Chap. 219.—An ACT to amend and re-enact sections 10 and 11 of an act en-
titled an act to raise revenue for the support of the government and pub-
lic free schools, and to pay the interest on the public debt, and to provide
a special tax for pensions as authorized by section 189 of the Constitu-
tion, approved April 16, 1903, and acts amendatory thereof. ES B 167]

Approved March 14, 1918.

Be it enacted by the general assembly of Virginia, That sections
ten and eleven of an act entitled an act to raise revenue for the
support of the Bovernment and public free schools, and to pay
the interest on the public debt, and to provide a special tax for
pensions as authorized by section one hundred and eighty-nine of
the Constitution, approved April sixteenth, nineteen hundred and
three, as heretofore amended, be amended and re-enacted so as to
read as follows:

Section 10. Income.—The classification under schedule D pro-
viding for the taxation of income shall be as follows, to-wit:

The aggregate amount of income of each person and corpora-
tion residing or doing business in this State, whether received or
due but not received within the year next preceding the first of
January in each year, subject to the deductions and exemptions here-
inafter recited.

The terms “person” and “corporation” as used in this act are
hereby defined as follows: a

(a) The term “person” shall mean and include any individual,
firm or co-partnership.

(b) The term “corporation” shall mean and include every in-
corporated company, every joint stock company, and every associa-
tion having capital stock represented by shares or certificates of
stock. organized for profit.

The term “income” as used in this act shall include:

(a) All rents, including ground rents and rents charge. salaries,
wages, fees or compensation of whatever kind from professions,
vocations or other services.

(b) All interest upon notes, bonds or other evidences of debt
of every description, including those of other States or other coun-
tries (except bonds of this State and bonds of the United States),
of any corporation, company, partnership, firm or individual, all
dividends derived from stock or other evidences of ownership or
interest in property, but not including dividends paid in stock;
all royalties derived from mines, patents, copyrights, or the pos-
session or use of franchises or legalized privileges of any kind;
and all annuities from invested funds or trusts; provided, that the
proceeds of life insurance policies paid upon the death of the person
insured or payments made by or credited to the insured on life
insurance, endowment or annuity contracts, upon the return thereof
to the insured at the maturity of the term mentioned in the con-
tract or upon surrender of contract, shall not be included as income.

(c) All profits derived from the transaction of business or from
the sale of real or personal estate.

(d) The amount of sales of live stock and meat of all kinds,
less the actual purchase price of live stock the sales of which are
reported as income.

(e) The amount of sales of wood, butter, cheese, hay, tobacco,
grain and other vegetables and agricultural productions during the
preceding year, whether the same was grown during the preceding
vear or not, less all sums paid for labor, fences, feed, fertilizers
and seed purchased and used upon the land upon which the vege-
tables and agricultural productions were grown or produced, and
ee eat of such land paid by said person, if he be not the owner

ereof.
(f) All other grains and profits derived from any source
whatever.

There shall be exempt from taxation under this schedule income
as follows:

a) To an individual income up to and including the sum of
twelve hundred dollars.

(b) To husband and wife living together income up to and
including the sum of eighteen hundred dollars.

(c) For each additional person who is actually supported by
and entirely dependent upon the taxpayer for support, the sum of
two hundred dollars.

(d) In computing said exemptions and the amounts of taxes
payable by persons residing together as members of a family, the
income of the wife and the income of each child under twenty-one

ears of age shall be added to that of the husband or father, or if

e be not living, to that of the head of the family, and assessed to
him. The taxes levied thereon shall be payable by such husband
or head of the family, but if not paid by him may be enforced
against any person whose income is included in the assessment.

(e) Salaries, wages and other compensation received from the
United States by officials or employees thereof.

(f) Pensions received from the United States or from the
State of Virginia.

(g) Income received by the United States, the State of Vir-
ginia or any political subdivision thereof.

(h) The value of property acquired by gift within the year
not exceeding the sum of one thousand dollars.

(1) All inheritances, devises and bequests received during the
year which are subject to the inheritance tax laws of this State and

ave actually been assessed under such laws, but income received
from such inheritances, devises and bequests shall be assessed under
the provisions of this schedule.

Persons and corporations in reporting income for purposes of
taxation shall be allowed the following deductions:

(a) Payments made within the year for salaries of officers,
wages of emplovees and a reasonable allowance for services of co-
partners or members of a firm actually rendered in producing such
income, but no deduction shall be made for any amount paid for
personal services unless there be reported the name and address
and amount paid each such officer, employee or copartner residing
within the State to whom the sum of one thousand dollars or more
shall have been paid during the assessment year.

(b) The necessary expenses actually paid within the year in
carrying on the profession, occupation or business from which the
Income is derived, not including personal living or family expenses.

(c) A reasonable annual allowance for depreciation by use,
wear, tear and obsolescence of the property from which the income
is derived, on the basis of its cost in cash or the equivalent of cash;
but no deduction shall be made for any amount of expenses of re-
storing property or making good the exhaustion thereof for which
an allowance is or has been made; and no deduction shall be allowed
for any amount paid for books, tools, instruments, machinery, appli-
ances, furniture or fixtures, buildings, permanent improvements or
betterments, or other taxable property purchased, whether used in
connection with the business or not.

