Sec. 12 (d). "For the purpose of the tax imposed by subdivision (a) of Sec. 10, the income embraced in a return of a corporation, joint stock company or association, or insurance company shall be credited with the amount received as dividends upon the stock or from the net earnings of any other corporation, joint stock company or association, or insurance company, which is taxable upon its net income as provided in this title, less that proportion of such amount which the amount received by the distributing corporation, joint stock company or association, or insurance company from similar sources bears to the entire net income of such distributing corporation, joint stock company or association, or insurance company."

The third paragraph of Section 4, Act of October 3, 1917, reads as follows: "Except for the purposes of the tax imposed by this section (the additional 4 per cent income tax-Editor) the income embraced in a return of a corporation, joint stock company or association, or insurance company, shall be credited with the amount received as dividends upon the stock or from the net earnings of any other corporation, joint stock company or association, or insurance company, which is taxable upon its net income as provided in this Title."

Sec. 29 provides "that in assessing income tax, the net income embraced in the return shall also be credited with the amount of any war profits tax imposed by Act of Congress and assessed for the same calendar or fiscal year upon the taxpayer and, in the case of a member of a partnership, with his proportionate share of such war profits tax imposed upon the partnership.

If any of the corporations, joint-stock companies or associations, or insurance companies aforesaid, shall refuse or neglect to make a return at the time or times hereinbefore specified in each year, or shall render a false or fraudulent return, such corporation, joint-stock company or association, or insurance company, shall be liable to a penalty of not exceeding $10,000.

Returns must be made by March 1, or within 60 days after close of fiscal year (if designated by notice at least 30 days prior to March 1), to the Collector of Internal Revenue of the district where company's head office is located. Companies will be notified of the amount of their tax by June 1, yearly, and tax must be paid by June 15 (or 105 days after return of income is required).

PREMIUM TAX

Beginning November 1, 1917, there is levied a tax of one cent on each dollar or fractional part thereof of premium charged under each policy of insurance or other instrument, by whatever name the same is called, whereby insurance is made or renewed upon property of any description (including rents or profits), whether because of peril by sea or inland waters, or by fire or lightning, or other perils (reinsurances are exempt). Within the first fifteen days of each month, every person, corporation, partnership or association issuing policies of insurance and taxable as above must make a return under oath,

in duplicate, and pay the tax mentioned to the Collector of Internal Revenue of the district in which the principal office or place of business of such person, corporation, partnership or association is located.

WAR PROFITS TAX

A war profits tax is levied by the law of Otober 3, 1917, upon insurance companies, based upon their excess of profits in 1917 (and subsequent years) over the average yearly profits in the pre-war period, namely, 1911, 1912, 1913. This tax is additional to the income and premium taxes previously mentioned. The war profits tax is as follows:

"Twenty per centum of the amount of the net income in excess of the deduction provided for hereinafter and not in excess of fifteen per centum of the invested capital for the taxable year;

"Twenty-five per centum of the amount of net income in excess of twenty per centum, and not in excess of twenty-five per centum of such capital;

"Thirty-five per centum of the amount of net income in excess of twenty per centum, and not in excess of twenty-five per centum of such capital;

"Forty-five per centum of the amount of net income in excess of twentyfive per centum and not in excess of thirty-three per centum of such capital, and "Sixty per centum of the amount of the net income in excess of thirty-three per centum of such capital."

The war profits tax is levied on net income in excess of the deduction (for a domestic corporation) from net income of the sum of an amount equal to the same percentage of invested capital for the taxable year which the average amount of annual net income during the pre-war period was of the invested capital in the pre-war period (but not less than seven per cent nor more than nine per cent), and $3000.

There are other provisions for unusual cases, the manner of computing income is prescribed and "invested capital" is defined.

TAX ON UNDISTRIBUTED PROFIT

There is also a tax of 10 per cent on profit remaining undistributed more than six months, except such as is employed in the business.

CERTAIN PAYMENTS TO BE REPORTED

Companies must report all payments for salaries; interest; rent; wages; premiums; annuities; compensation; remuneration; emolument; or other fixed or determinable gains, profits or income, except those specified in Sections 26 and 27 of the law of 1916 (dividends to stockholders, etc.), amounting to $800 or more.

