TAXABLE FIDUCIARY INCOME TAX RETURNS SUMMARY DATA Taxable fiduciary income tax returns filed for the income of estates and trusts for the year 1948 number 101,283. This is a decrease of 8,714 returns, or 7.9 percent, below the returns filed for 1947. However, the net income taxable to the fiduciary of $530,360,000 increased $21,116,000, or 4.2 percent, over that reported for the previous year; and the tax liability of $176,309,000 also increased in the amount of $3,238,000, or 1.9 percent, over last year. The 59,945 returns filed for income from property held in trust represent 59.2 percent of the total taxable fiduciary returns, while the remaining 41,338 returns, or 40.8 percent, were filed for the income from estates. The returns for trusts show total income of $670,814,000 of which $319,916,000, or 47.7 percent, is distributable to beneficiaries, while returns for estates show $315,991,000 total income of which 18.1 percent, or $57,105,000, is distributable to beneficiaries. The income from trusts produced tax amounting to $105,280,000 and the income from estates produced $71,029,000 in tax. Comparative data, taxable fiduciary returns, 1948 and 1947 Fiduciary income tax returns, Form 1041, from which the data contained herein are tabulated are for the calendar year 1948, a fiscal year ending within the period July 1948 through June 1949, and a part year with the greater portion of the accounting period in 1948. However, only taxable fiduciary returns are used; that is, returns with income which, after allowable deductions and the amount distributable to beneficiaries, is in excess of the allowable exemption. A small number of taxable returns for estates and trusts filed improperly on Form 1040 are included, the data being edited to conform to that. reported on Form 1041. Tentative returns are not included and INCOME TAX LAW WITH RESPECT TO FIDUCIARY RETURNS Every fiduciary, or at least one of joint fiduciaries, is required to file an income tax return on Form 1041 for every estate for which he acts, if the gross income of the estate is $600 or more, or if any beneficiary is a nonresident alien; and for every trust for which he acts, if the net income of the trust is $100 or more, or if the gross income is $600 or more regardless of the amount of net income, or in either case if any beneficiary is a nonresident alien. Supplement E of the Internal Revenue Code provides that the taxes imposed on the income of individuals by chapter 1 shall be applicable to the income of estates and to the income of property held in trust. The rates of tax, the provisions respecting gross income to be reported, the deductions with certain exceptions, and the tax credits provided for the income of individuals apply also to that of estates and trusts. The gross income to be reported by the fiduciary includes the entire income of the estate or trust even though a portion is distributable to beneficiaries. In general, the net income of an estate or a trust is computed in the same manner and on the same basis as in the case of individuals, except that in lieu of the deduction for contributions to charitable, religious, scientific, literary, and educational organizations allowed to individuals, there is allowed as a deduction, without limitation, any part of the fiduciary gross income which is set aside to be used exclusively for such purposes; and there is allowed, as an additional deduction, the amount of income which is to be distributed currently or becomes payable to beneficiaries, as well as amounts which in the discretion of the fiduciary may be distributed to the beneficiaries or accumulated, if such amounts are reported in the income of the beneficiaries. The exemption allowed against net income taxable to the fiduciary, for both normal tax and surtax purposes, is increased to $600 for estates for 1948, while the exemption of $100 for trusts remains the same. Also allowable against net income for the purpose of normal tax, is a credit for the amount of partially tax-exempt interest and partially tax-exempt dividends on share accounts in Federal savings and loan associations remaining undistributed in the hands of the fiduciary. The tax liability is based on the net income taxable to the fiduciary, less the exemption and credits mentioned in the preceding paragraph, and must be paid by the fiduciary after the close of the income year. Current collection of tax does not apply to fiduciary income. Tax credits are allowable for the fiduciary's share of the income tax paid to a foreign country or possession of the United States and of the income tax paid at source on interest from tax-free covenant bonds. BASIC ITEMS Total income is the amount resulting from the combination of profit or loss from rents and royalties, from trade or business, from partner dividends, interest, other fiduciaries, and from miscellaneous income. Total income is an approximation of the adjusted gross income tabulated for individual returns. Balance income is the excess of total income over total deductions allowed for expenses of a nontrade or nonbusiness character, such as, interest, taxes, and casualty losses. It is the amount available for income tax payment, disposition to beneficiaries, or accumulation, according to the trust instrument in the case of a trust, or under the directives of the will or of the jurisdictional court in the case of an estate. Amount distributable to beneficiaries is the amount of income apportioned to beneficiaries. Included