Hand Book OF THE War Revenue Act of 1918 1 I Approved, February 24, 1919 r Copyright 1919 by National Bank News. Philadelphia. . 3 C#U-.| 6 5> 68 - 71 , 73), and clause (e) of paragraph nonresident aliens. (3) 6/f) of subd j vis i on ( a ) sha n be allowed only if and to the extent that they are connected with income arising from a source within the United States; and the proper apportionment and allocation of the deductions with respect to sources of income within and without the United States shall be determined under rules and regulations prescribed by the Commissioner with the approval of the Secretary. Items Not Deductible 75. Sec. 215. That hi computing net income no deduction shall in any case be allowed in respect of — 76. Personal expenses. (a) Personal, living, or family expenses ; 77. Amounts paid t o increase values. 78. Amount expended when allowance made. 79. Premiums paid on life insurance poli- cies. (b) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate; (c) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made ; or (d) Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy. 15 Credits Allowed 80. Sec. 216. That for the purpose of the normal tax only there shall be allowed the following credits : oj (a) The amount received as dividends from a corporation Dividends which is taxable under this title upon its net income, and amounts received as dividends from a personal service cor- poration out of earnings or profits upon which income tax has been imposed by Act of Congress ; (b) The amount received as interest upon obligations of the United States and bonds issued by the War Finance Corporation, which is included in gross income under Section 213 (par. 49 , 54 ) ; (c) In the case of a single person, a personal exemption of $1,000, or in the case of the head of a family or a married person living with husband or wife, a personal exemption «of $2,000. A husband and wife living together shall receive but one personal exemption of $2,000 against their aggregate net income ; and in case they make separate returns, the personal exemption of $2,000 may be taken by either or divided between them ; (d) $200 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer, if such dependent person is under eighteen years of age or is incapable of self-support because mentally or physically defective. (e) In the case of a nonresident alien individual who is a citizen or subject of a country which imposes an income tax, the credits allowed in subdivisions (c) and (d) (par. 83 - 84 ) shall be allowed only if such country allows a similar credit to citizens of the United States not residing in such country. 82. Interest included in gross income. 83. Personal exemp- tion. One exemption of $2,000 allowed hus- band and wife. 84. Exemption for de- pendents. 85. Nonresident aliens credits. Nonresident Aliens — Allowance of Deductions and Credits Complete returns to be filed by non- resident aliens to re- ceive benefit of de- ductions and credits. 86. Sec. 217. That a nonresident alien individual shall receive the benefit of the deductions and credits allowed in this title only by filing or causing to be filed with the collector a true and accurate return of his total income received from all sources corporate or otherwise in the United States, in the manner prescribed by this title, including therein all the information which the Commissioner may deem necessary for the calculation of such deductions and credits : Provided, That the benefit of the credits allowed in subdivisions (c) and (d) of Section 216 (par. 83 - 84 ) may, in the discretion of the Commissioner, and except as otherwise provided in subdivision (e) (par. 85 ) of that section, be received by filing a claim therefor with the withholding agent. In case of failure to file a return, the collector shall collect the tax on such income, and all property belonging to such nonresident alien individual shall be liable to distraint for the tax. Partnerships and Personal Service Corporations 87. Sec. 218. (a) That individuals carrying on business in partnership shall be liable for income tax only in their individual capacity. There shall be included in computing the net income of each partner his distributive share, whether distributed or not, of the net income of the partnership for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the partnership is computed, then his distributive share of the net income of the partnership for any accounting period of the partnership ending within the fiscal or calendar year upon the basis of which the partner’s net income is computed. The partner shall, for the purpose of the normal tax, be Partners taxed only in their individ- ual capacity. Net in- come to be distribu- tive share of net in- come of partnership. 88 . Credits allowed for allowed as credits, in addition to the credits allowed to him norm 1 tax under Section 216 (par. 80 - 85 ), his proportionate share of a * such amounts specified in subdivisions (a) and (b) of section 216 (par. 81 - 82 ) as are received by the partnership. 16 89 . ! (b) If a fiscal year of a partnership ends during a calendar If fiscal year ends year for which the rates of tax differ from those for the pre- during calendar year ceding calendar year, then (1) the rates for such preceding v. hen rates vary. calendar year shall apply to an amount of each partner’s share of such partnership net income equal to the proportion which the part of such fiscal year falling within such calendar year bears to the full fiscal year, and (2) the rates for the calendar year during which such fiscal year ends shall apply to the remainder. 90 . (c) In the case of an individual member of a partnership which makes return for a fiscal year beginning in 1917 and ending in 1918, his proportionate share of any excess-profits Prop ortionate exceL nro^ft^ta^for tax irn Posed upon the partnership under the Revenue Act of 1917 Credited 1917 with respect to that part of such fiscal year falling in ' * 1917, shall, for the purpose of determining the tax imposed by this title, be credited against that portion of the net income embraced in his personal return for the taxable year 1918 to which the rates for 1917 apply. (d) The net income of the partnership shall be computed in the same manner and on the same basis as provided in Section 212 {par. 45-47), except that the deduction provided in paragraph (11) of subdivision (a) of Section 214 {par. 72) shall not be allowed. 91 . Computation of net income of partner- ships. (e) Personal service corporations shall not be subject to taxation under this title, but the individual stockholders thereof shall be taxed in the same manner as the members of partnerships. All the provisions of this title relating to partnerships and the members thereof shall so far as prac- ticable apply to personal service corporations and the stock- holders thereof : Provided, That for the purpose of this sub- division amounts distributed by a Personal Service Corporation during its taxable year shall be accounted for by the distributees ; and any portion of the net income remaining undistributed at the close of its taxable year shall be accounted for by the stockholders of such corporation at the close of its taxable year in proportion to their respective shares. 92 . Individual stock- holders of personal service corporations taxed as members of partnerships. Estates and Trusts 93 . Taxes apply to in- come 94 . Received by estates of decedents, 95 . Accumulated in trust, 96 . Held for distribu- tion, 97 . Distributed to beneficiaries or held. Sec. 219. (a) That the tax imposed by Sections 210 {par. 40-42 ) and 211 {par. 43-44 ) shall apply to the income of estates or of any kind of property held in trust, including — (1) Income received by estates of deceased persons during the period of administration or settlement of the estate; (2) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests ; (3) Income held for future distribution under the terms of the will or trust; and (4) Income which is to be distributed to the beneficiaries periodically, whether or not at regular intervals, and the income collected by a guardian of an infant to be held or distributed as the court may direct. 98 . Fiduciary responsi- ble for making re- turn. (b) The fiduciary shall be responsible for making the return of income for the estate or trust for which he acts. The net income of the estate or trust shall be computed in the same manner and on the same basis as provided in Section 212 {par. 45-47), except that there shall also be allowed as a deduction (in lieu of the deduction authorized by paragraph (11) of subdivision (a) of Section 214 {par. 72) any part of the gross income which, pursuant to the terms of the will or deed creating the trust, is during the taxable year paid to or permanently set aside for the United States, any state, territory, or any political subdivision thereof, or the District of Columbia, or any corporation organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to tbe~ benefit of any private stockholder or individual; and in cases under paragraph (4) 17 99. Tax to be paid by fiduciary. Deductions and credits allowed. 100 . Tax to be paid by beneficiary and his distributive share in- cluded in computing net income. Credits allowed beneficiaries. of subdivision (a) of this Section (pdr. 97) the fiduciary shall include In the fetufll a statement of each beneficiary’s distributive share of such net income, whether or not distributed before the close of the taxable year for which the return is made. (c) In cases under paragraph (1), (2), or (3) of sub- division (a) (par. 93-96 ) the tax shall be imposed upon the net income of the estate or trust and shall be paid by the fiduciary, except that in determining the net income of the estate of any deceased person during the period of administra- tion or settlement there may be deducted the amount of any income properly paid or credited to any legatee, heir or other beneficiary. In such cases the estate or trust shall, for the purpose of the normal tax, be allowed the same credits as are allowed to single persons under Section 216 (par. 80-83). (d) In cases under paragraph (4) of subdivision (a) (par. 97), and in the case of any income of an estate during the period of administration or settlement permitted by sub- division (c) (par. 99) to be deducted from the net income upon which tax is to be paid by the fiduciary, the tax shall not be paid by the fiduciary, but there shall be included in computing the net income of each beneficiary his distributive share, whether distributed or not, of the net income of the estate or trust for the taxable year, or, if his net income for such taxable year is computed upon the basis of a period different from that upon the basis of which the net income of the estate or trust is computed, then his distributive share of the net income of the estate or trust for any accounting period of such estate or trust ending within the fiscal or calendar year upon the basis of which such beneficiary’s net income is computed. In such cases the beneficiary shall, for the purpose of the normal tax, be allowed as credits in addition to the credits allowed to him under Section 216 (par. 80-83), his proportionate share of such amounts specified in subdivisions (a) and (b) of Section 216 (par. 81-82) as are received by the estate or trust. Profits of Corporations Taxable to Stockholders Sec. 220. That if any corporation, however created or organized, is formed or availed of for the purpose of prevent- ing the imposition of the surtax upon its stockholders or members through the medium of permitting its gains and profits to accumulate instead of being divided or distributed, such corporation shall not be subject to the tax imposed by Section 230 (par. 124-127), but the stockholders or members thereof shall be subject to taxation under this title in the same manner as provided in subdivision (e) of Section 218 (Par. 92) in the case of stockholders of a personal service corporation, except that the tax imposed by Title III shall be deducted from the net income of the corporation before the computation of the proportionate share of each stockholder or member. The fact that any corporation is a mere holding company, or that the gains and profits are permitted to accumulate beyond the reasonable needs of the business, shall be prima facie evidence of a purpose to escape the surtax; but the fact that the gains and profits are in any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the tax in such case unless the Commissioner certifies that in his opinion such accumulation is unreasonable for the purposes of the business. When requested by the Commissioner, or any collector, every corporation shall forward to him a correct statement of such gains and profits and the names and addresses of the individuals or shareholders who would be entitled to the same if divided or distributed, and of the amounts that would be payable to each. Payment of Tax at Source Sec. 221. (a) That all individuals, corporations and partnerships, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States, having the control, receipt, custody, disposal, or payment, of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, of any non- resident alien individual (other than income received as divi- dends from a corporation which is taxable under this title upon its net income) shall (except in the cases provided for in subdivision (b) (par. 103) and lft 101 . Corporations formed t o prevent imposition of surtax upon stockholders, not subject to income tax, but stockholders taxed. 102 . Persons having control, receipt, cus- tody, disposal or payment of fixed or determinable gains, profits and income of nonresident aliens to withhold tax. 103. In case of tax-free convenant bonds obligor to withhold 2% of interest upon such bonds and simi- lar obligations, un- less signed notice is filed with withhold- ing agent claiming benefit of credits. except as otherwise provided in regulations prescribed by the Commissioner under Section 217 ( par . 86)) deduct and withhold from such annual or periodical gains, profits, and income a tax equal to 8 per centum thereof : Provided, That the Com- missioner may authorize such tax to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent. (b) In any case where bonds, mortgages, or deeds of trust, or other similar obligations of a corporation contain a contract or provision by which the obligor agrees to pay any portion of the tax imposed by this title upon the obligee, or to reimburse the obligee for any portion of the tax, or to pay the interest without deduction for any tax which the obligor may be required or permitted to pay thereon or to retain therefrom under any law of the United States, the obligor shall deduct and withhold a tax equal to 2 per centum of the interest upon such bonds, mortgages, deeds of trust, or other obligations, whether such interest is payable annually or at shorter or longer periods and whether payable to a nonresident alien individual or to an individual citizen or resident of the United States or to a partnership: Provided, That the Commissioner may authorize such tax to be deducted and withheld in the case of interest upon any bonds, mortgages, deeds of trust or other obligations, the owners of which are not known to the with- holding agent. Such deduction and withholding shall not be required in the case of a citizen or resident entitled to receive such interest, if he files with the withholding agent on or before February 1, a signed notice in writing claiming the benefit of the credits provided in subdivisions (c) and (d) of Section 216 {par. 83-84) ; nor in the case of a nonresident alien individual if so provided for in regulations prescribed by the Commissioner under Section 217 (par. 86). (c) Every individual, corporation, or partnership required to deduct and withhold any tax under this section shall make return thereof on or before March first of each year and shall on or before June fifteenth pay the tax to the official of the United States Government authorized to receive it. Every such individual, corporation, or partnership is hereby made liable for such tax and is hereby indemnified against the claims and demands of any individual, corpora- tion, or partnership for the amount of any payments made in accordance with the provisions of this section. (d) Income upon which any tax is required to be with- held at the source under this section shall be included in the return of the recipient of such income, but any amount of tax so withheld shall be credited against the amount of income tax as computed in such return. (e) If any tax required under this section to be deducted and withheld is paid by the recipient of the income, it shall not be re-collected from the withholding agent ; nor in cases in which the tax is so paid shall any penalty be imposed upon or collected from the recipient of the income or the withholding agent for failure to return or pay the same, unless such failure was fraudulent and for the purpose of evading payment. Credit for Taxes 107. Sec. 222. (a) That the tax computed under Part II of this title shall be credited with : 10 g (1) In the case of a citizen of the United States, the Citizens of U S arn . ount of an y income, war-profits and excess-profits taxes paid during the taxable year to any foreign country, upon income derived from sources therein, or to any possession of the United States ; and jqq (2) In the case of a resident of the United States, the tt q amount of any such taxes paid during the taxable year to Residents 01 u. b. any posseS sion of the United States; and jjq (3) In the case of an alien resident of the United States Alien residents of who is a citizen or subject of a foreign country, the amount jj g of any such taxes paid during the taxable year to such country, upon income derived from sources therein, if such country, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and 104. Returns to be made and tax paid by withholding agent. 105. Income included in recipient’s return, but tax credited. 106. Tax paid by recip- ient of income not to be re-collected. 19 111 . Member O f part- nership o r benefi- ciary of estate or trust. (4) In the case of any such individual who is a member of a partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the partnership or the estate or trust paid during the taxable year to a foreign country or to any possession of the United States, as the case may be. 112 . If accrued taxes differ from credits claimed or in case of refund, tax re- determined. (b) If accrued taxes when paid differ from the amounts claimed as credits by the taxpayer, or if any tax paid is refunded in whole or in part, the taxpayer shall notify the Commissioner who shall redetermine the amount of the tax due under Part II of this title for the year or years affected, and the amount of tax due upon such redetermination, if any, shall be paid by the taxpayer upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of Section 252 ( par . 195 ). In the case of such a tax accrued but not paid, the Commissioner as a condition precedent to the allowance of this credit may require the taxpayer to give a bond with sureties satis- factory to and to be approved by the Commissioner in such penal sum as the Com- missioner may require, conditioned for the payment by the taxpayer of any amount of tax found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require. 113 . Credits allowed only on satisfactory evidence. (c) These credits shall be allowed only if the taxpayer furnishes evidence satisfactory to the Commissioner showing the amount of income derived from sources within such foreign country or such possession of the United States, and all other information necessary for the computation of such credits. Individual Returns Sec. 223. That every individual having a net income for the taxable year of $1,000 or over if single or if married and not living with husband or wife, or of $2,000 or over if married and living with husband or wife, shall make under oath a return stating specifically the items of his gross income and the deductions and credits allowed by this title. If a husband and wife living together have an aggregate net income of $2,000 or over, each shall make such a return unless the income of each is included in a single joint return. 114 . To be made of net income of $1,000 and over if single and v -,000 if married. 115 . Returns by author- ized agent or guardian. If the taxpayer is unable to make his own return, the return shall be made by a duly authorized agent or by the guardian or other person charged with the care of the person or property of such taxpayer. Partnership Returns 116 . To include names and addresses of members and dis- tributive shares. individual. The return Sec. 224. That every partnership shall make a return for each taxable year, stating specifically the items of its gross income" and the deductions allowed by this title, and shall include in the return the names and addresses of the indi- viduals who would be entitled to share in the net income if distributed and the amount of the distributive share of each shall be sworn to by any one of the partners. Fiduciary Returns Sec. 225. That every fiduciary (except receivers appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for the individual, estate or trust for which he acts (1) if the net income of such individual is $1,000 or over if single or if married and not living with husband or wife, or $2,000 or over if married and living with husband or wife, or (2) if the net income of such estate or trust is $1,000 or over or if any beneficiary of such estate or trust is a nonresident alien, stating specifically the items of the gross income and the deductions and credits allowed by this title. Under such regulations as the Commissioner with the approval of the Secretary may prescribe, a return made by one of two or more 117 . Fiduciaries to make returns for individ- uals, estates or trusts for which they act. 20 joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be a sufficient compliance with the above requirement. The fiduciary shall make oath that he has sufficient knowledge of the affairs of such individual estate or trust to enable him to make the return, and that the same is, to the best of his knowledge and belief, true and correct. 118. Fiduciaries required to make returns under this Act shall be subject to all the provisions of this Act which apply to individuals. Returns When Accounting Period Changed 119. Sec. 226. That if a taxpayer, with the approval of the Separate returns re- Commissioner, changes the basis of computing net income quired. from fiscal year to calendar year a separate return shall be made for the period between the close of the last fiscal year for which return was made and the following December 31. If the change is from calendar year to fiscal year, a separate return shall be made for the period between the close of the last calendar year for which return was made and the date designated as the close of the fiscal year. If the change is from one fiscal year to another fiscal year a separate return shall be made for the period between the close of the former fiscal year and the date designated as the close of the new fiscal year. If a taxpayer making his first return for income tax keeps his accounts on the basis of a fiscal year he shall make a separate return for the period between the beginning of the calendar year in which such fiscal year ends and the end of such fiscal year. In all the above cases the net income shall be computed on the basis of such period for which separate return is made, and the tax shall be paid thereon at the rate for the calendar year in which such period is included; and the credits pro- vided in subdivisions (c) and (d) of Section 216 (par. 83-84) shall be reduced respectively to amounts which bear the same ratio to the full credits provided in such subdivisions as the number of months in such period bears to twelve months. 120 . Net income com- puted on period covered and credits proportioned. Time and Place for Filing Returns Sec. 227. (a) That returns shall be made on or before the fifteenth day of the third month following the close of the fiscal year, or, if the return is made on the basis of the calendar year, then the return shall be made on or before the fifteenth day of March. The Commissioner may grant a reasonable extension of time for filing returns whenever in his judgment good cause exists and shall keep a record of every such extension and the reason therefor. Except in the case of taxpayers who are abroad, no such extension shall be for more than six months. 121 . To be made by March 15 or 15th day of 3rd month after close of fiscal year. 122 . To be made to col- lector for district or at Baltimore, Md. (b) Returns shall be made to the collector for the district in which is located the legal residence or principal place of business of the person making the return, or, if he has no legal residence or principal place of business in the United States, then to the collector at Baltimore, Maryland. Understatement in Returns Sec. 228. That if the collector or deputy collector has reason to believe that the amount of any income returned is understated, he shall give due notice to the taxpayer making the return to show cause why the amount of the return should not be increased, and upon proof of the amount understated, may increase the same accordingly. Such taxpayer may fur- nish sworn testimony to prove any relevant facts and if dissatisfied with the decision of the collector may appeal to the Commissioner for his decision, under such rules of procedure as may be prescribed by the Commissioner with the approval of the Secretary. 123. Income understated increased b y collec- tor. Appeal to Com- missioner if dissatis- fied with decision. PART III.— CORPORATIONS Tax on Corporations 124. Sec. 230. (a) That, in lieu of the taxes imposed by Section 10 of the Revenue Act of 1916, as amended by the Revenue Act of 1917, and by Section 4 of 21 the Revenue Act of 1917*, there shall be levied, collected, and paid for each taxable year upon the net income of every corporation a tax at the following rates: 125. For calendar year 1918. 126. Thereafter. (1) For the calendar year 1918, 12 per centum of the amount of the net income in excess of the credits provided in Section 236 {par. 165-168) ; and (2) For each calendar year thereafter, 10 per centum of such excess amount. (b) For the purposes of the Act approved March 21, 1918, entitled “An Act to provide for the operation of transporta- tion systems while under Federal control, for the just com- pensation of their owners and for other purposes,” five-sixths of the tax imposed by paragraph (1) of subdivision (a) {par. 125) and four-fifths of the tax imposed by paragraph (2) of subdivision (a) {par. 126) shall be treated as levied by an Act in amendment of Title I of the Revenue Act of 1917. 127. Railroads under Federal Control. Conditional and Other Exemptions 128. Exempt from tax. 129. Labor organiza- tions. 130. Mutual savings banks. Sec. 231. That the following organizations shall be exempt from taxation under this title — (1) Labor, agricultural, or horticultural organizations; (2) Mutual savings banks not having a capital stock represented by shares ; 131. Fraternal benefi ciary societies. ment of life, sick or association or their dependents; (3) Fraternal beneficiary societies, orders, or associa- tions, (a) operating under the lodge system or for the exclusive benefit of the members of a fraternity itself operat- ing under the lodge system, and (b) providing for the pay- accident, or other benefits to the members of such society, order 132. Building and loan associations. 133. Cemetery c o m - panies. (4) Domestic building and loan associations and co- operative banks without capital stock organized and operated for mutual purposes and without profit ; (5) Cemetery companies owned and operated exclusively for the benefit of their members ; 134. Religious, charita- ble, scientific or edu- c a t i o n a 1 organiza- tions. 135. Business leagues, boards of trade, etc. 136. Civic leagues. 137. Pleasure or recrea- tion clubs. (6) Corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual ; (7) Business leagues, chambers of commerce, or boards of trade, not organized for profit and no part of the net earnings of which inures to the benefit of any private stock- holder or individual ; (8) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare ; (9) Clubs organized and operated exclusively for pleasure, recreation, and other nonprofitable purposes, no part of the net earnings of which inures to the benefit of any private stockholder or member ; (10) Farmers’ or other mutual hail, cyclone, or fire insurance companies, mutual ditch or irrigation companies, mutual and co-operative telephone companies, or like organiza- tions of a purely local character, the income of which consists solely of assessments, dues, and fees collected from members for the sole purpose of meeting expenses ; 138. Mutual insurance or co-operative com- panies. *Tax at the rate of 6% on amount of total net income; and an additional tax of 10% on undis- tributed net income 6 months after end of calendar or fiscal year, excluding any income taxes paid within the year. The undistributed net income for the purpose of this tax reduced by such portion as is employed or required in the business or invested in obligations of U. S. issued after September 1, 1917. 22 139 . Farmers, fruit growers and like mutual sales agents. 140. Holding corpora- tions of exempt or- ganizations. (11) Farmers', Fruit Growers’, or like associations, organ- ized and operated as sales agents for the purpose of marketing the products of members and turning back to them the pro- ceeds of sales, less the necessary selling expenses, on the basis of the quantity of produce furnished by them; (12) Corporations organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by this title; (13) Federal land banks and national farm-loan associa- 1 a i i j tions as provided in Section 26 of the Act approved July 17, federal land ba s entitled “An Act to provide capital for agricultural and national tarm- development, to create standard forms of investment based loan associations. upon farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for United States bonds, to create Government depositaries and financial agents for the United States, and for other purposes”; 142. (14) Personal service corporations. Personal service corporations. Net Income Defined 143. Sec. 232. (a) That in the case of a corporation subject to the tax imposed by Section 230 (par. 124-127 ) the term “net income” means the gross income as defined in Section 233 (par. 144- 147) less the deductions allowed by Section 234 (par. 148-163 ), and the net income shall be computed on the same basis as is provided in subdivision (b) of Section 212 (par. 46-47 ) or in Section 226 (par. 1 19-120). Gross Income Defined 144. Sec. 233. (a) That in the case of a corporation subject “Gross income.” to the tax imposed by Section 230 (par. 124-127 ) the term “gross income” means the gross income as defined in Section 213 (par. 48-60), except that; 14 - (1) In the case of life insurance companies there shall 1 j . f . not be included in gross income such portion of any actual . e insurance o - p rem j um received from any individual policyholder as is panies. paid back or credited to or treated as an abatement of premium of such policyholder within the taxable year. 146. * (2) Mutual marine insurance companies shall include in Mutual marine in- gross income the gross premiums collected and received by surance companies. them less amounts paid for reinsurance. (b) In the case of a foreign corporation gross income Foreign corpora- deludes only the gross income from sources within the tions gross income" United States, including the interest on bonds, notes, or other g * interest-bearing obligations of residents, corporate or other- wise, dividends from resident corporations, and including all amounts received (although paid under a contract for the sale of goods or otherwise) representing profits on the manufacture and disposition of goods within the United States. Deductions Allowed 148. Deductions. Sec. 234. (a) That in computing the net income of a corporation subject to the tax imposed by Section 230 (par. 124-127 ) there shall be allowed as deductions: 149. (1) All the ordinary and necessary expenses paid or Ordinary and incurred during the taxable year in carrying on any trade or necessary expenses business, including a reasonable allowance for salaries or for carrying on busi- other compensation for personal services actually rendered, ness. and including rentals or other payments required to be made as a condition to the continued use or possession of property to which the corporation has not taken or is not taking title, or in which it has no equity; 23 150 . (2) All interest paid or accrued within the taxable year Interest on indebt- on its indebtedness, except on indebtedness incurred or con- edness, except obliga- tinued to purchase or carry obligations or securities (other tions o r securities than obligations of the United States issued after September (other than those of 24, 1917) the interest upon which is wholly exempt from U. S. issued after taxation under this title as income to the taxpayer, or, in 9-24-17) exempt from the case of a foreign corporation, the proportion of such tax. interest which the amount of its gross income from sources within the United States bears to the amount of its gross income from all sources within and without the United States ; 151. Taxes imposed by governmental au- thority except in- come, war and excess profits taxes and those assessed against local bene- fits. (3) Taxes paid or accrued within the taxable year imposed (a) by the authority of the United States, except income, war profits and excess-profits; or (b) by the authority of any of its possessions, except the amount of income, war- profits and excess-profits taxes allowed as a credit under Section 238 {par. 170-173 ) ; or (c) by the authority of any State or Territory, or any county, school district, municipality, or other taxing subdivision of any State or Territory, not including those assessed against local benefits of a kind tending to increase the value of the property assessed; or (d) in the case of a domestic corporation, by the authority of any foreign country, except the amount of income, war-profits and excess-profits taxes allowed as a credit under Section 238 {par. 170-173) ; or (e) in the case of a foreign corporation, by the authority of any foreign country (except income, war-profits and excess-profits taxes, and taxes assessed against local benefits of a kind tending to increase the value of the property assessed), upon the property or business: Provided, That in the case of obligors specified in subdivision (b) of Section 221 {par. 103 ) no deduction for the payment of the tax imposed by this title or any other tax paid pursuant to the contract or provision referred to in that subdivision, shall be allowed ; (4) Losses sustained during the taxable year and not compensated for by insurance or otherwise; (5) Debts ascertained to be worthless and charged off within the taxable year ; (6) Amounts received as dividends from a corporation which is taxable under this title upon its net income, and amounts received as dividends from a personal service cor- poration out of earnings or profits upon which income tax has been imposed by Act of Congress; 152. Losses sustained. 153. Worthless debts. 154. Dividends. 155. Exhaustion, wear, tear and obsoles- cence. (7) A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence; 156. Amortization i n case of property erected or acquired after 4-5-17 necessary for prosecution of war. (8) In the case of buildings, machinery, equipment, or other facilities, constructed, erected, installed, or acquired, on or after April 6, 1917, for the production of articles con- tributing to the prosecution of the present war, and in the case of vessels constructed or acquired on or after such date for the transportation of articles or men contributing to the prosecution of the present war, there shall be allowed a rea- sonable deduction for the amortization of such part of the cost of such facilities or vessels as has been borne by the taxpayer, but not again including any amount otherwise allowed under this title or previous acts of Congress as a deduction in computing net income. At any time within three years after the termination of the present war, the Commissioner may, and at the request of the taxpayer shall, reexamine the return, and if he then finds as a result of an appraisal or from other evidence that the deduction originally allowed was incorrect, the taxes imposed by this title and by Title III {par. 211-286 ) for the year or years affected shall be redetermined; and the amount of tax due upon such redetermination, if any, shall be paid upon notice and demand by the collector, or the amount of tax over- paid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of Section 252 {par. 195) ; 24 (9) In the case of mines, oil and gas wells, other natural deposits and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case, based upon cost including cost of development not otherwise deducted : Provided, That in the case of such properties acquired prior to March 1, 1913, the fair market value of the property (or the taxpayer’s interest therein) on that date shall be taken in lieu of cost up to that date : Provided further, That in the case of mines, oil and gas wells, discovered by the taxpayer, on or after March 1, 1913, and not acquired as the result of purchase of a proven tract or lease, where the fair market value of the property is materially disproportionate to the cost, the depletion allowance shall be based upon the fair market value of the property at the date of the discovery, or within thirty days thereafter; such reasonable allowance in all the above cases to be made under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary. In the case of leases the deductions allowed by this para- graph shall be equitably apportioned between the lessor and lessee; 157. Allowance for de- pletion and deprecia- tion of improvements in case of mines, oil and gas wells, other natural deposits and timber. 