CHAPTER 573

AN ACT to amend and reenact §§ 58-78, 58-81, 58-82, 58-84, 58-98,
58-105, 58-119, 58-120 and 58-122 of the Code of 1950, relating
to taration of income, the sections, respectively, relating to
gross income, deductions, limitation on deductions of non-
residents, items not deductible, personal exemptions, returns,
provisions applicable to fiduciaries, provisions applicable to
estates and trusts, and returns by fiduciaries; and to amend
the Code of 1950 by adding a section numbered 58-121.1, relat-
ing to income of an estate or trust in case of divorce; and to
repeal §§ 58-99 and 58-100 of the Code of 1950, relating to
exemptions and status of individuals.

[S 221]

Approved April 11, 1950

Be it enacted by the General Assembly of Virginia:
1. That §§ 58-78, 58-81, 58-82, 58-84, 58-98, 58-105, 58-119, 58-120
and 58-122 of the Code of 1950 be amended and reenacted, and that
the Code of 1950 be amended by adding a section ‘numbered
58-121.1, the amended and new sections being as follows:

§ 58-78. * Gross Income.

(a) General Definition.—The term “gross income”, as used
herein, includes gains, profits and income derived from salaries,
wages or compensation for personal services of whatever kind and
in whatever form paid or from professions, vocations, trades, busi-
nesses, commerce or sales or dealings in property, whether real or
personal, growing out of the ownership, use or interest in such
property; also from rent, interest, dividends, securities or trans-
actions of any business carried on for gain or profit or gains or
profits and income derived from any source whatever, including
gains or profits and income derived through estates or trusts
by the beneficiaries thereof, whether as distributive or as distri-
butable shares.

The term includes compensation received for personal service
as an officer or employee of the United States, any territory or
possession or political subdivision thereof, the District of Columbia
or any agency or instrumentality of any one or more of the fore-
going; and the term “officer or employee” includes a member of
a legislative body, a judge or officer of a court and a person in
the armed forces.

The amount of all such items shall be included in the gross
income for the taxable year in which received by the taxpayer,
unless under the methods of accounting permitted herein such
amounts are to be properly accounted for as of a different period. *

(b) Erclusions from Gross Income.—The following items shall
not be included tn gross income and shall be exempt from taxation
under this chapter:

(1) The proceeds of life insurance policies and contracts
paid upon the death of the insured.

(2) The amount received by the insured as a return of
premium or premiums paid by him under life insurance, endow-
ment or annuity contracts, either during the term or at the
maturity of the term mentioned in the contract, or at the sur-
render of the contract.

(3) The value of property acquired by gift, bequest,
devise or inheritance, * but the income received from such gifts,
bequests, devises and inheritances shall be assessed under the
provisions of this chapter.

(4) Any amount received through accident or health in-
surance or under the Workmen’s Compensation Act as com-
pensation for personal injuries or sickness and the amount of
any damages received, whether by suit or agreement, on account
of such injuries or sickness.

(5) Interest upon obligations of the United States or of
this State and interest upon securities issued under the pro-
visions of the Federal Farm Loan Act.

(6) Pensions received from the United States or this State
on account of military or naval service in armed forces, whether
such service was rendered by the recipient of the pension or by
a relative by blood or marriage.

(7) Amounts received as pensions, annuities, or similar
allowances for personal injury or sickness resulting from active
service in the armed forces of the United States or of this State.

