gross income of each year a reasonable allowance for depreciation of all physical property used in connection with the operation of the mine, and owned by the operator. For this purpose the actual cost (not value) will be equitably distributed over the useful life of such property until the true salvage value has been reached.

Both owner and lessee will keep accurate ledger accounts to which will be charged the capital invested in the mine or lease and in machinery, equipment, etc., crediting such accounts or a depletion and depreciation reserve account, with the amount claimed and allowed as a deduction each year until as a result of such credits the capital charge shall be extinguished, after which no further deduction on these accounts will be allowed.

CHAPTER 34

DEDUCTION OF ALLOWANCE FOR DEPLETION OF MINES

In the new regulations the subject of depletion of mines is treated together with the subject of depletion of oil and gas wells. The regulations are printed in full on pages 724 to 729 in this supplement.

[Page 382.]

CHAPTER 35

RETURN OF ANNUAL NET INCOME

By Whom Filed. Returns are required of all unmarried persons of lawful age having a net income of $1,000 or over. And of all married persons having a net income of $2,000 or over. Heads of families who are married will be required to make returns of income when having

Heads of families who

a net income of $2,000 or over. are unmarried will be required to make returns of income when having a net income of $1,000 or over, though the basic exemption which may be claimed in a return of income will be $2,000. Under the Act of September 8, 1916, as amended, the Act of October 3, 1917, returns will be required in the case of net incomes equal to or in excess of $1,000 or $2,000, according to the marital status of the person making the return. (Reg. 33 Rev., Art. 26.)

[Page 383.]

Husband and Wife. Where husband and wife file separate returns of income, one of them being filed in time and the other deliniquent, such returns are not supplemental of each other and delinquency must be answered for by the one in connection with whose return it occurred. (Reg. 33 Rev., Art. 26.)

[Page 385.]

When Filed. The time for filing all returns due after October 16, 1917, and on or before March 1, 1918, under the Act of September 8, 1916, and the Act of October 3, 1917, for income and excess profits taxes, whether made on the basis of the calendar year or of a fiscal year ended during the year 1917, is extended to April 1, 1918. (T. D. 2650.) This includes returns of information at the source and withholding at the source and returns by individuals and corporations.

[Page 389.]

Verification Abroad. Income tax returns executed abroad may be attested free of charge before United States consular officers. Where a foreign notary or

other official having no seal shall act as attesting officer, the authority of such attesting officer should be certified to by some judicial official or other proper officer having knowledge of the appointment and official character of the attesting officer. (Reg. 33 Rev., Art. 26.)

[Page 394.]

Returns of Fiduciaries. An executor acts for his principal and not for the beneficiaries of the estate of his principal. Beneficiaries are not entitled, as such, to an inspection of returns of income filed by such executor. (Reg. 33 Rev., Art. 26.)

CHAPTER 36

ASSESSMENT AND PAYMENT OF THE TAX

[Page 404.]

Advance Payment of Tax. As to the method of computing the tax to be paid in the case of advance payments, the Treasury Department has issued the following instructions:

If taxpayers elect to make advance partial payments on their income or excess profits taxes, or both, as provided by Section 1009 of the Act of October 3, 1917, at least one-fourth of the estimated tax due must be paid within thirty days after the close of the taxable year, at least an additional fourth within two months after the close of the taxable year, at least an additional fourth within four months after the close of the taxable year, and the remainder of the tax due on or before the time now fixed by law for such payment. For the first taxable year, this means in the case of partnerships and corporations who do not fix their own fiscal years and in

the case of individuals that at least one-fourth of the estimated tax due must be paid on or before January 30, 1918, at least an additional fourth on or before February 28, 1918, at least an additional fourth on or before April 30, 1918, and the remainder of the tax due on or before June 15, 1918. In the case of a partnership or corporation whose fiscal year ends July 31, for example, at least one-fourth of the estimated tax due must be paid on or before August 30, at least an additional fourth on or before September 29, at least an additional fourth on or before November 28, and the remainder of the tax due on or before January 12, 165 days after the close of its fiscal year. Taxpayers are not allowed under these regulations to make advance payments in installments or in whole before the close of their taxable year. Upon the first three installments, interest at the rate of 3% per annum (365 days) will be allowed from the date each payment is made to the date now fixed by law for such payment. If the final payment is made within 41⁄2 months after the close of the taxable year, interest at the rate of 3% per annum (365 days) will be allowed from the date of payment to the date now fixed by law for such payment.

In arriving at the amount of the fourth installment required to satisfy the assessed tax, it will be necessary to find the difference between the assessed tax and the sum of the first three installments and the interest at 3% per annum (365 days) on same from the dates of payment to the date now fixed by law for such payment. This difference will be the amount of the fourth installment, if said installment is paid after the expiration of 42 months after the close of the taxable year, since Sec. 1009 provides that no credit for interest shall be allowed on payments in excess of taxes determined to

be due, nor on payments made after the expiration of 412 months after the close of the taxable year.

If the fourth installment is paid before the expiration of 41⁄2 months after the close of the taxable year, the amount of such installment will be found by dividing the difference mentioned in the preceding paragraph by 1.00 plus the interest at 3% per annum (365 days) on $1 for the number of days from the date on which said fourth installment is paid to date now fixed by law for such payment.

For example, a taxpayer on January 15, 1918, files an income or excess profits tax return showing a tax liability of $4,000 and with the return makes partial payment of $1,000; February 25, 1918, makes a second payment of $1,000; March 25, 1918, a third payment of $1,000; and the balance May 1, 1918.

The first payment draws interest at the rate of 3% per annum from January 15 to June 15, 151 days (in January, 16; February, 28; March, 31; April, 30; May, 31; and June, 15), or $12.41, amount $1,012.41; the second payment, 110 days (February, 3; March, 31; April, 30; May, 31; and June, 15), or $9.04, amount $1,009.04; and the third payment, 82 days (March, 6; April, 30; May, 31; and June, 15), or $6.74 ($6.739), amount $1,006.74. The sum of the three payments and interest thereon is $3,028.19, making the difference $971.81. The amount to be paid on May 1, 1918, to satisfy this difference is found, by dividing $971.81, by 1.00369863, the "amount" of $1 for 45 days (May, 30; and June, 15), at 3% to be $968.23 ($968.228).

If, in the example given above, the fourth payment were made May 16, 1917, the taxpayer would be required to pay the whole of the difference, $971.81, as no interest would be allowable on same under the law.