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Proriso.
Organizations ex-

Determination of net income.

Deductions.
Operating expenses,

any foreign country, upon the amount of net income over and above
five thousand dollars received by it from business transacted and
capital invested within the United States and its Territories, Alaska,
and the District of Columbia during such year, exclusive of amounts
so received by it as dividends upon stock of other corporations, joint
stock companies or associations, or insurance companies, subject to
the tax hereby imposed: Provided, however, That nothing in this
section contained shall apply to labor, agricultural or horticultural cepted.
organizations, or to fraternal beneficiary societies, orders, or associ-
ations operating under the lodge system, and providing for the pay-
ment of life, sick, accident, and other benefits to the members of such
societies, orders, or associations, and dependents of such members,
nor to domestic building and loan associations, organized and operated
exclusively for the mutual benefit of their members, nor to any corpo-
ration or association organized and operated exclusively for religious,
charitable, or educational purposes, no part of the net income of which
inures to the benefit of any private stockholder or individual.

Second. Such net income shall be ascertained by deducting from the gross amount of the income of such corporation, joint stock company or association, or insurance company, received within the year from all sources, (first) all the ordinary and necessary expenses etc. actually paid within the year out of income in the maintenance and operation of its business and properties, including all charges such as rentals or franchise payments, required to be made as a condition to the continued use or possession of property; (second) all losses Losses, depreciation, actually sustained within the year and not compensated by insurance or otherwise, including a reasonable allowance for depreciation of property, if any, and in the case of insurance companies the sums other than dividends, paid within the year on policy and annuity contracts and the net addition, if any, required by law to be made within the year to reserve funds; (third) interest actually paid edInterest on indebtwithin the year on its bonded or other indebtedness to an amount of such bonded and other indebtedness not exceeding the paid-up capital stock of such corporation, joint stock company or association, or insurance company, outstanding at the close of the year, and in the case of a bank, banking association or trust company, all interest actually paid by it within the year on deposits; (fourth) all sums paid by it within the year for taxes imposed under the authority of the United States or of any State or Territory thereof, or imposed by the government of any foreign country as a condition to carrying on business therein; (fifth) all amounts received by it within the year as stock subject to tax. dividends upon stock of other corporations, joint stock companies or associations, or insurance companies, subject to the tax hereby imposed: Provided, That in the case of a corporation, joint stock foreign corporacompany or association, or insurance company, organized under the laws of a foreign country, such net income shall be ascertained by deducting from the gross amount of its income received within the year from business transacted and capital invested within the United States and any of its Territories, Alaska, and the District of Columbia, (first) all the ordinary and necessary expenses actually paid within the year out of earnings in the maintenance and operation of its business etc. and property within the United States and its Territories, Alaska, and the District of Columbia, including all charges such as rentals or franchise payments required to be made as a condition to the continued use or possession of property; (second) all losses actually sus- tion, ete. tained within the year in business conducted by it within the United States or its Territories, Alaska, or the District of Columbia not compensated by insurance or otherwise, including a reasonable allowance for depreciation of property, if any, and in the case of insurance companies the sums other than dividends, paid within the

Taxes.

Dividends upon

Proviso.

Deductions.
Operating expenses,

Losses, deprecia

Limit.

States,

subject to tax.

Assessment

year on policy and annuity contracts and the net addition, if any, Interest on indebt required by law to be made within the year to reserve funds; (third)

interest actually paid within the year on its bonded or other indebtedness to an amount of such bonded and other indebtedness, not exceeding the proportion of its paid-up capital stock outstanding at the close of the year which the

gross amount of its income for the year from business transacted and capital invested within the United States and any of its Territories, Alaska, and the District of Columbia bears to

the gross amount of its income derived from all sources within and Taxes in United without the United States; (fourth) the sums paid by it within the

year for taxes imposed under the authority of the United States or of Dividends on stock any State or Territory thereof; (fifth) all amounts received by it

within the year as dividends upon stock of other corporations, joint

stock companies or associations, and insurance companies, subject to

insur- the tax hereby imposed.. In the case of assessment insurance comance companies.