(c) Alimony, Etc., Income.—In the case of a wife who is
divorced or legally separated from her husband under a decree of
divorce or of separate maintenance, periodic payments (whether
or not made at regular intervals) received subsequent to such
decree in discharge of, or attributable to property transferred (in
trust or otherwise) in discharge of, a legal obligation which, be-
cause of the marttal or family relationship, is imposed upon or
incurred by such husband under such decree or tinder a written
instrument incident to such divorce or separation shall be includi-
ble in the gross income of such wife, and such amounts received
as are attributable to property so transferred shall not be includt-
ble wn the gross income of such husband. This subsection shall
not apply to that part of any such periodic payment which the
terms of the decree or written instrument fiz, in terms of an
amount of money or a portion of the payment, as a sum which is
payable for the support of minor children of such husband. In
case any such periodic payment is less than the amount specified
in the decree or written instrument, for the purpose of applying
the preceding sentence, such payment, to the extent of such sum
payable for such support, shall be considered a payment for such
support. Installment payments discharging a part of an obliga-
tion the principal sum of which is, in terms of money or property,
specified in the decree or instrument shall not be considered peri-
odic payments for the purposes of this subsection; except that an
installment payment shall be considered a periodic payment for
e purposes of this subsection if such principal sum, by the terms
the decree or instrument, may be or is to be paid within a period
ding more than 10 years from the date of such decree or tnstru-
ent, but only to the extent that such installment payment for
e taxable year of the wife (or if more than one such install-
ent for such tarable year is received during such tazable year,
e aggregate of such installment payments) does not exceed 10
r centum of such principal sum. For the purposes of the pre-
ding sentence, the portion of a payment of the principal sum
hich 1s allocable to a period after the tazable year of the wife
which it is received shall be considered an installment payment
r the tarable year in which it is received. (In cases where such
riodic payments are attributable to property of an estate or
‘operty held in trust, see § 58-121.1.)

(d) Definition of “Adjusted Gross Income’.—As used in this
apter the term “adjusted gross income” means the gross income
inus—

(1) Trade and Business Deductions.—The deductions al-
lowed by § 58-81 which are. attributable to a trade or business
carried on by the taxpayer, if such trade or business does not
consist of the performance of services by the tarpayer as an
employee ;

(2) EHapenses of Travel and Lodging in Connection with
Employment.—The deductions allowed by § 58-81 which consist
of expenses of travel, meals, and lodging while away from home,
paid or incurred by the taxpayer in connection with the per-
formance by him of services as an employee; .

(3) Reimbursed Expenses in Connection with Employment.
—The deductions allowed by § 58-81 (other than expenses of
travel, meals, and lodging while away from home) which con-
sist of expenses paid or incurred by the taxpayer, in connection
with the performance by him of services as an employee, undcr
a reimbursement or other expense allowance arrangement with
his employer;

(4) Deductions Attributable to Rents and Royalties.—The
deductions (other than those provided in paragraphs (1), (5), or
(6)) allowed by § 58-81 which are attributable to property held
for the production of rents or royalties ;

(5) Certain Deductions of Life Tenants and Income Bene-
ficiartes of Property.—The deductions (other than those pro-
vided in paragraph (1)) for depreciation and depletion, allowed
by § 08-81(1) and (j) to a life tenant of property or to an in-
come beneficiary of property held in trust ;

(6) Losses From Sales or Exchange of Property.—The de-
ductions (other than those provided in paragraph (1)) allowed
by § 58-81 as losses from the sale or exchange of property; and
(7) Dividend Deductions.—The deductions allowed by §
98-81(k) and (l).

§ 58-81. Deductions Allowed.—Taxpayers reporting income as
escribed by this chapter shall be allowed the following deduc-
ns:

(a) Expenses.—

(1) Trade or Business Erpenses.—

(A) In General.—All the ordinary and necessary expenses
paid or incurred during the taxable year in carrying on any
trade or business, including a reasonable allowance for salaries
or other compensation for personal services actually rendered
*; traveling expenses (including the entire amount expended
for meals and lodging) while. away from home in the pursuit
of a trade or business; and rentals or other payments requircd
to be made as a condition to the continued use or possession,
for purposes of the trade or business, of property to which the.
tarpayer has not taken or ts not taking title or in which he
has no equity.

(B) Corporate Charitable Contributions.—No deduction
shall be allowable under subparagraph (A) toa corporation for
any contribution or gift which would be allowable as a deduc-
tion under subsection (n) were it not for the 5 per centium
limitation therein contained and for the requirement therein
that payment be made within a specified time.

