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Tax not to be levied on con

conditions

Sec. 10. That no tax shall be levied under this act on any contract of sale mentioned in section three hereof tracts complying if the contract comply with each of the following con- prescribed. ditions:

First, Conform to the rules and regulations made pursuant to this act.

Second. Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made.

Third. Provide that cotton of or within the grade or of the type, or according to the sample or description specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder.

Fourth. Provide that the delivery of cotton under the contract shall not be effected by means of " set-off” or “ ring " settlement, but only by the actual transfer of the specified cotton mentioned in the contract.

The provisions of the first, third, and fourth subdivi. sions of this section shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “subject to United States cotton futures act, 'section ten."

This act shall not be construed to impose a tax on any sale of spot cotton.

This section shall not be construed to apply to any contract of sale made in compliance with section five of this act.

Sec. 11. That the tax imposed by section three of this act shall be paid by the seller of the cotton involved in the contract of sale, by means of stamps, which shall be affixed to such contracts or to the memoranda evidencing the same, and canceled in compliance with rules and regulations which shall be prescribed by the Secretary of the Treasury.

Sec. 12. That no contract of sale of cotton for future delivery mentioned in section three of this act which does requirements not conform to the requirements of section four hereof act not enforce and has not the necessary stamps affixed thereto, as re- United States. quired by section eleven hereof, shall be enforceable in any court of the United States by or on behalf of any party to such contract or his privies.

Sec. 13. That the Secretary of the Treasury is authorized to make and promulgate such rules and regulations and returns by as he may deem necessary to collect the tax imposed by elearing houses, this act and otherwise to enforce its provisions. Further

No tax on sale of spot cotton.

Tax to be paid by stamps.

Contracts

not to of

Regulations authorized ; records pointment

And compensation.

Failure to pay tax or other vio.

to effect this purpose, lie shall require all persons coming
within its provisions to keep such records and statements
of account, and may require such persons to make such
returns, verified under oath or otherwise, as will fully
and correctly disclose all transactions mentioned in sec-
tion three of this act, including the making, execution,
settlement, and fulfillment thereof; he may require all
persons who act in the capacity of a clearing house, clear-
ing association, or similar institution for the purpose of
clearing, settling, or adjusting transactions mentioned in
section three of this act to keep such records and to
make such returns as will fully and correctly disclose all

facts in their possession relating to such transactions; Agents, ap, and he may appoint agents to conduct the inspection

necessary to collect said tax and otherwise to enforce
this act and all rules and regulations made by him in pur-

suance hereof, and may fix the compensation of such Revenue laws agents. The provisions of the internal-revenue laws of made applicable. the United States, so far as applicable, including sections

thirty-one hundred and seventy-three, thirty-one hundred
and seventy-four, and thirty-one hundred and seventy-
five of the Revised Statutes, as amended, are hereby ex-
tended and made to apply to this act.

Regulations No. 36, August 29, 1916 (T. D. 2358); No.
40, November 30, 1917 (T. D. 2608).

Sec. 14. That any person liable to the payment of any lation of act or tax imposed by this act who fails to pay or evades or resolutions ; pun attempts to evade the payment of such tax, and any per,

son who otherwise violates any provision of this act, or
any rule or regulation made in pursuance hereof, shall be
deemed guilty of a misdemeanor, and, upon conviction
thereof, shall be fined not less than $100 nor more than
$20,000, in the discretion of the court; and, in case of
natural persons, may, in addition, be punished by im-
prisonment for not less than sixty days nor more than

three years, in the discretion of the court. Penalty, addi

Sec. 15. That in addition to the foregoing punishment there is hereby imposed, on account of each violation of this act, a penalty of $2,000, to be recovered in an action founded on this act in the name of the United States as plaintiff, and when so recovered one-half of said

amount shall be paid over to the person giving the infor

States mation upon which such recovery was based. It shall be attornectitapros- the duty of the United States attorneys, to whom satis

factory evidence of violations of this act is furnished, to
institute and prosecute actions for the recovery of the
penalties prescribed by this section.

SEC. 16. That no person whose evidence is deemed mate-
rial by the officer prosecuting on behalf of the United
States in any case brought under any provision of this
act shall withhold his testimony because of complicity by
him in any violation of this act or of any regulation made
pursuant to this act, but any such person called by such

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Testimony deemed material not to be withheld.

Exemption of witness from

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priation.

officer who testifies in such case shall be exempt from prosecution for any offense to which his testimony re- prosecution. lates.

Sec. 17. That the payment of any tax levied by this Payment act shall not exempt any person from any penalty or pun- empt from state ishment now or hereafter provided by the laws of any las, nor to pro State for entering into contracts of sale of cotton for State or municifuture delivery, nor shall the payment of any tax imposed pality. by this act be held to prohibit any State or municipality from imposing a tax on the same transaction. SEC. 18. That there is hereby appropriated, out of any

Expenditure on. moneys in the Treasury not otherwise appropriated, for the fiscal year ending June thirtieth, nineteen hundred and sixteen, the unexpended balance of the sum appropriated by the act of March fourth, nineteen hundred and fifteen (Thirty-eighth Statutes at Large, page one thousand and seventeen), for collecting "the cotton futures tax," or so much thereof as may be necessary, to enable the Secretary of the Treasury to carry out the provisions of this act and any duties remaining to be performed by him under the United States cotton futures act of August eighteenth, nineteen hundred and fourteen (Thirty-eighth Statutes at Large, page six hundred and ninety-three).

