If you use this table, tear off this page and file only pages 1 and 2

TAX TABLE FOR CALENDAR YEAR 1951

FOR PERSONS WITH INCOMES UNDER $5,000 NOT COMPUTING TAX ON PAGE 3
Read down the shaded columns below until you find the line covering the total income you entered in item 4, page 1. Then read across to the
column headed by the number corresponding to the number of exemptions claimed in item 1, page 1. Enter the tax you find there in Item 5(A), page ́1.

Page 4

1,050. 1,075 73
1,075 1,100 77
1,100 1,125

1,125 1,150
1,150 1,175 91
1,175 1,200 96
1,200 1,225 100
1,225 1,250 105
1,250 1,275 109
1,275 1,800 114
1,300 1.325 119
1,825 1,350 123

8

$0

$0

2,350

2,875

2,375 311 189 189
2,400 316 194

67 67

194

71

71

2,400

2,425 321 198

198

76

76

2,425
2,450

2.450 325 203

2,475 330 207

2,475 2.500 334 212

2,770 2,800 389 267
2,800 2.825 394 272
2,825 2,850 399 276 276 154
2,850 2,375 403 281 281 158
2,876 2.900 408 285 285 163
2,900 2,925 413 290 290 168
2,925 2,950 418 295 295 172
2,960 2,975 423 299 299 177 177
2,875 8.000 428 304 304 181 181
3,000 3,050 435 311
188 188
3,050 3.100 446 320
3,100 3.150 456
329 329 207 207
3,150
3,200 466 338 338 216 216
3,299 3,250 476 347 347 225 225
3.250 8,300 486 356 356 234 234 112
3,300 3,350 496 366 266 243 243
3,350 3.400 506 375 375 252 252 130
3,400 3,450 516 384
384 262 262 139
3,450 3.500 526 393 393 271 271 148
3,500 3,550 536 402 402 280
3,550 3,600 546 412
412 289
3,600 8,550 556 422 421 298 298
8,700 566 432 430 308 308
3.750 577 442 439 317 317 194
3,750 3,800 587 452 448 326
3,800 3.350 597 462 457 335
3,850 3,900 607 472 467 344
8,900 8,950 617 482 476
3.950 4,000 627 493 485 363 363 240
4,000
503 494 372 372 249 127
513 503 381 381 259 136
4,100 4,150 657 523 513 390 390
268 145
4,150 4.200 667 533 522 399 399 277 155
4,200 4,250 677 543 531
409 409 286
4,800 687 553 540 419 418 295
4,350 698 563 549
429 427 304 182
4.350 4,400 708 573 558 439 436 314 191
4,400 4,450 718 583 568 449 445 323 200
4.450 4,500 728 593 577 459 454 332 210 87
4,500 4,550 738 603 586 469 464 3411 219 96
4,550 4,600 748 614 595 479 473 350 228 106
4,600 $.650 758 624 604 489 482 360 237
4,650 4,700 768 634 614 499 491 369 246
4,700 4,750 778 644 623 509 500 378 256
4,750 4.800 788 654 632 519 509 387 265
4,800 4,850 798 664 641 530 519 396 274 151 29
4,850 4.900 808 674 650 540 528 405 283
4,900 4,950 818 684 659
550 537 415 292 170
4,950 5,000 829 694 669 560

272 149

149

154

158

163

168

172

320 197 197

93

103

121

17

26

280

158

35

289

167

44

176 54

$0

turn for Simplicity and

To Report Your In

is taxed.

-year

rent part of a house,

and living quarters

expenses of employees..
Going to and from

Figure Your Tax:
Using the tax

dence at a

tax-exempt interest.

The 3-percent rule

for estimated tax

you married?..
Separate or joint returns.
How to make a separate return.
How to make a joint return..
Advantages of a joint return..
Joint

For you

or

Net operating loss deduc

exchange of prop-
erty

are capital gains?.
Long- and short-term gains.
Long- and short-term losses..
Sales of homes, etc., General
Rule

Where To Get Forms

As far as practical, the Collector mails
forms directly to taxpayers. If you need ad-
ditional forms you can get them from any
collector's office, and also at most banks and
post offices. Many employers also keep forms
for the convenience of employees.

