Table	Pate
No.	No.
1	lA
2	19
3	25

5	35
10	70
11	73
13	75
14	76

GUIDE TO TABLES BY SUBJECT

Industry measurement:

Minor industry receipts, costs, net income, taxes, dividends

Major industry income statements

Major industry balance sheet and related income statements

Major industry asset size distribution, selected balance sheet and income statement

items

Major industry sales and receipts from operations, net income, total assets, by month

accounting period ended 7 62

Industrial division income size distribution, net income, tax, dividends 10 70

Asset size and income size distributions:

Balance sheets and related income statements, by size of total assets 4 33

Major industry selected balance sheet and income statement items, by size of total

assets

Industrial division net income, tax, dividends, by size of net income or deficit

Type of tax liability, by size of net income

Dividend and selected interest receipts, by size of net income or deficit

Type of dividends paid by size of net income or deficit

Payments on declarations of estimated tax, net income, tax, foreign tax credit, by size of net income , by accounting period 12 74

Dividends summary:

Dividend receipts by size of net income or deficit 13 75

Type of dividends paid by size of net income or deficit 14 76

Accounting periods:

Net income or deficit, and tax, by month in which accounting period ended 6 61

Major industry sales and receipts from operations, net income, total assets, by month

in which accounting period ended

Calendar and noncalendar periods related to size of total assets

Calendar and noncalendar periods related to size of net income or deficit

Returns with net income 15-18 77-99

Consolidated returns:

Industrial division, balance sheets and related income statements 19,21 100, 103

Asset size distribution, balance sheets and related income statements 20,22 101, 104

Foreign tax credit claimed, net income, foreign income, taxes 23-25 106, 107

Western Hemisphere trade corporation deduction, net income, foreign income, taxes, foreign

tax credit 26-28 108-112

Personal holding company income, undistributed income, tax, total assets 29-33 113, 114

Frequency of item entries on tax returns:

Major industry receipts of dividends, rents, royalties 34 115

Ma jor industry deductions for depreciation, amortization 35 116

Historical data:

Number of returns , 1947-48 through 1956-57 36 120

Receipts, net income, taxes, dividends, 1947-48 through 1956-57 37 120

Major industry specified current assets and liabilities, investments, total assets, net

worth, and related receipts, 1948-49 through 1956-57 38 121

Asset size distribution, returns, total compiled receipts, total assets, 1947-48 through

1956-57 39 131

7	62
8	69
9	69

CORPORATION INCOME TAX RETURNS WITH ACCOUNTING PERIODS ENDED JULY 1956-JUNE 1957

Every corporation, unless expressly exempt, must file an income tax return regardless of the amount of its income. This report provides summary finan- cial statistics derived from a sample of all corpo- ration income tax returns filed with accounting periods ended July 1956 through June 1957. There were 925 thousand such returns filed, of which nearly 886 thousand were for active corporations.

These statistics were compiled from returns as filed by the taxpayer. The provisions of the 195<+ Internal Revenue Code under which corporation re- turns were filed were substantially the same as those in effect during the preceding year.

COMPARISON WITH PRECEDING REPORT PERIOD

Gross sales and receipts from operations tabulated for this report amounted to nearly $647 billion, an increase of $3'+ billion over the preceding report period. Costs, however, rose relative to gross sales and receipts with the result that the net income of $46.9 billion was slightly lower in this period. Table A summarizes these developments.

