MARITAL STATUS OF TAXPAYER

Individual returns are classified according to the marital status and sex of the taxpayer. Returns with no adjusted gross income are included so that all returns are classified. The marital status of the taxpayer is determined as of the last day of the income year, or on the date of the death of a spouse. Four classifications are used: joint returns of husbands and wives, separate returns of husbands and wives, separate community property returns, and returns of single persons. Returns of men and women are shown separately for each classification except that of joint returns of husbands and wives. The number of returns, adjusted gross income, amount of exemption, and tax liability for each of the four classifications are tabulated in basic table 8. The size of adjusted gross income for the separate returns of husbands and wives and for separate community property returns is based on the respective amount reported. Joint returns of husbands and wives include joint returns filed on Form 1040A even though the collector determined the tax on the basis of separate incomes of husband and wife.

Separate returns of husbands and wives do not include joint returns, Form 1040A, on which the collector determined the tax from the separate incomes of husband and wife.

Separate community property returns of husbands and wives are filed on Form 1040 only, this form being required if husband and wife file separate community income returns. Separate community property returns, Form 1040, for 1948, showing income of spouses divided according to State laws, are filed in Arizona, California, Hawaii, Idaho, Louisiana, Michigan, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Texas, and Washington. The community law for Michigan was repealed on May 10, 1948. A community income return may include separate income of a spouse as well as the community income; nevertheless, the return is classified as a community property return.

An unequal number of returns for men and for women in the latter two classifications is the result of insufficient information to identify the returns of married persons and the use of samples as a basis of estimating data.

The advantage of filing returns on a community income basis is greatly reduced by the introduction of the split-income method of computing tax liability on joint returns, under the 1948 act. There are only 458,901 community property returns for 1948 as compared

Individual returns for 1948, by marital status and by sex: Number of returns and percentage distribution, adjusted gross income, and adjusted gross deficit [Money figures in thousands of dollars]

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

EXEMPTIONS

Exemptions for the income year 1948 as provided under the 1948 act are allowed as a credit against income for the purpose of computing both normal tax and surtax. The allowable exemptions are a per capita exemption of $600 for the taxpayer, his spouse, and each closely related dependent (specified by law) who received more than half his or her support from the taxpayer and who had less than $500 income for the year, together with the additional exemptions of $600 for blindness and $600 for age 65 or over of the taxpayer and his spouse. The number and amount of exemptions tabulated include the number and amount automatically allowed through use of the optional tax on returns, Form 1040A, and short-form returns, Form 1040, as well as the number and amount claimed by taxpayers who compute their tax liability. The amount of exemption is tabulated in basic table 2 by adjusted gross income classes and by returns with standard or itemized deductions, in basic table 6 by types of tax, and in basic table 8 by marital status and sex of the taxpayer. In basic table 9, the total number of exemptions, the number of exemptions for age and blindness, and a frequency distribution of returns by number of exemptions other than age or blindness are tabulated by marital status of the taxpayer. This basis is similar to that of previous years. For this tabulation, separate returns of husbands and wives and separate community property returns are combined.

Slight duplication of exemptions exists on account of dependents with less than $500 income, who file a return in order to claim refund of tax withheld on wages; such wages are not taxable to the dependent, neither do they constitute a part of the gross income of the taxpayer claiming the dependent.

The total number of exemptions claimed is 133,399,725 of which 47,336,204 are for dependents and 4,295,709 are for the additional exemptions for blindness and age 65 or over. Separate enumeration of exemptions for age and for blindness is not available. The number of exemptions distributed by marital status of the taxpayer, in

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

Footnotes for text tables

(Facsimiles of returns, Forms 1040 and 1040A, appear on pp. 458-481)

1 Adjusted gross income classes are based on the amount of adjusted gross income (see note 2), regardless of the amount of net income or net deficit when computed; returns with adjusted gross deficit are designatel "No adjusted gross income" without regard to the amount.

Adjusted gross income means gross income minus allowable trade and business deductions, expenses of travel and lodging in connection with employment, reimbursed expenses in connection with employ ment, deductions attributable to rents and royalties, certain deductions of life tenants and income beneficiaries of property held in trust, and allowable losses from sales or exchanges of property. Should these allowable deductions exceed the gross income, there is an adjusted gross deficit.

