Taxable Years Taxable Years such date, if such amounts would Taxable Years Beginning before 1944 Sec. 116. (a) (3) Definition of earned income. Same as 1944. Sec. 116. (a) (3) Definition of earned income.-For the purposes of this subsection, "earned income" means wages, salaries, professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income producing factors, under regulations prescribed by the Commissioner with the approval of the Secretary, a reasonable allowance as compensation for the personal services rendered by the taxpayer, not in excess of 20 per centum of his share of the net profits of such trade or business, shall be considered as earned income. Sec. 116 (a), I. R. C., supra, amended by Sec. 107 (b), R. A. of 1943, by omitting language in stricken-through type and by adding language in italics and by adding paragraph (3). Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1943. Sec. 116. (c) Income of foreign Sec. 116. (c) Income of foreign governments and of interna- governments.-The income of fortional organizations.-The income eign governments received from inof foreign governments or interna- vestments in the United States in tional organizations received from stocks, bonds or other domestic investments in the United States securities, owned by such foreign in stocks, bonds, or other domestic governments, or from interest on securities, owned by such foreign deposits in banks in the United governments or by international States of moneys belonging to such organizations, or from interest on foreign governments, or from any deposits in banks in the United other source within the United States of moneys belonging to such | States. Sec. 116. (c) Income of foreign governments. Section originated 1917 as Second Edition, p. 84, Taxable Years Beginning in 1949 foreign governments or international organizations, or from any other source within the United States. Taxable Years Beginning in 1948 Taxable Years Beginning in 1946 and 1947 Sec. 116. (d) Income of states, municipalities, etc. Income derived from any public utility or the exercise of any essential governmental function and accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, or income accruing to the government of any possession of the United States, or any political subdivision thereof. Whenever any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, prior to September 8, 1916, entered in good faith into a contract with any person, the object and purpose of which is to acquire, construct, operate, maintain a public utility or Sec. 116. (d) (1) If by the terms of such contract the tax imposed by this chapter is to be paid out of the proceeds from the operation of such public utility, prior to any division of such proceeds between the person and the State, Territory, political subdivision, or the District of Columbia, and if, but for the imposition of the tax imposed by this chapter, a part of such proceeds for the taxable year would accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then a tax upon the net income from the operation of such public utility shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter, but there shall be refunded to such State, Territory, political subdivision, or the District of Columbia (under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary) an amount which Sec. 116. (d) Income of states, municipalities, etc. Same as 1944. Sec. 116. (d) Income of states, municipalities, etc. Same as 1944. Sec. 116. (d) Income of states, municipalities, etc. Same as 1944. Sec. 116. (d) Income of states, municipalities, etc.-Income derived from any public utility or the exercise of any essential governmental function and accruing to any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, or income accruing to the government of any possession of the United States, or any political subdivision thereof. Whenever any State, Territory, or the District of Columbia, or any political subdivision of a State or Territory, prior to September 8, 1916, entered in good faith into a contract with any person, the object and purpose of which is to acquire, construct, operate, maintain a public utility— or Sec. 116. (d) (1) If by the terms of such contract the tax imposed by this chapter is to be paid out of the proceeds from the operation of such public utility, prior to any division of such proceeds between the person and the State, Territory, political subdivision, or the District of Columbia, and if, but for the imposition of the tax imposed by this chapter, a part of such proceeds for the taxable year would accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then a tax upon the net income from the operation of such public utility shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter, but there shall be refunded to such State, Territory, political subdivision, or the District of Columbia (under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary) an amount which Sec. 116. (d) Income of states, municipalities, etc. Section originated 1913 as Second Edition, p. 84, Taxable Years Beginning in 1949 bears the same relation to the amount of the tax as the amount which (but for the imposition of the tax imposed by this chapter) would have accrued directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, bears to the amount of the net income from the operation of such public utility for such taxable year. Sec. 116. (d) (2) If by the terms of such contract no part of the proceeds from the operation of the public utility for the taxable year would, irrespective of the tax imposed by this chapter, accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then the tax upon the net income of such person from the operation of such public utility shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. Sec. 116. (e) Bridges to be acquired by state or political subdivision.-Whenever any State or political subdivision thereof, in pursuance of a contract to which it is not a party entered into before May 29, 1928, is to acquire a bridge Sec. 116. (e) (1) If by the terms of such contract the tax imposed by this chapter is to be paid out of the proceeds from the operation of such bridge prior to any division of such proceeds, and if, but for the imposition of the tax imposed by this chapter, a part of such proceeds for the taxable year would accrue directly to or for the use of, or would be applied for the benefit of such State or political subdivision, then a tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter, but there shall be refunded to such State or political subdivision (under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary) an amount which bears the same relation to the amount of the tax as the amount which (but for the imposition of the tax imposed by Taxable Years Beginning in 1945 Sec. 116. (e) Bridges to be acquired by state or political subdivision, Same as 1944. Taxable Years Beginning in 1944 bears the same relation to the amount of the tax as the amount which (but for the imposition of the tax imposed by this chapter) would have accrued directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, bears to the amount of the net income from the operation of such public utility for such taxable year. Sec. 116. (d) (2) If by the terms of such contract no part of the proceeds from the operation of the public utility for the taxable year would, irrespective of the tax imposed by this chapter, accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then the tax upon the net income of such person from the operation of such public utility shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. Sec. 116. (e) Bridges to be acquired by state or political subdivision.-Whenever any State or political subdivision thereof, in pursuance of a contract to which it is not a party entered into before May 29, 1928, is to acquire a bridge Sec. 116. (e) (1) If by the terms of such contract the tax imposed by this chapter is to be paid out of the proceeds from the operation of such bridge prior to any division of such proceeds, and if, but for the imposition of the tax imposed by this chapter, a part of such proceeds for the taxable year would accrue directly to or for the use of or would be applied for the benefit of such State or political subdivision, then a tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter, but there shall be refunded to such State or political subdivision (under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary) an amount which bears the same relation to the amount of the tax as the amount which (but for the imposition of Taxable Years Beginning before 1944 Sec. 116. (e) Bridges to be acquired by state or political subdivision. Section originated 1928 as Eighth Edition, p. 194, |