SCOPE OF ESTIMATED DATA

Data tabulated for the individual returns for 1948 are estimated from samples of the optional returns, Form 1040A; short-form returns, Form 1040, with adjusted gross income under $5,000; and long-form returns, Form 1040, with adjusted gross income under $25,000. The number of returns is obtained from records of the Bureau, but the distribution of the returns by income classes and the related data together with their distribution by classes are estimated based on samples. The method of selecting samples, the procedure for extending data obtained from the samples to the universe, and the resultant sampling variations are fully explained in the description of the sample and limitations of the data, pages 44-52.

TABULATED DATA

Statistical data for individual returns for 1948 are presented in 12 basic tables, corresponding to the first 12 tables published for 1947. No industrial classification was made for the businesses operated by sole proprietors in 1948 and no sole proprietorship tables are available. Tables 1 through 10 are tabulated on a national basis by adjusted gross income classes; and taxable and nontaxable returns are shown separately except in tables 1 and 4. In order that the frequency distributions of returns may show an extensive cross classification by size of each specific source of income or loss comprising adjusted gross income in table 4, the taxable and nontaxable returns are combined and broader adjusted gross income classes, than appear in the other tables, are used. Data in tables 11 and 12 are tabulated on a State basis. Only returns with adjusted gross income are included in these two tables and the taxable and nontaxable returns are tabulated together. See the discussion on State aggregates on pages 51-55 concerning the variance between State and national data.

Tables appearing in the text, for the most part, are summaries of data from the basic tables, presented by broader class intervals and generally taxable and nontaxable returns are combined. However, there is information not elsewhere tabulated relating to the percentage distributions of income or loss from each source comprising adjusted gross income and of itemized deductions, to medical expenses reported on returns with itemized deductions, to returns with net gain or loss from sales of capital assets, and to the number of each type of return filed.

Throughout the tables, money amounts are rounded to the nearest thousand and, therefore, may not add to the totals.

SIMPLE AND CUMULATIVE DISTRIBUTIONS BY ADJUSTED GROSS INCOME CLASSES

The number of returns, the amount of adjusted gross income, and the tax liability for returns with adjusted gross income are tabulated by adjusted gross income classes in basic table 1 to show the simple distribution by income class, the cumulative distribution from the highest income class, the cumulative distribution from the lowest income class, and the corresponding percentage distribution. In these distributions, taxable and nontaxable returns are combined, except that the nontaxable returns with no adjusted gross income are shown in aggregate, apart from the cumulative data.

In the following table, these data are summarized by use of adjusted gross income class intervals which, in most instances, are broader

Individual returns for 1948, by adjusted gross income classes: Simple and cumulative distributions of number of returns, adjusted gross income, and tax liability, with corresponding percentage distributions

[Adjusted gross income classes and money figures in thousands of dollars]

Individual returns for 1948, by adjusted gross income classes: Simple and cumulative distributions of number of returns, adjusted gross income, and tax liability, with corresponding percentage distributions Continued

(Adjusted gross income classes and money figures in thousands of dollars]

For footnotes, see pp. 41-42; for extent to which data are estimated, see pp. 44-52.

SOURCES OF INCOME AND DEDUCTIONS

The amount of income, profit, or loss from each of the sources comprising adjusted gross income is the net amount to be included in the adjusted gross income; that is, gross receipts less the deductions allowable for the computation of adjusted gross income-trade and business deductions, expenses of travel, lodging, and reimbursed expenses in connection with employment, deductions attributable to rents and royalties, deductions for depreciation and depletion allowable to life tenants and income beneficiaries of property held in trust, and allowable losses from sales or exchanges of property. Should these deductions result in a net loss from the source to which they apply, the net loss nevertheless comprises a part of the adjusted gross income (or deficit). Therefore, the net losses from rents and royalties, from business, from partnership, from sales of capital assets, and from sales of other property, as well as the net profits from such sources are tabulated as component parts of the adjusted gross income. Descriptions of these income and loss sources are set forth on pages 17-20. In basic table 2, the amount of income or loss from each specific source comprising adjusted gross income is tabulated by adjusted gross income classes, for all returns, for returns with standard deduction, and for returns with itemized deductions. In basic table

income or loss are tabulated in a similar manner. Basic table 4 shows the frequency distributions of returns by adjusted gross income classes and by size of each specific source of income or loss comprising adjusted gross income (or deficit). Selected sources of income are tabulated by States and Territories in basic table 11.

The deductions tabulated are those of a nontrade or nonbusiness character which are deductible from the adjusted gross income for the computation of net income (or deficit); these deductions are the allowable deductions reported only by the segment of taxpayers who itemized their deductions, rather than using the optional standard deduction. Such deductions include contributions, medical expenses, taxes, interest, casualty losses, and other miscellaneous deductions authorized against adjusted gross income. Descriptions of these items are given on pages 20-21. The itemized deductions and net income or deficit reported by these taxpayers are tabulated in part three of basic table 2; and the frequency distributions of returns for each specific deduction are shown in part three of table 3.

An optional standard deduction is provided under the Code, which the taxpayer may use instead of itemizing his actual deductions, if he so elects. Use of the standard deduction relieves the taxpayer of the burden of having to itemize his nonbusiness deductions in detail and of having to support them with evidence. Under the 1948 act, the standard deduction is increased from the smaller of $500 or 10 percent of the adjusted gross income to the smaller of $1,000 or 10 percent of the adjusted gross income, except that on a separate return of a married person the standard deduction is limited to $500. The amount of standard deduction allowed for 1948 is not tabulated. On returns with adjusted gross income of less than $5,000, the optional standard deduction is approximately 10 percent of the adjusted gross income and is allowed automatically through use of the tax table. On returns with adjusted gross income of $5,000 or more, the standard deduction to be used by the taxpayer in computing net income and tax liability is the smaller of $1,000 or an amount equal to 10 percent of the adjusted gross income, except that in case of a separate return of a married person, the standard deduction is $500. Regardless of the amount of adjusted gross income, the standard deduction is not allowed the remaining spouse if the net income of one spouse is determined with the use of itemized nonbusiness deductions.

Amounts of income or loss from each of the sources comprising adjusted gross income are shown in the following summary which also shows the itemized nonbusiness deductions and the resultant net income or deficit. Taxable and nontaxable returns are combined and the returns with standard deduction are shown apart from returns with itemized deductions which are subdivided between returns showing adjusted gross income and returns showing no adjusted

Individual returns for 1948: Number of returns, income or loss from each of the sources comprising adjusted gross income, adjusted gross income, and the deductions for returns with itemized deductions

For footnotes, see pp. 41-42; for extent to which data are estimated, see pp. 44-52.

SOURCES OF INCOME OR LOSS COMPRISING ADJUSTED GROSS INCOME

Salaries and wages include salaries, wages, bonuses, fees, commissions, tips and other kinds of compensation used by the employer to pay the employee for personal services; but exclude wages not exceeding $100 per return, upon which no tax was withheld, reported as other income on the employee's optional return, Form 1040A. Salaries include compensation of employees of Federal, State and local

1,607, 178

12, 192

8,208

216, 504

25, 065

2,448

1, 276, 187

24, 329

3, 711

1,788, 670

29, 242

10,843

7,751, 742

106, 146

31, 153

37, 725, 101

30 35, 129

30 688, 999