If a corporation is not organized for profit and its method of doing business is purely of a mutual character, there is no liability. 21 Treas. Decis. (1713).

In Parkview B'ld'g Ass'n v. Herold, 203 Fed. Rep. 876, a building and loan association was held to be for the mutual benefit of its members and hence exempt, though under its plan of operation there might be inequality in the returns to the prepaying stockholder, etc., since the word "mutual" was not to be construed as synonymous with "equal."

Instructions as to when names of corporations should be removed from lists of corporations are given in 20 Treas. Decis. (1673).

Some of the decisions on the early statutes may possibly be made to apply to the present law. They are collected in Foster & Abbot, 331 et seq.

It should particularly be borne in mind that the act of 1909 was a special excise tax law and under it corporations were required to be organized for profit and have a capital stock represented by shares, etc., to be taxable. The present act provides that "the normal tax. shall be levied, etc., upon the entire net income arising or accruing from all sources," etc. Hence many corporations declared in the abovecited decisions to be exempt from taxation

under the act of 1909 are taxable under the present act.

Valuable notes on the corporations, organizations, etc., exempt from taxation, as provided above in G (a), are given in Speer, 33-36.

NET INCOME OF DOMESTIC AND FOREIGN CORPORATIONS DEDUCTIONS.

(b) Such net income shall be ascertained by deducting from the gross amount of the income of such corporation, jointstock company or association, or insurance company, received within the year from all sources, (first) all the ordinary and necessary expenses paid within the year in the maintenance and operation of its business and properties, including rentals or other payments required to be made. as a condition to the continued use or possession of property; (second) all losses actually sustained within the year and not compensated by insurance or otherwise, including a reasonable allowance for depreciation by use, wear and tear of property, if any; and in the case of mines a

reasonable allowance for depletion of ores and all other natural deposits, not to exceed five per centum of the gross value at the mine of the output for the year for which the computation is made; 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, 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 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 policy-holders 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 policy-holder as shall have been paid back or credited to such individual policy-holder, or treated as an abatement of premium of such individual policy-holder, within such year; (third) the amount of interest accrued and paid within the year on its indebtedness to an amount of such indebtedness not exceeding one-half 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 its indebtedness not exceeding the amount of capital employed in the business at the close of the year: Provided, that in case of indebtedness wholly secured by collateral the subject of sale in ordinary business of such corporation, jointstock company, or association, the total interest secured and paid by such company, corporation, or association within the year on any such indebtedness may be deducted as a part of its expense of doing business: Provided further, that in the case of bonds or other indebtedness, which have been issued with a guaranty that the interest payable thereon shall be free from taxation, no deduction for the payment of the tax herein imposed shall be allowed; and in the case of a bank, banking association, loan, or trust company, trust company, interest paid within the year on deposits or on moneys received for investment and secured by interest-bearing certificates of indebtedness issued by such bank, banking asso