Page:United States Statutes at Large Volume 49 Part 1.djvu/1702

 74 TH C ONGRESS. SESS. II. CH. 690. JUN E 22, 1936. 16 57 (g) IMP ROP ER ACCUMULATION OF SURPLUS .-For surtax on cor- porations which accumulate surplus to avoid surtax on stockholders, see section 102. Improper ac cumula- tion of surplus. Post, p. 1676 . P art II-Computation of Net Income Com put ati on of net income. SEC. 21. NET INCO ME. Net income. "Net income" means the gross income computed under section 22, Defi nitio n. less the deductions allowed by section 23. SEC. 22. GROSS INCOME. Gross income . (a) GE NE RAL DEFINITION.-"Gross income" includes gains, profits, Gene ral d efini tion. and income derived from salaries, wages, or compensation for per- sonal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or deal- ings in property, whether real or personal, growing out of the own- ership or use of or interest in such property ; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. In the case of Presidents of the United States Compensation of and judges of courts of the United States taking office after June States judges. United 6, 1932, the compensation received as such shall be included in gross income ; and all Acts fixing the compensation of such Presidents and judges are hereby amended accordingly. (b) EXCLUSIONS FROM GROSS INCOME.-The following items shall Items exemp t. not be included in gross income and shall be exempt from taxation under this title (1) LIFE INSURANCE .-Amounts received under a life insurance Life insurance. contract paid by reason of the death of the insured, whether in a single sum or otherwise (but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest pay ments sha ll be incl uded in g ross inco me) ; (2) ANNUITIES, ETC.-Amounts received (other than amounts Annuities, etc. paid by reason of the death of the insured and interest payments on such amounts and other than amounts received as annuities) under a life insurance or endowment contract, but if such amounts (when added to amounts received before the taxable year under such contract) exceed the aggregate premiums or consideration paid (whether or not paid during th e taxable year) then the excess shall be included in gross income. Amounts received as an Portion to be in . annuity under an annuity or endowment contract shall be included cluded in gross income. in gross income ; except that there shall be excluded from gross income the excess of the amount received in the taxable year over an amount equal to3 per centum of the aggregate premiums or consideration paid for such annuity (whether or not paid dur- ing such year), until the aggregate amount excluded from gross income under this title or prior income tax laws in respect of such annui ty equals the aggre gate prem iums or c onsiderat ion paid for such annuity. In the case of a transfer for a valuable considera- Transfers for value . tion, by assignment or otherwise, of a life insurance, endowment, or annuity contract, or any interest therein, only the actual value of such consideration and the amount of the premiums and other sums subsequently paid by the transferee shall be exempt from taxation under paragraph (1) or this paragraph ; (3) GIFTS, BEQUESTS, AND DEVISES .-The va lue of property Gif ts, b eques ts,et o, acquired by gift, bequest, devise, or inheritance (but the income from such property shall be included in gross income) ; (4) TAX-FREE INTEREST .--Interest upon (A) the obligations of Tax-free interest. a State, Territory, or any political subdivision thereof, or the State, etc ., bonds.