Oiort l.-CORPaUTrOH INCOME

	OROSS StUS INO RECEIPTS	NET IMCOIE IS PERCEKT OF
	FHOII OPERtTIONS	GROSS SUES INO RECEIPTS
gnu 400"	ni of doU.r.	FRON OPERiriONS Percent 10

200- 100-

tlNOFICTORING COIPOtlTIONS

igSl-S7 I9S9-9I

IHI-t; ll99-9(

nioni of dolUi

400"

300- 200-

Porcont

10 —

NONIIINUFICTOIIINC CORPORITIONS

Tabic A.— ACTIVE CORPORXTION RETURNS: RECEIPTS, DEDUCTIONS, TAX, AND PROFITS

	Accounting periods ended—
Item	July 1956- June 1957	July June	1955- 1956
	fSi/lioi,	doilara>
	646.7 33.2		612.7
	29.6
	679.9		642.2

	473.3 159.2		448.6
	145.7

	632.5		594.3

	47.4 21.4		47.9
	21.7

	26.0		26.2

Reported tax liability also declined somewhat, dropping from $21.7 billion to $21.4 billion. The declines in net income and tax were principally in manufacturing and only partially offset by increases in nonmanuf acturing sectors. Brief summary compari- sons are given in table B and chart 1.

About 94 percent of all active corporation re- turns, including almost all returns of large corpo- rations, show balance sheet data. The value of total assets reported for these corporations (table C) was $949 billion, an increase of $60 billion over the preceding report period. Tables 3 and 16 of this report provide balance sheet and related income statement data by industry group.

NEW FREQUENCY DATA

Information about the frequency with which certain receipts and deductions are reported on tax returns is contained in this volume of Statistics of Income. Table 34 shows the number and percentage of returns in each industry which have receipts from dividends, rents, and royalties. Table 35 provides similar inf oimation about returns with deductions for depre- ciation and amortization.

Table B.— CORPORA HON RETURNS: NUMBER, NET INCOME OR DEFICIT, AND TAX

	Accounting periods ended —	Increase or decrease (-)
Item	July 1956- June 1957	July 1955- June 1956	Number or amount	Percent
	(1)	(2)	(3)	(4)
	924,961 885,747 39,214 559,710 50,184,217 489, %6 21,364,290 326,037 3,299,305	842,125 807,303 34,822 513,270 50,328,887 451,406 21,740,890 294,033 2,850,616	82,836 78,444 4,392 46,440 -144,670 38,560 -376,600 32,004 448,689	9.8
	9.7
	12.6
Active corporations: Returns with net income:	9.0
Net Income thousand dollars.. Income tax:	-0.3 8.5
Aniount thousand dollars . . Returns irithout net Income:	-1.7 10.9
	15.7

^Returns with net income but with no tax liability occur as a result of special statutory deductions from net income. The tax liability tabulated Is before foreign tax credit.

CORPORATION INCOME TAX RETURNS, JULY 1956 -JUNE 1957

TshleC— RETURNS WITH BVLVNCE SHEETS- TOTAL VSSETS, TOTAL COMPILED RECEIPTS, AND NET INCOME OR DEFICIT, BY SIZE OF TOTAL ASSETS, JULY 1956 ■ JUNE 1957

Size of total assets	Number of returns	Total assets (Thauaand dollara)	Total compiled receipts (Thouaand dollara)	Net income or deficit doltara)
	(1)	(2)	(3)	(4)
Total	827,916	948,951,108	673,492,895	46,659,411

Under $25,000 $25,000 vmder $50,000 $50,000 under $100,000 $100,000 under $250,000 $250,000 under $500,000 $500,000 under $1,000,000 $1,000,000 under $2,500,000 $2,500,000 under $5,000,000 $5,000,000 under $10,000,000 $10,000,000 under $25,000,000 $25,000,000 under $50,000,000 $50,000,000 under $100,000,000 $100,000,000 under $250,000,000 $250,000,000 or more	202,925 129,760 150,165 171,122 76,929 41,336 27,703 12,158 7,295 4,774 1,773 896 627 453	2,241,663 4,678,935 10,733,548 27,157,a2 26,752,743 28,774,775 43,236,568 42,647,358 51,199,894 73,851,861 61,034,745 62,303,942 96,406,244 417,931,620	7,328,601 10,709,095 22,472,911 53,507,241 50,180,784 48,809,687 57,899,311 39,848,994 38,048,767 49,899,050 33,532,596 36,598,253 55,215,750 169,441,855	'114,822 125,324 416,088 1,282,470 1,361,381 1,592,172 2,563,490 2,136,241 2,305,330 3,796,288 2,794,812 3,387,818 4,886,190 20,126,629
'Deficit.