(2) Non-Trade or Non-Business Erpenses.—In the case of
in individual, all the ordinary and necessary erpenses paid or
neurred during the tarable year for the production or collection
yf income, or for the management, conservation, or maintcnance
yf property held for the production of income.

(b) Interest.—All interest paid or accrued within the taxable
Y on existing indebtedness, except on indebtedness incurred
continued to purchase or carry obligations or securities, the
erest from which is not or would not be taxable under this
pter.

(c) Taxes.—Taxes paid or accrued within the taxable year,
ept income taxes, inheritance taxes, and taxes assessed for
al benefits of a kind tending to increase the value of the prop-
y assessed.

(dq) Losses in trade or business.—Losses sustained during
taxable year and not compensated for by insurance or other-
e, if incurred in trade or business, the income from which is
ject to taxation in this State.

(e) Losses in other transactions entered into for profit.—
ses sustained during the taxable year and not compensated for
insurance or otherwise, if incurred in any transaction entered
o for profit, though not connected with the trade or business;
'in the case of a taxpayer other than a resident of the State
only such losses shall be deductible as relate to transactions in
real property or in tangible personal property having an actual
situs in this State.

(f) Losses from casualty or theft.—Losses sustained during
the taxable year of property not connected with the trade or busi-
ness (but in the case of a taxpayer other than a resident only of
real property or tangible personal property having an actual situs
in this State), if arising from fire, storms, shipwrecks or other
casualty or from theft and not compensated for by insurance or
otherwise.

(g) Bad debts.—Debts due the taxpayer and actually ascer-
tuined to be worthless and actually charged off within the taxable
year.

(h) Repairs.—The actual amount paid or incurred during
the taxable year for repairs to and maintenance of buildings and
machinery; provided that no deductions shall be made for any
repair which is chargeable to residence property occupied by its
owner, or for depreciation thereof, and the annual value of the
estimated rental thereof shall not be included in the income sub-
ject to taxation.

* * # # * #

(i) Depreciation * .—A reasonable allowance for the exhaus-
tion, wear and tear * (including a reasonable allowance for obso-
lescence )—

(1) of property used in the trade or business, or

(2) of property held for the production of income. In the
case of property held by one person for life with remainder to
another person the deduction shall be computed as if the life
tenant were the absolute owner of the property and shall be
allowed to the life tenant. In the case of property held in trust
the allowable deduction shall be apportioned between the income
beneficiaries and the trustee in accordance with the pertinent
provisions of the instrument creating the trust, or, in the absence
of such provisions, on the basis of the trust income allocable to
each.

(j) Depletion.—In the case of mines, oil and gas wells, other
natural deposits, and timber, a reasonable allowance for depletion
and for depreciation of improvements, according to the peculiar
conditions in each case; such reasonable allowance in all cases to
be made under rules and regulations to be prescribed by the De-
partment of Taxation. In any case in which it is ascertained as
a result of operations or of development work that the recoverable
units are greater or less than the prior estimate thereof, then such
prior estimate (but not the basis for depletion) shall be revised
and the allowance under this subsection for subsequent tarable
years shall be based upon such revised estimate. In the case of
leases the deductions shall be equitably apportioned between the
lessor and lessee. In the case of property held by one person for
life with remainder to another person, the deduction shall be com-
puted as tf the life tenant were the absolute owner of the property
and shall be allowed to the life tenant. In the case of property
held in trust the allowable deduction shall be apportioned between
the income benefictaries and the trustee in accordance with the
pertinent provisions of the instrument creating the trust, or, in the
absence of such provisions, on the basis of the trust tncome al-
locable to each.

(k) Dividends on banks stocks.—Dividends received during ©
the taxable year upon stock of national banks and dividends re-
ceived during the taxable year upon stock of banks and trust com-
panies organized under the laws of this State.