TAX WITHHELD

Section 1212, law of October 3, 1917, authorizes the release and payment, to individuals, of amounts heretofore withheld as required by Title I of the Law of September 8, 1916, on account of the tax imposed on the income of

any such individuals, associations or residents of the United States, for the calendar year 1917, and provides that the entire tax upon the income of such individuals shall be assessed and collected in the manner prescribed by such act as amended by the law of October 3, 1917.

SUNDRY TAXES

The law of 1917 also imposes taxes upon transportation of property by freight and express, and of persons; taxes upon telephone and telegraph and radio messages costing fifteen cents or more, and various stamp taxes upon surety bonds, parcel post packages, stock transfers, certain drafts or checks, custom house entries, proxies, powers of attorney, etc. Postal rates are also increased by this law.

REGULATIONS

Every company not specifically exempted must make the return required, whether it has net income liable to tax or not. The law relates to the total net income of American companies, and to the United States business of foreign companies. Blanks may be obtained from collectors of United States Internal Revenue, and failure to receive a blank will not excuse a company from making the required return nor relieve it from penalties for not making such return. New companies and those going into liquidation must make the returns.

The Treasury Department of the United States Government has announced its interpretation of the Federal Income Tax Law upon certain points in relation to the taxation of insurance companies. Commissioner of Internal Revenue R. E. Cabell stated that the net addition to reserves required by the law may be the highest amount required by any State in which a company does business. In the case of assessment insurance companies the law requires that actual deposits with State or Territorial officers be treated as payments required by law to reserve funds.

The reserves carried by companies to provide for taxes due and payable during the year will not be treated as taxes actually paid. Another point on which the Commissioner ruled treats of amortization of bond valuations. He said: "Where a corporation holds bonds which were purchased at a rate above par and said corporation shall proportionately reduce the value of those bonds on its books each year, so that the book value shall be the redemption value of the bonds when such bonds become due and payable, the return of annual net income of the corporation holding such bonds may show the depreciation on account of amortization of such bonds. The requirement is, however, that the amount carried to the amortization account each year shall be practically proportioned with respect to the difference between the purchase price and the maturing value and the number of years to elapse until the bonds become due and payable."

A decision (in 1915) of the United States Court of Appeals was to the effect that no revenue tax can be collected on funds reserved to meet losses.

MISCELLANEOUS

A bill prohibiting "trading with the enemy" was enacted into law by Congress in September, 1917. The Federal Government conducts a War Risk Bureau for the insurance of shipping, cargoes and seamen.

A National bank in a town of not over 5000 population may act as agent for a fire insurance company.

On or before

*March 1

June 15

July 31

CALENDAR-UNITED STATES

Income tax statement must be filed.
Income tax is payable.

Capital stock tax statement must be filed.
Capital stock tax is payable.

Each mth, 15 Premium statement must be filed.
Premium tax is payable.

Or sixty days after close of fiscal year.

STATE FIRE MARSHALS.

Below will be found a list of State and Provincial fire marshals in the United States and Canada:

ADDENDA

DOMINION OF CANADA

As of September 20, 1917, "The Insurance Act, 1917," superseded “The Insurance Act, 1910," repealed. The chief variations in the new Act from the old one are as follows:

LICENSES—A Dominion license must be obtained by every British or foreign company, even though it may operate in only one Province.

IMPAIRMENT-Canadian company must maintain assets to a value at least 15 per cent in excess of total liabilities, including pro rata unearned premium reserve. License may be revoked if assets are less than liabilities. INVESTMENTS-Unsecured debentures must be of company which has paid regular dividends on its preferred or common stocks for at least five years preceding date of investment. Canadian company cannot invest in shares of another company doing same class of business. Provincial companies taking Dominion licenses must dispose of unauthorized securities within five years.

MISCELLANEOUS-Explosion insurance includes bombardment and war risks. An automobile insurance policy may cover fire, explosion and inland transportation risks. Companies writing hail insurance must maintain a hail insurance surplus or deposit. PUBLICATION-Paid-up capital must be shown in any published statement

of authorized or subscribed capital, and any statement of surplus which includes subscribed or paid-up capital must specifically mention same. RECIPROCAL INSURANCE-Licenses may be issued to inter-insurance associations. V