that in his opinion such accumulation is unreasonable for the purpose of the business. When requested by the Commissioner of Internal Revenue, or any district collector of internal revenue, such corporation, joint-stock company or association, or insurance company shall forward to him a correct statement of such gains and profits and the names and addresses of the individuals or shareholders who would be entitled to the same if divided or distributed.

Art. 20. Graduated additional tax rates and amounts of income subject 162 thereto

Art. 21. The return must be filed after the close of the calendar 163 year and on or before March 1, annually.

Art. 22. The Commissioner of Internal Revenue may, in his dis- 165 cretion, upon application therefor and upon satisfactory showing, grant a reasonable extension of time, in meritorious cases, for filing returns of income by persons residing or traveling abroad who are required to make and file returns of income and who are unable to file

said returns on or before March 1 of each year. The return may be made by an agent when by reason of illness, absence, or nonresidence the person liable for said return is unable to make and render the same, the agent assuming the responsibility of making the return and incurring penalties provided for erroneous, false, or fraudulent return. In ordinary cases of citizens and residents, where failure to file returns is due to sickness or absence, the Collector of Internal Revenue may in his discretion and on application therefor before expiration of 30 days from the time return should have been filed, allow such further time as he may deem proper (not exceeding 30 days from the date return should have been filed), for making and filing return. The collectors' authority in such cases is limited to 30 days. Further extension can be made by the Commissioner of Internal Revenue only and is confined to meritorious cases and upon satisfactory showing why return was not or can not be made and filed within the extension granted by the collector.

166 Art. 23. Forms of returns are provided by the Commissioner of Internal Revenue, and are to be had from the collectors of internal revenue of the several collection districts.

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Art. 24. An individual keeping accounts upon any basis other than that of actual receipts and disbursements, unless such other basis does not clearly reflect his income may, subject to regulations made by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury, make his return upon the basis on which his accounts are kept.

168 Art. 25. The annual returns will be forwarded by collectors by

registered mail or express to the Commissioner of Internal Revenue with the list for the month in which the returns are filed. Collectors must provide that said returns and all forms relating thereto are securely sealed in envelopes or packages before forwarding the

169 same.

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Art. 26. In the case of citizens and resident aliens

Returns are required of all unmarried persons of lawful age having a net income of $1,000 or over.

And of all married persons having a net income of $2,000 or

over.

Heads of families who are married will be required to make returns of income when having a net income of $2,000 or

over.

Heads of families who are unmarried will be required to make returns of income when having a net income of $1,000 or over, though the basic exemption which may be claimed in a return of income will be $2,000.

Under the act of September 8, 1916, as amended, and the act of October 3, 1917, returns will be required in the case of net incomes

equal to or in excess of $1,000 or $2,000, according to the marital status of the person making the return. In the returns so required the basic personal exemptions will be $1,000 under the act of October 3, 1917, and $3,000 under the act of September 8, 1916, as amended. The exemption allowed husband and wife living together may be taken by one or divided between them in such ratio as they may determine.

RULINGS ON MAKING RETURNS.

Receipt and payment basis.-Returns should be made on the basis 171 of receipt unless the individual liable for the return keeps accounts on some other basis which will clearly reflect his income.

Where filed. Returns of income of individuals are to be filed with 172 the collector of internal revenue for the district in which such person has his legal residence or principal place of business, or if there be no legal residence or place of business in the United States, then with the collector of internal revenue at Baltimore, Md. The returns shall be in such form as shall be prescribed by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury.

On basis of calendar year.-Returns of individuals can not be 173 accepted prior to the close of the calendar year. The exception, in cases of closed administration, is a matter of convenience to those concerned and is granted by reason of the fact that the period to be covered by the return has completely elapsed.

Place of filing.-Persons in the military or naval service of the 174 United States may file their returns of income with the collector of internal revenue of the district in which they have a legal residence, or with the collector of internal revenue at Baltimore, Md.

Verification of.-All income-tax returns must be verified under oath 175 or affirmation. Persons in the naval or military service of the United States may verify their returns before any official of those services authorized to administer oaths for the purposes of those services. Income-tax returns executed abroad may be attested free of charge 176 before United States consular officers.

Where a foreign notary or other official having no seal shall act 177 as attesting officer, the authority of such attesting officer should be certified to by some judicial official or other proper officer having knowledge of the appointment and official character of the attesting officer.

