tions mentioned in subdivision 2 of Para-
graph E, although the same is less than
$3000.

The tax will not be withheld on income:

a-When the income, so far as applicable, is of
the same character as that excluded by the in-
dividual in making his individual return as
hereinbefore stated.

b-When the income received is interest on a cer-
tificate of deposit, or upon a deposit in a bank
or banking institution. (See T. D. 1893.)
c-When the income is not fixed, determinable
and annual, but is received incidentally as a
gain or profit for some special service or trans-
action.

d-When the net income (except in the case of
interest on all corporate indebtedness and
dividends on foreign corporate indebtedness
as herein stated) does not exceed $3000 for
any taxable year, or for such portion of the
year 1913, as before stated.

Under the provisions of Paragraph G the normal tax will be levied upon the entire net income arising or accruing from all sources during the preceding calendar year to corporations and others organized in the United States, not including partnerships: If organized, authorized, or existing under the laws of a foreign country, then upon the net income accruing from business transacted and capital invested within the United States during such year.

Under subdivision C a return is to be made by the corporations and others enumerated in said paragraph on or before the first day of March 1914, and upon the first day of said month annually thereafter, or in case of a day designated by such corporation within sixty days after the

close of its fixed year and each year thereafter. In case of a foreign corporation the return is to be made in the place where its principal business is located in the United States.

Such return must be made under the oath or affirmation of the president, vice president or other principal officer, and its treasurer or assistant treasurer, to the collector of internal revenue for the district in which it has its principal place of business. Subject to the following exclusions, the return shall set forth:

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 the year from all sources, includ-
ing dividends on the capital stock or
from the net earnings of corporations,
taxable on their net income. If the cor-
poration is organized under the laws of
a foreign country, the amount of its in-
come received within the year from the
business transacted and capital invested
in the United States must be stated.

There shall be excluded, in said return, from the gross income the following income received during said year:

a-The interest received upon the obligations of a
State or any political subdivision thereof, and
upon the obligations of the United States or
its possessions, or of the District of Columbia.
b-The income received from any public utility
by any State, Territory, or the District of Co-
lumbia or any political subdivision of either,

or accruing to the Philippine Islands, or Porto
Rico, or any political subdivision of the same.
Under Par. G.

c-The income received by agricultural or horti-
cultural organizations; mutual savings banks
not having a capital stock represented by
shares; fraternal beneficiary societies; orders
or associations operating under the lodge sys-
tem and providing for the payment of life,
sick, accident and other benefits to members
of such societies, orders or associations and
others enumerated in Paragraph G, that are
not organized for profit, all of which are ex-
empt form the tax under said paragraph.

From the gross income ascertained, there shall be deducted the following allowances in order to ascertain net taxable income as stated in subdivision (b) of Paragraph G:

First

All the ordinary and necessary expenses
paid within the year in the maintenance
and operation of its properties and busi-
ness, including rentals and other pay-
ments required to be made as a condition.
to the continued use or possession of
its property.

Second-All losses actually sustained within the
year and not compensated by insurance
or otherwise, including a reasonable al-
lowance for depreciation by use, wear,
and tear of property, if any; and in case
of mines a reasonable allowance for de-
pletion of ores and all other natural de-
posits, not exceeding 5 per centum of
the gross value at the mine of the output
for the year for which the computation.
is made; and in the case of insurance
companies the net addition, if any, re-
quired 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.

Third- The amount of interest accrued and paid
within the year on its indebtedness to
an amount of such indebtedness not ex-
ceeding one-half of the 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 exceed-
ing the amount of capital employed in
the business at the close of the year. In
the case of indebtedness wholly secured
by collateral the subject of sale in ordi-
nary business of such corporation, joint
stock company or association, the total
interest secured and paid by such com-
pany, corporation, or association within
the year on any such indebtedness may
be deducted as a part of its expense of
doing business. That in case of bonds
or other indebtedness which have been
issued with a guaranty that the interest
payable thereon shall be free from tax-
ation, no deduction for the payment of
the tax herein imposed shall be allowed.
Banks, banking associations, loan and
trust companies may also deduct the in-
terest paid within the year on deposits,
or on moneys received for investment
and secured by interest-bearing certifi-
cates of indebtedness.

Fourth- All sums paid within the taxable year
for taxes imposed under authority of the
United States, or of any State or Terri-
tory thereof, or imposed by the Govern-
ment of any foreign country.

In the case of corporations joint-stock companies or associations, or insurance companies organized, or existing

under the laws of a foreign country such net income shall be ascertained by making the same deductions that are applicable to domestic corporations, except that the same will be applied only to the business and property of such corporation in the United States. This statement is made, however, with the following qualifications: That the amount of interest to be deducted shall be the amount accrued and paid within the year on corporate indebtedness to an amount of such indebtedness not exceeding the proportion of 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 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.

In the case of foreign or domestic assessment insurance companies the actual deposit of sums with State or Territorial officers, pursuant to law, as additions to guarantee or reserve funds shall be treated as being payments required by law to reserve funds, and therefore are not taxable.

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 sources plus such portions of premium deposits as are retained by the companies for purposes other than payment of losses and expenses and insurance reserves.

Mutual marine insurance companies shall include in their 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 paid to