C .ruq : 8£A-nP-a CORPORATE PROFITS: Profits Before Tax, Profits Tax Liability, and Dividends e, Gross National Product in Current Dollars Gross national product 4,^ Personal consumption expenditures.. Durable goods Nondurable goods.. Services •'' Gross private domestic investment 1983 3,304.8 2,155.9 279 801 v*> W 4>*Sft -■■■ .% V ^ v ;> * ■••^'> V Fixed investment O,. X V'VVA- * ^ >^V Nonresidential * %■ , 'f>' '%V / 'A y .- '4 Structures ^ % %>, « * '< ^V>*• ^.- •%,* •■ C ^J^ - ■■■; Residential A >o. *W * **> ^CP, ^W» * Producers' durable equipment *.%, ^..""■■.. *.**.■ % ^vJ^sP^^ 0- Change in business inventories *> ' l *i ~t'r, '•■ ' l *> t \*.< N Nonfarm %. WV "■■,'••■•,'■■■■, ^ >* Farm A %, *«/** jjff r Net exports of goods and services v-» '■»/ . '£% %• X ^ Imports „ /'> «fe, %, '*„ ^ Government purchases of goods ar r. A -fy-ss ^e si ''b ''•• Federal T^^Ch' o^ ■■' ^ %,, stateandlocal ^¥K$>, «*, METHODOLOGY PAPERS: US. National Income and Product Accounts U.S. DEPARTMENT OF COMMERCE Bureau of Economic Analysis May 1985 BEA-MP-2 CORPORATE PROFITS: Profits Before Tax, Profits Tax Liability, and Dividends METHODOLOGY PAPERS U.S. National Income and Product Accounts May 1985 U.S. DEPARTMENT OF COMMERCE Malcolm Baldrige, Secretary Sidney L. Jones, Under Secretary for Economic Affairs BUREAU OF ECONOMIC ANALYSIS Allan H. Young, Acting Director Acknowledgments The papers in this series on the methodology of the national income and product accounts were prepared under the direction of Helen Stone Tice, who designed and planned the work. This paper on corporate profits was prepared by Kenneth A. Petrick, of the National Income and Wealth Division. Allan H. Young, Robert P. Parker, and Carol S. Carson guided the work. Dannelet A. Teske assisted in the design and planning and edited the papers. Tracy R. Tapscott prepared the list of sources. Gerald F. Donahoe supervised the work on corporate profits in the National Income and Wealth Division. Teresa A. Williams typed the camera-ready copy. Comments about the paper are invited. Comments, as well as questions about the material in the paper, should be directed to: National Income and Wealth Division, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230. Suggested Citation U.S. Department of Commerce. Bureau of Economic Analysis. Corporate Profits: Profits Before Tax, Profits Tax Liability, and Dividends . Methodology Paper Series MP-2. Washington, DC: GPO, May 1985. Contents Introduction 1 Definitions 3 NIPA tables 5 Overview of estimating procedures 6 Annual estimates 6 Quarterly estimates 9 Annual Estimates Derived from Corporation Returns 9 Prof i ts before tax 9 Posttabulation amendments and revisions, including allowances for audit profits and gross renegotiation refunds , 12 Depletion on domestic minerals 13 Adjustment to depreciate expenditures for mining exploration, shafts, and wells 13 Oil well bonus payments written off 18 State and local corporate profits tax accruals 18 Income of Federal Reserve banks and other federally sponsored credit agencies 18 Adjustment for insurance carriers and mutual depository institutions 18 Bad debt adjustment 19 Gains, net of losses, from sale of property 20 Dividends received from domestic corporations 21 Income on equities in foreign corporations and branches (to U.S. corporations) 21 Costs of trading or issuing corporate securities 21 Income received from equities in foreign corporations and branches by all U.S. residents, net of corresponding outflows 22 Profits tax liability 22 Posttabulation amendments and revisions, including results of audit and renegotiation and carryback refunds 22 Amounts paid to U.S. Treasury by Federal Reserve banks 24 State and local corporate profits tax accruals 24 Tax credits 24 Dividends 24 Posttabulation amendments and revisions 25 Dividends paid by Federal Reserve banks and other federally sponsored credit agencies 25 U.S. receipts of dividends from abroad, net of payments to abroad 25 Dividends received by U.S. corporations 25 Capital gains distributions of investment companies 28 -m- Profits - May 1985 Extrapolated Annual Estimates and Quarterly Estimates: Profits Before Tax 28 Reconciliation items prepared at the all-industry level 34 Aud i t prof i ts 34 Posttabulation adjustments: Nonprofit organizations 34 Posttabulation adjustments: Special assessments 34 Posttabulation adjustments: Construction interest and property taxes 34 Adjustment to depreciate expenditures for mining exploration, shafts, and wells 34 Oil well bonus payments written off 34 Costs of trading or issuing corporate securities 35 Agriculture, forestry, and fisheries 35 Mining 35 Construction 35 Manufacturing 35 Transportation 36 Communications 37 Electric, gas, and sanitary services 37 Whol esal e trade 37 Retail trade 38 Banki ng 38 Credit agencies other than banks 39 Security, commodity brokers and services 39 Insurance carriers 39 Insurance agents, brokers, and services 40 Real estate 40 Holding and other investment companies 40 Services 40 Rest of the world 40 Extrapolated Annual Estimates and Quarterly Estimates: Profits Tax Liabil i ty 41 Reconciliation items: Annual estimates 41 Industry extrapolations and the control: Annual estimates 43 Quarterly estimates 43 Extrapolated Annual Estimates and Quarterly Estimates: Dividends 45 Sources (Bracketed numbers refer to items in this list) 47 Appendix A. Financial, Tax, and NIPA Accounting: Selected Differences .. 