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 30

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injuries or sickness, plus thi& aitoitt of any' damdges 'teceived
Swhsther by suit or agreement on account of such injuries or sickness;
I (7) Income derived-frbtbnyubloiitOty or the exercise of
any esential governmental function and seemring tq any State,
TF.it oi tie Distrie1 of Colinbia t an p
1hial subdiitson
a State o Terrt*i
income taiig oe
goerment of

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an
btio". of tel'ot Maintain a'

ggif(c) I te cas~e of nonreqident alien 1#rdividuals gross incopshe inacnoucs - .th'rssi 6h*r6i6
ti~es n ihd United States,
.
'ud'ingterest'on bonds; hi6te; or other iihteresti-eating obhig'ations of residents corprate or otherwise, dividends from reeidant
' (iatodd anid idlchuding~ all ott receivedd (altho~tgh paid
f6'iWct f6Ptiliale of r ds or otherwise) rdpresiting
oi 'udrn 'duSiti I
Iand''
b tio o
dswithii'th
bjecpeoed*

EO.

214. (a) Thatincomuting netinevme

there shall b

Ildbed'

SIXTY-FIFTH CONGRESS.

SB&s/II1. Oid 18# Y1919.1

1067

wholly exempt from'taxation under this title as income to the tax-, moxsAx.
payer, or;4!A the case of sa nonresident alien'individtial, the proportion
of.such'iterestrwhiceb the amount of his.gros incom&from.houfies
within the United States bbark to the andount of his gbose income from
all soi~rces withitr and withotit th@ United States;k-, ,:- , , ,*,* *.
'-(3),.Theepid 6i acdrued within thetaxbl' lybarimposed i(a),by Donmestlotaxes.
the authority -of, the Unit & States, except, income wariprofits and Exoeptions.
exces:4pr6fitstaxes,;or9) by the authority 'fo'any of its ipbsdesions,
except1the iamomunt bfmcome, WarOprofits and' excess-ptofita-taxes
allowed as s credit under section 222; or (s) by the authority of.any
Stteor Territory,or 6Ady county school district, munici Ality 'or
othdi taxing, subdivisloh of any tate .or Territory4 n ot iMeluding
thdee assessed agatist local benefits of a kind tending totinorease the
value of thepropert assessed; or (d) in the case of a citizen or resi- Forein taxes.
dent of the United States, by the authority of any foreign country, dent.
except the Ambint of income, war-profits and excess-profits taxes
allowed -as a credit unddr section 222; or (e) in the case of, anon...inonresident
resident alien individual, by-the authority of.anyforeign country
(except' income, - warprofith and excess-profits, taxes, and taxes
assessed against local benefits of.askind tending to increase the value
of the property assessed), upoii property orbusiness;,
(4) Losses sustained during the taxable .yearandnot compensated Bu ines ose.
for byrinsurance or otherwise,tif incurred in trade or business; . <,
not connete(
with business.
(5) Losses sustained during the taxable year and not compensated
for by insurance orotherwise) if incurred in any transaction entered
into for profit, though not-connected.with the trade or business; but
in -the case of a n6nresident alien individual only as to such transactions within the United States;,to
not
(6) Losses sustained during the table year.of property not con- Coc
b
netted with thb trade or business (but in the case of a nonresident
alien individual only property within the United States) if arising
from fie's, itorms)lalpwreek, or other casualtyj or from theft, and
if iot compensated for by insurance or. otherwise;
Worthless debts.
(7) Debts ascertgined to be worthless and charged off within the

tAxable year ;

.

Exhaustion of budi.

