State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 22

166
la'dFU 11 Un--OJOtln·

SIXTY-THIRD CONGRESS.

Sl:SS. I.

CH. 16.

1913.

tion or to any State or municipal corporation or incorporated religious

soci~ty1 college. or other public institution~~cluiling stainea or

·

paintee1 window glass or stamed or painted g

- windon."'S imported

to be used in h<-US8::1 of worship and e..-,;cluding &ny article. in whole
()r in part, molded, cast, or mechanically wrought from meta.I within
twenty years prior to importa.ti~n; but such exemption shall be subject to such regulations as the Secretary of the Treasury may proscribe.
~0t~~v~·d."i:I:.·
656. Work~ of art (except rugs and carpets), collections in illustration of the progress of the arts, works in bronze, marble, term
ootta, parian, potterv, or porcelain, artistic antiquities, and objects
of art of ornamental wcharacter or educational value which shall have
been produced more than one hundred years prior to the date of
importation, but the free importation or such objects shall be subject to such regulation::; as to proof of antiquity as the Secret.ary of
the Treasury may prescribe.
Zd~.
657. Zaffer.
bcmu:. T11.:i:.
SECTIOS II.

A. Subdi~ision 1. That there shnll be leTI.ed, as..~d. colleC'ted
and paid annually upon the entire net income ari:ilng or n.ccruing
from all souoces in the proce<ilng calendar vea.r to every citizen o:: t.h.s
Allen n!'.:lfdents.
United States, whether residing at homo
abroad, and to f'•-ery person residing in the United States, though not a citizen thereofz a :..iu:
cf l ~r centum ~r annum UP.-OU such income, except as hereinafter
N~1.:tecu.
pro",ded; and a like tux shall be assessed, levied, collected, e.nd P.o.id
annually upon the entire net income from all .Propertl owned and of
eo;ery busin&>S, trade, or profession carried on m the United States by
persoM residing elsewhere.
M<llti~I tax on
Subtlh+,;ion 2. In addition to the in('orno ta..""t provided under this
:O~.rii~
e.scee<itng soction (herein referred to as tho nonnal income ta...~) there shall ha
levied,. a.ss<issed, and collected upon the net income of e~ery indhidu.al
11z1.-.
a.n ndditionlll income ta.."11: (he.rem refetto<l to as the additional tax) o[
1 per centum. por annum upon the amount by ""·hich the total net incomo exceeds $20,000 and does not o.~ceed $50,000, and 2 per ('entum
per annum upon the a.mount by which the total net income e."'<ceeds
$50,000 and docs nflt e.."'tceed $75,000, 3 per centum per nnnum upon
the amount by which the total net income e~e~ $75,000 nnd does
Dot e..""t-cced $Hl0,000, 4 per c.-enttun per annum upon the amocnt bv
which the total net income e..""'t.-ceed.S SI 00,000 and does not e_~ceed
$250,000, 5 per centum per annum upon tha a.mount by which the total
net income ex.coods $'250,000 and does not e.-,;:ceed $500,000, and 6 per
centum per annum up~n the amount by which tha tot:il net income
e..."i:ceeds $500,000. ~.\.ll the promions of this section re-la.ting to indiriduals who are to bec~ble with the nonnfll in<'"nm~ ta.~. so far
as they are applicable and a.re not inconsistent \\.ith this subJh-i.sion of
parngruph A, shall apply to the Je,-y, 8.Sde$8ment, and colh".-tion. of the
P£'rS;JME rtturtl$ tC) addition:i.1 la..~ imposed under this section.
Every person subject to
be m::t<!<>
this additior:ial ta.~ shall,. for the purpose of its asse»ment ll.Ild CQllection,. make n persons.I return of liis total net income from all sources
corporate or cthe.n"-1.set for the prece<ling calendarve.a.r, under rules and
rc-.gnlations to be prescribed hY' the Commissioner~of Internal Revenue
Tnd1'" 7•.1'1J ~ha:'<! ("f and Approved bv the Socreta.ry of tile Tre.a:;ur:y.
For the purpose of
~!:;~';!:':1:1.'"f..;'":i~~~ thls additional.
the ta."'lta.ble income of an•- imlividua.l shall embrace
the share to which he \\"ould be entitled ot tb.e gains nnd pro.fits, if
<livide<l or distributed, whether dhided o:r &stribut~ or not, of all
corporations,joint-stockcom_panies,orassociationsho't.m-ercteatedor
orgo.nizcd, formed or fo.m<lulently availed of fo:r the p1 .pose of E.r&"\'"ttnting the imposition of su.c:-h tax through the modium of permitting
such gains and profits ro accumulate instead of~ divided or ms:.
tributecl; o.nd the fact th.at sny such coxporation, 3oi.nt-st.ock comOne per ""m 1i'·11
0
:!e1. m~mcs
d• •

