Taxable Years on such annual basis as the number of months in the short period is of twelve months. separate return is made in the short number of months in such period Sec. 47. (c) (2) Exception.-If Sec. 47. (c) (2) Exception.-If the taxpayer establishes the amount the taxpayer establishes the amount of his net income for the period of of his net income for the period of twelve months beginning with the twelve months beginning with the first day of the short period, com- first day of the short period, computed as if such twelve-month pe- puted as if such twelve-month period were a taxable year, under the riod were a taxable year, under the law applicable to such year, then law applicable to such year, then the tax for the short period shall the tax for the short period shall be reduced to an amount which is be reduced to an amount which is such part of the tax computed on such part of the tax computed on the net income for such twelve- the net income for such twelvemonth period as the net income month period as the net income computed on the basis of the short computed on the basis of the short period is of the net income for the period is of the net income for the twelve-month period. The taxpayer twelve-month period. The taxpayer (other than a taxpayer to which the (other than a taxpayer to which the next sentence applies) shall com- next sentence applies) shall compute the tax and file his return with- pute the tax and file his return without the application of this para- out the application of this paragraph. If the taxpayer (other than graph. If the taxpayer (other than a corporation) was not in existence a corporation) was not in existence at the end of the twelve-month pe- at the end of the twelve-month period, or if the taxpayer is a corpo- riod, or if the taxpayer is a corporation and has disposed of substan- ration and has disposed of substantially all its assets prior to the end tially all its assets prior to the end of such twelve-month period, then of such twelve-month period, then in lieu of the net income for such in lieu of the net income for such twelve-month period there shall be twelve-month period there shall be used for the purposes of this para- used for the purposes of this paragraph the net income for the twelve- graph the net income for the twelvemonth period ending with the last month period ending with the last day of the short period. The tax day of the short period. The tax computed under this paragraph computed under this paragraph shall in no case be less than the tax shall in no case be less than the tax computed on the net income for the computed on the net income for the short period without placing such short period without placing such net income on an annual basis. The net income on an annual basis. The benefits of this paragraph shall benefits of this paragraph shall not be allowed unless the taxpayer, not be allowed unless the taxpayer, at such time as regulations pre- at such time as regulations prescribed hereunder require (but not scribed hereunder require (but not after the time prescribed for the after the time prescribed for the filing of the return for the first tax- filing of the return for the first taxable year which ends on or after able year which ends on or after twelve months after the beginning twelve months after the beginning of the short period), makes appli- of the short period), makes application therefor in accordance with cation therefor in accordance with such regulations. Such application, such regulations. Such application, in case the return was filed without in case the return was filed without regard to this paragraph, shall be regard to this paragraph, shall be considered a claim for credit or re- considered a claim for credit or refund with respect to the amount by fund with respect to the amount by which the tax is reduced under this which the tax is reduced under this paragraph. The Commissioner, with paragraph. The Commissioner, with the approval of the Secretary, shall the approval of the Secretary, shall prescribe such regulations as he prescribe such regulations as he number of months in such period number of months in such period is of twelve months. is of twelve months. Taxable Years Beginning before 1939 may deem necessary for the appli- may deem necessary for the application of this paragraph. Sec. 47 (c) I. R. C., supra, amended by Sec. 135 (a), R. A. of 1942, to read as above. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. For Sec. 47 (c), I. R. C., supra, before amendment, see 1942 column. Sec. 47. (d) Earned income.The Commissioner with the approval of the Secretary shall by regulations prescribe the method of applying the provisions of subsections (b) and (c) (relating to computing income on the basis of a short period, and placing such income on an annual basis) to cases where the taxpayer makes a separate return under subsection (a) on account of a change in the accounting period, and it appears that for the period for which the return is so made he has received earned in come. cation of this paragraph. Sec. 47 (c), I. R. C., amended by Sec. 135 (a), R. A. of 1942, by adding "(1) General rule.