DESCRIPTION OF THE SAMPLE AND LIMITATIONS OF DATA

The statistics in this report reflect the activ- ities of all corporations filing returns with accounting periods ended July 1956 through June 1957. The total number of such returns was estimated to be 925 thousand. This figure includes returns filed on Forms 1120, 1120L (life insurance), and 1120M (mutual insurance). It includes about 39 thousand returns for inactive coi^orations, although no analysis was made of these returns.

The estimate of the total number of corporation returns with accounting periods ended July 1956 through June 1957 allows for delinquent filing of income tax returns pertaining to these fiscal peri- ods. Since allowance for returns to be filed in the future was not made in the past tabulations, this difference in procedure accounts for a small part of the increase in the total number of returns filed.

The total number of returns does not include ten- tative returns and amended returns not associated with original returns. It does not include returns of tax exempt organizations filing returns in the 990 series. It does not include unincorporated businesses filing on Form 1120, which were estimated to number about 200.

The sample.— The sample was characterized by strat- ification, optimum allocation, and the use of pre- scribed serial number endings to designate returns included in the sample. The returns were stratified by type of return, by volume of business, by taxable and nontaxable status, by the 6^ district offices and the International Operations Division.

The returns were sorted and numbered in several groups by the district offices for their own opera- tions. For sampling purposes these groups were combined into three sample classes which can be identified as follows:

Sample class A: Consolidated returns, life and mutual insurance company returns, returns with over- payments of tax, and nonconsolidated returns with gross sales, gross receipts, or total income of $1,000,000 or more

Sample class B: Returns in which at least one of the items — gross sales, gross receipts, or total income — was between $100,000 and $l,000,000but none with $1,000,000 or more.

Sample class C: Returns with gross sales, gross receipts, or total income, each less than $100,000.

For each of these classes the number of returns filed, the number of returns in the sample, the pre- scribed sampling rates, and the achieved sampling rates are given below:

Corporation Sample Glasses

Sampling rates

Number of returns-

Sample class

Total

Filed

88,056 295,755

5'+3,150

924,961

In sample

88,056 53.703 ^9.355

191,11'+

Pre- scribed

1.00 0.20

0.10

Achieved

1.000 0.183 .0.091

Method of estimation, — The total number of returns filed was determined from counts made in each of the district offices and submitted to the Statistics Division. The adequacy of the sample size was tested by applying the prescribed sampling rates to the number of returns of various types filed and compar- ing this expected sample size with the number of sample returns actually received. Sample data were extended to the sample class totals by weights ob- tained by dividing the total number of returns filed in a sample class by the number of sample returns in that class. Since the number of sample returns finally received was less than the number prescribed, this was reflected in the weights.

Limitations of data. — The returns in sample class A, all of which were included in the sample, account for a large part of most money amounts and, there- fore, the maximum sampling variability on an overall basis is only a fraction of 1 percent for these items. For example, the maximum sampling variabil- ity in the basic totals for all industry groups sind asset sizes combined are as follows:

Item Percent

Total number of returns ±0.25

Net income less deficit iO.lO

Net income ±0.08

Deficit ±1.00

Gross sales i0.06

Gross receipts i0.19

Income tax ±0.06

Total assets ±0. 20

The estimated value would fall outside these limits in only 5 out of 100 similar samples of 1956-57 corporation returns.

The sampling variability of the principal charac- teristics of the industry groups with the smallest frequencies — forestry, anthracite mining, tobacco manufacturing, and ordnance and accessories — is also extremely small because the large corporations, all of which are included in the sample, account for most of the money values as well as for 75 percent or more of gross sales.

In addition to sampling variability, the data are subject to certain limitations arising from process- ing, incomplete coverage, and inaccuracies in esti- mating the total number of returns filed. While these biases exist, they were minimized by an exten- sive system of sampling management. On an overall basis, biases in money amounts due to taxpayer

CORPORATION INCOME TAX RETURNS, JULY 1956-JUNE 1957

errors, as estimated from audited returns, may some- what exceed the sampling variabilities given above.