51 Appendix B. Corporate Tax Return, Industry Classification, and List of Tabul ated I terns 54 -IV- Profits - May 1985 Tables 1. Location of Profits Measures in NIPA Tables 4 2. Information Used to Prepare Annual Industry Indicators for PBT 8 3. Corporate Profits, Taxes, and Dividends: Sources of Third July Est imates 10 4. Posttabulation Adjustments to IRS Total Receipts Less Total Deductions 14 5. Derivation of Rest-of-the-World Profits Measures 23 6. Posttabulation Adjustments to IRS Dividends Paid in Cash or Assets... 26 7. Framework for the Second and First July Estimates of Profits Before Tax 29 8. Profits Before Tax by Industry: Sources of Second and First July and Quarterly Est imates 30 9. Framework for the Second and First July Estimates of Profits Tax Liability 42 10. Relation of Total Tax Collections from the Monthly Treasury Statement to Collections of Liabilities for 1981 44 A-l. Selected Differences in Financial, Tax, and National Income and Product Accounti ng 52 As this paper was being prepared, work on a comprehensive revision of the national income and product accounts was under way and scheduled for completion in December 1985. Corporate profits will be revised to reflect the incorporation of more recent information; in addition, minor changes in procedure and in definitions and classifications will be made. These revisions will be described in the Survey of Current Business . The Survey will announce the availability of information about the changes in procedure and in definitions and classifications necessary to update this paper. -v- Introduction This paper describes the sources and methods used to prepare annual and quarterly estimates of profits before tax, profits tax liability, and dividends, the estimates prepared in deriving the "corporate profits" component of national income. After discussing the concept of corporate profits and its statistical implementation in the national income and product accounts (NIPA's), this introduction defines the profits measures that appear in the NIPA tables, indicates the tables in which they can be found, and provides an overview of the sources and methods. The measure of corporate profits included in national income is the income earned in current production by corporations. In the context of the NIPA's, production refers to the goods and services that make up GNP. The income consists of receipts that arise from current production less associated expenses; such receipts do not include investment income in the form of dividends and capital gains. Two sets of profits information are prepared by most businesses, and tabulated forms of this information are available to BEA to implement statistically the NIPA concept of profits. Financial accounting measures are prepared for reports to stockholders and to Government regulatory agencies. Tabulations for selected corporations are compiled by the financial press and by Federal statistical and regulatory agencies. Tax accounting measures are prepared for corporate income tax returns; tabulations of them are compiled by the Internal Revenue Service (IRS). Both financial and tax accounting calculate a corporation's profits as the difference between a set of its receipts and a set of its expenses, but the two types of accounting differ in the definitions of some receipts and expenses and in the timing with which some receipts and expenses are recognized. (See appendix A for examples of these differences.) Tax accounting measures are the primary source of profits information for the NIPA's, because they are based on well -specified accounting definitions and because the IRS tabulations of them are comprehensive in their coverage. Financial accounting measures, although less comprehensive, are used in extrapolating the tax-return-based estimates to current periods, because they are available sooner than the IRS tabulations and on a quarterly basis. Neither set of accounting measures is suitable in all respects for implementing the NIPA concept of profits. Consequently, the work of estimating corporate profits consists in large part of adjusting, supplementing, and integrating the two sets of information. Note. — Bracketed numbers in the text and tables refer to items in the "Sources," beginning on page 47. -1- Profits - May 1985 The measure of corporate profits included in national income — profits from current production—is shown in the NIPA tables as the sum of three elements. The first, profits before tax (PBT), is largely based on tax- return information, and thus reflects the charges used in tax accounting for inventory withdrawals and for depreciation. The other two elements are the inventory valuation adjustment (IVA) and the capital consumption adjustment (CCAdj), which restate the charges used in tax accounting for inventory withdrawals and depreciation to the basis needed for the NIPA's. The IVA converts the value of inventory withdrawals from the mixture of historical and current replacement costs used by business in tax accounting to current replacement costs. This adjustment removes from profits the capital-gain-like element