-" in first paragraph, shown in bold face type; by omitting language in stricken through type and adding language in italics in first paragraph; and also by adding second paragraph shown in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Taxable Years Sec. 47. (d) Earned income.— Sec. 47. (d) Earned income.The Commissioner with the ap- The Commissioner with the approval of the Secretary shall by proval of the Secretary shall by regulations prescribe the method of regulations prescribe the method of applying the provisions of subsec- applying the provisions of subsections (b) and (c) (relating to com- tions (b) and (c) (relating to computing income on the basis of a puting income on the basis of a short period, and placing such in- short period, and placing such income on an annual basis) to cases come on an annual basis) to cases where the taxpayer makes a sepa- where the taxpayer makes a separate return under subsection (a) on rate return under subsection (a) on account of a change in the account- account of a change in the accounting period, and it appears that for ing period, and it appears that for the period for which the return is the period for which the return is so made he has received earned in-so made he has received earned in Sec. 47. (e) Reduction of credits Sec. 47. (e) Reduction of credits Sec. 47. (e) Reduction of credits against net income. In the case against net income. In the case against net income.-In the case of a return made for a fractional of a return made for a fractional of a return made for a fractional part of a year, except a return part of a year, except a return part of a year, except a return made under subsection (a), on ac- made under subsection (a), on ac- made under subsection (a), on account of a change in the account- count of a change in the account- count of a change in the accounting period, the personal exemption ing period, the personal exemption ing period, the personal exemption and credit for dependents shall be and credit for dependents shall be and credit for dependents shall be reduced respectively to amounts reduced respectively to amounts reduced respectively to amounts which bear the same ratio to the which bear the same ratio to the which bear the same ratio to the full credits provided as the num- full credits provided as the num- full credits provided as the number of months in the period for ber of months in the period for her of months in the period for which return is made bears to which return is made bears to which return is made bears to twelve months. twelve months. Sec. 47 (f) Closing of taxable year in case of jeopardy.— For closing of taxable year in case of jeopardy, see section 146. Sec. 47. (f) Closing of taxable year in case of jeopardy. For closing of taxable year in case of jeopardy, see section 146. Sec. 47. (g) Returns where tax- Sec. 47. (g) Returns where taxpayer not in existence for twelve payer not in existence for twelve months. In the case of a taxpayer months.-In the case of a taxpayer not in existence during the whole not in existence during the whole of an annual accounting period end- of an annual accounting period ending on the last day of a month, or, ing on the last day of a month, or, if the taxpayer has no such annual if the taxpayer has no such annual accounting period or does not keep accounting period or does not keep books, during the whole of a calen-books, during the whole of a calendar year, the return shall be made dar year, the return shall be made for the fractional part of the year for the fractional part of the year twelve months. Sec. 47. (f) Closing of taxable year in case of jeopardy. For closing of taxable year in case of jeopardy, see section 146. Taxable Years Taxable Years Taxable Years Sec. 47. (d) Earned income.- Sec. 47. (d) Earned income.The Commissioner with the ap- The Commissioner with the approval of the Secretary shall by proval of the Secretary shall by regulations prescribe the method of regulations prescribe the method of applying the provisions of subsec- applying the provisions of subsections (b) and (c) (relating to com- tions (b) and (c) (relating to computing income on the basis of a puting income on the basis of a short period, and placing such in- short period, and placing such income on an annual basis) to cases come on an annual basis) to cases where the taxpayer makes a sepa- where the taxpayer makes a separate return under subsection (a) on rate return under subsection (a) on account of a change in the account-account of a change in the accounting period, and it appears that for ing period, and it appears that for the period for which the return is so made he has received earned in come. the period for which the return is come. Sec. 47. (e) Reduction of credits Sec. 47. (e) Reduction of credits against net income. In the case against net income. In the case of a return made for a fractional of a return made for a fractional part of a year, except a return part of a year, except a return made under subsection (a), on ac- made under subsection (a), on account of a change in the account- count of a change in the accounting period, the personal exemption ing period, the personal exemption and credit for dependents shall be and credit for dependents shall be reduced respectively to amounts reduced respectively to amounts which bear the same ratio to the which bear 'the same ratio to the full credits provided as the num- full credits provided as the number of months in the period for her of months in the period for which return is made bears to which return is made bears to twelve months. Sec. 47. (f) Closing of taxable year in case of jeopardy.