or

1

tax

SIXTY-THIRD CONGRESS.

S&SS.. I.

CH. 16.

167

1913.

pany7 or n.ssodati?n1 is a. mere holding company, or that the gains a.nd 1 ~~~o 111 K ""'I.......Qm..
profits are permittea t-0 accumulate beyond the ren.s0nable needs o! the
businltiS shall be prima facie evidence of a. fraudulent p~o:se to escape .
su.ch tax; but the fact that the gs.ins and. profits are in any case per- ( or;,!l~icn..
nutted to accumulu.te and become Slll'{>lus ~hall not ha construed t!5
ie...idence of a purpose to esc-Upe the sru.d ta..~ in =-uch case unless the
~et~ of the Trea.surv shall certify that in his opinion such a.ccumu.
lahon IS unreasonable lor the p11i"hoses of the business· When re- aJuc«i b' eu1ur~
:.i.,,te"'1e.n• ' 0 t..- l'n?I. •
-r
guested by the Comm1ss1oner of Internal Reven:.te, or v.nv district col·
lector of internal re~enue, such corporation, joint-stock-compa.nv, or
association shall forward to him a correct statement of such profits
and the names of the indinduals who would be entitled to the same if
distribut.ed.
B.._ That, subject only to ~ch exemptions and deductions as are 1.n£>:.;~~LDatJan.:>toe&
heteIDa.fter allowed, the Det mcome of a ta..."'t:able person shall include
gain;;, profits, and income derived from salaries, w~es, or compensation for personal service of whate\""er kind and in whateYer fonn pa.id,
or from professions, vocations, businessesr tra.de, commerce, or sales, or
dealings in property, whether ren.l or personal, growing out of the
ownership or use of or interest in real or personal propert"\"', al.90 from
interest, rent, dividends 7 securities, 'Or tlie transaction of any lawful
business carried on for gain or pro£t, or gains or profits and income
derh·cd from '.lny source whatever, indudilg the income from but not
the Yalue 01
roperty acquired bv ~ftt bequest, de"rise, or descent: Pr<Jf:Uti
Pror·v.ha, Tui{1 the proceeds of life lD.Sl.trnnce policies paid upon the I.lie mi~~
death of the

pel'Sl."lil

insured or pa.vnients ma.de hv or credited to the

in~u.red, on lifo insure.nee, endowment, -or :annuitv"contracts, upon the

des, "r"-· ""'""P

•

return theroof to the insured at the matluity of the term mentiuned in
contract, or upon surrender of contract, shall not be included
as mcome.
Tb ut · compuunq net ·
·
_
m
mcomc. f or t h <: purposu o ( t b c normn.11 tnx Dt:·.1tii!Uon!ln.l!o.-od.
Hll"lnc·~ \!:&:. 'n5E'B,
tht're sbtt.ll be allowed as deductions: First, the ni;>C~·s.<>ury (':Xpc-n'9e.~ lni1·•'"'51 oc febu1,
nctually rrud_in carrying OTl ruty busi;t-css, !JOt ~clu~in~ PN~ono.l, h>S!!'·!!.~tc.
l1vmg, -or family expl'nscs; second, all mtc-.r~t, :ps1d within the year
l1y a t1Lxob1o person on indebtedness; third, all nationnl 1 Stat£', county,
sclwol, and muuicipa.l taxes paid '\\·itbin tho year, not mclucUng those
D..~c:;sed ~run.qt locai benefits; fourth, losses actu . ..Jy sustained during
the "t"ear, tnc\JJTCd in tnLde or arising from fires, stoI'Ill9, or 8hipwreek.,
and· not cotnpenss.t(o'd for by insurance or otherwise; fifth, debts due
to the ta."1C:psyer actually ascertained to be worthless and charged o!T
within tdhe ye&r;f si.""Ctb. s. re~rui.ble a.llof~a.."l.ce for the c:x.haustio!J.. Jit~;..~;~ 0 r11t1on al
""ear :an tear o property m'lS!-fig out o its use or emp1oyment 10
th~

