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CHAPTER 12.

AN ACT To provide revenue to defray war expenses, and for other purposes.

Approved October 3, 1917 (40 Stat., 300).

Title I-War income tax.

Additional normal tax.
Additional tax for 1917 and sub-

sequent years.
Computation, levy, assessment,
collection, and

payment; exemptions; returns; withholding

at source. Additional tax on corporations,

etc.; computation, etc. l'orto Rico and Philippine Is

lands. Alaska railroads. (Act July 18,

1914.)
Title II-War excess-profits tax.

Definitions.
Rate of tax; exemptions.
Foreign corporations or nonresi-

dent aliens.
Deductions.
Deduction if rot in business dur-

ing prewar period. Corporations having no net in

come during prewar period or percentage very low; claim for

abatement. Ascertaining net income. " Invested capital " defined. Reorganization, consolidation, or

change of ownership. No invested capital or only nomi

nal capital. Deduction when unable to deter

mine invested capital. Returns. General provisions of law appli

cable. Regulations. Repeal and amendment of former

acts. Title 111-War tax on beverages.

Distilled spirits when used

beverage or as ingredient. Importation of distilled spirits. Removal of spirits from distil.

leries. Stock of distilled spirits on hand

intended for sale. Additional tax on rectified spirits. Discontinuance of certain stamps

authorized. Meters, tanks, pipes, and other ap

paratus at distilleries, etc. Additional tax on fermented liq

uors. Conveyance of taxable fermenteel

liquors to be used as distilling

material,
Additional tax on wine, including

vermutlı.
140184°—20—54

Title III-War tax on beverages —

Continued.
Wines in excess of 25 gallons on

hand for sale.
Additional tax on grape brandy

or wine spirits. Additional tax on grape brandy or

wine spirits for fortifying pur

poses. Sirups or extracts, etc., contain

ing less than one-half of 1 per cent alcohol; natural mineral

waters. Returns, monthly. Carbonic-acid gas in drums or

other containers. Title IV--War tax on cigars, tobacco,

and manufactures thereof. Additional tax on cigars and ciga

rettes. Additional tax on tobacco and

snuff; additional packages. Packages of cigarettes, tobacco,

and snuff. Tax on tobacco, snuff, cigars, or

cigarettes removed prior to pas

sage of act.

Cigarette paper and tubes.
Title V—War tax on facilities fur-

nished by public utilities, and

insurance. Amounts paid for transportation

by rail or water.
By whom tax shall be paid; ex-

exeinption.
Exemption.
Collection of tax; returns.
Insurance policies, issuance of;

exemption.

Returns, monthly, in duplicate.
Title VI--War excise taxes.

Articles subject to tax.
Returns, monthly.
Articles on hand at passage of the

act.

Boats and yachts.
Title VII-War tax on admissions and

dues.
Exemption and definition.
Membership fees or dues; exemp-

tions.
How and from whom tax col-

lected.
Title VIII-War stamp taxes.

On and after December 1, 1917.
Exemptions.
Penalty for violation.
Mutilation, fraudulent use of, re-

moval, unlawful possession of
stamps; penalty.

as

Tit'e VIII-War stamp taxes-Con

tinued. Cancellation of stamps. Stamps, preparation; contract;

extension of laws relative to as

sessment and collection of tax. Postmaster General to be fur

nished stamps. Assistant treasurers to be fur

nished stamps; Schedule A. Title IX-War estate tax.

Additional tax.
Exemption during war.
Acceptance of Liberty bonds in

payment of tax. (Act of April

4, 1918.) Title X-Administrative provisions.

West Indian Islands acquired

from Denmark, articles to and

from. Extension of administrative pro

visions of law. Returns where additional taxes

are imposed; payment extended. Collection of tax; applicability of

provisions.

Title X-Administrative provisions

Continued.
Penalty for failure to make re-

turn or making false or fraudu

lent return.
Rules and regulations,
Use of stamps on band authorized.
Prior contracts; definition of

“ dealer."
Fractions of a cent.
Advance payments and credits.
Certificates of indebtedness; un-

certified checks.
Title XII--Income-tax amendments.

Act of September 8, 1916 (secs. 2,

4-10, 12, 13, 18, 26). Act of September 8, 1916 (secs.

27-32 added). Releasing amount of tax retained

by withholding agent.
Title XIII-General provisions.

Effect of partial invalidity.
Repeal of Title I, act of March 3,

1917.
Date effective.
Citation of act.

TITLE I.-WAR INCOME TAX.

