434. Excess profits credit-allowance. 435. Excess profits credit-based on income. 436. Excess profits credit-based on invested capital. 437. Invested Capital Credit. 438. New capital credit changes. 439. Borrowed capital. 440. Admissible and inadmissible assets. 441. Rules for determining credit. 442. Average base period net income-abnormalities during base period. 443. Average base period net income-change in products or services. 444. Average base period net income-increase in capacity for production or operation. 445. Average base period net income-new corporation. 446. Average base period net income depressed industry subgroups. 447. Industry base period rates of return. 448. Excess profits credit-regulated public utilities. 449. Personal service corporations. 450. Corporations engaged in mining of strategic minerals. 451. Capitalization of advertising, etc., expenditures. 452. Adjustment in case of position inconsistent with prior income tax liability. 453. Nontaxable income from certain mining and timber operations, and from natural gas properties. PART IV-EXCESS PROFITS CREDIT BASED ON INCOME IN CONNECTION WITH CERTAIN TAXABLE ACQUISITIONS OCCURRING PRIOR TO DECEMBER 1, 1950. Sec. 474. Excess profits credit based on income Certain taxable acquisitions. SUBCHAPTER E.-TAX ON SELF-EMPLOYMENT 480. Rate of tax. 481. Definitions. 482. Miscellaneous provisions. SUBCHAPTER A.-INTRODUCTORY PROVISIONS CROSS REFERENCES Guam as subject to Federal income tax laws, see section 14211 of Title 48, Territories and Insular Possessions. § 1. Application of chapter. The provisions of this chapter shall apply only to taxable years beginning after December 31, 1938. Income, war-profits, and excess-profits taxes for taxable years beginning prior to January 1, 1939, shall not be affected by the provisions of this chapter, but shall remain subject to the applicable provisions of the Revenue Act of 1938 and prior revenue acts, except as such provisions are modified by legislation enacted subsequent to the Revenue Act of 1938. (53 Stat. 4.) DERIVATION Act May 28, 1938, ch. 289, § 1, 52 Stat. 452. SIMILAR PROVISIONS 1936 June 22, 1936, ch. 690, § 1, 49 Stat. 1652. 1934-May 10, 1934, ch. 277, § 1, 48 Stat. 683. 1932-June 6, 1932, ch. 209, § 1, 47 Stat. 173. 1928-May 29, 1928, ch. 852, § 1, 45 Stat. 795. § 2. Cross references. The cross references in this chapter to other portions of the chapter, where the word "see" is used, are made only for convenience, and shall be given no legal effect. (53 Stat. 4.) DERIVATION Act May 28, 1938, ch. 289, § 2, 52 Stat. 452. SIMILAR PROVISIONS 1936 June 22, 1936, ch. 690, § 2, 49 Stat. 1652. 1934 May 10, 1934, ch. 277, § 2, 48 Stat. 684. 1932-June 6, 1932, ch. 209, § 2, 47 Stat. 173. 1928-May 29, 1928, ch. 852, § 2, 45 Stat. 795. § 3. Classification of provisions. The provisions of this chapter are herein classified and designated as Subchapter A-Introductory provisions, Subchapter B-General provisions, divided into Parts and sections, Subchapter C-Supplemental provisions, divided into Supplements and sections. Subchapter E-Tax on Self-Employment Income (the Self-Employment Contributions Act), divided into sections. (53 Stat. 4; Oct. 21, 1942, 4: 30 p. m., E. W. T., ch. 619, title I, § 172 (b), 56 Stat. 892; May 29, 1944, 7 p. m., E. W. T., ch. 210, part I, § 6 (b) (1), 58 Stat. 234; Aug. 28, 1950, ch. 809, title II, § 208 (d) (1), 64 Stat. 544.) DERIVATION Act May 28, 1938, ch. 289, § 3, 52 Stat. 452. The "Self-Employment Contributions Act", referred to in the text, is set out as sections 480 482 of this title. AMENDMENTS 1950-Act Aug. 28, 1950, amended section by adding "Subchapter E-Tax on Self-Employment Income into sections." 1944 Act May 29, 1944, amended section by striking out "Subchapter D-Victory Tax on individuals, divided into parts and sections." 