(8),A reasonable allowance -for the exhaustion,. wear and tear of ness property.
property used in-the trade or business, including a reasonable allowance for obsolesconoe;f ,1.'
1IAmortiation
of eost
(0) In the case'of buildings, machinery, equipment, or other facili- or pants, vessels, etc.,
ties, constructed,, erected, installed, or.acquired, on or after April 6,fa
1917,, for the production of articles contributing to the prosecution
of the present war and in the case ofbvessels constructed or acquired
on or after such date for the transportation of.articles or men cont
tributing to the prosecution of the present war, there shall beallowed
a keasonable deduction for the amortization of such part of the cost Limit
of subh.facilities-ot vessels as has been borne by the taxpayer, but
not again including. any amount otherwise allowed, under.this title
or previbus Aoth of Congress as a deduction in computing net'income.
At any time within three years after the termination of the present
a
war, the Commissioner may, and at the request of the taxpayer shall e
reexamine the return' and if he then finds as a result of an appraisal
or from other
that the
.evidence deduction originally allowed was
incorrect, .the taxes imposed by this title and by Title III for the
O
year oif years affected shall be redetermined; and the -amount~of tax p. .I~ O on .
due, upon.estch redetermination, if. any, shall be paid Upon notice
and demand bysthe collector,or the amount of tax overpaid, if any,
shall~be credited ori-efunded to the*taxpayer in accordancewith the ~ree,p. toes.
:..
..
provisions of section 252;
(10) In the case of mines, oil and gas wells, other natural deposits, no onu~ tas,
and timber, a reasonable allowance for depletion and for depreciation Alonce for deple*
of improvements, according to the peculiar conditions in each case, tion, depreciation, so.

1068)

SIXTYrFIFTH CONGRESS.

Sas. TIL On; 18. '1919.

based ,upoi cost

udinf cost of development not otherwise de.
, That in the 'case of such properties acquired prior
Marh1'?,Ss.
to March 1 '1918, the fair market value of the property or the taxpayer's 'interesttherein) on that date shall be.taken m liewof! cost
If dgoveed by taxup to that date: Prod
edfLrther, That-inthe caseof ibnes, oil and
3.
gas wellddaoveredbythetaxpayek,,jon or after Martch1,4913 and
nbt aQquired, as theresuilt of purchase 6f a proven tract or ,ease,
where the fAir. marketvalue of the property is-materially dispropor-.
tionate t the cost, the depletion allowance shall be based upon the
fair narlhet value of the <property at the date of the discovery, or
withint'thirty days thereafter; such reasonable allowance in all,the
above cases to be made under rules and regulations to be prescribed
INCOUS

A

. prior to ducted: j PrQt

uOs8Os.

by the Commissioner with, the approval 6f the Secretary.

In the

case of leases the deductiOns slowed by this paragraph shall be
Gt toequitablyapportioned
between the lessor and lessee;
,,ue
on,
(11) Fobtrbutions orgifts made within thd taxable year to borporations organized and operated exclusively for religious, charitable, soientifio or educational purposes, or for thetprevention of,
common.
cruelty to children or animals, no part of the net earmngs of :which
inuies to the benefit of any private stockholder or individual, or to
taioat
Iehbi
1the special fund for vocational rehabilitation authorized by section
Ante, p.619.
7 of the VocationalijRehabilitation Act, to an amount not in excess
of 15 per century of the taxpayer's ies income as computed without
the benefits of this paragraph. Such contributions or gifts shall be
allowable as: deductions onl if verified under rules and regulations
rescribed by the Commissioner,-with the approval of the Secretary.
Nonresident aliens.
the case of a nonresidentIalien individual this deduction shall be
allowed only as to contributions or gifts made to domestic corporauefietions, or to 'such vocational rehabilitation fund;
to
r
,n
(12) (a) At the time of filing return for the taxable year 1918 a
clbas ft.ale taxpayer may file a claim in abatement based on the fact that he has
In
191&
sustained a substantial loss (whether or not actually realized by sale
or other disposition) resulting from any material reduction (not due
to temporary fluctuation) of the value of the inventory for such
taxable year, or from the actual payment after the close of such
taxable year of sales made during
Bond reacrea.
suoh year upon rebates in pursuance of contracts entered into during
such year. In such case payment
of the amount of the tax covered by such claim shall not be required
until these claim 'is"' decided, but the taxpayer shall accompany his
olhn with a bond in' double the amount of the tax: covered by the
claim, with sureties. satisfactory to the Commissioner, conditioned
t of part diafor the payment of anypart of such tax found to be due, with interest.
au1t.
t
If any part.of such claun is disallowed then the remainder of the tax
due shall on notice And demand by the collector be-paid by the taxpayer with interest at'the rate of 1 per centum per month from the
du
tbd
tile thetax would have been due had no such claim been filed. If
it is shown to the satisfaction of the Commissione that such sub"
stantial loss has been sustained, then in computing the tax imposed
n by this title the' amount of such lose shall be deducted from the not
o cm Wed.Come.(b) If no such clain is filed, but it is shown to the satisfaction of the Commissioner that during the taxable year 1919 the
taxpayer has sustained a substantial Foss of -the character above
described then the amount of such loss shall be deducted from the
taxable year 1918 and
credfit'e4c.p therfr,. netincome for the shall be redetermined the tax Inposed bythis
title for such year
accordingly. Any amount
found to be due to the taxpayer upon the basis of suish redeterinina'
t i shall be credited' or rounded to' the taxpayer -in accordance
with the provisions of section 252.