Additional normal tax. SECTION 1. That in addition to the normal tax imposed by subdivision (a) of section one of the Act entitled “ An Act to increase the revenue, and for other purposes," approved September eighth, nineteen hundred and sixteen, there shall be levied, assessed, collected, and paid a like normal tax of two per centum upon the income of every individual, a citizen or resident of the United States, received in the calendar year nineteen hundred and seventeen and every calendar year thereafter.

Proceeds of accident insurance policy received on account of personal injuries are not taxable income, nor is amount received by individual as result of suit or compromise for personal injuries sustained through accident. (T. D. 2747.)

Money received by defendant through embezzling moneys delivered to him to be paid as insurance premiums was not subject to taxation. (Rau v. United States, 260 Fed., 131.)

Additional tax for 1917 and subsequent years. Sec. 2. That in addition to the additional tax imposed by subdivision (b) of section one of such Act of September eighth, nineteen hundred and sixteen, there shall be levied, assessed, collected, and paid a like additional tax upon the income of every individual received in the calendar year nineteen hundred and seventeen and every calendar year thereafter, as follows:

One per centum per annum upon the amount by which the total net income exceeds $0,000 and does not exceed $7,500;

Two per centum per annum upon the amount by which the total net income exceeds $7,500 and does not exceed $10,000;

Three per centum per annum upon the amount by which the total net income exceeds $10,000 and does not exceed $12,500;

Four per centum per annum upon the amount by which the total net income exceeds $12,500 and does not exceed $15,000;

Five per centum per annum upon the amount by which the total net income exceeds $15,000 and does not exceed $20,000;

Seven per centum per annum upon the amount by which the total net income exceeds $20,000 and does not exceed $40,000;

Ten per centum per annum upon the amount by which the total net income exceeds $40,000 and does not exceed $60,000;

Fourteen per centum per annum upon the amount by which the total net income exceeds $60,000 and does not exceed $80,000;

Eighteen per centum per annum upon the amount by which the total net income exceeds $80,000 and does not exceed $100,000;

Twenty-two per centum per annum upon the amount by which the total net income exceeds $100,000 and does not exceed $150,000;

Twenty-five per centum per annum upon the amount by which the total net income exceeds $150,000 and does not exceed $200,000;

Thirty per centum per annum upon the amount by which the total net income exceeds $200,000 and does not exceed $250,000;

Thirty-four per centum per annum upon the amount by which the total net income exceeds $250,000 and does not exceed $300,000;

Thirty-seven per centum per annum upon the amount by which the total net income exceeds $300,000 and does not exceed $500,000;

Forty per centum per annum upon the amount by which the total net income exceeds $500,000 and does not exceed $750,000.

Forty-five per centum per annum upon the amount by which the total net income exceeds $750,000 and does not exceed $1,000,000.

Fifty per centum per annum upon the amount by which the total net income exceeds $1,000,000.

Computation, levy, assessment, collection, and payment; exemptions ; returns; withholding at

source.

SEC. 3. That the taxes imposed by sections one and two of this Act shall be computed, levied, assessed, collected, and paid upon the same basis and in the same manner as the similar taxes imposed by section one of such Act of September eighth, nineteen hundred and sixteen, except that in the case of the tax imposed by section one of this Act (a) the exemptions of $3,000 and $1,000 provided in section seven of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, shall be, respectively, $1,000 and $2,000, and (b) the returns required under subdivisions (b) and (c) of section eight of such Act as amended by this Act shall be required in the case of net incomes of $1,000 or over, in the case of unmarried persons, and $2,000 or over in the case of married persons, instead of $3,000 or over, as therein provided, and (c) the provisions of subdivision (c) of section nine of such Act, as amended by this Act, requiring the normal tax of individuals on income derived from interest to be deducted and withheld at the source of the income shall not apply to the new two per centum normal tax prescribed in section one of this Act until on and after January first, nineteen hundred and eighteen, and thereafter only one two per centum normal tax shall be deducted and withheld at the source under the provisions of such subdivision (c), and any further normal tax for which the recipient of such income is liable under this Act or such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, shall be paid by such recipient.

Returns made upon basis of cost or market value, whichever is lower, accepted. (T. Ds. 2609, 2649, 2740, 2744.)

Interest on bank deposits pail to nonresident alien individuals held subject to withholding provisions of act. (T. D, 2652.)

