Business and Professional Income Under the Personal Income Tax

The author is concerned here with the tax treatment of individuals' income from the sole proprietorships and partnerships in manufacturing, finance, trade, agriculture, and professional practice. Attention is paid to the changing relation between the income from sole proprietorship and partnership and the total income of owners. Appendixes contain explanations of figures and concepts. Originally published in 1964. The **Princeton Legacy Library** uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These editions preserve the original texts of these important books while presenting them in durable paperback and hardcover editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905. CONTENTS ACKNOWLEDGMENTS FOREWORD by Solomon Fabricant 1. INTRODUCTION AND SUMMARY Purpose of the Study Profit and Loss Concept in Tax Statistics Nature and Limitations of the Data Summary of Findings 2. SOURCES AND COVERAGE OF BUSINESS AND PROFESSIONAL INCOME ON TAX RETURNS Sources of Sole Proprietor and Partnership Income Relation to Total Income Coverage on Tax Returns Effect on Coverage of Income Below Filing Requirement Comparisons with Other Studies Coverage by Size of Income Reported 3. SIZE AND PATTERN OF INCOME ON RETURNS WITH PROFIT OR LOSS FROM BUSINESS AND PROFESSIONS Distribution by Size of Profit or Loss Relation of Income from Business and Profession to Total Income of Proprietors Conversion of Unincorporated Enterprise Profits into Other Income Effect on Business Organization of Tax Treatment of Pension Plan Contributions Pattern of Income on Returns with Profit or Loss from Business or Profession 4. THE TREATMENT OF LOSSES The Extent of Loss Offset Provisions for Loss Carryover Deductions The Conceptual Relation Between Loss Carryover Deductions and Net Losses on Returns with Negative Income 5. TAX LIABILITY ON UNINCORPORATED BUSINESS AND PROFESSIONS Effective Tax Rate on Business and Professional Income Marginal Tax Rate by Sole Proprietor and Partnership Profit and Loss Significance of Annual Mean Tax Rates for Aggregate Net Profits and Losses APPENDIXES A. Tabulation of Sole Proprietor and Partnership Income by Size of Income and Type of Industry: Explanation of Difference B. Derivation of the Estimates for Farm and Nonfarm Unincorporated Enterprise Income C. DerivationofEstimatesofTotalWagesandSalariesandAGI D. Estimates Based on 1948 ACP Data E. Patterns of Income on Returns Which Have Unincorporated Enterprise Income as Well as Income from Wages, Interest, Dividends, or Rents and Royalties, 1955 and 1959 F. Derivation of Tables 43 Through 46 G. Amounts and Frequencies of Reported Net Profits and Net Losses; Estimated Tax Liability Attributable to, and Estimated AGI on Returns with, Net Profit and Net Loss, by Sole Proprietors and Partners, Selected Years, 1939-60 H. Computation of Mean Effective and Marginal Tax Rates I. Note on Estimate of Net Operating Loss Deduction INDEX The author is concerned here with the tax treatment of individuals' income from the sole proprietorships and partnerships in manufacturing, finance, trade, agriculture, and professional practice. Attention is paid to the changing relation between the income from sole proprietorship and partnership and the total income of owners. Appendixes contain explanations of figures and concepts. Originally published in 1964. The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.