(1) If the corporation surtax net income is over $ 3,000 a tax computed as follows:
(A) [No provision.]
(B) Taxable Years Beginning After March 31, 1951, and Before April 1, 1954. -- In the case of taxable years beginning after March 31, 1951, and before April 1, 1954 --
(i) Normal tax. -- A normal tax of 30 per centum of the normal-tax net income, or 60 per centum of the amount by which the normal-tax net income exceeds $ 3,000, whichever is the lesser; plus
(ii) Surtax. -- A surtax of 22 per centum of the corporation surtax net income in excess of $ 25,000.
(2) If for the taxable year the gross amount of income from interest, dividends, rents, and net premiums, minus dividends to policyholders, minus the interest which under section 22(b)(4) is excluded from gross income, exceeds $ 75,000, a tax equal to the excess of --
(A) 1 per centum of the amounts so computed, or 2 per centum of the excess of the amount so computed over $ 75,000, whichever is the lesser, over
(B) the amount of the tax imposed under Subchapter E of Chapter 2.
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(4) Gross amount received over $ 75,000, but less than $ 125,000. -- If the gross amount received during the taxable year from interest, dividends, rents, and premiums (including deposits and assessments) is over $ 75,000 but less than $ 125,000, the amount ascertained under paragraph (1), paragraph (2)(A) and paragraph (3) shall be an amount which bears the same proportion to the amount ascertained under such paragraph, computed without reference to this paragraph, as the excess over $ 75,000 of such gross amount received bears to $ 50,000.
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(1) Gross investment income. -- "Gross investment income" means the gross amount of income during the taxable year from interest, dividends, rents, and gains from sales or exchanges of capital assets to the extent provided in section 117;
(2) Net premiums. -- "Net premiums" means gross premiums (including deposits and assessments) written or received on insurance contracts during the taxable year less return premiums and premiums paid or incurred for reinsurance. Amounts returned where the amount is not fixed in the insurance contract but depends upon the experience of the company or the discretion of the management shall not be included in return premiums but shall be treated as dividends to policyholders under paragraph (3);
(3) Dividends to policyholders. -- "Dividends to policyholders" means dividends and similar distributions paid or declared to policyholders. The term "paid or declared" shall be construed according to the method regularly employed in keeping the books of the insurance company;
(4) Net income. -- The term "net income" means the gross investment income less --
(A) Tax-free Interest. -- The amount of interest which under section 22(b)(4) is excluded for the taxable year from gross income;
(B) Investment Expenses. -- Investment expenses paid or accrued during the taxable year. If any general expenses are in part assigned to or included in the investment expenses, the total deduction under this subparagraph shall not exceed one-fourth of 1 per centum of the mean of the book value of the invested assets held at the beginning and end of the taxable year plus one-fourth of the amount by which net income computed without any deduction for investment expenses allowed by this subparagraph, or for tax-free interest allowed by subsection (b)(4)(A), exceeds 3 3/4 per centum of the book value of the mean of the invested assets held at the beginning and end of the taxable year;
(C) Real Estate Expenses. -- Taxes and other expenses paid or accrued during the taxable year exclusively upon or with respect to the real estate owned by the company, not including taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and not including any amount paid out for new buildings, or for permanent improvements or betterments made to increase the value of any property. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed upon a shareholder of a company upon his interest as shareholder, which are paid or accrued by the company without reimbursement from the shareholder, but in such cases no deduction shall be allowed the shareholder for the amount of such taxes;
(D) Depreciation. -- A reasonable allowance, as provided in section 23(l), for the exhaustion, wear and tear of property, including a reasonable allowance for obsolescence;
(E) Interest Paid or Accrued. -- All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this chapter.
(F) Capital Losses. -- Capital losses to the extent provided in section 117 plus losses from capital assets sold or exchanged in order to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders. Capital assets shall be considered as sold or exchanged in order to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders to the extent that the gross receipts from their sale or exchange are not greater than the excess, if any, for the taxable year of the sum of dividends and similar distributions paid to policyholders, losses paid, and expenses paid over the sum of interest, dividends, rents, and net premiums received. In the application of section 117(e) for the purposes of this section, the net capital loss for the taxable year shall be the amount by which losses for such year from sales or exchanges of capital assets exceeds the sum of the gains from such sales or exchanges and whichever of the following amounts is the lesser:
(i) the corporation surtax net income (computed without regard to gains or losses from sales or exchanges of capital assets); or
(ii) losses from the sale or exchange of capital assets sold or exchanged to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders.
(1) the sum of (A) the amount shown as the tax by the taxpayer upon his return, if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus (B) the amounts previously assessed (or collected without assessment) as a deficiency, over --
(2) the amount of rebates, as defined in subsection (b)(2), made. [Emphasis supplied.]
Adjustments [under sec. 207(a)(2)] -- 1952 | |
---|---|
Gross income disclosed by return | $ 1,256,675.70 |
Adjustments to gross income | None |
Gross income as adjusted | 1,256,675.70 |
* * * * | |
Computation of Tax -- 1952 | |
Gross amount of income | $ 1,256,675.70 |
Income tax liability computed at 1% | 12,566.76 |
Balance of income tax liability | 12,566.76 |
Tax assessed on return account #959005 | None |
Deficiency in income tax | $ 12,566.76 |
[Emphasis supplied.] |
[ITEM] | |
19. Total gross income in items 1 to 3, inclusive | $ 16,791.21 |
20. Net premiums | 1,239,884.49 |
21. Total gross amount of income from interest, dividends, | |
rents, and net premiums (item 19 plus item 20) | $ 1,256,675.70 |
22. LESS: Dividends to policyholders | |
23. Interest wholly exempt from tax * * * | |
24. Gross amount of income (item 21 minus the sum of items | |
22 and 23) | $ 1,256,675.70 |
Interest | $ 16,091.21 |
Dividends | 700.00 |
Rents | |
Total | 16,791.21 |
Investment expenses | $ 36.00 |
Taxes | 22.26 |
Real estate expenses | 6,053.82 |
Interest | 655.15 |
Total expenses | 6,767.23 |
This excess payment represents, not profits or receipts but an overpayment -- an overpayment because, being entitled to his insurance at cost and having paid more than it cost, he [the policyholder] is equitably entitled to have such excess applied for his benefit. It makes no difference what this excess is called. * * *