EXPLANATION OF TERMS

These explanations include definitions and limitations based on income tax law, descriptions and limitations of classifi- cations used, and adjustments made in tabulating the data. They apply particularly to current year data but are also appli- cable to items shown in the historical tables 36-39. When using historical data, the Synopsis of Federal Tax Laws, pages 144-151, should also be consulted. Facsimiles of the return forms for 1956, referred to in the explanations, are shown on pages 154-202.

Accounts and notes payable, shown in table 5, consist of amounts tabulated as accounts payable and bonds, notes, and mortgages payable with maturity of less than 1 year.

Alternative tax under section 1201 is explained in the facsimile of Schedule D, pages 169-172, column 2.

Alternative tax imposed on gross income of insur- ance companies by subchapter L of chapter 1 of the 195<+ Code is tabulated with the regular normal tax and surtax.

Amortization is the suai of (1) deductions taken in lieu of depreciation for emergency facilities (under section 168 of the 1954 Code), and grain storage facilities (section 169), and (2) the amounts of deferred expenses written of f in 1956 for research and experimental expenditures (section 17^+) explora- tion and development expenditures (sections 615 and 616), organizational expenditures (section 24-8), and trade-mark and trade name expenditures (section 177). Section 177 was added to the 1954 Code by Public Law 629, 84th Congress, and is effective for tax years beginning after December 31, 1955. Provisions of law governing this deduction are shown on page 164, paragraph 25.

Assets and liabilities were tabulated ft-cm end-of- year balance sheets. The liability items "Accounts payable" and "Capital stock, common" may be over- stated in the finance division, major industry group, "Credit agencies other than banks." This occurs because of taxpayer reporting of some savings and loan association savings accounts as such liability items rather than as "Other liabilities" where they were typically reported.'

Bad debts. — Bad debts occurring during the year or a reasonable addition to a bad debt reserve may be taken as a deduction. In the case of mutual sav- ings banks, domestic building and loan associations, and cooperative banks without capital stock and operated for mutual purposes without profit the amount claimed is deemed reasonable, by law, so long as it does not exceed the lesser of (1) taxable in- come before the bad debt deduction, or (2) the excess of 12 percent of deposits at end of year over the sum of surplus, undivided profits, and reserves at the beginning of the year.

Bonds, notes, mortgages payable. — For 1956-57 length of time from maturity is based on date of balance sheet rather than date of issue. Accord- ingly, long-term obligations nearing maturity were classified, together with short-term obligations, as "Maturity less than 1 year." Treatment for prior years is shown under "Current liabilities. "

In table 5 "Bonds and mortgages payable" are those tabulated as "Maturity one year or more."

Capital assets less reserves in table 5 include depreciable, depletable, and intangible assets plus land, reduced by accumulated amortization, deprecia- tion, and depletion.

Capital gain or loss. — Net short- and long-term capital gains and losses are computed under pro- visions of the Internal Revenue Code permitting an alternative tax on long-term capital gain. (Net capital gain is reported and tabulated whether the alternative tax is used or not.) See facsimile of Schedule D of the tax return, pages 169-172, for def- initions and other explanatory material.

Consolidated returns. — A single income tax ret\UTi may contain the combined financial data of two or more corporations meeting the following requirements:

(1) A common parent corporation owns at least 80

percent of the voting power of all classes of stock and at least 80 percent of each class of nonvoting stock (except stock which is limited and preferred as to dividends) of at least one member of the group.

(2) These same proportions of stock of each other

member of the group are owned within the group, A consolidated return (filed by the common parent) is treated as a unit, each classification being determined on 'the basis of the combined data of the affiliated group. Filing changes, to or from a consolidated return basis, affect year-to-year com- parability of data in each classification into which the individual companies or affiliated group would normally fall. The nvmiber of consolidated returns filed and the number of subsidiaries (exclusive of the common parent corporation) are shown in table D.

