(1) The amount of interest received during the taxable year which under paragraph (4) of subdivision (b) of section 213 is exempt from taxation under this title:

(2) An amount equa. to the excess, if any, over the deduction specified in paragraph (1) of this subdivision of 4 per centum of the mean of the reserve funds required by law and held at the beginning and end of the taxable year, plus (in case of life insurance companies issuing policies covering life, health and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation) 4 per centum of the mean of such reserve funds (not required by law) held at the beginning and end of the taxable year, as the Commissione. finds to be necessary for the protection of the holders of such policies only;

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(3) The amount received as dividends (A) from a domestic corporation other than corporation entitled to the benefits of section 262, and other than a corporation organized under the China trade act, 1922, or (B) from any foreign corporation when it is shown to the satisfaction of the commissioner that more than 50 per centum of the gross income of such foreign corporation for the threeyear period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the foreign corporation has been in existence) was derived from sources within the United States as determined under section 217; (4) An amount equal to 2 per centum of any sums held at the end of the taxable year as a reserve for dividends (other than dividends payable during the year following the taxable year) the payment of which is deferred for a period of not less than five years from the date of the policy contract. (5) Investment expenses paid during the taxable year: Provided. That if any general expenses are in part assigned to or included in the investment expenses, the total deduction under this paragraph shall not exceed one-fourth of 1 per centum of the book value of the mean of the inv st d assets held at the beginning and end of the taxable year:

(6) Taxes and other expenses paid 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 bil ings 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 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:

(7) A reasonable allowance for the exhaustion, wear and tear of property. including a reasonable allowance for obsolescence:

(8) All interest paid or accrued within the taxable year on its indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after Sept. 24. 1917. and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title: and

the net income is more than $25.000 the tax imposed by section 243 shall not exceed the tax which would be payable if the $2,000 credit were allowed, plus the amount of the net income in excess of $25,000.

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(b) No deduction shall be made under paragraphs (6) and (7) of subdivision (a) account of any real estate owned and occupied in whole or in part by a life insurance company unless there is included in the return of gross income the rental value of the space so occupied. Such rental value shall be not less than a sum which in addition to any rents received from o her tenants shall provide a net income (after deducting taxes, depreciation, and all other expenses) at the rate of 4 per centum per annum of the book value at the end of the taxable year of the real estate so owned or occupied, (c) In the case of a foreign life insurance company the amount of its net income for any taxable year from sources within the United States shall be the same proportion of its net income for the taxable year from sources within and without the United States, which the reserve funds required by law and held by it at the end of the taxable year upon business transacted within the United States is of the reserve funds held by it at the end of the taxable year upon all business transacted,

Sec. 246. (a) In lieu of the taxes imposed by sections 230 and 700. there shall be levied. collected and paid for each taxable year upon the net income of every insurance company (other than a life or mutual insurance company) a tax as follows:

(1) In the case of such a domestic insurance company the same percentage of its net income as is imnosed upon other corporations by section 230;

(2) In the case of such a foreign insurance company the same percentage of its net income from sources within the United States as is imposed upon the net income of other corporations by section 230.

(b) In the case of an insurance company subject to the tax imposed by this section(1) The term "gross income" means the combined gross amount. earned during the taxable year. from investment income and from underwriting income as provided in this subdivision, computed on the basis of the underwriting and investment exhibit of the annual statement approved by the National Convention of Insurance Commissioners:

(2) The term "net income" means the gross income as defined in paragraph (1) of this subdivision less the deductions allowed by section 247;

(3) The term "investment income" means the gross amount of income earned during the taxable year from interest, dividends and rents, computed as follows:

To all interest, dividends and rents received during the taxable year. add interest. dividends and rents due and accrued at the end of the taxable year and deduct all interest, dividends and rents due and accrued at the end of the preceding taxable year:

(4) The term "underwriting income" means the premiums earned on insurance contracts during the taxable year less losses incurred and expenses incurred;

(5) The term "premiums earned on insurance contracts during the taxable year" means an amount computed as follows:

outstanding business at the end of the taxable year:

(6) The term "losses incurred" means losses incurred during the taxable year on insurance contracts, computed as follows: To losses paid during the taxable year add salvage and reinsurance recoverable outstanding at the end of the preceding taxable year, and deduct salvage and reinsurance recoverable outstanding at the end of the taxable year. To the result so obtained add all unpaid losses outstanding at the end of the taxable year and deduct unpaid losses outstanding at the end of the preceding taxable year: (7) The term "expenses incurred" means all expenses shown on the annual statement approved by the National Convention of insurance Commissioners and shall be computed as follows:

To all expenses paid during the taxable year add expenses unpaid at the end of the taxable year and deduct expenses unpaid at the end of the preceding taxable year. For the purpose of computing the net income subject to the tax imposed by this section there shall be deducted from expenses incurred as defined in this paragraph all expenses incurred which are not allowed as deductions by section 247.