158. In case of insur- ance companies ad- d i t i o n to reserve funds and sums paid on policy and annuity contracts. (10) In the case of insurance companies, in addition to the above: (a) The net addition required by law to be made within the taxable year to reserve funds (including in the case of assessment insurance companies the actual deposit of sums with State or Territorial officers pursuant to law as additions to guarantee or reserve funds) ; and (b) the sums other than dividends paid within the taxable year on policy and annuity contracts; 159. Reserve funds of corporations issuing combination policies on weekly premium payment plan. (11) In the case of corporations issuing policies cover- ing life, health, and accident insurance combined in one policy issued on the weekly premium payment plan continuing for life and not subject to cancellation, in addition to the above, such portion of the net addition (not required by law) made within the taxable year to reserve funds as the Commissioner finds to be required for the protection of the holders of such policies only; 160. Returned premiums in case of mutual ma- rine insurance com- panies. (12) In the case of mutual marine insurance companies, there shall be allowed, in addition to the deductions allowed in paragraphs (1) to (10) (par. 149-138), inclusive, amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment and the payment thereof; (13) In the case of mutual insurance companies (other than mutual life or mutual marine insurance companies) requiring their members to make premium deposits to provide for losses and expenses, there shall be allowed, in addition to the deductions allowed in paragraphs (1) to (10) (par. 149- 158), inclusive, (unless otherwise allowed under such para- graphs) the amount of premium deposits returned to their policyholders and the amount of premium deposits retained for the payment of losses, expenses, and rein- surance reserves ; 161. Premium deposits in case of mutual in- surance companies. (14) (a) At the time of filing return for the taxable year 1918 a taxpayer may file a claim in abatement based on the fact that he has sustained a substantial loss (whether or not actually realized by sale or other disposition) resulting from any material reduction (not due to temporary fluctu- ation) of the value of the inventory for such taxable year, or from the actual payment after the close of such taxable year of rebates in pursuance of contracts entered into during such year upon sales made during such year. In such case payment of the amount of the tax covered by such claim shall not be required until the claim is decided, but the taxpayer shall accompany his claim with a bond in double the amount of the tax covered by the claim, with sureties satisfactory to the Commissioner, conditioned for the payment of any part of such tax found to be due, with interest. If any part of such claim is disallowed then the remainder of the tax due shall on notice and demand by the collector be paid by the taxpayer with interest at the rate of 1 per 162. Abatement claim based on sub- stantial loss sus- tained. In inventory value or actual pay- ment of rebates. 25 eetitum per month from the time the tax would have been due had no such claim been filed. If it is shown to the satisfaction of the Commissioner that such sub- stantial loss has been sustained, then in computing the taxes imposed by this title and by Title III the amount of such loss shall be deducted from the net income, (b) If no such claim is filed, but it is shown to the satisfaction of the Commissioner that dur- ing the taxable year 1919 the taxpayer has sustained a substantial loss of the character above described then the amount of such loss shall be deducted from the net income for the taxable year 1918 and the taxes imposed by this title and by Title III for such year shall be redetermined accordingly. Any amount found to be due to the taypayer upon the basis of such redetermination shall be credited or refunded to the taxpayer in accordance with the provisions of Section 252 (par. 195). (b) In the case of a foreign corporation the deductions 163. allowed in subdivision (a) (par. 148-162 ), except those Deductions allowed allowed in paragraph (2), (par. 150 ) and in clauses (a), (b), foreign corporations, and (c) of paragraph (3), (par. 151 ), shall be allowed only if and to the extent that they are connected with income arising from a source within the United States ; and the proper apportionment and allocation of the deductions with respect to sources of income within and without the United States shall be determined under rules and regulations prescribed by the Commissioner with the approval of the Secretary. Items Not Deductible 164. Sec. 235. That in computing net income no deduction shall in any case be allowed in respect of any of the items specified in Section 215 (par. 75-79). Credits Allowed 165. Sec. 236. That for the purpose only of the tax imposed by Section 230 (par. 124-127 ) there shall be allowed the following credits : (a) The amount received as interest upon obligations of the United States and bonds issued by the. War Finance Corporation, which is included in gross income under Section 233 (par. 144- 147) ; (b) The amount of any taxes imposed by Title III for the same taxable year : Provided, That in the case of a corpo- ration which makes return for a fiscal year beginning in 1917 and ending in 1918, in computing the tax as provided in sub- division (a) of Section 205 (par. 35-36), the tax computed for the entire period under Title II of the Revenue Act of 1917 shall be credited against the net income computed for the entire period under Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917 and under Title I of the Revenue Act of 1917, and the tax computed for the entire period under Title III of this Act at the rates prescribed for the calendar year 1918 shall be credited against the net income computed for the entire period under this title; and 166. Interest included in gross income. 167. Taxes imposed by Title III. 168. Domestic tion. corpora- (c) In the case of a domestic corporation, $2,000. 169. Tax withheld a t source in case of foreign corporations not engaged in busi- ness or having offices in U. S. Payment of Tax at Source Sec. 237. That in the case of foreign corporations subject to taxation under this title not engaged in trade or business within the United States and not having any office or place of business therein, there shall be deducted and withheld at the source in the same manner and upon the same items of income as is provided in Section 221 (par. 102-106) a tax equal to 10 per centum thereof, and such tax shall be re- turned and paid in the same manner and subject to the same conditions as provided in that section : Provided, That in the case of interest described in subdivision (b) of that section (par. 103) the deduction and withholding shall be at the rate of 2 per centum. Credit for Taxes 170. Sec. 238. (a) That in the case of a domestic corporation Domestic corpora- the total taxes imposed for the taxable year by this title and tion credited with by Title III shall be credited with the amount of any income, foreign taxes paid. war-profits and excess-profits taxes paid during the taxable year to any foreign country, upon income derived from sources therein, or to any possession of the United States. 26 171 . If accrued taxes differ from credits claimed or if refunds made taxes rede- termined by Com- missioner. If accrued taxes when paid differ from the amounts claimed as credits by the corporation, or if any tax paid is refunded in whole or in part, the corporation shall at once notify the Commissioner who shall redetermine the amount of the taxes due under this title and under Title III for the year or years affected, and the amount of taxes due upon such redetermination, if any, shall be paid by the corporation upon notice and demand by the collector, or the amount of taxes overpaid, if any, shall be credited or refunded to the corporation in accordance with the provisions of Section 252 {par. 195). In the case of such a tax accrued but not paid, the Commissioner as a condition precedent to the allowance of this credit may require the corporation t© give a bond with sureties satisfactory to and to be approved by him in such penal sum as he may require, conditioned for the pay- ment by the taxpayer of any amount of taxes found due upon any such redeter- mination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require. 172. Credit allowed only upon satisfac- tory evidence. 173. Proportioned for fiscal year. (b) This credit shall be allowed only if the taxpayer furnishes evidence satisfactory to the Commissioner showing the amount of income derived from sources within such for- eign country or such possession of the United States, as the case may be, and all other information necessary for the computation of such credit. (c) If a domestic corporation makes a return for a fiscal year beginning in 1917 and ending in 1918, only that propor- tion of this credit shall be allowed which the part of such period within the calendar year 1918 bears to the entire period. Corporation Returns Sec. 239. That every corporation subject to taxation under this title and every personal service corporation shall make a return, stating specifically the items of its gross in- come and the deductions and credits allowed by this title. The return shall be sworn to by the president, vice-president, or other principal officer and by the treasurer or assistant treasurer. If any foreign corporation has no office or place of business in the United States but has an agent in the United States, the return shall be made by the agent. In cases where receivers, trustees in bankruptcy, or assignees are operating the property or business of corporations, such receivers, trustees, or as- signees shall make returns for such corporations in the same manner and form as corporations are required to make returns. Any tax due on the basis of such returns made by receivers, trustees, or assignees shall be collected in the same manner as if collected from the corporations of whose business or property they have custody and contr®l. 174. Corporations t o make returns sworn to by proper officers. Agents for foreign corporations. Receivers, trustees or assignees to make returns and pay tax. 175. Returns made under this section shall be subject to the provisions of Sections 226 (par. 119-126) and 228 {par. 123). 176. Returns when ac- counting period changed. bears to twelve months. Whqn return is made under Section 226 {par. 119-120 ) the credit provided in subdivision (c) of Section 236 {par. 168 ) shall be reduced to an amount which bears the same ratio to the full credit therein provided as the num- ber of months in the period for which such return is made Consolidated Returns 177. Sec. 240. (a) That corporations which are affiliated Consolidated re- within the meaning of this section shall, under regulations turns by affiliated to be prescribed by the Commissioner with the approval corporations. of the Secretary, make a consolidated return of net income and invested capital for the purposes of this title and Title III, and the taxes thereunder shall be computed and determined upon the basis of such return: Provided, That there shall be taken out of such consoli- dated net income and invested capital, the net income and invested capital of any such affiliated corporation organized after August 1, 1914, and not successor to a then existing business, 50 per centum or more of whose gross income consists of Z7 gains, profits, commissions, or other income, derived from a Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclu- sive. In such case the corporation so taken out shall be separately assessed on the basis of its own invested capital and net income and the remainder of such affiliated group shall be assessed on the basis of the remaining consolidated invested capital and net income. In any case in which a tax is assessed upon the basis of a consolidated return, the total tax shall be computed in the first instance as a unit and shall then be assessed upon the respective affiliated corporations in such propor- tions as may be agreed upon among them, or, in the absence of any such agreement, then on the basis of the net income properly assignable to each. There shall be allowed in computing the income tax only one specific credit of $2,000 (as pro- vided in Section 236) (par. 168 ) ; in computing the war-profits credit (as provided in Section 311) (par. 232-242 ) only one specific exemption of $3,000; and in com- puting the excess-profits credit (as provided in Section 312) (par. 243 ) only one specific exemption of $3,000. 178. Total tax computed as a unit and assessed upon respective corp. One specific credit or exemption allowed. (b) For the purpose of this section two or more deemed af domestic corporations shall be deemed to be affiliated (1) if one corporation owns directly or controls through closely affiliated interests or by a nominee or nominees substan- tially all the stock of the other or others, or (2) if substantially all the stock of two or more corporations is owned or controlled by the same interests. 179. When filiated. (c) For the purposes of Section 238 (par. 170 - 173 ) a domestic corporation which owns a majority of the voting stock of a foreign corporation shall be deemed to have paid the same proportion of any income, war-profits and excess-profits taxes paid (but not including taxes accrued) by such foreign corporation during the taxable year to any foreign country or to any possession of the United States upon income derived from sources without the United States, which the amount of any dividends (not deductible under Section 234) (par. 154 ) received by such domestic corporation from such foreign corporation during the taxable year bears to the total taxable income of such foreign corporation upon or with respect to which such taxes were paid: Provided, That in no such case shall the amount of the credit for such taxes exceed the amount of such dividends (not deductible under Section 234) (par. 154 ) received by such domestic corporation during the taxable year. 180. Credit for foreign paid taxes. Not to exceed dividends re- ceived. Time and Place for Filing Returns 181. Sec. 241. (a) That returns of corporations shall be made at the same time as is provided in subdivision (a) of Section 227 (par. 121 ). 182. (b) Returns shall be made to the collector of the district in which is located the principal place of business or principal office or agency of the cor- poration, or, if it has no principal place of business or principal office or agency in the United States, then to the collector at Baltimore, Maryland. PART IV.— ADMINISTRATIVE PROVISIONS 183. Except as to pay- ment of tax at source, tax to be paid in four installments. Payment of Taxes Sec. 250. (a) That except as otherwise provided in this section and Sections 221 (par. 102 - 106 ) and 237 (par. 169 ) the tax shall be paid in four installments, each consisting of one-fourth of the total amount of the tax. The first installment shall be paid at the time fixed by law for filing the return, and the second installment shall be paid on the fifteenth day of the third month, the third installment on the fifteenth day of the sixth month, and the fourth installment on the fifteenth day of the ninth month, after the time fixed by law for filing the return. Where an exten- sion of time for filing a return is granted the time for payment of the first install- ment shall be postponed until the date of the expiration of the period of the exten- sion, but the time for payment of the other installments shall not be postponed unless the Commissioner so provides in granting the extension. In any case in which the time for the payment of any installment is at the reques of the tax- 28 payer thus postponed, there shall be added as part of such installment interest thereon at the rate of of 1 per centum per month from the time it would have been due if no extension had been granted, until paid. If any installment is not paid when due, the whole amount of the tax unpaid shall become due and payable upon notice and demand by the collector. lg4 The tax may at the option of the taxpayer be paid in 1 q. * . „ a single payment instead of in installments, in which case dingle payment at t ^ e total amount shall be paid on or before the time fixed option ot taxpayer. by j aw f or ^jj n g t he re turn, or, where an extension of time for filing the return has been granted, on or before the expiration of the period (b) As soon as practicable after the return is filed, the Commissioner shall examine it. If it then appears that the correct amount of the tax is greater or less than that shown in the return, the installments shall be recomputed. If the amount already paid exceeds that which should have been paid on the basis of the installments as recomputed, the excess so paid shall be credited against the subsequent installments; and if the amount already paid exceeds the correct amount of the tax, the excess shall be credited or refunded to the taxpayer in accordance with the provisions of Section 252 (par. 195 ). of such extension. 185. Returns examined and adjustment of taxes made if neces- sary. 186. If amount paid is less than due, bal- ance to be paid upon notice. Penalty for understatement due to negligence. If the amount already paid is less than that which should have been paid, the difference shall, to the extent not covered by any credits then due to the taxpayer under Section 252 (par. 195), be paid upon notice and demand by the collector. In such case if the return is made in good faith and the understatement of the amount in the return is not due to any fault of the taxpayer, there shall be no penalty because of such understatement. If the under- statement is due to negligence on the part of the taxpayer, but without intent to defraud, there shall be added as part of the tax 5 per centum of the total amount of the deficiency, plus interest at the rate of 1 per centum per month on the amount of the deficiency of each installment from the time the installment was due. If the understatement is false or fraudulent with intent to evade the tax, then, in lieu of the penalty provided by * Section 3176 of the Revised Statutes (par. 675 ), as amended, u ae statement. for f a j se or f rau dulent returns willfully made, but in addi- tion to other penalties provided by law for false or fraudulent returns, there shall be added as part of the tax 50 per centum of the amount of the deficiency. (c) If the return is made pursuant to section 3176 of the Revised Statutes (par. 673 - 676 ) as amended, the amount of tax determined to be due under such return shall be paid upon notice and demand by the collector. (d) Except in the case of false or fraudulent returns with intent to evade the tax, the amount of tax due under any return shall be determined and assessed by the Com- missioner within five years after the return was due or was made, and no suit or proceeding for the collection of any tax shall be begun after the expiration of five years after the date when the return was due or was made. In the case of such false or fraudulent returns, the amount of tax due may be determined at any time after the return is filed, and the tax may be collected at any time after it becomes due. jqq (e) If any tax remains unpaid after the date when it is Penalties for un due, an< * * or ten days a ^ ter notice and demand by the col- naid ta es " ^ ector » then, except in the case of estates of insane, p x * deceased, or insolvent persons, there shall be added as part of the tax the sum of 5 per centum on the amount due but unpaid, plus interest at the rate of 1 per centum per month upon such amount from the time it became due: Provided, That as to any such amount which is the subject of a bona fide claim for abatement such sum of 5 per centum shall not be added and the interest from the time the amount was due until the claim is decided shall be at the rate of l / 2 of 1 per centum per month. 188. Returns made by collectors. 189. Proceedings for col- lection of taxes to be made within 5 years. 29 191 . Instructions on re- turn sufficient notice and demand. sufficient notice of the amount due. In the ease of the first installment provided for in Sub-division (a) (par. 183 ) the instructions printed on the return shall be deemed sufficient notice of the date when the tax is due and sufficient demand, and the taxpayer’s computation of the tax on the return shall be deemed 192. If warrant of dis- traint served. (f) In any case in which in order to enforce payment of a tax it is necessary for a collector to cause a warrant of distraint to be served, there shall also be added as part of the tax the sum of $5. 193. Where taxpayer designs to evade the tax by sudden de- parture from U. S. or removal or conceal- ment of his property, Commissioner to take summary proceedings for its collection. (g) If the Commissioner finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his prop- erty therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the tax for the taxable year then last past or the taxable year then current unless such proceedings be brought without delay, the Commissioner shall declare the taxable period for such taxpayer terminated at the end of the calendar month then last past and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of said tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall thereupon become immediately due and payable. In any action or suit brought to enforce payment of taxes made due and payable by virtue of the provisions of this subdivision the finding of the Commissioner, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of the taxpayer’s design. A taxpayer who is not in default in making any return or paying income, war-profits, or excess-profits tax under any Act of Congress may furnish to the United States, under regulations to be prescribed by the Commissioner with the approval of the Secretary, security approved by the Commissioner that he will duly make the return next there- after required to be filed and pay the tax next thereafter required to be paid. The Commissioner may approve and accept in like manner security for return and payment of taxes made due and payable by virtue of the provisions of this subdivision, provided the taxpayer has paid in full all other income, war-profits, or excess-profits taxes due from him under any Act of Congress. If security is approved and accepted pursuant to the provisions of this subdivision and such further or other security with respect to the tax or taxes covered thereby is given as the Commissioner shall from time to time find necessary and require, payment of such taxes shall not be enforced by any proceedings under the provisions of this subdivision prior to the expiration of the time otherwise allowed for paying such respective taxes. Receipts for Taxes Sec. 251. That every collector to whom any pay- ment of any tax is made under the provisions of this title shall upon request give to the person making such payment a full written or printed receipt, stating the amount paid and the particular account for which such payment was made; and whenever any debtor pays taxes on account of payments made or to be made by him to separate creditors the collector shall, if requested by such debtor, give a separate receipt for the tax paid on account of each creditor in such form that the debtor can con- veniently produce such receipts separately to his several creditors in satisfaction of their respective demands up to the amounts stated in the receipts; and such receipt shall be sufficient evidence in favor of such debtor to justify him in withholding from his next payment to his creditor the amount therein stated; but the creditor may, upon giving to his debtor a full written receipt acknowledging the payment to him of any sum actually paid and accepting the amount of tax paid as aforesaid (specifying the same) as a further satisfaction of the debt to that amount, require the surrender to him of such collector’s receipt. JO 194. Collector upon re- quest to give receipt for taxes and sep- arate receipt for each creditor, which suf- ficient evidence to withhold amount from next payment to creditor. m. Refunds of any re- turn of income, ex- cess or war profits taxes paid in excess of those due, if claim made within 5 years. Rmmcs Sec. 252. That if, upon examination of any retufii ot income made pursuant to this Act, the Act of August 5, 1909, entitled “An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,” the Act of October 3, 1913, entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” the Reve- nue Act of 1916, as amended, or the Revenue Act of 1917, it appears that an amount of income, war-profits or excess-profits tax has been paid in excess of that properly due, then, notwithstanding the provisions of Section 3228 of the Revised Statutes, the amount of the excess shall be credited against any income, war-profits or excess-profits taxes, or installment thereof, then due from the taxpayer under any other return, and any balance of such excess shall be immediately refunded to the taxpayer: Provided, That no such credit or refund shall be allowed or made after five years from the date when the return was due, unless before the expiration of such five years a claim therefor is filed by the taxpayer. Penalties Sec. 253. That any individual, corporation, or part- nership required under this title to pay or collect any tax, to make a return or to supply information, who fails to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, shall be liable to a penalty of not more than $1,000. Any individual, corporation, or partnership, or any officer or employee of any corporation or member or employee of a partnership, who willfully refuses to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, or who willfully attempts in any manner to defeat or evade the tax imposed by this title, shall be guilty of a misdemeanor and shall be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution. 196. Failure or refusal to pay or collect tax, make return or sup- ply information. Returns of Payments of Dividends 197. Sec. 254. That every corporation subject to the tax imposed by this title and every personal service corporation shall, when required by the Commissioner, render a correct return duly verified under oath, of its payments of dividends, stating the name and address of each stockholder, the number of shares owned by him, and the amount of dividends paid to him. Returns of Brokers Sec. 255. That every individual, corporation, or part- nership doing business as a broker shall, when required by the Commissioner, render a correct return duly veri- fied under oath, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe, showing the names of customers for whom such individual, corporation, or partnership has transacted any business, with such details as to the profits, losses, or other information which the Com- missioner may require, as to each of such customers, as will enable the Com- missioner to determine whether all income tax due on profits or gains of such customers has been paid. Information at Source Sec. 256. That all individuals, corporations, and part- nerships, in whatever capacity acting, including lessees or mortgagors of real or personal property, fiduciaries, and employers, making payment to another individual, cor- poration, or partnership, of interest, rent, salaries, wages, premiums, annuities, compensations, remunerations, emolu- ments, or other fixed, or determinable gains, profits, and income (other than paym'ents described in Sections 254 and 255 {par. 197-198), of $1,000 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such n 199. Persons making payments of fixed or determinable gains, profits and income of $1,000 or more to make returns to Com- missioner setting forth details thereof. 198. Brokers returns showing names of customers, and de- tailed information. payments and required to make returns in regard thereto by the regulations hereinafter provided for, shall render a true and accurate return to the Com- missioner, under such regulations and in such form and manner and to such extent as may be prescribed by him with the approval of the Secretary, setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment. Such returns may be required, regardless of amounts, (1) in the case of payments of interest upon bonds, mortgages, deeds of trust, or other similar obligations of corporations, and (2) in the case of collections of items (not payable in the United States) of interest upon the bonds of foreign countries and interest upon the bonds of and dividends from foreign corporations by individuals, corporations, or partnerships, undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange. 200 . Regardless of amount returns may be required of pay- ments of interest on corporations’ obliga- tions and collection of foreign items. 201 . Names and ad- dresses may be de- manded. When necessary to make effective the provisions of this section the name and address of the recipient of income shall be furnished upon demand of the individual, corporation, or partnership paying the income. 202 . Obligations of U. S. not affected. The provisions of this section shall apply to the calen- dar year 1918 and each calendar year thereafter, but shall not apply to the payment of interest on obligations of the United States. 203. Open to inspection only on order of President. State of- ficials by request of Governor. Bona fide stockholders. Penalty for dis- closures. Returns to be Public Records Sec. 257. That returns upon which the tax has been determined by the Commissioner shall constitute public records; but they shall be open to inspection only upon order of the President and under rules and regulations prescribed by the Secretary and approved by the Presi- dent: Provided, That the proper officers of any State imposing an income tax may, upon the request of the governor thereof, have access to the returns of any cor- poration, or to an abstract thereof showing the name and income of the corporation, at such times and in such manner as the Secretary may prescribe: Provided further, That all bona fide stockholders of record owning 1 per centum or more of the outstanding stock of any corporation shall, upon making request of the Commissioner, be allowed to examine the annual income returns of such corporation and of its sub- sidiaries. Any stockholder who pursuant to the provisions of this section is allowed to examine the return of any corporation, and who makes known in any manner whatever not provided by law the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any such return, shall be guilty of a misdemeanor and be punished by a fine not exceeding $1,000, or by imprisonment not exceeding one year, or both. 204 The Commissioner shall as soon as practicable in each Z T ‘ f f • j- -j 1 year cause to be prepared and made available to public .Lusts ot individuals i nspec ti 0 n in such manner as he may determine, in the maKing returns. office of the collector in each Internal-Revenue District and in such other places as he may determine, lists containing the names and the post-office addresses of all individuals making income-tax returns in such district. Publication of Statistics 205. Sec. 258. That the Commissioner, with the approval Statistics to be pub- of the Secretary, shall prepare and publish annually sta- lished annually. tistics reasonably available with respect to the operation of the income, war-profits and excess-profits tax laws, including classifications of taxpayers and of income, the amounts allowed as deductions, exemptions, and credits, and any other facts deemed pertinent and valuable. 32 206. Licenses required for collection of foreign payments of interest or dividends. Collection op Foreign Items Sec. 259. That all individuals, corporations, or part- nerships undertaking as a matter of business or for profit the collection of foreign payments of interest or dividends by means of coupons, checks, or bills of exchange shall obtain a license from the Commissioner and shall be sub- ject to such regulations enabling the Government to obtain the information required under this title as the' Commissioner, with the approval of the Secretary, shall prescribe; and whoever knowingly undertakes to collect such payments without having obtained a license therefor, or without complying with such regulations, shall be guilty of a misdemeanor and shall be fined not more than $5,000, or imprisoned for not more than one year, or both. Citizens of United States Possessions 207. Sec. 260. That any individual who is a citizen of any Taxed on income possession of the United States (but not otherwise a citi- from sources in U. S. zen of the United States) and who is not a resident of the United States, shall be subject to taxation under this title only as to income derived from sources within the United States, and in such case the tax shall be computed and paid in the same manner and subject to the same conditions as in the case of other persons who are taxable only as to income derived from such sources. 208. Act of 1916 as amended applies. Porto Rico and Philippine Islands Sec. 261. That in Porto Rico and the Philippine Islands the income tax shall be levied, assessed, collected, and paid in accordance with the provisions of the Revenue Act of 1916 as amended. 209. Returns shall be made and taxes shall be paid under Returns made and Title I of such Act in Porto Rico or the Philippine Islands, taxes paid in P. R. as the case may be, by (1) every individual who is a citi- & P. I. zen or resident of Porto Rico or the Philippine Islands or derives income from sources therein, and (2) every cor- poration created or organized in Porto Rico or the Philippine Islands or deriving income from sources therein. $.n individual who is neither a citizen nor a resi- dent of Porto Rico or the Philippine Islands but derives income from sources therein, shall be taxed in Porto Rico or the Philippine Islands as a nonresident alien individual, and a corporation created or organized outside Porto Rico or the Philippine Islands and deriving income from sources therein shall be taxed in Porto Rico or the Philippine Islands as a foreign corporation. For the pur- poses of Section 216 (par. 80-85), and of paragraph (6) of subdivision (a) of Sec- tion 234 (par. 154 ), a tax imposed in Porto Rico or the Philippine Islands upon the net income of a corporation shall not be deemed to be a tax under this title. The Porto Rican or Philippine Legislature shall have power by due enactment to amend, alter, modify, or repeal the income tax laws in force in Porto Rico or the Philip- pine Islands, respectively. 210 . Power of respective legislature^ TITLE III.— WAR-PROFITS AND EXCESS-PROFITS TAX PART I.— GENERAL DEFINITIONS 211. Sec. 300. That when used in this title the terms Definitions same as “taxable year,” “fiscal year,” “personal service corpora- fcr income tax pur- tion,” “paid or accrued,” and “dividends” shall have the poses. same meaning as provided for the purposes of income tax in Sections 200 and 201 (par. 16, 19-21). The first taxable year for the purposes of this title shall be the same as the first taxable year for the purposes of the income tax under Title II. PART II.— IMPOSITION OF TAX 212. Sec. 301. (a) That in lieu of the tax imposed by Title Tax in addition to II of the Revenue Act of 1917*, but in addition to the *The following rates applied on amount of net income of every corporation, partnership or indi- vidual in excess of deduction allowed and not in excess of 15% of invested capital for taxable year, 20%; in excess of 15% and not over 20%, 25%; in excess of 20% and not over 25%, 35%; in excess of 25% and not over 33%, 45%; and in excess of 33% of such invested capital, 60%. In case of trade or business, including professions and occupations, having no invested capital or only a nominal capital, 8% on amount of net income in excess of deduction allowed. 33 other taxes. Rates other taxes imposed by this Act, there shall be levied, col- for taxable year lected, and paid for the taxable year 1918 upon the net 1918 — sum of income of every corporation a tax equal to the sum of the following: First Bracket 213. 30 per centum of the amount of the net income in excess of the excess- profits credit (determined under Section 312) {par. 243 - 244 ) and not in excess of 20 per centum of the invested capital; Second Bracket 214. 65 per centum of the amount of the net income in excess of 20 per centum of the invested capital; Third Bracket 215. The sum, if any, by which 80 per centum of the amount of the net income in excess of the war-profits credit (determined under Section 311) {par. 232 - 242 ) exceeds the amount of the tax computed under the first and second brackets. (b) For the taxable year 1919 and each taxable year thereafter there shall be levied, collected, and paid upon the net income of every corporation (except corporations taxable under subdivision (c) {par. 219 - 222 ) of this section) a tax equal to the sum of the following: 216. Rates for taxable year 1919 and there- after — sum of First Bracket 217. 20 per centum of the amount of the net income in excess of the excess- profits credit (determined under Section 312) {par. 243 - 244 ) and not in excess of 20 per centum of the invested capital : Second Bracket 218. 40 per centum of the amount of the net income in excess of 20 per centum of the invested capital. 219. Where net income over $10,000, from any government con- tract or contracts made between 4-6-17 and 11-11-18. 220 . Rates on income attributable to such contracts. 221 . Rates on other in- come. (c) For the taxable year 1919 and each taxable year thereafter there shall be levied, collected, and paid upon the net income of every corporation which derives in such year a net income of more than $10,000 from any Govern- ment contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive, a tax equal to the sum of the following: (1) Such a portion of a tax computed at the rates specified in subdivision (a) {par. 212 - 213 ) as the part of the net income attributable to such Government contract or contracts bears to the entire net income. In computing such tax the excess-profits credit and the war-profits credit applicable to the taxable year shall be used; (2) Such a portion of a tax computed at the rates specified in subdivision (b) {par. 216 - 218 ) as the part of the net income not attributable to such Government contract or contracts bears to the entire net income. For the purpose of determining the part of the net income attributable to such Government contract or con- tracts, the proper apportionment and allocation of the deductions with respect to gross income derived from such Government contract or contracts and from other sources, respectively, shall be determined under rules and regula- tions prescribed by the Commissioner with the approval of the Secretary. (d) In any case where the full amount of the excess- n r profits credit is not allowed under the first bracket of sub- ull amount ot division ( a j or (b) {par. 213 , 217 ), by reason of the fact that such credit is in excess of 20 per centum of the the part not so allowed shall be deducted from the amount in the 222 . Determination o f net income attrib- utable to such con- tracts. credit allowed. invested capital, second bracket. der (e) For the purposes of the Act approved March 21, 1918, entitled “An Act to provide for the operation of transportation systems while under Federal control, for the just compensation of their owners and for other pur- poses,” the tax imposed by this title shall be treated as levied by an Act in amend- ment of Title II of the Revenue Act of 1917. 224. Railroads u n Federal Control. 