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 a foreign country or possession of the United States. Such credits are reported on individual returns, Form 1040, with itemized deductions.

This class includes nontaxable returns with adjusted gross income exceeding the designated class limit.

Returns with no adjusted gross income are returns showing adjusted gross deficit; that is, returns on which the deductions allowable for the computation of adjusted gross income equal or exceed the gross income (see note 2).

• Less than 0.005 percent. Not computed. Adjusted gross deficit.

• Adjusted gross income less adjusted gross deficit. 10 Returns with standard deduction are optional returns, Form 1040A, and short-form returns, Form 1040, with adjusted gross income less than $5,000, on both of which the tax is determined from the tax table; and long-form returns, Form 1040, with adjusted gross income of $5,000 or more on which the standard deduction is used. On the latter returns, the standard deduction is the smaller of $1,000 or 10 percent of adjusted gross income, except that on the return of a married person filing a separate return the standard deduction is $500.

11 Returns with itemized deductions are long-form returns, Form 1040, on which non business deductions are itemized; long-form returns, Form 1040, with no deductions filed by spouses of taxpayers who itemized deductions (such spouses are denied the standard deduction); and returns, Form 1040, with no adjusted gross income whether or not deductions are itemized.

11 Salaries and wages include annuities, pensions, and retirement pay reported in the schedule for salaries, but exclude wages not exceeding $100 per return from which no tax was withheld reported as other income on Form 1040A (see note 22).

13 Dividends, foreign and domestic, include partially tax-exempt dividends on share accounts in Federal savings and loan associations, but exclude dividends not exceeding $100 per return reported as other income on Form 1040A (see note 22) and all dividends received through partnerships and fiduelaries.

14 Interest received includes interest on notes, mortgages, bank deposits, and interest (before amortization of bond premium) from corporation bonds and from taxable and partially tax-exempt Government obligations; also includes, when received through partnerships and fiduciaries, partially tax exempt Government interest and partially taxexempt dividends on share accounts in Federal savings and loan associations. Excludes interest not exceeding $100 per return reported as other income on Form 1040A (see note 22).

14 Income from annuities and pensions is only the taxable portion of amounts received during the year. Amounts received to the extent of 3 percent of the total cost of the annuity are reported as income for each taxable year, until the aggregate of amounts received and excluded from gross income in this and prior years equals the total cost. Thereafter, entire amounts received are taxable and must be included in adjusted gross income. Annuities, pensions, and retirement pay upon which tax is withheld may be reported in salaries and wages.

16 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.

17 Net profit from business is the excess of gross receipts from business over deductions for business expenses and the net operating loss deduction due to the unabsorbed net operating loss from business, partnership, and common trust funds for the 2 preceding years. Conversely, net loss from business is the excess of business expenses and net operating loss deduction over total receipts from business.

18 Partnership net profit or loss excludes 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.

19 Net gain or loss from sales or exchanges of capital assets is the net gain or the allowable loss used in computing adjusted gross income. Each is the result of combining net short- and long-term capital gain and loss and any capital loss carry-over from the years 1943-47, inclusive, not previously deducted. Deduction for the loss, however, is limited to the amount of such loss, or the net income (adjusted gross income if tax is determined from the tax table) 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 stocks, 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 from partnerships and common trust funds.

20 Net gain 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 March 1, 1941, on a discount basis and payable 1 year from date of issue, and (3) real property used in trade or business.

11 Income from estates and trusts excludes partially tax-exempt interest on Government obligations and partially tax-exempt dividends on share accounts in Federal savings and loan associations. (The net operating loss deduction is allowed to estates and trusts and is deducted in computing the distributable income.)

"Miscellaneous income includes alimony received, prizes, rewards, sweepstakes winnings, gambling profits, recoveries of bad debts or insurance received as reimbursement for medical expenses if deduction for either was taken in a prior year. For returns with standard deduction, there is included $40,448,000 of wages not subject to withholding, dividends, and interest, not exceeding in total $100 per return, reported as other income on 896,400 returns, Form 1040A.

(Footnotes continued on p. 42)

Footnotes for text tables-Continued

(Facsimiles of returns, Forms 1040 and 1040A, appear on pp. 458-486)

n Contributions, reported on returns with itemized deductions, include each partner's share of charitable contributions of partnerships, but the deduction cannot exceed 15 percent of the adjusted gross income.

