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VOLUME II

PROPOSED REARRANGEMENT OF

INCOME TAX TITLE

60481–27-VOL. II

- 1

NOTE.-This print is a proposed tentative rearrangement and proposed new typographical setup of the income tax title of the Revenue Act of 1928. The basis for the rearrangement is the distribution of the provisions between two classifications: General Provisions and Supplemental Provisions. There are also separated out a few Introductory Provisions.

The General Provisions are those which in general apply to the ordinary transactions of the ordinary classes of taxpayers. It is believed that approximately 80 per centum of the taxpayers who file returns will find in the General Provisions practically all the income tax statute law of interest to them. The General Provisions are divided into Parts and sections.

The Supplemental Provisions comprise all provisions of the income tax title other than the General Provisions and the Introductory Provisions. In the main the Supplemental Provisions are those which apply only to extraordinary classes of taxpayers or which apply only to the extraordinary transactions of ordinary classes of taxpayers. The Supplemental Provisions are divided into Supplements and articles.

The present draft is framed as the Revenue Act of 1928 would appear if

(1) The Congress made no changes in policy; and

(2) Transactions for prior taxable periods were left untouched and would remain covered by the prior Acts.

Mr. Middleton Beaman, House Legislative Counsel, Mr. Frederic P. Lee, Senate Legislative Counsel, and Mr. E. C. Alvord, Special Assistant to the Secretary of the Treasury, have contributed very largely both to the form and plan of this rearrangement. The present draft of the rearrangement has been prepared by Mr. Beaman.

The Committee desires to express its appreciation of the hearty cooperation of the Public Printer, of Mr. E. S. Moorhead, Production Manager, and of Mr. E. A. Huse, Night Assistant Production Manager.

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AN ACT

To reduce and equalize taxation, provide revenue, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE 1-INCOME TAX

TABLE OF CONTENTS

SUBTITLE A-INTRODUCTORY PROVISIONS

Sec. 1. Classification of provisions.
Sec. 2. Special classes of taxpayers.

SUBTITLE B-GENERAL PROVISIONS

PART I-RATES OF TAX

Sec. 11. Normal tax on individuals.
Sec. 12. Surtax on individuals.
Sec. 13. Tax on corporations.
Sec. 14. Returns embracing years with different laws.

PART II-COMPUTATION OF NET INCOME

Sec. 21. Net income.
Sec. 22. Gross income.
Sec. 23. Deductions from gross income.
Sec. 24. Items not deductible.
Sec. 25. Credits of individual against net income.
Sec. 26. Credits of corporation against net income.

PART III-CREDITS AGAINST TAX

Sec. 31. Earned income credit.
Sec. 32. Taxes of foreign countries and possessions of United States.
Sec. 33. Taxes withheld at source.
Sec. 34. Erroneous payments.

PART IV-ACCOUNTING PERIODS AND METHODS OF ACCOUNTING

Sec. 41. General rule.
Sec. 42. Period in which items of gross income included.
Sec. 43. Period for which deductions and credits taken.
Sec. 44. Installment sales.
Sec. 45. Consolidation of accounts.
Sec. 46. Change of accounting period.
Sec. 47. Returns for a period of less than twelve months.
Sec. 48. Definitions.

PART V-RETURNS AND PAYMENT OF TAX

Sec. 51. Individual returns.
Sec. 52. Time and place for filing individual returns.
Sec. 53. Corporation returns.
Sec. 54. Records and special returns.
Sec. 55. Publicity of returns.
Sec. 56. Payment of tax.
Sec. 57. Examination of returns and determination of tax.
Sec. 58. Penalties.
Sec. 59. Administrative proceedings.

PART VI. - MISCELLANEOUS PROVISIONS

Sec. 61. Laws made applicable.
Sec. 62. Rules and regulations.
Sec. 63. Definitions.
Sec. 64. Taxes in lieu of taxes under 1926 Act.
Sec. 65. Cross references.
Sec. 66. Short title.
Sec. 67. Effective date of title.

SUBTITLE C-SUPPLEMENTAL PROVISIONS

SUPPLEMENT A-RATES OF TAX

Sec. 101. Capital net gains and losses.
Sec. 102. Sale of mines and oil or gas wells.
Sec. 103. Exemptions from tax on corporations.
Sec. 104. Accumulation of surplus to evade surtaxes.
Sec. 105. Returns embracing years with different laws.