Sec. 247. (a) In computing the net income of an insurance company subject to the tax imposed by section 246 there shall be allowed as deductions:

(1) All ordinary and necessary expenses incurred. as provided in paragraph (1) of subdivision (a) of section 234;

(2) All interest as provided in paragraph (2) of subdivision (a) of section 234; (3) Taxes as provided in paragraph (3) of subdivision (a) of section 234;

(4) Losses incurred:

(5) Bad debts in the nature of agency balances and bills receivable ascertained to be worthless and charged off within the taxable year:

(6) The amount received as dividends from corporations as provided in paragraph (6) of subdivision (a) of section 234;

(7) The amount of interest earned during the taxable year which under paragraph (4) of subdivision (b) of section 213 is exempt from taxation under this title. and the amount of interest allowed as a credit under section 236:

Returns of Brokers.

Sec. 255. Every person doing business as a broker shall, when required by the commissioner, render a correct return duly verified under oath, under such rules and regulations as the commissioner, with the approval of the secretary, may prescribe, showing the names of customers for whom such person has transacted any business, with such details as to the profits. losses or other information which the commissioner may require, as to each of such customers, as will enable the commissioner to determine whether all income tax due on profits or gains of such customers has been paid.

Information at Source.

Sec. 256. All persons, in whatever capacity acting, including lessees or mortgagors of ployers, making payment to another person, real or personal property, fiduciaries, and emof interest, rent, salaries, wages, premiums. annuities, compensations, remunerations, emoluments or other fixed or determinable gains, profits and income (other than payments described in sections 254 and 255), of $1,000 or more in any taxable year or in the case of such payments made by the United States. the officers or employes of the United States required to make returns in regard thereto by having information as to such payments and the regulations hereinafter provided for, shall render a true and accurate return to the commissioner, under such regulations and in such form and manner and to such extent as may be prescribed by him with the approval of the secretary, setting forth the amount of such gains, profits and income, and the name and address of the recipient of such payment.

Such returns may be required, regardless of amounts. (1) in the case of payments of inter st upon bonds mortgages, deeds of trust or other similar obligations of corporations. and (2) in the case of collections of items (not payable in the United States) of interest upon the bonds of foreign countries and interest upon the bonds of and dividends from foreign corporations by persons undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks or bills of exchange.

(9) In the case of such a domestic insurance company, the net income of which (computed without the benefit of this paragraph) is $25.000 or less, the sum of $2.000; but if the net income is more than $25,000 the tax imposed by section 246 shall not exceed the tax which would be payable if the $2,000 credit were allowed, plus the amount of the net income in excess of $25.000. (b) In the case of a foreign corporation the deductions allowed in this section shall be allowed to the extent provided in subdivision (b) of section 234.

(c) Nothing in this section or in section 246 shall be construed to permit the same item to be twice deducted.

Part IV-Administrative Provisions. Returns of Payments of Dividends. Sec. 254. Every corporation subject to the tax imposed by this title shall, when required by the commissioner, render a correct return, duly verified under oath. of its payments of dividends, stating the name and address of each shareholder, the number of shares owned by him, and the amount of dividends paid to him.

not The provisions of this section shall tions of the United States. apply to the payment of interest on obliga

Returns to Be Public Records. Sec. 257. (a) Returns upon which the tax has been determined by the commissioner shall constitute public records; but they shall be open to inspection only upon order of the president and under rules and regulations prescribed by the secretary and approved by the president: Provided, That the committee on ways and means of the house of representatives. the committee on finance of the senate or a special committee of the senate or house, shall have the right to call on the secretary of the treasury for, and it shall be his duty to furnish, any data of any character contained in or shown by the returns or any of them. that may be required by the committee; and any such committee shall have the right, acting directly as a committee or by and through such examiners agents as it may designate or appoint. to inspect all or any of the returns at such times and in such manner as it may determine; and any relevant or useful information thus ob tained may be submitted by the committee obtaining it to the senate or the house or to

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payable to such individuals or for their benefit, by reason of their interest in the corporation; and

(3) That such distribution has been made to or for the benefit of such individuals in proportion to the par value of the shares of stock of the corporation owned by each; except that if the corporation has more than one class of stock, the certificate shall contain a statement that the articles of incorporation provide a method for the apportionment of such special dividend among such individuals, and that the amount certified has been distributed in accordance with the method so provided.

(c) For the purposes of this section shares of stock of a corporation shall be considered to be owned by the person in whom the equitable right to the income from such shares is in good faith vested.

(d) As used in this section the term "China" shall have the same meaning as when used in the China trade act, 1922. Part V-Payment, Collection and Refund of Tax and Penalties.