Where To Get Help

After reading these instructions you should
be able to prepare your own return, unless
you had complicated problems. If you do
need help, you can get it at any collector's of-
fice. For example, you may need advice in
connection with filing a return for a decedent.
Your Rights of Appeal

If you believe there is an error in any bill,
statement, or refund in connection with your
tax, you are entitled to present your reasons
to the Collector and have the matter recon-
sidered. Also, if any audit or investigation
causes proposed changes in your tax, to which
you do not agree, you are entitled to have the
matter reconsidered by the Collector or the
Internal Revenue Agent in Charge in your
district, whoever made the disputed decision.
If agreement is not reached with the Collec-
tor, you can appeal to the Internal Revenue
Agent in Charge. Any decisions by the In-
ternal Revenue Agent in Charge can be ap-
pealed to the Technical Staff in your district.
Further appeal can be made to the Federal

courts.

The Three Types of Returns
In an effort to fit the tax returns to the
differing needs of the more than 50,000,000
persons who must file them, three types of
returns have been provided-Form 1040A,
Short-Form 1040, and Long-Form 1040.

The law expects you to pay your correct
tax-no more-no less. It will pay you to
think for a moment which of these three
types of returns is the best and easiest form
in your case. To do this you need to consider
the size of your income, the sources of your
income, your eligibility to deduct travel and

and wife file separate returns and each had
income of $5,000 or more, the standard de-
duction is a flat $500 for each.
Married Persons-Joint
or Separate Return

Are you Married?-If you were a married
person on Dec. 31, 1951, you are considered
married for the entire year 1951. If you were
divorced or legally separated on or before
December 31, you are considered single for
the entire year. If your wife or husband
died during the year, you are considered
married for the entire year, and may file a
joint return.

Separate or Joint Returns.-If husband and
wife have separate income (for example, if
both work), they may file separate returns
or a joint return. A separate return accounts
only for the exemptions, income, and deduc-
tions of one person. If married persons liv-
ing in community property States file sepa-
rate returns, each must report half of any
community income. A joint return accounts
for the exemptions, income, and deductions
of both husband and wife. A husband and
wife may file a joint return even though one
of them had no income. A joint return
may not be filed if either husband or wife
was a nonresident alien at any time during
the taxable year.

How To Make a Separate Return.-To file
separate returns, husband and wife must each
have income under the laws of their State and
they must fill out separate forms. The "split
income" provisions of the Federal tax law do
not apply to separate returns. When filing
separate returns, the husband and wife
should each claim the deductions for those al-
lowable expenses paid with his or her own
funds. (In community property States, de-
ductions resulting from payments made out
of funds belonging jointly to husband and
wife may be divided half and half.) If one
itemizes and claims actual deductions, instead
of using the tax table or the "standard deduc-
tion", then both must itemize and claim ac-
tual deductions on Long-Form 1040 returns.
How To Make a Joint Return.-You can
make a joint return by including all exemp-
tions, income, and deductions of both hus-
band and wife. In the heading of the return,
list both names (for example: "John H. and
Mary D. Doe"). Both must sign the return.
Advantages of a Joint Return.-The present
law usually makes it advantageous for mar-
ried couples to file joint returns. The law pro-
vides a "split-income" method of figuring the

tax on a joint return which often results in a lower tax than would result from separate returns. If you make a joint return on Form 1040A, the Collector will figure your tax both on the separate and the joint basis, and give you the benefit of the lower figure. If you file Form 1040-either the short or long form-a joint return usually will result in as low as or a lower tax than separate returns. There are

some cases, when husband and wife both
have income, where separate returns result in
a lower total tax than joint returns.
Joint Tax or Refund.-When husband and
wife sign a joint return, each assumes full
legal responsibility for the entire tax, and if
one fails to pay, the other must pay it. If they
are entitled to a refund, the check will be
made out to them jointly.

HOW TO CLAIM YOUR EXEMPTIONS

Exemptions for You and Wife

For You.-You, as the taxpayer, are always
entitled to at least one exemption for yourself.
If, at the end of your taxable year, you were
blind or were 65 or older, you get two exemp
tions for yourself. If you were both blind
and 65 or over, you get three exemptions.
For Your Wife.-You get exemptions for
your wife (or husband) if you and she are
filing a joint return. If you file a separate re-
turn, you may claim her exemptions only if

she had no income and was not claimed as a
dependent on another taxpayer's return for
1951. Otherwise, your wife's exemptions are
like your own-one if she was neither blind
nor 65; two if she was either blind or 65;
three if she was both blind and 65.

In Case of Death.-If wife or husband died
during 1951, the exemption for age or blind-
ness is determined as of the date of death.
Proof of Blindness.-If totally blind, attach
a statement of such fact to the return. If par-
tially blind, attach a statement from a quali-
fied physician or a registered optometrist that
(1) central visual acuity did not exceed 20/
200 in the better eye with correcting lenses, or
(2) that the widest diameter of the visual
field subtends an angle no greater than 20°.