— For closing of taxable year in case of jeopardy, see section 146. twelve months. Sec. 47. (f) Closing of taxable year in case of jeopardy. For closing of taxable year in case of jeopardy, see section 146. Sec. 47. (d) Earned income. See p. 96, Eighth Edition. Sec. 47. (e) Reduction of credits against net income. See p. 96, Eighth Edition. Sec. 47. (f) Closing of taxable year in case of jeopardy. See p. 96, Eighth Edition. during which the taxpayer was in during which the taxpayer was in existence. Sec. 47 (g), I. R. C., supra, added to I. R. C. by Sec. 135 (c), R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 48. Definitions. When used in this chapter Sec. 48. (a) Taxable year. existence. Sec. 47 (g), I. R. C., supra, added to I. R. C. by Sec. 135 (c), R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 48. Definitions. When used in this chapter Sec. 48. (a) Taxable year. Taxable Years Sec. 48. Definitions. When used in this chapter— Sec. 48. (a) Taxable year. "Taxable year" means the calendar "Taxable year" means the calendar "Taxable year" means the calendar year, or the fiscal year ending dur-year, or the fiscal year ending dur-year, or the fiscal year ending during such calendar year, upon the ing such calendar year, upon the ing such calendar year, upon the basis of which the net income is basis of which the net income is basis of which the net income is computed under this Part. "Taxable computed under this Part. "Taxable computed under this Part. "Taxyear" means, in the case of a re- year" means includes, in the case able year" includes, in the case of turn made for a fractional part of of a return made for a fractional a return made for a fractional part a year under the provisions of this part of a year under the provisions of a year under the provisions of chapter or under regulations pre- of this chapter or under regulations this chapter or under regulations scribed by the Commissioner with prescribed by the Commissioner prescribed by the Commissioner the approval of the Secretary, the with the approval of the Secretary, with the approval of the Secretary, period for which such return is the period for which such return is the period for which such return is made. made. made. Sec. 48 (a), I. R. C., supra, amended by Sec. 135 (d), R. A. of 1942, to read as above. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. For Sec. 48 (a), I. R. C., supra, before amendment, see 1942 column. Sec. 48. (b) Fiscal year.-"Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December. Sec. 48 (a), I. R. C., supra, amended by Sec. 135 (d), R. A. of 1942, by striking out "includes" and inserting in lieu thereof "means." Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 48. (b) Fiscal year.-"Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December. Sec. 48. (b) Fiscal year.-"Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December. Sec. 48. (c) "Paid or incurred,'' Sec. 48. (c) "Paid or incurred,'' Sec. 48. (c) "Paid or incurred,”’ "Paid or accrued."-The terms "Paid or accrued."-The terms "Paid or accrued."-The terms "paid or incurred" and "paid or "paid or incurred" and "paid or "paid or incurred" and "paid or accrued" shall be construed accord- accrued" shall be construed accord- accrued" shall be construed according to the method of accounting upon the basis of which the net income is computed under this Part. Sec. 48. (d) Trade or business. -The term "trade or business" includes the performance of the functions of a public office. ing to the method of accounting ing to the method of accounting upon the basis of which the net income is computed under this Part. Sec. 48. (d) Trade or business. Sec. 48. (d) Trade or business. -The term "trade or business" in--The term "trade or business" includes the performance of the func- cludes the performance of the funetions of a public office. tions of a public office. PART V-RETURNS AND PAYMENT OF PART V--RETURNS AND PAYMENT OF PART V-RETURNS AND PAYMENT OF TAX Sec. 51. Individual returns. TAX Sec. 51. Individual returns. Sec. 51. (a) Requirement.-The TAX Sec. 51. Individual returns. Sec. 51. (a) Requirement.-The Sec. 51. (a) Requirement.-The following individuals shall each following individuals shall each following individuals shall each make a return, which shall contain make under oath a return, which make under oath a return stating or be verified by a written declara- shall contain or be verified by a specifically the items of his gross tion that it is made under the written declaration that it is made income and the deductions and penalties of perjury, stating specif- under the penalties of perjury, credits allowed under this chapter ically the items of his gross income stating specifically the items of his and such other information for the |