Footnotes for basic tables 1–10, pages 82-345 (Facsimiles of return forms, to which references are made, appear on pp. 477-504) 1 Data are compiled from the returns as filed, prior to revisions that may be made as a result of audit by the Internal Revenue Service and prior to changes resulting from carry-backs after the returns were filed. • Returns filed in a State may not be a complete coverage of all corporations whose principal place of business is located therein. Conversely, a tabulation for a given State may include data from returns of corporations having their principal place of business in another State. A corporation may file an income tax return either in the collection district in which it has its principal place of business or in the collection district in which it has its principal office or agency. The total number of returns shown includes returns of inactive corporations. 4 "Net income" or "Deficit" is the difference between the total income and the total deductions as reported on the return, exclusive of the net operating loss deduction. "Income tax" consists of normal tax, surtax, and alternative tax reported in lieu of normal tax and surtax where the income includes an excess of net long-term capital gain over net short-term capital loss, if and only if such tax is less than the normal tax and surtax. Tabulated with the income tax for returns with net income is a small amount of tax reported on returns with no net income, under the special provisions applicable to certain mutual insurance companies, other than life or marine. The item "Dividends paid in cash and assets other than own stock" (shown in table 6 as "Dividends paid") does not include liquidating dividends. Dividend payments are reported in schedule M, page 4, Form 1120. 7 The industrial classification is based on the business activity reported on the return. When multiple businesses are reported on a return, the classification is determined by the business activity which accounts for the largest percentage of total receipts. Therefore, the industrial groups do not reflect pure industry classifications. The industrial groups are based on the Standard Industrial Classification, issued by the Division of Statistical Standards, Bureau of the Budget, Executive Office of the President. For 1948 changes have been made in the contents of certain industry groups to conform, generally, with recent changes in the Standard Industrial Classification. A comparison of the major industrial groups employed for 1948 with those for 1947 is shown in a chart on pages 428-431. A comparison of the minor industrial groups employed for 1948 with those for 1947 is shown in a chart on pages 438-450. 8 "Total compiled receipts" consists of gross sales (less returns and allowances), gross receipts from operations (where inventories are not an incomedetermining factor), all interest received on Government obligations (less amortizable bond premium), other interest, rents, royalties, excess of net short term capital gain over net long-term capital loss, excess of net long-term capital gain over net shortterm capital loss, net gain from sale or exchange of property other than capital assets, dividends, and other receipts required to be included in gross income, described in note 22. "Total compiled receipts" excludes nontaxable income other than taxexempt interest received on certain Government obligations. 10 Number of returns shown excludes returns of inactive corporations. 11 "Gross sales" consists of amounts received for goods, less returns and allowances, in transactions where inventories are an income-determining factor. For "Cost of goods sold," see "Deductions." 12 "Gross receipts from operations" consists of amounts received from transactions in which inventories are not an income-determining factor. For "Cost of operations," see "Deductions." 13 "Interest received on Government obligations, wholly taxable" consists of interest on Treasury notes issued on or after December 1, 1940, and obligations issued on or after March 1, 1941, by the United States or any agency or instrumentality thereof, reported as item 9(c), page 1, Form 1120. 14 "Interest received on Government obligations, subject to surtax only" consists of interest on United States savings bonds and Treasury bonds owned in principal amount of over $5,000 issued prior to March 1, 1941, reported as item 9(a), page 1, Form 1120; and interest on obligations of instrumentalities of the United States (other than obligations of Federal land banks, joint stock land banks, and Federal intermediate credit banks) issued prior to March 1, 1941, reported as item 9(b), page 1, Form 1120, 15 "Interest received on Government obligations, wholly tax-exempt" consists of interest on obligations thereof, the District of Columbia, and United States of States, Territories, or political subdivisions possessions; obligations of the United States issued on or before September 1, 1917; all postal savings bonds; Treasury notes issued prior to December 1, 1940; Treasury bills issued prior to March 1, 1941; United States savings bonds and Treasury bonds owned in principal amount of $5,000 or less issued to March 1, 1941, by Federal land banks, joint stock prior to March 1, 1941; and obligations issued prior land banks, and Federal intermediate credit banks. Interest from such sources is reported under item 19(a), (b), and (c) of schedule M, page 4, Form 1120. 16 Amount shown as "Rents" consists of gross amounts received. The amounts of depreciation, repairs, interest, taxes, and other expenses, which are deductible from the gross amount received for rents, are included in the respective deduction items. 