T.ble D.-NUMBER OF CONSOLIDXTED RETURNS AND SUBSIDIARIES, BV INDUSTRUI. DIVLSION

Industrial division

All industrial divisions

Agriculture, forestry, and fishery..

Mining and quarrying

Construction

Manufacturing

Public utilities

■Trade

Finance, Insurance, real estate and

lessors of real property

Services

Nature of business not allocable...

Number of consolidated

returns for accounting

periods ended —

NuiDber of subsidiaries for accounting periods ended —

July 1956- June 1957

(1)

24 153 139 883 345 826

856 363

July 1955- June 1956

(2)

18 137 110 797 277 682

607 274

July 1956- June 1957

(3)

13,131

492

278

2,964

1,780

2,806

2,801 1,915

July 1955- June 1956

(4)

10,966

395

278

2,761

1,640

2,211

2,037 1,573

An additional surtax of 2 percent of taxable in- come computed (1) before deduction of partially tax-exempt interest, and (2) by excluding taxable income of regulated public utilities and Western Hemisphere trade corporations is imposed on affil- iated groups filing consolidated returns.

For more detailed information and treatment prior to 1956-57, see table C, Synopsis of Laws,

Contributions or gifts, — See paragraph 23, page 164, for limitations and carryover provisions.

Cost of goods sold and cost of operations, — Iden- tifiable amounts of taxes, depreciation, amortiza- tion, depletion, advertising, and pension and other employee benefit plan contributions reported in these costs were transferred to their specific headings.

CORPORATION INCOME TAX RETURNS, JULY 1956 -JUNE 1957

"Cost of goods sold" was reported for transactions in which inventories were an income-determining factor. "Cost of operations" was reported for all other transactions. See "Gross sales and gross receipts from operations" for use of net profit or loss for certain industrial groups.

Table E summarizes receipts and deductions for 1956-57.

-\CTIVE CORPORATION RETURNS: INCOME STATEMENT ITEMS FOR RETURNS WITH OR WITHOUT BALANCE SHEETS. JULY 1956-JUNE 1957

Returns with and without

balance

sheets

Number of returns :

Receipts:

Gross sales

Gross receipts from operations ,

Interest on Government obligations (less aroortizable bond premium):

Wholly taxable

Subject to surtax only ,

Wholly tax-exempt

Other interest

Rents

Royalties

Net short-term capital gain reduced by

net long-term capital loss. Net long-term capital gain reduced by

net short-term capital loss. Net gain, sales other than capital

assets.

Dividends, domestic corporations ,

Dividends, foreign corporations

Other receipts

Total compiled receipts ,

Deductions:

Cost of goods sold

Cost of operations

Compensation of officers

Rent paid on business property

Repairs

Bad debts :

Interest paid

Taxes paid

Contributions or gifts

Amortization

Depreciation

Depletion

Advertising

Amounts contributed under pension

plans. Amounts contributed under other

employee benefit plans. Net loss, sales other than capital

assets. Other deductions

Total compiled deductions

Compiled net profit or net loss (16 less

3i).

Net Income or deficit (35 less 6)

Net operating loss deduction

Income tax

Compiled net profit less Income tax (35

less 38).

Dividends paid:

Cash and assets other than own stock. . Corporation's own stock

Returns with balance sheets

Returns without balance sheets

(Thousand dollars)