(1) Other dividends or portions thereof.—Dividends received
during the taxable year from stock in any corporation, the income
of which was assessable for the preceding year under the pro-
visions of the income tax laws of this State; provided that when
only a part of the income of any such corporation was so assess-
able, only a corresponding part of the dividends received there-
from shall be deductible.

(m) Charitable and Other Contributions.—In the case of an in-
dividual, contributions or gifts payment of which is made * within
the taxable year to or for the use of:

(1) The United States, any State, Territory, or any political
subdivision thereof or the District of Columbia, or any possession
of the United States, for exclusively public purposes ;

(2) * A corporation, trust, or community chest, fund, or
foundation, created or organiz ed in the United States or in any
possession thereof or under the law of the United States or of
any State or Territory or of any possession of the United States,
organized and operated exclusively for religious, charitable,
scientific, literary, or educational purposes, or for the prevention
of cruelty to children or animals, no part of the net earnings of
which inures to the benefit of any private shareholder or in-
dividual, and no substantial part of the activities of whtch 1s
carrying on propaganda, or otherwise attempting, to influence
legislation ;

(3) the special fund for vocational rehabilitation authorized
by section * 12 of the World War Veterans’ Act, 1924, 43 Stat.
611 (U. 8. C., Title 38, § 440);

(4) posts or organizations of war veterans, or auxiliary
units or societies of any such posts or organizations, if such
posts, organizations units, or societies are organized in the
United States or any of its possessions, and if no part of their
net earnings inures to the benefit of any private shareholder or
individual; or
(5) a domestic fraternal society, order or association, oper-

ating under the lodge system, but only if such contributions or
gifts are to be used exclusively for religious, charitable, scientific,
literary, or educational purposes, or for the prevention of cruelty
to children or animals;
) an amount which in all the above cases combined does not ex-
ed 15 per centum of the taxpayer’s * adjusted gross income *.
ach contributions or gifts shall be allowable as deductions only
verified under rules and regulations prescribed by the Depart
ent of Taxation.

(n) Charitable and Other Contributions by Corporations.—In
e case of a corporation, contributions or gifts payment of which
made within the taxable year to or for the use of:

(1) The United States, any State, Territory, or any polttical
subdivision thereof or the District of Columbia, or any possession
of the United States, for exclusively public purposes;

(2) A corporation, trust, or community chest, fund, or foun-
dation, created or organized in the United States or in any pos-
session thereof or under the law of the United States, or of any
State or Territory, or of the District of Columbia, or of any
possession of the United States, organized and operated eaclu-
sively for religious, charitable, scientific, veteran rehabilitation
service, literary, or educational purposes or for the prevention of
cruelty to children (but only if such contributions or gifts are
to be used within the United States or any of its possessions ex-
clusively for such purposes), no part of the net earnings of which
inures to the benefit of any private shareholder or individual,
and no substantial part of the activities of which is carrying on
propaganda, or otherwise attempting, to influence legislation; or

(3) Posts or organizations of war veterans, or auziliary
units of, or trusts or foundations for, any such posts or organiza-
tions, if such posts, organizations, units, trusts, or foundations
are organized in the United States or any of its possessions, and
if no part of their net earnings inure to the benefit of any private
shareholder or individual ;
an amount which does not exceed 5 per centum of the tarpayer’s
t income as computed without the benefits of this subsection.
ch contributions or gifts shall be allowable as deductions only
verified under rules and regulations prescribed by the Depart-
nt of Taxation.

In the case of a corporation reporting its net income on the ac-
sal basis, at the election of the taxpayer any contribution or gift
yment of which is made after the close of the tarable year and

or before the 15th day of the third month following the close of
oh year shall, for the purposes of this subsection, be considered
paid during such tarable year if, during such year, the board of
ectors authorized such contribution or gift. Such election shall
be made only at the time of the filing of the return for the taxable
year, and shall be signified in such manner as the Department of
Tazation shall by rules and regulations prescribe.