17 Amount shown as "Royalties" consists of gross amounts received. The amount of depletion, which is deductible from the gross amount of royalties received, is included in the item of "Depletion" in deductions. arising from the sale or exchange of capital assets. 18 Capital gain or loss is the amount of gain or loss (A net loss from this source is not deductible for the current year, but may be carried over and applied against capital gains in the five succeeding taxable years to the extent not allowed as a deduction against any net capital gains of any taxable year interven ing between the taxable year in which the net capital loss was sustained and the taxable year to which carried.) The term "Capital assets" means property held by the taxpayer (whether or not con nected with trade or business), but excludes (1) stock in trade or other property which would properly be included in inventory if on hand at the close of the taxable year, (2) property held primarily for sale to customers in the ordinary course of trade or business, (3) property used in trade or business, of a char acter which is subject to the allowance for deprecia tion, (4) Government obligations issued on or after March 1, 1941, on a discount basis and payable without interest at a fixed maturity date not exceeding 1 year from the date of issue, and (5) real property used in the trade or business of the taxpayer. Begin ning 1942 gains and losses from (a) sale or exchange of depreciable property and real property, used in the trade or business and held for more than 6 months, and from (b) involuntary conversion of such property and of capital assets held for more than 6 months are treated as long-term capital • Life insurance companies are required to include only interest, dividends, and rents in gross income, Beginning 1942, life insurance companies are allowed a reserve and other policy liability credit" equal to a flat percentage of investment income less taxexempt interest. This credit, which is deducted after arriving at net income, takes the place of the deductions for reserve earnings, deferred dividends, and interest paid, which formerly were allowed in computing net income. Footnotes for basic tables 1-10, pages 82-345—Continued gains and losses, if the gains exceed the losses. If the losses exceed the gains, the net loss is deductible as an ordinary loss. For taxable years beginning after December 31, 1941, "short-term" applies to gains or losses on the sale or exchange of capital assets held 6 months or less; "long-term" applies to gains or losses on capital as sets held over 6 months. 19 "Net gain or loss. sales other than capital assets" is the net amount of gain or loss arising from the sale or exchange of depreciable and real property used in trade or business and short-term non-interest-bearing Government obligations issued on or after March 1, 1941, on a discount basis. If the property used in trade or business has been held for more than 6 months, special treatment of the gain or loss is provided as described in note 18 above. 20 "Dividends, domestic corporations" consists of dividends received from domestic corporations subject to income taxation under chapter 1 of the Internal Revenue Code. This item is reported in column 2, schedule E, page 2, Form 1120, and is the amount used for computation of the dividends received credit. 21 "Dividends, foreign corporations" is the amount reported in column 3, schedule E, page 2, Form 1120, and is not used for the computation of dividends received credit. 22 "Other receipts" includes amounts not else where reported on the return such as: Profit from sales of commodities other than the principal commodity in which the corporation deals; income from minor operations; bad debts recovered; cash discount; income from claims, license rights, judgments, and joint ventures; net amount under operating agreements; net profit from commissaries; profit on dealing in futures; profit on prior years' collections (installment basis); profit on purchase of corporation's own bonds; recoveries of bonds, stocks, and other securities; refunds for cancellation of contracts, for insurance, management expenses, and processing taxes; and income from sales of scrap, salvage, or waste. 23 Where the amount reported as "Cost of goods sold" or "Cost of operations" includes items of deductions such as depreciation, taxes, etc., these items ordinarily are not transferred to their specific headings. However, an exception is made with respect to amounts reported in costs and identifiable as "Amortization of "Amounts contributed under pension plans, etc.,' emergency facilities" and such amounts being transferred to the respective deduction items. Amount shown as "Repairs" is the cost of incidental repairs, including labor and supplies, which do not add materially to the value of the property or appreciably prolong its life. 25 The item "Taxes paid" excludes (1) Federal income tax and Federal excess profits taxes, (2) estate, inheritance, legacy, succession, and gift taxes, (3) income taxes paid to a foreign country or possession of the United States if any portion is claimed as a tax credit, (4) taxes assessed against local benefits, (5) Federal taxes paid on tax-free covenant bonds, and (6) taxes reported in "Cost of goods sold" and "Cost of operations." gifts" is limited to 5 percent of net income as comThe deduction claimed for "Contributions or puted without the benefit of this deduction. 