Purpose of the law Withholding at source applies only to normal tax on nonresident aliens II. Income Tax on Corporations 1. Basis of tax (See footnote, be assessed by personal return under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury. The intent and purpose of this title is that all gains, profits, and income of a taxable class, as defined by this title, shall be charged and assessed with the corresponding tax, normal and additional, prescribed by this title, and said tax shall be paid by the owner of such income, or the proper representative having the receipt, custody, control, or disposal of the same. For the purpose of this title ownership or liability shall be determined as of the year for which a return is required to be rendered. "The provisions of this section, except subdivision (c), relating to the deduction and payment of the tax at the source of income shall only apply to the normal tax hereinbefore imposed upon nonresident alien individuals." PART II.-ON CORPORATIONS. "Sec. 10.** (a) That there shall be levied, assessed, collected, and paid annually upon the total net income received in the preceding calendar year from all sources by every corporation, On what income joint-stock company or association, or insurance company, organized in the United States, no mat War Income Tax, levied WAR INCOME TAX. +(The tax imposed below is in addition to the existing 2% tax on corporations. A corporation, therefore, is subject to a total tax on net income of 6%.) SEC. 4. That in addition to the tax imposed by subdivision (a) of section ten of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, there shall be levied, assessed, collected, and paid a like tax of four per centum upon the income received in the calendar year nineteen hundred and seventeen and every calendar year thereafter, by every corporation, joint-stock company or association, or insurance *As amended October 3, 1917. defined ter how created or organized, but not including corporations, partnerships, a tax of two per centum upon such 2% income; and a like tax shall be levied, assessed, collected, and paid annually upon the total net in- Foreign come received in the preceding calendar year from corporations, 2% all sources within the United States by every corporation, joint-stock company or association, or insurance company, organized, authorized, or ex- Taxable income isting under the laws of any foreign country, including interest on bonds, notes, or other interestbearing obligations of residents, corporate or otherwise, and including the income derived from dividends on capital stock or from net earnings of resident corporations, joint-stock companies or associations, or insurance companies, whose net income is taxable under this title." Tax applies to may fix own Corporations The foregoing tax rate shall apply to the to- calendar year tal net income received by every taxable corporation, joint-stock company or association, or insurance company in the calendar year nineteen hundred and sixteen and in each year thereafter, except that if it has fixed its own fiscal year under the provisions of existing law, the foregoing rate shall apply to the proportion of the total net income returned for the fiscal year ending prior to December thirty-first, nineteen hundred and sixteen, which the period between January first, nineteen hundred and sixteen, and the end of such fiscal year bears to the whole of such fiscal year, company, subject to the tax imposed by that subdivision of that section, except that if it has fixed its own fiscal year, the tax imposed by this section for the fiscal year ending during the calendar year nineteen hundred and seventeen shall be levied, assessed, collected, and paid only on that proportion of its income for such fiscal year which the period between January first, nineteen hundred and seventeen, and the end of such fiscal year bears to the whole of such fiscal year. Profit from sale of property acquired prior to Mar. 1, 1913 2. Undistributed profits tax Dividends received by and the rate fixed in Section II of the Act approved October third, nineteen hundred and thirteen, entitled "An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes," shall apply to the remaining portion of the total net income returned for such fiscal year. For the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition by a corporation, joint-stock company or association, or insurance company, of property, real, personal, or mixed, acquired before March first, nineteen hundred and thirteen, the fair market price or value of such property as of March first, nineteen hundred and thirteen, shall be the basis for determining the amount of such gain derived or loss sustained. (b) * In addition to the income tax imposed by subdivision (a) of this section there shall be levied, assessed, collected, and paid annually an The tax imposed by this section shall be commay be credited puted, levied, assessed, collected, and paid upon corporations to income for supplementary normal tax the same incomes and in the same manner as the tax imposed by subdivision (a) of section ten of such Act of September eighth, nineteen hundred and sixteen, as amended by this Act, except that for the purpose of the tax imposed by this section the income embraced in a return of a corporation, joint-stock company or association, or insurance company, shall be credited with the amount received as dividends upon the stock or from the net earnings of any other corporation, joint-stock company or association, or insurance company, which is taxable upon its net income as provided in this title. *As amended October 3, 1917. On what levied additional tax of ten per centum upon the amount, Rate 10% invested in exempted "The tax imposed by this subdivision shall income actually not apply to that portion of such undistributed business net income which is actually invested and employed in the business or is retained for employment in the reasonable requirements of the business, or is invested in obligations of the United States issued after September first, nineteen hundred and seventeen: Provided, That if the Secretary of the Treasury ascertains and finds that any portion of such amount so retained at any time for employment in the business is not so employed or is not reasonably required in the business a tax of fifteen per centum shall be levied, assessed, collected, and paid thereon. "The foregoing tax rates shall apply to the undistributed net income received by every taxable corporation, joint-stock company or association, or insurance company in the calendar year nineteen hundred and seventeen and in each year thereafter, except that if it has fixed its own fiscal year under the provisions of existing law, the foregoing rates shall apply to the proportion of the taxable undistributed net income returned for the fiscal year ending prior to December thirtyfirst, nineteen hundred and seventeen, which the period between January first, nineteen hundred and seventeen, and the end of such fiscal year bears to the whole of such fiscal year." Income declared but not so used, to be invested, taxed 15% Tax applies to year 1917 and following years 3. Conditional and other exemptions Organizations exempted CONDITIONAL AND OTHER EXEMPTIONS. SEC. 11. (a) That there shall not be taxed under this title any income received by any— First. Labor, agricultural, or horticultural organization; Second. Mutual savings bank not having a capital stock represented by shares; Third. Fraternal beneficiary society, order, or association, operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operating under the lodge system, and providing for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents; Fourth. Domestic building and loan association and cooperative banks without capital stock organized and operated for mutual purposes and without profit; Fifth. Cemetery company owned and operated exclusively for the benefit of its members; Sixth. Corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual; Seventh. Business league, chamber of commerce, or board of trade, not organized for profit and no part of the net income of which inures to the benefit of any private stockholder or individual; Eighth. Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare; Ninth. Club organized and operated exclusively for pleasure, recreation, and other non |