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taxable year to any foreign country or to any possession of the United States; and (6) his proportionate share of any such taxes of a partnership of which he is a partner or of an estate or trust of which he is a beneficiary paid or accrued during the taxable year to a foreign country or to any possession of the United States, as

be. (2) In the case of an alien resident of the United States the basis of the credit for taxes is as follows: (a) The amount of any such taxes paid or accrued during the taxable year to any possession of the United States; (b) the amount of any such taxes paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and (c) his proportionate share of any such taxes of a partnership of which he is a partner or of an estate or trust of which he is a beneficiary paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country, or to any possession of the United States, as the case may be. A citizen deriving income from sources within a possession of the United States, who is entitled to the benefits of section 262, is not allowed any of the credits provided by section 222. As to credits for taxes in the case of corporations see section 238 of the statute and articles 611 and 612.

Art. 382. Meaning of terms.“Amount of any income, war-profits and excess-profits taxes paid or accrued during the taxable year means taxes proper (no credit being given for amounts representing interest or penalties) paid or accrued during the taxable year on behalf of the individual claiming credit. “Foreign country” includes within its meaning any foreign sovereign state or self-governing colony (for example, the Dominion of Canada), but does not include a foreign municipality (for example, Montreal) unless itself a sovereign state (for example, Hamburg). “Any possession of the United States” includes, among others, Porto Rico, the Philippines, and the Virgin Islands. As to the meaning of “sources” see section 217. See also section 2 of the statute.

ART. 383. Conditions of allowance of credit.-(a) When credit is sought for income, war-profits or excess-profits taxes paid other than to the United States, the income-tax return of the individual must be accompanied by Form 1116, carefully filled in with all the information there called for and with the calculations of credits there indir cated, and duly signed and sworn to or affirmed. When credit is sought for taxes already paid the form must have attached to it the receipt for each such tax payment. When credit is sought for taxes

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accrued the form must have attached to it the return on which each such accrued tax was based. This receipt or return so attached must be either the original, a duplicate original, a duly certified or authenticated copy, or a sworn copy. In case only a sworn copy

of receipt or return is attached, there must be kept readily available for comparison on request the original, a duplicate original or a duly certified or authenticated copy. (b) In the case of a credit sought for a tax accrued but not paid, the Commissioner may require as a condition precedent to the allowance of credit a bond from the taxpayer in addition to Form 1116. If such a bond is required, Form 1117 shall be used for it. It shall be in such sum as the Commissioner may prescribe, and shall be conditioned for the payment by the taxpayer of any amount of tax found due upon any redetermination of the tax made necessary by such credit proving incorrect, with such further conditions as the Commissioner may require. This bond shall be executed by the taxpayer, his agent or representative, as principal, and by sureties satisfactory to and approved by the Com

, missioner. See also section 1029 of the statute.

ART. 384. Redetermination of tax when credit proves incorrect.-In case credit has been given for taxes accrued, or a proportionate share thereof, and the amount that is actually paid on account of such taxes, or a proportionate share thereof, is not the same as the amount of such credit, or in case any tax payment credited is refunded in whole or in part, the taxpayer shall immediately notify the Commissioner. The Commissioner will thereupon redetermine the amount of the income tax of such taxpayer for the year or years for which such incorrect credit was granted. The amount of tax, if any,

due upon such redetermination shall be paid by the taxpayer upon notice and demand by the collector. The amount of tax, if any, shown by such redetermination to have been overpaid shall be credited against any income, war-profits, or excess-profits taxes, or installment thereof, then due from such taxpayer under any other return, and any balance of such amount shall be immediately refunded to him. See section 281 of the statute and articles 1301-1308.

ART. 385. Countries which do or do not satisfy the similar credit requirement.-(a) The following is an incomplete list of the countries which satisfy the similar credit requirement of section 222(a) (3) of the Revenue Act of 1924, either by allowing to citizens of the United States residing in such countries a credit for the amount of income taxes paid to the United States, or in imposing such taxes, by exempting from taxation the incomes received from sources within the United States by citizens of the United States residing in such countries: Australia, Austria, Bulgaria, Canada, Czechoslovakia, Italy, Netherlands, Newfoundland, Salvador. (b) The following is an incomplete list of the countries which do not satisfy the similar

credit requirement of section 222 (a)(3) of the Revenue Act of 1924, either because such countries do not allow any credit to citizens of the United States residing in such countries for the amount of income taxes paid to the United States, or because such countries do not impose any income taxes: Argentina, Bahama, Belgium, Bermuda, Bolivia, Bosnia, Brazil, Chile, China, Costa Rica, Dutch Guiana, Ecuador, Egypt, Finland, France, Germany, Great Britain and Ireland, Guatemala, Herzegovina, India, Jamaica, Japan, Montenegro, Morocco, New Zealand, Nicaragua, Panama, Paraguay, Persia, Peru, Portugal, Rumania, Santo Domingo, Serbia, Siam, Straits Settlements, Sweden, Switzerland, Venezuela. The former names of certain of these territories are here used for convenience in spite of the actual or possible change in the name or sovereignty. A resident of the United States who is a citizen or subject of any country in the first list is entitled, for the purpose of the total tax due the United States for 1924 and subsequent years, to a credit for the amount of any income, war-profits, and excess-profits taxes paid or accrued during the taxable year to any foreign country. If he is a citizen or subject of any country in the second list, he is not entitled to such credit. If he is a citizen or subject of a country which is in neither list, then to secure the desired credit he must prove to the satisfaction of the Commissioner that his country satisfies the similar credit requirement of the statute.