27 Amount shown as "Amortization" is the deduction provided by section 124 of the Internal Revenue Code as amended with respect to the amortization of the cost of emergency facilities necessary for national defense. amounts reported under income, (2) losses by 29 Included in "Other deductions" are (1) negative abandonment, fire, storm, shipwreck, or other casualty (including war losses), and theft, (3) salaries and wages not deducted elsewhere on the return, and (4) amounts not otherwise reported, such as: Administrative, general, and office expenses; bonuses shipping expenses; payments in connection with and commissions; delivery charges; freight and lawsuits; research expenses; sales discount; selling costs; travel expenses; unrealized profits on installment sales; and Federal Deposit Insurance Corporation assessments reported by banks. herein is the amount originally reported, consisting 30 The net operating loss deduction tabulated only of the net operating loss carry-over reduced by certain adjustments, and does not take into account whatever revisions may subsequently be made as the result of any carry-back of net operating loss from the two succeeding tax years. net operating loss carry-over is the sum of the net In general, the operating losses, if any, for the two preceding taxable years. If there is net income in the first preceding preceding taxable year is reduced to the extent such taxable year, the net operating loss for the second loss has been absorbed by such net income. 31 Amount shown as "Compensation of officers" companies which file Form 1120L. Data not excludes compensation of officers of life insurance available. 32 See note 31. 33 Compiled net loss or deficit. 34 Compiled net loss after income tax payment. 35 "Number of returns with balance sheets" ex cludes returns of inactive corporations and returns posits. obligations" consists of obligations of the United 38 Where investments are not segregated as between amount is included in "Other investments." "Government obligations" and "Other," the entire (1) depreciable tangible assets such as buildings, 39 Amount shown as "Capital assets" consists of fixed mechanical equipment, manufacturing facili ties, transportation facilities, and furniture and fixtures, (2) depletable tangible assets-natural rechises, formulas, copyrights, leaseholds, good will, and trade-marks, and (4) land. (Amounts in tables sources, (3) intangible assets such as patents, fran4 through 5-A exclude land.) assets not elsewhere reported on return, such as: ber 31, 1948, or close of fiscal year nearest thereto. 41 Assets and liabilities are tabulated as of Decem "Amounts contributed under pension plans, etc.," consists of deductions claimed under section 23(p) of the Internal Revenue Code for amounts contributed by employers under pension, annuity, ferred compensation plans. stock-bonus, or profit-sharing plans, or other de Footnotes for basic tables 1-10, pages 82-345-Continued assets" and "Total liabilities" are decreased by the 42 Amount shown as "Other liabilities" consists of liabilities not elsewhere reported on return, such as: Deferred and suspense items; accrued expenses; dividends payable; funds held in trust; borrowed securities; outstanding coupons and certificates; and overdrafts. "Other liabilities" of life insurance companies includes the net value of outstanding policies and annuities, and borrowed money. "Other liabilities" of banks includes deposits (time, savings, demand, etc.) and bank notes in circulation. 43 Capital stock which is not definitely designated as either common or preferred is tabulated under common stock. 37, and "Other investments" (items 4 and 5, respectively, schedule L, page 4, Form 1120). 50 Bonds, notes, and mortgages payable, with original maturity of less than 1 year, are combined with accounts payable to obtain the amount of "Accounts and notes payable" shown in table 6. 51 "Bonds and mortgages payable" shown in table 6 are those with original maturity of 1 year or more. 52"Capital stock" consists of both preferred and common stock. 53 The amount of "Surplus and undivided profits" shown in table 6 includes surplus reserves, paid-in or capital surplus, and earned surplus and undivided profits. 54 Surplus deficit. 55 The lower limit of each net income and deficit class is shown in this table. For definition of net income or deficit, see ncte 4. 56 Included in the total, but not in the detail, under "Income tax," is $177,000 of tax reported on returns with no net income. See note 5. 57 For taxable years beginning after December 31, 1941, if the net long-term capital gain exceeds the net short-term capital loss, an alternative tax is imposed in lieu of the normal tax and surtax if and only if such tax is less than the normal tax and surtax. The alternative tax is the sum of (1) a partial tax, computed at the normal tax and surtax rates on the net income decreased by the amount of the excess of the net long-term capital gain over the net short-term capital loss, and (2) 25 percent of such excess. HISTORICAL DATA BASIC TABLES CORPORATION INCOME AND PROFITS TAX RETURNS All returns: 11. General summary, 1909-1948. 12. Net income and deficit classes, 1937-1948. 13. Receipts and deductions, 1918-1948. 14. Industrial groups, 1939-1948. 15. States and Territories, 1939-1948. Returns with balance sheets: 16. Assets and liabilities, 1926-1948; receipts and deductions, 1931-1948. 17. Total assets classes, 1931-1948. Taxable excess profits tax returns: 18. General summary, 1940-1946. Consolidated returns: 19. Income tax returns, summary, 1928-1948. 20. Taxable excess profits tax returns, summary, 1940-1946. 349 |