(o) Alimony, Etc., Payments.—In the case of a husband de-
scribed in § 58-78(c), amounts includible under § 58-78(c) in the
gross income of his wife, payment of which is made within the hus-
band’s tarable year. If the amount of any such payment is, under
§ 58-78 (c) or § 58-121.1, stated to be not includible in such husband's
gross income, no deduction shall be allowed with respect to such
payment under this subsection.

(p) Medical, Dental, Etc., Expenses.—Egrpenses paid during
the tarable year, not compensated for by insurance or otherwise,
for medical care of the tarpayer, his spouse, or a dependent speci-
fied in § 58-98(c), to the extent that such expenses exceed 5 per
centum of the adjusted gross income. The deduction shall not be
in ercess of $1,250 multiplied by the number of eremptions allowed
under § 58-98 for the tarable year (exclusive of exemptions allowed
under § 58-98/a)(2) or (3), with a marimum deduction of $2,500,
ercept that the maximum deduction shall be $5,000 in the case of a
joint return of husband and wife under § 58-105(b). The term
“medical care’, as used in this subsection, shall include amounts
paid for the diagnosis, cure, mitigation, treatment, or prevention
of disease, or for the purpose of affecting any structure or function
of the body (including amounts paid for accident or health in-
surance).

(q) Optional Standard Deduction for Individuals.—

(1) Allowance.—In the case of an individual, at his elec-
tion a standard deduction as follows:

(A) Adjusted Gross Income $5,000 or More.—If his ad-
justed gross income is $5,000 or more, the standard deduction
shall be $300 or an amount equal to 5 per centum of the
adjusted gross income, whichever is the lesser, ercept that in
the case of a separate return by a married individual, the
standard deduction shall be $250.00.

(B) Adjusted Gross Income Less Than $5,000.—If his ad-
justed gross income ts less than $5,000 the standard deduction
shall be an amount equal to 5 per centum of the adjusted
gross income.

(2) In Ineu of Certain Deductions and Credits.—The stand-
ard deduction shall be in liew of: (A) all deductions other than
those which under § 58-78(d) are to be subtracted from gross
income in computing adjusted gross income, and (B) all credits
with respect to taxes of other states.

(3) Method and Effect of Election.—

(A) The standard deduction shall be allowed only if the
tarpayer so elects in his return, and the Department of Tara-
tion shall by rules and regulations prescribe the manner of

signifying such election in the return.

(B) If the taxpayer does not signify, in the manner pro-
vided by subparagraph (A), his election to take the standard
deduction, it shall not be allowed. If he does so signify, such
election shall be irrevocable.

(4) Husband and Wife.—In the case of husband and wife,
the standard deduction shall not be allowed to either tf the net
income of one of the spouses is determined without regard to the
standard deduction.

(5) Short Period.—In the case of a taxable year of less than
twelve months on account of a change in the accounting period,
the standard deduction shall not be allowed.

(6) Determination of Status.—For the purposes of this sub.
section—

(A) the determination of whether an individual is married
shall be made as of the close of his tarable year, unless his
spouse dies during his taxable year, in which case such determi-
nation shall be made as of the time of such death; and

(B) an windividual legally separated from his spouse
under a decree of divorce or of separate maintenance shall not
be considered as married.

§ 58-82. Limitation on deductions of nonresidents.—In the
se of a taxpayer other than a resident of this State, * the
andard deduction provided in § 58-81 (q) shall not be allowed.
ich tarpayer shall be allowed the other deductions provided
_ § 58-87 only if, and to the extent that, they are connected
ith income arising from sources within this State and tax-
ye under this chapter to a nonresident taxpaver; and the
‘oper apportionment and allocation of the deductions with re-
ect to sources of income within and without this State shall be
‘termined under rules and regulations to be prescribed by the
epartment of Taxation.

§ 58-84. Specific instances of items not deductible—In com-
iting net income no deductions shall in any case be allowed in
spect of:

(1) Personal, living or family expenses (including premi-
ums paid on insurance policies), ercept extraordinary medical
expenses deductible under § 58-81 (p).