34 225. Tax in no case to exceed specified per- centages of net in- come. Sec. 302. That the tax imposed by subdivision (a) of Section 301 (par. 213-215) shall in no case be more than 30 per centum of the amount of the net income in excess of $3,000 and not in excess of $20,000, plus 80 per centum of the amount of the net income in excess of $20,000; the tax imposed by subdivision (b) of Section 301 (par. 216- 218 ) shall in no case be more than 20 per centum of the amount of the net income in excess of $3,000 and not in excess of $20,000, plus 40 per centum of the amount of the net income in excess of $20,000; and the above limitations shall apply to the taxes computed under subdivisions (a) and (b) of Section 301 (par. 212-218), respectively, when used in subdivision (c) (par. 219-222) of that section. Nothing in this section shall be construed in such manner as to increase the tax imposed by Section 301 (par. 212-224). Sec. 303. That if part of the net income of a corpora- tion is derived (1) from a trade or business (or a branch of a trade or business) in which the employment of capita! is necessary, and (2) a part (constituting not less than 30 per centum of its total net income) is derived from a sep- arate trade or business (or a distinctly separate branch of the trade or business) which if constituting the sole trade or business would bring it within the class of “personal service corporations,” then (under regulations prescribed by the Commissioner with the approval of the Secretary) the tax upon the first part of such net income shall be separately computed (allow- ing in such computation only the same proportionate part of the credits authorized in Sections 311 and 312 (par. 232-244), and the tax upon the second part shall be the same percentage thereof as the tax so computed upon the first part is of such first part: Provided , That the tax upon such second part shall in no case be less than 20 per centum thereof, unless the tax upon the entire net income, if com- puted without benefit of this section, would constitute less than 20 per centum of such entire net income, in which event the tax shall be determined upon the entire net income, without reference to this section, as other taxes are deter- mined under this title. The total tax computed under this section shall be subject to the limitations provided in Section 302 (par. 225). Sec. 304 . (a) That the corporations enumerated in Section 231 (par. 128-142) shall, to the extent that they are exempt from income tax under Title II, be exempt from taxation under this title. (b) Any corporation whose net income for the taxable year is less than $3,000 shall be exempt from taxation under this title. 226 . Computation if part of net income derived from business where capital is necessary, and part from sep- arate business within class of “personal service corporation.” 227 . Corporations empt. ex- 223 . Net income of less than $3,000. cor- (d) In the case of any corporation engaged in the mining of gold, the portion of the net income derived from the mining of gold shall be exempt from the tax imposed by this title, and the tax on the remaining portion of the net income shall be the proportion of a tax computed without the benefit of this subdivision which such remaining portion of the net income bears to the entire net income. 229 . Gold mining poration. 230 . Exemption propor- tioned for less than a year. months. . Sec. 305. That if a tax is computed under this title for a period of less than twelve months, the specific exemption of $3,000, wherever referred to in this title, shall be reduced to an amount which is the same proportion of $3,000 as the number of months in the period is of twelve PART III.— CREDITS 231 . Sec. 310. That as used in this title the term “prewar Definition of “pre- period” means the calendar years 1911, 1912, and 1913, or, war period.” if a corporation was not in existence during the whole of such period, then as many of such years during the whole of which the corporation was in existence. 232 . Sec. 311 . (a) That the war-profits credit shall consist War-profits credit, of the sum of: 233 . ( 1 ) A specific exemption of $3,000; and Specific Exemption. 35 234. Average iiet income for prewar period, plus or minus 10% of difference between in- vested capitals of re- spective periods. 235. Where no net in- c o m e for prewar period, etc. (2) An amount equal to the average net income of the corporation for the prewar period plus or minus, as the case may be, 10 per centum of the difference between the average invested capital for the prewar period and the invested capital for the taxable year. If the tax is com- puted for a period of less than twelve months such amount shall be reduced to the same proportion thereof as the number of months in the period is of twelve months. (b) If the corporation had no net income for the pre- war period, or if the amount computed under paragraph (2) of subdivision (a) {par. 234) is less than 10 per centum of its invested capital for the taxable year, then the war- profits credit shall be the sum of: 236. Specific exemption. 237. 10% of invested capital. 238. When not in exist- ence in prewar period. (1) A specific exemption of $3,000; and (2) An amount equal to 10 per centum of the invested capital for the taxable year. (c) If the corporation was not in existence during the whole of at least one calendar year during the prewar period, then, except as provided in subdivision (d), {par. 241 ) the war-profits credit shall be the sum of ; (1) A specific exemption of $3,000; and (2) An amount equal to the same percentage of the in- vested capital of the taxpayer for the taxable year as the average 'percentage of net income to invested capital, for the prewar period, of corporations engaged in a trade or business of the same general class as that conducted by the taxpayer ; but such amount shall in no case be less than 10 per centum of the invested capital of the taxpayer for the taxable year. Such average percentage shall be determined by the Commissioner on the basis of data contained in returns made under Title II of the Revenue Act of 1917, and the average known as the median shall be used. If such average percentage has not been determined and published at least 30 days prior to the time when the return of the taxpayer is due, then for purposes of such return 10 per centum shall be used in lieu thereof ; but such average percentage when determined shall be used for the purposes of Section 250 {par. 183-193) in determining the correct amount of the tax. 239. Specific exemption. 240. Same percentage as corporations in same general class. (d) The war-profits credit shall be determined in the manner provided in subdivision (b) {par. 235-237) instead of in the manner provided in subdivision (c) {par. 238-240) in the case of any corporation which was not in existence during the whole of at least one calendar year during the prewar period, if (1) a majority of its stock at any time during the taxable year is owned or controlled, directly or indirectly, by a corporation which was in existence during the whole of at least one calendar year during the prewar period, or if (2) 50 per centum or more of its gross income (as computed under Section 233 {par. 144- 147) for income tax purposes) consists of gains, profits, commissions, or other income, derived from a government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive. 241. Manner o f deter- mining war-profits credit of certain cor- porations not in ex- istence one year dur- ing prewar period. 242. Foreign tion. corpora- (e) A foreign corporation shall not be entitled to a specific exemption of $3,000. 243. Excess profits credit. 244. Foreign corpora- tion. Sec. 312. That the excess-profits credit shall consist of a specific exemption of $3,000 plus an amount equal to 8 per centum of the invested capital for the taxable year. A foreign corporation shall not be entitled to the specific exemption of $3,000. PART IV.— NET INCOME 245. Net income. Sec. 320. (a) That for the purpose of this title the net income of a corporation shall be ascertained and returned— 36 246. (1) For the calendar shears 1911 and 1912 upon the same Calendar years 1911 basis and in the same manner as provided in Section 38 of and 1912 as returned, the Act entitled “An Act to provide revenue, equalize duties, except taxes included, and encourage the industries of the United States, and for other purposes,” approved August 5, 1909, except that taxes imposed by such section and paid by the corporation within the year shall be included ; (2) For the calendar year 1913 upon the same basis and in the same manner as provided in Section II of the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” ap- proved October 3, 1913, except that taxes imposed by Section 38 of such Act of August 5, 1909, and paid by the corporation within the year shall be included, and except that the amounts received by it as dividends upon the stock or from the net earnings of other corporations subject to the tax imposed by Section II of such Act of October 3, 1913, shall be deducted; and 248. (3) For the taxable year upon the same basis and in Taxable year. the same manner as provided for income tax purposes in Title II of this Act. 247. Calendar year 1913 as returned, except taxes included and dividends or earnings of other corporations deducted. 249. (b) The average net income for the prewar period shall How average net be determined by dividing the number of years within that income for prewar period during the whole of which the corporation was in period determined. existence into the sum of the net income for such years, even though there may have been no net income for one or more of such years. PART V.— INVESTED CAPITAL Definitions. 250. “Intangible prop- erty.” 251. “Tangible prop- erty.” 252. “Borrowed capital.” Sec. 325 . (a) That as used in this title — The term “intangible property” means patents, copyrights, secret processes and formulae, good will, trade-marks, trade- brands, franchises, and other like property; The term “tangible property” means stocks, bonds, notes, and other evidences of indebtedness, bills and accounts receiv- able, leaseholds, and other property other than intangible property ; The term “borrowed capital” means money or other property borrowed, whether represented by bonds, notes, open accounts, or otherwise; 253. The term “inadmissible assets” means stocks, bonds, and “Inadmissible as- other obligations (other than obligations of the United sets.” States), the dividends or interest from which is not included in computing net income, but where the income derived from such assets consists in part of gain or profit derived from the sale or other disposition thereof, or where all or part of the interest derived from such assets is in effect included in the net income because of the limitation on the deduction of interest under paragraph (2) of subdivision (a) of Section 234 (par. 750), a corresponding part of the capital invested in such assets shall not be deemed to be inadmissible assets ; The term “admissible assets” means all assets other “Admissible assets.” than inadmissible assets, valued in accordance with the pro- visions of subdivision (a) of Section 326 (par. 255-266), Section 330 (par. 275-278), and Section 331 (par. 279). (b) For the purposes of this title, the par value of stock or shares shall, in the case of stock or shares issued at a nominal value or having no par value, be deemed to be the fair market value as of the date or dates of issue of such stock or shares. 254. Constructive par value of stock or shares. 255. “Invested capital.” 256. Cash paid in. 257. Cash value of tangible property. Sec. 326. (a) That as used in this title the term “invested capital” for any year means (except as provided in sub- divisions (b) and (c) (par. 261-262 ) of this section) : (1) Actual cash bona fide paid in for stock or shares; (2) Actual cash value of tangible property, other than cash, bona fide paid in for stock or shares, at the time of such payment, but in no case to exceed the par value of the original stock or shares specifically issued therefor, unless 37 the actual cash value of such tangible property at the time paid in is shown to the satisfaction of the Commissioner to have been clearly and substantially in excess of such par value, in which case such excess shall be treated as paid-in surplus : Provided, That the Commissioner shall keep a record of all cases in which tangible property is included in invested capital at a value in excess of the stock or shares issued therefor, containing the name and address of each taxpayer, the business in which engaged, the amount of invested capital and net income shown by the return, the value of the tangible property at the time paid in, the par value of the stock or shares specifically issued therefor, and the amount included under this paragraph as paid-in surplus. The Commissioner shall furnish a copy of such rgcord and other detailed information with respect to such cases when required by resolution of either house of Congress, without regard to the restrictions contained in Section 257 (par. 203-204). (3) Paid-in or earned surplus and undivided profits; not including surplus and undivided profits earned during the year ; (4) Intangible property bona fide paid in for stock or shares prior to March 3, 1917, in an amount not exceeding (a) the actual cash value of such property at the time paid in, (b) the par value of the stock or shares issued therefor, or (c) in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding on March 3, 1917, whichever is lowest; (5) Intangible property bona fide paid in for stock or shares on or after March 3, 1917, in an amount not exceeding (a) the actual cash value of such property at the time paid in, (b) the par value of the stock or shares issued therefor, or (c) in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding at the beginning of the taxable year, whichever is lowest : Provided, that in no case shall the total amount included under paragraphs (4) and (5) (par. 239-260), exceed in the aggregate 25 per centum of the par value of the total stock or shares of the corporation outstanding at the beginning of the taxable year ; but 258. Surplus and un- divided profits. 259. Intangible proper- ty paid in for stock or shares prior to 3-3-17. 260. On or after 3-3-17. Limitation on total amount intangible property. 261. Borrowed capital not included. (b) As used in this title the term “invested capital’ not include borrowed capital. does 262. Deduction from in- vested capital. (c) There shall be deducted from invested capital as above defined a percentage thereof equal to the percentage which the amount of inadmissible assets is of the amount of admissible and inadmissible assets held during the taxable year. (d) The invested capital for any period shall be the o f average invested capital for such period, but in the case of a corporation making a return for a fractional part of a year, it shall (except for the purpose of paragraph (2) of subdivision (a) of Section 311) (par. 234) be the same fractional part of such average invested capital. . The average invested capital for the prewar period shall , be determined by dividing the number of years within that * or prewar perio . p er j 0( j d ur ing the whole of which the corporation was in existence into the sum of the average invested capital for such years. 263. Determination invested capital. 265. Cases where — 266. Invested capital undetermined. Sec. 327. That in the following cases the tax shall be determined as provided in Section 328 (par. 270-274) ; (a) Where the Commissioner is unable to determine the invested capital as provided in Section 326 (par. 233-264) ; 267. Foreign cor- poration. 268. Commissioner un- a b 1 e to determine necessary informa- tion. (b) In the case of a foreign corporation; (c) Where a mixed aggregate of tangible property and intangible property has been paid in for stock or for stock and bonds and the Commissioner is unable satisfactorily to determine the respective values of the several classes of property at the time of payment, or to distinguish the classes of property paid in for stock and for bonds, respectively; 38 269. Tax determined without this section would work hardship, except where due to high rate of profits or where 50% or more of gross income derived on cost-plus basis from govern- ment contracts, etc. (d) Where upon application by the corporation the Com- missioner finds and so declares of record that the tax if determined without benefit of this section would, owing to abnormal conditions affecting the capital or income of the corporation, work upon the corporation an exceptional hard- ship evidenced by gross disproportion between the tax com- puted without benefit of this section and the tax computed by reference to the representative corporations specified in Section 328 {par. 270 - 272 ). This subdivision shall not apply to any case (1) in which the tax (computed without benefit of this section) is high merely because the corporation earned within the taxable year a high rate of profits upon a normal invested capital nor (2) in which 50 per centum or more of the gross income of the corporation for the taxable year (computed under Section 233 of Title II) {par. 144 - 147 ) consists of gains, profits, commissions, or other income, derived on a cost- plus basis from a Government contract or' contracts made between April 6, 1917, and November 11, 1918, both dates inclusive. Sec. 328. (a) In the cases specified in Section 327 {par. 266 - 269 ) the tax shall be the amount which bears the same ratio to the net income of the taxpayer (in excess of the specific exemption of $3,000) for the taxable year, as the average tax of representative corporations engaged in a like or similar trade or business, bears to their average net income (in excess of the specific exemption of $3,000) for such year. In the case of a foreign corporation the tax shall be computed without deducting the specific exemption of $3,000 either for the taxpayer or the representative corporations. In computing the tax under this section the Commissioner shall compare the taxpayer only with representative cor- 270. Tax to bear same ratio to net income as average tax of like corporations. 271. Commissioner to compare only with representative cor- porations similar- porations whose invested capital can be satisfactorily deter- mined under Section 326 {par. 255 - 262 ) and which are, as nearly as may be, similarly circumstanced with respect to 1 r ; rr nnict 9 nr<*H gross income, net income, profits per unit of business trans- y * acted and capital employed, the amount and rate of war- profits or excess-profits, and all other relevant facts and circumstances. (b) For the purposes of subdivision (a) the ratios be- P , • tween the average tax and the average net income of repre- . rnmmiceinnpr sentative corporations shall be determined by the Commis- y * sioner in accordance with regulations prescribed by him with the approval of the Secretary. In cases in which the tax is to be computed under this section, if the tax as computed without the benefit of this section is less than 50 per centum of the net income of the taxpayer, the installments shall in the first instance be com- puted upon the basis of such tax; but if the tax so computed is 50 per centum or more of the net income, the installments shall in the first instance be computed upon the basis of a tax equal to 50 per centum of the net income. In any case, the actual ratio when ascertained shall be used in determining the correct, amount of the tax. If the correct amount of the tax when determined exceeds 50 per centum of the net income, any excess of the correct installments over the amounts actually paid shall on notice and demand be paid together with interest at the rate of 54 of 1 per centum per month on such excess from the time the installment was due. (c) The Commissioner shall keep a record of all cases in which the tax is determined in the manner prescribed in subdivision (a) {par. 270 - 271 ), containing the name and address of each taxpayer, the business in which engaged, the amount of invested capital and net income shown by the return, and the amount of invested capital as determined under such subdivision. The Commissioner shall furnish a copy of such record and other detailed information with respect to such cases when required by resolution of either House of Congress, without regard to the restrictions contained in Section 257 {par. 203 ). 39 273. Method of deter- mining installment in first instance. Actual ratio used t o de- t ermine correct amount of tax. In- terest o n excess o f correct installments. 274. Complete record to be kept where tax so determined. 275. Reorganiza- tion, consolidation or change of ownership after 1 - 1 - 11 . PART VI.— REORGANIZATIONS Sec. 330. That in the case of the reorganization, con- solidation, or change of ownership after January 1, 1911, of a trade or business now carried on by a corporation, the corporation shall for the purposes of this title be deemed to have been in existence prior to that date, and the net income and invested capital of such predecessor trade or business for all or any part of the prewar period prior to the organization of the corporation now carrying on such trade or business shall be deemed to have been the net income and invested capital of such corporation. 270 If such predecessor trade or business was carried on by a Tf u llc i partnership or individual the net income for the prewar _ ^ • j v • period shall, under regulations prescribed by the Commissioner dividual or partner- t ^ ie a PP rova ^ °f the Secretary, be ascertained and returned ship. 277. Where organized before 7-1-19 in which capital is material in- come producing fac- tor. Net income of individual or partner- ship may be taxed as corp. from 1-1-18 to such date. as nearly as may be upon the same basis and in the same manner as provided for corporations in Title II, including a reasonable deduction for salary or compensation to each partner or the individual for personal services actually rendered. In the case of the organization as a corporation before July 1, 1919, of any trade or business in which capital is a material income-producing factor and which was previously owned by a partnership or individual, the net income of such trade or business from January 1, 1918, to the date of such reorganization may at the option of the individual or partner- ship be taxed as the net income of a corporation is taxed under Titles II and III ; in which event the net income and invested capital of such trade or business shall be computed as if such corporation had been in existence on and after January 1, 1918, and the undistributed profits or earnings of such trade or business shall not be subject to the surtax imposed in Section 211 (par. 43-44 ) but amounts distributed on or after January 1, 1918, from the earnings of such trade or business shall be taxed to the recipients as dividends, and all the provisions of Titles II and III relating to corporations shall, so far as practicable, apply to such trade or business : Provided, That this paragraph shall not apply to any trade or business the net income of which for the taxable year 1918 was less than 20 per centum of its invested capital for such year : Provided further, That any tax- payer who takes advantage of this paragraph shall pay the tax imposed by Section 1000 (par. 51 5 - 521) of this Act and by the first subdivision of Section 407 of the Revenue Act of 1916, as if such taxpayer had been a corporation on and after January 1 , 1918, with a capital stock having no par value. If any asset of the trade or business in existence both during the taxable year and any prewar year is included in the invested capital for the taxable year but is not included in the invested capital for such prewar year, or is valued on a different basis in computing the invested capital for the taxable year and such prewar year, respectively, then under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary such readjust- ments shall be made as are necessary to place the computation of the invested capital for such prewar year on the basis employed in detesmining the invested capital for the taxable year. Sec. 331. In the case of the reorganization, consolidation, or change of ownership of a trade or business, or change of ownership of property, after March 3, 1917, if an interest or control in such trade or business or property of 50 per centum or more remains in the same persons, or any of them, then no asset transferred or received from the previous owner shall, for the purpose of determining invested capital, be allowed a greater value than would have been allowed under this title in computing the invested capital of such previous owner if such asset had not been so transferred or received : Provided, That if such previous owner was not a corporation, then the value of any asset so transferred or received shall be taken at its cost of acquisition (at the date when acquired by such previous owner) with proper allowance for depreciation, impairment, betterment or development, but no addition to the original cost shall be made for any charge or expenditure deducted as expense or otherwise on or after March 1, 1913, in computing the net income of such previous owner for purposes of taxation. 40 278. Assets in existence during taxable and prewar years. 279. Value of assets when interest or con- trol of 50% remains in same persons, where change occurs after 3-3-17. 280. Computation of tax when return is for fiscal year 1917-18. 281. Amounts paid un- der Act of 1917 credited against tax, and excess refunded. PART VII.— MISCELLANEOUS Sec. 335. (a) That if a corporation (other than a per- sonal service corporation) makes return for a fiscal year beginning in 1917 and ending in 1918, the tax for the first taxable year under this title shall be the sum of: (1) the same proportion of a tax for the entire period computed under Title II of the Revenue Act of 1917 which the portion of such period falling within the calendar year 1917 is of the entire period, and (2) the same proportion of a tax for the entire period computed under this title at the rates specified in sub- division (a) of Section 301 (par. 212 - 215 ) which the portion of such period falling within the calendar year 1918 is of the entire period. Any amount heretofore or hereafter paid on account of the tax imposed for such fiscal year by Title II of the Revenue Act of 1917 shall be credited toward the payment of the tax imposed for such fiscal year by this title, and if the amount so paid exceeds the amount of the tax imposed by this title, the excess shall be credited or refunded to the corporation in accordance with the provisions of Section 252 (par. 195 ). 2 g 2 (b) If a corporation makes return for a fiscal year f n . beginning in 1918 and ending in 1919, the tax for such fiscal 1918 a i919 r * 1SCa ^ ear year under this title shall be the sum of: (1) the same y y y# proportion of a tax for the entire period computed under subdivision (a) of Section 301 (par. 212 - 215 ), which the portion of such period falling within the calendar year 1918 is of the entire period, and (2) the same proportion of a tax for the entire period computed under subdivision (b) (par. 216-218 ) or (c) of Section 301 (par. 219-222 ) which the portion of such period falling within the calendar year 1919 is of the entire period. (c) If a partnership or a personal service corporation makes return for a fiscal year beginning in 1917 and ending in 1918, it shall pay the same proportion of a tax for the entire period computed under Title II of the Revenue Act of 1917 which the portion of such period falling within the calendar year 1917 is of the entire period. Any tax paid by a partnership or personal service cor- poration for any period beginning on or after January 1, 1918, shall be immediately refunded to the partnership or corpora- tion as a tax erroneously or illegally collected. Sec. 336. That every corporation, not exempt under Sec- tion 304 (par. 227 - 229 ) shall make a return for the purposes of this title. Such returns shall be made, and the taxes imposed by this title shall be paid, at the same times and places, in the same manner, and subject to the same conditions, as is provided in the case of returns and payment of income tax by corporations for the purposes of Title II, and all the provisions of that title not inapplicable, including penalties, are hereby made applicable to the taxes imposed by this title. Sec. 337. That in the case of a bona fide sale of mines, oil or gas wells, or any interest therein, where the principal value of the property has been demonstrated by prospecting or exploration and discovery work done by the taxpayer, the portion of the tax imposed by this title attributable to such sale shall not exceed 20 per centum of the selling price of such property or interest. 283. Partnership or per- sonal service cor- poration return for fiscal year 1917-1918. 284. Refunds of tax paid for 1918. 285. Returns required of corporations. 286. Tax limit on bona fide sales of mines, oil or gas wells. Definitions. TITLE IV— ESTATE TAX Sec. 400. That when used in this title- 287. “Executor.’ 288. “Collector. 5 The term “executor” means the executor or administrator of the decedent, or, if there is no executor or administrator, any person who takes possession of any property of the decedent; and The term “collector” means the collector of internal revenue of the district in which was the domicile of the dece- dent at the time of his death, or, if there was no such domicile in the United States, then the collector of the district in which is situated the part of the gross estate of the decedent in the United States, or, if such part of the gross estate is situated in more than one district, then the collector of internal revenue of such district as may be designated by the Commissioner. 289. Sec. 401. That (in lieu of the tax imposed by Title II Tax on transfer of of the Revenue Act of 1916, as amended, and in lieu of the 41 net estate of decedents tax imposed by Title IX of the Revenue Act of 1917)* a dying after passage of tax equal to the sum of the following percentages of the Act. value of the net estate (determined as provided in Section 403 (par. 298-310), is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this Act, whether a resident or non-resident of the United .States : 1 per centum of the amount of the net estate not in excess of $50,000; 2 per centum of the amount by which the net estate exceeds $50,000 and does not exceed $150,000 ; 3 per centum of the amount by which the net estate exceeds $150,000 and does not exceed $250,000; 4 per centum of the amount by which the net estate exceeds $250,000 and does not exceed $450,000; 6 per centum of the amount by which the net estate exceeds $450,000 and does not exceed $750,000; 8 per centum of the amount by which the net estate exceeds $750,000 and does not exceed $1,000,000; 10 per centum of the amount by which the net estate exceeds $1,000,000 and does not exceed $1,500,000; 12 per centum of the amount by which the net estate exceeds $1,500,000 and does not exceed $2,000,000; 14 per centum of the amount by which the net estate exceeds $2,000,000 and does not exceed $3,000,000 ; 16 per centum of the amount by which the net estate exceeds $3,000,000 and does not exceed $4,000,000; 18 per centum of the amount by which the net estate exceeds $4,000,000 and does not exceed $5,000,000; 20 per centum of the amount by which the net estate exceeds $5,000,000 and does not exceed $8,000,000; 22 per centum of the amount by which the net estate exceeds $8,000,000 and does not exceed $10,000,000; and 25 per centum of the amount by which the net estate exceeds $10,000,000. The taxes imposed by this title or by Title II of the Revenue Act of 1916 (as amended by the Act entitled “An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes,” approved March 3, 1917) or by Title IX of the Revenue Act of 1917, shall not apply to the transfer of the net estate of any decedent who has died or may die while serving in the military or naval forces of the United States in the present war or from injuries received or disease contracted while in such service, and any such tax collected upon such transfer shall be refunded to the executor. 290. Not applicable to estates of those dying while in military or naval service. 291. Gross estate in- cludes value of all property 292. Subject to charges of expenses and dis- tribution. Sec. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated — (a) To the extent of the interest therein of the decedent at the time of his death which after his death is subject to the payment of the charges against his estate and the expenses of its administration and is subject to distribution as part of his estate; *The following arc the rates on the transfer of net estates under the acts specified. An exemption of $50,000 is allowed estates of residents of U. S. in computing value of net estate. On amount of net estate Not exceeding $50,000 Between 50,000 and $150,000 “ 150,000 “ 250,000 “ 250,000 “ 450,000 “ 450,000 “ 1,000,000 “ 1 , 000,000 “ 2 , 000,000 “ 2,000,000 “ 3,000,000 “ 3,000,000 “ 4,000,000 “ 4,000,000 “ 5,000,000 “ 5,000,000 “ 8,000,000 “ 8,000,000 “ 10,000,000 Exceeding $10,000,000 Rate at date of death 9-9-16 3-3-17 on and to to after 3-2-17 10-3-17 10-4-17 1% 154% 2% 2% 3% 4% 3% 454% 6% 4% 6% 8% 5% 754% 10% 6% 9% 12% 7% 1054% 14% 8% 12% 16% 9% 1354% 18% 10% 15% 20% 10% 15% 22% 10% 15% 25% 42 293. Dower or courtesy. of dower or courtesy; (b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent’s death as dower, courtesy, or by virtue of a statute creating an estate in lieu 294. Transferred or trust created in contempla- tion of or to take effect after death. (c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money’s worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, mde by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this title; (d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person, or deposited in banks or other institutions in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have belonged to the decedent ; (e) To the extent of any property passing under a general power of appointment exercised by the decedent (1) by will, or (2) by deed executed in contemplation of, or intended to take effect in possession or enjoyment at or after, his death, except in case of a bona fide sale for a fair consideration in money or money’s worth ; and (f) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life. Sec. 403. That for the purpose of the tax the value of the net estate shall be determined — (a) In the case of a resident, by deducting from the value of the gross estate — (1) Such amounts for funeral expenses, administration expenses, claims against the estate, unpaid mortgages, losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualty, or from theft, when such losses are not compensated for by insurance or otherwise, and such amounts reasonably required and actually expended for the support during the settlement of the estate of those dependent upon the decedent, as are allowed by the laws of the jurisdiction, whether within or without the United States, under which the estate is being administered, but not including any income taxes upon income received after the death of the decedent, or any estate, succession, legacy, or inheritance taxes ; (2) An amount equal to the value at the time of the decedent’s death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in the decedent’s gross estate ; 295. Held jointly as ten- ants, or deposited in banking institutions. 296 Passing under gen- eral power of ap- pointment exercised by decedent. 297. Life insurance re- ceivable by executor and beneficiaries. 298. Value of net estate. 299. Residents. 300. Deductions allowed. Funeral and adminis- tration expenses, claims, losses, sup- port of dependents, but not designated taxes. 301. Value of share of estate of persons who died within 5 years upon which Estate tax was paid. 302. Bequests, legacies, devises or gifts to U. S., state, etc., or ex- clusively for religious, charitable, scientific, (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any state, territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational 43 literary or educa- purposes, including the encouragement of art and the pre- tional purposes. vention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stocks holder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917 ; and 303. Exemption. (4) An exemption of $50,000; 304. (b) In the case of a non-resident, by deducting from Non-residents d e - the value of that part of his gross estate which at the time ductions. of his death is situated in the United States — (1) That proportion of the deductions specified in para- graph (1) of subdivision (a) {par. 300 ) of this section which the value of such part bears to the value of his entire gross estate, wherever situated, but in no case shall the amount so deducted exceed 10 per centum of the value of that part of his gross estate which at the time of his death is situated in the United States; (2) An amount equal to the value at the time of the decedent’s death of any property, real, personal, or mixed, which can be identified as having been received by the decedent as a share in the estate of any person who died within five years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received, if an estate tax under the Revenue Act of 1917 or under this Act was collected from such estate, and if such property is included in that part of the decedent’s gross estate which at the time of his death is situated in the United States; and 305. Proportioned, but not over 10% of gross estate in U. S. 306. Share in estate of person who died within 5 years upon which tax paid and property included in gross estate. (3) The amount of all bequests, legacies, devises, or gifts, to or for the use of the United States, any state, territory, any political subdivision thereof, or the District of Columbia, for exclusively public purposes, or to or for the use of any domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational pur- poses, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private stockholder or individual, or to a trustee or trustees exclusively for such religious, charitable, scientific, literary, or educational purposes within the United States. This deduction shall be made in case of the estates of all decedents who have died since December 31, 1917 ; and 307. Bequests, legacies, devises or gifts to U. 3., state, etc., or ex- clusively for religious, charitable, scientific, literary or educa- tional purposes. No deductions shall be allowed in the case of a non- oi resident unless the executor includes in the return required lowed unless com- to be under Section 404 {par. 311-312 ) the value at the nlefp return filed time of h ls death of that part of the gross estate of the p ‘ non-resident not situated in the United States. For the purpose of this title stock in a domestic corpora- tion owned and held by a nonresident decedent, and the amount receivable as insurance upon the life of a nonresident decedent where the insurer is a domestic corporation, shall be deemed property within the United States, and any property of which the decedent has made a transfer or with respect to which he has created a trust, within the meaning of subdivision (c) of Section 402 {par. 294) shall be deemed to be situated in the United States, if so situated either at the time of the transfer or the creation of the trust, or at the time of the decedent’s death, oi q In the case of any estate in respect to which the tax under wViAti tav existing law has been paid, if necessary to allow the benefit • j ’ of the deduction under paragraph (3) of subdivision (a) {par. 302), or (b) {par. 307), the tax shall be redetermined and any excess of tax paid shall be refunded to the executor. 