Table 8.-TAXABLE FIDUCIARY RETURNS: NUMBER OF RETURNS, TOTAL INCOME, TAX, AND EFFECTIVE TAX RATE, BY TOTAL INCOME CLASSES, 1944-1951 Footnotes for fiduciary historical tables (In the tables, values in thousand dollars and percentages are rounded and, therefore, may not add to the totals) 1 Total income classes are based on the amount of total income reported on each return. (See note 2.) 2 Total income is a combination of the profit and loss from rents and royalties, from trade or business, from partnerships, from sales or exchanges of property, and income from dividends, interest, other fiduciaries, and miscellaneous income. Tax liability for 1944 is the tax before credits relating to foreign taxes paid and to tax paid at source. For 1945-51, the tax is after credits. Effective tax rates are based on the total income and tax as tabulated in this table for the respective years. 5 Business profit is the net result of all trade and business activities in which the estate or trust is engaged, the combined result of which is a net profit. The net loss from one business offsets the profits of another. Deductions from total receipts are allowed for expenses of doing business, such as cost of merchandise sold, employees' salaries, interest, taxes, rent, repairs, depreciation, obsolescence, depletion, bad debts, and losses on business property. (Net operating loss deduction, allowable against total income, is reported in other deductions.) "Partnership profit excludes the taxable and partially tax-exempt interest on Government obligations and net gain or loss from sales of capital assets, such income being reported in their respective sources. 7 ? Net gain from sales of capital assets is the net gain reported in total income. It is the result of combining net short- and longterm capital gain and loss and the allowable capital loss carryover from preceding years not previously deducted. Short-term applies to sales of capital assets held for 6 months or less upon which 100 percent of the recognized gain or loss is taken into account; long-term applies to sales of capital assets held more than 6 months upon which 50 percent of the recognized gain or loss is taken into account. Short- and long-term sales include such sales from partnerships. The allowable capital loss carryover is the amount of "net capital loss" carried forward from each of the 5 preceding years (but not prior to January 1, 1942) to the extent that such loss exceeds any "net capital gain" of subsequent years intervening between the year in which the net capital loss arose and the year to which it is carried. Net capital loss for any year (beginning 1942) is the excess of (1) current year capital losses over (2) the sum of current year capital gains and the smaller of (a) $1,000 or (b) net income computed without regard to gains or losses from sales of capital assets. Net capital gain for any year (beginning 1942) is the excess of (1) the sum of current year capital gains and the smaller of (a) $1,000 or (b) net income computed without regard to gains or losses from sales of capital assets, over (2) the current year capital losses, "Net gain from sales of property other than capital assets is that from (1) property used in trade or business of a character which is subject to the allowance for depreciation, (2) real property used in trade or business, (3) obligations of the United States or any of its possessions, a State or Territory or any political subdivision thereof, or the District of Columbia, issued on a discount basis and payable without interest at a fixed maturity date not exceeding 1 year from date of issue, and (4) for 1951, certain copy 'Rents and royalties profit is the combined net profit from these two sources, neither of which is reported separately. Deductions against gross rents and gross royalties received are allowable for taxes, interest, repairs, depreciation, depletion, and other expenses pertaining to the respective income. A net loss from either source offsets net profit of the other; the net profit reported is the combined result. 10 Income from other fiduciaries excludes taxable and partially tax-exempt interest on Government obligations. This interest is reported in interest income. 11 Dividends, foreign and domestic, exclude those received through partnerships and other fiduciaries, since the dividends are a part of the income from these entities. 12 Business loss is the net result of all trade or business activities in which the estate or trust is engaged, the combined result of which is a net loss. A net profit from one activity offsets the net loss of another. Business deductions are mentioned in par. 2, note 5. 13 Partnership loss excludes taxable and partially tax-exempt interest on Government obligations and net gain or loss from sales of capital assets, such income being reported in their respective sources. 14 Net loss from sales of capital assets is the statutory loss used in computing net income taxable to fiduciary. It is the result of combining net short- and long-term capital gain and loss and the allowable capital loss carryover from preceding years not previously deducted. However, deduction for the loss is limited to the smallest of-the amount of such loss, or $1,000, or net income computed without regard to gains and losses from sales of capital assets. (For description of short- and long-term and of carryover, see last two paragraphs of note 7.) 15 Net loss from sales of property other than capital assets is the net loss from sales of property listed in note 8. 16 Rents and royalties loss is the combined net loss from these two sources, neither of which is reported separately. Allowable deductions for taxes, interest, repairs, depreciation, depletion, and other expenses pertaining to the respective income exceed the gross rents and gross royalties received. A net profit from one source offsets the net loss of the other; the net loss reported by the fiduciary is the combined result. 17 Interest paid excludes that reported in schedules for business and rent income, and interest paid to carry obligations, the income from which is nontaxable. 18 Taxes paid exclude those reported in the schedules for business and rent income, real estate taxes assessed against property which tend to increase the value, Federal income taxes, estate, inheritance, or legacy taxes, gift taxes, and foreign taxes paid if any portion thereof is claimed as a tax credit. 19 Other deductions include bad debts, net operating loss deduction, losses from fire, storm, shipwreck, or other casualty, or from theft, and other authorized deductions except interest and taxes. 20 Net income taxable to fiduciary is net income remaining in the hands of the fiduciary after deductions for allowable expenses |