"8% (" 83,600) Balance subject to normal tax ... $87,600 66 Surtax on $90,000 at 1921 rates. . $18,910 Surtax on $90,000 at 1922 rates.. $17,960 Illustrating Time and Place for Filing Returns of Individuals, Partnerships, Fiduciaries, and Corporations FACTS: Georges Cartier, a nonresident alien, has income from sources within the United States. He keeps his accounts on a fiscal year basis ending July 31. He has no legal residence or principal place of business in the United States. QUESTION: What is the latest date on which Mr. Cartier must file his United States income tax return for his fiscal year ended July 31, 1921? Where should his return be filed? ANSWER: Mr Cartier's return should be filed not later than January 15, 1922 with the Collector of Internal Revenue at Baltimore, Md. The following table is appended to show the latest dates on which taxpayers may file their returns: Whenever in his opinion there is sufficient cause for requesting a reasonable extension, the Commissioner may grant an extension of not over six months, except in the case of taxpayers abroad. Returns are to be made to the Collector for the district in which the individual has his legal residence or principal place of business in the United States or in the case of a corporation to the collector for the district in which is located the principal office, agency or place of business in the United States. Where the taxpayer has no legal residence or principal place of business in the United States, the return is to be made to the collector at Baltimore, Maryland. REFERENCES: Sec. 227: "(a) That returns (except in the case of nonresident aliens) shall be made on or before the fifteenth day of the third month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or before the 15th day of March. In the case of a nonresident alien individual returns shall be made on or before the fifteenth day of the sixth month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or before the 15th day of June. The Commissioner may grant a reasonable extension of time for filing returns whenever in his judgment good cause exists and shall keep a record of every such extension and the reason therefor. Except in the case of taxpayers who are abroad no such extension shall be for more than six months. (b) Returns shall be made to the collector for the district in which is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal place of business in the United States, then to the collector at Baltimore, Maryland." Sec. 241: "(a) That returns of corporations shall be made at the same time as is provided in subdivision (a) of section 227, except that in the case of foreign corporations not having any office or place of business in the United States returns shall be made at the same time as provided in section 227 in the case of a nonresident alien individual. "(b) Returns shall be made to the collector of the district in which is located the principal place of business or principal office or agency of the corporation, or, if it has no principal place of business or principal office or agency in the United States, then to the collector at Baltimore, Maryland." PROBLEM 199 Illustrating Time for Paying Tax Installments in the Case of Corporation Reporting on a Fiscal-Year Basis FACTS: The Carson Carpet Manufacturing Company, incorporated under the laws of the State of New York, closes its books on September 30th each year and reports its taxable income on such fiscal year basis. For the past two years the company has paid its Federal taxes in four equal installments. QUESTION: When will the above company be required to pay its taxes for the fiscal year 1921? ANSWER: As the above company has established an accounting period for the twelve months ending on September 30, 1921, which is a fiscal year within the meaning of the statute, it should file a return on or before the fifteenth day of the third month, following the close of its fiscal year, or December 15, 1921. See Problem 198. The entire tax due by the company may be paid either in one sum at or before the time of filing the return or in four equal installments. If it chooses to pay its tax in installments, the first installment becomes due on the date fixed by law for filing the return, or December 15, 1921; the second installment becomes due on the fifteenth day of the third month after the time fixed by law for filing the return, or March 15, 1922; the third installment becomes due on the fifteenth day of the sixth month following date fixed for filing the return, or June 15, 1922; and the fourth installment becomes due on the fifteenth day of the ninth month following the date fixed for filing the return, or September 15, 1921. REFERENCE: Sec. 250 (a): "That except as otherwise provided in this section and sections 221 and 237 the tax shall be paid in four installments, each consisting of one-fourth of the total amount of the tax. The first installment shall be paid at the time fixed by law for filing the return, and the second installment shall be paid on the fifteenth day of the third month, and the third installment on the fifteenth day of the sixth month, and the fourth installment on the fifteenth day of the ninth month, after the time fixed by law for filing the return. The tax may at the option of the taxpayer be paid in a single payment instead of in installments, in which case the total amount shall be paid on or before the time fixed by law for filing the return. PROBLEM 200 Illustrating Procedure to be Followed by a Taxpayer Upon Receipt from Collector of Notice of Understatement in His Return FACTS: Mr. Fred Smith, personally filed his return for the year 1921, at the office of the collector for his district. Subsequently he received notice to show cause why the tax should not be increased, due to the inclusion on the return of certain expenses which the collector believed to be non-deductible. QUESTION: What recourse has Mr. Smith? ANSWER: He should immediately file sworn statements with the collector, setting forth the reasons for so reporting the facts, and other proofs if any, which may help to establish his contention. If the taxpayer is not satisfied with the conclusions of the collector, he has the privilege of appealing to the Commissioner for his decision. REFERENCE: Sec. 228: "That if the collector or deputy collector has reason to believe that the amount of any income returned is understated, he shall give due notice to the taxpayer making the return to show cause why the amount of the return should not be increased, and upon proof of the amount understated, may increase the same accordingly. Such taxpayer may furnish sworn testimony to prove any relevant facts and if dissatisfied with the decision of the collector may appeal to the Commissioner for his decision, under such rules of procedure as may be prescribed by the Commissioner with the approval of the Secretary." Art. 451, Reg. 45 Revised: "If a collector suspects that the amount of any income is understated in a return, he may on his own initiative take up the matter with the taxpayer and upon becoming satisfied that the amount was understated may increase it accordingly, subject to the right of the taxpayer to appeal to the Commissioner." PROBLEM 201 Illustrating Computation of Tax in Case of Incorporation of Individual or Partnership within Four Months after November 23, 1921 FACTS: John Dodge, conducting a machine shop during 1921 as an individual, with an invested capital of $500,000 as of January |