540,039,596 106,632,639

2,388,101

74,806

527,736

12,067,541

6,(X2,049 787,977 44,704

2,331,975

1,024,377

2,688,181

758,292

4,460,194

679,868,168

409,018,021 64,262,359 11,045,160 6,274,115 6,130,840 1,920,401

8,280,952

15,038,562

417,996

2,625,949 14,952,881

3,084,301

7,061,631 3,&45,380

682,338 76,711,212

632,455,520

47,412,&48

46,884,912

917,670

21,364,290

26,048,358

14,498,400 2,725,210

535,213,755 105,465,272

2,373,155

74,441

524,230

11,994,830

5,910,661 780,723 43,584

2,279,635

1,000,411

2,663,353

754,722

4,414,123

673,492,895

405,212,934

63,599,705

10,897,467

6,201,024

6,074,154

1,903,111

8,201,675

14,907,990

414,102

2,620,521 14,788,998

3,056,747

6,993,574 3,626,038

669,013 75,843,813

626,309,254

47,183,641

46,659,411

894,081

21,221,546

25,962,095

14,358,799 2,718,189

4,825,341 1,167,367

U,946

365

3,506

72,711

131,388 7,254

1,120

52,340

23,966

24,828

3,570

46,071

6,375,273

3,805,087

663,154

U7,693

73,091

56,686

17,290

76,277

130,572

3,894

5,423

163,883

27,554

68,057 19,342

13,295 867,399

6,146,266

229,007

225,501 23,589

142,744 86,263

139,601

7,021

Credit claimed for foreign taxes paid and state- ment filed in support thereof. — See facsimile of Form 1118 with extracts from the Internal Revenue Code, pages 197-200. Supporting statements. Form 1118, were not available for tabulation for all re- turns on which foreign tax credit was claimed.

Current assets. — In historical table 38 specified current assets consist of cash, notes, and accounts receivable less reserve for bad debts, and inven- tories. For 195-4-55 and subsequent years they also include prepaid expenses and supplies.

The balance sheet schedule on the income tax return, facsimile page 158, does not require classification of assets and liabilities as current or noncurrent. Therefore "Specified current assets" include only the accounts shown above.

Current liabilities. — In historical table 38 for 19';8-<49 through 1953-5-; specified current liabili- ties consist of accounts payable, and bonds, notes, and mortgages payable with original maturity of less than one year. For 1954-55 through 1956-57 they consist of accounts payable, bonds, notes, and mortgages payable with maturity less than one year from date of balance sheet, and accrued expenses. (See also Statistics of Income-1954 , Corporation Income Tax Returns, page 23, for explanatory note concerning the change in definition of current bonds, notes, and mortgages payable.)

The balance sheet schedule on the income tax return, facsimile page 158, does not require classi- fication of assets and liabilities as current or noncurrent. Therefore "Specified current liabili- ties" include only the accounts shown above.

Declaration of estimated tax. — See facsimile of Form 1120ES and instructions, pages 201 and 202, and "Payments on declarations of estimated tax" below.

Deficit. — See "Net income or deficit."

Depletion may be based on cost or, in the case of natural deposits, on a fixed percentage of gross income, less rents and royalties paid, from the depletable property. Percentage depletion may not, however, exceed 50 percent of the taxable income from the property, computed without the depletion deduction. Percentage depletion rates for each type of deposit are listed in section 613 of the Code and range from 5 to 27-1/2 percent.

Depreciable assets. — For life and mutual insurance carriers (Forms 1120L and 1120M, facsimiles on pages 179-196) and for all other insurance carriers which filed balance sheets in the form required by state laws in lieu of the income tax schedule, depreciable assets include only the home and branch office build- ings and equipment. All other real estate holdings of these companies were tabulated as "Other invest- ments."

For the industry group "Real estate, except lessors of real property other than buildings," land and buildings were tabulated as "Other investments," "Depreciable assets," or "Land" according to the method of reporting used on the return.

Depreciation. — See discussion of this deduction for income tax purposes, page 165, paragraph 26.

Dividends from foreign sources in tables 23-28 were tabulated from line 5, Form 1118 (facsimile, pages 197-200) and exclude dividends received from foreign corporations doing 50 percent or more of their business in the United States to the extent that such dividends were deducted from taxable in- come under sections 245 and 246 of the 1954 Code and were not eligible for use in computing the foreign tax credit. (Sections 245 and 246 pertain to the special deductions allowed corporations for dividends received. )

Prior to 1955 dividends from foreign sources shown in the foreign tax credit and Western Hemisphere trade corporation tables were tabulated from Sched- ule C of Form 1120 and represented the total divi- dends received from foreign corporations.

