ART. 1603. Allowance of net loss.—The amount allowed by the Commissioner in respect of any such claim shall be deducted from the net income for the taxable year 1918 and the income and the war profits and excess profits tax, if any, for such year shall be recomputed accordingly. Any amount found to be due him shall be credited or refunded to the taxpayer. See section 252 of the statute and articles 1034-1036. In any case in which it is found by the Commissioner that such net loss is in excess of the net income of such preceding taxable year, the taxpayer may carry forward the amount of such excess and claim it as a deduction in computing net income for the succeeding taxable year.

FISCAL YEAR WITH DIFFERENT RATES.

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SEC. 205. (a) That if a taxpayer makes return for a fiscal year beginning in 1917 and ending in 1918, his tax under this title for the first taxable year shall be the sum of: (1) the same proportion of a tax for the entire period computed under Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917 and under Title I of the Revenue Act of 1917, which the portion of such period falling within the calendar year 1917 is of the entire period, and (2) the same proportion of a tax for the entire period computed under this title at the rates for the calendar year 1918 which the portion of such period falling within the calendar year 1918 is of the entire period: Provided, That in the case of a personal service corporation the amount to be paid shall be only that specified in clause (1).

Any amount heretofore or hereafter paid on account of the tax imposed for such fiscal year by Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917, and by Title I of the Revenue Act of 1917, shall be credited towards the payment of the tax imposed for such fiscal year by this Act, and if the amount so paid exceeds the amount of such tax imposed by this Act, or, in the case of a personal service corporation, the amount specified in clause (1), the excess shall be credited or refunded in accordance with the provisions of section 252.

(b) If a taxpayer makes a return for a fiscal year beginning in 1918 and ending in 1919, the tax under this title for such fiscal year shall be the sum of: (1) the same proportion of a tax for the entire period computed under this title at the rates specified for the calendar year 1918 which the portion of such period falling within the calendar year 1918 is of the entire period, and (2) the same proportion of a tax for the entire period computed under this title at the rates specified for the calendar year 1919 which the portion of such period falling within the calendar year 1919 is of the entire period.

(c) If a fiscal year of a partnership begins in 1917 and ends in 1918 or begins in 1918 and ends in 1919, then notwithstanding the provisions of subdivision (b) of section 218, (1) the rates for the calendar year during which such fiscal year begins shall apply to an amount of each partner's share of such partnership net income (determined under the law applicable to such year) equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year, and (2) the rates for the calendar year during which such fiscal year ends shall apply to an amount of each partner's share of

such partnership net income (determined under the law applicable to such calendar year) equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year: Provided, That in the case of a personal service corporation with respect to a fiscal year beginning in 1917 and ending in 1918, the amount specified in clause (1) shall not be subject to normal tax.

ART. 1621. Fiscal year with different rates.-Section 205 of the statute applies to income taxes. For the provisions with respect to war profits and excess profits taxes see section 335 and articles 951955. Subdivision (a), which deals with fiscal years beginning in 1917 and ending in 1918, applies to corporations, including personal service corporations, and to individuals. Subdivision (b), which deals with fiscal years beginning in 1918 and ending in 1919, applies to corporations other than personal service corporations and to individuals. Subdivision (c), which deals with fiscal years beginning in 1917 or 1918 and ending in 1918 or 1919, applies to partnerships and to personal service corporations. See as to partnerships articles 321-327, and as to personal service corporations articles 328-335.

