TABLE 11.-Taxable fiduciary returns for 1948 filed for trusts, by net income classes and by relationship of beneficiary to grantor: Number of trusts, total income, amount distributable to beneficiaries, and net income-Continued

[Net income classes and money figures in thousands of dollars]

Footnotes for fiduciary text and basic tables (Facsimile of return, Form 1041, appears on pp. 482-489)

1 Total income classes are based on the amount of total income tabulated for taxable fiduciary returns (see note 2).

Total income is the amount resulting from the combination of profit or loss from rents and royalties, from trade or business, from partnerships, from sales or exchanges of property, together with income from dividends, interest, other fiduciaries, and from miscellaneous income. (Total income is an approximation of the adjusted gross income tabulated for individual returns.)

Tax liability after tax credits relating to income tax paid at source on interest from tax-free covenant bonds and to income tax paid to foreign countries or possessions of the United States.

Dividends, foreign and domestic, exclude partially tax-exempt dividends on share accounts in Federal savings and loan associations and all dividends received through partnerships and other fiduciaries.

Interest on bank deposits, notes, mortgages, corporation bonds, taxable and partially tax-exempt interest on Government obligations, and partially tax-exempt dividends on share accounts in Federal savings and loan associations. Also includes such Government interest and partially tax-exempt dividends on share accounts received through partnerships and other fiduciaries.

Rents and royalties net profit is the excess of gross rents received over deductions for depreciation, repairs, interest, taxes, and other expenses attributable to rent income; and the excess of gross royalties over depletion and other royalty expenses. Conversely, net loss from these sources is the excess of the respective expenses over gross income received. Trade or business profit or loss is the current year net profit or loss. (Net operating loss deduction is reported in miscellaneous deductions.)

'Partnership net profit or loss excludes taxable and partially tax-exempt interest on Government obligations, partially tax-exempt dividends on share accounts in Federal savings and loan associations, and net gain or loss from sales of capital assets. In computing partnership profit or loss, charitable contributions are not deductible nor is the net operating loss deduction allowed.

Net gain or loss from sales or exchanges of capital assets is the net gain or the allowable loss used in computing the net income taxable to the fiduciary. Each is the result of combining net short- and longterm capital gain and loss and any capital loss carryover from the years 1943-47, inclusive, not previously deducted. Deduction for the loss, however, is limited to the amount of such loss, or to the net income computed without regard to gains and losses from sales of capital assets, or to $1,000, whichever

is smallest.

Sales of capital assets include worthless stock, worthless bonds if they are capital assets, nonbusiness bad debts, certain distributions from employees' trust plans, and each participant's share of net shortand long-term capital gain and loss to be taken into account from partnerships and common trust funds.

10 Net gain or loss from sales or exchanges of property other than capital assets is that from the sales of (1) property used in trade or business of a character which is subject to the allowance for depreciation, (2) 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 or after Mar. 1, 1941, on a discount basis and payable without interest at a fixed maturity date not exceeding 1 year from date of issue, and (3) real property used in trade or business.

11 Income from other fiduciaries excludes taxable and partially tax-exempt interest on Government obligations, and partially tax-exempt dividends on share accounts in Federal savings and loan associations.

12 Miscellaneous income includes taxable income from sources other than those tabulated.

13 Aggregate positive income is the sum of dividends, interest, net profits from rents and royalties, from trade or business, from partnerships, from sales of capital assets and of other property, income from other fiduciaries, and miscellaneous income.

14 Aggregate negative income is the sum of the net losses from rents and royalties, from trade or business, from partnerships, and from sales of capital assets and of other property.

15 Interest is that paid on debts, mortgages, and bank loans; it does not include interest reported in schedule for business or rent income, nor interest on indebtedness incurred to buy tax-exempt securities or single-premium life insurance and endowment contracts.