Date on Which Tax Shall Be Paid. Sec. 270. (a) Except as provided in subdivisions (b), (c), and (d) of this section the total amount of tax imposed by this title shall be paid

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(1) In the case of a taxpayer other than nonresident alien individual. and other than a foreign corporation not having an office or place of business in the United States. on or before the fifteenth day of March following the close of the calendar year. or if the return should be made on the basis of a fiscal year, then on or before the fifteenth day of the third month following the close of the fiscal year; and

(2) In the case of a nonresident alien in dividual and of a foreign corporation not having an office or place of business in the United States. on or before the fifteenth day of June following the close of the calendar year or if the return should be mad on the basis of a fiscal year, then on or before the fifteenth day of the sixth month following the close of the fiscal year.

(b) (1) The taxpayer may elect to pay the tax in four equal installments, in which case the first installment shall be paid on or before the latest date prescribed in subdivision (a) for the payment of the tax by the taxpayer, the second installment shall be paid on or before the fifteenth day of the third month, the third installment on or before the fifteenth day of the sixth month, and the fourth installment on or before the fiftenth day of the ninth month, after such date.

(2) If any installment is not paid on the date fixed for its payment, the whole amount of the tax unpaid shall be paid upon notice and demand from the collector.

(c) (1) At the request of the taxpayer, the commissioner may extend the time for payment of the amount determined as the tax hy the taxpayer, or any installment thereof, for a period not to exceed six months from the date prescribed in subdivision (a) or (b) for the payment of the tax or an installment thereof. In such case the amount in respect of which the extension is granted shall be paid on or before the date of the expiration of the period of the extension.

(2) If the time for payment is thus extended there shall be collected, as a part of such amount, interest thereon at the rate of 6 per centum per annum from the date when such payment should have been made if no extension had been granted. until the expiration of the period of the extension.

(d) The provisions of this section shall not apply to the payment of a tax required to

be withheld at the source under section 221 or 237. Examination of Return and Determination of Tax.

Sec. 271. As soon as practicable after the return is filed the commissioner shall examine it and shall determine the correct amount of the tax.

Overpayments.

Sec. 272. If the taxpayer has paid as an installment of the tax more than the amount determined to be the correct amount of such installment, the excess shall be credited against the unpaid installments, if any. If the amount already paid, whether or not on the basis of installments, exceeds the amount determined to be the correct amount of the tax, the excess shall be credited or refunded as provided in section 281.

Deficiency in Tax.

Sec. 273. As used in this title the term "deficiency" means

(1) The amount by which the tax imposed by this title exceeds the amount shown as the tax by the taxpayer upon his return; but the amount so shown on the return shall first be increased by the amount previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, credited, refunded or otherwise repaid in respect of such tax: or

(2) If no amount is shown as the tax by the taxpayer upon his return or if no return is made by the taxpayer, then the amount by which the tax exceeds the amounts previously assessed (or collected without assessment) as a deficiency; but such amounts previously assessed or collected without assessment, shali first be decreased by the amounts previously abated, credited, refunded or otherwise repaid in respect of such tax.

Sec. 274. (a) If, in the case of any taxpayer, the commissioner determines that there is a deficiency in respect of the tax imposed by this title, the taxpayer, except as provided in subdivision (d) shall be notified of such deficiency by registered mail, but such deficiency shall be assessed only as hereinafter provided. Within 60 days after such notice is mailed the taxpayer may file an appeal with the board of tax appeals established by section 900.

(b) If the board determines that there is a deficiency, the amount so determined shall be assessed and shall be paid upon notice and demand from the collector. No part of the amount determined as a deficiency by the commissioner but disallowed as such by the board shall be assessed, but a proceeding in court may be begun, without assessment, for the collection of any part of the amount so disallowed. The court shall include in its judgment interest upon the amount thereof at the rate of 6 per centum per annum from the date prescribed for the payment of the tax to the date of the judgment. Such proceeding shall be begun within one year after the final decision of the board, and may be begun within such year even though the period of limitation prescribed in section 277 has expired.

(c) If the taxpayer does not file an appeal with the board within the time prescribed in subdivision (a) of this section, the deficiency of which the taxpayer has been notified shall be assessed, and shall be paid upon notice and demand from the collector.

(d) If the commisisoner believes that the assessment or collection of a deficiency will be jeopardized by delay such deficiency shall be assessed immediately and notice and demand shall be made by the collector for the payment thereof. In such case the assess

ment may be made (1) without giving the notice provided in subdivision (a) of this section, or (2) before the expiration of the sixty-day period provided in subdivision (a) of this section even though such notice has been given, or (3) at any time prior to the final decision by the board upon such deficiency even though the taxpayer has filed an appeal. If the taxpayer does not file a claim in abatement as provided in section 279 the deficiency so assessed (or, if the claim so filed covers only a part of the deficiency, then the amount not covered by the claim) shall be paid upon notice and demand from

the collector.