Dividends received. — "Dividends, domestic corpo- rations" exclude dividends from domestic corpora- tions not subject to income tax under chapter 1 of the Internal Revenue Code (1954). The excluded dividends are tabulated in "Other receipts" and include dividends from China Trade Act corporations.

CORPORATION INCOME TAX RETURNS, JULY 1956- JUNE 1957

corporations deriving a large percentage of their gross income from sources within a possession of the United States, and corporations exempt from in- come tax under sections 501 and 521 of the 195<4 Code.

"Dividends, foreign corporations" include all dividends received from foreign corporations and reported on the return. See "Dividends from foreign sources," above, for limitation in tables 23-28.

For deductions from net income of a portion of div- idends received, see computation of special deduc- tions, page 157, and paragraphs 36 and 37, page 166.

Earned surplus and undivided profits is a net figure after deduction of negative amounts reported.

Employee benefit plans other than those within the purview of section 4-04. of the 1954- Code include insurance plans, noninsured death benefit plans, and health, accident, and other welfare benefit plans, contributions to which are deductible under section 162.

Estimated tax. — See facsimile of return Form 112CIES and instructions, pages 201-202, and "Payments oh declarations of estimated tax" below.

Excess profits tax. — The excess profits tax shown in historical table 37 is that imposed by section <430 which was added to the 1939 Code by the Excess Profits Tax Act of 1950, effective July 1, 1950. The amounts tabulated are after limitation and certain adjustments and before credit for foreign taxes paid. This tax terminated December 31, 1953, and for re- turns with accoimting periods beginning before and ending after that date the tax is a prorated amount determined according to the number of days in the accounting period before January 1, 195-4.

Foreign tax credit.— See Form 1118, pages 197-200, for computation and explanation of foreign tax credit. A few Form 1118 's for returns showing credit were not available for tabulation.

Form 1118 statements. — See "Foreign tax credit" above.

Gross sales and gross receipts from operations. — Gross sales, less returns and allowances, were re- ported when inventories were an income-determining factor. Gross receipts from operations were reported when inventories were not an income-determining factor. Costs are shown as deductions.

Rents reported as a principal business income by certain types of manufacturing, public utility, and service corporations were included in gross receipts from operations. These corporations include manu- facturers who, frequently rent rather than sell products, such as tabulating equipment, lessors of public utility facilities such as docks, warehouses, and pipelines, and rental services such as automo- bile and clothing rental agencies.

Sales and receipts reported on certain nonconsoli- dated returns of financial corporations were subject to special treatment in preparing the statistical tabulations. In lieu of gross sales and cost of goods reported by investment and holding companies (other than operating-holding companies), security and commodity-exchange brokers and dealers, and developers of real property, including traders on own account, the net profit or loss from sale of securities or real estate was tabulated in "Net gain (or loss), sales other than capital assets." Net gain or loss from other sales reported by these

companies and by insursinoe carriers other than life or mutual were included in "Other receipts" or "Other deductions."

Throughout the finance division, if gross receipts from operations were itemized on the return they were included in specific income items (e.g., inter- est, rents) with the exceptions of interest reported by automobile finance companies and rent and coop- erative apartment assessment rent reported by real estate operators. These two types of income were tabulated as gross receipts from operations.

Inactive corporations are defined as those which reported no item of income or deduction. Returns are filed by inactive corporations in accordance with the regulation that a corporation having an existence during any portion of a taxable year is required to file a return. Returns of inactive cor- porations were not included in the tabulations, but the number filed is shown in tables B and 36.

Income, other than dividends, from foreign sources is the net amount of taxable income or loss, exclu- sive of dividends, from foreign countries or United States possessions reported on line 6 of Form 1118. (See facsimile, page 197.)

