whatever, including the income from but not the value of property acquired by gift, bequest, devise, or descent: Provided, That the proceeds of life insurance policies paid upon the death of the person insured or payments made by or credited to the insured, on life insurance, endowment, or annuity contracts, upon the return thereof to the insured at the maturity of the term mentioned in the contract, or upon surrender of contract, shall not be included as income.

Тах

That in computing net income for the purpose of Individual the normal tax there shall be allowed as deductions: Deductions in First, the necessary expenses actually paid in carry- Determining ing on any business, not including personal, living, Net Income or family expenses; second, all interest paid within for Normal the year by a taxable person on indebtedness; third, all national, State, county, school, and municipal taxes paid within the year, not including those assessed against local benefits; fourth, losses actually sustained during the year, incurred in trade or arising from fires, storms, or shipwreck, and not compensated for by insurance or otherwise; fifth, debts due to the taxpayer actually ascertained to be worthless and charged off within the year; sixth, a reasonable allowance for the exhaustion, wear and tear of property arising out of its use or employment in the business, not to exceed, in the case of mines, 5 per centum of the gross value at the mine of the output for the year for which the computation is made, but no deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made: Provided, That no deduction shall be allowed for any amount paid out for new buildings, permanent improvements, or betterments,

made to increase the value of any property or estate; seventh, the amount received as dividends upon the stock or from the net earnings of any corporation, joint stock company, association, or insurance company which is taxable upon its net income as hereinafter provided; eighth, the amount of income, the tax upon which has been paid or withheld for payment at the source of the income, under the provisions of this section, provided that whenever the tax upon the income of a person is required to be withheld and paid at the source as hereinafter required, if such annual income does not exceed the sum of $3,000 or is not fixed or certain, or is indefinite, or irregular as to amount or time of accrual, the same shall not be deducted in the personal return of such person.

The net income from property owned and business carried on in the United States by persons residing elsewhere shall be computed upon the basis prescribed in this paragraph and that part of paragraph G of this section relating to the computation of the net income of corporations, joint-stock and insurance companies, organized, created, or existing under the laws of foreign countries, in so far as applicable.

That in computing net income under this section there shall be excluded the interest upon the obligations of a State or any political subdivision thereof, and upon the obligations of the United States or its possessions; also the compensation of the present President of the United States during the term for which he has been elected, and of the judges of the supreme and inferior courts of the United States now in office, and the compensation of all officers and employees of a State or any political subdivision thereof except when

such compensation is paid by the United States Government.

C. That there shall be deducted from the amount Individual of the net income of each of said persons, ascertained Deduction of as provided herein, the sum of $3,000, plus $1,000 $3,000 additional if the person making the return be a married man with a wife living with him, or plus the sum of $1,000 additional if the person making the return be a married woman with a husband living with her; but in no event shall this additional exemption of $1,000 be deducted by both a husband and a wife: Provided, That only one deduction of $4,000 shall be made from the aggregate income of both husband and wife when living together.

D. The said tax shall be computed upon the re- Computation mainder of said net income of each person subject of Individual thereto, accruing during each preceding calendar year Tax ending December thirty-first: Provided, however, That for the year ending December thirty-first, nineteen hundred and thirteen, said tax shall be computed on the net income accruing from March first to December thirty-first, nineteen hundred and thirteen, both dates inclusive, after deducting five-sixths only of the specific exemptions and deductions herein provided for. On or before the first day of March, nineteen hundred and Individual fourteen, and the first day of March in each year there- Returns after, a true and accurate return, under oath or affirmation, shall be made by each person of lawful age, except as hereinafter provided, subject to the tax imposed by this section, and having a net income of $3,000 or over for the taxable year, to the collector of internal revenue for the district in which such person resides or has his principal place of business, or, in the case of

Returns by
Fiduciaries
of Income of
Beneficiary

Returns in Behalf of Another

a person residing in a foreign country, in the place
where his principal business is carried on within the
United States, in such form as the Commissioner of
Internal Revenue, with the approval of the Secretary
of the Treasury, shall prescribe, setting forth spe-
cifically the gross amount of income from all separate
sources and from the total thereof, deducting the aggre-
gate items or expenses and allowance herein authorized;
guardians, trustees, executors, administrators, agents,
receivers, conservators, and all persons, corporations,
or associations acting in any fiduciary capacity, shall
make and render a return of the net income of the
person
for whom they act, subject to this tax, coming
into their custody or control and management, and be
subject to all the provisions of this section which apply
to individuals: Provided, That a return made by one
of two or more joint guardians, trustees, executors,
administrators, agents, receivers, and conservators, or
other persons acting in a fiduciary capacity, filed in
the district where such person resides, or in the district
where the will or other instrument under which he acts
is recorded, under such regulations as the Secretary of
the Treasury may prescribe, shall be a sufficient com-
pliance with the requirements of this paragraph; and
also all persons, firms, companies, copartnerships, cor-
porations, joint-stock companies or associations, and
insurance companies, except as hereinafter provided, in
whatever capacity acting, having the control, receipt,
disposal, or payment of fixed or determinable annual or
periodical gains, profits, and income of another person
subject to tax, shall in behalf of such person deduct
and withhold from the payment an amount equivalent
to the normal income tax upon the same and make and

render a return, as aforesaid, but separate and distinct, of the portion of the income of each person from which the normal tax has been thus withheld, and containing also the name and address of such person or stating that the name and address or the address, as the case may be, are unknown: Provided, That the provision requiring the normal tax of individuals to be withheld at the source of the income shall not be construed to require any of such tax to be withheld prior to the first day of November, nineteen hundred and thirteen: Provided further, That in either case above mentioned no return of income not exceeding $3,000 shall be required: Provided further, That any persons carrying on business in partnership shall be liable for income tax Partnerships only in their individual capacity, and the share of the profits of a partnership to which any taxable partner would be entitled if the same were divided, whether divided or otherwise, shall be returned for taxation and the tax paid, under the provisions of this section, and any such firm, when requested by the Commissioner of Internal Revenue, or any district collector, shall forward to him a correct statement of such profits and the names of the individuals who would be entitled to the same, if distributed: Provided further, That persons liable for the normal income tax only, on their own account or in behalf of another, shall not be required to make return of the income derived from dividends on the capital stock or from the net earnings of corporations, joint-stock companies or associations, and insurance companies taxable upon their net income

as hereinafter provided. Any person for whom return Individual has been made and the tax paid, or to be paid as afore- Returns said, shall not be required to make a return unless such