308. 309. Stock, life insurance and property deemed within the U. S. 311. Executor to give written notice to col- lector. File complete return. Sec. 404. That the executor, within sixty days after qualifying as such, or after coming into possession of any property of the decedent, whichever event first occurs, shall give written notice thereof to the collector. The executor shall also, at such times and in such manner as may be required by regulations made pursuant to law, file with the 44 collector a return under oath in duplicate, setting forth (a) the value of the gross estate of the decedent at the time of his death, or, in case of a nonresident, of that part of his gross estate situated in the United States ; (b) the deductions allowed under Section 403 (par. 298-310) ; (c) the value of the net estate of the decedent as defined in Section 403 (par. 298-310)', and (d) the tax paid or payable thereon; or such part of such information as may at the time be ascertainable and such supple- mental data as may be necessary to establish the correct tax. Return shall be made in all cases where the gross estate at the death of the decedent exceeds $50,000, and in the case of the estate of every nonresident any part of whose gross estate is situated in the United States. If the executor is unable to make a complete return as to any part of the gross estate of the decedent, he shall include in his return a descrip- tion of such part and the name of every person holding a legal or beneficial interest therein, and upon notice from the collector such person shall in like manner make a return as to such part of the gross estate. The Com- missioner shall make all assessments of the tax under the authority of existing administrative special and general provisions of law relating to the assessment and collection of taxes. Sec. 405. That if no administration is granted upon the estate of a decedent, or if no return is filed as provided in Section 404 (par. 311-312), or if a return contains a false or incorrect statement of a material fact, the collector or deputy collector shall make a return and the Commissioner shall 312. Returns required where gross estate exceeds $50,000 and all non-resident es- tates. 313. When collector or deputy collector makes returns. assess the tax thereon. Sec. 406. That the tax shall be due one year after the decedent’s death ; but in any case where the Commissioner finds that payment of the tax within one year after the decedent’s death would impose undue hardship upon the estate, he may grant an extension of time for the payment of the tax for a period not to exceed three years from the due date. If the tax is not paid within one year and 180 days after the decedent's death, interest at the rate of 6 per centum per annum from the expiration of one year after the decedent’s death shall be added as part of the tax. Sec. 407. That the executor shall pay the tax to the collector or deputy collector. If the amount of the tax can not be determined, the payment of a sum of money sufficient, in the opinion of the collector, to discharge the tax shall be deemed payment in full of the tax, except as in this section otherwise provided. If the amount so paid exceeds the amount of the tax as finally determined, the Commissioner shall refund such excess to the executor. If the amount of the tax as finally determined exceeds the amount so paid, the collector shall notify the executor of the amount of such excess and demand payment thereof. If such excess part of the tax is not paid within thirty days after such notification, interest shall be added thereto at the rate of 10 per centum per annum from the expiration of such thirty days’ period until paid, and the amount of such excess shall be a lien upon the entire gross estate, except such part thereof as may have been sold to a bona fide purchaser for a fair considera- tion in money or money’s worth. The collector shall grant to the person paying the tax 314. Tax due one year after death, but time may be extended three years. Interest added if unpaid. 315. Tax paid to col- lector. If unable to determine, collector to fix amount and ad- just later. Interest added to excess tax not paid 30 days after notification. Duplicate tax re- ceipts given. duplicate receipts, either of which shall be sufficient evidence of such payment, and shall entitle the executor to be credited and allowed the amount thereof by any court having juris- diction to audit or settle his accounts. Sec. 408. That if the tax herein imposed is not paid with 180 days after it is due, the collector shall, unless there is reasonable cause for further delay, proceed to collect the tax under the provisions of general law, or commence appro- priate proceedings in any court of the United States, in the name of the United States, to subject the property of the decedent to be sold under the judgment or decree of the court. From the proceeds of such sale the amount of the tax, together with the costs and expenses of every description to be allowed by the court, shall be first paid, and the balance shall be deposited according to the order of the court, to be paid under its direction to the person entitled thereto. 45 317. Collector to pro- ceed to collect tax 180 days after it is due. Tax and ex- penses first paid from proceeds of sale. 318. Tax to be paid out of estate before dis- t r i b u t i o n unless otherwise directed by will. Executor t o collect tax on pro- ceeds of life insur- ance from bene- ficiaries. If the tax or any part thereof is paid by, or collected out of that part of the estate passing to or in the possession of, any person other than the executor in his capacity as such, such person shall be entitled to reimbursement out of any part of the estate still undistributed or by a just and equitable contribution by the persons whose interest in the estate of the decedent would have been reduced if the tax had been paid before the distribution of the estate or whose interest is subject to equal or prior liability for the payment of taxes, debts, or other charges against the estate, it being the pur- pose and intent of this title that so far as is practicable and unless otherwise directed by the will of the decedent the tax shall be paid out of the estate before its distribution. If any part of the gross estate consists of proceeds of policies of insurance upon the life of the decedent receivable by a beneficiary other than the executor, the executor shall be entitled to recover from such beneficiary such portion of the total tax paid as the proceeds, in excess of $40,000, of such policies bear to the net estate. If there is more than one such beneficiary the executor shall be entitled to recover from such beneficiaries in the same ratio. Sec. 409. That unless the tax is sooner paid in full, it shall be a lien for ten years upon the gross estate of the decedent, except that such part of the gross estate as is used for the payment of charges against the estate and expenses of its administration, allowed by any court having jurisdiction thereof, shall be divested of such lien. If the Commissioner is satisfied that the tax liability of an estate has been fully discharged or provided for, he may, under regulations prescribed by him with the approval of the Secretary, issue his certificate releasing any or all property of such estate from the lien herein imposed. If (a) the decedent makes a transfer of, or creates a trust with respect to, any property in contemplation of or intended to take effect in possession or enjoyment at or after his death (except in the case of a bona fide sale for a fair consideration in money or money’s worth) or (b) if insur- ance passes under a contract executed by the decedent in favor of a specific beneficiary, and if in either case the tax in respect thereto is not paid when due, then the transferee, trustee, or beneficiary shall be personally liable for such tax, and such property, to the extent of the decedent’s interest therein at the time of such transfer, or to the extent of such beneficiary’s interest under such contract of insurance shall be subject to a like lien equal to the amount of such tax. Any part of such property sold by such transferee or trustee to a bona fide purchaser for a fair consideration in money or money’s worth shall be divested of the lien and a like lien shall then attach to all the property of such transferee or trustee, except any part sold to a bona fide purchaser for a fair consideration in money or money’s worth. Sec. 410. That whoever knowingly makes any false statement in any notice or return required to be filed under this title shall be liable to a penalty of not exceeding $5,000, or imprisonment not exceeding one year, or both. Whoever fails to comply with any duty imposed upon him by Section 404 {par. 311 - 312 ), or, having in his possession or control any record, file, or paper, containing or supposed to contain any information concerning the estate of the decedent, or, having in his possession or control any property comprised in the gross estate of the decedent, fails to exhibit the same upon request to the Commissioner or any collector or law officer of the United States, or his duly authorized deputy or agent, who desires to examine the same in the performance of his duties under this title, shall be liable to a penalty of not exceeding $500, to be recovered, with costs of suit, in a civil action in the name of the United States. TITLE V.— TAX ON TRANSPORTATION AND OTHER FACILITIES, AND ON INSURANCE 323 . Sec. 500. That from and after April 1, 1919, there shall Effective April 1 , be levied, assessed, collected, and paid, in lieu of the taxes 1919 . imposed by Section 500 of the Revenue Act of 1917* — *The same rates applied as specified in this Act with the following exceptions, rate of 10% on amount paid for seats, berths, and staterooms in parlor and sleeping cars or on vessels; 5% on amount paid for transportation of oil by pipe line; tax of Sc on telephone, telegraph or radio messages for which charge of 15c or more is imposed, and there was no tax imposed on leased wires of telegraph and telephone companies. 46 319 . Unpaid tax lien for 10 years upon gross estate. 320 . Transferee, trustee or beneficiary per- sonally liable for por- tion of tax on prop- erty not paid when due. 321 . Penalties for false statements. 322 . Penalty for failure to comply with duties imposed or exhibit records, files or pa- pers on request. 324. , (a) A tax equivalent to 3 pef centum of the amount 3% on afUoUnt paid paid for the transportation on or after such date, by rail for transportation of or by water or by any form of mechanical motor power when property b y freight in competition with carriers by rail or water, of property by within U. S. freight transported from one point in the United States to another ; and a like tax on the amount paid for such trans- portation within the United States of property transported from a point without the United States to a point within the United States ; (b) A tax of 1 cent for each 20 cents or fraction thereof of the amount paid to any person for the transportation on or after such date, by rail or water or by any form of mechanical motor power when in competition with express by rail or water, of any package, parcel, or shipment, by express, transported from one point in the United States to another ; and a like tax on the amount paid for such transportation within the United States of property transported from a point without the United States to a point within the United States; (c) A tax equivalent to 8 per centum of the amount paid for the transportation on or after such date of persons by rail or water, or by any form of mechanical motor power on 325. lc for each 20c or fraction of amount paid for express ship- ments within U. S. 326. 8% on amount paid for passenger trans- « + o + ; J 5 *, a regular established line when in competition with carriers portarion, except , •, ^ commutation less than 30 miles or fare of 42c. by rail or water, from one point in the United States to another or to any point in Canada or Mexico, where the ticket or order therefor is sold or issued in the United States, not including the amount paid for commutation or season tickets for trips less than thirty miles, or for transportation the fare for which does not exceed 42 cents : Provided, That where such water transportation lines are in competition between American ports with foreign water transportation lines from adjacent foreign ports, the tax imposed under this subdivision on amounts paid for water transportation between American ports shall not exceed the amount of the transportation tax to which such foreign water transportation lines are subjected by their government corresponding to this tax ; (d) A tax equivalent to 8 per centum of the amount 327. paid for seats, berths, and staterooms in parlor cars, sleeping 8% on Pullman ac- cars, or on vessels, used on or after such date in connection commodations. with transportation upon which tax is imposed by subdivision (c) (par. 326 ) ; (e) A tax equivalent to 8 per centum of the amount paid for the transportation on or after such date of oil by pipe line ; (f) In the case of each telegraph, telephone, cable, or radio, dispatch, message, or conversation, which originates Telegraph, tele- on or after such date within the United States, and for the phone, cable or radio transmission of which the charge is more than 14 cents and messages where not more than 50 cents, a tax of 5 cents; and if the charge charge 15 to 50c, tax is more than 50 cents, a tax of 10 cents: Provided, That 5c; over 50c, tax 10c. only one payment of such tax shall be required, notwithstand- ing the lines or stations of one or more persons are used for the transmission of such dispatch, message, or conversation; and (g) A tax equivalent to 10 per centum of the amount paid after such date to any telegraph or telephone company for any leased wire or talking circuit special service fur- nished after each such date. This subdivision shall not apply to the amount paid for so much of such service as is utilized (1) in the collection and dissemination of news through the public press, or (2) in the conduct, by a common carrier or telegraph or telephone company, of its business as such. (h) No tax shall be imposed under this section upon any payment received for services rendered to the United 328. 8% on oil by pipe lines. 329. 330. 10% of amount paid for leased wire or talking circuit. 331. . " States or to any State or Territory or the District of ** ' Columbia. The right to exemption under this subdivision shall be evidenced in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. 032 Sec. 501. (a) That the taxes imposed by Section 500 R v whom nairl (P ar - 3^3~33i) shall be paid by the person paying for the ay wnom paid. services or facilities rendered. 47 333. 4 (b) If a mileage book used for transportation or accorn- Cash fare paid or modation was purchased before November 1, 1917, or if cash mileage book or com- fare is paid, the tax imposed by Section 500 (par. 326-327) mutation purchased shall be collected from the person presenting the mileage before 11-1-17. book, or paying the cash fare, by the conductor or other agent, when presented for such transportation or accommoda- tion, and the amount so collected shall be paid to the United States in such manner and at such times as the Commissioner, with the approval of the Secretary, may prescribe; if a ticket (other than a mileage book) was bought and partially used before November 1, 1917, it shall not be taxed, but if bought but not so used before Section 500 (par. 323) takes effect, it shall not be valid for passage until the tax has been paid and such payment evidenced on the ticket in such manner as the Commis- sioner, with the approval of the Secretary, may by regulation prescribe. 334. Taxes apply when services or facilities rendered for hire. Carriers not receiving amount ordinarily charged. (c) The taxes imposed by Section 500 (par. 323-330 ) shall apply to all services or facilities specified in such section when rendered for hire, whether or not the agency rendering them is a common carrier. In case a carrier (other than a pipe line) principally engaged in rendering transportation services or facilities for hire does not, because its ownership of the goods transported, or for any other reason, receive the amount which as a carrier it would otherwise charge, such carrier shall pay a tax equivalent to the tax which would be imposed upon the transportation of such goods if the carrier received payment for such transportation, such tax, if it can not be computed from actual rates or tariffs of the carrier, to be computed on the basis of the rates or tariffs of other carriers for like services as determined by the Commissioner. In the case of any carrier (other than a pipe line) the principal business of which is to transport goods belonging to it on its own account and which only incidentally renders services for hire, the tax shall apply to such services or facilities only as are actually rendered by it for hire. Nothing in this or the preceding section shall be construed as imposing a tax (1) upon the trans- portation of any commodity which is necessary for the use of the carrier in the conduct of its business as such and is intended to be so used or has been so used ; or (2) upon the transportation of company material transported by one carrier, which constitutes a part of a railroad system, for another carrier which is also a part of the same system. (d) The tax imposed by subdivision (e) of Section 500 (par. 328 ) shall apply to all transportation of oil by pipe line. In case no charge for transportation is made, by reason of ownership of the commodity transported, or for any other reason, the person transporting by pipe line shall pay a tax equivalent to the tax which would be imposed if such person received payment for such transportation, and if the tax can not be computed from actual bona fide rates or tariffs, it shall be computed (1) on the basis of the rates or tariffs of other pipe lines for like services, as determined by the Commissioner, or (2) if no such rates or tariffs exist, on the basis of a reasonable charge for such transportation, as determined by the Commissioner. Sec. 502. That each person receiving any payments re- ferred to in Section 500 (par. 3 2 3~33o) shall collect the amount of the tax, if any, imposed by such section from the person making such payments, and shall make monthly returns under oath, in duplicate, and pay the taxes so collected and the taxes imposed upon it under subdivision (c) (par. 334) or (d) (par. 333) of Section 501 to the collector of the district in which the principal office or place of business is located. No carrier collecting the taxes imposed by subdivision (a) or (b) of Section 500 (par. 324-325), shall be required to list the amount of such tax separately in any bill of lading, freight or express receipt, or other similar document, if the total amount of the transportation charge and the tax is stated therein. 335. Tax applies to all transportation of oil by pipe line whether payment received by carrier or not. 336. Monthly returns to be made in duplicate to collector. 337. Separate listing of tax not required. 338. Amounts refunded credited o n subse- quent returns. Any person making a refund of any payment upon which tax is collected under this section may repay therewith the amount of the tax collected on such payment; and the amount so repaid may be credited against amounts included in any subsequent monthly return. 48 The returns required under this section shall contain such information, and be made at such times and in such manner, as the Commissioner, with the approval of the Sec- retary, may by regulation prescribe. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the col- lector at the time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Insurance Sec. 503. That from and after April 1, 1919, there shall be levied, assessed, collected, and paid, in lieu of the taxes imposed by Section 504 of the Revenue Act of 1917*, the following taxes on the issuance of insurance policies, includ- ing, in the case of policies issued outside the United States (except those taxable under sul division 15 of Schedule A of Title XI (par. 609 - 610 ), their delivery within the United States by any agent or broker, whether acting for the insurer or the insured; such taxes to be paid by the insurer, or by such agent or broker : (a) Life insurance: A trx equivalent to 8 cents on each $100 or fractional part thereof of the amount for which any life is insured under any policy of insurance, or other in- strument, by whatever name the same is called : Provided, that on all policies for life insurance only by which a life is insured not in excess of $500, issued on the industrial or weekly or monthly payment plan of insurance, the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the case may be: Provided further, that on policies of group life insurance, cover- ing groups of not less than 25 lives in the employ of the same person, for the benefit of persons other than the employer, the tax shall be equivalent to 4 cents on each $100 of the aggregate amount for which the group policy is issued and of any net increase in the amount of the insurance under such policy: And provided further, that on all policies covering life, health, and accident insurance combined in one policy by which a life is insured not in excess of $500, issued on the industrial, or weekly or monthly payment plan of insurance, the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the case may be ; (b) Marine, inland and fire insurance: A tax equivalent to 1 cent on each dollar or fractional part thereof of the premium charged under each policy of insurance or other instrument by whatever name the same is called whereby in- surance is made or renewed upon property of any description (including rents or profits), whether against peril by sea or inland waters, or by fire or lightning, or other peril ; 339. Returns 340. Tax due when re- turns filed. Penalty for non-payment. 341. Tax on insurance policies effective 4-1-19 including de- liveries in U. S. 342. Life insurance 8c on each $100 or frac- tion. Policies on in- dustrial, weekly or monthly payment plan. Group life in- surance. 343. Marine, inland and fire insurance lc on each $1 or fraction of premium. 344 Casualty insurance lc on each $1 or frac- tion of premium charged under each policy or renewal. (c) Casualty insurance: A tax equivalent to 1 cent on each dollar or fractional part thereof of the premium charged under each policy of insurance or obligation of the nature of indemnity for loss, damage, or liability (except bonds and policies taxable under subdivision 2 of Schedule A of Title XI (par. 592) issued or executed or renewed by any person transacting the business of employer’s liability, workmen’s compensation, accident, health, tornado, plate glass, steam boiler, elevator, burglary, automatic sprinkler, auto- mobile, or other branch of insurance (except life insurance, and insurance described and taxed in the preceding subdivision) : Provided, that in case of policies of insur- ance issued on the industrial or weekly or monthly payment plan the tax shall be 40 per centum of the amount of the first weekly premium or 20 per centum of the amount of the first monthly premium, as the case may be; (d) Policies issued by any corporation enumerated in ** p . Section 231 (par. 128-142), and policies of reinsurance, shall exemptions. be exempt from the taxes imposed by this section. *The rates are the same as specified in this Act, but Act of 1917 did not make the special provisions for policies of life insurance issued on monthly payment plan or in case of group life insurance and the limitation in case of casualty insurance policies issued on industrial or weekly or monthly payment plan. 49 347. Tax to be paid when return due. Penalties for non- payment. 346. Sec. 504. That every person issuing policies of insurance Monthly returns in upon the issuance of which a tax is imposed by Section 503 duplicate made to {par. 341-345) shall make monthly returns under oath, in collector. duplicate, and pay such tax to the collector of the district in which the principal office or place of business of such person is located. Such returns shall contain such information and be made at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. The tax shall, without assessment by the Commissioner or notice from the collector, be due and payable to the col- lector at the time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. TITLE VI.— TAX ON BEVERAGES 348. Sec. 600. (a) That there shall be levied and collected on Tax on distilled all dir.tilled spirits now in bond or that have been or that may spirits. be hereafter produced in or imported into the United States, except such distilled spirits as are subject to the tax provided in Section 604 {par. 359), in lieu of the internal-revenue taxes now imposed thereon by law*, a tax of $2.20 (or, if withdrawn for beverage purposes or for use in the manufacture or production of any article used or intended for use as a beverage, a tax of $6.40) on each proof gallon, or wine gallon when below proof, and a propor- tionate tax at a like rate on all fractional parts of such proof or wine gallon, to be paid by the distiller or importer when withdrawn, and collected under the provisions of existing law. (b) That the tax imposed by subdivision (a) {par. 348) on distilled spirits intended for beverage purposes shall not be due or payable on such spirits while stored in any dis- tillery, bonded warehouse, or special or general bonded warehouse, and which, pursuant to any Act of Congress or proclamation of the President of the United States, can not be lawfully sold or removed from any such warehouse during the period of pro- hibition fixed by such Act or proclamation; and all warehousing bonds or trans- portation and warehousing bonds conditioned for the payment of tax on any such spirits so stored on the date such prohibition takes effect shall as to all such spirits actually so stored be canceled and discharged, provided the distiller of such spirits shall in lieu of such bonds and prior to their cancellation execute a bond in a penal sum of not less than $10,000, with sureties satisfactory to the col- lector of the district, conditioned that the principal shall, during the period of such prohibition, safely keep or cause to be kept in good condition all such spirits and the warehouse in which the same are stored, and shall not remove or suffer to be removed from warehouse, contrary to law, any such spirits during the period of such prohibition; and the bond herein prescribed shall be in such further sum and shall contain such further conditions as the Commissioner, with the approval of the Secretary, may by regulations require. The distiller may, subject to the pro- visions of this section, be permitted to retain in any such bonded warehouse dis- tilled spirits on which, under the terms of any existing bond, the tax imposed thereon becomes due and pa able prior to the date such prohibition takes effect: Provided , That on the removal of such prohibition the distiller shall, as to ajl spirits as to which the bonded period fixed by law has not expired and which remain stored in warehouse, execute new and satisfactory bond in the form required by existing law, conditioned for the payment of the tax on all such spirits; and all provisions of existing law relating to such bonded warehouses, or the storage of spirts therein, or to the execution of new or additional bonds, so far as applicable, shall continue in force as to all distilled spirits rebonded under the provisions of this section. Upon the withdrawal of distilled spirits from bonded 3 a jj. • warehouse, after the period of prohibition has ended, and Additional a 1 low- un( j er the conditions imposed by Section 50 of an Act ance tor loss by rea- entitled “An Act to reduce taxation, to provide revenue for son ot longer storage. t h e SU pp 0r t G f the Government, and for other purposes,” approved August 28, 1894, an allowance for loss by leakage or other unavoidable cause, not exceeding one proof gallon as to packages of a capacity of not less 349. Not applicable to distilled spirits stored during period of pro- hibition. *Tax of $2.20 and if withdrawn for beverage purposes $3.20. 50 351. Bonded period ex tended. than 40 wine gallons, may be made in addition to that provided in said Section 50, as amended; and a like additional allowance of one proof gallon as to each package withdrawn may be made for each period of four months, or fraction thereof, for such spirits as shall have remained in warehouse during the period of prohibition and after the expiration of the maximum leakage period fixed by that section. Under regulations prescribed by the Secretary, any imported distilled spirits, wines or other liquors which may be in any customs bonded warehouse under the cus- toms laws on the date such prohibition takes effect shall be permitted to remain therein without payment of any taxes or duties thereon, beyond the three-year period provided in Section 2971 of the Revised Statutes, during such period of prohibition; and may be exported at any time during such extended period. Any imported spirits, wines or other liquors as to which the three-year bonded period may expire after the passage of this Act and prior to the date such prohibition takes effect may at the option of the owner remain in bond during such period of prohibition. (c) In lieu of the internal-revenue tax now imposed .p r thereon by law* there shall be levied and collected upon i a x o n ir'eriumes a jj p er f umes hereafter imported into the United States fry'll H F^tainmg containing distilled spirits, a tax of $1.10 per wine gallon, distilled spirits. and a proportionate tax at a like rate on all fractional parts of such wine gallon. Such tax shall be collected by the collector of customs and deposited as internal-revenue collections, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe. 223 _ Sec. 601. That no distilled spirits produced after Importation of bev- erage spirits limited. 354. Packages filled from receiving cis- terns at registered distilleries. Transfer of such spirits. October 3, 1917, shall be imported into the United States from any foreign country, or from the Virgin Islands (unless produced from products the growth of such islands, and not then into any State or Territory or District of the United States in which the manufacture or sale of intoxicating liquor is prohibited), or from Porto Rico, or the Philippine Islands. Under such rules, regulations, and bonds as the Secretary may prescribe, the provisions of this section shall not apply to distilled spirits imported for other than (1) beverage purposes or (2) use in the manu- facture or production of any article used or intended for use as a beverage. Sec. 602. That at registered distilleries producing alcohol, or other high-proof spirits, packages may be filled with such spirits reduced to not less than one hundred proof from the receiving cisterns and tax paid without being entered into bonded warehouse. Such spirits may be also transferred from the receiving cisterns at such dis- tilleries, by means of pipe lines, direct to storage tanks in the bonded warehouse and may be warehoused in such storage tanks. Such spirits may be also transferred in tanks or tank cars to general bonded ware- houses for storage therein, either in storage tanks in such warehouses or in the tanks in which they were transferred. Such spirits may also be transferred from receiving cisterns or warehouse storage tanks to barrels, drums, tanks, tank cars, or other approved containers, and may be transported in such containers for exportation or other lawful purposes. The Commissioner, with the approval of the Secretary, is hereby empowered to prescribe all necessary regulations relating to the drawing off, transferring, gauging, storing, and transporting of such spirits; the records to be kept and returns to be made; the size and kind of packages and tanks to be used; the marking, branding, numbering, and stamping of such packages and tanks; the kinds of stamps, if any, to be used; and the time and manner of paying the tax; the kind of bond and the penal sum of same. The tax prescribed by law must be paid before such spirits are removed from the distillery premises, or from general bonded warehouse in the case of spirits transferred thereto, except as otherwise provided by law. Under such regulations as the Commissioner, with the approval of the Secretary, may prescribe, distilled spirits may hereafter be drawn from receiving cisterns and deposited in distillery warehouses without having affixed to the packages containing the same, distillery warehouse stamps, and such packages, when so deposited in warehouse, may be withdrawn therefrom on the original gauge where the same have remained in such ware- house for a period not exceeding thirty days from the date of deposit. 355. Temporary ware- housing without stamps. # Tax same as specified in this Act. 51 357. Ethyl alcohol for other non-beverage purposes. 356. Under such regulations as the Commissioner, with the Ethyl and dena- approval of the Secretary, may prescribe, the manufacture, tured alcohol. warehousing, withdrawal, and shipment, under the pro- visions of existing law, of ethyl alcohol for other than (1) beverage purposes or (2) use in the manufacture or production of any article used or intended for use as a beverage, and denatured alcohol, may be exempted from the provisions of Section 3283 of the Revised Statutes. The Commissioner, with the approval of the Secretary, may by regulations exempt distillers of ethyl alcohol, for use* in* production * of use * n t ^ ie P r °duction of munitions of war, or for other non- mimifinne nf r»r beverage purposes, from so much of the provisions of Sec- munitions ot war or tions 3285> Qr 33()9 of the Revised Statues> and Acts amendatory thereof, respecting the survey of distilleries, the period of fermentation, the filling and emptying of fer- menting tubs, and assessments, as, in his judgment, may be expedient: Provided, That the bond prescribed in Section 3260 of the Revised Statutes shall, in the cases herein provided, be in such sum and contain such further conditions as the Com- missioner may require. Sec. 603. That under such regulations as the Com- ,oi missioner, with the approval of the Secretary, may pre- alc h i° ° y scribe, ethyl alcohol of not less than 180 degrees proof, ° ° ’ produced at any central distilling and denaturing plant established under the provisions of subsection 2, paragraph N, of Section IV of the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, may be removed from such plant to any central denaturing bonded warehouse for denaturation, or may, before or after denaturation be removed from such plant or from such denaturing bonded warehouse, free of tax, for use of the United States or for shipment to any nation while engaged against the German Govern- ment in the present war, and the removal herein authorized may be made in such tank vessels, tank cars, drums, casks, or other containers as may be approved by the Commissioner. It shall be lawful, under regulation prescribed by the Commissioner, with the approval of the Secretary, for an allowance to be made for leakage or loss by unavoidable accident and without fault or negligence of the distiller, owner, carrier, or his agents or employees, which may occur during the transportation of such spirits or while the same are lawfully stored on either of the premises herein described. __ Sec. 604. That upon all distilled spirits produced in ,. or imported into the United States upon which the in- /?° r * ° n aiS " ternal-revenue tax now imposed by law has been paid, tilled spirits. and on the day after the passage of this Act, are held by any person and intended for sale or for use in the manufacture or production of any article intended for sale, there shall be levied, assessed, col- lected, and paid a floor tax of $3.20 if intended for sale for beverage purposes or for use in the manufacture or production of any article used or intended for use as a beverage on each proof gallon, and a proportionate tax at a like rate on all fractional parts of such proof gallon. Sec. 605. That in addition to the tax imposed by this Act on distilled spirits and wines, there shall be levied, assessed, collected, and paid in lieu of the tax imposed by Section 304 of the Revenue Act of 1917*, a tax of 30 cents on each proof gallon and a proportionate tax at a like rate on all fractional parts of such proof gallon on all distilled spirits or wines hereafter rectified, purified, or refined in such man- ner, and on all mixtures hereafter produced in such manner, that the person so rectifying, purifying, refining, or mixing the same is a rectifier within the mean- ing of Section 3244 of the Revised Statutes, as amended: Provided, that this tax shall not apply to gin produced by the redistillation of a pure spirit over juniper berries and other aromatics. Upon all such articles heretofore produced, and which r ic on the day after the passage of this Act are held by any ^ f° r ii X 0t 15C P erson and intended for sale, there shall be levied, assessed, proot gallon. collected, and paid a floor tax of 15 cents on each proof gallon, and a proportionate tax at a like rate on all fractional parts of each proof gallon; and all such distilled spirits so held and not contained in the •Rate of 15c per proof gallon. 360. Additional tax on distilled spirits or wines rectified, puri- fied or refined. 