the business, not to exceed, in the ca.-;e of mines, 5 per centum of the
gross value at the mine of the output for tho year for which the computation is made l but no deducrivn shall be made for any amount of
e.xpense of rcstonng property or making good tbo exhuustion th('reof
for which an allowance is CJ& h~ ..c; hf."en mu.de: P'l"ot.oided, That no ~~~~~nis. &~
de<luction. shall be allo·wed for n.nv amount po.id out for new build- IQ;e~p:t'd
i~, permanent impro.,.enients, or-betterments, made to incrpa.....coe tho
.
"Ii
·
D1vldenl!.!fl'otna:>mvruue o f any property or estate; seventh , t h a :amount receive d fLS pan!M 1.ax....i = nu
dindends upon the stock or from the net earnings of any corpora- caminp_
tion. joint stock compan.Y, association, or insunmc.e company which
is ta..··u~b]e upon its net meoro.::i as hereinafter pr:J~ded; eighth. the ~~~~~':i.g :~
~mount of income, the ta."t upon which has ht ·1 paid or withheld for BCJurce.
payment at tho ~urce of the income, undn?- ~he previsions -0f thi3 F.x~pu-..
~tion. provided that whenever the tax upon the income of a person
is r"{>quired to be withheld and paid at di~ SOUT<'.e as hc.reinu.f ter required, if such annual income dm-s not exceed the sum of $:1,000 or
is not fi.""ted or certain, or i~ indt>finite4 or irregular as to amount or
time cf accrutl!. the surue shall not be aeduetcd in the persoual return
of such pe~on.

168

SIXTY-THIRD COXGRESS.

SESs. I.

Cn. HJ.

1913.

