FOREWORD

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This book is intended for reference. It has been written and arranged for the use of the taxpayer who must comply with the exacting requirements of the Federal Revenue laws but who has not had opportunity to follow the official interpretation and administration of their many intricate and involved provisions.

It is suggested that the index be consulted for reference to the subject regarding which information is desired; in this way an answer may be found immediately to the question in the taxpayer's mind, without unnecessary reading.

Toward the back of the book will be found the text of the laws, which also can be consulted, according to the direction of the index, when the taxpayer would see whether in his own opinion instructions are in compliance with the law.

For the reason that "net income", as ascertained under the provisions of the Act of September 8, 1916—the general Income Tax Law, is taken as the basis of computation, not only of the combined Income Taxes, but also of the Excess Profits Tax, it has been deemed advisable to go very thoroughly into the requirements of that Act.

The Act of September 8, 1916, as amended, has become, by a wide margin, the most important of Federal tax laws. It is the fundamental statute. With respect to it the War Income Tax law is supplementary, and the Excess Profits Tax law occupies a position of relationship due to the fact that "net income," as ascertained for Income Tax purposes, is one of the controlling factors of the computation of the Excess Profits Tax.

The instructions given in this book are based upon an experience of four years in administering Federal Tax laws, as Collector of Internal Revenue at San Francisco, Cal. That experience included the inauguration of taxation of income under the old law of 1913 and continued through the handling of thousands of individual and corporation assessments under both the law of 1913 and the Act of September 8, 1916.

Supporting the instructions and advice given in succeeding chapters are not only the regulations and practice of the Treasury DepartM699156

ment and the decisions of the Federal courts but also experience in
dealing with actual conditions when general rules did not seem to ap-
ply and the problems that arose could be solved only by extensive offi-
cial correspondence.

The taxpayer is entitled to know his rights. In this book an
effort is made to tell him what they are and how to claim them.

But the taxpayer, judging by the experience of the writer, desires
to meet his obligations as well as to be able to assert his rights; hence,
he is told not only what he can do but also what he must do.

The Income Tax, the Excess Profits Tax, the Capital Stock Tax,
the Estate Tax, the new Stamp Tax, and the several other taxes, as
increased or originally imposed by the provisions of the War Revenue
Act are covered in appropriate chapters, as indicated by the Table of
Contents.

No instruction has been given that is not within the law. Au-
thority can be cited on every point. The full text of official regula-
tions has been omitted, in most cases, for the reason that, in general,
the text of such regulations is little less involved and confusing than
that of the laws they are intended to interpret.

JOSEPH J. SCOTT.