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1 exemption of $1,000 be deducted by both a husband and a 2 wife: Provided, That only one deduction of $4,000 shall 3 be made from the aggregate income of both husband and wife 4 when living together: Provided further, That if the person 5 making the return is the head of a family there shall be an 6 additional exemption of $200 for each child dependent upon 7 such person, if under eighteen years of age, or if incapable 8 of self-support because mentally or physically defective, 9 but this provision shall operate only in the case of one 10 parent in the same family: Provided further, That 11 guardians or trustees shall be allowed to make this 12 personal exemption as to income derived from the property 13 of which such guardian or trustee has charge in favor of each 14 ward or cestui que trust: Provided further, That in no 15 event shall a ward or cestui que trust be allowed a greater 16 personal exemption than $3,000, or, if married, $4,000, as 17 provided in this section, from the amount of net income 18 received from all sources. There shall also be allowed an 19 exemption from the amount of the net income of estates of 20 deceased citizens or residents of the United States during 21 the period of administration or settlement, and of trust or 22 other estates of citizens or residents of the United States 23 the income of which is not distributed annually or regularly 24 under the provisions of subdivision (b) of section two, the

1 sum of $3,000, including such deductions as

2 under section five."

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are allowed

(2) Subdivision (b) of section seven of such Act of Sep

4 tember eighth, nineteen hundred and sixteen, is hereby repealed.

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SEC. 1204. (1) That subdivisions (c) and (e) of section

6 eight of such Act of September eighth, nineteen hundred and

7 sixteen, are hereby amended to read as follows:

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"(c) Guardians, trustees, executors, administrators, re9 ceivers, conservators, and all persons, corporations, or asso10 ciations, acting in any fiduciary capacity, shall make and 11 render a return of the income of the person, trust, or estate for 12 whom or which they act, and be subject to all the provisions of 13 this title which apply to individuals. Such fiduciary shall make 14 oath that he has sufficient knowledge of the affairs of such person, trust, or estate to enable him to make such return and 16 that the same is, to the best of his knowledge and belief, true 17 and correct, and be subject to all the provisions of this title 18 which apply to individuals: Provided, That a return made by one of two or more joint fiduciaries filed in the district where 20 such fiduciary resides, under such regulations as the Secretary 21 of the Treasury may prescribe, shall be a sufficient compliance 22 with the requirements of this paragraph: Provided further, 23 That no return of income not exceeding $3,000 shall be re24 quired except as in this title otherwise provided.

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"(e) Persons carrying on business in partnership shall

2 be liable for income tax only in their individual capacity, 3 and the share of the profits of the partnership to which any 4 taxable partner would be entitled if the same were divided, 5 whether divided or otherwise, shall be returned for taxation 6 and the tax paid under the provisions of this title: Provided, 7 That from the net distributive interests on which the indi8 vidual members shall be liable for tax, normal and additional, 9 there shall be excluded their proportionate shares received 10 from interest on the obligations of a State or any political or taring subdivision thereof, and upon the obligations of 12 the United States and its possessions, and that for 13 the purpose of computing the normal tax there shall be 14 allowed a credit, as provided by section five, subdi15 vision (b), for their proportionate share of the profits 16 derived from dividends. Such partnership, when requested 17 by the Commissioner of Internal Revenue or any district col18 lector, shall render a correct return of the earnings, profits, 19 and income of the partnership, except income exempt under 20 section four of this Act, setting forth the item of the gross 21 income and the deductions and credits allowed by this title, 22 and the names and addresses of the individuals who would 23 be entitled to the net earnings, profits, and income, if dis24 tributed. A partnership shall have the same privilege of 25 fixing and making returns upon the basis of its own fiscal

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year as is accorded to corporations under this title. The 2 share of the profits of a partnership to which any taxable 3 partner would be entitled for a fiscal year ending in nineteen 4 hundred and sixteen, or subsequent tax years for which the 5 rates of tax have been or shall be changed by law, shall be 6 returned for taxation and the tax paid under the respective rates applicable to each calendar year in the proportion that 8 the period of each calendar year bears to the full fiscal year." (2) Subdivision (d) of section eight of such Act of Septem10 ber eighth, nineteen hundred and sixteen, is hereby repealed. SEC. 1205. (1) That subdivisions (b), (f), and (g) of 12 section nine of such Act of September eighth, nineteen hundred 13 and sixteen, are hereby amended to read as follows:

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14 "(b) All persons, corporations, partnerships, associa 15 tions, and insurance companies, in whatever capacity acting, 16 including lessees or mortgagors of real or personal property, 17 trustees acting in any trust capacity, executors, administra18 tors, receivers, conservators, employers, and all officers and 19 employees of the United States, having the control, receipt, 20 custody, disposal, or payment of interest, rent, salaries, wages, 21 premiums, annuities, compensation, remuneration, emolu22 ments, or other fixed or determinable annual or periodical 23 gains, profits, and income of any nonresident alien individual, 24 other than income derived from dividends on capital stock, or 25 from the net earnings of a corporation, joint-stock company

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or association, or insurance company, which is taxable upon

2 its net income as provided in this title, are hereby authorized 3 and required to deduct and withhold from such annual or peri4 odical gains, profits, and income such sum as will be sufficient 5 to pay the normal tax imposed thereon by this title, and shall 6 pay the amount withheld to the officer of the United States 7 Government authorized to receive the same; and they are each 8 hereby made personally liable for such tax, and they are each 9 hereby indemnified against every person, corporation, partner10 ship, association, or insurance company, or demand whatso11 ever for all payments which they shall make in pursuance 12 and by virtue of this title.

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"(f) All persons, corporations, partnerships, or associa14 tions, undertaking as a matter of business or for profit the col15 lection of foreign payments of interest or dividends by means 16 of coupons, checks, or bills of exchange shall obtain a license 17 from the Commissioner of Internal Revenue, and shall be sub18 ject to such regulations enabling the Government to obtain the 19 information required under this title, as the Commissioner 20 of Internal Revenue, with the approval of the Secretary 21 of the Treasury, shall prescribe; and whoever know22 ingly undertakes to collect such payments as aforesaid 23 without having obtained a license therefor, or without com24 plying with such regulations, shall be deemed guilty of a 25 misdemeanor and for each offense be fined in a sum not

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