52 362. Unlawful to reduce in proof or increase volume of tax paid spirits or wines. distillers’ original stamped packages, or in bottles or other containers bearing the distillers’ original labels, shall for the purpose of this section be regarded as rectified spirits. When the process of rectification is completed and the taxes prescribed by this section have been paid, it shall be unlawful for the rectifier or other dealer to reduce in proof or increase in volume such spirits or wine by the addition of water or other substance; nothing herein con- tained shall, however, prevent a rectifier from using again in the process of rectification spirits already rectified and upon which the taxes have theretofore been paid. The taxes imposed by this section shall not attach rA , r , , to cordials or liqueurs on which a tax is imposed and lax not applicable. paid under Section 6n (/)ar 375 - 37 s) or 613 (par. 381-385), nor to the mixing and blending of wines, where such blending is for the sole purpose of perfecting such wines according to commercial standards, nor to blends made exclusively of two or more pure straight whiskies aged in wood for a period not less than four years and without the addition of coloring or flavoring matter or any other substance than pure water and if not reduced below ninety proof: Provided, That such blended whiskies shall be exempt from tax under this section only when compounded under the immediate supervision of a revenue officer, in such tanks and under such conditions and supervision as the Commissioner, with the approval of the Secretary, may prescribe. All distilled spirits or wines taxable under this section cniritc shall be subject to uniform regulations concerning the k * + +■ S 1 'f T S use thereof in the manufacture, blending, compounding, S ull t ^ ttOU 1 ° m mixing, marking, branding, and sale of whiskey and recti- regu ations. fied sp i r j^ s> an( j no discrimination whatsoever shall be made by reason of a difference in the character of the material from which same may have been produced. 365. The business of a rectifier of spirits shall be carried on, and the tax on rectified spirits shall be paid, under such rules, regulations, and bonds as may be prescribed by the Commissioner, with the approval of the Secretary. Whoever violates any of the provisions of this sec- tion shall be deemed to be guilty of a misdemeanor and, upon conviction, shall be fined not more than $1,000 or imprisoned not more than two years, and shall, in addition, be liable to double the tax evaded, together with the tax, to be collected by assessment or on any bond given. Sec. 606. That hereafter collectors shall not furnish wholesale liquor dealer’s stamps in lieu of and in exchange for stamps for rectified spirits unless the package covered by stamp for rectified spirits is to be broken into smaller packages. The Commissioner, with the approval of the Secre- tary, is authorized to discontinue the use of the follow- ing stamps whenever in his judgment the interests of the Government will be subserved thereby: Distillery warehouse, special bonded warehouse, special bonded reware- 367. When wholesale liquor dealer’s stamps furnished. 368. Stamp discontinue authorized. 369. house, general bonded warehouse, general bonded retransfer, transfer brandy, export tobacco, export cigars, export oleomargarine, and export fermented-liquor stamps. Sec. 607. That the Commissioner, with the approval of the Secretary, is hereby authorized to require at dis- tilleries, breweries, rectifying houses, and wherever else in his judgment such action may be deemed advisable, the installation of meters, tanks, pipes, or any other apparatus for the purpose of protecting the revenue, and such meters, tanks, and pipes and all necessary labor incident thereto shall be at the expense of the person on whose premises the installation is required. Any such person refusing or neglecting to install such apparatus when so required by the Commissioner shall not be permitted to conduct business on such premises. 371. Sec. 608. That there shall be levied and collected on Beer, lager beer, all beer, lager beer, ale, porter, and other similar fer- 53 370. Installation of ap- paratus. ale, porter and sim- mented liquor, containing one-half of one per centum, or ilar fermented liquor, more, of alcohol, brewed or manufactured and hereafter sold, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, in lieu of the internal- revenue taxes now imposed thereon by law*, a tax of $ 6.00 for every barrel con- taining not more than thirty-one gallons, and at a like rate for any other quantity or for the fractional parts of a barrel authorized and defined by law, to be collected under the provisions of existing law. 272 Sec. 609. That from and after the passage of this Act PprmpntpH linnnrc taxable fermented liquors may be conveyed without pay- conveved q ment of tax from the brewery premises where produced y to a contiguous industrial distillery of either class estab- lished under the Act entitled “An Act to reduce tariff duties and to provide revenue for the Government, and for other purposes,” approved October 3, 1913, to be used as distilling material, and the residue from such distillation, con- taining less than one-half of 1 per centum of alcohol by volume, which is to be used in making beverages, may be manipulated by cooling, flavoring, carbonating, settling, and filtering on the distillery premises or elsewhere. 273 The removal of the taxable fermented liquor from the Qnnprtricinn brewery to the distillery and the operation of the distillery mov ^j " and removal of the residue therefrom shall be under the supervision of such officer or officers as the Commissioner shall deem proper, and the Commissioner, with the approval of the Secretary, is hereby authorized to make such regulations from time to time as may be necessary to give force and effect to this section and to safeguard the revenue. 374 Sec. 610. That natural wine within the meaning of fural Win,*” this Act shall be deemed to be the produce made from £ ne j ‘ the normal alcoholic fermentation of the juice of sound, ripe grapes, without addition or abstraction, except such as may occur in the usual cellar treatment of clarifying and aging: Provided, howe'ver, that the product made from the juice of sound, ripe grapes by com- plete fermentation of the must under proper cellar treatment and corrected by the addition (under the supervision of a gauger or storekeeper-gauger in the capacity of gauger) of a solution of water and pure cane, beet, or dextrose sugar (containing, respectively, not less than 95 per centum of actual sugar, calculated on a dry basis) to the must or to the wine, to correct natural deficiencies, when such addition shall not increase the volume of the resultant product more than 35 per centum, and the resultant product does not contain less than five parts per thousand of acid before fermentation and not more than 13 per centum of alcohol after complete fermentation, shall be deemed to be wine within the meaning of this Act, and may be labeled, transported, and sold as “wine,” qualified by the name of the locality where produced, and may be further quali- fied by the name of its own particular type or variety: And provided further, that wine as defined in this section may be sweetened with cane sugar or beet sugar or pure condensed grape must and fortified under the provisions of this Act, and wines so sweetened or fortified shall be considered sweet wine within the meaning of this Act. Sec. 611. That upon all still wines, including vermuth, and all artificial or imitation wines or compounds sold as still wine, which are hereafter produced in or imported into the United States, or which on the day after the passage of this Act are on any winery premises or other bonded premises or in transit thereto or at any custom- house, there shall be levied, collected, and paid, in lieu of the internal-revenue taxes now imposed thereon by law**, taxes at rates as follows, when sold, or removed for consumption or sale: 376. On wines containing not more than 14 per centum of absolute alcohol, 16 cents per wine gallon, the per centum of alcohol taxable under this section to be reckoned by volume and not by weight; 377. On wines containing more than 14 per centum and not exceeding 21 per centum of absolute alcohol, 40 cents per wine gallon; 378. On wines containing more than 21 per centum and not exceeding 24 per centum of absolute alcohol, $1 per wine gallon; 375. Still wines, ver- m u t h, artificial or imitation wines or compounds. •Rate of $3.00 per barrel. ••Rates one-half those specified in this Act. 54 380. Withdrawal of grape brandy or wine spirits for fortifica- tion of wines. Tax of 60c proof gallon. 379. All such wines containing more than 24 per centum of absolute alcohol by volume shall be classed as distilled spirits and shall pay tax accordingly. Sec. 612. That under such regulations and official supervision and upon the giving of such notices, entries, bonds, and other security as the Commissioner, with the approval of the Secretary, may prescribe, any producer of wines defined under the provisions of this title, may withdraw from any fruit distillery or special bonded ware- house grape brandy, or wine spirits, for the fortification of such wines on the premises where actually made: Provided , that there shall be levied and assessed against the producer of such wines a tax (in lieu of the internal-revenue tax now imposed there by law*) of 60 cents per proof gallon of grape brandy or wine spirits whenever withdrawn and hereafter so used by him in the fortification of such wines during the preceding month, which assess- ment shall be paid by him within ten months from the date of notice thereof: Provided further, that nothing contained in this section shall be construed as exempting any wines, cordials, liqueurs, or similar compounds from the pay- ment of any tax provided for in this title. Sec. 613. That upon the following articles which are hereafter produced in or imported into the United States, or which on the day after the passage of this Act are on any winery premises or other bonded premises or in transit thereto or at any customhouse, there shall be levied, collected, and paid taxes at rates as follows, when sold, or removed for consumption or sale: 382. On each bottle or other container of champagne or sparkling wine, 12 cents on each one-half pint or fraction thereof: 383. On each bottle or other container of artificially carbonated wine, 6 cents on each one-half pint or fraction thereof; 384. On each bottle or other container of liqueurs, cordials, or similar com- pounds, by whatever name sold or offered for sale, containing sweet wine forti- fied with grape brandy, 6 cents on each one-half pint or fraction thereof. 385. The tax imposed by this section shall, in the case of any article upon which a corresponding internal-revenue tax is now imposed by law**, be in lieu of such tax. Sec. 614. That upon all articles specified in Section 611 {par. 375) or 613 {par. 381-385 ) upon which the internal- revenue tax now imposed by law has been paid and which are on the day after the passage of this Act held by any person and intended for sale, there shall be levied, col- lected, and paid a floor tax equal to the difference between the tax imposed by this Act and the tax so paid. Sec. 615. That upon all sweet wines held for sale by 381. Champagne or sparkling wine, car- b o n a t e d wine, liqueurs, cordials, etc. 386. Floor tax equal to difference between the two taxes. Floor tax on grape brandy or wine the producer thereof upon the day after the passage of this Act there shall be levied, assessed, collected, and snirits paid a ^ oor tax equivalent to 30 cents per proof gallon P ' upon the grape brandy or wine spirits used in the fortification of such wine. 2 gg Sec. 616. That the taxes imposed by Section 611 Tax paid by stamp {par. 375 - 379 ) or 613 {par. 381-385) shall be paid by stamp on removal on remova ^ wines from the customhouse, winery, or other bonded place of storage for consumption or sale, and every person hereafter producing, or having in his possession or under his control when this title takes effect, any wines subject to the tax imposed in Section 611 {par. 375-379) or 613 {par. 381-385) shall file such notice, describing the premises on which such wines are produced or stored; shall execute a bond in such form; shall make such inventories under oath; and shall, prior to sale or removal for consumption, affix to each cask or vessel containing such wine such marks, labels, or stamps as the Commissioner, with the approval of the Secretary, may from time to time prescribe; and the premises described in such notice shall, for the purpose of this Act, be regarded as bonded premises. But the provisions of this section, except as to payment of tax and the affixing of the required stamps or labels, shall not apply to wines held by retail dealers, 55 *Rate of 30c per proof gallon. **Rates one-half those specified in this Act. 390. Fortifying sweet wines. as defined in Section 3244 of the Revised Statutes, nor, subject to regulations prescribed by the Commissioner, with the approval of the Secretary, shall the tax imposed by Section 611 {par. 375-378) apply to wines produced for the family use of the duly registered producer thereof and not sold or otherwise removed from the place of manufacture and not exceeding in any case two hundred gallons per year. ogg Sec. 617. That Sections 42, 43, and 45 of the Act Amended laws entitled “An Act to reduce the revenue and equalize duties on imports, and for other purposes,” approved October 1, 1899, as amended by Section 68 of the Act entitled “An Act to reduce taxation, to provide revenue for the Government, and for other pur- poses,” approved August 27, 1894, are further amended to read as follows: “Sec. 42. That any producer of pure sweet wines may use in the preparation of such sweet wines, under such regulations and after the filing of such notices and bonds, together with the keeping of such records and the rendi- tion of such reports as to materials and products as the Commissioner of the Internal Revenue, with the approval of the Secretary of the Treasury, may pre- scribe, wine spirits produced by any duly authorized distiller, and the Com- missioner of Internal Revenue, in determining the liability of any distiller of wine spirits to assessment under Section 3309 of the Revised Statutes, is authorized to allow such distiller credit in his computations for the wine spirits withdrawn to be used in fortifying sweet wines under this Act. ggi “Sec. 43. That the wine spirits mentioned in Sec- Definitinn nf wine tion 42 ^ ar ' #°) is the P roduct resulting from the dis- soirits tillation of fermented grape juice, to which water may p * have been added prior to, during, or after fermentation, for the sole purpose of facilitating the fermentation and economical distillation thereof, and shall be held to include the product from grapes or their residues commonly known as grape brandy, and shall include commercial grape brandy which may have been colored with burnt sugar or caramel; and the pure sweet wine which may be fortified with wine spirits under the provisions of this Act is fermented or partially fermented grape juice only, with the usual cellar treat- ment, and shall contain no other substance whatever introduced before, at the time of, or after fermentation, except as herein expressly provided: Provided, That the addition of pure boiled or condensed grape must or pure crystallized cane or beet sugar, or pure dextrose sugar containing, respectively, not less than 95 per centum of actual sugar, calculated on a dry basis, or water, or any or all of them to the pure grape juice before fermentation, or to the fermented product of such grape juice, or to both, prior to the fortification herein pro- vided for, either for the purpose of perfecting sweet wines according to com- mercial standards or for mechanical purposes, shall not be excluded by the definition of pure sweet wine aforesaid: Provided, however , That the cane or beet sugar, or pure dextrose sugar added for sweetening purposes shall not be in excess of 11 per centum of the weight of the wine to be fortified: And provided further, That the addition of water herein authorized shall be under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may from time to time prescribe: Provided, however, That records kept in accordance with such regulations as to the percentage of saccharine, acid, alcoholic, and added water content of the wine offered for fortification shall be open to inspection by any official of the Department of Agriculture thereto duly authorized by the Secretary of Agricul- ture; but in no case shall such wines to which water has been added be eligible for fortification under the provisions of this Act, where the same, after fer- mentation and before fortification, have an alcoholic strength of less than 5 per centum of their volume. “Sec. 45. That under such regulations and official . , , . f supervision, and upon the execution of such entries and Withdrawal ot t ^ e g{ v j n g G f such bonds, bills of lading, and other security wine spirits. as t j ie Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, any producer of pure sweet wines as defined by this Act may withdraw wine spirits from any special bonded warehouse in original packages or from any registered dis- tillery in any quantity not less than eighty wine gallons, and may use so much of the same as may be required by him under such regulations, and after the filing of such notices and bonds and the keeping of such records and the 56 endition of such reports as to materials and products and the disposition of the same as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, in fortifying the pure sweet wines made by him, and for no other purpose, in accordance with the foregoing limitations and provisions; and the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, is authorized whenever he shall deem it to be necessary for the prevention of violations of this law to pre- scribe that wine spirits withdrawn under this section shall not be used to fortify wines except at a certain distance prescribed by him from any distillery, rectifying house, winery, or other establishment used for producing or storing distilled spirits, or for making or storing wines other than wines which are so fortified, and that in the building in which such fortification of wines is prac- ticed no wines or spirits other than those permitted by this regulation shall be stored in any room or part of the building in which fortification of wines is practiced. The use of wine spirits for the fortification of sweet wines under this Act shall be under the immediate supervision of an officer of internal revenue, who shall make returns describing the kinds and quantities of wine so fortified, and shall affix such stamps and seals to the packages containing such wines as may be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury; and the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall provide by regulations the time within which wines so fortified with the wine spirits so withdrawn may be subject to inspection, and for final accounting for the use of such wine spirits and rewarehousing or for payment of the tax on any portion of such wine spirits which remain not used in fortifying pure sweet wines.” 300 Sec. 618. (a) That under such regulations and upon t? ~i «f • the execution of such notices, entries, bonds, and other ov o w s. secur ity as the Commissioner, with the approval of the Secretary, may prescribe, domestic wines subject to the tax imposed by Sec- tion 611 (par. 375-378) may be removed from the winery where produced, free of tax, for storage on other bonded premises or from such premises to other bonded premises (but not more than one such additional removal shall be allowed), or for exportation . from the United States or for use as distilling material at any regularly registered distillery: Provided, however. That the dis- tiller using any such wine as material shall, subject to the provisions of Section 3309 of the Revised Statutes, as amended, be held to pay the tax on the product of such wines as will include both the alcoholic strength therein produced by fermentation and that obtained from the brandy or wine spirits added to such wines at the time of fortification. (b) Under regulations prescribed by the Commis- 394. sioner with the approval of the Secretary, it shall be non beverae-e nur lawful to produce grape wines on bonded winery premises Doses & P "by the usual method, and to transport and use the same, and like wines heretofore produced and now stored on bonded winery premises, as distilling material for the production of non- beverage spirits in the production of nonalcoholic wines, containing less than ^ of 1 per centum of*alcohol by volume, in any fruit brandy or industrial distillery: Provided, That all alcoholic spirits so obtained at any industrial dis- tillery shall be denatured, and all spirits so obtained at any fruit distillery shall be removed and used only for non-beverage purposes or for denaturation. - Sec. 619. That the collection of the tax on imported rtf Tav st ^ wines, including vermuth, and sparkling wines, in- * eluding champagne, and on imported liqueurs, cordials, and similar compounds, may be made within the discretion of the Commis- sioner, with the approval of the Secretary, by assessment instead of by stamps. 3 gg Sec. 620. That whoever evades or attempts to evade FWiaRiV* any tax im Posed by Sections 611 to 615 (par. 37 5-387), both fnr virtlafirmc r«f inclusive, or any requirement of Sections 610 to 621 (par. for violations of law. m _ 397 ^ both incl ^ sive , G r regulation . issued pursuant thereto, or whoever, otherwise than as provided in such sections, recovers or attempts to recover any spirits from domestic or imported wine, or whoever rectifies, mixes, or compounds with distilled spirits any domestic wines, other than in the manufacture of liqueurs, cordials, or similar compounds, shall on conviction, be punished for each such offense by a fine of not exceeding $5,000, or imprisonment for not more than five years, or both, and in addition thereto 57 397. Commissioner may require use of meters, locks, and seals. by a penalty of double the tax evaded, or attempted to be evaded, to be assessed and collected in the same manner as taxes are assessed and collected, and all wines, spirits, liqueurs, cordials, or similar compounds as to which such violation occurs shall be forfeited to the United States. But the provisions of this section and the provisions of Section 3244 of the Revised Statutes, as amended, relating to rectification, or other internal-revenue laws of the United States, shall not be held to apply to or prohibit the mixing or blending of wines subject to tax under the provisions of Sections 611 to 615 {par. 375-387 ), both inclusive, with each other or with other wines for the sole purpose of perfecting such wines according to commercial standards: Provided, that nothing herein contained shall be construed as prohibiting the use of tax-paid grain or other ethyl alcohol in the fortification of sweet wines as defined in Section 610 {par. 374 ) of this Act and Section 43 {pa.r. 391 ) of the Act entitled “An Act to reduce the revenue and equalize duties on imports, and for other purposes,” approved October 1, 1890, as amended by this Act. Sec. 621. That the Commissioner, by regulations to be approved by the Secretary, may require the use at each fruit distillery of such spirit meters, and such locks and seals to be affixed to fermenters, tanks, or other vessels and to such pipe connections as may in his judg- ment be necessary or expedient, and is hereby authorized to assign to any such distillery and to each winery where wines are to be fortified such number of gaugers or storekeeper-gaugers in the capacity of gaugers as may be neces- sary for the proper supervision of the manufacture of brandy or the making or fortifying of wines subject to tax imposed by this section; and the compensa- tion of such officers shall not exceed $5 per diem while so assigned, together with their actual and necessary traveling expenses, and also a reasonable allow- ance for their board bills, to be fixed by the Commissioner, with the approval of the Secretary, but not to exceed $2.50 per diem for such board bills. 2 gg Sec. 622. That the Commissioner, with the approval Allowance for loss. of the Secretary, is hereby authorized to make such allow- ances for unavoidable loss of wines while on storage or during cellar treatment as in his judgment may be just and proper. Sec.- 623. That the second paragraph of Section 3264 of the Revised Statutes, as amended by Section 5 of the Act of March 1, 1879, and as further amended by the Act of June 22, 1910, be amended so as to read as follows: “In all surveys forty-five gallons of mash or beer brewed or fermented from grain shall represent not less than one bushel of grain, and seven gallons of mash or beer brewed or fermented from molasses shall represent not less than one gallon of molasses, except in distilleries operated on the sour- mash principle, in which distilleries sixty gallons of beer brewed or fermented from grain shall represent not less than one bushel of grain, and except that in distilleries where the filtration-aeration process is used, with the approval of the Commissioner of Internal Revenue; that is, where the mash after it leaves the mash tub is passed through a filtering machine before it is run into the fermenting tub, and only the filtered liquor passes into the fermenting tub, there shall hereafter be no limitation upon the number of gallons of water which may be used in the process of mashing or filtration for fermentation; but the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, in order to protect the revenue, shall be authorized to pre- scribe by regulation, to be made by him, such character of survey as he may find suitable for distilleries using such filtration-aeration process. The pro- vision hereof relating to filtration-aeration process shall apply only to sweet- mash distilleries.” Sec. 624. That under such regulations as the Com- missioner, with the approval of the Secretary, may pre- scribe, alcohol or other distilled spirits of a proof strength of not less than one hundred and eighty degrees intended for export free of tax may be drawn from receiving cisterns at any distillery, or from storage tanks in any distillery warehouse, for transfer to tanks or tank cars for export from the United States, and all provisions of existing law relating to the exportation of distilled spirits not inconsistent herewith shall apply to spirits removed for export under the provisions of this Act. 399. Portion Sec. 3264 R. S. amended. 400. Basic grain and molasses in distilling. 401. Alcohol or other distilled spirits in- tended for export. 58 402. Sec. 625. That Section 3255 of the Revised Statutes Sec. 3255 R. S. as amended by the Act of June 3, 1896, and as further amended. amended by the Act of March 2, 1911, be further amended so as to read as follows: 403. Commissioner may sively of fruit from provisions relating to mfr. of spirits, except as to tax. “Sec. 3255. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may exemot distillers of exem P t distillers of brandy made exclusively from apples, brandy made exclu- P eac . hes - grapes, pears, pineapples, oranges, apricots, c i^Ur fruit frnn, berries, plums, pawpaws, persimmons, prunes, figs, or cherries from any provision of this title relating to the manufacture of spirits, except as to the tax thereon, when in his judgment it may seem expedient to do so: Provided, that where, in the manufacture of wine, artificial sweet- ening has been used the wine or the fruit pomace residuum may be used in the distillation of brandy, and such use shall not prevent the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, from exempting such distiller from any provision of this title relating to the manu- facture of spirits, except as to the tax thereon, when in his judgment it may seem expedient to do so: And provided further, That the distillers mentioned in this section may add to not less than five hundred gallons (or ten barrels) of grape cheese not more than five hundred gallons of a sugar solution made from cane, beet, starch, or corn sugar, 95 per centum pure, such solution to have a saccharine strength of not to exceed 10 per centum, and may ferment the resultant mixture on a winery or distillery premises, and such fermented product shall be regarded as distilling material.” Sec. 626. That distilled spirits known commercially ^ u i. p .as gin of not less than 80 per centum proof may at any uin or expor . time within eight years after entry in bond at any dis- tillery be bottled in bond at such distillery for export without the payment of tax, under such rules and regulations as the Commissioner, with the approval of the Secretary, may prescribe. 405. Sec. 3354 amended. R. S. 406. Withdrawal of fer- Sec. 627. That Section 3354 of the Revised Statutes as amended by the Act approved June 18, 1890, be, and is hereby, amended to read as follows: “Sec. 3354. Every person who withdraws any fer- mented liquor from any hogshead, barrel, keg, or other t j 1 • f " vessel upon which the proper stamp has not been affixed bottline: ** for t ^ ie P ur P° se °f bottling the same, or who carries on or attempts to carry on the business of bottling fermented liquor in any brewery or other place in which fermented liquor is made, or upon any premises having communication with such brewery, or any ware- house, shall be liable to a fine of $500, and the property used in such bottling or business shall be liable to forfeiture: Provided, however. That this section shall not be construed to prevent the withdrawal and transfer of unfermented, partially fermented, or fermented liquors from any of the vats in any brewery by way of a pipe line or other conduit to another building or place for the sole purpose of bottling the same, such pipe line or conduit to be constructed and operated in such manner and with such cisterns, vats, tanks, valves, cocks, faucets, and gauges, or other utensils or apparatus, either on the premises of the brewery or the bottling house, and with such changes of or additions thereto, and such locks, seals, or other fastenings, and under such rules and regulations as shall be from time to time prescribed by the Commissioner of Internal Revenue, subject to the approval of the Secretary of the Treasury, and all locks and seals prescribed shall be provided by the Commissioner of Internal Revenue at the expense of the United States: Provided further, That the tax imposed in Section 3339 of the Revised Statutes shall be paid on all fermented liquor removed from a brewery to a bottling house by means of a pipe or conduit, at the time of such removal, by the cancellation and defacement, by the col- lector of the district or his deputy, in the presence of the brewer, of the num- ber of stamps denoting the tax on the fermented liquor thus removed. The stamps thus canceled and defaced shall be disposed of and accounted for in the manner, directed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury. And any violation of the rules and regula- tions hereafter prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, in pursuance of these provisions, shall be subject to the penalties above provided by this section. Every owner, 59 agent, or superintendent of any brewery or bottling house who removes, or connives at the removal of, any fermented liquor through a pipe line or con- duit, without payment of the tax thereon, or who attempts in any manner to defraud the revenue as above, shall forfeit all the liquors made by and for him, and all the vessels, utensils, and apparatus used in making the same.” 407. Taxes on Sec. 628. That there shall be levied, assessed, collected, and paid in lieu of the taxes imposed by Sections 313 and 315 of the Revenue Act of 1917* — (a) Upon all beverages derived wholly or in part from cereals or substitutes therefor, and containing less than one- half of one per centum of alcohol, sold by the manufacturer, producer, or importer, in bottles or other closed containers, a tax equivalent to 15 per centum of the price for which so sold ; and upon all unfermented grape juice, ginger ale, root beer, sarsaparilla, pop, artificial mineral waters (carbonated or not carbonted), other carbonated waters or beverages, and other soft drinks, sold by the manufacturer, producer, or importer, in bottles or other closed containers, a tax equivalent to 10 per centum of the price for which so sold ; and 408. Beverages derived from cereals or sub- stitutes. (b) Upon all natural mineral waters or table waters, sold by the producer, bottler, or importer thereof, in bottles or other closed containers, at over 10 cents per gallon, a tax of 2 cents per gallon. Sec. 629. That each manufacturer, producer, bottler, or importer of any of the articles enumerated in Section 628 (par. 408-409) shall make monthly returns under oath in duplicate and pay the taxes imposed in respect to such articles by such section to the collector for the district in which is located the principal place of business, containing such information necessary for the assessment of the tax, and at such times and in such manner as the Commissioner, with the approval of the Secretary, may by regulation prescribe. 409. Natural mineral or table waters. 410. Monthly returns. The tax shall, without assessment by the Commissioner a „ a nav or notice from the collector, be due and payable to the col- ment y P y - lector at the time so fixed for filing the return. If the tax is not paid when due, there shall be added as part of the tax a penalty of 5 per centum, together with interest at the rate of 1 per centum for each full month, from the time when the tax became due. Sec. 630. That on and after May 1, 1919, there shall be levied, assessed, collected, and paid a tax of 1 cent for each 10 cents or fraction thereof of the amount paid to any person conducting a soda fountain, ice-cream parlor, or other similar place of business, for drinks commonly known as soft drinks, compounded or mixed at such place of business, or for ice cream, ice cream sodas, sundaes, or other similar articles of food or drink, when any of the above are sold on or after such date for consumption in or in proximity to such place of business. Such tax shall be paid by the purchaser to the vendor at the time of the sale and shall be collected, returned, and paid to the United States by such vendor in the same manner as provided in Section 502 (par. 336-340). 412. Effective May 1, 1919, tax on soft drinks, ice cream, etc., consumed at place of business. TITLE VII.— TAX ON CIGARS, TOBACCO, AND MANUFACTURES THEREOF 413. Sec. 700. (a) That upon cigars and cigarettes manufactured in or imported into the United States, and hereafter sold by the manufacturer or importer, or removed for consumption or sale, there shall be levied, collected, and paid under the provisions *Tax upon all prepared sirups or extracts used in manufacture of soft drinks if sold for not more than $1.30 per gallon, 5c; between $1.30 and $2, 8c; between $2 and $3, 10c; between $3 and $4, 15c, and if sold for more than $4, 20c. Unfermented grape juice, soft drinks or artificial mineral waters (not carbonated) and fermented liquors containing less than J4 % alcohol, sold by manufacturer, producer or importer in bottles or closed containers, lc. Ginger ale, root beer, sarsaparilla, pop and all other carbonated waters or beverages manufactured and sold by manufacturer, producer or importer of the carbonic-acid gas used in carbonating same, lc per gallon. Natural mineral waters or table waters sold by producer, bottler or importer in bottles or other closed containers at over 10c per gallon, tax of lc. Carbonic-acid gas in drums or other containers (intended for use in manufacture or production of carbonated water or other drinks) sold by manufacturer, producer or importer thereof, tax of 5c per pound. 60 414. Tax on cigars. 418. Determination price. of 419. Designating paid label. tax of existing law, in lieu of the internal-revenue taxes now imposed* thereon by law, the following taxes, to be paid by the manufacturer or importer thereof — On cigars of all descriptions made of tobacco, or any sub- stitute therefor, and weighing not more than three pounds per thousand, $1.50 per thousand; 415. On cigars made of tobacco, or any substitute therefor, and weighing more than three pounds per thousand, if manufactured or imported to retail at not more than 5 cents each, $4 per thousand; If manufactured or imported to retail at more than 5- cents each and not more than 8 cents each, $6 per thousand ; If manufactured or imported to retail at more than 8 cents each and not more than 15 cents each, $9 per thousand; If manufactured or imported to retail at more than 15 cents each and not more than 20 cents each, $12 per thousand; If manufactured or imported to retail at more than 20 cents each, $15 per thousand ; On cigarettes made of tobacco, or any substitute therefor, . .. and weighing not more than three pounds per thousand, $3 Tax on cigarettes. per thou ° san< f. 417. Weighing more than three pounds per thousand, $7.20 per thousand. (b) Whenever in this section reference is made to cigars manufactured or imported to retail at not over a certain price each, then in determining the tax to be paid regard shall be had to the ordinary retail price of a single cigar. (c) The Commissioner may, by regulation, require the manufacturer or importer to affix to each box, package, or container a conspicuous label indicating the clause of this section under which the cigars therein contained have been tax-paid, which must correspond with the tax-paid stamp on such box or container. (d) Every manufacturer of cigarettes (including small cigars weighing not more than three pounds per thousand) shall put up all the cigarettes and such small cigars that he manufactures or has manufactured for him, and sells or re- moves for consumption or sale, in packages or parcels contain- ing five, eight, ten, twelve, fifteen, sixteen, twenty, twenty- four, forty, fifty, eighty, or one hundred cigarettes each, and shall securely affix to each of such packages or parcels a suitable stamp denoting the tax thereon and shall properly cancel the same prior to such sale or removal for con- sumption or sale under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe ; and all cigarettes imported from a foreign country shall be packed, stamped, and the stamps canceled in a like manner, in addition to the import stamp indicating inspection of the customhouse before they are withdrawn therefrom. .£i Sec. 701. (a) That upon all tobacco and snuff manufac- T harm a«H cnnff ture d in or imported into the United States, and hereafter ° sold by the manufacturer or importer, or removed for con- sumption or sale, there shall be levied, collected, and paid, in lieu of the internal-revenue taxes now imposed thereon by law**, a tax of 18 cents per pound, to be paid by the manufacturer or importer thereof. Sec. 3362 R. S. (b) Section 3362 of the Revised Statutes, as amended, amended. is hereby amended to read as follows : 422 “Sec. 3362. All manufactured tobacco shall be put up Packages manu- anc ^ P re P arec ^ by the manufacturer for sale, or removal for factured tobacco " sa ^ e or consum Pti° n > i n packages of the following description 1 co ‘ and in no other manner : 423. “All smoking tobacco, snuff, fine-cut chewing tobacco, all cut and granulated tobacco, all shorts, the refuse of fine-cut chewing, which has passed through a riddle of thirty-six meshes to the square inch, and all refuse scraps, clippings, cuttings, and *Cigars weighing not more than 3 lbs. per 1,000 tax of $1.00 per M, weighing more than 3 lbs. per M, retailed at less than 4c each $3; retailing 4c to 7c, $4; 7c — 15c, $6; 15c — 20c, $8 and more than 20c each $10; and cigarettes weighing not more than 3 lbs. per 1,000 $2.05, and if weighing more than 3 lbs. per 1,000, $4.80. **Tax at rate of 13c per pound. 