Prior to 1955 the amount tabulated was the total net taxable income or loss from foreign countries (line 7, Form 1118) reduced by total dividends re- ceived from foreign corporations. Comparability of 1956-57 data with that prior to 1955 is affected by the different concepts of "Dividends from foreign sources" mentioned in the explanation of that item above.

Income tax. — Computation of the regular corporate income tax on Form 1120 is shown on page 157 or page 170 if the alternative tax is used. The amount tabulated for this report is taken from line A6, page 157. Computation of life insurance company income tax is shown on pages 180-181 and 191-192. The amount tabulated is that reported on line 1, page 179. For mutual insurance companies other than life, see pages 194- and 193. The amount tab- ulated is taken from line 25, page 193. Instruc- tions are shown on pages 166 and 167 (Form 1120), and page 186 (Form 1120L). Table A of the Synopsis of Laws shows the tax rates and bases for the last 10 years.

Industrial divisions and groups.— Industrial clas- sification of each return was determined by the business activity accounting for the largest per- centage of the total receipts. Because many cor- porations, virtually all of the large firms, carry on business in more than one of the standard indus- trial groups, the classification of corporation data by industry is necessarily subject to limitations. Year-to-year changes in the classification of spe- cific corporations result from mergers, other altera- tions in corporate structiire, and from filing of consolidated returns.

The classification system used for this report contains 225 minor industrial groups, 65 major groups, and 9 divisions and was adapted to an ownership basis from the 1945-49 Standard Industrial Classification issued ^ the Office of Statistical Standards, Bureau of the Budget, Executive Office of the President. There have been no changes in the classification used for Statistics of Income since 1952. Summary data for the 9 industrial divisions are shown in table F.

CORPORATION INCOME TAX RETURNS, JULY 1956-JUNE 1957

Table F.— ACTIVE CORPORATION RETURNS: TOTAL COMPILED RECEIPTS. NET INCOME OR DEFICIT, AND T\X. BY NET INCOME ST\TUS \ND INDUSTRIAL DIVISION, JULY 1956-JUNE 1957

Industrial division

Total

number of

returns

Returns with net income

Number of

returns

Percent of division

total

Total compiled receipts

( Thoumand dollmrm)

(Thousand doUmra)

Number of returns

( Thousand dollars)

Returns without net income

Number of

returns

Percent of

division total

Total compiled receipts

(Thousand dollars)

( Thousand dollar*)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

All industrial divisions

Agriculture, forestry, and fishery

Mining and quarrying

Construction

Uanuf acturing

Public utilities

Trade

Finance, Insurance, real estate, and lessors of real

property

Services

Nature of business not allocable

885,747

10,973 11,743 48,292

132,835 36,181

286,252

265,005 81,598 12,868

559,710

5,768

5,519

29,506

89,208

22,916

135,469

172,377

46,086

2,861

63.2

52.6 47.0 61.1 67.2 63.3 6i.8

65.0 56.5 22.2

614,857,002

2,193,807

9,107,747

20,037,334

300,009,759

48,339,737

192,213,927

29,228,503

13,609,941

111,247

50,184,217

191,201 1,468,368

843,094

25,678,144

6,180,388

5,957,583

8,791,668

1,057,087

16,684

489,966

4,606 4,760 25,932 77,802 20,031 162,193

154,461

37,941

2,240

21,364,290

68,375

648,655

328,794

12,289,618

3,024,761

2,547,725

2,038,036

413,670

4,656

326,037

5,205

6,224

18,785

43,627

13,265

100,783

92,628 35,512

10,007

36.3

47.4 53.0 38.9 32.8 36.7 35.2

35.0 43.5

77.8

65,011,166

560,655 1,764,303 3,471,520

19,303,987 3,968,733

25,953,050

7,018,911

2,921,295

48,662

(11)

62,254

303,136 166,297 ,049,395 a8,035 715,000

555,768 a3,805 15,615

Intangible assets. — The coi^oration income tax return provides for the reporting of intangible as- sets subject to amortization for this item. Since definition, valuation, and life of intangible assets varies from business to business no definitive description of this item can