(2) Any amount paid out for new buildings or new ma-
chinery or for permanent improvements or betterments or for
any other capital outlay made to increase the value of any
property or estate.

(3) Any amount expended in restoring property or in
making good the exhaustion thereof for which an allowance is
or has been made.
(4) Premiums paid on any life insurance policy covering
the life of any officer or employee, or of any person financially
interested in any trade or business carried on by the taxpayer,
when the taxpayer is directly or indirectly a beneficiary under
such policy.

§ 58-98. Personal exemptions allowed individuals.—
(a) HEzemptions.—The following exemptions shall be allowed
to individuals reporting income as required by this chapter:

* # * * % *

(1) An exemption of $1000 for the taxpayer; and an addi-
tional eremption of $1000 for the spouse of the taxpayer if a
separate return is made by the taxpayer, and tf the spouse, for
the calendar year in which the taxable year of the taxpayer
begins, has no gross income and is not the dependent of another
taxpayer ;

(2) (A) An additional exemption of $600 for the taxpayer
if he has attained the age of 65 before the close of his tarable
year ; and

(B) An additional exemption of $600 for the spouse of the
tarpayer if a separate return is made by the taxpayer, and tf the
spouse has attained the age of 65 before the close of such tarable
year, and, for the calendar year in which the taxable year of the
tarpayer begins, has no gross income. and is not the dependent of
another taxpayer ;

(3) (A) An additional exemption of $600 for the tarpayer
tf he is blind at the close. of his tarable year; and

(B) An additional exemption of $600 for the spouse of the
tarpayer if a separate return is made by the tarpayer, and if
the spouse is blind and, for the calendar year in which the tar-
able year of the tarpayer begins, has no gross income and is not
the dependent of another tarpayer. For the purposes of this
subparagraph the determination of whether the spouse is blind
shall be made as of the close of the taxable year of the tarpayer,
unless the spouse dies during such tazrable year, in which case
such determination shall be made. as of the time of such death;

(C) For the purposes of this paragraph an individual is
blind only if either: his central visual acuity does not erceed
20/200 in the better eye with correcting lenses, or his visual
acuity is greater than 20/200 but is accompanied by a limitation
in the fields of vision such that the widest diameter of the visual
field subtends an angle no greater than 20 degrees;

(4) An exemption of $200 for each dependent whose. gross
income for the calendar year in which the tarable year of the
tarpayer begins is less than $500, ercept that (A) in the case of
an unmarried person uith one or more such dependents among
whom is a father, mother, son, daughter, sister or brother of the
tarpayer, an exemption of $1,000 shall be allowed for one such
dependent so related to the tarpayer and an exemption of $200
each shall be allowed for all other such dependents, and (B) the
cremption shall not be allowed in respect of a dependent who has
made a joint return with his spouse under § 58-105(b) for the
tarable year beginning in such calendar year.

(b) Determination of Status.—For the purposes of this sec-
on—

(1) the determination of whether an individual is married
shall be made as of the close of his tarable year, unless his
spouse dies during his taxable year, in which case such determt-
nation shall be made as of the time of such death; and

(2) an individual legally separated from his spouse under
a decree of divorce or of separate maintenance shall not be con-
sidered as married.

(c) Definition of Dependent.—As used in this chapter the term
lependent” means any of the following persons over half of whose
ipport, for the calendar year in which the tarable year of the
rpayer begins, was received from the tarpayer:

(1) a son or daughter of the tarpayer, or a descendant of
either,

2) a stepson or stepdaughter of the tarpayer,

(3) a brother, sister, stepbrother, or stepsister of the tur-
payer,

(4) the father or mother of the taxpayer, or an ancestor of
either,

(5) a stepfather or stepmother of the taxpayer,

(6) a son or daughter of'a brother or sister of the taxpayer,

(7) a brother or sister of the father or mother of the taz-
payer,

(8) a son-in-law, daughter-in-law, father-in-law, mother-in-
law, brother-in-law or sister-in-law of the taxpayer.