panies the actual deposit of sums with State or Territorial officers, pursuant to law, as additions to guaranty or reserve funds shall be

treated as being payments required by law to reserve funds. Further deduction. Third. There shall be deducted from the amount of the net income

of each of such corporations, joint stock companies or associations,

or insurance companies, ascertained as provided in the foregoing Computation of tax. paragraphs of this section, the sum of five thousand dollars, and said

tax shall be computed upon the remainder of said net income of such corporation, joint stock company or association, or insurance com

pany, for the year ending December thirty-first, nineteen hundred Annual returns re- and nine, and for each calendar year thereafter; and on or before the

first day of March, nineteen hundred and ten, and the first day of March in each year thereafter, a true and accurate return under oath or affirmation of its president, vice-president, or other principal officer, and its treasurer or assistant treasurer, shall be made by each of the corporations, joint stock companies or associations, and insurance companies, subject to the tax imposed by this section, to the collector of internal revenue for the district in which such corporation, joint stock company or association, or insurance company, has its principal place of business, or, in the case of a corporation, joint stock company or association, or insurance company, organized under the laws of a foreign country, in the place where its principal business is carried on within the United States, in such form as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe, setting forth, (first) the total amount of the paid-up capital stock of such corporation, joint stock company or association, or insurance company, outstanding at the close of the year; (second) the total amount of the bonded and other indebtedness of such corporation, joint stock company or association, or insurance company at the close of the year; (third) the gross amount of the income of such corporation, joint stock company or

association, or insurance company, received during such year from Foreign companies. all sources, and if organized under the laws of a foreign country the

gross amount of its income received within the year from business

transacted and capital invested within the United States and any of Dividends from its Territories, Alaska, and the District of Columbia; also the amount stock subject to tax.

received by such corporation, joint stock company or association, or insurance company, within the year by way of dividends upon stock of other corporations, joint stock companies or associations, or

insurance companies, subject to the tax imposed by this section; Operating expenses. (fourth) the total amount of all the ordinary and necessary expenses

actually paid out of earnings in the maintenance and operation of the business and properties of such corporation, joint stock company or association, or insurance company, within the year, stating separately all charges such as rentals or franchise payments required to be made

Forms contents.

out

Capital stock standing.

Indebtedness.

Gross income.

panies.

as a condition to the continued use or possession of property, and Foreign companies. if organized under the laws of a foreign country the amount so paid in the maintenance and operation of its business within the United States and its Territories, Alaska, and the District of Columbia; (fifth) the total amount of all 'losses actually sustained during the tion, etc.

Losses, depreciayear and not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, and in the case of insurance companies the sums other than dividends, paid within the year on policy and annuity contracts and the net addition, if any, required by law to be made within the year to reserve funds; and in the case of a corporation, joint stock company or association, Foreign companies. or insurance company, organized under the laws of a foreign country, all losses actually sustained by it during the year in business conducted by it within the United States or its Territories, Alaska, and the District of Columbia, not compensated by insurance or otherwise, stating separately any amounts allowed for depreciation of property, and in the case of insurance companies the sums other than dividends, insurance compaid within the year on policy and annuity contracts and the net addition, if any, required by law to be made within the year to reserve fund; (sixth) the amount of interest actually paid within the year on its Interest paid on inbonded or other indebtedness to an amount of such bonded and other indebtedness not exceeding the paid-up capital stock of such corporation, joint stock company or association, or insurance company, outstanding at the close of the year, and in the case of a bank, banking association or trust company, stating separately all interest paid by it within the year on deposits; or in case of a corporation, joint stock Foreign companies, company or association, or insurance company, organized under the laws of a foreign country, interest so paid on its bonded or other indebtedness to an amount of such bonded and other indebtedness not exceeding the proportion of its paid-up capital stock outstanding at the close of the year, which the gross amount of its income for the year from business transacted and capital invested within the United States and any of its Territories, Alaska, and the District of Columbia, bears to the gross amount of its income derived from all sources within and without the United States; (seventh) the amount paid by it within the year for taxes imposed under the authority of the United States or any State or Territory, thereof, and separately the amount so paid by it for taxes imposed by the government of any foreign country as a condition to carrying on business therein; (eighth) the net income of such corporation, joint stock company or association, or insurance company, after making the deductions in this section authorized. All such returns shall as received be transmitted forth- turns with by the collector to the Commissioner of Internal Revenue.

