Evening star., 1942-10-28
Corporations Have S Main
Tax Law Changes to Observe
Normal Rate Unoltered but Surtuxes
And Coendor Yeor Bosis Are Imposed

| postwar rebate and current re-
duction credit, and put all corpora
tions on calendar year tax basis
for the future.
Let's take them up one by one: !:
The normal tax rate is un-
changed. For corporations with nor
NAL tax net income of not more
than $4,000. the rates are Is per
cent on the first 5000; II per cent
on the next bracket up to $4,000
10 per cent on the $50, 1000 -$25, 900
bracket. For corporations whose
normal tax net income is over
SIS, 900, the rate is a fiat "a per
cent.
The surtax rates have been
boosted. For corporations whose
surtax net income is not more than
$25,000. the new rate is 10 per cent.
For corporations whose surtax net
income is over $25, 900, the new rate
is 16 per cent, applicable to the
whole amount.
Thus the total of corporate in
come tax at full rates will be 40
per cent, compared with the present
81 per cent.
corporate net income for tax
purposes Is decreased by the
amount of any excess-profits net
income, which is subject only to
excess profits taxes.)
Corporations with affiliated COM
pan1eS may file consolidated returns
on their regular as we'll as excess
prof1ts taxes if they pay an extra
per cent in corporate income
Surtax.
Excess Profits Tax.
A fiat 80 per cent is levied on the
adjusted excess profit net income
that is, the excess-p profits net in
come less the excess-profits credit
and a specific exemption of $4,000.
In determining the excess-profits
credit by the income method, the
figure of 95 per cent of average
earnings in the base period 1896
39) Is retained. However, in case of
deficit year or years in the base
period, the law provides for in
creasing the base by using for one
such year an amount equal to IS
per cent of the average of the
other years.
For corporations using the in
vested-capital method of determin-
ing the credit, there are two changes
IN rates, for the first $4,000 of
invested capital, the rate of 8 per
cent is retained: for the next S.
100000. the rate of 7 per cent is
continued. For the amount from
$1o,000,00O to 5000 900 900, the new
rate is per cent dnstead of y,
and over 5000, 200, 900, the new rate
is per cent dnstead of ..
Overall Limit.
A limitation of the total effective
rate OF income and excess profits
taxes assessed against any corpora
ton Is placed at 80 per cent of
corporation surtax net income lcom-
puted without any excess profits
credit.
Relief Provisions.
A postwar credit In the amount
OF 10 per cent of the excess profits
tax Will take the form of non
negotiable, non interest bearing
bonds to be issued to the corpora
ton by the Treasury, to be paid off
after the war.
Up to the same amount, a corpora
ton may take credit against excess
prof1tS taxes to the extent of 40 per
cent OF the money it pays out dur
ing the taxable year in retirement
OF debt. But this credit reduces the
postwar credit by its amount.
The Calendar-Year Basis,
All corporations are placed on a
calendar-year tax basis in the future.
For 1912, there are two provisions:
A corporation with a fiscal year
which ended on or before June 30,
1912, will pay under the rates of
the old law; a corporation having
fiscal year ending later than June
30 in this year will have to make
two computations and pay propor-
tionately.
Notes.
The dividing line between short
and long term capital gains and
losses Is fixed at six months for-
merly 18 months.
The capital stock tax and de-
clared-value-excess-pro profits tax, are
retained.
Taxpayers are permitted to charge
on losses on property seized by the
enemy.