sion, making an allowance in the case of profits arising upon the sale of such property, so that the Excess-profits Tax will not be confiscatory? A. In the case of a bona fide sale of mines, oil or gas wells or any interest therein, where the principal value of the property has been demonstrated by the prospecting or exploration and discovery work done by the taxpayer, the portion of the Excessprofits Tax attributable to the profit on such sale, will not exceed 20% of the selling price of the property or interest therein. PAYMENT OF TAX Q. When are the war-profits and excess-profits taxes payable? A. At the same time and in the same manner as the income tax. See page 39. However, if the tax is computed on the basis of rates applying to representative corporations in the same line of business as provided in section 328 of the statute the instalments are governed by the following provisions, viz: when the tax computed according to the actual income and capital of the corporation is less than 50% of its net income the instalment in the first instance will be computed upon the basis of such tax; but if 50% or more than on the basis of 50% of its net income. In any case the actual ratio when ascertained shall be used in determining the correct amount of the tax. If the correct amount exceeds 50% of its net income any excess of the correct instalments over the amounts actually paid must on notice and demand be paid together with interest at rate of 2% per month on such excess from the time the instalment was due. FOR CORPORATION WITH INVESTED CAPITAL Taxable Year (1919): Invested Capital..... Net Income....... First Bracket: $1,000,000 400,000 COMPUTATION OF WAR-PROFITS AND EXCESS-PROFITS TAX. NOTE.—(1) In no case shall the total War-Profits and Excess-Profits Tax for 1919, computed as above, amount to more than 20% of amount of the net income in excess of $3,000 and not in excess of $20,000, plus 40% of the amount of the net income in excess of $20,000. (2) This chart is not applicable in computing the tax of a corporation receiving in 1919 more than $10,000 from government contracts made between April 6, 1917, and November 10, 1918. CAPITAL STOCK TAX APPLIES TO CORPORATIONS § 1000 Revenue Act of 1918. On and after July 1, 1918, the tax described below is imposed in lieu of the tax imposed under the Revenue Act of 1916. Returns-When to be Filed. Every corporation must file a return during the month of July of each year in accordance with such regulations as the Commissioner of Internal Revenue may prescribe. What Corporations Need Not File Returns. Corporations that were not engaged in business during the preceding fiscal year, i. e., the 12 months ending June 30th, and those exempt under section 231 of the Income Tax Law need not file Returns. Basis and Rate of Tax. This is an annual excise tax with respect to carrying on or doing business, equivalent to $1 for each $1,000 of so much of the fair average value of its capital stock for the preceding year ending June 30th as is in excess of $5,000. Surplus and undivided profits must be included in estimating the value of the capital stock. A proportionate tax is imposed on foreign corporations doing business in the United States. Such deposits and reserve funds required by law or contract to be maintained or held by insurance companies for the protection of or payment to or apportionment among policy holders are not included in computing the tax. Special provisions apply to the imposition of this tax on Mutual Insurance Companies, both domestic and foreign. When Tax Is To Be Paid. The tax may be paid at the time the Return is filed, but no penalty will be incurred if not paid until assessment is made, provided the tax is paid within 10 days after notice and demand by the Collector. ESTATE TAX §§ 400-410 Revenue Act, 1918. The Estate Tax applies to the estates of decedents dying after February 24, 1919, the date of the passage of the Revenue Act of 1918. This tax is in lieu of the Estate Taxes imposed under the Revenue Acts of 1916 and 1917. Estates of decedents whether resident or non-resident dying after the passage of the Revenue Act of 1918, are subject to a tax equal to the sum of the following percentages of the value of the Net Estate. The rates under the Revenue Act of 1918 are as follows: Exemption of $50,000 is allowed in computing the net estate of a resident decedent before the taxes above set forth apply. The taxes imposed by the Revenue Act of 1918 or by the Revenue Act of 1916 as amended or by the Revenue Act of 1917, do not apply to the transfer of the net estate of any decedent who has died or may die while serving in the Military or Naval Forces of the United States in the present war or from injuries received or disease contracted while in such service, and any such tax collected upon such transfer shall be refunded to the Executor. Gross estate-how determined. The value of the gross estate of the decedent is determined by including the value at the time of his death of all property, real and personal, tangible or intangible, wherever situated (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent's death as dower, courtesy, or by virtue of a statute creating an estate in lieu of dower or courtesy; (c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of the Revenue Act of 1918), except in case of a bona fide sale for a fair consideration in money or money's worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this law; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his OW rec wh pro the has be eit or Ne |