Fourth. Whenever evidence shall be produced before the Commis- ir returns incorrect sioner of Internal Revenue which in the opinion of the commissioner or not made. justifies the belief that the return made by any corporation, joint stock company or association, or insurance company, is incorrect, or whenever any collector shall report to the Commissioner of Internal Revenue that any corporation, joint stock company or association, or insurance company, has failed to make a return as required by law, the Commissioner of Internal Revenue may require from the corporation, joint stock company or association, or insurance company making such return, such further information with reference to its capital, income, losses, and expenditures as he may deem expedient; and the Commissioner of Internal Revenue, for the purpose of books, etc. ascertaining the correctness of such return or for the purpose of making a return where none has been made, is hereby authorized, by any regularly appointed revenue agent specially designated by him for that purpose, to examine any books and papers bearing upon the matters required to be included in the return of such corporation, joint stock company or association, or insurance company, and

Taxes paid.

Net income.

Disposition of

re

Agents to examine

Powers, etc.

.

. I. CH.

6.

etc.

ings.

to be

Assesements made.

Addition if returns false.

of sickness, etc.

tional tax.

sessment.

to require the attendance of any officer or employee of such corporation, joint stock company or association, or insurance company, and to 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; and the Commissioner of Internal Revenue may also invoke the aid of any court of the United States having

jurisdiction to require the attendance of such officers or employees Amending returns, and the production of such books and papers. Upon the information

so acquired the Commissioner of Internal Revenue may amend any Approval of proceed- return or make a return where none has been made. All proceed

ings taken by the Commissioner of Internal Revenue under the provisions of this section shall be subject to the approval of the Secretary of the Treasury.

Fifth. All returns shall be retained by the Commissioner of Internal Revenue, who shall make assessments thereon; and in case of any

return made with false or fraudulent intent, he shall add one hundred Neglect, etc.

per centum of such tax, and in case of a refusal or neglect to make a

return or to verify the same as aforesaid he shall add fifty per centum Further time in case of such tax.

In case of neglect occasioned by the sickness or absence of an officer of such corporation, joint stock company or association, or insurance company, required to make said return, or for other sufficient reason, the collector may allow such further time for making

and delivering such return as he may deem necessary, not exceeding Collection of addi- thirty days.

The amount so added to the tax shall be collected at the same time and in the same manner as the tax originally assessed unless the refusal, neglect, or falsity is discovered after the date for payment of said taxes, in which case the amount so added shall be paid by the delinquent corporation, joint stock company or associa

tion, or insurance company, immediately upon notice given by the Notification of as- collector. All assessments shall be made and the several corpora

tions, joint stock companies or associations, or insurance companies, shall be notified of the amount for which they are respectively liable on or before the first day of June of each successive year, and said assessments shall be paid on or before the thirtieth day of June, except in cases of refusal or neglect to make such return, and in cases of false or fraudulent returns, in which cases the Commissioner of Internal Revenue shall, upon the discovery thereof, at any time within three years after said return is due, make a return upon

information obtained as above provided for, and the assessment made by the Commissioner of Internal Revenue thereon shall be paid by such

corporation, joint stock company or association, or insurance comPenalty for delay. pany immediately upon notification of the amount of such assess

ment; and to any sum or sums due and unpaid after the thirtieth day of June in any year, and for ten days after notice and demand thereof by the collector, there shall be added the sum of five per centum on the amount of tax unpaid and interest at the rate of one per centum

per month upon said tax from the time the same becomes due. Custody of returns.

Sixth. When the assessment shall be made, as provided in this section, the returns, together with any corrections thereof which may have been made by the commissioner, shall be filed in the office of the Commissioner of Internal Revenue and shall constitute public records and be open to inspection as such.