420. Number of cigar- ettes and small cigars put in packages, stamps affixed and cancelled. 61 sweepings of tobacco, and all other kinds of tobacco not otherwise provided for, in packages containing one-eighth of an ounce, three-eighths of an ounce, and further packages with a difference between each package and the one next smaller of one- eighth of an ounce up to and including two ounces, and further packages with a difference between each package and the one next smaller of one-fourth of an ounce up to and including four ounces, and packages of five ounces, six ounces, seven ounces, eight ounces, ten ounces, twelve ounces, fourteen ounces, and sixteen ounces : Provided, that snuff may, at the option of the manufacturer, be put up in bladders and in jars containing not exceeding twenty pounds. “All cavendish, plug, and twist tobacco, in wooden pack- ages not exceeding two hundred pounds net weight. “And every such wooden package shall have printed or marked thereon the manufacturer’s name and place of manu- facture, the registered number of the manufactory, and the gross weight, the tare, and the net weight of the tobacco in each package : Provided, that these limitations and descriptions of packages shall not apply to tobacco and snuff transported in bond for exportation and actually ex- ported : And provided further, that perique tobacco, snuff flour, fine-cut shorts, the refuse of fine-cut chewing tobacco, refuse scraps, clippings, cuttings, and sweepings of tobacco, may be sold in bulk as material, and without the payment of tax, by one manufacturer directly to another manufacturer, or for export, under such restrictions, rules, and regulations as the Commissioner of Internal Revenue may prescribe: And provided further, that wood, metal, paper, or other materials may be used separately or in combination for packing tobacco, snuff, and cigars, under such regulations as the Commissioner of Internal Revenue may establish.” 424. Tobacco in wood. 425. Markings on wood- en packages. 426. Floor tax. Sec. 702. That upon all the articles enumerated in Sec- tion 700, (par. 413-417), or 701 (par. 421 ), which were manu- factured or imported, and removed from factory or custom- house on or prior to the date of the passage of this Act, and upon which the tax imposed by existing law has been paid, and which are, on the day after the passage of this Act, held by any person and intended for sale, there shall be levied, assessed, collected, and paid a floor tax equal to the difference between (a) the tax imposed by this Act upon such articles according to the class in which they are placed by this title, and (b) the tax imposed upon such articles by existing law other than Section 403 of the Revenue Act of 1917. Sec. 703. That there shall be levied, collected, and paid, in lieu of the taxes imposed by Section 404 of the Revenue Act of 1917*, upon cigarette paper made up into packages, books, sets, or tubes, made up in or imported into the United States and hereafter sold by the manufacturer or importer to any person (other than to a manufacturer of cigarettes for use by him in the manufacture of cigarettes) the follow- ing taxes, to be paid by the manufacturer or importer: On each package, book, or set, containing more than twenty-five but not more than fifty papers, J4 cent ; con- taining more than fifty but not more than one hundred papers, 1 cent; containing more than one hundred papers, 54 cent for each fifty papers or fractional part thereof ; and upon tubes, 1 cent for each fifty tubes or fractional part thereof. 427. Tax on cigarette paper made up into packages, books, sets or tubes. 428. Bond of manufac- turers purchasing cigarette tubes. Every manufacturer of cigarettes purchasing any cigarette paper made up into tubes (a) shall give bond in an amount and with sureties satisfactory to the Commissioner that he will use such tubes in the manufacture of cigarettes or pay thereon a tax equivalent to the tax imposed by this section, and (b) shall keep such records and render under oath such returns as the Commis- sioner finds necessary to show the disposition of all tubes purchased or imported by such manufacturer of cigarettes. 42 g Sec. 704. That Section 35 of the Act entitled “An Act c .. 11 to provide revenue, equalize duties and encourage the in- ^ ’ dustries of the United States, and for other purposes,” ap- proved August 5, 1909, be, and is hereby, repealed, to take effect April 1, 1919. Sec. 3360 amended. R. S. That Section 3360 of the Revised Statutes be, and is hereby, amended to read as follows : *Tax same as this Act but cigarette papers taxed at rate of lc and tubes 2c for each 100 or fraction. 62 430. Statement filed by dealers in leaf to- bacco. 431. Bond with surety. “Sec. 3360. (a) Every dealer in leaf tobacco shall file with the collector of the district in which his business is carried on, a statement in duplicate, subscribed under oath, setting forth the place, and, if in a city, the street and number of the street, where his business is to be carried on, and the exact location of each place where leaf tobacco is held by him on storage, and, when- ever he adds to or discontinues any of his leaf tobacco storage places, he shall give immediate notice to the collector of the district in which he is registered. “Every such dealer shall give a bond with surety, satis- factory to, and to be approved by, the collector of the district, in such penal sum as the collector may require, not less than $500; and a new bond may be required in the discretion of the collector or under instructions of the Commissioner. 432 “Every such dealer shall be assigned a number by the col- Certificate and ^ ector t ^ ie district, which number shall appear in every number inventory, invoice and report rendered by the dealer, who shall also obtain certificates from the collector of the district setting forth the place where his business is carried on and the places designated by the dealer as the places of storage of his tobacco, which certificates shall be posted conspicuously within the dealer’s registered place of business, and within each desig- nated place of storage. “(b) Every dealer in leaf tobacco shall make and deliver ^ y . to the collector of the district a true inventory of the quantity inventories. Q f t jj e different kinds of tobacco held or owned, and where stored by him, on the first day of January of each year, or at the time of commencing and at the time of concluding business, if before or after the first day of January, such inventory to be made under oath and rendered in such form as may be prescribed by the Commissioner. 434 “Every dealer in leaf tobacco shall render such invoices ^ , and keep such records as shall be prescribed by the Commis- icecoras. sioner, and shall enter therein, day by day, and upon the same day on which the circumstance, thing or act to be recorded is done or occurs, an accurate account of the number of hogsheads, tierces, cases and bales, and quantity of leaf tobacco contained therein, purchased or received by him, on assignment, con- signment, for storage, by transfer or otherwise, and of whom purchased or received, and the number of hogsheads, tierces, cases and bales, and the quantity of leaf tobacco contained therein, sold by him, with the name and residence in each instance of the person to whom sold, and if shipped, to whom shipped, and to what district; such records shall be kept at his place of business at all times and preserved for a period of two years, and the same shall be open at all hours for the inspection of any internal-revenue officer or agent. 43 - “Every dealer in leaf tobacco on or before the tenth day ^ Monthlv renort °* eac ^ mont ^» furnish to the collector of the district 0 1 y p a true and complete report of all purchases, receipts, sales and shipments of leaf tobacco made by him during the month next preceding, which report shall be verified and rendered in such form as the Commissioner, with the approval of the Secretary, shall prescribe. 436 “(c) Sales or shipments of leaf tobacco by a dealer in c of adhesive stamps to be distributed to and kept on sale by p * the various postmasters in the United States. The Post- master General may require each such postmaster to give additional or increased bond as postmaster for the value of the stamps so furnished, and each such postmaster shall deposit the receipts from the sale of such stamps to the credit of and render accounts to the Postmaster General at such times and in such form as he may by regulations prescribe. The Postmaster General shall at least once monthly transfer all collections from this source to the Treasury as internal-revenue collections. ,g Q Sec. 1107. That the collectors of the several districts Q’tomncfnmiciipH shall furnish without prepayment to any assistant treasurer or or designated depositary of the United States located in their /lAciVnafpri respective collection districts a suitable quantity of adhesive taries of U S P " stam P s f° r sa ^ e *. I n such cases the collector may require a bond, with sufficient sureties, to an amount equal to the value of the adhesive stamps so furnished, conditioned for the faithful return, whenever so 77 591. Bonds of indebted- ness. required, of all quantities or amounts undisposed of, and for the payment monthly of all quantities or amounts sold or not remaining on hand. The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all such adhesive stamps. SCHEDULE A.— STAMP TAXES (1) Bonds of indebtedness: On all bonds, debentures, or certificates of indebtedness issued by any person, and all instruments, however termed, issued by any corporation with interest coupons or in registered form, known generally as corporate securities, on each $100 of face value or fraction thereof, 5 cents : Provided , That every renewal of the foregoing shall be taxed as a new issue : Provided further, That when a bond conditioned for the repayment or payment of money is given in a penal sum greater than the debt secured, the tax shall be based upon the amount secured. 2 Q 2 (2) Bonds, indemnity and surety : On all bonds executed Tnrl#»rrmifv nnd cur f° r indemnifying any person who shall have become bound ety bonds ” or engaged as surety, and on all bonds executed for the due y * execution or performance of any contract, obligation or requirement, or the duties of any office or position, and to account for money received by virtue thereof, and on all policies of guaranty and fidelity insurance, including policies guaranteeing titles to real estate and mortgage guarantee policies, and on all other bonds of any description, made, issued, or executed, not otherwise provided for in this schedule, except such as may be required in legal proceedings, 50 cents : Provided , That where a premium is charged for the issuance, execution, renewal or continuance of such bond the tax shall be 1 cent on each dollar or fractional part thereof of the premium charged: Provided further, That policies of reinsurance shall be exempt from the tax imposed by this subdivision. ego (3) Capital stock, issue: On each original issue, whether r’anital on organization or reorganization, of certificates of stock, or p ' of profits, or of interest in property or accumulations, by any corporation, on each $100 of face value or fraction thereof, 5 cents : Provided, That where a certificate is issued without face value, the tax shall be 5 cents per share, unless the actual value is in excess of $100 per share, in which case the tax shall be 5 cents on each $100 of actual value or fraction thereof. 594. The stamps representing the tax imposed by this subdivision shall be attached to the stock books and not to the certificates issued. (4) Capital stock, sales or transfers: On all sales, or < 5 * i rw f r9 ncfprc agreements to sell, or memoranda of sales or deliveries of, of capital stock or trans ^ ers °f legal title to shares or certificates of stock p * or of profits or of interest in property or accumulations in any corporation, or to rights to subscribe for or to receive such shares or certificates, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, interest, or rights, or not, on each $100 of face value or fraction thereof, 2 cents, and where such shares are without par or face value, the tax shall be 2 cents on the transfer or sale or agreement to sell on each share, unless the actual value thereof is in excess of $100 per share, in which case the tax shall be 2 cents on each $100 of actual value or fraction thereof : Provided, That it is not intended by this title to impose a tax upon an agreement evidencing a deposit of certificates as collateral security for money loaned thereon, which certificates are not actually sold, nor upon the delivery or transfer for such purpose of certificates so deposited : Provided further. That the tax shall not be imposed upon deliveries or transfers to a broker for sale, nor upon deliveries or transfers by a broker to a customer for whom and upon whose order he has purchased same, but such deliveries or transfers shall be accompanied by a certificate setting forth the facts : Provided further, That in case of sale where the evidence of transfer is shown only by the books of the corporation the stamp shall be placed upon such books ; and where the change of ownership is by transfer of the certificate the stamp shall be placed upon the certificate; and in cases of agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed ; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the seller, the amount of the sale, and the - 78 matter or thing to which it refers. Any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale, or who in pursuance of any such sale delivers any certificate or evidence of the sale of any stock, interest or right, or bill or memorandum thereof, as herein required, without having the proper stamps affixed thereto with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000, or be imprisoned not more than six months, or both. 596. Sales of produce on exchange for future delivery. (5) Produce, sales of, on exchange: Upon each sale, agreement of sale, or agreement to sell (not including so- called transferred or scratch sales), any products or mer- chandise at, or under the rules or usages of, any exchange, or board of trade, or other similar place for future delivery, for each $100 in value of the merchandise covered by said sale or agreement of sale or agreement to sell, 2 cents, and for each additional $100 or fractional part thereof in excess of $100, 2 cents : Provided, That on every sale or agreement of sale or agreement to sell as aforesaid there shall be made and delivered by the seller to the buyer a bill, memorandum, agreement, or other evidence of such sale, agreement of sale, or agreement to sell, to which there shall be affixed a lawful stamp or stamps in value equal to the amount of the tax on such sale : Provided further, That sellers of commodities described herein, having paid the tax provided by this subdivision, may transfer such contracts to a clearing-house corporation or association, and such transfer shall not be deemed to be a sale, or agreement of sale, or an agreement to sell within the provisions of this Act, provided that such transfer shall not vest any beneficial interest in such clearing-house association but shall be made for the sole purpose of enabling such clearing-house association to adjust and balance the accounts of the members of such clearing-house association on their several contracts. Every such bill, memorandum, or other evidence of sale or agreement to sell shall show the date thereof, the name of the seller, the amount of the sale, and the matter or thing to which it refers ; and any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale or agreement of sale, or agreement to sell, or who, in pursuance of any such sale, agreement of sale, or agreement to sell, delivers any such products or merchandise without a bill, memorandum, or other evidence thereof as herein required, or who delivers such bill, memorandum, or other evidence of sale, or agreement to sell, without having the proper stamps affixed thereto, with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000 or be imprisoned not more than six months or both. No bill, memorandum, agreement, or other evidence of such sale, or agreement of sale, or agreement to sell, in case of cash sales of products or merchandise for immediate or prompt delivery which in good faith are actually intended to be delivered shall be subject to this tax. (6) Drafts or checks (payable otherwise than at sight or on demand) upon their acceptance or delivery with the United States whichever is prior, promissory notes, except bank notes issued for circulation, and for each renewal of 2 cents; and for each additional $100 or 597. Cash sales for prompt delivery not taxed. 598. Drafts, checks and promissory notes. the same, for a sum not exceeding $100, fractional part thereof, 2 cents, egg This subdivision shall not apply to a promissory note onnUroKU secured by the pledge of bonds or obligations of the United * / States issued after April 24, 1917, or secured by the pledge of a promissory note which itself is secured by the pledge of such bonds or obligations : Provided, That in either case the par value of such bonds or obligations shall be not less than the amount of such note. 600. Conveyances. (7) Conveyances: Deed, instrument, or writing, whereby any lands, tenements, or other realty sold shall be granted, assigned, transferred, or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his, her, or their direction, when the consideration or value of the interest or property conveyed, exclusive of the value of any lien or encumbrance remaining thereon at the time of sale, exceeds $100 and does not exceed $500, 50 cents ; and for each additional $500 or fractional part thereof, 50 cents. This subdivision shall not apply to any instrument or writing given to secure a debt. 79 601. Entry of goods at customhouse. 602. Entry for with- drawal. (8) Entry of any goods, wares, or merchandise at any customhouse, either for consumption or warehousing, not exceeding $100 in value, 25 cents ; exceeding $100 and not exceeding $500 in value, 50 cents; exceeding $500 in value, $1. (9) Entry for the withdrawal of any goods or merchan- dise from customs bonded warehouse, 50 cents. (10) Passage ticket, one way or round trip, for each T? man naccaap passenger, sold or issued in the United States for passage tickets ^ ^ § by any vessel to a port or place not in the United States, ' Canada, or Mexico, if costing not exceeding $30, $1 ; costing more than $30 and not exceeding $60, $3 ; costing more than $60, $5. This sub- division shall not apply to passage tickets costing $10 or less. (11) Proxy for voting at any election for officers, or 0 p . meeting for the transaction of business, of any corporation, roxies. except religious, educational, charitable, fraternal, or literary societies, or public cemeteries, 10 cents. 60 - (12) Power of attorney granting authority to do or per- p r form some act for or in behalf of the grantor, which ow ° 0 y* authority is not otherwise vested in the grantee, 25 cents. This subdivision shall not apply to any papers necessary to be used for the collection of claims from the United States or from any State for pensions, back pay, bounty, or for property lost in the military or naval service, or to powers of attorney required in bankruptcy cases. 603. 606. Playing cards. tax of 8 cents per pack. (13) Playing cards: Upon every pack of playing cards containing not more than fifty-four cards, manufactured or imported, and sold, or removed for consumption or sale, a 609. Policies or instru- m e n t s of insurance not signed or coun- tersigned by an of- ficer or agent of in- surer in U. S. gQ~ (14) Parcel-post packages: Upon every parcel or package Parcel cost oack- trans P orte d from one point in the United States to another p p " by parcel post on which the postage amounts to 25 cents or s ' more, a tax of 1 cent for each 25 cents or fractional part thereof charged for such transportation, to be paid by the consignor. 608. No such parcel or package shall be transported until a stamp or stamps representing the tax due shall have been affixed thereto. (15) On each policy of insurance, or certificate, binder, covering note, memorandum, cablegram, letter, or other in- strument by whatever name called whereby insurance is made or renewed upon property within the United States (including rents and profits) against peril by sea or on inland waters or in transit on land (including trans-shipments and storage at terminal or way points) or by fire, lightning, tornado, wind- storm, bombardment, invasion, insurrection or riot, issued to or for or in the name of a domestic corporation or partnership or an individual resident of the United States by any foreign corporation or partnership or any individual not a resident of the United States, when such policy or other instrument is not signed or countersigned by an officer or agent of the insurer in a State, Territory, or district of the United States within which such insurer is authorized to do business, a tax of 3 cents on each dollar, or fractional part thereof of the premium charged : Provided, That policies of re-insurance shall be exempt from the tax imposed by this subdivision. g.Q Any person to or for whom or in whose name any •p*>naifT 7 foHurA such policy or other instrument is issued, or any solicitor or . affiv broker acting for or on behalf of such person in the procure- p ' ment of any such policy or other instrument, shall affix the proper stamps to such policy or other instrument, and for failure to affix such stamps with intent to evade the tax shall, in addition to other penalties provided therefor, pay a fine of double the amount of the tax. TITLE XII.— TAX ON EMPLOYMENT OF CHILD LABOR 611. Sec. 1200. That every person (other than a bona fide Mine or quarry boys’ or girls’ canning club recognized by the Agricultural e m p 1 oying children Department of a State and of the United States) operating under 16, or mill, can- (a) any mine or quarry situated in the United States in 80 nery, workshop, fac- which children under the age of sixteen years have been tory or manufactur- employed or permitted to work during any portion of the ing establishment em- taxable year; or (b) any mill, cannery, workshop, factory, or ploying children un- manufacturing establishment situated in the United States der 14. in which children under the age of fourteen years have been employed or permitted to work, or children between the ages of fourteen and sixteen have been employed or permitted to work more than eight hours in any day or more than six days in any week, or after the hour of seven o’clock post meridian, or before the hour of six o’clock ante meridian, during any portion of the taxable year, shall pay for each taxable year, in addition to all other taxes imposed by law, an excise tax equivalent to 10 per centum of the entire net profits received or accrued for such year from the sale or disposition of the product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment. Sec. 1201. That in computing net profits under the pro- visions of this title, for the purpose of the tax there shall be allowed as deductions from the gross amount received or 612. Computation of net profits. accrued for the taxable year from the sale or disposition of 618. Where person sells products at less than fair market price. such products manufactured within the United States the following items : 613. (a) The cost of raw materials entering into the production; 614. (b) Running expenses, including rentals, cost of repairs, and maintenance, heat, power, insurance, management, and a reasonable allowance for salaries or other compensations for personal services actually rendered, and for depreciation ; 615. (c) Interest paid within the taxable year on debts or loans contracted to meet the needs of the business, and the proceeds of which have been actually used to meet such needs ; 616. (d) Taxes of all kinds paid during the taxable year with respect to the business or property relating to the production ; and 617. (e) Losses actually sustained within the taxable year in connection with the business of producing such products, including lossses from fire, flood, storm, or other casualties, and not compensated for by insurance or otherwise. Sec. 1202. That if any such person during any taxable year or part thereof, whether under any agreement, arrange- ment, or understanding or otherwise, sells or disposes of any product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment at less than the^ fair market price obtainable therefor either (a) in such manner as directly or indirectly to benefit such person or any person directly or indirectly interested in the business of such person; or (b) with intent to cause such benefit; the gross amount received or accrued for such year or part thereof from the sale or disposition of such product shall be taken to be the amount which would have been received or accrued from the sale or disposition of such product if sold at the fair market price. Sec. 1203. (a) That no person subject to the provisions G d faith n cer title shall be liable for the tax herein imposed if tificate " the only employment or permission to work which but for this section would subject him to the tax, has been of a child as to whom such person has in good faith procured at the time of employing such child or permitting him to work, and has since in good faith relied upon and kept on file a certificate, issued in such form, under such conditions and by such persons as may be prescribed by a board consisting of the -Secretary, the Commissioner, and the Secretary of Labor, showing the child to be of such age as not to subject such person to the tax imposed by this title. Any person who knowingly makes a false statement or presents false evidence in or in relation to any such certificate or application therefor shall be punished by a fine of not less than $100, nor more than $1,000, or by imprisonment for not more than three months, or by both such fine and imprisonment, in the discretion of the court. In any State designated to such board an employment certificate or other similar paper as to the age of the child, & e ’ issued under the laws of that State, and not consistent with the provisions of this title, shall have the same force and effect as a certificate herein provided for. 62 i (b) The tax imposed by this title shall not be imposed Mistake of fact * n t ^ ie case an ^ P erson wh° proves to the satisfaction of the Secretary that the only employment or permission to work which but for this Section would subject him to the tax, has been of a child employed 81 or permitted to work under a mistake of fact as to the age of such child, and with- out intention to evade the tax. 6 22 Sec. 1204. That on or before the first day of the third T?#»fnrn +r» month following the close of each taxable year, a true and 0 ’ accurate return under oath shall be made by each person sub- ject to the provisions of this title to the collector for the district in which such person has his principal office or place of business, in such form as the Commissioner, with the approval of the Secretary, shall prescribe, setting forth specifically the gross amount of income received or accrued during such year from the sale or disposition of the product of any mine, quarry, mill, cannery, workshop, factory, or manufac- turing establishment, in which children have been employed subjecting him to the tax imposed by this title, and from the total thereof deducting the aggregate items of allowance authorized by this title, and such other particulars as to the gross receipts and items of allowance as the Commissioner, with the approval of the Secretary, may require. Sec. 1205. That all such returns shall be transmitted ° A* « c e> « « mpnf anH forthwith by the collector to the Commissioner, who shall, oavment as soon as practicable, assess the tax found due and notify p ^ * the person making such return of the amount of tax for which such person is liable, and such person shall pay the tax to the collector on or before thirty days from the date of such notice. g2 4 Sec. 1206. That for the purposes of this Act the Com- Authoritv to in- m ^ ss i° ner » or an Y other person duly authorized by him, shall soect ^ " have authority to enter and inspect at any time any mine, p * quarry, mill, cannery, workshop, factory, or manufacturing establishment. The Secretary of Labor, or any person duly authorized by him, shall, for the purpose of complying with a request of the Commissioner to make such an inspection, have like authority, and shall make report to the Commissioner of inspections made under such authority in such form as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury. g25 Any person who refuses or obstructs entry or inspection Penalties authorized by this section shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or both such fine and imprisonment. g2Q Sec. 1207. That as used in this title the term “taxable rf* . „ par year” shall have the same meaning as provided for the pur- ^ * poses of income tax in Section 200 (par. 16 ). The first tax- able year for the purposes of this title shall be the period between sixty days after the passage of this Act and Decembr 31, 1919, both inclusive, or such portion of such period as is included within the fiscal year (as defined in Section 200) (par. 16 ) of the taxpayer. TITLE XIII.— GENERAL ADMINISTRATIVE PROVISIONS £27 Sec. 1300 . That hereafter the salary of the Commissioner Salary of Commis- t> e $ 10,000 a year. The difference between the amount sioner ^ " a PP ro P r iated under existing law and the salary herein estab- lished shall, for the period between the passage of this Act and July 1, 1919, be paid out of the appropriations for collecting internal revenue. ___ Sec. 1301. (a) That hereafter there may be employed . in the Bureau of Internal Revenue, in lieu of the deputy com- JJeputy commis- m i ss i oners whose salaries are now fixed by law, five deputy sioners. commissioners and an assistant to the Commissioner, who shall each receive a salary of $5,000 a year, payable monthly. The assistant to the Commissioner may be authorized by the Commissioner to perform any duties which the deputy commissioners may perform under existing law. (b) The salaries of collectors may be readjusted and increased under such regulations as may be prescribed by the Commissioner, subject to the approval of the Secretary, but no collector shall receive a salary in excess of $6,000 a year. (c) There is hereby appropriated, out of any money in the Treasury not otherwise appropriated, for the fiscal year ending June 30, 1919, the sum of $7,500,000 for the expenses of assessing and collecting the internal-revenue taxes as 629 . Salaries of col- lectors. 630 . Appropriation for expenses. provided in this Act, including the employment of necessary officers, attorneys, experts, 82 agents, inspectors, deputy collectors, clerks, janitors, and messengers in the District of Columbia and the several collection districts, to be appointed as provided by law, telegraph and telephone service, rental and repair of quarters, postage, and the pur- chase of such supplies, equipment, furniture, mechanical devices, printing, stationery, law books and books of reference, not to exceed $500 for street car fares in the District of Columbia, and such other articles as may be necessary for use in the District of Columbia and the several collection districts : Provided, That not more than $2,750,000 of the total amount appropriated by this section may be expended in the Bureau of Internal Revenue, in the District of Columbia. (d) (1) There is hereby created a board to be known ™ as the “Advisory Tax Board,” hereinafter called the Board, g a v 1 s 0 r y aX anc * t° be composed of not to exceed six members to be S5 ° ra ’ appointed by the Commissioner with the approval of the Secretary. The Board shall cease to exist at the expiration of two years after the passage of this Act, or at such earlier time as the Commissioner with the approval of the Secretary may designate. 632. Vacancies in the membership of the board shall be filled in the same manner as an original appointment. Any member shall be subject to removal by the Commissioner with the approval of the Secretary. The Commissioner, with the approval of the Secretary, shall designate the chairman of the Board. Each member shall receive an annual salary of $9,000, payable monthly, together with actual necessary expenses when absent from the District of Columbia on official business. 633. Duties of Board. (2) The Commissioner may, and on the request of t k e any taxpayer directly interested shall, submit to the Board 634. Offices. any question relating to the interpretation or administra- tion of the income, war-profits or excess-profits tax laws, and the Board shall report its findings and recommendations to the Commissioner. (3) The board shall have its office in the Bureau of Internal Revenue in the District of Columbia. The ex- penses and salaries of members of the Board shall be audited, allowed, and paid out of appropriations for collecting internal revenue, in the same manner as expenses and salaries of employees of the Bureau of Internal Revenue are audited, allowed, and paid. goc (4) The Board shall have the power to summon wit- P wers f Board nesses, take testimony, administer oaths and to require ° 0 * any person to produce books, papers, documents, or other data relating to any matter under investigation by the Board. Any member of the Board may sign subpoenas and members and employees of the Bureau of Internal Revenue designated to assist the Board, when authorized by the Board, may administer oaths, examine witnesses, take testimony and receive evidence. Sec. 1302. That all internal-revenue agents and in- spectors shall be granted leave of absence with pay, which shall not be cumulative, not to exceed thirty days in any calendar year, under such regulations as the Commis- sioner, with the approval of the Secretary, may prescribe. Sec. 1303. (a) That there is hereby created a Legis- lative Drafting Service under the direction of two drafts- men, one of whom shall be appointed by the President of the Senate, and one by the Speaker of the House of Repre- sentatives, without reference to political affiliations and solely on the ground of fitness to perform the duties of the office. Each draftsman shall receive a salary of $5,000 a year, payable monthly. The draftsmen shall, subject to the approval of the President of the Senate and the Speaker of the House of Representatives, employ and fix the compensation of such assistant draftsmen, clerks, and other employees, and purchase such furniture, office equipment, books, stationery, and other supplies, as may be necessary for the proper performance of the duties of the service and as may be appropriated for by Congress. (b) The Drafting Service shall aid in drafting public bills and resolutions or amendments thereto on the re- quest of any committee of either House of Congress, but the Library Committee of the Senate and the Library Committee of the House of Representatives, respectively, may determine the preference, if any, to be given to such 83 636. Leave of absence granted agents and inspectors. 637. Legislative Draft- ing Service created. 638. To aid in drafting bills and resolutions or amendments thereto. requests of the committees of either House, respectively. The draftsmen shall, from time to time, prescribe rules and regulations for the conduct of the work of the service for the committees of each House, subject to the approval of the Library Committee of each House, respectively. ggg (c) For the remainder of the current fiscal year there Armrrmriafirtn * s hereby appropriated, out of any money in the Treasury PP P * not otherwise appropriated, the sum of $25,000, or so much thereof as may be necessary, for the purpose of defraying the expenses of the establishment and maintenance of the service, including the payment of salaries herein authorized. One-half of all appropriations for the service shall be dis- bursed by the Secretary of the Senate and one-half by the Clerk of the House of Representatives. £40 Sec. 1304. That there shall be levied, collected, and T a y n n P a id i n the United States, upon articles coming into the imported from Virgin United States from the Virgin Islands a tax equal to the Islands internal revenue tax imposed in the United States upon like articles of domestic manufacture; such articles shipped from such islands to the United States shall be exempt from the payment of any tax imposed by the internal-revenue laws of such islands: Provided, That there shall be levied, collected, and paid in such islands, upon articles imported from the United States, a tax equal to the internal-revenue tax imposed in such islands upon like articles there manufactured; and such articles going into such islands from the United States shall be exempt from payment of any tax imposed by the internal-revenue laws of the United States. 641. Applicable p r o v sions extended. Sec. 1305. That all administrative, special, or stamp provisions of law, including the law relating to the assess- ment of taxes, so far as applicable, are hereby extended to and made a part of this Act, and every person liable to any tax imposed by this Act, or for the collection thereof, shall keep such records and render, under oath, such statements and returns, and shall comply with such regulations as the Commissioner, with the approval of the Secretary, may from time to time prescribe. Whenever in the judgment of the Commissioner neces- sary he may require any person, by notice served upon him, to make a return or such statements as he deems suf- ficient to show whether or not such person is liable to tax. The Commissioner, for the purpose of ascertaining the correctness of any return or for the purpose of making a return where none has been made, is hereby authorized, by any revenue agent or inspector designated by him for that purpose, to examine any books, papers, records or memoranda bearing upon the matters required to be included in the return, and may require the attendance of the person rendering the return or of any officer or employee of such person, or the attendance of any other person having knowledge in the premises, and may take his testimony with reference to the matter required by law to be included in such return, with power to administer oaths to such person or persons. 642. Returns or state- ments. 