of such loss shall be deducted from the net income for the taxable year 1918, and the tax for such year shall be redetermined with the proper credit for refund. 53. It should also be noted that deductions from net income are allowed in the case of loss resulting from the sale of property, etc., used in aiding the prosecution of the war, and also that there is a deduction for amortization for such part of the cost as was borne by the taxpayer in providing ships, buildings, etc., and other facilities for war work, not including of course, other amounts allowed as deductions in computing net income. Income Tax 54. Before 1917, credit was given for income taxes paid. In 1917, credit was not allowed for the Federal income tax paid, but an allowance was made for payment Longer of Federal excess profits taxes. The 1918 Law does not allow either to be used as a deduction. of real significance to many taxpayers. This is a matter Deductible Taxes 55. The Revenue Act of 1918 has extended the provisions permitting the deductions of foreign taxes. It allows citizens to deduct the amount of any income, war profits or excess profits taxes paid during the year to Foreign any foreign country upon income derived therein, or to Income any possession of the United States; and residents to deduct the amount of such taxes paid to any possession of the United States; and resident aliens, citizens and subjects of a foreign country, to deduct the amount of such taxes on income derived therein providing his country allows a similar credit to citizens of the United States residing in said foreign country. This provision regarding credit for foreign taxes lays the basis for reciprocal action on the part of other coun tries which should be of advantage to both countries and to their respective citizens or subjects. Estates and Trusts 56. The estate of a deceased person is treated as an entirety and is so taxed for the period of its administration or settlement. The income of estates of any kind of property appears to be likewise taxable, including income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests; also income held for future distribution under the terms of a will or trust. In many instances the practical effect of taxing an estate or trust in its entirety, rather than according to the several or individual shares therein, is to increase materially the income taxes on the estate because of the rapid progression of the surtax rates. Any income tax shall be levied against the representative of the estate or trust unless return of such income is made by the beneficiary. 57. Certain instances in which the tax is paid by the fiduciary are (1) Income received by estates of deceased persons during the period of administration or settlement; (2) Income accumulated in trust for the benefit of unborn or unascertained persons; (3) Income held for future distribution under the terms of the will or trust. 58. Income, the distribution of which is not withheld by the terms of the will or trust, whether distributed or undistributed, constitutes income to the beneficiaries and they must include it in their returns and pay the tax thereon. Tax Paid by There are three cases in which the tax is not paid by the fiduciary, but rather by the beneficiary on his dis- Beneficiary tributive share, regardless of whether or not he has already received such shares: (1) the amount paid to him during the period of administration or settlement, (2) amount of income to be distributed to him periodically, and (3) such income as is collected by the guardian of an infant to be distributed or held according to the direction of the Court. Obviously such income is included in the returns made by the beneficiary. Presumably it must also be included in the return made by the fiduciary. an 59. Every fiduciary (except legally appointed receiv- Return made ers in possession of a part only of the property of by Fiduciary individual) shall make under oath, a return for the individual, estate or trust for which he acts if the income of such an individual is $1,000 or over if unmarried, or, not living with husband or wife, or $2,000 or over if married, and living with husband or wife; or if the net income of such estate or trust is $1,000 or over, or if the beneficiary is a non-resident alien. The items of the gross income must be given specifically with allowable deduction and credits. This return must be filed at the office of the Collector of the district where the fiduciary resides. The fiduciary must make oath that he has sufficient knowledge of the affairs of such individual, estate or trust to enable him to make the return, and that such return is true and correct to the best of his knowledge and belief. Under prescribed regulations, the return may be filed by one of two or more fiduciaries. The fiduciaries are made subject to all the provisions of the law which apply to individuals. Credits Allowed Estates 60. The beneficiary is allowed the personal exemption given other individuals, as well as his proportionate share of certain credits which are received by the estate; guardians or trustees are also permitted to take advantage of the personal exemption on behalf of a ward on beneficiary. 61. Estates of deceased persons during the period of administration or settlement and trusts or estates of the same classes of persons, the income of which is not distributed annually or regularly, are allowed the same credits on the normal tax as are allowed to single persons. 62. In computing the net income such part of the gross income may be deducted as was during the taxable year paid to or permanently set aside, pursuant to the will, for the United States, any state, territory, or political subdivision, or for any corporation organized and operated exclusively for any religious, charitable or similar purpose, no part of the net earnings from which accrued to the benefit of any private stockholder, etc. 63. The amount properly paid to any beneficiary during the period of administration or settlement may be deducted from the net income of the estate. Partnerships 64. The subject of partnerships was in somewhat of a maze from the enactment of the 1913 Act until October 3, 1917. On that date the law was so amended as to clear up much of the remaining uncertainty. The Revenue Act of 1918 is in many respects clearer still. 65. The new law requires partnerships to file returns. To File As partnerships, however, they are not taxed; but the Returns members thereof pay taxes as individuals for their share of the firm's net income for the year even though that income may not be actually distributed. Allowed Partnership Credits 66. A partnership's net income is ascertained in the Partners same manner as an individual's. For the purpose of the normal tax, the partners shall be allowed as credits, in addition to those given him as an individual, his proportionate share of certain credits received by the partnership: (a) Interest upon so-called Municipal bonds, including obli- 67. Gifts to charities, etc. are not deductible for the partnership; perhaps they may be held to be deductible by the partners individually. 68. A partnership may also fix its fiscal year at a Fiscal period different from the calendar year. Any return Year which a partnership may be required to make, may be calculated on this basis. If a partnership's fiscal year is not the calendar year, then the income for the fiscal year is prorated between the two calendar years in which the fiscal year falls. For |