1942-Act Oct. 21, 1942, added "Subchapter D-Victory Tax on individuals, divided into parts and sections." EFFECTIVE DATE OF 1944 AmendmenT Section 2 of act May 29, 1944 provided that the amendment of this section was made applicable to taxable years beginning after Dec. 31, 1943. EFFECTIVE DATE OF 1942 AMENDMENT Section 172 (g) of act Oct. 21, 1942 provided that the amendment of this section was made effective January 1943, applicable to all wages paid on or after such date. SIMILAR PROVISIONS 1936-June 22, 1936, ch. 690, § 3, 49 Stat. 1652. 1934 - May 10, 1934, ch. 277, § 3, 48 Stat. 684. 1932-June 6, 1932, ch. 209, § 3, 47 Stat. 174. 1928-May 29, 1928, ch. 852, § 3, 45 Stat. 795. TREATY OBLIGATIONS Section 109 of act Oct. 21, 1942, provided as follows: "No amendment made by this title shall apply in any case where its application would be contrary to any treaty obligation of the United States." § 4. Special classes of taxpayers. The application of the General Provisions and of Supplements A to D, inclusive, to each of the following special classes of taxpayers, shall be subject to the exceptions and additional provisions found in the Supplement applicable to such class, as follows: (a) Estates and trusts and the beneficiaries thereof,-Supplement E. (b) Members of partnerships, Supplement F. (c) Insurance companies,-Supplement G. (d) Nonresident alien individuals,-Supplement H. (e) Foreign corporations,-Supplement I. (f) Individual citizens of any possession of the United States who are not otherwise citizens of the United States and who are not residents of the United States,-Supplement J. (g) Individual citizens of the United States or domestic corporations, satisfying the conditions of section 251 by reason of deriving a large portion of their gross income from sources within a possession of the United States,-Supplement J. (h) China Trade Act corporations,-Supplement K. (i) Foreign personal holding companies and their shareholders, Supplement P. (j) Regulated investment companies, - Supplement Q. (k) Shareholders of Personal Service Corporations, Supplement S. (7) Individuals with adjusted gross income of less than $5,000,-Supplement T. (53 Stat. 4; Sept. 20, 1941, 12:15 p. m., E. S. T., ch. 412, title I, § 102 (c), 55 Stat. 692; Oct. 21, 1942, 4:30 p. m., E. W. T., ch. 619, title I, § 170 (b) (1), 56 Stat. 881; May 29, 1944, 7 p. m., E. W. T., ch. 210, part I, § 5 (b), 58 Stat. 234.) Act May 28, 1938, ch. 289, § 4, 52 Stat. 452. 1944 Subsec. (1) amended by act May 29, 1944, which struck out subsec. "(1) Individuals with gross income from certain sources of $3,000 or less,-Supplement T" and inserted new subsec. “(l).” 1942-Subsec. (1) amended by act Oct. 21, 1942, which substituted "Regulated" for "Mutual" investment companies. 1941-Subsecs. (k) and (1) added by act Sept. 20, 1941. EFFECTIVE DATE OF 1944 AMENDMENT Amendment of subsec. (1) made applicable to taxable years beginning after Dec. 31, 1943 by section 2 of act May 29, 1944. EFFECTIVE DATE OF 1942 AMENDMENT Amendment of subsec. (1) made applicable to taxable years beginning after Dec. 31, 1943 by section 2 of act Oct. 31, 1942. EFFECTIVE DATE OF 1941 AMENDMENT Section 118 of act Sept. 20, 1941 provided that the amendment of this section was made applicable only to taxable years beginning after Dec. 31, 1940. SIMILAR PROVISIONS 1937-Aug. 26, 1937, ch. 815, title 2, § 207 (a), 50 Stat. 826. 1936 June 22, 1936, ch. 690 § 4, 49 Stat. 1653. 1934-May 10, 1934, ch. 277, § 4, 48 Stat. 684. 1932-June 6, 1932, ch. 209, § 4, 47 Stat. 174. 1928-May 29, 1928, ch. 852, § 4, 45 Stat. 795. TREATY OBLIGATIONS Section 108 of act Sept. 20, 1941, provided as follows: "No amendment made by this title shall apply in any case where its application would be contrary to any treaty obligation of the United States." This provision was repeated in section 109 of act Oct. 21, 1942. SUBCHAPTER B.