24 Interest, reported on returns with itemized deductions, is that paid on personal debts, bank loans, or mortgages, but excludes interest paid on business debts reported in schedules for business or rent income, and interest on loans to buy tax-exempt securities or single-premium life insurance and endowment contracts.

25 Taxes paid, reported on returns with itemized deductions, include personal property taxes, State income taxes, certain retail sales taxes, and real estate taxes except those levied for improvement which tend to increase the value of property. This deduction excludes Federal income taxes; estate, inheritance, legacy, succession, or gift taxes; taxes on shares in a corporation which are paid by the corporation without reimbursement from the taxpayer; taxes deducted in the schedules for rents and business; income taxes paid to a foreign country or possession of the United States if any portion thereof is claimed as tax credit; and Federal social security and employment taxes paid by or for the employee. 26 Losses resulting from fire, storm, shipwreck, or other casualty, or theft, reported on returns with itemized deductions, are the actual nonbusiness losses sustained, that is, the value of such property less salvage value and insurance or other reimbursement received.

27 Medical and dental expenses, reported on returns with itemized deductions, paid for the care of the taxpayer, his spouse, or dependents, not compensated by insurance or otherwise, which exceed 5 percent of the adjusted gross income. The deduction cannot exceed $1,250 multiplied by the number of exemptions other than those for age and blindness with a maximum deduction of $2,500, except that on a joint return of husband and wife the maximum is $5,000.

18 Miscellaneous deductions, reported on returns with itemized deductions, include alimony payments, expenses incurred in the production or collection of taxable income or in the management of property held for the production of taxable income, amortizable bond premium, the taxpayer's share of interest and real estate taxes paid by a cooperative apartment corporation, and gambling losses not exceeding gambling gains reported in income.

29 Number of returns associated with this item is subject to sampling variation of more than 100 percent. Such items are not shown separately since they are considered too unreliable for general use; however, they are included in the totals. For description of sample, see pp. 44-52.

30 Net deficit, reported on nontaxable returns, Form 1040, classified as returns with itemized deductions, consists of adjusted gross deficit on shortform returns and the net deficit on long-form returns resulting from the combination of adjusted gross def

itemized deductions over adjusted gross income. There is a net deficit on 367,779 returns of which 326,309 show adjusted gross deficit and 41,470 show adjusted gross income of various amounts and itemized deductions of larger amounts.

31 Aggregate positive income is the sum of salaries and wages, dividends, interest, annuities and pensions, net profit from rents and royalties, net profit from business, net profit from partnerships, net gain from sales of capital assets and other assets, income from estates and trusts, and miscellaneous income.

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

33 Net income reported on long-form returns, Form 1040, which have adjusted gross income in excess of itemized deductions.

Percentages for this total only are computed on the basis of adjusted gross income less adjusted gross deficit.

35 Nontaxable returns are those with no adjusted gross income and those with adjusted gross income which income, when reduced by deductions, standard or itemized, and exemptions, results in no tax liability.

36 Number of returns is subject to maximum sampling variation of 30 to 100 percent, depending on the number in the cell. For description of sample, see pp. 44-52.

37 Payments on 1948 declaration of estimated tax, reported on returns, Form 1040, include the credit for overpayment of prior year tax as well as the aggregate payments made on the declaration, Form 1040-ES. The frequency of returns with such payments includes returns showing credit only, cash payments only, and those showing both.

38 Joint returns of husbands and wives include joint returns filed on Form 1040A even though the collector determined the tax on the basis of separate incomes of husband and wife.

39 Separate returns of husbands and wives do not include joint returns filed on Form 1040A even though the collector determined the tax on the basis of separate incomes of husband and wife. Unequal numbers of returns for men and women result from insufficient information to identify returns of married persons and from the use of samples as a basis of estimating data.

40 Separate community property returns of husbands and wives are filed on Form 1040 only. Unequal numbers of returns for men and for women result from insufficient information to identify the returns of married persons and from the use of samples as a basis of estimating data.

41 Number of exemptions includes the per capita exemption of the taxpayer, his spouse, and each dependent, together with the number of additional