Exemptions for Your Children

You get only one exemption for each child
(the additional exemption for age or blind-
ness applies only to you and your wife but not
to dependents). The law puts very exact limi-
tations on who is a dependent. Each child
must meet all four of the following tests:

1. Did not have $600 or more gross in-
come, and

2. Received more than one-half of his or

her support from you (or from husband or
wife if this is a joint return), and

3. Is not claimed as an exemption on the
return of her husband (or his wife), and

4. Was either a citizen of the United States
or a resident of the United States, Canada, or
Mexico.

Exemptions for Your Relatives

You get one exemption for each dependent
close relative. The law puts very exact limi-
tations on who may be claimed as a depend-
ent close relative. Each must meet all five of
the following tests:

1. Did not have $600 or more gross in-
come, and

2. Received more than one-half of his or

her support from you (or from husband or
wife if this is a joint return), and

3. Is not claimed as an exemption on the
return of her husband (or his wife), and

4. Was either a citizen of the United States
or a resident of the United States, Canada, or
Mexico, and

5. Is related to you (or to husband or wife
if this is a joint return) in one of the follow-
ing ways:

Mother
Father

Stepbrother
Stepsister

Son-in-law
Daughter-in-law
Uncle-

Grandmother

Stepmother

Stepfather

Aunt

Mother-in-law

Nephew

Father-in-law

Niece

Grandfather
Brother
Sister

Grandson

Brother-in-law (but only if re

Granddaughter Sister-in-law

lated by blood)

cally exempt must be included in your return, even though it may be offset by expenses and other deductions. On the other hand, exempt income should be omitted from your return altogether.

Examples of Income Which Should Not Be
Reported

Armed forces pay due to active service in a combat
zone or while hospitalized from such service after
June 24, 1950-enlisted men's entire service pay
for each month; officers' service pay up to $200
for each month. Your service withholding
statement (Form W-2) does not include this
nontaxable service pay but shows only the pay
you need report

All Government payments and benefits made to
veterans and their families, except nondisability
retirement pay and interest on terminal leave bonds
Dividends on veterans' Government insurance
Federal and State social security benefits
Railroad Retirement Act benefits

Gifts, inheritances, bequests
Workmen's compensation, insurance, damages, etc.,
for bodily injury or sickness

Interest on State and municipal bonds; certain Fed-
eral bonds issued before March 1, 1941
Life insurance proceeds upon death

and lodging furnished her. A special provi-
sion of law also exempts a clergyman from
paying tax on the value of a parsonage fur-
nished for his use by his church.
Travel Expenses of Employees. The law
provides special deductions for the expenses
of travel, meals, and lodging while away
from home in connection with your employ-
er's business. Traveling "away from home"
means going away from the city or town
where you normally work and remaining
away at least overnight. If you choose to live
away from the city where you regularly work,
or do not transfer your home when your em-
ployer transfers your work to a different city,
the law does not allow "travel deduction'
any
resulting from your choice of residence.

"Travel expenses" means the cost of trans-
portation fares, meals, and lodging while
away from home on your employer's busi-
ness. It also includes porters' tips, hire of
public stenographers, baggage charges, and
similar expenses necessary to travel. Enter-
tainment expenses cannot be included in "tra-
vel expenses." You cannot deduct laundry
and other personal expenses. Any amount
paid to you to cover "travel expenses" must
be included in your wages. You can deduct
your full "travel expenses" from your wages
before writing the balance of your wages in
item 2, page 1, Form 1040. You must attach
a statement to your return explaining in de-
tail the expenses you deducted.
Reimbursed Expenses Other Than Travel.-
If your employer pays you an "expense
account" or otherwise reimburses you for
money spent for him (other than "travel ex-
penses"), you should add these payments to

5

your wages, and then subtract your actual ex-
penses but not more than the reimburse-
ments. Enter the balance in item 2, page 1,
Form 1040, and attach a detailed statement in
explanation. Any allowable expense in excess
of the reimbursed amount must be treated as
"Other Expenses" discussed below.

Other Expenses of Employees. On page 1 of
Form 1040, the law allows only "travel" and
"reimbursed" expenses to be deducted from
wages, as explained in the two preceding par-
agraphs. If you file Form 1040A or a Short-
Form 1040, or if you take the standard de-
duction on a Long-Form 1040, you receive an
allowance for deductions which takes the
place of all other employment expenses and
nonbusiness deductions. On the other hand,
if you itemize your deductions on a Long-
Form 1040, you can deduct the cost of tools,
materials, dues to unions and professional so-
cieties, entertaining customers, and other ex-
penses which are ordinary and necessary in
connection with your employment. These
items may be itemized and deducted on
page 3 under the heading "Miscellaneous."
Going To and From Work. The law re-
gards the cost of going to and from work as
your personal expense, and never allows you
to deduct such costs, no matter how far you
live from work, or how expensive the trans-
portation may be.