Partnerships or individuals paying oflicers or business employees salaries and wages during war period in which in service of United States may deduct amount so paid as expenses. (T. D. 2660.)

Instructions governing preparation of income tax returns by farmers. (T. D. 2665.)

Additional tax on corporations, etc.; computation, etc.

Sec. 4. That in addition to the tax imposed by subdivision (a) of section ten of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, there shall be levied, assessed, collected, and paid a like tax of four per centum upon the income received in the calendar year nineteen hundred and seventeen and every calendar year thereafter, by every corporation, joint-stock company or association, or insurance company, subject to the tax imposed by that subdivision of that section, except that if it has fixed its own fiscal year, the tax imposed by this section for the fiscal year ending during the calendar year nineteen hundred and seventeen shall be levied, assessed, collected, and paid only on that proportion of its income for such fiscal year which the period between January first, nineteen hundred and seventeen, and the end of such fiscal year bears to the whole of such fiscal year.

The tax imposed by this section shall be computed, levied, assessed, collected, and paid upon the same incomes and in the same manner as the tax imposed by subdivision (a) of section ten of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, except that for the purpose of the tax imposed by this section the income embraced in a return of a corporation, joint-stock company or association, or insurance company, shall be credited with the amount received as dividends upon the stock or from the net earnings of any other corporation, joint-stock company or association, or insurance company, which is taxable upon its net income as provided in this title.

Corporations paying officers or business employees salaries and wages during war period in which in service of United States may deduct amount so paid as expenses. (T. D. 2660.)

Instructions governing preparation of income tax return by farmers. (T. D. 2665.)

Proof necessary to be filed by religious, charitable, scientific, etc., organizations to establish fact that they are exempt from filing returns or paying income tax. (T. D. 93.)

Corporation may distribute earnings for an accounting period ratably over the period for the purpose of ascertaining earnings to date of dividend payment within such period. (T. D. 2678.)

Method to be followed in crediting overpayment of 2 per cent income tax by corporation filing supplementary return for fiscal year ended on last day of some month during year 1917, or final return for period ended during such year. (T. D. 2663.)

Article 62 of Regulations relating to limited partnerships, revised. (T. 1. 2711.)

Porto Rico and Philippine Islands.

Sec. 5. That the provisions of this title shall not extend to Porto Rico or the Philippine Islands, and the Porto Rican or Philippine Legislature shall have power by due enactment to amend, alter, modify, or repeal the income tax laws in force in Porto Rico or the Philippine Islands, respectively.

1916

Alaska railroads.

AN ACT To levy and collect an income tax on railroads in Alaska, and for

other purposes. Approved July 18, 1914 (38 Stat., 517).

Be it enacted, etc., That in addition to the normal income tax of one per centum on net income there shall be levied and collected one per centum on the gross annual income of all railroad corporations doing business in Alaska, on business done in Alaska, which shall be computed and collected in the manner provided in the act of Congress, approved October third, nineteen hundred and thirteen, entitled "An act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” the proceeds of which tax when collected shall be paid to the treasurer of Alaska and be applicable to general Territorial purposes. So much of the provisions of the act of Congress, approved March third, eighteen hundred and ninety-nine, entitled “An act to define and punish crimes in the District of Alaska, and to provide a code of criminal procedure for said district,” or acts amendatory thereof as impose a license tax of $100 per mile per annum on railroads operated in Alaska is hereby repealed, and all penalties for nonpayment thereof are hereby remitted.

TITLE II.-WAR EXCESS PROFITS TAX.

Definitions.

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SEC, 200. That when used in this title

The term “ corporation” includes joint-stock companies or associations and insurance companies;

The term "domestic” means created under the law of the United States, or of any State, Territory, or District thereof, and the term " foreign means created under the law of any other possession of the United States or of any foreign country or government.

The term "United States” means only the States, the Territories of Alaska and Hawaii, and the District of Columbia;

The term "taxable year” means the twelve months ending December thirty-first, excepting in the case of a corporation or partnership which has fixed its own fiscal year, in which case it means such fiscal year. The first taxable year shall be the year ending December thirty-first, nineteen hundred and seventeen, except that in the case of a corporation or partnership which has fixed its own fiscal year, it shall be the fiscal year ending during the calendar year nineteen hundred and seventeen. If a corporation or partnership, prior to March first, nineteen hundred and eighteen, makes a return covering its own fiscal year, and includes therein the income received during

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