under $22,000 nor on joint returns with surtax net income under $44,000 because of the split-income provision. Alternative tax 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 net longterm capital gain or the excess over net short-term capital loss and (2) 50 percent of such long-term gain.

The tax liability is tabulated in basic table 1 by simple and cumulative distributions for each adjusted gross income class; and basic table 6 shows the tax liability and related data for returns with normal tax and surtax separately from returns with alternative tax on income containing gain from sales of capital assets held more than 6 months. The average tax per return, computed for the latter table, is based on the tax liability after the two tax credits are deducted. The effective tax rate shown is based on the adjusted gross income.

TAX PAYMENTS AND TAX OVERPAYMENT

Current collection of the income tax liability for the majority of persons is accomplished through the tax withheld on wages by employers and the payments made on account of a declaration of estimated income tax, Form 1040-ES, filed by persons who have income not subject to the withholding of tax or whose withholding is insufficient to cover the estimated tax reported thereon. Both the tax withheld and the payments on declaration are considered payments toward the discharge of the tax liability on the final return, filed after the close of the income year. If these payments do not cover the total tax liability, the balance is paid with the filing of the final return. If the tax withheld and the payments on declaration exceed the total tax liability, the overpayment of tax is refundable to the taxpayer unless he signifies on a return, Form 1040, that he wishes the overpayment to be credited on his 1949 estimated income tax.

Returns are classified as returns with neither overpayment nor tax due at time of filing, as returns with tax overpayment, and as returns with tax due at time of filing. The first two groups are nonassessable; the third group is assessable. These groups are described subsequently. The number of returns in each group is shown below, separately for taxable and nontaxable returns. Returns with overpayment and returns with tax due are subdivided to show the kinds of tax payment, singly and in combination, resulting from current collection.

Returns with neither overpayment nor tax due at time of filing are those on which the taxpayer reports that the amount of tax withheld and/or the payments on 1948 declaration of estimated tax (including credit for the prior year's overpayment) equal the tax liability for 1948. These returns, sometimes referred to as breakevens, are tabulated in basic table 7; but the segregation of returns by kinds of tax payment is not available.

Returns with tax overpayment are those on which the taxpayer reports that the amount of tax withheld from wages and/or the payments on 1948 declaration of estimated tax (including credit for the prior year's overpayment) exceed the tax liability for 1948. In basic table 7, returns with tax overpayment are segregated according to kinds of tax payment; tax withheld, payments on 1948 declaration, singly and in combination. Also, under each kind of tax payment, the returns are further subdivided to show the number of returns with a refund and the number of returns with a credit on 1949 estimated tax, together with the amount of each.

Returns with tax due at time of filing are those on which the taxpayer reports that the amount of tax withheld from wages and/or the payments on 1948 declaration of estimated tax (including credit for the prior year's overpayment) are not sufficient to cover the tax liability for 1948, and those returns on which neither kind of payment is reported. In basic table 7, returns showing a tax due at time of filing are segregated according to kinds of tax payment; tax withheld, payments on 1948 declaration, singly and in combination, and neither kind of payment. The latter returns showing neither tax withheld nor payments on declaration include returns of farmers who are not required to file a declaration if a final return is filed and the tax due thereon paid in full on or before January 15, 1949.

Tax withheld on wages by employers, during 1948, was determined by the employers either by (1) use of the wage bracket withholding tables, in which the amounts to be withheld are based on various wage levels after an allowance for withholding exemption, or (2) application of the prescribed percentage rate to the amount of wages in excess of the withholding exemption. Amounts to be withheld under either method were reduced, by the 1948 act, applicable with respect to wages paid on or after May 1, 1948. Certain types of wage and salary payments, such as those for military service, agricultural labor, domestic service, and ministry of the gospel, are exempt from withholding. The amount of tax withheld, reported on the income tax return as a payment on the tax liability, is tabulated in basic table 2; and the frequency distribution of returns showing a tax withheld is tabulated in basic table 3. Basic table 7, shows the amount of tax withheld on returns with tax due at time of filing and on returns with tax overpayment, separately.

Irregularities occur in the relationship of salaries and wages and the tax withheld. The following cases serve to illustrate. (1) A return showing compensation covering 36 months or more, received during 1948 and taxed under the provisions of section 107 of the Code: Only the portion of compensation taxed at 1948 rates is included but the total amount of tax withheld is tabulated. (2) A return of a member of a partnership who received salary therefrom and reported the tax withheld: The salary is not tabulated, since for income tax purposes, it is a part of the partnership profit; therefore, the tax withheld is

(for instance, an actor) reporting, in the business schedule, deductible expenses in connection with employment: Data are tabulated as reported, i. e., tax withheld and no corresponding salary. (4) Pensions and retirement pay, even though a tax is withheld, reported either as salaries and wages or on the schedule for annuities and pensions: Data are tabulated as reported. (5) Returns showing an amount of tax withheld from salaries, supported by the withholding receipt, but exceeding the prescribed percentage of withholding: Data are tabulated as reported.

Payments on 1948 declaration of estimated income tax, reported by the taxpayer on return, Form 1040, as a payment on the 1948 tax liability, are a combination of (1) amounts paid on the 1948 declaration of estimated tax, Form 1040-ES, and (2) any credit against the 1948 estimated tax on account of an overpayment of the 1947 income tax. The payments on 1948 declaration of estimated tax (including credit for 1947 tax overpayment) are tabulated in basic table 2; and a frequency of returns showing such payments is tabulated in basic table 3. This frequency is not indicative of the number of taxable declarations filed, but is rather a frequency of the returns which show payments on 1948 declaration of estimated tax as a payment on the 1949 tax liability; and such frequency is without regard to whether the payments are (1) only cash payments on 1948 declaration, (2) only credit claimed on account of the 1947 tax overpayment, or (3) a combination of cash payments on declaration and the credit for 1947 tax overpayment. A declaration of estimated tax does not necessarily result in actual payment because the estimated income tax may be nil or, in the case of an estimated tax, the amount of tax to be withheld (also estimated) and the credit for the prior year's tax overpayment may leave no balance to be paid. The amount reported as payments on 1948 declaration of estimated tax is tabulated in basic table 7, for the returns with tax overpayment and for returns with tax due at time of filing.

Tax due at time of filing is the excess of the 1948 tax liability over the sum of the tax withheld and payments on the 1948 declaration of estimated tax including the credit for the 1947 tax overpayment. The amount of tax due is paid with the filing of the final return after the close of the year. The amount of tax due is shown in basic tables 2 and 7, and the frequency of returns on which this item occurs is tabulated in basic table 3.

Overpayment of the tax liability occurs when the sum of the tax withheld and payments on the 1948 declaration of estimated tax including the credit for 1947 tax overpayment, exceeds the 1948 tax liability. The overpayment is refundable or, at the request of the taxpayer using Form 1040, is credited against his 1949 estimated income tax. The amount of tax overpayment is tabulated in basic table 2; and the frequency distribution of returns with overpayment is shown in basic table 3. In basic table 7, the amount of tax overpayment is segregated to show the amount of refund and the amount of credit on 1949 estimated income tax, as well as the number of returns on which each occurs.

The following tabulation is a condensation of the frequency distribution of returns as shown in basic table 7, for returns with neither overpayment nor tax due at time of filing and for returns with tax over