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Federal Taxes

Complete Digest of the Revenue
Law enacted by the Congress, Fixing the

Rates for 1918
and Subsequent Years

Compiled and edited by

Ewell D. Moore
Attorney-at-Law-Author of « Federal Taxation”,

-

War Tax, etc.
(Member San Francesco Bar)

The information contained in this book is the
result of long study, followed by painstaking
investigation made by the author in the City
of Washington while the Revenue law was in
process of enactment. All his statements,
tables and examples were gone over and
verified by the best tax experts in Washington
before they were released for publication.

Published by
The ten Bosch Company

San Francisco, California

Copyright 1919 by EWELL D MOORE

19

89398 TABLE OF CONTENTS

15

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66

INCOME TAX, INDIVIDUALS:
The Normal Rates for 1918, etc...

3 The Surtax Rates..

4 Example of Normal Tax.

3
Surtax.
Gross Income Defined.
Net
Items Excluded from Gross Income
Deductions Allowed
Interest on State, Municipal Bonds Deductible
Soldiers' and Sailors' Salaries Exempt..
Deductions for Losses
Amortization Allowances on War Plants, Ships,
etc...

6 Depletion on Mines, Oil, Gas Wells, Timber. Preceding Year Losses Deductible.

6 Items Which Cannot be Deducted.

6 Credits Allowed Citizens .

6 Nonresident Aliens Personal Exemptions.

6
Partnerships, How Taxed.
Personal Service Corporations.

7
Income Tax on Estates, Trusts.
Fiduciary's Return...
Corporation's Profits, When Taxed to Stock-

holder.
Withholding Taxes, When Required.
Credit Given for Taxes Paid..
Individual Returns, Who Must Make.

8
Partnership Returns....
Charge of Accounting Period.
Filing Returns, When and Where.

9 Payment of Tax, When and Where.

9 If Tax is Understated...

9 Income Tax Table..

16

Limit of 30% on Small Corporations.
Explanation and Examples ..
If Income is from Two Businesses.
Corporations Exempt from this Tax.
Pre-war Period Defined.
Credits Should be Studied First.
Excess Profits Credit Explained.
War
Net Income, How Ascertained.
Invested Capital

-- Terms Defined

Explained. Inadmissible Assets. Rule for Determining Taxability Comparison with Like Concerns Reorganizations and Consolidations. Change of Ownership... Returns on Differing Rates. All Corporations Must File Return. Relief for Prospectors, etc..

19 20 20 20 20 20 20 21 21 21 21 21 22 22 22 23 23

66

TRANSPORTATION TAXES..

25 BEVERAGE TAXES..

26 CIGAR, CIGARETTE, TOBACCO TAX. 26 AMUSEMENT TAXES.....

26 CLUB DUES AND MEMBERSHIP. 27 EXCISE OR LUXURY TAXES

27 MOVING PICTURE FILM LEASES TAX 28 FURNITURE, CLOTHING, TAXES..... 28

GENERAL DEFINITIONS OF TERMS
USED
Dividends Defined.

31 Basis to Determine Gain or Loss.

32 Inventories.

31 Net Losses—the Most Important Relief Clause 32 Fiscal Year with Different Rates..

32 Income Subject to

32

66

CORPORATION INCOME TAX:

1918 Rates.
Subsequent Year Rates.
Exemptions, Conditional, Etc.
Corporation Net Income Defined.

Gross

Deductions Allowed.
Deductions for Taxes Paid.
Amortization of Costs on War Plants.
Depletion and Depreciation.
1919 and 1920 Losses Deductible.
Insurance Companies' Deductions.
Preced ng Year Losses
Items Not Deductible.
Credits Allowed Corporations..
When Tax is Paid at Source.
How to Credit Taxes Paid..
Corporation Returns
Consolidated Returns.
Time for Making Returns.
Taxes Payable in Four Installments
Negligence Penalized
Receipts for Taxes Paid.
Five-Year Limit on Refund Claims.
Failure or Refusal Give Information, Fine.
Dividend Payments Reported
Brokers' Reports..
Information at the Source.
Taxpayers' Names Made Public
Statistics to be Published:
Licenses Required.....

9 9 9 10 10 10 10 11 11 11 11 11 12 12 12 12 12 12 13 13 13 13 14 14 14 14

ESTATE TAX:

The Rates.
Gross Estate, How Determined.
Net
Executor, His Duties
Exemption, $50,000.
Due Date for Tax.
How and When Paid.
Penalties.
Unpaid Taxes a Lien.
False Statements Punished.

