Excess profits tax procedure - Tapa blanda

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1920 Excerpt: ...and included in computing invested capital. If a corporation has paid a stock dividend in excess of its true surplus, it can not be deemed to have any greater invested capital than could have been computed had no such stock dividend been paid. (Art. 859.) When dividends during first 60 days should not reduce invested capital.--When a corporation has a substan tial surplus at the beginning of a taxable year the rule that dividends paid during the first sixty days shall be deemed to be paid from such surplus is fair. But in the case of a new corporation, which declares a dividend during the first sixty days of its existence from earnings definitely known, to have accumulated during such period, the same rule becomes inequitable. New corporations or corporations with no surplus at the beginning of the taxable year, desiring to pay dividends should wait for sixty-one days before actually paying their first dividend. Method of determining income available for dividends.--The regulations provide that net income of a taxable year will be deemed to be allocated (a) to federal taxes, (b) to dividends paid after the expiration of the first sixty days. If dividends are in excess of the net income after allowing for federal taxes and if the payment of such dividends decreases the invested capital at the beginning of the year, the net earnings for the year will be affected, because the amount of invested capital will be reduced, federal taxes increased and the amount available for dividends decreased. This calculation would require the use of an algebraic formula,7 but the regulation eliminates the necessity for using such a complicated method. Regulation. Whether at the time of any payment made during the taxable year there is sufficient income of the taxable year avai...