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DIVISION I-INTRODUCTORY PROVISIONS

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act, divided into titles and sections according to the following Table of Contents, may be cited as the "Revenue Act of 1932": (See Table of Contents, pp. v-xxi.)

TITLE I—INCOME TAX

SUBTITLE A-INTRODUCTORY PROVISIONS

SECTION 1. APPLICATION OF TITLE.

The provisions of this title shall apply only to the taxable year 1932 and succeeding taxable years. Income, war-profits, and excessprofits taxes for taxable years preceding the taxable year 1932 shall not be affected by the provisions of this title, but shall remain subject to the applicable provisions of prior revenue Acts, except as such provisions are modified by Title IX of this Act or by legislation enacted subsequent to this Act.

SEC. 2. CROSS REFERENCES.

The cross references in this title to other portions of the title, where the word "see" is used, are made only for convenience, and shall be given no legal effect.

SEC. 3. CLASSIFICATION OF PROVISIONS.

The provisions of this title are herein classified and designated asSubtitle A-Introductory provisions,

Subtitle B-General provisions, divided into Parts and sections, Subtitle C-Supplemental provisions, divided into Supplements and sections.

SEC. 4. SPECIAL CLASSES OF TAXPAYERS.

The application of the General Provisions and of Supplements A to D, inclusive, to each of the following special classes of taxpayers, shall be subject to the exceptions and additional provisions found in the Supplement applicable to such class, as follows:

(a) Estates and trusts and the beneficiaries thereof,-Supplement E. (b) Members of partnerships,-Supplement F.

(c) Insurance companies,-Supplement G.

(d) Nonresident alien individuals,-Supplement H.

(e) Foreign corporations,-Supplement I.

(f) Individual citizens of any possession of the United States who are not otherwise citizens of the United States and who are not residents of the United States,-Supplement J.

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(g) Individual citizens of the United States or domestic corporations, satisfying the conditions of section 251 by reason of deriving a large portion of their gross income from sources within a possession of the United States,-Supplement J.

(h) China Trade Act corporations,-Supplement K.

ARTICLE 1. Division of regulations.-These regulations relating to the income tax provisions of the Revenue Act of 1932' consist of four divisions as follows:

Division I, entitled "Introductory Provisions,” relating to Introductory Provisions, Subtitle A of Title I.

Division II, entitled "General Provisions," relating to General Provisions, Subtitle B of Title I.

Division III, entitled " Supplemental Provisions," relating to Supplemental Provisions, Subtitle C of Title I.

Division IV, entitled "Miscellaneous Provisions," relating to certain provisions of Titles VII and IX.

The application of the articles under Division II and the application of the articles under Division III relating to Supplements A-D of the Act, to certain special classes of taxpayers is subject to the exceptions and additional provisions in Supplements E-K of the Act and in the articles under Division III relating to those Supplements. The special classes of taxpayers, and the Supplements, sections of the Act, and articles of the regulations containing such exceptions and additional provisions are stated in the following table:

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1 The principal provisions of the Revenue Act of 1928, the Revenue Act of 1926, the Revenue Act of 1924, and the Revised Statutes relating to income taxes for 1932 and subsequent taxable years are printed in the appendix to these regulations.

DIVISION II-GENERAL PROVISIONS

SUBTITLE B-GENERAL PROVISIONS

PART I-RATES OF TAX

SEC. 11. NORMAL TAX ON INDIVIDUALS.

There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax equal to the sum of the following:

(a) 4 per centum of the first $4,000 of the amount of the net income in excess of the credits against net income provided in section 25; and

(b) 8 per centum of the remainder of such excess amount. ART. 11. Income tax on individuals.-Title I of the Act, which in general is effective January 1, 1932 (see section 65), imposes an income tax on individuals, including a normal tax (sections 11 and 211) and a surtax (section 12). The tax is upon net income which is determined by subtracting the allowable deductions from the gross income. (See generally sections 21-24.) In certain cases credits are allowed against the net income before computing the tax (section 25) and in other cases against the amount of the tax (sections 31, 32, and 131). In general the tax is payable upon the basis of returns rendered by persons liable thereto (sections 51, 53, 142, and 217), except that in some instances it is to be paid at the source of the income (section 143). Exceptions and additional provisions applicable to certain special classes of taxpayers are listed in section 4 and article 1. See section 104 as to shareholders of corporations formed or availed of to prevent imposition of surtax. See sections 101, 168, and 186 as to treatment of capital gains and capital losses.

ART. 12. Normal tax on individual citizens or residents of the United States. The normal tax on individual citizens or residents of the United States upon the amount of the net income, as defined in section 21, in excess of the credits provided in section 25 is at the rate of 4 per cent upon the first $4,000 of such excess and 8 per cent. upon the remainder of the net income. For normal tax on nonresident alien individuals see section 211 and article 1021.