Income from exempt securities.-Where the entire income of an indi- 178 vidual is from tax-exempt bonds and where the amount of income other than that from tax-exempt securities is less than the amount of income for which a return is required, no return of income is to be made. Interest from securities which is exempt from tax under sec

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180

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tion 4 of the Income Tax Law is not to be included in returns of income.

Administrator or executor.-Administrators or executors may, immediately after their discharge, upon final accounting, file with the proper collector of internal revenue a return of income for the income of the estate for the calendar year in which the administration was closed, and should pay the tax found by such return to be due immediately upon receipt of notice and demand for the amount of such tax. There should be attached to this return a copy of the certificate, under seal, setting forth the fact of final accounting and discharge of the executor or administrator. The liability for return is fixed by the law as of December 31, and return will be required in accordance with the provisions of law existing on that date.

An ancillary administrator is held to be merely an agent of the domiciliary administrator and should transmit to him all information as to income of the estate received by the ancillary administrator, to the end that the original administrator may make a return covering the entire income of the estate.

Receivers who, as officers of a court, stand in the stead of some principal are required to account for income tax as the principal would have been required to account.

182 Husband and wife filing separate.-Where husband and wife file separate returns of income, one of them being filed in time and the other delinquent, such returns are not supplemental of each other and delinquency must be answered for by the one in connection with whose return it occurred.

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Wife's income.-Unless the wife has a separate estate which requires her to file a separate return of income, or to join with her husband in a return which shall set forth her income separately, her husband should include in his return the income accruing to the wife from services rendered by her, or the sale of product of her labor. The actual proceeds coming into the wife's possession during the tax year constitute the income to be included, and not the amount estimated upon acceptance prior to payment for articles sold.

184 Inspection of.-An executor acts for his principal and not for the beneficiaries of the estate of his principal. Beneficiaries are not entitled, as such, to an inspection of returns of income filed by such executor.

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FIDUCIARIES.

Art. 27. Fiduciaries acting for minors or other incompetents will be required to make returns of income according to the marital status of the beneficiaries, and in all cases of return under section 2 (b), act of September 8, 1916, as amended, when the income of the estate

or trust, as an entity, is $1,000 or over. This return will be on Form 1040 or 1040A.

Fiduciaries are required to make returns of income on Income Tax 186 Form 1041 whenever the interest of any beneficiary in the net income of an estate or trust for which the fiduciary acts is $1,000 or over for an unmarried beneficiary, and in case there are married beneficiaries, then a return will be required whenever the interest of any such married beneficiary is $2,000 or over.

Art. 28. Where the beneficiary is a nonresident alien individual 187 the tax imposed by the act of September 8, 1916, as amended, and the act of October 3, 1917, is to be accounted for by such fiduciary on a return of income for such nonresident alien beneficiary on Income Tax Form 1040 or 1040A, as the case may be.

Art. 29. Fiduciaries will be subject to all the provisions of law 188 which apply to individuals who are required to make returns of income. A fiduciary making return shall make oath that he has sufficient knowledge of the affairs of the person, trust, or estate for whom or which he acts to enable him to make such return, and that the same is, to the best of his knowledge and belief, true and correct. A return by one of two or more joint fiduciaries in the form prescribed filed in the district in which such fiduciary resides shall be a sufficient compliance with the requirement for fiduciary return.

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Fiduciary" is a term which applies to all persons or corporations 189 that occupy positions of peculiar confidence toward others, such as trustees, executors, or administrators; and the fiduciary for incometax purposes is any person or corporation that holds in trust an estate of another person or persons.

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There may be a fiduciary relationship between an agent and a 190 principal, but the word "agent" does not denote a fiduciary" within the meaning of the income-tax law.

Power of attorney.-A fiduciary relationship for the purposes of 191 the income tax can not be created by a power of attorney. An agent having entire charge of property with authority to effect and execute leases with tenants entirely on his own responsibility and without consulting his principal, paying taxes and expenses and all other charges in connection with the property out of funds in his hands from collection of rents, merely turning over the net profits from the property periodically to his principal by virtue of authority conferred upon him by a power of attorney, is not a fiduciary within the meaning of the income-tax law. In all cases where no legal trust has been created in the estate controlled by the agent and attorney the liability under the law rests with the principal.

Trust estates as entities.-Where income under the provisions of 192 section 2(b), act of September 8, 1916, is accounted for in a return of income by the executor, administrator, or trustee, as the case may