that arises during inflation from valuing inventory withdrawals at prices of earlier periods. (Likewise, in a period of deflation, it removes a capital-loss-like element.) The CCAdj converts depreciation charges used by business in tax accounting to a consistent accounting basis (one based on straight-line depreciation and on uniform service lives) and to current replacement costs. This adjustment restates the depreciation charge to reflect as a cost in the current period the value of fixed capital used up and removes from profits the capital-gain- or loss-like element that arises from valuing depreciation charges at prices of earlier periods. The relation of these three elements is illustrated below for 1981. Corporate profits with IVA and CCAdj — the term for profits from current production in the NIPA's—was smaller than PBT. Both the IVA and CCAdj were negative. The IVA was negative because current replacement costs were higher than the costs at which inventory withdrawals were valued in determining PBT. The part of the CCAdj that places depreciation on a consistent accounting basis (at historical cost) was positive because depreciation using consistent accounting was less than the depreciation used in determining PBT. This part of the CCAdj was more than offset by the part that places depreciation at current replacement cost, which was negative because the costs of replacing fixed capital were higher than the acquisition costs used in determining PBT. 1981 bill ions of dollars Corporate profits with IVA and CCAdj 189.9 PBT 221.2 IVA -23.6 CCAdj -7.6 For consistent accounting at historical cost 70.5 For current replacement cost -78.2 -2- Profits - May 1985 Definitions The profits measures that appear in the NIPA tables are listed in table 1. They, along with the associated IVA and CCAdj , are defined as follows. Corporate profits with IVA and CCAdj . --This measure--"profits from current production"--is the income, measured before income taxes, of organizations treated as corporations in the NIPA's. These organizations consist of all entities required to file Federal corporate tax returns, including mutual financial institutions and cooperatives subject to Federal income tax; private noninsured pension funds; nonprofit organizations that primarily serve business; Federal Reserve banks; and federally sponsored credit agencies. The income is that arising in current production. With several differences, this income is measured as receipts less expenses as defined in Federal tax law. Among these differences are: Receipts exclude capital gains and dividends received, expenses exclude depletion and capital losses, inventory withdrawals are valued at current replacement cost, and depreciation is on a consistent accounting basis and valued at current replacement cost. Because national income is defined as the income of U.S. residents, its profits component includes income earned abroad by U.S. corporations and excludes income earned in the United States by foreigners. Corporate profits with IVA . --Corporate profits with IVA is defined in the same way as corporate profits with IVA and CCAdj, except that it reflects the depreciation accounting practices used for Federal income tax returns. Profits based on this definition are shown by industry because the CCAdj is not available by industry. PBT . — PBT is defined in the same way as corporate profits with IVA and CCAdj, except that it reflects the inventory and depreciation accounting practices used for Federal income tax returns. PBT consists of profits tax liability, dividends, and undistributed corporate profits. This measure is sometimes referred to as "book profits." Profits tax liability . --Prof its tax liability is the sum of all Federal, State, and local income taxes on corporate earnings; these earnings include capital gains and other income excluded from PBT. The taxes are measured on an accrual basis, net of applicable tax credits. Profits after tax . — Profits after tax equals PBT less profits tax liability. It consists of dividends and undistributed corporate profits. Profits after tax with IVA and CCAdj . --Prof its after tax with IVA and CCAdj equals corporate profits with IVA and CCAdj less profits tax 1 i ab i 1 i ty . Dividends . — Dividends are payments in cash or other assets, excluding the corporation's own stock, made by corporations located in the United States and abroad to stockholders who are U.S. residents. 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CD 3 * w >i l/l . — •i- c o >> 1 — l/> 3 CD •"D 4-> j-> +j x: i/i c: c w 3 S^'5 l/l l/l ^3 4_> jD TO > +-> XI TO T3 -O -1— Ifl TO TO >1 * -o L. r- C CD — * TO C C c o 4-> CM 0) o o O l/l o ■ — ■ >! TO c +-> 4-» i/l CD i- CL TO CD l/l l/l - CD E 3 +-> (T3 l/l 3 i— TO •!-> CD TO in 4-» C > •i- C CL TO O 4-> CD U -o <_) >^ « >> C i- CD f— r— O 1- UJ TO TO 4-> .