Act of 1924. ing together shall receive but one personal exemption. The amount of such personal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them. SEC. 216. (c) In the case of a SEC. 216. (c) In the case of SEC. 216. (c) In the case of a single person, a personal exemp- a single person, a personal ex- single person, a personal exemption of $1,000; or in the case emption of $1,000; or in the tion of $1,000, or in the case of of the head of a family or a mar- case of the head of a family or the head of a family or a married ried person living with husband a married person living with person living with husband or or wife, a personal exemption of husband or wife, a personal ex-wife, a personal exemption of $2,500. A husband and wife liv-emption of $2,500, unless the net $2,000. A husband and wife livincome is in excess of $5,000, in ing together shall receive but one which case the personal exemp- personal exemption of $2,000 tion shall be $2,000. A husband against their aggregate net inand wife living together shall come; and in case they make receive but one personal exemp- separate returns, the personal extion. The amount of such per- emption of $2,000 may be taken sonal exemption shall be $2,500, by either or divided between unless the aggregate net income them; of such husband and wife is in excess of $5,000, in which case the amount of such personal exemption shall be $2,000. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them. In no case shall the reduction of the personal exemption from $2,500 to $2,000 operate to increase the tax, which would be payable if the exemption were $2,500, by more than the amount of the net income in excess of $5,000; SEC. 216. (d) $400 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is incapable of selfsupport because mentally or physically defective. SEC. 216. (d) $400 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is incapable of selfsupport because mentally or physically defective. Credits allowed beneficiaries. Sec. 219. (d), p. 138. Credits allowed estates or trusts. Sec. 219. (c), p. 138. SEC. 216. (d) $200 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer, if such dependent person is under eighteen years of age or is incapable of selfsupport because mentally physically defective. Credits allowed beneficiaries. Sec. 219. (d), p. 138. Credits allowed estates or trusts. Sec. 219. (c), p. 138. or 149 Title I, Part I, Act of 1916, as amended by See. 1203 (1), Title XII, Act of 1917. 150 Sec. 3 of the Act of 1917 allowed exemptions as follows when computing the tax at the 1917 rates: SEC. 3. That the taxes imposed by sections one and two of this Act shall be computed, levied, assessed, collected, and paid upon the same basis and in the same manner as the similar taxes imposed by section one of such Act of September eighth, nineteen hundred and sixteen, except that in the case of the tax imposed by section one of this Act (a) the exemptions of $3,000 and $4,000 provided in section seven of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, shall be, respectively, $1,000 and $2,000, and (b) the returns required under subdivisions (b) and (c) of section eight of such Act as amended by this Act shall be required in the case of net incomes of $1,000 or over, in the case of unmarried persons, and $2,000 or over in the case of married persons, instead of $3,000 on over, as therein provided, and (c) the provisions of subdivision (c) of section nine of such Act, as amended by this Act, re Act of 1917. SEC. 1203. (1) 149 That section seven of such Act of September eighth, nineteen hundred and sixteen, is hereby amended to read as follows: Act of 1916. PERSONAL EXEMPTION. Act of 1913. "SEC. 7. That for the purpose SEC. 7. (a) That for the pur- C. That there shall be deof the normal tax only, there pose of the normal tax only, ducted 151 from the amount of the shall be allowed as an exemp- there shall be allowed as an ex- net income of each of said pertion150 in the nature of a deduc-emption in the nature of a de- sons, ascertained as provided tion from the amount of the net duction from the amount of the herein, the sum of $3,000, plus income of each citizen or resident net income of each of said per- $1,000 additional152 if the perof the United States, ascertained sons, ascertained as provided son making the return be a maras provided herein, the sum of herein, the sum of $3,000, plus ried man with a wife living with $3,000, plus $1,000 additional if $1,000 additional if the person him, or plus the sum of $1,000 the person making the return be making the return be a head of additional if the person making a head of a family or a married a family or a married man with the return be a married woman man with a wife living with him, a wife living with him, or plus with a husband living with her; or plus the sum of $1,000 addi- the sum of $1,000 additional if but in no event shall this additional if the person making the the person making the return be tional exemption of $1,000 be return be a married woman with a married woman with a hus- deducted by both a husband and a husband living with her; but band living with her; but in no a wife: Provided, That only one in no event shall this additional event shall this additional ex-deduction of $4,000 shall be exemption of $1,000 be deducted emption of $1,000 be deducted made from the aggregate income by both a husband and a wife: by both a husband and a wife: of both husband and wife when Provided, That only one deduc- Provided, That only one deduc- living together. tion of $4,000 shall be made tion of $4,000 shall be made from the aggregate income of from the aggregate income of both husband and wife when liv- both husband and wife when living together: Provided further, ing together: Provided further, That if the person making the That guardians or trustees shall return is the head of a family, be allowed to make this personal there shall be an additional ex- exemption as to income derived emption of $200 for each child from the property of which such dependent upon such person, if guardian or trustee has charge under eighteen years of age, or in favor of each ward or cestui if incapable of self-support be- que trust: Provided further, cause mentally or physically de- That in no event shall a ward or fective, but this provision shall cestui que trust be allowed a operate only in the case of one greater personal exemption than parent in the same family: Pro- $3,000, or, if married, $4,000, as vided further, That guardians of provided in this paragraph, trustees shall be allowed to make from the amount of net income this personal exemption as to in- received from all sources. There come derived from the property shall also be allowed an exempof which such guardian or trus- tion from the amount of the net tee has charge in favor of each income of estates of deceased ward or cestui que trust: Pro- persons during the period of advided further, That in no event ministration or settlement, and of trust or other estates the in quiring the normal tax of individuals on income derived from interest to be deducted and withheld at the source of the income shall not apply to the new two per centum normal tax prescribed in section one of this Act until on and after January first, nineteen hundred and eighteen, and thereafter only one two per centum normal tax shall be deducted and withheld at the source under the provisions of such subdivision (c), and any further normal tax for which the recipient of such income is liable under this Act or such Act of Septem ber eighth, nineteen hundred and sixteen, as amended by this Act, shall be paid by such recipient. 