SUPPLEMENT B-COMPUTATION OF NET INCOME

Sec. 111. Determination of amount of gain or loss.
Sec. 112. Recognition of gain or loss from sales and exchanges.
Sec. 113. Basis for determining gain or loss.
Sec. 114. Basis for depreciation and depletion.
Sec. 115. Distributions by corporations.
Sec. 116. Exclusions from gross income.
Sec. 117. Net losses.
Sec. 118. Loss on sale of stock or securities.
Sec. 119. Income from sources within United States.
Sec. 120. Unlimited deduction for charitable, etc., contributions.

SUPPLEMENT CCREDITS AGAINST TAX

Sec. 131. Taxes of foreign countries and possessions of United States. Sec. 132. Payments under 1926 Act.

SUPPLEMENT D--RETURNS AND PAYMENT OF TAX

Sec. 141. Consolidated returns of corporations.
Sec. 142. Fiduciary returns.
Sec. 143. Withholding of tax at source.
Sec. 144. Payment of corporation income tax at source.
Sec. 145. Penalties.
Sec. 146. Closing by Commissioner of taxable year.
Sec. 147. Information at source.
Sec. 148. Information by corporations.
Sec. 149. Returns of brokers.
Sec. 150. Collection of foreign items.

SUPPLEMENT E-ESTATES AND TRUSTS

Sec. 161. Imposition of tax.
Sec. 162. Net income.
Sec. 163. Credits against net income.
Sec. 164. Different taxable years.
Sec. 165. Employees' trusts.
Sec. 166. Revocable trusts.
Sec. 167. Income for benefit of grantor.
Sec. 168. Capital net gains and losses.
Sec. 169. Net losses.
Sec. 170. Taxes of foreign countries and possessions of United States.

SCPPLEMENT PARTNERSHIPS

Sec. 181. Partnership not taxable.
Sec. 182. Tar of partners.
Sec. 183. Computation of partnership income.
Sec. 184. Credits against net income.
Sec. 185. Earned income.
Sec. 186. Capital net gains and losses.
Sec. 187. Net losses.
Sec. 188. Taxes of foreign countries and possessions of United States
Sec. 189. Partnership returns.

SUPPLEMENT G-INSURANCE COMPANIES
Sec. 201. Tax on life insurance companies.
Sec. 202. Gross income of life insurance companies.
Sec. 203. Set income of life insurance companies.
Sec. 204. Insurance companies other than life or mutual.
Sec. 205. Vet losses.
Sec. 206. Taxes of foreign countries and possessions of United States.
Sec. 207. Mutual insurance companies other than life.

SUPPLEMENT --NONRESIDENT ALIEN INDIVIDUALS

Sec. 211. Normal tax.
Sec. 212. Gross income.
Sec. 213. Deductions.
Sec. 214. Credits against net income.
Sec. 215. Allowance of deductions and credits.
Sec. 216. Credits against tax.
Sec. 217. Returns.
Sec. 218. Payment of tax

SUPPLEMENT FOREIGN CORPORATIONS

Sec. 231. Gross income.
Sec. 232. Deductions.
Sec. 233. Allowance of deductions and credits.
Sec. 234. Credits against tax.
Sec. 235. Returns.
Sec. 236. Payment of tax.
Sec. 237. Foreign insurance companies.

SUPPLEMENT J-POSSESSIONS OF THE UNITED STATES

Sec. 251 Income from sources within possessions or United States.
Sec. 252. Citizens of possessions of United States.

SUPPLEMENT K-CHINA TRADE ACT CORPORATIONS

Sec. 261. Credit against net income.
Sec. 262. Credits against the tax.
Sec. 263. Consolidated returns.
Sec. 264. Income of shareholders.

SUPPLEMENT L-ASSESSMENT AND COLLECTION OF DEFICIENCIES

Sec. 271. Definition of deficiency.
Sec. 272. Procedure in general.
Sec. 273. Jeopardy assessments.
Sec. 274. Bankruptcy and receiverships.
Sec. 275. Period of limitation upon assessment and collection.
Sec. 276. Same-Exceptions.
Sec. 277. Suspension of running of statute.

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