ART. 1622. Fiscal year of corporation ending in 1918.-The method provided for computing the tax for a fiscal year beginning in 1917 and ending in 1918 is as follows: (a) the tax attributable to the calendar year 1917 is found by computing the income of the taxpayer and the tax thereon in accordance with Title I of the Revenue Act of 1916 as amended and Title I of the Revenue Act of 1917 as if the fiscal year was the calendar year 1917, and determining the proportion of such tax which the proportion of the fiscal year falling within the calendar year 1917 is of the full fiscal year; (b) the tax attributable to the calendar year 1918 is found by computing the income of the taxpayer and the tax thereon in accordance with the present statute as if the fiscal year was the calendar year 1918, and determining the proportion of such tax which the portion of such fiscal year falling within the calendar year is of the full fiscal year; and (c) the tax for the fiscal year is found by adding the tax attributable to the calendar year 1917 and the tax attributable to the calendar year 1918. If a corporation made its return for the taxable year 1917 on the calendar year basis and for the taxable year 1918 on a fiscal year basis, the tax attributable to the calendar year 1917 need not again be computed and the tax attributable to the calendar year 1918 computed as herein provided shall be the tax of the corporation for the portion of such fiscal year falling within the calendar year 1918. A personal service corporation is not required to pay the tax attributable to the calendar year 1918, since for that year it is treated substantially like a partnership for the purposes of taxation. See section 218 of the statute and articles 328-335.

ART. 1623. Deductions and credits in the case of corporation fiscal year ending in 1918.-Net losses deductible from net income of the fiscal

year under the provisions of section 204 of the statute shall be deducted in computing the tax attributable to the calendar year 1917, as well as in computing the tax attributable to the calendar year 1918. In computing the tax attributable to the calendar year 1917 the net income computed for the entire period under Title I of the Revenue Act of 1916 as amended and Title I of the Revenue Act of 1917 shall be credited with the excess profits tax computed for the entire period under Title II of the Revenue Act of 1917. In computing the tax attributable to the calendar year 1918 the net income computed for the entire period under the present statute shall be credited with the war profits and excess profits tax computed for the entire period under Title III of the statute at the rates prescribed for 1918. Seo section 236 of the statute and article 591. Amounts previously paid by the taxpayer on account of the income tax for such fiscal year shall be credited towards the payment of the income tax imposed for such fiscal year by the present statute. Any excess shall be credited or refunded in accordance with the provisions of section 252. See articles 1031 and 1034-1036.

ART. 1624. Fiscal year of individual ending in 1918.-Since under the law applicable to the calendar year 1917 individuals were not permitted to make returns on the fiscal year basis (see Title I of the Revenue Act of 1916 as amended), the tax of an individual for that part of a fiscal year ending in 1918 attributable to the calendar year 1917 has already been included in the tax for such calendar year and need not ordinarily again be computed. The tax for that part of the year attributable to the calendar year 1918 is found by computing the income of the taxpayer for the taxable year and the tax thereon in accordance with the present statute as if the taxable year was the calendar year 1918, and determining the proportion of such tax which the portion of such fiscal year falling within the calendar year is of the full fiscal year.

ART. 1625. Fiscal year of corporation or individual ending in 1919.The method provided for computing the tax for a fiscal year beginning in 1918 and ending in 1919 is as follows: (a) the tax attributable to the calendar year 1918 is found by computing the income of the taxpayer and the tax thereon in accordance with the statute as if the fiscal year was the calendar year 1918, and determining the proportion of such tax which the portion of such fiscal year falling within the calendar year is of the full fiscal year; (b) the tax attributable to the calendar year 1919 is found by computing the income of the taxpayer and the tax thereon in accordance with the statute as if the fiscal year was the calendar year 1919, and determining the proportion of such tax which the portion of such fiscal year falling within the calendar year is of the full fiscal year; and (c) the tax for the fiscal year is found by adding the tax attributable to the calendar year 1918 and the tax attributable to the calendar year 1919.

PARTS OF INCOME SUBJECT TO RATES FOR DIFFERENT YEARS.

SEC. 206. That whenever parts of a taxpayer's income are subject to rates for different calendar years, the part subject to the rates for the most recent calendar year shall be placed in the lower brackets of the rate schedule provided in this title, the part subject to the rates for the next preceding calendar year shall be placed in the next higher brackets of the rate schedule applicable to that year, and so on until the entire net income has been accounted for. In determining the income, any deductions, exemptions or credits of a kind not plainly and properly chargeable against the income taxable at rates for a preceding year shall first be applied against the income subject to rates for the most recent calendar year; but any balance thereof shall be applied against the income subject to the rates of the next preceding year or years until fully allowed.