As used in this subsection, the terms brother and sister in-
clude a brother or sister by the half-blood. For the. purposes of
determining whether any of the foregoing relationships erist, a
legally adopted child of a person shall be considered a child of
such person by blood. The term “dependent” does not include
any individual who is a citizen or subject of a foreign country
unless such individual is a resident of the. United States or of a
country contiguous to the United States. A payment to a wife
which ig includible under § 58-78(c) or § 58-121.1 in the gross
income of such wife shall not be considered a payment by her
husband for the support of any dependent.

(d) Exemptions of Nonresidents.—When a taxpayer is taxable

a nonresident of this State the exemptions allowed under this *
ction shall be reduced to amounts which bear the same ratio to
e full exemptions provided for herein as the income returnable
under this chapter bears to the gross income of the taxpayer for
the entire taxable year.

§ 58-105. * Individual returns.

(a) Who must file * and where.—Every individual having for
the tarable year a gross income * of * $1000 or more * shall make
* a return stating specifically the items of his entire income and the
items which he claims as deductions and exemptions allowed by
this chapter.

Every resident individual who is required by this chapter to
file a return shall file his return with the commissioner of the
revenue for the county or city in which he resides and every non-
resident individual who is required by this chapter to file a return
shall file his return with the commissioner of the revenue for the
county or city in which all or a part of his income from sources
within this State was derived. If the individual is unable to make
his own return, the return shall be made by a duly authorized
agent.

(b) Husband and wtfe.—

(1) In General_—A husband and wife may make a single
return jointly. Such a return may be made even though one of
the spouses has neither gross income nor deductions. If a jotnt
return 1s made the tar shall be computed on the aggregate in-
come and the liability with respect to the tag shall be joint and
several.

(2) Nonresident.—No joint return may be made tf either
the husband or wife is a nonresident of this State.

(3) Different Tarable. Years.-—-No joint return shall be made
tf the husband and wife have different tarable years; except that
if such taxable years begin on the same day and end on different
days because of the death of either or of both, then the joint re-
turn may be made with respect to the tarable year of each. Fhe
above exception shall not apply tf the surviving spouse remarries
before the close of his tarable year, nor if the tarable year of
either spouse is a fractional part of a year under § 58-88.

(4) Joint Return After Death—In the case of the death of
one spouse or both spouses the joint return with respect to the
decedent may be made only by his executor or administrator;
except that in the case of the death of one spouse the joint re-
turn may be made by the surviving spouse with respect to both
himself and the decedent if (A) no return for the tazrable year
has been made by the decedent, (B) no executor or administra-
tor has been appointed, and (C) no executor or administrator
is appointed before the last day prescribed by law for filing the
return of the surviving spouse. If an executor or administrator
of the decedent is appointed after the making of the joint return
by the surviving spouse, the executor or administrator may dis-
affirm such joint return by making, within one year after the
last day prescribed by law for filing the return of the surviving
spouse, a separate return for the tarable year of the decedent
with respect to which the joint return was made, in which case
the return made by the survivor shall constitute his separate
return.

(5) Determination of Status.—For the purpose of this sec-
tion—

(A) the status as husband and wtfe of two individuals
having taxable years beginning on the same day shall be de-
termined—

(+) if both have the same taxable year—as of the close
of such year; and

(1) if one dies before the close of the tarable year of
the other—as of the time of such death; and

(B) an individual who is legally separated from his spouse
under a decree of divorce or of separate maintenance shall not
be considered as married.

