strued as taxing the income of foreign governments received from investments in the United States in stocks, bonds, or other domestic securities, owned by such foreign governments, or from interest on deposits in banks in the United States of moneys belonging to foreign governments.

New Sec. 31

amended

"SEC. 31. (a) That the term 'dividends' as Dennition of used in this title shall be held to mean any dis- dividends tribution made or ordered to be made by a corporation, joint-stock company, association, or insurance company, out of its earnings or profits accrued since March first, nineteen hundred and thirteen, and payable to its shareholders, whether Stock dividends in cash or in stock of the corporation, joint-stock Income to the company, association, or insurance company, which earnings or stock dividend shall be considered income, to the distributed" amount of the earnings or profits so distributed.

66

are considered

amount of "the

profits so

be deemed to be

of

(b) Any distribution made to the sharehold- Dividends shall ers or members of a corporation, joint-stock com- paid out of net pany, or association, or insurance company, in the taxable year year nineteen hundred and seventeen, or subsequent tax years, shall be deemed to have been made from the most recently accumulated undivided profits or surplus, and shall constitute a part of the annual income of the distributee for the year in which received, and shall be taxed to the distributee at the rates prescribed by law for the years in which such profits or surplus were accumulated by the corporation, joint-stock company, association, or insurance company, but nothing herein shall be construed as taxing any earnings or profits accrued prior to March first, nineteen hundred and thirteen, but such earnings or profits may be distributed in stock dividends or otherwise, exempt from the tax, after the distribution of earnings and profits accrued since March first, nineteen hundred and thirteen, has been made. This subdivision shall not apply to any distribution made prior to August sixth, nineteen

New Sec. 32 Premiums paid on insurance of officers for benefit of corporation, etc. not deductible from net income

Release of funds

withheld under

8, 1916

Except on

containing "tax free" covenant

hundred and seventeen, out of earnings or profits accrued prior to March first, nineteen hundred and thirteen.

"SEC. 32. That premiums paid on life insurance policies covering the lives of officers, employees, or those financially interested in any trade or business conducted by an individual, partnership, corporation, joint-stock company or association, or insurance company, shall not be deducted in computing the net income of such individual, corporation, joint-stock company or association, or insurance company, or in computing the profits of such partnership for the purposes of subdivision (e) of section nine."

SEC. 1212. That any amount heretofore withAct of September held by any withholding agent as required by Title I of such Act of September eighth, nineteen hundred and sixteen, on account of the tax imposed upon the income of any individual, a citizen or interest on bonds resident of the United States, for the calendar year nineteen hundred and seventeen, except in the cases covered by subdivision (c) of section nine of such act, as amended by this act, shall be released and paid over to such individual, and the entire tax upon the income of such individual for such year shall be assessed and collected in the manner prescribed by such Act as amended by this Act.

General
Provisions

Invalidity of any section

TITLE XIII.-GENERAL PROVISIONS.

SEC. 1300. That if any clause, sentence, paragraph, or 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 of said Act, 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.

SEC. 1301. That Title I of the Act entitled, "An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extension of fortifications, and for other purposes," approved March third, nineteen hundred and seventeen, be, and the same is hereby, repealed.

Date Act takes

SEC. 1302. That unless otherwise herein spe- effect cially provided, this Act shall take effect on the day following its passage.

Approved, October 3, 1917.

Bank of Commerce in New York is to provide all of the provisions of law which relate to the income tax in as usable and convenient a form as possible, and at the same time to maintain the authoritative rendering of the text of the law. For this purpose, the text of the law as amended is printed, with supplementary footnotes containing the provisions of the War Income Tax Law levied by Title I of the War Revenue Act, and also pertinent administrative provisions of Title IX of the War Revenue Act.