-GENERAL PROVISIONS § 11. Normal tax on individuals. (a) Taxable years beginning after September 30, 1950. In the case of taxable years beginning after September 30, 1950, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax of 3 per centum of the amount of the net income in excess of the credits against net income provided in section 25. For alternative tax which may be elected if adjusted gross income is less than $5,000, see supplement T. (b) Taxable years beginning before October 1, 1950. In the case of taxable years beginning before October 1, 1950, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax determined by computing a tentative normal tax of 3 per centum of the amount of the net income in excess of the credits against net income provided in section 25, and by reducing such tentative normal tax as provided in section 12 (c). For alternative tax which may be elected if adjusted gross income is less than $5,000, see supplement T. For computation of tax in case the taxable year (other than the calendar year 1950) ends after September 30, 1950, see section 108 (e). (53 Stat. 5; Sept. 20, 1941, 12:15 p. m., E. S. T., ch. 412, title I, § 102 (b) (1), 55 Stat. 692; Oct. 21, 1942, 4:30 p. m., E. W. T., ch. 619, title I, § 102, 56 Stat. 802; May 29, 1944, 7 p. m., E. W. T., ch. 210, part I, § 3, 58 Stat. 231; Nov. 8, 1945, 5:17 p. m., E. S. T., ch. 453, title I, § 101 (a), 59 Stat. 557; Apr. 2, 1948, 3:18 p. m., E. S. T., ch. 168, title I, § 104 (a), 62 Stat. 111; Sept. 23, 1950, 3:15 p. m., E. D. T., ch. 994, title I, pt. I, § 101 (a), 64 Stat. 910.) DERIVATION Act May 28, 1938, ch. 289, § 11, 52 Stat. 452. AMENDMENTS 1950-Act Sept. 23, 1950, amended section generally to increase the normal tax on individuals after Oct. 1, 1950, although the tax rate base will remain the same. 1948-Act Apr. 2, 1948, made a technical amendment by striking out "by 5 per centum thereof" and inserting in lieu thereof "as provided in section 12 (c)." 1945-Act Nov. 8, 1945, amended section by adding "determined by computing a tentative normal tax", omitting "(a)" following "section 25", and adding “and by reducing such tentative normal tax by 5 per centum thereof." 1944 -Act May 29, 1944, amended section by changing tax rate from 6% to 3%, omitting "(For alternate tax, if gross income from certain sources is $3000 or less, see section 400)" following "section 25", and adding last sentence. 1942-Rate increased from 4 to 6 per centum by act Oct. 21, 1942. 1941-Parenthetical cross-reference to section 400 was inserted by act Sept. 20, 1941. EFFECTIVE DATE OF 1950 AMENDMENT Section 104 of act Sept. 23, 1950, provided that: "Except as provided in section 103 [set out as a note under this section], the amendments made by this part [amending sections 11, 12 and 400 of this title] shall be applicable only with respect to taxable years ending after December 31, 1949. For treatment of taxable years (other than the calendar year 1950) beginning before October 1, 1950, and ending after September 30, 1950, see section 131 [section 108 (e)-(g) of this title]." EFFECTIVE DATE OF 1948 AMENDMENT Section 105 of act Apr. 2, 1948, provided that the amendment made by section 104 (a) of said act Apr. 2, 1948, to section 11 of this title should be applicable to taxable years beginning after Dec. 31, 1947, and that taxable years beginning in 1947 and ending 1948 shall be governed by subsec. (d) of section 108 of this title. EFFECTIVE DATE OF 1945 AMENDMENT Section 101 (d) of act Nov. 8, 1945 provided that the amendment of this section was made applicable to taxable years beginning after Dec. 31, 1945. For treatment of taxable years beginning in 1945 and ending in 1946, see sections 108 and 710 of this title. EFFECTIVE DATE OF 1944 AMENDMENT