Act of 1917. upon the basis of the net income for the calendar year preceding the date of assessment; and it shall give notice of the day it has thus designated as the closing of its fiscal year to the collector of the district in which its principal business office is located at any time not less than thirty days prior to the first day of March of the year in which its return would be filed if made upon the basis of the calendar year; SEC. 13. [1] (b) Every corpo Act of 1916. stead of upon the basis of the Act of 1913. insurance company subject to this tax may designate the last day of any month in the year as the day of the closing of its fiscal year and shall be entitled to have the tax payable by it computed upon the basis of the net income ascertained as herein provided for the year ending on the day so designated in the year preceding the date of assessment instead of upon the basis of the net income for the calendar year preceding the date. of assessment; and it shall give notice of the day it has thus designated as the closing of its fiscal year to the collector of the district in which its principal business office is located at any time not less than thirty days prior to the date upon which its annual return shall be filed. SEC. 13. [1] (b) Every corpo- All corporations, joint-stock ration, joint-stock company or ration, joint-stock company or companies or associations, and association, or insurance com- association, or insurance com- insurance companies subject to pany, subject to the tax herein pany, subject to the tax herein the tax herein imposed, computimposed, shall, on or before the imposed, shall, on or before the ing taxes upon the income of the first day of March, nineteen hun- first day of March, nineteen calendar year, shall, on or bedred and seventeen, and the first hundred and seventeen, and the fore the first day of March, nineday of March in each year there- first day of March in each year teen hundred and fourteen, and after, or, if it has designated a thereafter, or, if it has desig- the first day of March in each fiscal year for the computation of nated a fiscal year for the com- year thereafter, and all corporaits tax, then within sixty days putation of its tax, then within tions, joint-stock companies or after the close of such fiscal year sixty days after the close of such associations, and insurance comending prior to December thirty- fiscal year ending prior to De- panies, computing taxes upon the first, nineteen hundred and cember thirty-first, nineteen hun- income of a fiscal year which it sixteen, and the close of each dred and sixteen, and the close may designate in the manner such fiscal year thereafter, ren- of each such fiscal year there herein before provided, shall der a true and accurate return after, render a true and accurate render a like return within sixty of its annual net income in the return of its annual net income days after the close of its said manner and form to be pre- in the manner and form to be fiscal year, and within sixty days scribed by the Commissioner of prescribed by the Commissioner after the close of its fiscal year Internal Revenue, with the ap- of Internal Revenue, with the in each year thereafter, or in the proval of the Secretary of the approval of the Secretary of the case of a corporation, joint-stock Treasury, and containing such Treasury, and containing such company or association, or infacts, data, and information as facts, data, and information as surance company, organized or are appropriate and in the opin- are appropriate and in the opin- existing under the laws of a ion of the commissioner necessary ion of the commissioner neces- foreign country, in the place to determine the correctness of sary to determine the correctness the net income returned and to of the net income returned and carry out the provisions of this to carry out the provisions of title. The return shall be sworn this title: The return shall be to by the president, vice presi- sworn to by the president, vice dent, or other principal officer, and by the treasurer or assistant treasurer. president, or other principal of where its principal business is located within the United States, in such form as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, shall render a true and accurate return under oath or affirmation of its president, vice president, or other principal officer, and its Act of 1924. Act of 1921. Act of 1918. SEC. 239. (a) [2] In cases SEC. 239. (a) [2] In cases SEC. 239. [2] In cases where where receivers, trustees in bank- where receivers, receivers, trustees in receivers, trustees in bankruptcy, ruptcy, or assignees are operat- bankruptcy, or assignees are or assignees are operating the operating the property or busi- property or business of corporaness of corporations, such re- tions, such receivers, trustees, or ceivers, trustees, or assignees assignees shall make returns for shall make returns for such cor- such corporations in the same porations in the same manner manner and form as corporaand form as corporations are re- tions are required to make required to make returns. Any turns. Any tax due on the basis tax due on the basis of such re- of such returns made by receivturns made by receivers, trus- ers, trustees, or assignees shall tees, or assignees shall be be collected in the same manner collected in the same manner as as if collected from the corporaif collected from the corporations tions of whose business or propof whose business or property erty they have custody and they have custody and control. control. ing the property or business of corporations, such receivers, trustees, or assignees shall make returns for such corporations in the same manner and form as corporations are required to make returns. Any tax due on the basis of such returns made by receivers, trustees, or assignees shall be collected in the same manner as if collected from the corporations of whose business or property they have custody and control. 