643. A u t h o rization to examine papers, etc. 644. Sec. 1306. That where floor taxes are imposed by T? 1 . f this Act in respect to articles or commodities, in respect , r>avm#»ntc U to which the tax imposed by existing law has been paid, p y ' the person required by this Act to pay the tax shall, within thirty days after its passage, make return under oath in such form and under such regulations as the Commissioner, with the approval of the Secretary, shall prescribe. Payment of the tax shown to be due may be extended to a date not exceeding seven months from the passage of this Act, upon the filing of a bond for payment in such form and amount and with such sureties as the Commis- sioner, with the approval of the Secretary, may prescribe. 645. Where Sec. 1307. That in all cases where the method of col- , , e lecting the tax imposed by this Act is not specifically pro- „ ^ vided in this Act, the tax shall be collected in such man- collecn g taxes not ner ag t j ie c omm i S sioner, with the approval of the Secre- speci ea. tary, may prescribe. All administrative and penalty pro- visions of Title XI {par. 575 - 590 ) of this Act, in so far as applicable, shall apply to the collection of any tax which the Commissioner determines or prescribes shall be paid by stamp. 84 646 . Additional penalty for failure to pay or to collect tax, make returns or supply in- formation. Sec. 1308. (a) That any person required under Titles V, VI, VII, VIII, IX, X, or XII, to pay, or to collect, account for and pay over any tax, or required by law or regulations made under authority thereof to make a re- turn or supply any information for the purposes of the computation, assessment or collection of any such tax, who fails to pay, collect, or truly account for and pay over any such tax, make any such return or supply any such information at the time or times required by law or regulation shall in addition to other penalties provided by law be subject to a penalty of not more than $1,000. (b) Any person who willfully refuses to pay, collect, or truly account for and pay over any such tax, make such Willful refusal, or return or supply such information at the time or times attempt to evade tax. re q U i rec j by law or regulation, or who willfully attempts in any manner to evade such tax shall be guilty of a misdemeanor and in addition to other penalties provided by law shall be fined not more than $10,000 or impris- oned for not more than one year, or both, together with the costs of prosecution. (c) Any person who willfully refuses to pay, collect, i + or truly account for and pay over any such tax shall in Willful refusal to addition to other penalties provided by law be liable to' a pay or collect tax. penalty of the amount of the tax evaded, or not paid, col- lected, or accounted for and paid over, to be assessed and collected in the same manner as taxes are assessed and collected: Provided, however , That no penalty shall be assessed under this subdivision for any offense for which a penalty may be assessed under authority of Section 3176 of the Revised Statutes (par. 673-676 ), as amended, or of Section 605 (par. 366) or 620 (par. 396 ) of this Act, or for any offense for which a penalty has been recovered under Section 3256 of the Revised Statutes. g.g (d) The term “person” as used in this section includes ° “Person” defined an °ffi cer or employee of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation Sec. 1309. That the Commissioner, with the approval of the Secretary, is hereby authorized to make all needful rules and regulations for the enforcement of the provisions of this Act. The Commissioner with such approval may by regula- tion provide that any return required by Titles V, VI, VII, VIII, IX or X to be under oath may, if the amount of the tax covered thereby is not in excess of $10, be signed or acknowledged before two witnesses instead of under oath. Sec. 1310. (a) That in the case of any overpayment or overcollection of any tax imposed by Section 628 (par. 407-409 ) or 630 (par. 412) or by Title V, Title VIII, or Title IX, the person making such overpayment or over- collection may take credit therefor against taxes due upon any monthly return, and shall make refund of any excessive amount collected by him upon proper application by the person entitled thereto. (b) Wherever in this Act a tax is required to be paid by the purchaser to the vendor at the time of a sale, and such sale is made on credit, then, under regulations pre- scribed by the Commissioner, with the approval of the Secretary, the tax may, at the option of the vendor, be returned and paid by him to the United States as if paid to him by the purchaser at the time of the sale, and in such case the vendor shall have a right of action in any court of competent jurisdiction against the purchaser for the amount of the tax so returned and paid to the United States. (c) Under such rules and regulations as the Commis- (nr sioner with the approval of the Secretary may prescribe, P * the taxes imposed under the provisions of Titles VI, VII or IX shall not apply in respect to articles sold or leased for export and in due course so exported. Under such rules and regulations the amount of any internal- revenue tax erroneously or illegally collected in respect to exported articles may be refunded to the exporter of the article, instead of to the manufacturer, if the manufacturer waives any claim for the amount so to be refunded. 650 . Rules and regula- tions. 651 . Where tax not in excess of $10. 652 . O v e r-payment or over-col lection of taxes. 653 . Sales made credit. 85 655. Stamps on hand. 656. Contracts made prior to 5-9-17 where tax cannot be added to price. 657. Contracts with dealers p r io r to 9-3-18. Sec. 1311. That where the rate of tax imposed by this Act, payable by stamps, is an increase over previously existing rates, stamps on hand in the collectors’ offices and in the Bureau of Internal Revenue may continue to be used until the supply on hand is exhausted, but shall be sold and accounted for at the rates provided by this Act, and assessment shall be made against manufacturers and other tax- payers having such stamps on hand on the day this Act takes effect for the dif- ference between the amount paid for such stamps and the tax due at the rates provided by this Act. Sec. 1312. (1) That (a) if any person has prior to May 9, 1917, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI {par. 6 o 6 ) or under this subdivision, and (b) if such con- tract does not permit the adding of the whole of such tax to the amount to be paid under such contract, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of such tax as is not so permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, the tax collected under this Act shall be the tax in force on May 9, 1917. (2) If (a) any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI {par. 6 o 6 ), or under this subdivision, and in respect to which no corresponding tax was imposed bj r the Revenue Act of 1917, and (b) such contract does not permit the adding, to the amount to be paid under such contract, of the whole of the tax imposed by this Act, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of the tax imposed by this Act as is not so permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, no tax shall be collected under this Act. (3) If (a) any person has prior to September 3, 1918, made a bona fide contract with a dealer for the sale or lease, after the tax takes effect, of any article in respect to which a tax is imposed under Title VI, VII, or IX, or under subdivision 13 of Schedule A of Title XI {par. 6 o 6 ), or under this subdivision, and in respect to which a corresponding tax was imposed by the Revenue Act of 1917, and (b) such contract does nor permit the adding, to the amount to be paid under such contract, of the whole of the differ- ence between such tax and the corresponding tax imposed by the Revenue Act of 1917, then the vendee or lessee shall, in lieu of the vendor or lessor, pay so much of such difference as is not so permitted to be added to the contract price. If a contract of the character above described was made with any person other than a dealer, the tax collected under this Act shall be the tax in force on Sep- tember 3, 1918. fic .Q (4) The taxes payable by the vendee or lessee under , . . this section shall be paid to the vendor or lessor at the l axes to De paid to t j me t h e sa i e or lease is consummated, and collected, re- vendor or lessor. turned, and paid to the United States by such vendor or lessor in the same manner as provided in Section 502 {par. 336 - 340 ). (5) The term “dealer” as used in this section includes a vendee who purchases any article with intent to use it in the manufacture or production of another article intended for sale. (6) This section shall not apply to any tax imposed by Section 906 {par. 310 ). Sec. 1313. That in the payment of any tax under this Act not payable by stamp a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. Sec. 1314. That collectors may receive, at par with an adjustment for accrued interest, certificates of indebted- ness issued by the United States and uncertified checks in payment of income, war-profits and excess-profits taxes and any other taxes payable other than by stamp, during such time and under such regulations as the Commissioner, 86 658. V/ h e r e increased tax cannot be added to contract price. 660. “Dealer” defined. 661. Not applicable. 662. Fraction of a cent. 663. U. S. certificates of indebtedness and checks in payment of taxes. with the approval of the Secretary, shall prescribe; but if a check so received is not paid by the bank on which it is drawn the person by whom such check has been tendered shall remain liable for the payment of the tax and for all legal penalties and additions the same as if such check had not been tendered. Section 3315 R. S. Sec. 1315. That Section 3315 of the Revised Statutes, amended. as amended, is hereby amended to read as follows: . “Sec. 3315. The Commissioner of Internal Revenue b P . . . may, under regulations prescribed by him with the approval Kepiacing lost Q £ t ^ e Secretary of the Treasury, issue stamps for restamp- stamps. i n g packages of distilled spirits, tobacco, cigars, snuff, cigarettes, fermented liquors, and wines which have been duly stamped but from which the stamps have been lost or destroyed by unavoidable accident.” Section 3220 R. S. amended. 665. Repayment of unau thorized collections. Section 3225 R. S. amended. 666 . Refunds on second assessments. Sec. 1316. (a) That Section 3220 of the Revised Statutes is hereby amended to read as follows: “Sec. 3220. The Commissioner of Internal Revenue, subject to regulations prescribed by the Secretary of the Treasury, is authorized to remit, refund, and pay back all taxes erroneously or illegally assessed or collected, all penalties collected without authority, and all taxes that appear to be unjustly assessed or excessive in amount, or in any manner wrongfully collected; also to repay to any collector or deputy collector the full amount of such sums of money as may be recovered against him in any court, for any internal revenue taxes collected by him, with the cost and expenses of suit; also all damages and costs recovered against any assessor, assistant assessor, collector, deputy collector, agent, or inspector, in any suit brought against him by reason of anything done in the due performance of his official duty, and shall make report to Congress at the beginning of each regular session of Congress of all transactions under this section.” (b) Section 3225 of the Revised Statutes of the United States is hereby amended to read as follows: “Sec. 3225. When a second assessment is made in case of any list, statement, or return, which in the opinion of the collector or deputy collector was false or fraudulent, or contained any understatement or undervaluation, such assessment shall not be remitted, nor shall taxes collected under such assess- ment be refunded, or paid back, or recovered by any suit, unless it is proved that such list, statement, or return was not willfully false or fraudulent and did not contain any willful understatement or undervaluation.” (c) That the paragraph of Section 3689 of the Revised Statutes, as amended, reading as follows: 667. “Refunding taxes illegally collected (internal reve- a - nrn nue) : To refund and pay back duties erroneously or f j illegally assessed or collected under the internal-revenue j .• laws,” is repealed from and after June 30, 1920; and the Secretary of the Treasury shall submit for the fiscal year 1921, and annually thereafter, an estimate of appropriations to refund and pay back duties or taxes erroneously or illegally assessed or collected under the internal-revenue laws, and to pay judgments, including interest and costs, rendered for taxes or penalties erroneously or illegally assessed or collected under the internal-revenue laws. Sec. 1317. That Sections 3164, 3165, 3167, 3172, 3173, and 3176 of the Revised Statutes as amended are hereby amended to read as follows: “Sec. 3164. It shall be the duty of every collector of internal revenue having knowledge of any willful violation of any law of the United States relating to the revenue, within thirty days after coming into possession of such knowledge, to file with the district attorney of the district in which any fine, penalty, or forfeiture may be incurred, a statement of all the facts and circumstances of the case within his knowledge, together with the names of the witnesses, setting forth the provisions of law believed to be so violated on which reliance may be had for condemnation or conviction. ggg “Sec. 3165. Every collector, deputy collector, internal Powers of internal revenue agent, and internal revenue officer assigned to revenue employees duty under an internal revenue agent, is authorized to p y * administer oaths and to take evidence touching any part 87 Sections R. amended. S. 668 . Col lectors having knowledge of willful violations of law. of the administration of the internal-revenue laws with which he is charged, or where such oaths and evidence are authorized by law or regulation authorized by law to be taken. “Sec. 3167. It shall be unlawful for any collector, deputy collector, agent, clerk, or other officer or employee of the United States to divulge or to make known in any manner whatever not provided by law to any person the 670. Penalties for dis- closing information. operations, style of work, or apparatus of any manufacturer or producer visited by him in the discharge of his official duties, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth or disclosed in any income return, or to permit any income return or copy thereof or any book containing any abstract or particulars thereof to be seen or examined by any person except as provided by law; and it shall be unlawful for any person to print or publish in any manner whatever not provided by law any income return, or any part thereof or source of income, profits, losses, or expenditures appearing in any income return; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding $1,000 or by imprisonment not exceeding one year, or both, at the discretion of the court; and if the offender be an officer or employee of the United States he shall be dismissed from office or discharged from employment. “Sec. 3172. Every collector shall, from time to time, cause his deputies to proceed through every part of his district and inquire after and concerning all persons therein 671. Inquisition. who are liable to pay any internal-revenue tax, and all persons owning or having the care and management of any objects liable to pay any tax, and to make a list of such persons and enumerate said objects. “Sec. 3173. It shall be the duty of any person, part- nership, firm, association, or corporation, made liable to 672. n.cn nro 1 rvr^T7ici/Mnc the day on which the taxes accrue, to make a list or return, verified by oath, to the collector or a deputy collector of the district where located, of the articles or objects, including the quantity of goods, wares, and merchandise, made or sold and charged with a tax, the several rates and aggregate amount, according to the forms and regulations to be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, for which such person, part- nership, firm, association, or corporation is liable: Provided, That if any person liable to pay any duty or tax, or owning, possessing, or having the care or man- agement of property, goods, wares, and merchandise, article or objects liable to pay any duty, tax, or license, shall fail to make and exhibit a list or return required by law, but shall consent to disclose the particulars of any and all the property, goods, wares, and merchandise, articles, and objects liable to pay any duty or tax, or any business or occupation liable to pay any tax as aforesaid, then, and in that case, it shall be the duty of the collector or deputy collector to make such list or return, which, being distinctly read, consented to, and signed and verified by oath by the person so owning, possessing, or having the care and management as aforesaid, may be received as the list of such person: Provided further, that in case no annual list or return has been rendered by such person to the collector or deputy collector as required by law, and the person shall be absent from his or her residence or place of business at the time the collector or a deputy collector shall call for the annual list or return, it shall be the duty of such collector or deputy collector to leave at such place of residence or business, with some one of suitable age and discretion, if such be present, otherwise to deposit in the near- est post office, a note or memorandum addressed to such person, requiring him or her to render to such collector or deputy collector the list or return required by law within ten days from the date of such note or memorandum, verified by oath. And if any person, on being notified or required as aforesaid, shall refuse or neglect to render such list or return within the time required as aforesaid, or whenever any person who is required to deliver a monthly or other return of objects subject to tax fails to do so at the time required, or delivers any return which, in the opinion of the collector, is erroneous, false, or fraudulent, or con- tains any undervaluation or understatement, or refuses to allow any regularly authorized Government officer to examine the books of such person, firm, or cor- poration, it shall be lawful for the collector to summon such person, or any other person having possession, custody, or care of books of account containing entries 88 673. When collector or deputy shall make re- turn or list. 675. Penalties, relating to the business of such person or any other person he may deem proper, to appear before him and produce such books at a time and place named in the summons, and to give testimony or answer interrogatories, under oath, respecting any objects or income liable to tax or the returns thereof. The collector may summon any person residing or found within the State or Territory in which his district lies; and when the person intended to be summoned does not reside and can not be found within such State or Territory, he may enter any collection dis- trict where such person may be found and there make the examination herein authorized. And to this end he may there exercise all the authority which he might lawfully exercise in the district for which he was commissioned: Provided, that ‘person,’ as used in this section, shall be construed to include any corpora- tion, joint-stock compan}' or association, or insurance company when such con- struction is necessary to carry out its provisions. “Sec. 3176. If any person, corporation, company, or association fails to make and file a return or list at the time prescribed by law or by regulation made under author- ity of law, or makes, willfully or otherwise, a false or fraudulent return or list, the collector or deputy collector shall make the return or list from his own knowledge and from such information as he can obtain through testimony or otherwise. In any such case the Com- missioner may, from his own knowledge and from such information as he can obtain through testimony or otherwise, make a return or amend any return made by a collector or deputy collector. Any return or list so made and subscribed by the Commissioner, or by a collector or deputy collector and approved by the Commissioner, shall be prima facie good and sufficient for all legal purposes. 674. “If the failure to file a return or list is due to sickness or absence, the collector may allow such further time, not exceeding thirty days, for making and filing the return or list as he deems proper. “The Commissioner of Internal Revenue shall deter- mine and assess all taxes, other than stamp taxes, as to which returns or lists are so made under the provisions of this section. In case of any failure to make and file a return or list within the time prescribed by law, or prescribed by the Commissioner of Internal Revenue or the collector in pursuance of law, the Commissioner of Internal Revenue shall add to the tax 25 per centum of its amount, except that when a return is filed after such a time and it is shown that the failure to file it was due to a reasonable cause and not to willful neglect, no such addition shall be made to the tax. In case a false or fraudulent return or list is willfully made, the Commissioner of Internal Revenue shall add to the tax 50 per centum of its amount. 676. “The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax unless the tax has been paid before the discovery of the neglect, falsity, or fraud, in which case the amount so added shall be collected in the same manner as the tax.” g77 Sec. 1318. That if any person is summoned under t .. r j. this Act to appear, to testify, or to produce books, papers t j . ri ® ^ . 10I \ r° u V or other data, the district court of the United States for 1 ou s .a. district in which such person resides shall have juris- diction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data. 678. The district courts of the United States at the instance of the United States are hereby invested with such jurisdiction to make and issue, both in actions at law and suits in equity, writs and orders of injunction, and of ne exeat republica, orders appointing receivers, and such other orders and process, and to render such judgments and decrees, granting in proper cases both legal and equitable relief together, as may be necessary or appropriate for the enforcement of the provisions of this Act. The remedies hereby provided are in addition to and not exclusive of any and all other remedies of the United States in such courts or otherwise to enforce such provisions. 67 o Sec. 1319. That whoever in connection with the sale 0/ ,' . • or lease, or offer for sale or lease, of any article, or for the increasing p c o p lir p 0se Q f making such sale or lease, makes any statement, under pretext o tax- wr ; tten or ora^ (1) intended or calculated to lead any per- atlon ‘ son to believe that any part of the price at which such article is sold or leased, or offered for sale or lease, consists of a tax imposed under the authority of the United States, or (2) ascribing a particular part of such price to a tax imposed under the authority of the United States, knowing 89 680. U. S. bonds in lieu of sureties on penal bonds. that such statement is false or that the tax is not so great as the portion of such price ascribed to such tax, shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than $1,000 or by imprisonment not exceeding one year, or both. Sec. 1320. That wherever by the laws of the United States or regulations made pursuant thereto, any person is required to furnish any recognizance, stipulation, bond, guaranty, or undertaking, hereinafter called “penal bond” with surety or sureties, such person may, in lieu of such surety or sureties, deposit as security with the official having authority to approve such penal bond, United States Liberty bonds or other bonds of the United States in a sum equal at their par value to the amount of such penal bond required to be furnished, together with an agreement authorizing such official to collect or sell such bonds so deposited in case of any default in the performance of any of the conditions or stipulations of such penal bond. The acceptance of such United States bonds in lieu of surety or sureties required by law shall have the same force and effect as individual or corporate sureties, or certified checks, bank drafts, post-office money orders, or cash, for the penalty or amount of such penal bond. The bonds deposited hereunder, and such other United States bonds as may be substituted therefor from time to time as such security, may be deposited with the Treasurer, or an Assistant Treasurer of the United States, a Government depository, Federal Reserve bank, or member bank, which shall issue receipt therefor, describing such bonds so deposited. As soon as security for the per- formance of such penal bond is no longer necessary, such bonds so deposited, shall be returned to the depositor: Provided, That in case a person or persons supplying a contractor with labor or material as provided by the Act of Congress, approved February 24, 1905 (33 Stat., 811), entitled “An Act to amend an Act approved August thirteenth, eighteen hundred and ninety-four, entitled ‘An Act for the protection of persons furnishing materials and labor for the construction of public works,’ ” shall file with the obligee, at any time after a default in the performance of any contract subject to said Acts, the application and affidavit therein provided, the obligee shall not deliver to the obligor the deposited bonds nor any surplus proceeds thereof until the expiration of the time limited by said Acts for the institution of suit by such person or persons, and, in case suit shall be instituted within such time, shall hold said bonds or proceeds subject to the order of the court having jurisdiction thereof: Provided further , That nothing herein contained shall affect or impair the priority of the claim of the United States against the bonds deposited or any right or remedy granted by said Acts or by this section to the United States for default upon any obligation of said penal bond: Provided further, That all laws inconsistent with this section are hereby so modified as to conform to the provisions hereof: And provided further, That nothing contained herein shall affect the authority of courts over the security, where such bonds are taken as security in judicial proceedings, or the authority of any administrative officer of the United States to receive United States bonds for security in cases authorized by existing laws. The Secretary may prescribe rules and regulations necessary and proper for carrying this section into effect. TITLE XIV— GENERAL PROVISIONS Sec. 1400. (a) That the following parts of Acts are , . . hereby repealed, subject to the limitations provided in sub- Repeal provisions. division (b) (par 685 -6g 7 ). 682. (1) The following titles of the Revenue Act of 1916. Title I (called “Income Tax”); Title II (called “Estate Tax”) ; Title III (called “Munitions Manufacturers’ Tax”), as amended; Title IV (called “Miscellaneous Taxes”). 683. (2) The following parts of the Act entitled “An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes,” approved March 3. 1917: Title III (called “Estate Tax”); Section 402 (called “Returns of Dividends”). 684. (3) The following titles of the Revenue Act of 1917: Title I (called “War-Income Tax”); Title II (called “War Excess-Profits Tax”); Title III (called “War Tax on Beverages”); Title IV (called “War Tax on Cigars. Tobacco, and Manufactures Thereof”); 90 685 In force for assess- ment and collection of taxes accrued thereunder. Title V (called “War Tax on Facilities Furnished by Public Utilities, and Insurance”) ; Title VI (called “War Excise Taxes”); Title VII (called “War Tax on Admissions and Dues”); Title VIII (called “War Stamp Taxes”); Title IX (called “War Estate Tax”); Title X (called “Administrative Provisions”); Title XII (called “Income-Tax Amendments”). (b) Such parts of Acts shall remain in force for the assessment and collection of all taxes which have accrued thereunder, and for the imposition and collection of all penalties or forfeitures which have accrued and may accrue in relation to any such taxes, and except that the unex- pended balance of any appropriation heretofore made and now available for the administration of any such part of an Act shall be available for the administration of this Act or the corresponding provision thereof: Pro- vided, That, except as otherwise provided in this Act, no taxes shall be collected under Title I of the Revenue Act of 1916 as amended by the Revenue Act of 1917, or Title I or II of the Revenue Act of 1917, in respect to any period after December 31, 1917: Provided further, That the assessment and collection of all estate taxes and the imposition and collection of all penalties or forfeitures, which have accrued under Title II of the Revenue Act of 1916 as amended by the Act entitled “An Act to provide increased revenue to defray the expenses of the increased appropriations for the Army and Navy and the extensions of fortifications, and for other purposes,” approved March 3, 1917, or Title IX of the Revenue Act of 1917, shall be according to the provisions of Title IV of this Act {par. 287-322 ). In the case of any tax imposed by any part of an Act . rr .• herein repealed, if there is a tax imposed by this Act in Tji ax t S i j e lieu thereof, the provision imposing such tax shall remain u tii ew ta e e e t. j n f orce un ^ii the corresponding tax under this Act takes effect under the provisions of this Act. Title I of the Revenue Act of 1916 as amended by the P P and P I in- R evenue Act °f 1917 shall remain in force for the assess- come taxes ' 1 rnent and collection of the income tax in Porto Rico and the Philippine Islands, except as may be otherwise pro- vided by their respective legislatures. Sec. 1401. That section 1100 of the Revenue Act of 1917 is hereby repealed, to take effect on July 1, 1919, and thereafter the rate of postage on all mail matter of the first Effective July 1, rficc ° n * St class shall be the same as the rate in force, on October 2, 1917: Provided, That letters written and mailed by sol- diers, sailors, and marines assigned to duty in a foreign country engaged in the present war may be mailed free of postage, subject to such rules and regulations as may be prescribed by the Postmaster General. 689. Section 1107 of such Act is hereby repealed, to take effect July 11, 1919. Sec. 1402. That if any clause, sentence, paragraph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judg- ment shall not affect, impair, or invalidate the remainder of this Act, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment has been rendered. 691. Sec. 1403. That the Revenue Act of 1916 is hereby amended by adding at the end thereof a section to read as follows: “Sec. 903. That this Act may be cited as the ‘Revenue Act of 1916.’ ” 692. Sec. 1404. That the Revenue Act of 1917 is hereby amended by adding at the end thereof a section to read as follows: “Sec. 1303. That this Act may be cited as the ‘Revenue Act of 1917.’ ” 690. Portions of Act ad- judged invalid not to affect remainder. 693. Title of Act. 694. $60 paid armed forces resigned or honorably discharged. Sec. 1405. That this Act may be cited as the “Reve- nue Act of 1918.” Sec. 1406. That all persons serving in the military or naval forces of the United States during the present war who have, since April 6, 1917, resigned or been discharged under honorable conditions (or, in the case of reservists, been placed on inactive duty), or who at any time here- 91 after (but not later than the termination of the current enlistment or term of service) in the case of the enlisted personnel and female nurses, or within one year after the termination of the present war in the case of officers, may resign or be discharged under honorable conditions (or, in the case of reservists, be placed on inactive duty), shall be paid, in addition to all other amounts due them in pursuance of law, $60 each. This amount shall not be paid (1) to any person who 695. not though appointed or inducted into the military or naval forces on or prior to November 11, 1918, had not reported To whom payable. £ or ^ty at his station on or prior to such date; or (2) to any person who has already received one month’s pay under the provisions of Section 9 of the Act entitled “An Act to authorize the President to increase temporarily the military establishment of the United States,” approved May 18, 1917; or (3) to any person who is entitled to retired pay; or (4) to the heirs or legal representatives of any person entitled to any payment under this section who has died or may die before receiving such payment. In the case of any person who subsequent to separation from the service as above specified has been appointed or inducted into the military or naval forces of the United States and has been or is again separated from the service as above specified, only one payment of $60 shall be made. The above amount, in the case of separation from the When and how serv * ce on or P r i° r to the passage of this Act, shall be paid • i as soon as practicable after the passage of this Act, and P ’ in the case of separation from the service after the passage of this Act shall be paid at the time of such separation. 697. The amounts herein provided for shall be paid out of the appropriations for “pay of the army” and “pay of the navy,” respectively, by such disbursing officers as may be designated by the Secretary of War and the Secretary of the Navy. 693. The Secretary of War and the Secretary of the Navy respectively shall make all regulations necessary for the enforcement of the provisions of this section. 699. Laws relating to intoxicating liquors in interstate commerce applicable to D. C. 700. Contracts with U. S. Sec. 1407. That the provisions of Section 5 of the Act entitled “An Act making appropriations for the service of the Post Office Department for the fiscal year ending June 30, 1918, and for other purposes,” approved March 3, 1917, relating to intoxicating liquors in interstate com- merce, as amended by section 1110 of an Act entitled “An Act to provide revenue to defray war expenses, and for other purposes,” approved October 3, 1917, be, and the same are hereby, made applicable to the District of Columbia. Sec. 1408. That every person who on or after April 6, 1917, has entered into any contract, undertaking, or agreement with the United States, or with any depart- ment, bureau, officer, commission, board, or agency under the United States or acting in its behalf, or with any other person having con- tract relations with the United States, for the performance of any work or the supplying of any materials or property for the use of or for the account of the United States, shall, within thirty days after a request of the Commissioner therefor, file with the Commissioner a true and correct copy of every such con- tract, undertaking, or agreement. 701. Whoever fails to comply with such request of the Commissioner shall be guilty of a misdemeanor and shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or both. 702. The Commissioner shall (when not violate of the technical military or naval secrets of the Government) have access to all information and data relating to any such contract, undertaking, or agreement, in the possession, control or custody of any department, bureau, board, agency, officer or commission of the United States and may call upon any such department, bureau, board, agency officer or commission for a full statement and description of any allowance for amortization, obsolescence, depreciation or loss, or of any valuation, appraisal, adjustment or final settlement, made in pursuance of any such contract, under- taking, or agreement. Sec. 1409. That unless otherwise herein specially pro- vided, this Act shall take effect on the day following its passage. 703. When Act effective. 92 ALPHABETICAL INDEX PAR. Absconding to defeat tax, proceedings against 193 Academies, riding, special tax on 532 Accident, compensation for, excluded from taxation 56 Accounting period, change of 47 Change of, method of computing income.. 119 Accumulating companies to avoid surtax, stockholders made taxable 101 Act effective, date of 703 Acts extended 641 Adjustment of corporation tax 280-284 Administering drugs, tax on 555 Admission, definition of 452 Excess rates charged for, tax on 447-448 Free, tax on 446 Paid, tax on 445 Price of, to be printed on ticket 453 Tax on, collection and payment 455 Tax on, exemptions from 451 Advisory Tax Board 631-635 Agent, when return may be made by 115 Agents, internal revenue-leave of absence for 636 Amendments to the drug act 551-569 Amortization, amount of, deductible from gross income 70 Deductible, of corporations 156 Alcohol, ethyl, see Ethyl alcohol Export, may be handled in tanks or tank cars 401 Alcoholic content in natural wines 374 Non-intoxicating beverages 408 Still wines 375-379 Alien, resident, credit for foreign taxes. 110-1 1 1 Deductions from gross income of 74 Distraint of property 86 Gross income of when taxable 60 Income of, when taxable 60 Payment of tax on incomes of at source.. 102 Personal exemption 86 Return essential to deductions and credits. 86 Allowance on account of shortage or rebates, claim for 73 For loss of wines 398 On distilled spirits after removal of pro- hibition 350 Annuities, proceeds of, excluded from taxa- tion 51-52 Apparatus, installation of distilleries, brewer- ies and rectifying houses 370 Appeal from alleged under-statements of returns 123 Application of rate for 1917-18 35 Of rate for 1918-19 37 Appropriation for legislative drafting service. .639 Art, objects of, excise tax on 481 Assessment, collection by, of tax on wines ..395 Of difference of value of stamps 655 Assistant to Commissioner of Internal Rev- enue 628 Treasurers, stamps for 590 Attestation of corporate returns 174 Attorney, powers of, stamp tax on 605 Automobiles, excise tax on 458-459 Rented, special tax on 533 Trucks, excise tax on 457 Average income, determination of 270-274 Invested capital 263-264 Avoidance of excise tax by collateral bargains, provisions against 480 Of tax at source 103 Bargains, collateral, with reference to child labor tax 618 To avoid excise tax, provisions against . .480 Basis of inventories 31 Materials in distillation 399-400 Beer, tax on 371 Withdrawal of for bottling 405-406 Beneficiary, distributive share of, statement of required 98 Tax payment by 99 Beneficiaries of estates, liable for tax ......320 Benefits, local, assessment for, not deductible from gross income 64 Bequests excluded from taxation 53 Beverage, non-alcoholic, return and payment of tax 410-411 Non-alcoholic, tax on ..407-409 Tax extended during prohibitive period ..349 Billiard rooms, special tax on 530 Binoculars, excise tax on 507 Blending of wines 396 Boats, excise tax on 476 Special tax on 544-547 Bond covering wines in possession ...388 To keep beverage distilled spirits during prohibition period 349 Bonded period for distilled spirits extended during prohibition _ 351 Premises, location of wines creates 388 Bonds, indemnity, stamp tax on 592 Of indebtedness, stamp tax on 592 Surety, stamp tax on ....592 United States, acceptable in lieu of sureties, 680 Bone-dry provision for District of Columbia. . 