are amounts which become payable to, or are permanently set aside for, beneficiaries as well as amounts actually paid to them. Each beneficiary must include his share of such distributions in his gross income, if required to file a return of income. Charitable and similar organizations are beneficiaries as well as individuals. Net income taxable to the fiduciary is the amount of income remaining in the hands of the fiduciary after deductions for allowable expenses and the amount distributable to beneficiaries. This net income, after deduction for the exemption and credits against net income, is the basis for the tax liability of the fiduciary. Exemption of $600 for an estate, or $100 for a trust, is allowable against net income taxable to the fiduciary for the computation of both the normal tax and the surtax. Tax liability tabulated in this report is the income tax after deducting the two tax credits relating to income tax paid at source on interest from tax-free covenant bonds and to income tax paid to a foreign country or possession of the United States. The liability consists of the normal tax, surtax, and alternative tax. Normal tax and surtax are imposed on income which includes a net gain or an allowable loss from sales of capital assets unless the alternative tax relating to the gain is effective. Alternative tax, not effective on returns with surtax net income under $22,000, is imposed on income containing a net long-term capital gain or an excess of net long-term capital gain over net short-term capital loss only when such alternative tax is less than the regular normal tax and surtax computed on income which includes net gain from sales of capital assets. CLASSIFICATION OF FIDUCIARY RETURNS The taxable fiduciary returns are classified by total income classes, by net income classes, by types of tax liability, by States and Territories, and as returns for an estate or for a trust. The returns for trusts are further classified by the relationship of the beneficiary to the grantor. Selected items are tabulated by these classifications but not all items are available for every classification. Total income classes.-Returns are segregated into total income and tabulated as such in the tables of this report. The majority of the fiduciary data are tabulated by total income classes, in order that the data may be associated with that tabulated for individual returns, since total income is approximately equivalent to the adjusted gross income used for the size classification of individual returns. Net income classes.-Returns are segregated into net income classes based on the net income taxable to the fiduciary. Types of tax liability.-Returns with normal tax and surtax are distinguished from returns with alternative tax imposed on net income which includes a net long-term capital gain or an excess of net longterm capital gain over net short-term capital loss. Returns for estates or for trusts.-This classification is based on the fact that certain fiduciary returns are filed for the income of an estate while other returns are filed for the income from property held in trust. Relationship of the beneficiary to the grantor.-The relationship of the grantor to each beneficiary of a trust is required in schedule G on Form 1041. From this information, returns for trusts are classified by the relationship of the beneficiary to the grantor. These relationships are segregated into five groups-spouse, children, self, all others, and relationship not stated-the first four of which occur singly and in combination. Selected data from the returns for trusts are tabulated by these beneficiary relationships and the returns are segregated to show trusts with one beneficiary separately from trusts with two or more beneficiaries. States and Territories.-This classification consists of the 48 States, Hawaii, and the District of Columbia. The segregation of returns is determined by the location of the collection district in which the return is filed, except that for the District of Columbia, which comprises a part of the collection district of Maryland, the segregation is determined from the address of the fiduciary. The Territory of Alaska comprises a part of the collection district of Washington, but the returns with an Alaskan address are not segregated. TABULATED DATA Statistical data for fiduciary returns are tabulated from each taxable return, prior to any change that may be made as a result of official audit by the Bureau of Internal Revenue, and are presented in 11 basic tables. These data are tabulated, as nearly as possible, in the same manner as the data for individual returns. However, in view of the different forms employed and some variations in the method of reporting certain items common to both returns, the two series of data are not precisely comparable. Throughout the tables, money amounts are rounded to the nearest thousand and, therefore, may not add to the totals. SIMPLE AND CUMULATIVE DISTRIBUTIONS BY TOTAL INCOME CLASSES The number of fiduciary returns filed, the amount of total income, and the tax liability are presented in basic table 1 by total income classes showing a simple distribution, a cumulative distribution from the highest income class, a cumulative distribution from the lowest income class, with corresponding percentage distributions. The following summary table presents the same data by total income classes which are, in most cases, of broader class intervals than those in the |