Section 2 of act May 29, 1944 provided that the amendment of this section was made applicable to taxable years beginning after Dec. 31, 1943. EFFECTIVE DATE OF 1942 AMENDMENT Section 101 of act Oct. 21, 1942 provided that the amendment of this section was made applicable to taxable years beginning after Dec. 31, 1941. EFFECTIVE DATE OF 1941 AMENDMENT Section 118 of the act Sept. 20, 1941, provided that the amendment of this section was made applicable only to taxable years beginning after Dec. 31, 1940. SHORT TITLE Congress in enacting act Sept. 23, 1950, provided by section 1 of said act Sept. 23, 1950, that it should be popularly known as the "Revenue Act of 1950". For distribution of the act throughout this title, see Tables Volume. Congress in enacting amendments to sections 11, 12, 23, 25, 51, 58, 108, 113, 142, 147, 163, 400, 811-813, 936, 1000, 1004 and 1622 of this title by act Apr. 2, 1948, provided by section 1 of said act Apr. 2, 1948, that it should be popularly known as the "Revenue Act of 1948." SIMILAR PROVISIONS 1936 June 22, 1936, ch. 690, § 11, 49 Stat. 1653. 1934 May 10, 1934, ch. 277, § 11, 48 Stat. 684. 1932-June 6, 1932, ch. 209, § 11, 47 Stat. 174. 1928-May 29, 1928, ch. 852, § 11, 45 Stat. 795. 1926-Feb. 26, 1926, ch. 27, § 210, 44 Stat. 21. 1924-June 2, 1924, ch. 234, § 210, 43 Stat. 264. 1923-Mar. 4, 1923, ch. 280, § 1, 42 Stat. 1507. 1921-Nov. 23, 1921, ch. 136, § 210, 42 Stat. 1507. 1919-Feb. 24, 1919, ch. 18. § 210, 40 Stat. 84. 1916 Sept. 8, 1916, ch. 463, § 1 (a), 39 Stat. 756. 1913-Oct. 3, 1913, ch. 16, § II, A, 38 Stat. 166. COMPUTATION OF TAX IN CASE OF CERTAIN JOINT RETURNS Section 103 of act Sept. 23, 1950, provided that: "If a joint return of a husband and wife is filed under the provisions of section 51 (b) (3) of the Internal Revenue Code [section 51 (b) (3) of this title] in a case where the husband and wife have different taxable years because of the death of either spouse, and the taxable year of the surviving spouse covered by such joint return began before October 1, 1950, and ended after September 30, 1950, the amendments made by this part [amending sections 11, 12, and 400 of this title] shall be applicable in respect of such joint return as if the taxable years of both spouses covered by the joint return ended on the date of the closing of the surviving spouse's taxable year." TREATY OBLIGATIONS Section 214 of act Sept. 23, 1950, provided that: "No amendment made by this act [act Sept. 23, 1950] shall apply in any case where its application would be contrary to any treaty obligation of the United States." Similar provisions were contained in the following acts: 1942-Oct. 21, 1942, 4:30 p. m., E. W. T., ch. 619, title I, § 109, 56 Stat. 808. 1941-Sept. 20, 1941, 12:15 p. m., E. S. T., ch. 412, title I, § 108, 55 Stat. 695. § 12. Surtax on individuals—(a) Definition of “surtax net income." As used in this section the term "surtax net income" means the amount of the net income in excess of the credits against net income provided in section 25 (b). (b) Rates of surtax. (1) Calendar year 1951. In the case of a taxable year beginning on January 1, 1951, and ending on December 31, 1951, there shall be levied, collected, and paid for such taxable year upon the surtax net income of every individual the surtax shown in the following table: If the surtax net income is: Not over $2,000___ Over $2,000 but not over $4,000. Over $4,000 but not over $6,000. Over $6,000 but not over $8,000. Over $8,000 but not over $10,000. Over $10,000 but not over $12,000. Over $12,000 but not over $14,000. Over $14,000 but not over $16,000. The surtax shall be: 17.4% of the surtax net income. $348, plus 19.4% of excess over $2,000. $736, plus 24% of excess over $4,000. $1,216, plus 27% of excess over $6,000. $1,756, plus 32% of excess over $8,000. $2,396, plus 36% of excess over $10,000. $3,116, plus 40% of excess over $12,000. $3,916, plus 45% of excess over $14,000. If the surtax net income is: Over $16,000 but not over $18,000. Over $18,000 but not over $20,000. Over $20,000 but not over $22,000. Over $22,000 but not over $26,000. Over $26,000 but not over $32,000. Over $32,000 but not over $38,000. Over $38,000 but not over $44,000. Over $44,000 but not over $50,000. Over $50,000 but not over $60,000. Over $60,000 but not over $70,000. Over $70,000 but not over $80,000. Over $80,000 but not over $90,000. Over $90,000 but not over $100,000. Over $100,000 but not over $150,000. Over $150,000 but not over $200,000. Over $200,000__. The surtax shall be: cess over $16,000. $5,776, plus 51% of ex cess over $18,000. $6,796, plus 54% of ex cess over $20,000. $7,876, plus 57% of ex cess over $22,000. $10,156, plus 60% of ex cess over $26,000. $13,756, plus 63% of ex cess over $32,000. $17,536, plus 66% of ex cess over $38,000. $21,496, plus 70% of ex cess over $44,000. $25,696, plus 72% of ex cess over $50,000. $32,896, plus 75% of ex cess over $60,000. $40,396, plus 79% of ex cess over $70,000. $48,296, plus 81% of ex cess over $80,000. $56,396, plus 84% of ex cess over $90,000. $64,796, plus 86% of excess over $100,000. $107,796, plus 87% of excess over $150,000. $151,296, plus 88% of excess over $200,000. after October 31, 1951, (2) Taxable years beginning If the surtax net income is: Over $20,000 but not over $22,000. Over $22,000 but not over $26,000. Over $26,000 but not over $32,000. Over $32,000 but not over $38,000. Over $38,000 but not over $44,000. Over $44,000 but not over $50,000. Over $50,000 but not over $60,000. Over $60,000 but not over $70,000. Over $70,000 but not over $80,000. Over $80,000 but not over $90,000. Over $90,000 but not over $100,000. Over $100,000 but not over $150,000. Over $150,000 but not over $200,000. Over $200,000__ The surtax shall be: $7,516, plus 59% of excess over $20,000. $8,696, plus 63% of excess over $22,000. $11,216, plus 64% of excess over $26,000. $15,056, plus 65% of excess over $32,000. $18,956, plus 69% of excess over $38,000. $23,096, plus 72% of excess over $44,000. $27,416, plus 74% of excess over $50,000. $34,816, plus 77% of excess over $60,000. $42,516, plus 80% of excess over $70,000. $50,516, plus 82% of excess over $80,000. $58,716, plus 85% of excess over $90,000. $67,216, plus 87% of excess over $100,000. $110,716, plus 88% of excess over $150,000. $154,716, plus 89% of excess over $200,000. (3) Taxable years beginning after December 31, 1953. In the case of taxable years beginning after December 31, 1953, there shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual (other than a head of a household to whom subsection (c) applies) the surtax shown in the following table: If the surtax net income is: Not over $2,000‒‒‒ Over $2,000 but not over $4,000. Over $4,000 but not over $6,000. Over $6,000 but not over $8,000. Over $8,000 but not over $10,000. Over $10,000 but not over $12,000. Over $12,000 but not over $14,000. Over $14,000 but not over $16,000. Over $16,000 but not over $18,000. Over $18,000 but not over $20,000. Over $20,000 but not over $22,000. Over $22,000 but not over $26,000. Over $26,000 but not over $32,000. The surtax shall be: 17% of the surtax net income. $340, plus 19% of excess over $2,000. $720, plus 23% of excess over $4,000. $1,180, plus 27% of excess over $6,000. $1,720, plus 31% of ex cess over $8,000. $2,340, plus 35% of excess over $10,000. $3,040, plus 40% of excess over $12,000. $3,840, plus 44% of excess over $14,000. $4,720, plus 47% of excess over $16,000. $5,660, plus 50% of excess over $18,000. $6,660, plus 53% of excess over $20,000. $7,720, plus 56% of excess over $22,000. $9,960, plus 59% of excess over $26,000. |