16 Taxes paid include State income taxes, certain retail sales taxes, and real estate taxes except those levied for improvements which tend to increase the value of property. This deduction excludes Federal income tax, estate, inheritance, legacy, succession, and gift taxes; taxes imposed upon shares in a corporation which are paid by the corporation without reimbursement from the taxpayer; taxes deducted in the schedules for business and rent income, and income taxes paid to a foreign country or possession of the United States if any portion thereof is claimed as

a tax credit.

17 Miscellaneous deductions include the net operating loss deduction, losses resulting from fire, storm, shipwreck, or other casualty or from theft, not compensated by insurance or otherwise, and all other authorized deductions except interest and taxes.

18 Balance income is the excess of total income over total deductions; that is, income before the amount distributable to beneficiaries is deducted.

19 Net income taxable to the fiduciary is the net income remaining in the hands of the fiduciary after deductions for allowable expenses and for the amount distributable to beneficiaries.

20 Exemption is $600 for each estate and $100 for each trust, in the form of a credit against net income for purposes of both normal tax and surtax. 21 Less than $500.

22 Less than 0.005 percent.

23 Net income classes are based on the net income taxable to the fiduciary (see note 19).

24 Average tax is based on the tax liability after deducting tax credits relating to income tax paid at source on interest from tax-free covenant bonds and to income tax paid to foreign countries or possessions of the United States.

23 Returns with normal tax and surtax are returns

on which the regular normal tax and surtax are reported, that is, all returns except those on which the alternative tax is imposed as described in note 27. 26 Not computed.

27 Returns with alternative tax are returns showing a net long-term capital gain or an excess of net longterm capital gain over net short-term capital loss, on which the alternative tax is less than the regular which includes the net gain from sales of capital normal tax and surtax computed on net income assets. Alternative tax (not effective on returns with surtax net income under $22,000) is the sum of

(1) a partial tax computed at the regular normal tax and surtax rates on net income reduced for this purpose by the amount of such long-term capital gain, and (2) fifty percent of such long-term gain.

25 Short-term applies to gains and losses from the sales or exchanges of capital assets held 6 months or less and 100 percent of the recognized gain or loss

Footnotes for fiduciary text and basic tables-Continued
(Facsimile for return, Form 1041 appears on pp. 482-489)

thereon is taken into account in computing net short-
term capital gain or loss. The amount reported is a
combination of short-term gains and losses for the
year, together with those received through partner-
ships and common trust funds, but, unlike last year,
the amount reported is not combined with the
capital loss carry-over.

29 Long-term applies to gains and losses from the sales and exchanges of capital assets held more than 6 months, and 50 percent of the recognized gain or loss thereon is taken into account in computing net long-term capital gain or loss. The net amount reported includes such gain or loss received through partnerships and common trust funds.

30 Capital loss carry-over reported on the 1948 returns is a combination of the 1947 net capital loss and the remaining capital loss carry-overs from 1943-46, not offset by net capital gains of the succeeding years, 1944-47. A net capital loss of any year, to

be used as a capital loss carry-over, is the excess of current year capital losses over the sum of (1) current year capital gains and (2) the smaller of $1,000 or current year net income computed without regard to capital gains and losses. The net capital loss may be carried forward as a short-term capital loss for five succeeding years to the extent not previously eliminated.

31 Amounts are a combination of the tabulated net

long-term gain and net short-term loss before the carry-over. This combination results in a slight overstatement of the amount subject to the 50 percent rate in cases where the taxpayer combined a carryover with a short-term loss to determine the excess of long-term gain, or in cases where the carry-over exceeded the short-term gain resulting in a loss which was used to determine the excess of long-term gain.

32 Includes Alaska.

TAXABLE FIDUCIARY INCOME TAX RETURNS

1937-1948

HISTORICAL TABLES

12. Number of returns, income, and tax, 1937-48.

13. Number of returns, income, tax, and effective tax rate, by income classes, 1937-48.

14. Sources of income, deductions, total income, and net income, 1937-48.

15. Number of returns, income, and tax, by States and Territories, 1939-48.

301