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be credited to

tion

sixteen, as amended by this Act, except that for Exception the purpose of the tax imposed by this section the income embraced in a return of a corporation, Dividends received joint-stock company or association, or insurance income of corporacompany, 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.

apply to

SEC. 5. That the provisions of this title shall Porto Rico and not extend to Porto Rico or the Philippine Islands, income tax does not and the Porto Rican or Philippine Legislature shall have power by due enactment to amend, alter, modify, or repeal the income tax laws in force in Porto Rico or the Philippine Islands, respectively.

TITLE II.-WAR EXCESS PROFITS Tax.
SEC. 200. That when used in this title-

The term "corporation" includes joint-stock
companies or associations and insurance companies;
The term "domestic" means created under the
law of the United States, or of any State, Territory, "Domestle"
or District thereof, and the term "foreign" means
created under the law of any other possession of
the United States or of any foreign country or
government;

The term "United States" means only the "United States" states, the territories of Alaska and Hawaii, and the District of Columbia;

War excess
profits tax
1. Definitions
"Corporation"

"Foreign"

The term "taxable year" means the twelve Taxable year” months ending December thirty-first, excepting in the case of a corporation or partnership which has "Fiscal year" fixed its own fiscal year, in which case it means such "First taxable fiscal year. The first taxable year shall be the year ending December thirty-first, nineteen hundred and seventeen, except that in the case of a corporation

year"

"Prewar period"

"Trade" or "business"

"Net income" for

nonresident aliens, or foreign corporations

2. War excess profits tax rates

or partnership which has fixed its own fiscal year, it shall be the fiscal year ending during the calendar year nineteen hundred and seventeen. If a corporation or partnership, prior to March first, nineteen hundred and eighteen, makes a return covering its own fiscal year, and includes therein the income received during that part of the fiscal year falling within the calendar year nineteen hundred and sixteen, the tax for such taxable year shall be that proportion of the tax computed upon the net income during such full fiscal year which the time from January first, nineteen hundred and seventeen, to the end of such fiscal year bears to the full fiscal year; and

The term "prewar period" means the calendar years nineteen hundred and eleven, nineteen hundred and twelve, and nineteen hundred and thirteen, or, if a corporation or partnership was not in existence or an individual was not engaged in a trade or business during the whole of such period, then as many of such years during the whole of which the corporation or partnership was in existence or the individual was engaged in the trade or business.

The terms "trade" and "business" include professions and occupations.

The term "net income" means in the case of a foreign corporation or partnership or a nonresident alien individual, the net income received from sources within the United States.

SEC. 201. That in addition to the taxes under existing law and under this Act there shall be levied, assessed, collected, and paid for each taxable year upon the income of every corporation, partnership, or individual, a tax (hereinafter in this title referred to as the tax) equal to the following percentages of the net income:

20%

Twenty per centum of the amount of the net 15% excess income in excess of the deduction (determined as hereinafter provided) and not in excess of fifteen per centum of the invested capital for the taxable year;

Twenty-five per centum of the amount of the net income in excess of fifteen per centum and not in excess of twenty per centum of such capital;

15% to 20%
excess profits
taxed 25%

20% to 25%
35%

Thirty-five per centum of the amount of the excess profits
net income in excess of twenty per centum and not
in excess of twenty-five per centum of such capital;

25% to 33%

excess profits

Forty-five per centum of the amount of the net taxed 45% income in excess of twenty-five per centum and not in excess of thirty-three per centum of such capital; and

Over 33% excess

60%

Sixty per centum of the amount of the net profits taxed income in excess of thirty-three per centum of such capital.

3. All activities

or

business"

For the purpose of this title every corpora- of corporations tion or partnership not exempt under the provi- deemed a "single sions of this section shall be deemed to be engaged in business, and all the trades and businesses in which it is engaged shall be treated as a single trade or business, and all its income from whatever source derived shall be deemed to be received from such trade or business.

This title shall apply to all trades or businesses 4. Law applies to of whatever description, whether continuously carried on or not, except

every

Except:

(a) In the case of officers and employees under the United States, or any State, Territory, or the District of Columbia, or any local subdivision officials thereof, the compensation or fees received by them as such officers or employees;

(b) Corporations exempt from tax under the provisions of section eleven of Title I of such Act

(a) Government

(b) Corporations
exempted under
Income Tax
and

partnerships and
engaged in same

individuals

business

(c) Incomes from weekly premium payment insurance

Exemption

Foreign corporations or non-resident aliens whose income is less than $3,000

5. Deduction from war excess profits, how to determine

(a) Domestic corporation

(b) Domestic partnership or citizen or resident of U. S.

of September eighth, nineteen hundred and sixteen, as amended by this Act, and partnerships and individuals carrying on or doing the same business, or coming within the same description; and

(c) Incomes derived from the business of life, health, and accident insurance combined in one policy issued on the weekly premium payment plan.

SEC. 202. That the tax shall not be imposed in the case of the trade or business of a foreign corporation or partnership or a nonresident alien individual, the net income of which trade or business during the taxable year is less than $3,000.

SEC. 203. That for the purposes of this title the deduction shall be as follows, except as otherwise in this title provided—

(a) In the case of a domestic corporation, the sum of (1) an amount equal to the same percentage of the invested capital for the taxable year which the average amount of the annual net income of the trade or business during the prewar period was of the invested capital for the prewar period (but not less than seven or more than nine per centum of the invested capital for the taxable year), and (2) $3,000;

(b) In the case of a domestic partnership or of a citizen or resident of the United States, the sum of (1) an amount equal to the same percentage of the invested capital for the taxable year which the average amount of the annual net income of the trade or business during the prewar period was of the invested capital for the prewar period (but not less than seven or more than nine per centum of the invested capital for the taxable year), and (2) $6,000;

(c) In the case of a foreign corporation or tion or partnership partnership or of a nonresident alien individual, an

(c) Foreign corpora

amount ascertained in the same manner as provided in subdivisions (a) and (b), without any exemption of $3,000 or $6,000.

prewar

cannot be de

(d) If the Secretary of the Treasury is (a) Where average unable satisfactorily to determine the average termined amount of the annual net income of the trade or business during the prewar period, the deduction shall be determined in the same manner as provided in section two hundred and five.

Where corporation

SEC. 204. That if a corporation or partner- was not in existence ship was not in existence, or an individual was not or individual not in engaged in the trade or business, during the whole period of any one calendar year during the prewar period, the deduction shall be an amount equal to eight per centum of the invested capital for the taxable year, plus in the case of a domestic corporation $3,000, and in the case of a domestic partnership or a citizen or resident of the United States $6,000.

business is

existence during

prewar period

A trade or business carried on by a corpora- reorganization or tion, partnership, or individual, although formally continuation of one organized or reorganized on or after January second, nineteen hundred and thirteen, which is substantially a continuation of a trade or business carried on prior to that date, shall, for the purposes of this title, be deemed to have been in existence prior to that date, and the net income and invested capital of its predecessor prior to that date shall be deemed to have been its net income and invested capital.

Where business

come during

prewar period

SEC. 205. (a) That if the Secretary of the yielded no net inTreasury, upon complaint finds either (1) that during the prewar period a domestic corporation or partnership, or a citizen or resident of the United States, had no net income from the trade or business, or (2) that during the prewar period the percentage, which the net income was of the invested

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