291 The remainder of Section G (c) of the Act of 1913 is as follows: G. (c) (first) the total amount of its paid-up capital stock outstanding, or if no capital stock, its capital employed in business, at the close of the year; (second) the total amount of its bonded and other indebtedness at the close of the year; (third) the gross amount of its income, received during such year from all sources, and if organized under the laws of a foreign country the gross amount of its income received within the year from business transacted and capital invested within the United States; (fourth) the total amount of all its ordinary and necessary expenses paid out of earnings in the maintenance and operation of the business and properties of such corporation, joint-stock company or association, or insurance company within the year, stating separately all rentals or other payments required to be made as a condition to the continued use or possession of property, and if organized under the laws of a foreign country the amount so paid in the maintenance and operation of its business within the United States; (fifth) the total amount of all losses actually sustained during the year and not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, and in case of insurance companies the net addition, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts: Provided further, That mutual fire insurance companies requiring their members to make premium deposits to provide for losses and expenses shall not return as income any portion of the premium de posits returned to their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance reserves: Provided further, That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment thereof and the payment thereof and life insurance companies shall not include as income in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, with. in such year; and in case of a corporation, jointstock company or association, or insurance company, organized under the laws of a foreign country, all losses actually sustained by it during the year in business conducted by it within the United States, not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, and in case of insurance companies the net addition, if any, required by law to be made within the year to reserve funds and the sums other than dividends paid within the year on policy and annuity contracts: Provided further, That mutual fire insurance companies requiring their members to make premium de SEC. 13. (c) In cases wherein SEC. 13. (c) In cases wherein receivers, trustees in bankruptcy, receivers, 292 trustees in bankor assignees are operating the ruptcy, or assignees are operatproperty or business of corpora- ing the property or business of tions, joint-stock companies or corporations, joint-stock associations, or insurance com- panies or associations, or insurpanies, subject to tax imposed ance companies, subject to tax by this title, such receivers, imposed by this title, such retrustees, or assignees shall make ceivers, trustees, or assignees returns of net income as and for shall make returns of net income such corporations, joint-stock as and for such corporations, companies or associations, and joint-stock companies or associainsurance companies, in the same tions, and insurance companies, manner and form as such or- in the same manner and form ganizations are hereinbefore re- as such organizations are herequired to make returns, and any inbefore required to make reincome tax due on the basis of turns, and any income tax due such returns made by receivers, on the basis of such returns made trustees, or assignees shall be as- by receivers, trustees, or assessed and collected in the same signees shall be assessed and colmanner as if assessed directly lected in the same manner as if against the organizations of assessed directly against the orwhose businesses or properties ganizations of whose businesses they have custody and control; or properties they have custody and control; Act of 1913. treasurer or assistant treasurer, to the collector of internal revenue for the district in which it has its principal place of business, setting forth:291 posits to provide for losses and expenses shall not return as income any portion of the premium deposits returned to their policyholders, but shall return as taxable income all income received by them from all other sources plus such portions of the premium deposits as are retained by the companies for purposes other than the payment of losses and expenses and reinsurance reserves: Provided further, That mutual marine insurance companies shall include in their return of gross income gross premiums collected and received by them less amounts paid for reinsurance, but shall be entitled to include in deductions from gross income amounts repaid to policyholders on account of premiums previously paid by them and interest paid upon such amounts between the ascertainment thereof and the payment thereof and life insurance companies shall not include as income in any year such portion of any actual premium received from any individual policyholder as shall have been paid back or credited to such individual policyholder, or treated as an abatement of premium of such individual policyholder, within such year; (sixth) the amount of interest accrued and paid within the year on its bonded or other indebtedness not exceeding onehalf of the sum of its interest bearing indebtedness and its paid up capital stock outstanding at the close of the year, or if no capital stock, the amount of interest paid within the year on an amount of indebtedness not exceeding the amount of