after nearly five
months deliberation by Congress
Bankers are especially pleased
that the new law contains no pro.
visions for a tax on bank checks
although taxes on safe deposit boxe.
were increased.
A digest of the law discloses that
the 10 per cent defense tax imposed
by the Second Revenue Act of 194C
has been eliminated and in lieu
thereof the normal corporation in.
come tax on corporations with net
income of not more than $4,000 has
been increased as follows: Is per
cent on the first $1,000 net income
II per cent on net income in excess
Of $4,000 and not in excess of S20.00G
and 10 per cent on net income in
excess of 100000
For corporations with net incomes
In excess of $4,000 the rate con-
tinues at "a per cent, but is made
permanent, and for corporations
having net incomes slightly in eX-
cess of S25 900, the alternative tax
is S4250 plus 81 per cent of the
taxable net income in excess of
S25, 900. This alternative tax will
apply to corporations with net in
comes between $25, 900 and S38, ,46l "a.
A surtaX is imposed for the first
time on the net income Of all cor
porations, a credit being allowed
for dividends received in computing
such net income in the amount of
IS per cent of the net income in
lieu of IS per cent of the adjusted
net income. The rate Of SurtaX is
as follows: 6 per cent upon surtax
net income not in excess Of S25 900
plus 7 per cent of the excess over
$4,000.
Other Provisions in Law.
Although income from partially
taX-eXempt Government bonds is
sued prior to March l. 194l, con-
tinueS to be exempt from the nor
NAL corporation income tax, such
income will be subject to the cor
poration surtaX.
The surtaX on net income of in
dividuals is made applicable to the
first dollar of SurtaX net income
the exemption of the first $4,000 be-
ing eliminated. The rates of SurtaX
continue to be based upon sliding
scale commencing at 6 per cent on
surtaX net income not over $4,000
and increasing to II per cent on sur
tax net income over S5000,000.
The 10 per cent defense tax i'm
posed under the Second Revenue Act
of 1910 is eliminated.
Provision is made for the optional
use of a simplifled return where the
gross income of the taxpayer derived
solely from salaries, wages, compen-
sation for personal services, divi-
dends, interest, rent, annuities or
royalties does not exceed $4,000. The
amount of tax for various income
brackets is set forth in table con-
tained in the act which will be
printed on the back of the return.
The personal exemption of indi-
viduals is reduced in the case of a
married person or the head of a
family from $4,000 to $500, and the
personal exemption of single per-
son or married person not living
with husband or wife is reduced
from $500 to $3.50.
Rules on Fiduciary Returns.
Individual and fiduciary returns
and information returns are made
to conform to the changes in the
personal exemptions. Thus single
persons or married persons not liv-
ing with husband or wife are re-
quired to file a return if having a
gross income of $3.50 or over Married
persons living with husband or wife
are required to file a return if having
a gross income of 81 500 or over.
Where fiduciary returns were for
merly required if gross income was
$4,000 or more, such returns are re-
quired if gross income is sl.500 or
more, and where such returns we're
required if gross income was $500 or
more, such returns are required if
gross income is $3.50 or more
The rates of excess profits tax are
increased 10 percentage points in
each rate bracket. the lowest rate
being IS per cent of adjusted excess
profits net income not over $4,000,
and the highest rate being go per
cent of adjusted excess profits net
income over S500000.
The credit with respect to
corporations using the invested cap
ital method is reduced in cases
where the invested capital exceeds
S5,000,000 to 7 per cent, the former
credit of 8 per cent continuing to
apply where invested capital is not
over $5,000,000
Special credit is given for new
capital by increasing invested cap
ital Sl25 for each Sl00 of new cap
ital paid into a corporation.
The capital stock tax is increased
to SIPS per $1,000 of adjusted de-
clared value This increased rate
is made applicable to the taxable
year ending June 80, 1941.
The 10 per cent defense tax ap-
plicable to the declared value excess
profits tax is eliminated and in lieu
thereof the tax rate schedule is in
creased as follows: 66-10 per cent
of such portion of the net income
as is in excess of 10 per cent and
not in excess of Is per cent of the
declared value: 1920 per cent of
such portion of the net income as
is in excess of Is per cent Of the
declared value.
Higher Safe Deposit Tax.
Further study of the law shows
that estate and gift taxes are in
creased. Twenty-four existing ex-
else taxes are made permanent
without increasing the rates of tax,
although the defense tax is inte-
grated. Increased rates among
existing excise taxes are of special
concern to bankers as the group
includes a safe deposit box tax,
which has been advanced to 20 per
cent.
Financial District Comment.
Mergenthaler Linotype opened at
"a on the Washington Stock Ex-
change today and closed at 24A
The days turnover was "a shares
Cooita1 Transit onened the week s