Seventh. It shall be unlawful for any collector, deputy collector, agent, clerk, or other officer or employee of the United States to divulge or make known in any manner whatever not provided by law to any person any information obtained by him in the discharge of his oflicial duty, or to divulge or make known in any manner not provided by law any document received, evidence taken, or report made under this section except upon the special direction of the President; and any offense against the foregoing provision shall be a misdemeanor and be punished by a fine not exceeding one thousand dollars,

Payment.

Divulging returns unlawful.

Punishment for.

to make true returns.

ternal-revenue laws.

to compel

Panama Canal.
Additional issue of

construc

Amount,

or by imprisonment not exceeding one year, or both, at the discretion of the court.

Eighth. If any of the corporations, joint stock companies or asso- Penalty for failing ciations, or insurance companies, aforesaid, shall refuse or neglect to make a return at the time or times hereinbefore specified in each year, or shall render a false or fraudulent return, such corporation, joint stock company or association, or insurance company, shall be liable to a penalty of not less than one thousand dollars and not exceeding ten thousand dollars.

Any person authorized by law to make, render, sign, or verify any fake returns, cene, for return who makes any false or fraudulent retu or statement, with officials. intent to defeat or evade the assessment required by this section to be made, shall be guilty of a misdemeanor, and shall be fined not exceeding one thousand dollars or be imprisoned not exceeding one year, or both, at the discretion of the court, with the costs of prosecution.

All laws relating to the collection, remission, and refund of internal- . Application of inrevenue taxes, so far as applicable to and not inconsistent with the provisions of this section, are hereby extended and made applicable to the tax imposed by this section.

Jurisdiction is hereby conferred upon the circuit and district attendance, etc courts of the United States for the district within which any person summoned under this section to appear to testify or to produce books, as aforesaid, shall reside, to compel such attendance, production of books, and testimony by appropriate process.

SEC. 39. That the Secretary of the Treasury is hereby authorized to borrow on the credit of the United States from time to time, as tion, etc. the proceeds may be required to defray expenditures on account of the Panama Canal and to reimburse the Treasury for such expenditures already made and not covered by previous issues of bonds, the sum of two hundred and ninety million five hundred and sixty-nine thousand dollars (which sum together with the eighty-four million six hundred and thirty-one thousand nine hundred dollars already borrowed upon issues of two per cent bonds under section eight of the Act of

Vol. 32, p. 484. June twenty-eighth, nineteen hundred and two, equals the estimate of the Isthmian Canal Commission to cover the entire cost of the Canal from its inception to its completion), and to prepare and issue therefor coupon or registered bonds of the United States in such form as he may prescribe, and in denominations of one hundred Denominations. dollars, five hundred dollars, and one thousand dollars, payable fifty yemayable in fifty years from the date of issue, and bearing interest payable quarterly Interest. in gold coin at a rate not exceeding three per centum per annum; and the bonds herein authorized shall be exempt from all taxes or duties of the United States, as well as from taxation in any form by or under State, municipal, or local authority: Provided, That said bonds may be disposed of by the Secretary of the Treasury at not less than par, under such regulations as he may prescribe, giving to all citizens of the United States an equal opportunity to subscribe therefor, but no commissions shall be allowed or paid thereon; and a sum not exceeding one-tenth of one per centum of the amount of the bonds herein authorized is hereby appropriated, out of any money, in the Treasury not otherwise appropriated, to pay the expenses of preparing, advertising, and issuing the same; and the authority con- bonds repealebo tained in section eight of the Act of June twenty-eighth, nineteen hundred and two, for the issue of bonds bearing interest at two per centum per annum, is hereby repealed.

SEC. 40. That section thirty-two of an Act, entitled, “An Act debtedness. providing ways and means to meet war expenditures, and for other Vol 30, p. 466, purposes," approved June thirteenth, eighteen hundred and ninetyeight, be, and the same is hereby, amended to read as follows:

"That the Secretary of the Treasury is authorized to borrow from 3 per cent. time to time, at a rate of interest not exceeding three per centum per

Exemption from taxation.

Proviso.

Disposal.

Appropriation for expenses.

Issue of two per cent

Vol. 32, p. 181.

Certificates of in

amended.

Issue authorized at

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