ART. 13. Citizens or residents of the United States liable to tax.-In general, citizens of the United States, wherever resident, are liable. to the tax, and it makes no difference that they may own no assets

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within the United States and may receive no income from sources within the United States. Every resident alien individual is liable to the tax, even though his income is wholly from sources outside the United States. As to nonresident alien individuals, see sections 211-218 and articles 1021-1091.

ART. 14. Who is a citizen.-Every person born or naturalized in the United States, and subject to its jurisdiction, is a citizen. When any naturalized citizen has left the United States and resided for two years in the foreign country from which he came, or for five years in any other foreign country, it is presumed that he has ceased to be an American citizen. This presumption does not apply, however, to residence abroad while the United States was at war, nor does it apply in the case of individuals born in the United States subject to its jurisdiction. For example, if a Swede, after being naturalized in the United States, returned to Sweden and resided there for two years prior to April 6, 1917, he is presumed once more to be an alien. However, even though an individual born in the United States, subject to its jurisdiction, of either citizen or alien parents, resided in a foreign country for a number of years, he would still be a citizen of the United States, unless he had become naturalized in, or taken an oath of allegiance to, the foreign country of residence or some other foreign state. A foreigner who has filed his declaration of intention of becoming a citizen of the United States but who has not yet received his final citizenship papers is an alien. See articles 1022-1025 for distinction between a resident alien individual and a nonresident alien individual.

SEC. 12. SURTAX ON INDIVIDUALS.

(a) Rates of surtax.-There shall be levied, collected, and paid for each taxable year upon the net income of every individual a surtax as follows:

Upon a net income of $6,000 there shall be no surtax; upon net incomes in excess of $6,000 and not in excess of $10,000, 1 per centum of such excess.

$40 upon net incomes of $10,000; and upon net incomes in excess of $10,000 and not in excess of $12,000, 2 per centum in addition of such excess.

$80 upon net incomes of $12,000; and upon net incomes in excess of $12,000 and not in excess of $14,000, 3 per centum in addition of such excess.

$140 upon net incomes of $14,000; and upon net incomes in excess of $14,000 and not in excess of $16,000, 4 per centum in addition of such excess.

$220 upon net incomes of $16,000; and upon net incomes in excess of $16,000 and not in excess of $18,000, 5 per centum in addition of such excess.

$320 upon net incomes of $18,000; and upon net incomes in excess of $18,000 and nct in excess of $20,000, 6 per centum in addition of such excess.

$440 upon net incomes of $20,000; and upon net incomes in excess of $20,000 and not in excess of $22,000, 8 per centum in addition of such excess.

$600 upon net incomes of $22,000; and upon net incomes in excess of $22,000 and not in excess of $24,000, 9 per centum in addition of such excess.

$780 upon net incomes of $24,000; and upon net incomes in excess of $24,000 and not in excess of $26,000, 10 per centum in addition of such excess.

$980 upon net incomes of $26,000; and upon net incomes in excess of $26,000 and not in excess of $28,000, 11 per centum in addition of such excess.

$1,200 upon net incomes of $28,000; and upon net incomes in excess of $28,000 and not in excess of $30,000, 12 per centum in addition of such excess.

$1,440 upon net incomes of $30,000; and upon net incomes in excess of $30,000 and not in excess of $32,000, 13 per centum in addition of such excess.

$1,700 upon net incomes of $32,000; and upon net incomes in excess of $32,000 and not in excess of $36,000, 15 per centum in addition of such excess.

$2,300 upon net incomes of $36,000; and upon net incomes in excess of $36,000 and not in excess of $38,000, 16 per centum in addition of such excess.

$2,620 upon net incomes of $38,000; and upon net incomes in excess of $38,000 and not in excess of $40,000, 17 per centum in addition of such excess.

$2,960 upon net incomes of $40,000; and upon net incomes in excess of $40,000 and not in excess of $42,000, 18 per centum in addition of such excess.

$3,320 upon net incomes of $42,000; and upon net incomes in excess of $42,000 and not in excess of $44,000, 19 per centum in addition of such excess.

$3,700 upon net incomes of $44,000; and upon net incomes in excess of $44,000 and not in excess of $46,000, 20 per centum in addition of such excess.

$4,100 upon net incomes of $46,000; and upon net incomes in excess of $46,000 and not in excess of $48,000, 21 per centum in addition of such excess.

$4,520 upon net incomes of $48,000; and upon net incomes in excess of $18,000 and not in excess of $50,000, 22 per centum in addition of such excess.

$4,960 upon net incomes of $50,000; and upon net incomes in excess of $50,000 and not in excess of $52,000, 23 per centum in addition of such excess.

$5,420 upon net incomes of $52,000; and upon net incomes in excess of $52,000 and not in excess of $54,000, 24 per centum in addition of such excess.

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