Sec. 19. That there are hereby appropriated out of any Appropriation. moneys in the Treasury not otherwise appropriated, available until expended, the unexpended balance of the sum of $150,000 appropriated by section twenty of the said act of August eighteenth, nineteen hundred and fourteen, and for the fiscal year ending June thirtieth, nineteen hundred and sixteen, the unexpended balance of the sum of $75,000 appropriated for the “ Enforcement of the United States cotton futures act,” by the act making appropriations for the Department of Agriculture for the fiscal year ending June thirtieth, nineteen hundred and sixteen (Thirty-eighth Statutes at Large, page one thousand and eighty-six), or so much of each of said unexpended balances as may be necessary, to be used by the Secretary of Agriculture for the same purposes, in carrying out the provisions of this act, as those for which said sums, respectively, were originally appropriated, and to enable the Secretary of Agriculture to carry out any duties remaining to be performed by him under the said act of August eighteenth, nineteen hundred and fourteen. The Secretary of Agriculture is hereby directed to publish from time to time the results of investigations made in pursuance of this act. All sums col- tigation dispo.. lected by the Secretary of Agriculture as costs under sition of moneys section five, or for furnishing practical forms under section nine, of this act, shall be deposited and covered into the Treasury as miscellaneous receipts.

Sec. 20. That sections nine, eighteen, and nineteen of this act and all provisions of this act authorizing rules

Publication of results of inves.

Pot act.

Repeal; effect.

Date of taking and regulations to be prescribed shall be effective imafected by mediately. All other sections of this act shall become

and be effective on and after the first day of the calendar month next succeeding the date of the passage of this act: Provided, That nothing in this act shall be construed to apply to any contract of sale of any cotton for future delivery mentioned in section three of this act which shall have been made prior to the first day of the calendar month next succeeding the date of the passage of this act.

Sec. 21. That the act entitled “An act to tax the privilege of dealing on exchanges, boards of trade, and similar places in contracts of sale of cotton for future delivery, and for other purposes," approved August eighteenth, nineteen hundred and fourteen (Thirty-eighth Statutes at Large, page six hundred and ninety-three), is hereby repealed, effective on and after the first day of the calendar month next succeeding the date of the passage of this act: Provided, That nothing in this act shall be construed to affect any right or privilege accrued, any penalty or liability incurred, or any proceeding commenced under said act of August eighteenth, nineteen hundred and fourteen, or to diminish any authority conferred by said act on any official of the United States necessary to enable him to carry out any duties remaining to be performed by him under the said act, or to impair the effect of the findings of the Secretary of Agriculture upon any dispute referred to him under said act, or to affect any right in respect to or arising out of any contract mentioned in section three of said act, made on or subsequent to February eighteenth, nineteen hundred and fifteen, and prior to the first day of the calendar month next succeeding the date of the passage of this act, but so far as concerns any such contract said act of August eighteenth, nineteen hundred and fourteen, shall remain in force with the same effect as if this act had not been passed.

SEC. 22. That if any clause, sentence, paragraph, or vial invalidity of

part of this act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

Efect of par

act.

CHAPTER SIXTEEN.

INCOME TAXES.1, 2

[Title II, Act of February 24, 1919 (40 Stat. 1057).]

PART I.-GENERAL PROVISIONS. Sec.

Sec. 200. Definitions.

204. Net losses. 201. Dividends.

205. Fiscal year with different rates. 202. Basis for determining gain or loss. 206. Parts of income subject to rates 203. Inventories.

for different years.

PART II.--INDIVIDUALS. Sec.

Sec. 210. Normal tax; rate,

221. Payment of tax at source. 211. Surtax.

222. Credit for taxes. 212. Net income defined ; computation. 223. Individual returns. 213. Gross income.

224. Partnershfp returns. 214. Deductions.

225. Fiduciary returns. 215. Items not deductible.

226. Returns when accounting period 216. Credits allowed.

changed. 217. Nonresident aliens.

227. Time and place for filing returns. 218. Partnerships.

228. Understatement in returns. 219. Estates and trusts. 220. Profits of corporations taxable to stockholders.

PART III.-CORPORATIONS. Sec.

Sec. 230. Rates of tax.

236. Credits allowed. 231. Conditional and other exemptions. 237. Payment of tax at source. 232. Net income defined.

238. Credit for taxes. 233. Gross income.

239. Returns. 231. Deductions allowed.

240. Consolidated returns. 235. Items not deductible.

241. Time and place for filing returns. Part IV.-ADMINISTRATIVE PROVISIONS. Sec.

Sec. 250. Payment of taxes in installments; 256. Information at source. - penalties.

257. Returns as public records. 251. Receipts for taxes.

258. Publication of statistics. 252. Refunds.

259. Collection of foreign items. 253. Penalties for failure to make re- 260. Citizens of l'nited States possesturns or supply information.

sions. 254. Returns of payments of dividends. 261. Porto Rico and Philippine Islands. 255. Brokers' returns.

TITLE II.-INCOME TAX.

Definitions.

• Taxable

PART 1. GENERAL PROVISIONS.
Sec. 200. [Act of February 24, 1919 (40 Stat., 1057).]
That when used in this title-

The term taxable year means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net income is computed under section 212 or section 232. The term fiscal

year means an accounting period of twelve months ending on the last

year."

66

“ Fiscal year."

* See Regulations No. 45.

2 Act of October 3, 1913, post, p. 729 ; act of September 8, 1916, post, p. 793; act of October 3, 1917, post, p. 849.

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