151 Under the Act of 1913, the personal exemption of individuals was limited to the normal tax only. Cohen v. Lowe (Col.), (D. C., S. D. N. Y. 1916) 234 Fed. 474. 152 The provision of the Act of 1913 permitting a greater deduction by individuals at the head of a family as compared with single individuals was not wanting in "due process of law." Brushaber v. U. P. R. R. Co., (1916) 240 U. S. 1. Act of 1924. Act of 1921. Act of 1918. SEC. 216. (e) In the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262,154 the personal exemption shall be only $1,000. The credit provided in subdivision (d) shall not be allowed in the case of a nonresident alien individual unless he is a resident of a contiguous country, nor in the case of a citizen entitled to the benefits of section 262. SEC. 216. (f) (1) The credits allowed by subdivisions (d) and (e) of this section shall be determined by the status of the taxpayer on the last day of his taxable year. (2) The credit allowed by subdivision (c) of this section shall, in case the status of the taxpayer changes during his taxable year, be the sum of (A) an amount which bears the same ratio to $1,000 as the number of months during which the taxpayer was single bears to 12 months, plus (B) an amount which bears the same ratio to $2,500 as the number of months during which the taxpayer was a married person living with husband or wife or was the head SEC. 216. (e) 153 In the case of SEC. 216 (e) In the case of a a nonresident alien individual or nonresident alien individual who of a citizen entitled to the bene- is a citizen or subject of a counfits of section 262,154 the per- try which imposes an income tax, sonal exemption shall be only the credits allowed in subdivi$1,000, and he shall not be en- sions (c) and (d) shall be altitled to the credit provided in lowed only if such country subdivision (d). allows a similar credit to citizens of the United States not residing in such country. SEC. 216. (f) The credits allowed by subdivisions (c), (d), and (e) of this section shall be determined by the status of the taxpayer on the last day of the period for which the return of income is made; but in the case of an individual who dies during the taxable year, such credits shall be determined by his status at the time of his death, and in such case full credits shall be allowed to the surviving spouse, if any, according to his or her status at the close of the period for which such survivor makes return of income. 153 Sec. 216 (e) of the Act of 1921, as amended by the Act of March 4, 1923, effective Jan. 1, 1922: SEC. 2. That subdivision (e) of section 216 of the Revenue Act of 1921 is amended, to take effect January 1, 1922, to read as follows: 66 (e) In the case of a nonresident alien individual, or of a citizen entitled to the benefits of section 262, the personal exemption shall be only $1,000. The credit provided in subdivision (d) shall not be allowed in the Act of 1917. shall a ward or cestui que be allowed a greater personal exemption than as provided in this section, from the amount of net income received from all sources. There shall also be allowed an exemption from the amount of the net income of estates of deceased citizens or residents of the United States during the period of administration or settlement, and of trust or other estates of citizens or residents of the United States the income of which is not distributed annually or regularly under the provisions of subdivision (b) of section two, the sum of $3,000, including such deductions as are allowed under section five." case of a nonresident alien individual unless he is a resident of a contiguous country, nor in the case of a citizen entitled to the benefits of section 262." 154 Sec. 262, p. 268. of a family bears to 12 months. For the purposes of this paragraph a fractional part of a month shall be disregarded unless it amounts to more than half a month, in which case it shall be considered as a month. (3) In the case of an individual who dies during the taxable year, the credits allowed by subdivisions (c), (d), and (e) shall be determined by his status at the time of his death, and in such case full credits shall be allowed to the surviving spouse, if any, according to his or her status at the close of the taxable year. NET INCOME OF NONRESIDENT ALIEN INDIVIDUALS. SEC. 217. (a) In the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262,155 the following items of gross income shall be treated as income from sources within the United States: (1) Interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, not including (A) interest on deposits with persons carrying on the banking business paid to persons not engaged in business within the United States and not having an office or place of business therein, or (B) interest received from a resident alien individual, a resident foreign corporation, or a domestic corporation, when it is shown to the satisfaction of the Commissioner that less than 20 per centum of the gross income of such resident payor or domestic corporation has been derived from sources within the United States, as determined under the provisions of this section, for the three-year period ending with the close of the taxable year of such payor preceding the payment of such interest, or for such part of such period as may be applicable; 155 Sec. 262, p. 268. NET INCOME OF NONRESIDENT SEC. 217. (a) That in the case of a nonresident alien individual or of a citizen entitled to the benefits of section 262,155 the following items of gross income shall be treated as income from sources within the United States. (1) Interest on bonds, notes, or other interest-bearing obligations of residents, corporate or otherwise, not including (A) interest on deposits with persons carrying on the banking business paid to persons not engaged in business within the United States and not having an office or place of business therein, or (B) interest received from a resident alien individual or a resident foreign corporation when it is shown to the satisfaction of the Commissioner that less than 20 per centum of the gross income of such resident payor has been derived from sources within the United States, as determined under the provisions of this section, for the three-year period ending with the close of the taxable year of such payor, or for such part of such period immediately preceding the close of such taxable year as may be applicable; Act of 1918. |