1069

.SIXTY.FIFTH CONGRESS.8884.: 111 iOt. e1919.
(b) In, the case of a nonresident alien individual the. deductions
allowed :in'i p'aragraphs (1), (4), '(7), (8),', (9), (10), and '(12) and

n==

cue (e) of patah(3)i of sibdivmsion (a) shall.be allowed onlys
i( anid~to the extshtthat they're connected with Income arising from
a borce within'the United states; and thb proper apportionment and Apportonment.
allbtation of the deductions with respect to sourced of income within
tid without the United Sta'tes shalf be determined, under fues and
reglt~if' prescribed by the Commissioner with the approval,, of
the Secretary.
ITEMS NOT DEDUOTIBLE.

,IItenotdductibl.

SEo. 215. That in computing net income no deduction shall in any Objctspclied.
., exo
'
'
case 'e allowed in, respect of-.
(a)Personal, living, or family expenses; .improve.
(b) Any amount paid out for new. buildings or for permanent mew..
improvements or betterments made to increase the value of any
. gorng exhausted
oin
property or estate;r')t
() Any--amount-expended in restoring property or in aaogProper.
goo the exhaustion thereof for which an allowance is or has been
made; or

I..I

(d) Presidums paid on any life insurance policy covering the
of any officer or employee, or of any person financially nterestein
any trade or business carried on by the taxpayer, when the taxpayer
is directly or indirectly a beneficiary tmder such policy.
.:
CREDITS ALLOWED.

uMe Insurano for
aFwe " taxpayer

Credits atlowed.

.

Objects specified.

216. That for the purpose of the normal tax only there'shall
corporation
p
be allowed the following credits:
(A) The amount received as' dividends from a; corporation which is;Andsd.
taxable under this title upon its net income, and amounits received
as dividends from a peregnal service corporation out of earning or
profits upon which income'tax has keen umphsed by Act of Copess;IntestonFedea
the
(b) iehe amountt received as Inteikest upon ollgatiops, of * securities, eto.
Corporation,
Od6
United States and, bonds issued by -the War 'itii
o
whiphis i4cludpd in grqssIncomeuder'sectio 213;
e
a single person, a ers6naleemption of $1,000,
(c) In the case of
SE0.

or a the owe of'the head of a fmy or a married person livig with
lush

bof
d or wife, a personal eoebti6Z

Mt

for husband

v'and and w .
$2,00o. A husband

wife living together 'shall receive 1tiv one personal -exfinption of
42,000 agamet their agregate net hcome* axd' in case they make
separate returns the personal exemption 'o $2,000 inay be taken by
rd
either or divided between them.Aon
'(d) $200 for each person (other than husband or wife) dependent efrents.
upon and receiving is chief support from the taxpayer,' if 'such
dependent person is under eighteen years of age' o2 ineaphble of
-support because mentally or'ph cally de ive
an individual ho is a citizen Personal exemptious
nonresid
(e)
ndht'
oritry which impoes ati income tax, the credits ratited.
o'r subi eot of a
allowed in subdivisions (c) and '() shall be'allowed 6nl' if sioh
country allows' a similar credit to citizens of the United States not
Residing in such couptry.
NONRESIDENT

ALIENS-ALLOWANoE

OF

DEDUCTIONS-AND

CREDITS.

NonreskeIteensw'.

217 That a nonresident alien individual shall receive the sea'A
-benefit of the deductions and credits allowed in this title only by tbons.
filing or, causing "to be filed with the collector a true and securate
return of his total income received from all sources corporate or
otherwise in the United States, in the manner prescribed by this
t4tle, including therein all the information which the Commissioner
'SE.

meno.