— CD 3 CD ■♦-» £Z TO -M -— £Z «sr •^ C TO - — - TO C 3 1 <_> •— • <: o- l/l •<-> CD TD +-> <- < O O >■ -Z. (_) ^-t -K -M- Profits - May 1985 Undistributed corporate pro fits . --Und is tributed corporate profits equals PBT less profits tax liability and less dividends. Undistributed corporate profits with IVA and CCAdj . — Undistributed corporate profits with IVA and CCAdj is the sum of undistributed corporate profits, the IVA, and the CCAdj. It measures corporate saving from profits from current production. IVA . --The IVA is the difference between the cost of inventory withdrawals as valued in determining PBT and the cost of withdrawals valued at current replacement cost. CCAdj . --The CCAdj is the difference between depreciation used in determining PBT and depreciation on the basis of consistent accounting and valued at current replacement cost. NIPA tables The profits measures are published in the NIPA tables, which appear in the Survey of Current Business (and reference volumes cited there). Table 1 indicates the location, by NIPA table number, of the profits measures. The table distinguishes among annual and quarterly estimates of profits measures on both an aggregate and an industry basis. Annual measures cover 1929 to the present; quarterly measures, the first quarter of 1946 to the present. In most of the NIPA tables, the totals shown are on a national basis— that is, they are related to production on which U.S. residents have a claim, wherever it takes place. The totals shown in NIPA table 1.13, which shows gross domestic product of corporate business, are on a domestic basis — that is, they are related to production within the territory of the United States, irrespective of the residence of those who have a claim on it. Unlike profits on a national basis, profits on a domestic basis exclude income earned abroad by U.S. corporations and include income earned in the United States by foreigners. The difference between profits on a national basis and on a domestic basis is referred to as "profits originating in the rest of the world." In tables showing industry detail, profits on a national basis are shown as the total of profits for domestic industries and for the rest-of-the-world industry. Annual and quarterly estimates showing the relation of the major NIPA aggregates—gross and net national product, national income, and personal income—are in NIPA table 1.7. Corporate profits with IVA and CCAdj is shown as a component of national income. Annual estimates showing the relation of several dividend measures- including dividends in personal income— are in NIPA table 8.6. Annual estimates showing the relation of corporate profits, taxes, and dividends in the NIPA's to corresponding totals published by the IRS are in NIPA table 8.12. -5- Profits - May 1985 All of the estimates referred to in table 1 are in current dollars; the NIPA's do not include constant-dollar (that is, real, or price-adjusted) measures of profits. With few exceptions, BEA does not prepare constant- dollar estimates of income measures because price indexes cannot be associated with them, as they can with product measures. One exception is disposable personal income, which is within the NIPA framework; another is the profits measures presented in BEA's Business Conditions Digest . In both cases, the series are adjusted for price change by reference to prices of the goods and services on which the income is spent. Overview of estimating procedures Of the three elements that make up profits from current production, only PBT will be described further; the sources and methods used to prepare the IVA and the CCAdj are more conveniently described in connection with the change in business inventories component of GNP and the capital consumption allowances component of charges against GNP, respectively. Of the three components that make up PBT, profits tax liability and dividends are estimated independently, and therefore their preparation also will be described; undistributed profits are obtained as a residual and are not described. For PBT, profits tax liability, and dividends, the description of sources and methods begins with the annual estimates for which complete (or nearly complete) information is available; as of May 1935, the latest such year is 1981. The description then takes up the two annual estimates that are based on less complete annual information; as of May 1935, these years are 1982 and 1983. Finally, the description takes up the quarterly estimates, which extend through the current quarter. Annual estimates . — The annual estimates of PBT, profits tax liability, and dividends for domestic industries are based primarily on annual tabulations of corporate income tax returns; the annual estimates of PBT and dividends for the rest-of-the-world industry are from BEA's balance of payments accounts. The tabulations of corporate income tax returns are prepared by IRS and published in Statistics of Income: Corporation Income Tax Returns [52] (hereafter Corporation Returns ). The tabulations are based on a stratified sample of unaudited tax returns that currently includes all active corporations with more than $50 million of assets (with certain exceptions) as well as smaller firms on a probability basis. The information on the returns is edited statistically by IRS in the course of preparing the tabulations. The tabulations provide estimates of universe totals, by industry, for many of the items in the corporate income tax return, including receipt and expense items, tax liabilities, and balance sheet items. Appendix B reproduces selected items tabulated in Corporation Returns , the major schedules from the tax return for 1981, and the list of