ART. 386. Limitation of credit for taxes.—The amount allowable as a credit against the income tax under Parts I and II of Title II of the statute is limited by section 222(a) (5) to a sum not in excess of the same proportion of the tax (computed upon the basis of the taxpayer's net income without deducting any income or profits taxes, any part of which may be allowed as a credit under section 222) against which the credit is taken, which the taxpayer's net income (computed without deduction for such income and profits taxes) from sources without the United States bears to his entire net income (computed without such deduction) for the same taxable year. The operation of this limitation in the case of a citizen of the United States having $10,000 earned income within the meaning of section 209 and entitled to an exemption of $1,000, is illustrated as follows: Income from sources within the United States_

$50, 000 Income from sources without the United States..

25, 000

Total net income (without deduction of income and profits taxes

paid or accrued to foreign countries or possessions of the

United States).
United States normal tax and surtax on $75,000_.
Foreign income and profits taxes upon $25,000.-

25000 Amount which may be credited against the United States tax (75000

of $13,290)

75, 000 13, 290 5, 000

4, 430

In addition to the credit of $4,430, the taxpayer in this case is entitled to a further credit of $75 against the total tax, such sum of $75 being the amount of the credit by reason of earned income computed under section 209(b).

Art. 387. When credit for taxes may be taken.—The credit for taxes provided by subdivision (a) of section 222 may ordinarily be taken either in the return for the year in which the taxes accrued or in which the taxes were paid, dependent upon whether the accounts of the taxpayer are kept and his returns filed upon the accrual basis or upon the cash receipts and disbursements basis. Subdivision (c) of section 222 allows the taxpayer at his option and irrespective of the method of accounting employed in keeping his books to take such credit for taxes as may be allowable in the return for the year in which the taxes accrued. An election thus made must be followed in returns for all subsequent years. A taxpayer whose accounts are kept upon the cash receipts and disbursements basis and who elects under section 222(c) to take the allowable credit for taxes in the year in which the taxes accrued, may include in the credit for the first such year the amount of taxes accrued for that year plus the amount of taxes, if any, paid for the preceding year, and not previously taken as a credit.

INDIVIDUAL RETURNS

SEC. 223. (a) The following individuals shall each make under oath a return stating specifically the items of his gross income and the deductions and credits allowed under this title

(1) Every individual having a net income for the taxable year of $1,000 or over, if single, or if married and not living with husband or wife;

(2) Every individual having a net income for the taxable year of $2,500 or over, if married and living with husband or wife; and

(3) Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income.

(b) If a husband and wife living together have an aggregate net income for the taxable year of $2,500 or over, or an aggregate gross income for such year of $5,000 or over

(1) Each shall make such a return, or

(2) The income of each shall be included in a single joint return, in which case the tax shall be computed on the aggregate income.

(c) If the taxpayer is unable to make his own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer.

ART. 401. Individual returns. For each taxable year every single person, whose gross income as defined in section 213 of the statute is $5,000 or over, or whose net income as defined in section 212 of the statute and articles 21–26 is $1,000 or over, must make a return of income. The return shall be for his taxable year, whether calendar or fiscal. Whether or not an individual is the head of a family or has dependents is immaterial in determining his liability to render a return. A husband and wife living together need make no returns unless their aggregate gross income for the taxable year is at least $5,000, or their aggregate net income is at least $2,500. If their aggregate net income for the taxable year is $2,500 or more, or their aggregate gross income is $5,000 or more, either each must make a return, or the income of each must be included in a single joint return. Where the income of each is included in a single joint return, the tax is computed on the aggregate income and all deductions and credits to which either is entitled shall be taken from such aggregate income. The husband shall include in his return the income derived from services rendered by the wife or from the sale of products of her labor if she does not file a separate return or join with him in a return setting forth her income separately. For returns by partnerships see section 224 and articles 411 and 412; by fiduciaries see section 225 and articles 421-425; and by corporations see sections 239 and 240 and articles 621–625 and 631-638. See also section 227 and articles 441-446.

ART. 402. Form of return.—The return shall be on Form 1040, except that it may be on short Form 1040 A where the net income does not exceed $5,000, and is derived chiefly from salaries and wages. The forms may be had from the collectors of the several districts. The return may be made by an agent when by reason of illness, absence, or nonresidence the person liable for the return is unable to make it, the agent assuming the responsibility for making the return and incurring liability for the penalties provided for erroneous, false, or fraudulent returns.

ART. 403. Return of income of minor.-An individual under the statutory age of majority is required to render a return of income if he has a net income of his own of $1,000 or over, or a gross income of $5,000 or over, for the taxable year. If he is married, see article 401. If a minor has been emancipated by his parent, his earnings are his own income, and such earnings, regardless of amount, are not required to be included in the return of the parent. If the aggregate of the net income of a minor from any property which he possesses, and from any funds held in trust for him by a trustee or guardian, and from his earnings in case he has been emancipated, is at least $1,000, or his gross income is at least $5,000, a return as in the case of any other individual must be made by him or by his guardian, or some other person charged with the care of his person or property for him. See article 422. In the absence of proof to the contrary, a parent will be assumed to have the legal right to the earnings of the minor and must include them in his return.

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