699 Bonus, military 694-698 Borrowed capital defined 252 Bottling, withdrawal of beer for 405-406 Bowling alleys, special tax on 530 Breweries, installation of apparatus in ....370 Removal of fermented liquors to distil- leries 372-373 Brokers, returns of 198 Special tax on 523 Brokers’ transactions exempt from tax 595 Building and loan associations exempt from corporate tax 132 Stocks and bonds exempt from instru- ment tax 574 Business associations exempt from corporate tax 135 Cabarets, tax on 450 Calendar year, rate for applied in case of dividend returns 119 Cameras, excise tax on 463 Cancellation of stamps 585 Candy, excise tax on 465 Canning clubs exempt from tax on child labor 611 Capital stock, issue of, stamp tax on 593-594 Transfer, of, stamp tax on 595 Carbonated water, tax on 408 Carpets, excise tax on 485 Carriers, to collect transportation tax . .336-338 Cash fare tax 333 Sales of produce exempt from stamp tax. ..597 Casualty insurance, tax on 344 Cemetery companies exempt from corporate tax 133 Certificates of indebtedness, United States, receivable for taxes 663 Relating to child labor 619-621 Champagne, tax on 382 Charitable corporations exempt from corporate tax 134 Chautauquas exempt from special tax 529 Checks, uncertified, receivable for taxes ....663 Stamp tax on 598 Chewing gum, tax on 462 Child labor employment in good faith and on certificate, exempt from tax 619-621 Tax, collateral bargains with reference of, 618 Computation of net profits for 612-617 Taxable 611 93 PAR. PAR. Cigars, determination of taxable price 418 Floor tax on 426 Manufacturers of, special tax on 540-541 Tax on 414-415 Cigarette Packages 420 Paper, tax on 427-428 Cigarettes, floor tax on 426 Manuafcturers of, special tax on 542 Tax on 416-417 Circuses, special tax on 528 Citations of present and past acts 691-693 Civic leagues, exempt from corporate tax . . . .136 Claim for allowance on account of shrinkage or rebates 73 Classifications to be published 205 Clearing house operations exempt from stamp tax 596 Clocks, excise tax on 507 Club memberships, tax on 454 Coca leaves, exhausted, exempt from tax . . . 569 Tax on 561 Collateral, deposit of, exempt from tax ....595 Bargains, with reference to child labor tax, 618 To avoid payment of excise tax, pro- visions against 480 Collection of back taxes, repeal provisions to remain in force for 685-686 At Source, information for 199-202 Of tax on admissions and dues 455 Of taxes — discretionary methods 645 Of transportation tax 336-338 Collections, unauthorized, repayment of .... 665 Foreign, license required for 206 Collector, returns by 673 Internal Revenue, power to enter other districts 672 Power to summon witnesses 672 Salaries of . .. 629 Combined insurance policies, tax on 342 Commissioner, copies of Government contracts to be furnished to 700-702 To procure and regulate use of adhesive stamps 586 Of Internal Revenue, examination by, for returns 643 When to assess tax 675 Salary of 627 Committee on destruction of forfeited drugs . .571 Common carrier, when exempt from transpor- tation tax 334 Compensation acts, workmen’s receipts under, excluded from taxation 56 For accident, excluded from taxation .... 56 Competition, foreign, in passenger transpor- tation, provision to meet 326 Computations, separate, for corporations per- mitted 226 Concealment to defeat tax, proceedings against 193 Concert halls, special tax on 527 Consolidated returns of corporations ....177-180 Consolidation of corporations, definition of ..179 Contracts, Government, copies of, to be fur- nihed to commissioner 700-702 For stamps limited 587 Contributions deductible from gross income . . 72 To estates tax 318 Co-operative banks exempt from corporate . tax 132 Building and Loan Association stocks and bonds exempt from instrument tax . . . .574 Corporation, adjustment of tax 280-284 Corporations not in business previous year ex- empt from special tax 519-520 Consolidated, definition of 179 Consolidated returns 177-180 Character of, a holding or accumulating companies, how determined 101 Credits allowed to 165-168 Credit, excess profits tax 243 Credit for taxes 170-173 Credits on war profits tax 232-242 Defined 2 Domestic, defined 3 Special tax on 516 94 Corporations, exemptions from war profits and excess profits tax 227-229 Expenses not deductible 164 Foreign, special tax on 517 Gross income defined 144-147 Net income, war profits and excess profits tax 245-249 Payment of foreign taxes 180 Personal service, definition 19 Stockholders of taxed, as partners 92 Reorganization of 275-279 Determination of gain or loss 30 When no gain or loss deemed to occur.. 29 Returns 174-176 Time and place for filing 181-182 Separate computations permitted 226 Tax on 124-126 Exceptions to 128-142 War and excess profits tax on 212-223 Corporate returns, war and excess profits tax, 285 Securities, stamp tax on 591 Cordials, floor tax on 386 Tax on 384 Credits allowed on normal tax 80-85 To corporations 165-168 Corporate, on war profits tax 232-242 Excess profits tax 243-244 Of members of partnerships 88 For prior payment 36 Sales, payment of tax 653 For tax paid on boats 548-549 For taxes 107-113 For taxes allowed corporations 170-173 For taxes, redetermination of 112-113 Cruelty to animals, corporations for preven- tion of, exempt from corporate tax ...134 To children, corporations to prevent, exempt from corporate tax 134 Customers of brokers, names to be returned, 198 Customhouse brokers, tax on 526 Operations, stamp tax on 601-602 Date, effective of act 703 Dealing in drugs, registration required for 552-554 Tax on . 555 Debts, deductible, of corporations 153 From gross income 68 Deduction allowed estates 98 Deductions for estates 298-302 Allowed from gross income 61-74 Etc., to be published 205 Deeds of conveyance, stamp tax on 600 Deferred installments of taxes 183 Definition of admission 452 Of borrowed capital 252 Of consolidation of corporations 179 Of corporation 2 Of dividend 21 Of domestic corporation 3 Relating to drugs act 556-558 Of executor 287 Of fiduciary 17 Of foreign corporation 4 General 1-15 Of Government contracts 12 Of gross income 49 Of gross income of corporation 144-147 Of admissible assets 253 Income tax 16-20 Of intangible property 250 Of invested capital 255-258 Of military forces 13 Of natural wines 374 Of net income 45 Of net income of corporations 143 Of “Paid” 20 Of par value 254 Of person 1 Of personal service corporation 19 Of tax on pipe lines 335 Of pre-war period 231 Of tangible property 251 Of taxable year 16 Of present war 14 War profits and excess profits tax 211 Of wine spirits 391 Of withholding agent 18 PAR. Delay in paying taxes, penalty for 190 Denaturing ethyl alcohol, removal for 358 Depletion, cost of restoration of, not deduct- ible from gross income 78 Deductible, of corporations 157 Of natural deposits, deduction of, from gross income 71 Depreciation, deductible, of corporations. ... 155 Deductible from gross income 69 Cost of restoration of, not deductible from gross income 78 Deposit of collateral, exempt from tax ....595 Depositaries, stamps for 590 Deputy Commissioners of Internal Revenue, 628 Descent, property acquired by, excluded from taxation 53 Determination of average income 270-274 Of character of corporations as holding or accumulating companies 101 Of invested capital 265-269 Of taxable price of cigars and cigarettes . .418 Devises, property acquired by, excluded from taxation 53 Disclosing information, penalty for 670 Discontinuance of stamps 368-369 Discretionary method of collection of taxes ..645 Discrimination forbidden against materials producing rectified distilled spirits or wines 364 Dispensing drugs, officials engaged in, not required to register or pay tax 558 Tax on 555 Distillation, basis of materials in 399-400 Filtration aeration process, exception in favor of 399-400 Fruit, use of sugar in 402-403 Distillers, fruit, exemption in favor of ..402-403 Distilleries may bottle gin in bond for export. 404 Removal of fermented liquors to, from breweries 372-373 Installation of apparatus in 370 Distilled spirits, bond to keep, during pro- hibition period 349 Bonded period for, extended during prohibition 351 Rectified, floor tax on 361 Rectified, tax on 360 Distraint, property alien non-resident 86 Distribution of earnings and profits 22 How taxed 25 When a dividend • 21 Distributive share of beneficiary, statement of required 98 From partnership 116 Of partnerships in computing income . . 87 District of Columbia, bonds, etc., issued by, exempt from instrument tax 574 Bone-dry provision for 699 Ditch companies, mutual, stock and bonds, exempt from instrument tax 574 Dividend, credit for, on normal tax 81 Deductible, of corporations 154 Definition of 21 Regulations regarding 21-25 Documents making, etc., without payment of tax, penalty for 575-579 Domestic corporation defined 3 Special tax on 516 Drafting service, legislative, appropriation for, 639 Legislative, created 637 Legislative, duties of 638 Drafts, stamp tax on 598 Drug act, amendments to 551-567 Drugs, forfeited, committee on destruction of 571 To be turned over to federal authorities, 571 Forfeiture of non-stamped packages of ..565 Maximum non-taxed narcotic content 569 Personal custody of ...i 563 Professional use of 563 Records and returns rating to 566 Regulation for stamps on 563 Under seizure, forfeiture after convic- tion 570-571 Dues, tax on, collection and payment of . . . .455 PAR. Duty of employees with regard to payment of tax 649 Duties of legislative drafting service 638 Earnings and profits, distribution of 22 Distribution of, how taxed 25 Educational corporations exempt from cor- porate tax 134 Effective date of Act 703 Eight per cent, gross normal tax after 1918, 42 Electric fans, portable, excise tax on 469 Employment of child labor exempt from tax under certificate 619-621 Employees of dealers in drugs not required to register 558 Duty in regard to payment of tax 649 Endowment policies, proceeds of, excluded from taxation 51-52 Estate, rate of tax on 289 Of soldiers and sailors when exempt from tax 290 Tax, beneficiaries liable for 320 Tax, contribution to 318 Deductions for 298-302 Exemption for 303 Gross valuation of 291-297 Lien on, for tax 319 Of non-resident 304-308 Tax, overdue 317 Tax, receipts for 316 Tax, penalty for failure to comply with provisions 321-322 Tax on, redetermination of 310 Tax, regulations for 93-100 Tax, reimbursement for amount paid on . .318 Tax, transferees liable for 320 Returns by collectors 313 Tax, when due 314 Estimate for reimbursement of refunds 666 Ethyl alcohol, exemptions in favor of . ...356-357 Removal for denaturing 358 Evasion of tax, penalty for 196 Examination, for returns by Commissioner, 643 Excess profits, corporation, tax on . — 212-223 Tax, net income 245-249 Tax not deductible from gross income . . 64 Tax, credit on 243-244 Tax, limitation on 225 Excise tax (see tax, excise) Exchange of property, determination of gain or loss 29 Sales of produce, stamp tax on 596 Of wholesale liquor dealers and rectified spirits stamps 367 Exclusion of items of income from taxation, 50-59 Exceptions to special tax 529 From instrument tax 574 To tax on rectified, spirits and wines 363 Executor, definition of 287 To notify collector of appointment 311 Payment of tax by 315 Returns by 312 Exemptions from tax on admissions 451 Of canning clubs from tax on child labor, 611 From child labor tax under certificate, 619-621 Of clearing house operations from stamp tax 596 Of common carrier from transportation tax, 334 For estates 303 Of exhausted coca leaves from tax 569 In favor of fruit distillers 402-403 From insurance tax 345 From normal tax for dependent 84 Personal, alien non-resident 86 From normal tax 83 From punishment or penalty, not to be through payment of special tax 535 From war profits and excess profits tax, 227-229 For less than twelve months, war profits tax 230 Exhibitions, public, special tax on 529 Existing stamps, difference in value to be assessed 655 May be used 655 95 PAR. Expense deductible from gross income .... 62 Deductible, of corporations 149 Not deductible, corporations 164 Export alcohol may be handled in tank cars . .401 Articles, remission of internal revenue tax on 653 Gin, bottling in bond 404 Express shipments, tax on 325 Extension of time of payment of floor tax . . 644 For returns 674 Failure, negligent, to pay tax, penalty for ..646 Willful, to pay tax, penalty for 647-648 Fairs, industrial or agricultural, exempt from special tax 529 Family expenses not deductible from gross income 76 Wines exempt from tax 388 Fans, excise tax on 492 Farm loan securities, excluded from taxation, 54 Farmers exempt from leaf tobacco regula- tions 443 Federal officials made taxable 49 Fermented liquors, removal of, from brew- eries to distilleries 372-373 Fiduciary, definition of 17 Responsible for return 98 Return by 117 Tax payment by 99 Field glasses, excise tax on 507 Film§, motion picture (see motion picture films) 510 Filtration, aeration process, exception in favor of 399-400 Firearms, excise tax on 466 Fire insurance, tax on 343 Fittings, precious metal, for personal use, excise tax on 507 Floor tax on cigars, cigarettes, tobacco and snuff 426 On Distilled spirits 359 On rectified spirits and wines 361 On still and sparkling wines 386 On sweet wines 387 Return and payment under 644 Footwear, excise tax on 498 Foreign collections, license required for ....206 Competition in passenger transportation, provision to meet 326 Corporation, deductions allowed to 163 Defined 4 Not entitled to specific exemption, war excess profits tax 242-244 Excluded from personal service class . . 19 Gross income of 147 Payment of tax at source ...169 Governments, bonds, etc., issued by, exempt from instrument tax 574 Income of, excluded from taxation .... 55 Passage tickets, stamp tax on 603 Taxes, credit for 108 Paid by corporations 180 Written insurance policies, when taxable .341 Forfeiture of drugs under seizure 570-571 Of non-stamped packages of drugs 565 Fortification of wines 396 Of sweet wines 390-392 Withdrawal of wine spirits for 380 Four per cent, tax on first four thousand dollars after 1918 42 Fractional part of a cent, computation of ..662 Fraud, clearance of, required to secure refund 666 In tax payment, penalty for 187 Free admissions, tax on 446 Freight, tax on 324 Fruit distillers, exemption in favor of . .402-403 Distilleries, gaugers and storekeepers 397 Meters, etc., required 397 Distillation, use of sugar in 402-403 Furs, excise tax on 475 Gain, how ascertained 26-30 Gas wells, taxable selling price of 44 Gaugers for fruit distilleries 397 General definitions 1-15 Gifts deductible from gross income 72 Excluded from taxation 53 PAR. Gin exempt from tax on rectified spirits ....360 For export, bottling in bond 404 Ginger Ale, tax on 408 Gold mining, by corporation, exempt from war profits and excess profits tax 229 Government income excluded from taxation . . 57 Contracts, copies of, to be furnished Com- missioner 700-702 Defined 12 Governmental interest, credit for, normal tax, 82 Obligations, interest on, excluded from taxation 54 Telephone and telegraph business exempt from tax 331 Governmentally directed utilities, income of, when excluded from taxation 58 Grains, basis of, for distillation 399-400 Grape juice, tax on 408 Must, addition of, to wine 392 Gross income (see income, gross) Group insurance, tax on 342 Hand bags, excise tax on 489 Baggage, excise tax on 488 Health insurance, proceeds of, excluded from taxation 56 Hearing on under-statement in returns ....123 Hire, transportation for, tax on 334 Holding companies to avoid surtax, stockhold- ers made taxable 101 Corporations exempt from corporate tax ..140 House jackets, tax on 493 Husband and wife exemption from normal tax 83 Ice cream, tax on 412 Importation of beverage spirits limited . — 353 Of taxed article without payment pen- alized 577-579 Improvements, permanent, cost of, not deduct- ible from gross income 77 Inquiry as to taxable assets 671 Inadmissible assets defined 253 Income, average, determination of .270-274 Of citizens of United States possessions, how taxed 207 Of foreign governments excluded from taxation 55 Of Government-directed utilities, when ex- cluded from taxation 58 Governmental, excluded from taxation . . 57 Gross, assessment for local benefits, not deductible from 64 Deductions allowed from 61-74 Of non-resident aliens, when taxable ... 60 Corporation, defined 144-147 Defined 49 Items not deductible from 75-79 Items of, excluded from taxation 50-59 Made taxable 49 Net 45-47 How computed 46 Of corporation, defined 143 Defined 45 One thousand dollars, single person’s ex- emption from normal tax 83 Parts of, rates for different years 39 Two thousand dollars, husband and wife exemption from normal tax 83 For war profits and excess profits tax . .245-249 Tax, collection in Porto Rico and Philippine Islands 208-210 Definitions of 16-20 First four thousand dollars, income, six per cent, normal tax, 1918 41 Not deductible from gross income .... 64 Four per cent, on first four thousand dollars after 1918 42 Eight per cent, gross after 1918 42 Twelve per cent, gross, 1918 41 Increase of price under pretext of taxation, penalty for 679 Indebtedness, bonds of, stamp tax on 591 Indemnity bonds, certain, to United States, exempt from instrument tax 574 Stamp tax on 592 96 PAR. Industrial insurance, tax on 342 Information for collection at source .... 199-202 Penalty for disclosing 670 Inland insurance, tax on 343 Inspectors, internal revenue, leave of absence for 636 Installments of taxes, interest on 183 Insurance, by domestic company, part of non- resident decedent gross estate 309 Health, proceeds of, excluded from taxa- tion 56 Life, beneficial, premiums on not deductible from gross income 79 Companies, deductions allowed to 158-161 Mutual, subjected to special tax. .. .519-520 Reserve of, exempt from special tax ...518 Policies, combined, tax on 342 Taxable on issue 341 Transactions, stamp tax on 609 Tax on 341-345 Penalty for non-payment of 347 Returns of 346 Intangible property defined 250 As part of invested capital 259-260 Interest, credit to corporations 166 Deductible, of corporations 150 Governmental, credit for, normal tax .... 82 On Governmental obligations, excluded from taxation 54 Internal Revenue, Advisory Tax Board ..631-635 Assistants to Commissioner 628 Authority to administer oaths 669 Collector’s power to enter other districts. 672 Deputy Commissioners of 628 Repeal provisions relating to 572 Salaries of Collectors 629 Inventory, basis of 31 Basis of gain or loss 28 Invested capital, average 263-264 Deductions from 261-262 Defined 255-258 Determination of 270-273 Valuation of intangible capital 259-260 Investments, tax guaranteed, tax on 103 Irrigation companies, mutual, exempt from instrument tax 574 Issuance, insurance policies made taxable on 341 Jewelry, excise tax on 507 Joint fiduciaries, return by 117 Kimonos, excise tax on 504 Knives, excise tax on 467-468 Knuckles, metallic, excise tax on 468 Land banks exempt from corporate tax 141 Leaf tobacco, regulations for dealing in . .429-443 Leased wires, telephone and telegraph, tax on, 330 Leasing motion picture films, excise tax on ..510 Leave of absence for internal revenue agents and inspectors . 636 Lecture lyceums exempt from special tax . . . 529 Legislative Drafting Service created ......637 Lessee of motion picture films, when excise tax payable by 510 When required to pay tax 656-660 When required to pay tax on theaters, and concert halls . 527 License required for foreign collections ....206 Lien on estate for tax 319 Life insurance premiums, _ beneficial, not deductible from gross income 79 Tax on 342 Proceeds of, excluded from taxation ... 51 Life memberships, tax on 454 Lighting fixtures, portable, excise tax on ...490 Limitation of importation of beverage spirits. 353 Of increased value following transfer ....279 Of proceedings to collect tax 189 Liqueurs, tax on 384 Floor tax on ..386 Liquor dealers, in prohibition territory, special tax on 534 Lists, provision for 672 Liveries, excess tax on 473 Living expenses not deductible from gross income 76 Lodges exempt from corporate tax 131 Lorgnettes, excise tax on 507 Loss, how ascertained 26-30 PAR. Losses deductible from gros« income 65-67 Net, regulations regarding 32-34 Deductible, of corporatio ns 152 Lost stamps, replacement of 664 Lounging robes, tax on 493 Manufacture of taxed article without payment penalized 577-579 Marine glasses, excise tax on 507 Medicinal preparations, excise tax on 513 When exempt from excise tax 513 Memberships, club, tax on 454 Men’s headwear, excise tax on 496-497 Messages, telephone and telegraph, tax on ..329 Marine insurance, tax on 343 Mileage, prior purchased 333 Military bonus 694-693 Forces defined 13 Letters to remain free 688 Pay, when excluded from taxation 59 Mineral waters, artificial, tax on 408 Natural, tax on 409 Mines, taxable proportion of sale price 286 Taxable selling price of 44 Motion picture films, excise tax on 510 Motorcycles, excise tax on 458 Municipal corporations, bonds, etc., issued by, exempt from instrument tax 574 Music boxes, excise tax on 460 Mutual associations exempt from corporate tax 138-139 Ditch and irrigation companies exempt from instrument tax 574 Natural deposits, depletion of, deduction from gross income 71 Naval pay, when excluded from taxation . . 59 Neckwear, excise tax on 499 Negligence in payment of taxes, penalty for, 186 Negligent failure to pay tax penalty for ..646 Net income (see Income, net) Net losses (see Losses, net) Nightwear, excise tax on 503-504 Non-alcoholic beverages, return and payment of tax 410-411 Tax on 407-409 Non-deductible items from gross income ..75-79 Non-paid service, transportation tax on 334 Non-resident alien (see Alien, non-resident) Estate of 304-308 Estate of, domestic stock and insurance . .309 Normal tax, credits allowed on 80-85 Rates of 46-42 Notice of alleged under-statement in returns, 123 To collector, by executors, of appointment, 311 Oaths, authority to administer 669 Officials dispensing drugs, not required to register, or pay tax 558 Federal, income of, made taxable 49 Oil transportation by pipe line, tax on .... 328 Wells, taxable selling price of 44 Opera glasses, excise tax on 507 Opium, tax on 561 Organs, excise tax on 460 Pipe, exemption from excise tax 460 Overcollection, refund of 652 Overdue estates tax 317 Owner unknown, payment of tax on income of, at source 102 Ownership, individual, reorganized into cor- poration 277 Packages for cigarettes 420 For tobacco 422-425 For leaf tobacco 436 “Paid,” definition of 20 Par value defined 254 Parasols, excise tax on 491 Parcel post, penalty for shipment by, without payment of tax 576, 579 Parlor car accommodations, tax on 327 Partners, distributive shares 116 Names and addresses of 116 Partnership, reorganized into corporation . .277 Returns 116 Shares, allocation of rates for 38 Tax regulations applying to 87-92 97 PAR. Passenger transportation, tax on 326 Pawnbrokers, special tax on 524 Payment of collections under transportation tax 340 Of expenses of suits 665 Of floor tax 644 Of taxes 183-193 Of tax on non-alcoholic beverages 411 On admissions and dues 455 At source 102-106 Penalty for carrying on occupation without payment of special tax 550 For delay in paying taxes 190 For disclosing information 670 For evasion of tax on wines and spirits ..396 For failing to file returns or lists within prescribed time 675-676 For failure to affix document stamps 595 For failure to comply with provisions of estate tax 321-322 For failure to pay tax or supply informa- tion 196 For failure to print price of admission on ticket 453 For foreign collections without license ....206 For fraud in tax payment 187 For fraudulent removal of stamps ....580-584 For fraudulent use of stamps 582, 584 For increase of price under pretext of taxation 679 For making, etc., instruments, documents, etc., without tax payment 575-579 For manufacture, importation or sale of playing cards, package, or other article without tax payment 577, 579 For negligence in payment of taxes 186 For negligent failure to pay tax 646 For non-cancellation of stamps 578-579 For non-payment of excise tax 483 For non-payment of tax on insurance ....347 For non-payment of tax on non-alcoholic beverages 411 For possession of washed or altered stamps 583-584 For shipment by parcel post without pay- ment of tax 576, 579 For tampering with cancellation of stamps 582, 584 Perfume, tax on 352 Permanent improvements, cost of, not deduct- ible from gross income 77 Person defined 1 Personal custody of drugs 563 Exemption from normal tax 83 Expenses not deductible from gross income 76 Returns, time and place of filing 121 Service corporation defined 19 Exempt from corporate tax 142 Stockholders of, taxed as partners 92 Philippine Islands, collection of income tax _ in 208-210 Photographic films and plates, excise tax on . .464 Pianos, excise tax on 460 Piano players, excise tax on 460 Picture frames, excise tax on 486 Pipe line for beer, use of 405-406 Definition of tax on 335 Oil transportation by, tax on 328 Pipe organs, exempt from paving excise tax, 460 Place of filing personal return 121 Players, piano, excise tax on 460 Playing cards, manufacture, importation or sale without tax payment penalized, 577, 579 Stamp tax on 606 Pleasure clubs exempt from corporate tax ..137 Pocketbooks, excise tax on 489 Pop, tax on 408 Porto Rico, collection of income tax in . .208-210 Possessions of United States, citizens of, in- come tax 207 Of United States, credit for taxes paid in . .109 Postage, rate of, effective July 1, 1919 ....688 Post Office Department, sale of stamps ....589 Powers of attorney, stamp tax on 605 Premiums on beneficial life insurance not duductible from gross income 79 Present war defined 14 Pre-war period defined 231 PAR. Price of admission to be printed on ticket. .453 Pridr payment, credit for 36 Purchase of mileage or ticket 333 Proceedings for violation of act 668 Proclamation of President terminating war, 15 Produce, cash sales of, exempt from stamp tax 597 Exchange sales of, stamp tax on 596 Professional use of drugs 563 Profits, net, for purpose of child labor tax 612-617 Prohibition territory, special tax on liquor dealers in 534 Of withdrawal of distilled spirits ..349 Property, exchange of, determination of gain or loss 29 Provision for lists and returns 672 Proxies, stamp tax on 604 Public exhibitions, special tax on 529 Public records, returns to be 203-204 Publication of statistics of operation 205 Purses, excise tax on 489 Rate applied to partnerships 89-90 For different years assigned 35-38 Of postage effective July 1, 1919 688 For 1917-18, when applied 35 For 1918-19, when applied 37 For parts of income for different years ... 39 For partnership shares, allocation of 38 For surtax 43 Of tax on estates *' **’*?fo Rebates, corporate claim for 162 Payments of, claim for allowance for 73 Receipts for estates tax 316 For taxes J9j Receivers, etc., returns by 174 Recomputation of taxes 185 Records, excise tax on ...460 Redetermination of deduction for amortiza- tion 70 Of credit for taxes ....112-113 Of credit for taxes paid by corporation, 171-172 For net losses 33-34 Of tax on estates 310 Reduced tax on transportation systems 127 Re-enactment, of applicable internal revenue provisions 588 Refunds of taxes 195 Refund, not to be made in case of fraud ..666 Of overcollection 652 Of overpayment . 652 Reimbursement for amount paid on estates tax 318 Religious corporations exempt from corpo- rate tax 134 Rented automobiles, special tax on 533 Reorganization of corporations 275-278 Determination of gain 30 Repayment of unauthorized collection 665 Replacement of lost stamps 664 Repeal provisions 681-684 Internal Revenue Act 572 To remain in force for collection of back taxes 685 Reserve of insurance companies exempt from special tax 518 Return attestation of corporate 174 May be made by agent 115 Of brokers 198 For purpose of child labor tax 622 By collector 673 By collector, of estates 313 Consolidated, of corporations 177-180 Corporations 174-176 Time and place for filing 181-182 Corporate, war and excess profits tax ....285 Divided, required when accounting period is changed 119 Examination for, by Commissioner 643 For excise tax 482 By executors 312 Extension of time for 674 Failure to file, within prescribed time, pen- alty for 675-676 By fiduciary 117 For floor taxes 644 Individual 114-115 98 PAR. Return, For tax on insurance 346 Of tax on non-alcoholic beverages 410 By non-resident alien 86 On notice of Commissioner 642 Partnership ; 116 Personal, time and place of filing 121 Provisions for 672 To be public records 203-204 By receivers, etc 174 Responsibility of fiduciary for 98 Of tax at source 104-105 Of list of stockholders 197 Of transportation tax 339 Under-statement in 123 When they may be witnessed 651 Riding academies, special on 532 Roof gardens, tax on 450 Root beer, tax on 408 Rugs, excise tax on 485 Sailors, estates of, when exempt from tax ..290 Sale of property, gain or loss in 26-30 Sales, cash, of produce, exempt from stamp tax 597 Sale at retail by manufacturer, etc., nature of tax on 478 Of tax article without payment pen- alized 577-579 Scientific corporations exempt from corpo- rate tax 134 Season tickets, tax on 449 Securities, corporate, stamp tax on 591 Service, non-paid, transportation tax on ....334 Shares, distributive, of partnerships, in com- puting income 87 Shipbrokers, special tax on 525 Shooting galleries, special tax on 531 Shrinkage, coroorate claim for 162 Single payment of taxes 184 $6.00 per barrel tax on beer 371 Sleeping car accommodations, tax on 327 Slot machines, excise tax on 472 Smokers’ articles, excise tax on 471 Smoking coats, tax on 493 Soda water, tax on 412 Soft drinks, tax on 408 Soldiers, estate of when exempt from tax.... 290 Source, collection at, information for .... 199-202 Payment of tax at 102-106 Tax at, return of 104-105 Specific credit to corporations 168 Non-beverage, wine for distillation of.... 394 Wine, definition of 392 Return and inspection of 392 Withdrawal of 392 Withdrawal for fortification 380 Sporting garment, tax on 474 Goods, tax on 461 Stamps-cancellation of 585 Commissioner to procure and regulate use of 586 Computing fractional part of a cent 662 Contracts for, limited 587 Document, penalty for failure to affix.... 595 Difference in value to be assessed 655 Discontinuance of 368-369 Fraudently used, penalty for 581, 584 On hand 655 Lost, replacement of 664 Penalty for fraudulent removal 580, 584 Penalty for non-cancellation 578-579 Penalty for possession of washed or al- tered 583, 584 Penalty for tempering with cancellation of 582, 584 Rectified spirits, exchange of 367 Sale through Post Office Department. ... 589 To be furnished to assistant treasurers and depositories 590 Tax on exchange sales of produce 596 States, bonds, etc., issued by, exempt from instrument tax 574 Statistics of operation of law to be pub- lished 205 Still wines, tax on 375-379 Stock dividends considered income 23 How taxed 24 PAR. Stock, domestic, held by non-resident deced- ent, part of gross estate 309 Capital, issue of, stamp tax on 593-594 Transfer of, stamp tax on 595 Stockholders of holding, or accumulating companies made taxable 101 Return of list of 197 Stockings, excise tax on 500-501 Street fair, special tax 529 Suit, payment of expenses of 665 Sun shades, excise tax on 491 Surety bonds, stamp tax on 592 Sureties, bonds of United States acceptable in lieu of .680 Surgical instruments, exempt from excise tax 507 Rates for 43 Tangible property defined 251 Table water, tax on 409 Tax, income, war profits and excess profits, not deductible from gross income 64 Deductible from gross income 64 On admissions and dues, collection and payment 455 Exemptions from 451 On excess rates charged for admission. 447-448 Board, Advisory 631-635 On powers of attorney 605 On rented automobiles 533 Paid on boat, credit for 548-549 On bowling alleys and billiard rooms.... 530 On brokers 523 On customhouse brokers 526 On shipbrokers 525 On cameras 463 On candy 465 On issue of capital stock 593-594 On transfer of capital stock 595 On carbonated waters 408 On carpets 485 Certificates of indebtedness. United States, receivable for 663 On champagne, sparkling wines, liqueurs, etc 381-385 On chewing gum 462 On child labor 611 On cigars 414-415 On cigarettes 416 On cigarette paper 427-428 On circuses 528 On club membership 454 On corporations 124-126 Corporation, adjustment of 280-284 Special, on domestic corporation 516 On corporations, exceptions to 128-142 Paid, credit to corporations 167 Payment on credit sales 653 On custom house operations 601-602 Normal, credits allowed on 80-85 Normal, rates of 40-42 Stamp, on deeds of conveyance 600 Stamp, on drafts and check 598 On portable electric fans 469 Estates, when due 314 Excise, penalty for non-payment of 483 Excise, returns for 482 On express shipments 325 On firearms 466 On foreign passage tickets 603 On freight 324 On ice cream and soda water 412 On insurance 341-345 Special, reserve of insurance companies exempt from .. 518 Stamp, on insurance transactions . .. 609 On jewelry and precious metal fittings. .. .507 On leasing and licensing motion picture films 510 When lessee or vendee shall pay ....656-660 On life memberships 454 On portable lighting fixtures 490 On liquor dealers in prohibition territory. . 534 On medicinal preparations 513 On artificial mineral waters 408 On natural mineral waters 409 On nightwear and underwear 503-504 On objects of art. .••••; 481 On oil transportation by pipe line 328 99 PAR. PAR. Tax On opium, coca leaves, etc 561 On parcel post packages 607-608 On passenger transportation 326 On pawnbrokers 524 Payment of 183-193 By beneficiary 99 Payment of by executors 315 By fiduciary 99 Of at source 102-106, 169 On photographic films and plates 464 On players, player-pianos, talking machines, etc 460 Proceedings against absconding or conceal- ment 193 On proxies 604 On public exhibitions 529 On purses, pocket books and handbags .... 489 Tax rates for estates and trusts 93-98 Rate of, on estate 289 Receipt for 194 On rectified distilled spirits and wines.... 360 Floor, on rectified spirits and wines 361 Redetermination of credit for 112-113 Refunds of . 195 Regulations applying to partnerships. ... 87-92 On riding academies 532 On sleeping car accommodations 327 At source, when paid by recipient 106 At source, return of 104-105 Special, exceptions to 529 On foreign corporation 517 Payment of, not an exemption from penalty or punishment 535 On theatres and concert halls, when lessee pays 527 On manufacturers of tobacco, cigars and cigarette 537-543 On sporting goods 461 On still wine 375-379 On street fairs 529 On table waters 409 On tax guaranteed investments 103 On telegraph and telephone leased wires.. 330 On telephone and telephone messages 329 On theaters and concert halls 527 On tobacco and snuff 421 Transportation, collection of 336-338 On non-paid pipe line transportation 335 On non-paid transportation service 334 Transportation, paid by person served . ...332 Transportation, payment of collections under 340 Transportation, returns of 339 On trunks On umbrellas, parasols and sun shades. .. .491 In Virgin Islands 640 On waist coats 494 Selling price of mines, c: 1 and gas wells.. 44 Talking machines, excess tax on 460 Telegraph messages, tax on 329 Service, Governmental, exempt from tax.. 331 Wires, leased, tax on 330 Telephone messages, tax on 329 Service, Governmental, exempt from tax... 331 Wires, leased, tax on 330 Termination of war, how fixed 15 Territories. Bonds, etc., issued by, exempt from instrument tax 574 Theaters, special tax on 527 Thermos appliances, excise tax on 470 Three cent postage, repeal effective July 1, 1919 688 Tickets, prior purchased 333 Foreign passage, stamp tax on 603 Time of filing personal return 121 Tobacco, floor tax on 426 Manufactures of, special tax on 538-539 Toilet articles, excise tax on 512 Transfer, limitation of value following 279 Transferees of estates, liable for tax 320 Transportation tax, collection of 336-338 For hire, tax on 334 Pipe-line, non-paid, tax on 335 Systems, reduced tax on 127 Tax paid by person served 332 Trucks, automobile, excise tax on 457 Trunks, excise tax on 487 Trusts tax. regulations for 93-100 Tax on corporations in 1918 125 Twelve per cent, gross normal tax, 1918... 41 Two per cent tax on tax guaranteed invest- ments 103 $2.20 tax on distilled spirits in bond 348 Umbrellas, excise tax on 491 Unauthorized collections, repayment of 665 Underwear, excise tax on 503-504 United States bonds acceptable in lieu of sureties 680 Certain indemnity bonds to exempt from instrument tax 574 Bonds, etc., issued by exempt from instru- ment tax 574 Possessions, citizens of, income tax 207 Possesion of, credit for taxes paid in 109 Unknown owner, payment of tax on income of at source 102 Utilities, government directed, income of when excluded from taxation 58 Value, increase of, following transfer, limi- tation of 279 Valuation of gross estates 291-297 Vendee, when required to pay tax 659-660 Violations of act, proceedings in 668 Virgin Islands, taxes in 640 Volume of rectified spirits and wines not to be increased 362 Waistcoats, excise tax on 494 War finance securities excluded from taxa- tion 54 War profits, corporation, tax on 212-223 Tax not deductible from gross income. . 64 Tax on, credits 232-242 Tax, limitation on 225 Tax, net income 245-249 War, termination of, how fixed 15 Work, corporations doing, to make separate returns 177 Warehousing, temporary, of distilled spirits without stamps 355 Watches, excise tax on 507 Waters, table, tax on 409 Wells, taxable proportion of sale price 286 Whisky, straight, when not subject to tax on rectified spirits 363 Wholesale liquor dealers stamps, exchange of 367 Wilful failure to pay tax, penalty for .... 647-048 Refusal to pay tax or furnish information, penalty for 196 Wine, addition of must to 391 Of sugar to 391 Allowance for loss 398 Artificially carbonated, tax on 383 Blended, when not subject to tax on recti- fied wines 363 Blending of 396 Use of for distillation of non-beverage spirits 394 For distillation, removal of 393 Penalty for evasion of tax on 396 Family, exempt from tax 388 Fortification of 396 Natural — definition of 374 Possession of, inventory and bond re- quired 388 Rectified — tax on 360 Floor tax on 361 Retail dealers exempt from inventory and bond 388 Sparkling, floor tax on 386 Spirits, see Spirits, wine. Still, tax on 375-379 Floor tax on 386 And sparkling, etc., tax on may be by assessment 395 Sweet, floor tax on 387 Fortification of 390-392 Withdrawal of beer for bottling 405-406 Of wine spirits 392 Spirits for fortification 380 Withholding agent, definition of 18 Witnessing returns, when it may be affected. 651 Women’s headwear, excise tax on 495 Workmen’s compensation acts, receipts under, excluded from taxation 56 100