§ 58-119. Fiduciary to make Return; Computation of Income;
Statement of Distributives Shares.—The fiduciary shall be respon-
sible for making the return of income for the estate or trust for
which he acts, whether such income be taxable to the estate or
trust or to the beneficiaries thereof. The net income of an estate
or trust shall be computed in the same manner and on the same
basis as provided in this chapter for individual taxpayers, except
that (a) lawful commissions paid to the fiduciary, bond premiums
paid and fees paid to commissioners of accounts shall be allowable
as deductions, * (b) there shall * be allowed as a deduction (in
lieu of the deduction for charitable, etc., contributions authorized
by § 58-81 (m)) any part of the gross income, without limitation,
which, pursuant to the terms of the will or deed creating the trust,
is during the taxable year paid * or permanently set aside for the
purposes and in the manner specified in * § 58-81 (m), or is to be
ised exclusively for religious, charitable, scientific, literary, or
»ducational purposes or for the prevention of cruelty to children or
:nimals, or for the establishment, acquisition, maintenance or oper-
ttion of a public cemetery not operated for profit, and (c) the
standard deduction provided in § 58-81 (q) shall not be allowed.

* In cases under paragraphs (4) and (5) of § 58-118 the
iduciary shall include in the return a statement of each benefi-
iary’s distributive share of such net income, whether or not dis-
ributed before the close of the taxable year for which the return
3 made.

§ 58-120. When Tax Imposed on Estate or Trust.—In the case
f income of the character described in paragraphs (1), (2) and (3)
f § 58-118, the tax shall be imposed upon the estate or trust with
espect to the net income of the estate or trust and shall be paid by
he fiduciary, except that in determining the net income of the
estate of any deceased person during the period of administration
or settlement there may be deducted the amount of any income
properly paid or credited to any legatee, heir or other beneficiary.
In such cases the estate or trust shall be allowed an exemption of
$1,000, and in such cases an estate or trust created by a person not
a resident and an estate of a person not a resident shall be subject
to tax only to the extent to which individuals other than residents
are liable under this chapter.

In the case of income of the character described in paragraphs
(4) and (5) of § 58-118, if the distribution of income is in the dis-
cretion of the fiduciary, either as to the beneficiaries to whom pay-
able or as to the amounts to which any beneficiary is entitled, the
tax shall be imposed upon the estate or trust in the manner pro-
vided in the preceding paragraph of this section, but without the
deduction of any amounts of income paid or credited to any such
beneficiary.

§ 58-121.1. Income of an Estate or Trust in case of Divorce, etc.

(a) Inclusion in Gross Income.—There shall be included in
the gross income of a wife who is divorced or legally separated
under a decree of divorce or of separate maintenance the amount
of the income of any trust which such wife is entitled to receive
and which, except for the provisions of this section, would be tn-
cludible in the gross income of her husband, and such amount shall
not, despite any other provision of this chapter, be includible in
the gross income of such husband. This subsection shall not apply
to that part of any such income of the trust which the terms of the
decree or trust instrument fiz, in terms of an amount of money ora
portion of such income, as a sum which is payable for the support
of minor children of such husband. In case such income is less than
the amount specified in the decree or instrument, for the purpose
of applying the preceding sentence, such income, to the ertent of
such sum payable for such support, shall be considered a payment
for such support.

(b) Wife Considered a Beneficiary.—For the purposes of com-
puting the net income of the estate or trust and the net income of
the wife described in § 58-78(c) or subsection (a) of this section,
such wife shall be considered as the beneficiary specified in this
article. A periodic payment under § 58-78(c) to any part of which
the provisions of this article are applicable shall be included in the
gross income of the beneficiary in the tarable year in which undcr
this article such part is required to be included.

§ 58-122. When Return of Fiduciary Required.—Every fidu-
clary (except * a receiver appointed by authority of law in possess-
sion of part only of the property of * an individual) shall make *
a return for any of the * following individuals, estates, or trusts

for which he acts—
& r yr &
(f7 very indiviaua narving @ gross income jor the tG@raule
year of $1000 or over;

(2) Every estate or trust the gross income of which for the
tarable year ig $1000 or over.
2. §§ 58-99 and 58-100 of the Code of 1950 are repealed.
3. This act shall be in force for the taxable year nineteen hun-
dred fifty, and for every taxable year thereafter until otherwise
provided by law.