Th(1 net incomo irom property owned and business carried on in
the Cnited Stv.tes by pC'rsons residing elsewhere shall be computed
upon tho basis prcscribC"d in this }"Jtuagmph and that pert of pnmgraph G of this section reln.ting to the computation or tlie net income
of corpora.~ions, joint-stock unrl insurance compo.nies, organized,
cr<.'o.t<'d, or existing under tho laws of foreign countries, in so far u.s
applicable.
113
Eicclasta •
That in computinir net incomo under this section t.hcre shn.11 he
l.DlelWlt on fUILt<' Of
"
•
•
Fodernl ohllgaHon:i.
excl U(l c d t b e • terest upon t h o o bl'ign.Oons o f n. s ta.to or n.ny poli ti ca}
m
subdivision tlwreof, and upon the obligations of the l:nited St.at.es
~sJJ.,nPhnins his or its possl'ssions; nlso tho compl'nsation of tho present President or
tho l'nitrd States during the t<·rm for whjch lio has been elcctl'd,
J\ldlciat
omclJ119. a.ii.I Sll\HI and of tbe J·udgC"s of the suCir<.•mo and infrrior courts of tho United
Stntes now in office, n.n<l 1 o compC'nsu.tion of nil officers and emp1oyces of a Stute or n.ny politic1\l subdiYision th(•r<'of except when
such compC'nsation is pa.id by thn l 'nited Stn.tc-s Government.
D<><:h1cttonor1:1.ooo.
C'. Th1Lt thC"r(' shall he deducted from the amount of 1he net income
of C'ach of snid p(•rsuns, n.-.cprtnin<'d as prm-i<led herein, the sum of
l.(lOO
the
°"Addltlo.i..i ror "'"" $J,OOO, plus $with a ad<litionni ifwith hl'rson makin~ othe return be a
l:ms1:>11nJ.
married mftn
wife li Ying
im, or p 1ug t
sum of$! ,000
additiono.I jf the person making the :return be a married woman with
a husbancl living with her; but in no event shall this ndditjoual
C'St'mption of Sl,000 be deducted by both a. husband n.nd a wife:
Pr1wuo.
Llroltatlon.
Provided, That only one deduction of $4,000 shall be made from the
agg-re~n.to income c;Jf both hushand and wife when living toFO'cthcr.
en~~~f~~uun rur <-.u.
D. The. sai<l tnx shall be computed upon the remainder o said net
incomo of each person suhj<'ct thereto, accruing during each prcccd~~~1;1~f~:rromMM''h ing calendar year cndi!lg December. thirty-first: Pr:<n:ided, li.fJWevcr1
J to IJcoembt;r :11.
Tlin.t for the yt'ar t'ndm~ Dl~cernber thirty-first, mne-t<>en hundred
nnd thirtcC'n, !'-aid tn.x shall be computc-d on thi" net ineomo nccruin~
from )larch fi.rut to December thirtv-first, nineteen hundred anu
n
t
• .....
d thirteen, both <la.tcs inclusive, aftl'r-clt>ducting fiv~-si..xths only of
"" urns ,o "" mn e
"fi
•
.
.
"d
0 n or
bv i;.;rS()n' having t h e spect c <"X<>npt10ns nn d (I e <l uct10ns h ere1n prov1 <' d f or.
000
over • ·
beforo the first day of March, nineteen hundred and fourteen, an<l
the first <lny of .March in each yenr thereafter, a true nnd nccurate
return, i.md('r oath or a.ffinne.tion, shall be made by ea.ch pPrson of
]o.wfol age, E.'XCept an hereinafter pro\·idcd, subject to t.he tnx imposed
},y this section, nnd having n. net income of 83,000 or O\"('t for the
taxnhle :ren.r, to the collector of intemnl reve>nue for the district in
which st1<:h pC'rson r<-'s.ides or hn.s his principu.l place of business, or,
in tho case of n. person re>si<ling in a. foreign country, in the pin.cc
Farm.
where hii' principn.J bu::;inf'ss is carried on within the l'nit~d States,
in such form M tho Commissioner of Intcrnnl Rc•enm•, with the
approval of the Secr'i"tll.ry of the Treasury, shl\ll prescribe, setting
fr·rth i-:pccificaliy 1hc gross amount of income from n!l s('pr..rate sources
nnd from tht~ toto.1 thereof, deductinrr the aP-QTegntc items or expenses
Oue..rdl(YlS trustt·~·>.
•
·
eic.
·
an<l fl. ]] owanc~ ,_
....i:C're1n a uth onzf" d ;~gua.rd'I"-·
tans, tn.istN•s, executors,
ttdministrntors, agc>nts, l"l'C('h·e·s, cr,nscrva.tors, and all p£>rsons 1
<"orpornt.ions, or associations n.ctbg in. nny fic-lucinry capo.city, shall
m11.ke n.n<l :render .a. return of th(.~ n<'t in< omc (1f the p('rson for whom
th<'Y net, subject to this tfl.XJ coming ; lto th~ir custody or control
nnd mann.g('ntent, and be subject to a .I the provisions of this sec7otntguimlfons.<t~ tion which rpply to i•.i<lividun.ls: ProvaPd, Tho.t n r{'turn made by
one of two or more joint guardians, tn1stecs, executors, administrators, a~ents, receivers, and conservators, or at.her persons acting
in a fiduciary capacity, fi]ed in the dis.rlct where such person resides,
or in the district where the will or ot bf!'r instrument under which he
acts is recorded, under such rt"guJq,tions o.s the Secretary of the
Treasury ma.y rrcscribe, shall be fl. sufficient compliance with the
requirements o lhis paragraph; a·.id e.lso all persons, firms, com·
Illcollll11t

Un~~i:ne

ux-Cuo.-

or DOO.f~si·
dents compute<!.
Po.t, P· m.