23 23 24 24 24 24 24 25 25 25

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CHILD LABOR EMPLOYMENT TAX. 30 INSURANCE TAXES.

26 JEWELRY TAX ....

28 TOILET PREPARATIONS TAX

29 STAMP TAXES. .

29 TWO CENT POSTAGE:.:

32 PAYMENTS TO SOLDIERS, ETC.. 32 TAX ADVISORY BOARD.

32 SPECIAL TAXES.

29

WAR EXCESS-PROFITS TAX:
Rates for 1918.

1919.

15 15

FOREWORD This book contains a digest of the New Revenue Act which has just been enacted by the Congress. It is not a copy of the law, but a concise summary of it, with all the rates, information, directions, and the original section numbers, for the tax payer's guidance. The taxes shown are in lieu of those in effect heretofore.

There are numerous important relief provisions in the new law which should be studied and understood before making the tax return for 1918 — particularly those providing for “Net loss” deductions, "Personal Service Corporations,” “Preceding year losses, “Amortization, of cost on war plants, ships, etc.,” “Inventory shrinkage,” “Depletion allowance on mines, oil and gas wells and timber, limitation of the tax on small corporations, and a special method of determining the tax where the ordinary method would be unjust. If these relief provisions are understood and availed of they will prevent much inequality of taxation.

The income, corporation and War Excess Profits taxes apply to the entire calendar year of 1918. The “Credits" under these taxes should be thoroughly understood as the first step in computing the taxes.

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Title II

INCOME TAX-INDIVIDUALS THE NORMAL TAX: (Sec. 210)

In lieu of the normal taxes imposed by the Revenue Acts of 1916 and 1917, the new law fixes the normal rates upon the net income of every individual as follows:

(a) For the calendar year 1918, 12% of the net income in excess of the credits

allowed in Sec. 216; Provided, that in the case of a citizen or resident, the

rate on the first $4,000 of the excess shall be 6%.
(b) For each calendar year after 1918, 8% of the net income in excess of the

credits; Provided, that in the case of a citizen or resident, the rate on

the first $4,000 of the excess shall be 4%. Explanation: After determining your net income, turn to Section 216 and ascertain your credits. Suppose you are single and a citizen, with a salary of $5,000 for 1918, and that your only credit is a personal exemption of $1,000; the tax would be: First $1,000, personal exemption credit.......

No tax
On $1,000 to $5,000 ($4,000 being the excess over the credit, at 6%) is. $240
If your taxable net income is $7,500, with a $1000 exemption, figure the

first $5,000 as above, and the remainder, $2500, as follows:
On $5,000 to $7,500 — ($2,500 at 12%) is...

$300 Total normal tax on $7,500 taxable net income is..

$540 In addition to the normal tax, the surtax on $7,500 would be: First $5,000..

No tax
On $5,000 to $6,000, ($1,000 at 1%).

$10
On $6,000 to $7,500, ($1,500 at 2%).

30 Total of normal and surtaxes..

$580 Another Example of the Normal Tax: A married person, citizen, with two dependents under 18 years; wife has no separate income: Net taxable income from salary in 1918.

. $25,000
First $2,000, personal exemption credit.

No tax
Next 400, credit for 2 dependents at $200 each.

No tax
Tax on $2,400 to $6,400 (being first $4,000 over credits, at 6%).

240
Tax on 6,400 to $25,000 ($18,600 at 12%).

2,232 Total Normal Tax.....

$2,472 The Surtax: In addition to the normal tax on above income, the surtax is: On over $ 5,000 to $ 6,000, at 1%, the tax is.

$ 10.00 On over 6,000 to 8,000, at 2%, the tax is.

40.00 On over 8,000 to 10,000, at 3%, the tax is.

60.00 On over 10,000 to 12,000, at 4%, the tax is.

80.00 On over 12,000 to 14,000, at 5%, the tax is.

100.00 On over 14,000 to 16,000, at 6%, the tax is.

120.00 On over 16,000 to 18,000, at 7%, the tax is.

140.00 On over 18,000 to 20,000, at 8%, the tax is.

160.00 On over 20,000 to 22,000, at 9%, the tax is.

180.00 On over 22,000 to 24,000, at 10%, the tax is.

200.00 On over 24,000 to 25,000, at 11%, the tax is.

110.00 Total of normal and surtaxes...

$3672.00 3

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