OCR Text |
Show Excess Profits Tax Rulings By U. S. Treasury Department Article No. 1 A'lvarii'e copies of recent important rulings of the treasury department on the excels protits tax law have tteeu torar!cl trom Va:-hin:jton to the t'tah L'hapter of the American Mining ronrus by A. G. Mackenzie, e-retary of tbo chapter. The ruling arc to uumerou:-, as to preclude puMi.-at ion in their entirety in one Usuc, but will be euutinued frum day to day imt.l all have bevn printed. Ankle s. "Trade" In I he case or !n-divMuals. !n-divMuals. In the ense of nn lnilMJual, tlie tr:ra . "trade." " business," ainl "uute or buM-1 buM-1 nts" roinproheiid nil hi? aotUlil1 for : ;:.iin, pmi'it, ir ii tliI:o"ii, itiw-rel Into witi' MjfiU'ieut frequency, fn" Occupying such portion of his time or utt ntlon s to constitute a ocatlon, including oceu-Ia oceu-Ia rions and tirofe.Mon. Wlien such activities ac-tivities constitute a oc.it Ion it shall he construed to he a trado or business whether continuously carried en during tho t.i.il':e year or not, ark! all the In-como In-como arising therefrom shall he included includ-ed In his rrMurn for excess profits tax. In the follow 1 1:1; cases the pa in or in-rome in-rome is not RuhjfCt to excess profits tax. and the capital from which such cain or income is. derived shall not be include 1 in "invested capital": (a) Gains or profits fiom transaction? entered Into for profit, but which are isolated, iuc ident.il, or so 1 r. frequent as not to constitute an occupation, and ( r) the income from property artslnp merely from its ownership. owner-ship. Including interest, rent, and similar Income from in vestment a except In Uiose cas-es in which the niHtiapenxnt of such investments reahy constitutes a trade or business. Article IS. Constructive capital for application ap-plication of rates. Where the deduction allowed to a taxpayer tax-payer is determined under article -4, the invested capital for tne purpose uf applying ap-plying the rates of taxation under article !i shall be deemed to bo an amount which bears the same ratio to the net income of tlie trade or business for the taxable year which the average invested capital for the correspond inc calenda r year of representative corporations, partnerships, part-nerships, and individuals encaged in a like or similar trade or-busmcss bears to their average net income. The commissioner of intern.il revenue in determining for any calendar year tlie ratio which the average invested capital of representative corporations, partnerships, partner-ships, and individuals engaged in any particular trade or business hears to their average net Income, will Include tho invested in-vested capital and net income of representative repre-sentative corpora lions and partnerships for fiscal years ending during such a calendar cal-endar year. Kor the purpose of applying this article in the case of 11 corporation or partnership partner-ship which has ilxed its own fiscal year, the ratio determined for the calendar year ending during such fiscal year shall be used. Article 10. Computation of tax- for fiscal fis-cal year, part of which falls within calendar cal-endar year 19 It!. If a corporation or partnership prior to March 1. 191$, makes a return for a ttscai' year, part of which falls within the calendar cal-endar year 1916, tlie tax for the firt taxable year shall be t hat proport ion of t he tax computed upon the net Income for such fiscal year which the number of months from January 1. 1917, to the end of sm'h fiscal yea r bears to the entire number of months In such fiscal year Articl 20. Computation of tax for a period of less than twelve months. If a corporation or partnership at any time, either because it lias just desig-nated desig-nated a fiscal year as provided in sections sec-tions S or 13 of the act of September S, 1910 (See Income Tax Regulations, nr-ticies nr-ticies 31 and "11 ), or for any 01 her reason, rea-son, makes a return for a period of less than twelve months, the deduction will be an amount which bears the same ratio ra-tio to the deduction allowable for a full year as the number of months In audi period Is of twelve months. Articl 22. Tra'Ie or business reorganized reorgan-ized on or after January 2. 1913. If Ti trade or business carried on by a rorpor.itiun, partnership or individual wd formally orrjan: Ced or reorganized ou or after January 2, lyl.1, but is substantially a coniinn.it luii of m trade or business carried car-ried on prior to that date, then the corporation cor-poration or partnership hhall be deemed to have been in tjxistcnce. or the individual indi-vidual shall he deemed to have been encaged en-caged in the trade or business, prior to that date, and lor the purpose of computing com-puting the deduction, the net income and invesied capital of the predecessor shall he deemed to have bven the net -income and invested capital of the present owner for tlie pre-war period. Article 2.1. When Income for pre-war period cannot bo satisfactorily determined, deter-mined, or when net income was low during dur-ing pre-war pcri-d. or when there was no net income during pre-war period. In the following cases the deduction shall be determined as provided in this article: tat If the secretary of the treasury Is unable satisfactorily to determine the average av-erage amount of annual net income of the trade or business for the pre-war period. (hi If the secretary of the treasury upon complaint finds that during the prewar pre-war period the percentage which the net Income was of the invested capital was less than 9 r;er cent and that the percentage per-centage whicfc the net income during such period eV representative oorpora-tions. oorpora-tions. partnerships, and individuals engaged en-gaged in a like or similar trade or business, busi-ness, was of their Invested capital 9 per cent or more: or e If, In the case only of a domestic corporation or partnership which was In existence during the pre-war period, or of a c'.tizc-n or resident of the United States who was engaged in the trade or business during the pre-war period, the secretary of the treasury upon complaint finds that durlntr the pre-war period there was no net income from the trade or business. In such cases the deduction shall be U An amount eq,ual to the same percentage per-centage of the invested .capita for th taxable year which the average deduc-tlon deduc-tlon (determined in the same manner as provided in article 21, without including the S-C'CO or frfnOO therein referred to) tor such year of representative corporations, corpora-tions, partnerships, or individuals engaged en-gaged in a like or similar trade or business, busi-ness, is of their average invested capital for such year, plus (21 Tn the case of domestic corporations. corpora-tions. SSr.oo and in the case of domestic partnership or a citizen or resident of the United States. Jtfooo. In eases arising under subdivisions (a) or (e of this article the tax shall be assessed In the first instance upon the has:s of a deduction computed bv the use of 7 per cent. In cases arising under subdivision (M the tax shall be assessed in the first instance upon the basis of a deduction determined as provided in article ar-ticle 21. In any ea?es under this article a tax- 1 raver claiming the benefit of this provision pro-vision shall at the time of making the 1 return file a claim for abatement "(form ' 47) of t lie amount by which the tax so assessed exceeds the tax computed upon ! the basis of the deduction determined as, provided In this article. In cases coming i within the provisions of this article pay- 1 ment of that portion of the tax covered bv tho claim for abatement will not be I re-iuInM until the claim is decided, if. I however, in the Judgment of the commissioner commis-sioner nT internal revenue, the interests ' of the United States would bo leopar-rlizecl leopar-rlizecl thereby, the right is reserved to require The claimant to give a bond of such amo'.uit and with such sureties as the commissioner thinks wise to safe- ' guard such interests. The bond shall be conditioned for tlie payment of anv tax ! found to be due with Interest thereon. ; and If a bond satisfactory ' to the com- i missioner is not given within such time as he prescribes the full amount of the tax assessed will become immediately due a nd the amount overpaid, if anv will upon final decision of the application, bo i refunded as a tax erroneously or Jlle- I gaily enlljctcd. (Article No. 2 will appear tomorrow.) |