Act of 1924. of an estate or trust, or of the beneficiary of an estate or trust, the proper part of each share of the net income which consists, respectively, of ordinary net income, capital net gain, or capital net loss, shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary, and shall be separately shown in the return of the partnership or estate or trust, and shall be taxed to the member or beneficiary or to the estate or trust as provided in sections 21867 and 219,68 but at the rates and in the manner provided in subdivision (b) or (c) of this section. Act of 1921. trust, the proper part of each share of the net income which consists, respectively, of ordinary net income and capital net gain, shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary, and shall be separately shown in the return of the partnership or estate or trust, and shall be taxed to the member or beneficiary or to the estate or trust as provided in sections 218 67 and 219,68 but at the rates and in the manner provided in subdivision (b) of this section. EARNED INCOME. SEC. 209. (a) For the purposes of this section— (1) The term "earned income' means wages, salaries, professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income producing factors, a reasonable allowance as compensation for the personal services actually rendered by the taxpayer, not in excess of 20 per centum, of his share of the net profits of such trade or business, shall be considered as earned in come. (2) The term "earned income deductions" means such deductions as are allowed by section 21469 for the purpose of computing net income, and are properly 67 Sec. 218, p. 128. 68 Sec. 219, p. 134. Act of 1918. Act of 1924. Act of 1921. Act of 1918. allocable to or chargeable against earned income. (3) The term "earned net income" means the excess of the amount of the earned income over the sum of the earned income deductions. If the taxpayer's net income is not more than $5,000, his entire net income shall be considered to be earned net income, and if his net income is more than $5,000, his earned net income shall not be considered to be less than $5,000. In no case shall the earned net income be considered to be more than $10,000. SEC. 209. (b) In the case of an individual the tax shall, in addition to the credits provided in section 222,70 be credited with 25 per centum of the amount of tax which would be payable if his earned net income constituted his entire net income; but in no case shall the credit allowed under this subdivision exceed 25 per centum of his tax under section 210. SEC. 209. (c) In the case of the members of a partnership the proper part of each share of the net income which consists of earned income shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary and shall be separately shown in the return of the partnership and shall be taxed to the member as provided in section 218.71 on the net income of every individual73 a normal tax of 8 per centum of the amount of the net income in excess of the credits provided in section 216:78 Provided, That in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount shall be 4 per centum. 6 per centum of the amount of the net income in excess of the credits provided in section 216,78 except that in the case of a citizen or resident of the United States the rate upon the first $4,000 of such excess amount SEC. 210.82 (a) That in lieu of shall be 2 per centum, and upon the tax imposed by section 210 the next $4,000 of such excess of the Revenue Act of 1918 there amount shall be 4 per centum; shall be levied, collected, and SEC. 210. (b) In lieu of the paid for each taxable year upon tax imposed by subdivision (a), the net income of every indithere shall be levied, collected, vidual (except as provided in and paid for each taxable year subdivision (b) of this section) upon the net income of every a normal tax of 8 per centum Act of 1918. be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax" at the following rates: SEC. 210. (a) For the calendar year 1918, 12 per centum of the amount of the net income in excess of the credits provided in section 216:78 Provided, That in the case of a citizens or resident of the United States the rate upon the first $4,000 of such excess amount shall be 6 per centum; SEC. 210. (b) For each calendar year thereafter, 8 per centum of the amount of the net income in excess of the credits sion (a) shall be applied in reduction of the amount of tax shown upon the return, or, if the tax is to be paid in installments, shall be prorated to the four installments. The amount so prorated to any installment, the date for payment of which has not arrived, shall be applied in reduction thereof. The amount so prorated to any installment, the date for payment of which has arrived, shall be credited against the installment next falling due after the enactment of this Act. (e) Where the taxpayer at the time of the enactment of this Act has not paid in full that part of the amount shown as the tax upon the return which should have been paid on or before the time of the enactment of this Act, then 25 per centum of any amount already paid shall be applied in reduction of the amount unpaid (such unpaid amount being first reduced by 25 per centum thereof) and any excess shall be credited or refunded as provided in section 281 of this Act. (f) If the correct amount of the tax is determined to be in excess of the amount shown as the tax upon the return, and a deficiency has been assessed before the enactment of this Act, then 25 per centum of any amount of such deficiency which has been paid shall be applied in reduction of the amount unpaid (such unpaid amount being first reduced by 25 per centum thereof) and any excess shall be credited or refunded as provided in section 281 of this Act. Any deficiency assessed after the enactment of this Act shall be reduced by 25 per centum of the amount which would have been assessed as a deficiency if this title had not been enacted. (g) The allowance provided in subdivision (a) shall be deducted from the tax or deficiency for the purpose of determining the amount on which any interest, penalties or additions to the tax shall be based. SEC. 1201. (a) Any taxpayer making return, for a period beginning in 1922 and ending in 1923, of the taxes imposed by Parts I and II of Title II of the Revenue Act of 1921, shall be entitled to an allowance by credit or refund of 25 per centum of the same proportion of his tax for such period (determined under the law applicable to the calendar year 1923 and at the rates for such year) which the por tion of such period falling within the calendar year 1923 is of the entire period. (b) Any taxpayer making return, for a period beginning in 1923 and ending in 1924, of the taxes imposed by Parts I and II of Title II of this Act, shall be entitled to an allowance by credit or refund of 25 per centum of the same proportion of a tax for such period (determined under the law applicable to the calendar year 1923 and at the rates for such year) which the portion of such period falling within the calendar year 1923 is of the entire period. (c) In the case of a deficiency assessed upon a taxpayer entitled to the benefits of subdivision (a) or (b) in respect of the tax for a period beginning in 1922 and ending in 1923 or beginning in 1923 and ending in 1924, the allowance provided for in subdivisions (a) and (b) shall be made in respect of such deficiency in a similar manner to that provided in subdivision (f) of section 1200. SEC. 1202. Any taxpayer who has made return of the taxes imposed by Parts I and II of Title II of the Revenue Act of 1921, for a period of less than a year and beginning and ending within the calendar year 1923, shall be entitled to an allowance by credit or refund of 25 per centum of the amount shown as the tax upon his return. If the correct amount of the tax for such period is determined to be in excess of the amount shown as the tax upon the return, the taxpayer shall be entitled to the benefits of subdivision (f) of section 1200 of this Act. SEC. 1203. The allowance provided in sections 1201 and 1202 shall, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, be made in a similar manner to that provided in section 1200. SEC. 1204. The interest provided in section 1019 of this Act shall not be allowed in respect of the allow ance provided for in this title. SEC. 1205. The benefits of the allowance provided for in this title shall be granted to the taxpayer under rules and regulations prescribed by the Commissioner with the approval of the Secretary. SEC. 1206. Terms defined in the Revenue Act of 1921 shall, when used in this title, have the meaning assigned to such terms in that Act. 73 (a) The Act of 1921 was not unconstitutional |