ART. 1641. Parts of income subject to rates for different years.-Section 206 of the statute applies to a partner's share of partnership net income; to a stockholder's share of the net income of a personal service corporation; and to stock dividends received by a taxpayer between January 1 and November 1, 1918, or declared during that period and received by the taxpayer after November 1, 1918, and before March 27, 1919. For the treatment of income of a partner or of a stockholder in a personal service corporation see sections 218 and 205 of the statutes and articles 321-335, 1621 and 1624. For the treatment of stock dividends see section 201 and articles 1546 and 1642.

ART. 1642. Stock dividend subject to rates for different years.-The method of ascertaining the precise rate applicable to such portions of stock dividends received or credited in 1918 as are taxable at rates prescribed for previous years is as follows: The amount of the income of the recipient to which the 1918 rates are applicable is first ascertained. To such amount is then added the amount of income of the recipient liable to tax at the 1917 rates and the table of 1917 rates applied to see in which brackets such income falls. The income liable to 1916 rates is then added and the table of 1916 rates applied to it. For instance, an individual has $20,000 of income liable to 1918 rates and $25,000 of dividends liable to 1917 rates. The total would be $45,000, of which $20,000 would be taxable at the 1918 rates and $20,000 to $45,000 at the surtax rates under the 1917 table applying to income over $20,000. In order that the correctness of the rates may be verified, taxpayers reporting stock dividends at other than 1918 rates will be required to render a statement at the time of filing their returns showing the corporations from which dividends taking other than 1918 rates were received, with the particulars of the dividends received from each. See also article 1546.

ADVISORY TAX BOARD.

SEC. 1301. (d) (1) There is hereby created a Board to be known as the "Advisory Tax Board,” hereinafter called the Board, and to be composed of not to exceed six members to be appointed by the Commissioner with the approval of the Secretary. The Board shall cease to exist at the expiration of two years after the passage of this Act, or at such earlier time as the Commissioner with the approval of the Secretary may designate.

Vacancies in the membership of the Board shall be filled in the same manner as an original appointment. Any member shall be subject to removal by the Commissioner with the approval of the Secretary. The Commissioner with the approval of the Secretary shall designate the chairman of the Board. Each member shall receive an annual salary of $9,000, payable monthly, together with actual necessary expenses when absent from the District of Columbia on official business.

(2) The Commissioner may, and on the request of any taxpayer directly interested shall, submit to the Board any question relating to the interpretation or administration of the income, war-profits or excess-profits tax laws, and the Board shall report its findings and recommendations to the Commissioner.

(3) The Board shall have its office in the Bureau of Internal Revenue in the District of Columbia. The expenses and salaries of members of the Board shall be audited, allowed, and paid out of appropriations for collecting internal revenue, in the same manner as expenses and salaries of employees of the Bureau of Internal Revenue are audited, allowed, and paid.

(4) The Board shall have the power to summon witnesses, take testimony, administer oaths, and to require any person to produce books, papers, documents, or other data relating to any matter under investigation by the Board. Any member of the Board may sign subpoenas and members and employees of the Bureau of Internal Revenue designated to assist the Board, when authorized by the Board, may administer oaths, examine witnesses, take testimony and receive evidence.

ART. 1701. Submission of questions to Advisory Tax Board.-Questions elating to the interprétation or administration of the income tax nd war profits and excess profits tax laws may be submitted to the Advisory Tax Board by the Commissioner on his own initiative or at he request of any taxpayer directly interested for the purpose of obaining the recommendation of the Board thereon. When a final conclusion has been reached by the income tax unit of the Internal ReveQue Bureau as to the disposition of a matter, any taxpayer directly nterested therein may request the Commissioner to submit such matter to the Board. In the case of matters arising in connection with the audit of a taxpayer's return the taxpayer will ordinarily be notified of such conclusion prior to assessment by letter. The taxpayer shall file with the Commissioner (to be transmitted to the income tax unit) a request in writing for submission with a statement