(e) If the taxpayer has elected to pay the tax in installments and a deficiency has been assessed, the deficiency shall be prorated to the four installments. Except as provided in subdivision (d) of this section, that part of the deficiency so prorated to any installment the date for payment of which has not arrived, shall be collected at the same time as and as part of such installment. That part of the deficiency so prorated to any installment the date for payment of which has arrived, shall be paid upon notice and demand from the collector.

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(1) Interest upon the amount determined as a deficiency, or, if the tax is paid in installments, upon the part of the deficiency prorated to each installment, shall be sessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as part of the tax, at the rate of 6 per centum per annum from the date prescribed for the payment of the tax, or the payment of such installment, to the date the deficiency is assessed.

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(g) Where it is shown to the satisfaction of the commissioner that the payment deficiency upon the date prescribed for the payment thereof will result in undue hardship to the taxpayer the commissioner, with the approval of the secretary (except where the deficiency is due to negligence, to intentional disregard of rules and regulations or to fraud with intent to evade tax), may grant an extension for the payment of such deficiency or any part thereof for a period not in excess of eighteen months. If an extension is granted, the commissioner may require the taxpayer to furnish a bond in such amount, not exceeding double the amount of the deficiency, and with such sureties, as the commissioner deems necessary, conditioned upon the payment of the deficiency in accordance with the terms of the extension. In such case there shall be collected, as a part of the tax, interest on the part of the deficiency the time for payment of which is so extended, at the rate of 6 per centum per annum for the period of the extension, and no other interest shall be collected on such part of the deficiency for such period. If the part of the deficiency the time for payment of which is so extended is not paid in accordance with the terms of extension, there shall be collected, as a part of the tax, interest on such unpaid amount at the rate of 1 per centum a month for the period from the time fixed by the terms of the extension for its payment until it is paid, and no other interest shall be collected on such unpaid amount for such period.

Additions to the Tax in Case of Deficiency. Sec. 275. (a) If any part of any deficiency is due to negligence or unintentional disregard of rules and regulations but without intent to defraud, 5 per centum of the total amount the deficiency (in addition to such demey) shall be assessed, collected and paid same manner as if it were a deficiency, that the provisions of subdivisions (e)

and (f) of section 274 shall not be applicable.

(b) If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid, in lieu of the 50 per centum addition to the tax provided in section 3176 of the revised statutes, as amended.

Additions to the Tax in Case of Delinquency. Sec. 276. (a) (1) Where the amount determined by the taxpayer as the tax imposed by this title, or any installment thereof or any part of such amount or installment, is not paid at the time prescribed for its payment. there shall be collected as a part of the tax, interest upon such unpaid amount at the rate of 1 per centum a month from the date prescribed for its payment until it is paid.

(2) Where an extension of time for payment of the amount so determined, as the tax by the taxpayer, or any installment thereof, has been granted, and the amount the time for payment of which has been extended, and the interest thereon determined under paragraph (2) of subdivision (c) of section 270, is not paid in full prior to the expiration of the period of the extension, then, in lieu of the interest provided for in paragraph (1) of this subdivision, interest at the rate of 1 per centum a month shall be collected on such unpaid amount from the date of the expiration of the period of the extension until it is paid.

(b) Where a deficiency or any interest or additional amounts assessed in connection therewith under subdivision (f) of section 274 or under section 275 or any addition to the tax in case of delinquency provided for in section 3176 of the revised statutes. as amended, is not paid in full within ten days from the date of notice and demand from the collector, there shall be collected as part of the tax, interest upon the unpaid amount at the rate of 1 per centum a month from the date of such notice and demand until it is paid. If any part of a deficiency prorated to any unpaid installment under subdivision (e) of section 274 is not paid in full on the date prescribed for the payment of such installment, there shall be collected as part of the tax interest upon the unpaid amount at the rate of 1 per centum a month from such date until it is paid.

(c) In the case of estates of incompetent, deceased or insolvent persons, there shall be collected interest at the rate of 6 per centum per annum in lieu of the interest provided in subdivisions (a) and (b) of this section.

(d) If a claim in abatement is filed, 29 provided in section 279, the provisions of subdivisions (b) ar.d (c) of this section shall not apply to the amount covered by the claim in abatement.

Period of Limitation Upon Assessment and Collection of Tax

Sec. 277. (a) Except as provided in section 278 and in subdivision (b) of section 274 and in subdivision (b) of section 279

(1) The amount of income, excess-profits and war-profits taxes imposed by the revenue act of 1921 and by such act as amended, for the taxable year 1921 and succeeding taxable years, and the amount of income taxes imposed by this act, shall be assessed within four years after the return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of such period

(2) The amount of income, excess-profits and war-profits taxes imposed by the act entitled "An act to provide revenue. equalize