(d) Losses of property actually sustained during the year and
not compensated for by insurance or otherwise.

(e) Debts due to the taxpayer actually ascertained to be worth-
less and actually charged off within the year, provided same are
listed showing amounts, when due, and names of debtors.

(f) Sums paid by the taxpayer within the year for taxes 1m-
posed by any State of this Union or possession thereof, upon the
property, profession, occupation or business from which the income
hereby taxed is derived; but not including assessments for local
improvements or inheritance taxes wherever imposed.

(g) Dividends or profits received from stock or an interest in
any corporation or copartnership the income of which shall have
been assessed under the provisions of this act, provided, that when
only part of the income of any corporation or copartnership shall
have been assessed under this act only a corresponding part of the
dividends or profits received therefrom shall be deducted.

(h) All interest paid within the year on existing indebtedness;
provided that the amount so deducted by any corporation or co-
partnership shall not exceed one-half of the sum of its interest-
bearing indebtedness and its paid up capital stock outstanding at
the close of the vear, or if no capital stock, the amount shall not
exceed the sum of its net worth and one-half of its interest-bearin
indebtedness as both stood at the close of the year; the actua
amount paid during the vear for repairs to and maintenance of
buildings, the rent of which is reported as income, and all fire, tor-
nado and casualty insurance premiums on property in this State
due and paid during the year.

(1) No deduction shall be made for expenses chargeable to
residence property occupied by its owner, nor for the depreciation
thereof, and the annual value of estimated rental thereof shall not
be included in the income subject to taxation.

Persons and corporations doing a part of their business within
the State and a part without the State, and having offices or other
regular places of business both within and without the State, shall
be taxed only upon such income as is derived from business trans-
acted and property located within the State, which may be deter-
mined by an allocation and separate accounting for such income
when the books of such person or.corporation show income realized
from such transactions and property located within the State; other-
wise such income shall be apportioned and determined as follows:

The gross business in dollars, of the person or corporation in
the State, including the business of production measured by cost of
production and the business of distribution or sales measured by
the value of gross sales less the cost of production for the year
ending December thirty-first. shall be added to the book value of
the gross assets on the first day of January of the year for which
return is being made, employed in the business within this State
(with no deduction on account of any encumbrance thereon). The
sum so obtained shal] be the numerator of a fraction of which the
denominator shall consist of the total gross business, as above de-
fined, of the person or corporation both within and without the
State, added to the total book value of the gross assets on the day
last aforesaid, wherever employed in business (with no deduction
on account of any encumbrance thereon). The proportion of the
entire gross income of such person or corporation which is repre-
sented by the fraction so obtained shall be the gross income of such
person or corporation returnable for taxation in this State, subject
only to the exemptions and deductions hereinbefore provided for.

Guardians, trustees, executors, administrators, committees,
agents, receivers, curators, conservators, and all persons or corpora-
tions acting in any fiduciary capacity, hereinafter called fiduciaries,
shall make and render a verified list or return of the amount of in-
come of every person for whom thev act, subject to this tax, coming
into their custodv or control and management, and be subject to
all of the provisions of this section which apply to individuals:
provided that no deduction or exemption shall be allowed which
has been otherwise claimed by or for any person for whom they act.

When the return of income has been made by a fiduciary accord-
ing to the provisions of this section and the tax on same has been
paid or withheld such income shall not be again taxed under this
schedule when it. is distributed or paid to the beneficiaries.

The auditor of public accounts shall prepare and furnish to the
commissioner of the revenue necessary forms of interrogations for
the assessment of the income tax, separate and distinct from other
forms of interrogatories.

In entering the income tax returns for each year, the commis-
sioners of the revenue shall not use for such entry the property
book. or any other public record book but shall use a special book,
which shall be: furnished by the auditor of public accounts, and
such book and the return blanks containing the statements of in-
comes shall be kept safely by the commissioners under lock and
key except when in their personal possession, and shall not be in-
spected by any person not officially entitled to inspect them, and the
commissioner shall not give to any person, except some other officer
authorized by law. or by special order of a court of competent
jurisdiction to receive the same, any information regarding such
returns.

The treasurers of the several counties and cities of the State,
and the auditor of public accounts shal] keep under lock and key
all lists of individuals paying the tax upon incomes and shall not
permit the same to be inspected. except by tax officers of this State;
provided, that in the event the United States government, or any
other State, allows this State’s officials to examine its income tax
returns, then this State shall allow an inspection of its income
tax returns by proper officials of the United States government,
or such other State, whose official duties require them to make such
inspection; nor shall they give any information to any person
other than those hereinbefore enumerated except in obedience to
a decree or order of court of competent jurisdiction.

. Sec. 11. On income, as defined in this schedule, the tax shall
be one per centum, and no city, town or county shall levy or assess
any tax on income for municipal or county purposes, and any pro-
vision of any city or town charter in conflict with this act is hereby
repealed; provided nothing herein contained shall be construed as
imposing an income tax on any part of the receipts of any public
service corporation which are now subject to a State franchise tax
upon such receipts, or on insurance companies which may pay a
State license tax on gross premiums, or on State and national
banks, banking associations, trust and security companies, or on
religious, educational, benevolent, and other corporations or asso-
ciations of individuals not organized or conducted for pecuniary
profit.