Dividends

If you own stock in a corporation or associ-
ation, the payments you receive on your stock
out of earnings and profits are called divi-
dends and must be reported in your tax re-
turn. Usually dividends are paid in cash, but
if paid in merchandise or other property,
they are taxable at their fair market value.

If, however, a distribution is not paid from
earnings and profits, it is not taxable as a div-
idend. Such distributions are treated as re-
ductions of the cost or other basis of your
stock. These distributions are not taxable un-
til they exceed your cost or other basis. After
you

have received full repayment of your cost
or other basis, you must include any addi-
tional receipts as gains from the sale or ex-
change of property for which special tax
treatment is provided.

In some cases a corporation distributes both
a dividend and a repayment of capital at the
same time. When these mixed distributions
are made, the check or notice will usually
show the dividend and the capital repayment
separately. In any case, you must report the
dividend portion as income.

6

A distribution in the form of shares of
stock in the same corporation is not taxable
if it does not change your proportionate
interest in the corporation; as, for example,
where each holder of common stock receives
one additional share of the same class of com-
mon stock for each share he owns. A stock
distribution is taxable if it changes the stock-
holder's proportionate interest in the corpo-
ration. If so, the fair market value of the new
stock must be reported as dividend income.

Dividends on shares of stock issued before
March 28, 1942, by Federal land banks, na-
tional farm loan associations, and Federal
Reserve banks are not taxable. If the shares
were issued on or after that date, the divi-
dends are taxable.

If you own shares in a Federal savings and
loan association, see next section.

You should itemize in Schedule A divi-
dends received unless you are engaged in the
trade or business of buying and selling stock
to customers. In such case, you should report
dividends received from such stock in sepa-
rate Schedule C.

Interest

You must include in your return any inter-
est you receive or is credited to your account
and which can be withdrawn by you. All in-
terest from bonds, debentures, notes, savings
accounts, or loans is taxable, except for cer-
tain governmental issues as described below.
State and Municipal Bonds and Securities.-
The interest on these obligations is com-
pletely exempt from tax.

U. S. Government Bonds and Securities.-
The interest on obligations issued on or after
March 1, 1941, is fully taxable.

If you own United States Savings or War
bonds (Series A to F, inclusive), the gradual
increase in value of each bond (as shown in
the table on its back) is considered "interest,"
but you need not report it in your tax return
until you cash the bond. Matured Series E
bonds continue to earn interest until cashed.
However, you may at any time elect to report
each year the annual increase in value, but
if you do so you must report in the first year
the entire increase to date and must continue
to report the annual increase each year.

If you own U. S. Savings bonds or Treas-
ury bonds issued prior to March 1, 1941, you
can exclude from your tax return the interest
on any $5,000 principal value of such bonds
(valuing Savings bonds at cost and Treasury
bonds at face value).

ness portion but not the personal portion. For
instance, a doctor who uses his car half for
business can deduct only half the operating
expenses of the car.

If your business income depends on manu-
facturing, buying, or selling of merchandise,
the law requires you to show the size of
your
inventory at the beginning and end of the
year. You may value your inventory (1) at
cost, or (2) you may value each item by deter-
mining both cost and market value and select-
ing the lower figure. Once you choose one of
these methods of valuing inventory, you must
continue that method unless you get permis-
sion to change from the Commissioner of In-
ternal Revenue. For information on other less
commonly used methods of handling inven-
tory, see your Collector of Internal Revenue.
If you use the installment method of re-
porting income from sales, you should attach
to your return a schedule showing separately
for the years 1948, 1949, 1950, and 1951 the
following: (a) Gross sales; (b) cost of goods
sold; (c) gross profits; (d) percentage of
profits to gross sales; (e) amounts collected;
and (f) gross profit on amount collected.

If in your business, you suffer a loss from
the loan of cash or property, you can deduct
the "bad debt" in the year in which it be-
came worthless, but not in any other year.
If a business debt becomes partially worth-
less, you can deduct the portion actually
charged off on your books. Uncollected bills
for services, like doctors' bills, cannot be de-
ducted unless the anticipated income was re-
ported in your current or previous tax return.