capital employed in the business at the close of the year, and in the case of a bank, banking association, or trust company, stating separately all interest paid by it within the year on deposits; or in case of a corporation, joint-stock com pany or association, or insurance company, organized under the laws of a foreign country, interest so paid on its bonded or other indebtedness to an amount of such bonded or other indebtedness not exceeding the proportion of its paid-up capital stock outstanding at the close of the year, or if no capital stock, the amount of capital employed in the business at the close of the year, which the gross amount of its income for the year from business transacted and capital invested within the United States bears to the gross amount of its income derived from all sources within and without the United States; (seventh) the amount paid by it within the year for taxes imposed under the authority of the United States and separately the amount so paid by it for taxes imposed by the Government of any foreign country; (eighth) the net income of such corporation, joint-stock company or association, or insurance company, after making the deductions in this subsection authorized. All such returns shall as received be transmitted forthwith by the collector to the Commissioner of Internal Revenue. 292 (a) The Act of 1916 imposed an income tax on the income of a railway corporation operated by a receiver appointed in foreclosure proceedings, Sec. 13 (c) clearly indicating such congressional intent. S. v. Chicago & Eastern Illinois Railway Co., (D. C., N. D. Ill. 1924) 298 Fed. 779. U. 292 (b) Income of a railway corporation operated by a receiver appointed in foreclosure proceedings may be subjected to an income tax by Congress. U. S. v. Chicago & Eastern Illinois Railway Co., (D. C., N. D. Ill. 1924) 298 Fed. 779. Act of 1924. Act of 1921. Act of 1918. SEC. 239. (b) Returns made under this section shall be subject to the provisions of section 226.2 293 In the case of a return made for a fractional part of a year, except a return made under subdivision (a) of section 226, the credit provided in subdivision (b) of section 236295 shall be reduced to an amount therein provided as the number therein provided as the number which bears the same ratio to of months in the period for which of months in the period for the full credit therein provided such return is made bears to which such return is made bears as the number of months in the twelve months. to twelve months. period for which the return is made bears to twelve months. SEC. 239. (b) Returns made SEC. 239. [3] Returns made under this section shall be sub- under this section shall be subject to the provisions of sections ject to the provisions of sections 226293 and 228.29 When return 226293 and 228.294 When return is made under section 226 the is made under section 226 the credit provided in subdivision credit provided in subdivision (b) of section 236295 shall be re- (c) of section 236295 shall be reduced to an amount which bears duced to an amount which bears the same ratio to the full credit the same ratio to the full credit SEC. 239. (c) There shall be SEC. 239. (c) There shall be included in the return or ap- included in the return or appended thereto a statement of pended thereto a statement of such facts as will enable the such facts as will enable the ComCommissioner to determine the missioner to determine the porportion of the earnings or prof- tion of the earnings or profits its of the corporation (including of the corporation (including gains, profits and income not gains, profits and income not taxed) accumulated during the taxed) accumulated during the taxable year for which the return taxable year for which the reis made, which have been dis- turn is made, which have been tributed or ordered to be dis- distributed or ordered to be distributed, respectively, to its tributed, respectively, to to its shareholders during such year. stockholders or members during such year. SEC. 240. (a) That corpora CONSOLIDATED RETURNS. SEC. 240. (a) Corporations SEC. 240. (a) That corporawhich are affiliated within the tions which are affiliated within tions which are affiliated within meaning of this section may, for the meaning of this section may, the meaning of this section shall, any taxable year, make separate for any taxable year beginning under regulations to be prereturns or, under regulations on or after January 1, 1922, scribed by the Commissioner prescribed by the Commissioner make separate returns or, under with the approval of the Secrewith the approval of the Secre-regulations prescribed by the tary, make a consolidated return 293 Sec. 226, p. 168. 294 Sec. 228, p. 172. SEC. 13. (d) A corporation, SEC. 13. (d) A corporation, joint-stock company or associa- joint-stock company or association, or insurance company, tion, keeping accounts upon any basis other than that of actual receipts and disbursements, unless such other basis does not clearly reflect its income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make its return upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as so returned; or insurance company, keeping accounts upon any basis. other than that of actual receipts and disbursements, unless such other basis does not clearly reflect its income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make its return upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as so returned; Act of 1913. CONSOLIDATED RETURNS FOR YEAR 1917. SEC. 1331.296 (a) That Title II of the Revenue Act of 1917 shall be construed to impose the taxes therein mentioned upon the basis of consolidated returns of net income and invested capital in the case of domestic corpora 295 Sec. 236 (b) and (c), p. 218. 296 Sec. 1331, Act of 1921, construing the Act of |