Do not deduct taxes levied for paving,
sewers, or other local improvements that in-
crease the value of your property.
Do not deduct any salary or other com-
pensation for yourself.

Farming

For the assistance of farmers, a separate
schedule, Form 1040F, is provided and must
be used by all farmers who report on a cash
basis. This form is optional with farmers who
keep books on an accrual basis.

Farmers should report as business income
all Government payments, such as milk sub-
sidy and conservation payments and amounts
received under the Soil Conservation and Do-
mestic Allotment Act, as amended, the Price
Adjustment Act of 1938, section 303 of the
Agricultural Adjustment Act, as amended,
and the Sugar Act of 1937. Farmers who in-
clude in their income loans from the Com-

7

modity Credit Corporation should attach a statement explaining the details.

Farmers who market produce through a
cooperative should add to the sales price of
the produce, or to ordinary income, any pa-
tronage dividends received in the taxable year
as a result of such transactions. Farmers who
buy, through a cooperative, implements, gas-
oline, seed, fertilizer, or other items for use in
their business should either reduce their de-
ductions for such items by the amount of
patronage dividends received or add patron-
age dividends to income. Patronage divi-
dends received as rebates for purchases of
items not used in your business should be
omitted from your tax return. Patronage divi-
dends are considered paid to you when re-
mitted in cash, merchandise, stock certifi-
cates, or when credited to your account.

For further information relating to farm
income and expense, see instructions on page
4 of Form 1040F.

Partnerships

A partnership or similar business firm (not
a corporation) does not pay income tax in the
firm's name. Therefore, each partner must
report in his personal tax return his share of
his partnership's income and pay tax on it.
Include in Schedule C Summary, page 2 of
Form 1040, your share of the net profit
(whether actually received by you or not) or
the net loss of a partnership, joint venture, or
the like, whose taxable year ends within the
year covered by your return. In computing
the amount of the net income or loss of
the partnership or other organization do
not include:

(a) Interest on obligations of the United
States or its instrumentalities which is ex-
empt from normal tax (see Interest). Your
share of this interest should be reported in
Schedule B, page 2, of your return.

(b) Deductions and credits for contribu-
tions, income taxes paid to a foreign govern-
ment, and income taxes paid at the source on
tax-free covenant bond interest. If you item-
ize your deductions on Long-Form 1040,
your share of these items should be entered
on page 3.

(c) Capital gains or losses. Your share of
these should be reported by you in separate
Schedule D.

Your share of partnership gains and losses
from transactions described in subsections
(j) and (k) of section 117 of the Internal
Revenue Code should be aggregated with
your gains and losses from like transactions

8

to determine whether you are entitled to the
benefits of such subsections.

If the partnership is engaged in a trade or
business, the individual partner may be sub-
ject to the self-employment tax on his share of
the partnership's self-employment income. In
such a case the partner's share of partnership
self-employment net earnings (or loss)
should be entered on line 26, Separate Sched-
ule C.

Net Operating Loss Deduction

If, in 1951, your business or profession lost
money instead of making a profit or you had
a casualty loss, you can apply these losses
against your other 1951 income. If these
losses exceed your other income, the excess or
"net operating loss" may be carried back-
ward to offset your income for 1950, and any
remaining excess may be carried over to the
years 1952-1956, inclusive. If a carry-back
entitles you to a refund of 1950 taxes, ask the
Collector for Form 1045 to claim quick ad-
justment. For further information, see sec-
tion 122 of the Internal Revenue Code.

If you claim a net operating loss deduction
on line 5 of Schedule C Summary, page 2, of
Form 1040, you should file a concise state-
ment setting forth the amount of the net oper-
ating loss deduction claimed and all material
and pertinent facts relative thereto, including
a detailed statement showing the computa-
tion of the net operating loss deduction.

Self-employment tax

For taxable vears beginning after Decem-
ber 31, 1950, many self-employed individuals
are brought within the Social Security system
for the first time and will have to pay taxes
on their self-employment income in addition
to the regular income tax.

Every self-employed individual will have
to file an annual return of his self-employ-
ment income on Form 1040 if he has at least
$400 of net earnings from self-employment
in a taxable year, even though he may not
have sufficient income to otherwise require
the filing of an income tax return.

If your income is derived solely from salary
or wages, or from dividends and interest on
investments, capital gains, annuities, or pen-
sions, you will have no self-employment in-
come and, therefore, will have no self-em-
ployment tax to pay.

Generally, if you carry on a business as a
sole proprietor, or if you render service as an
independent contractor, or as a member of
a partnership or similar organization, you