industries used by IRS to classify corporations by industry. The universe totals are the starting point for preparing NIPA estimates. The adjustments necessary to conform them to the coverage and -6- Profits - May 1985 definitions of PBT, profits tax liability, and dividends are detailed in the next section. The tabulations become available about 3 years after the year to which they refer, and this timing determines the approach used in preparing the NIPA estimates. Each July, the existing estimates for the year for which IRS tabulations are newly available are replaced with estimates based on these tabulations, and preliminary estimates are prepared for the 2 most recent years. In this paper, the estimates based on the IRS tabulations are designated "third July estimates," and the preliminary estimates for the 2 most recent years are designated "second July estimates" and "first July estimates." The second and first July estimates are obtained by extrapolating the third July estimates. For PBT, the extrapolations are carried out separately for each of about 75 industries using industry indicators. An overview of the information used to prepare these indicators is provided in table 2, which groups the industries by the type of information used. The first group shown in the table, which accounted for 63 percent of PBT in 1981, consists of the detailed industries in mining, manufacturing, wholesale trade, and retail trade. The indicators for these industries are based on universe estimates in the Quarterly Financial Report , a tabulation of corporate income and other financial information collected quarterly by the Bureau of the Census. This tabulation is based on a stratified sample of corporations — including those privately held — having mining, manufacturing, or trade as their principal activity. Currently, the sample includes nearly all corporations within these industries with assets greater than $50 million, most corporations with assets of $25 to $50 million, and a rotating sample of smaller ones. The second group in table 2, which accounted for 14 percent of PBT in 1981, consists of most of the detailed industries in transportation, utilities, finance, and insurance. The indicators for these industries are based on income information contained in reports filed with the Government agencies that regulate the industries. The third group, which accounted for 11 percent of PBT, consists of water transportation, the communication industries, credit agencies, security and commodity brokers, life insurance carriers, and services industries. The indicators for these industries are based on income from samples of shareholder reports tabulated by BEA. The fourth group, which accounted for 1 percent of PBT, consists of the remaining domestic industries. The indicators are based either on information related to corporate income, such as sales, or on judgment. The final group is the rest of the world, which accounted for 11 percent of PBT. Like the third July estimates, the second and first July estimates for the rest of the world are from BEA's balance of payments accounts. For Federal profits tax liability and for dividends, the same sources of information as shown in table 2 for PBT are used to prepare the industry indicators. For Federal profits tax liability, the industry extrapolations are forced to an all-industry control, which is derived from information -7- Profits - May 1985 Industry Table 2. — Information Used to Prepare Annual Industry Indicators for PBT Information Percentage of profits before tax, 1981 All industries, total 1. Mining (4); manufacturing (21); wholesale trade; retail trade (4) Income tabulated in Quarterly F inane i al Report . 100 63 2. Railroad transportation; local and interurban passenger transit; truck- ing and warehousing; transportation by air; electric and gas utilities (3); Federal Reserve banks; commercial and mutual banks (2); credit unions; federally sponsored credit agencies (3); savings and loan associations; property and casualty insurance carriers. Income from reports filed with regulatory agencies. 14 3. Water transportation; communication (2); credit agencies; security, commodity brokers and services; life insurance carriers; services (11). Income tabulated by BEA from samples of shareholder reports, 11 Agriculture, forestry, and fisher- ies (2); construction; pipelines, except natural gas; transportation services; sanitary services; private noninsured pension plans; insurance agents, brokers, and services; real estate; holding and other investment companies (4). Data related to profits, such as sales, or judgment. Rest of the world Not extrapolated. Receipts and payments separately from BEA's balance of payments accounts. 11 Note. --The numbers in parentheses indicate the number of subindustries that are extrapolated separately. -8- Profits - May 1985 on tax collections and refunds. For State and local profits tax liability, the estimates are based on tabulations of tax collections by the Census Bureau. Quarterly estimates . --The quarterly estimates are obtained by interpolation and, for the most recent quarters, by extrapolation. In general, the industry indicators used for the quarterly interpolations and extrapolations are based on the same source information as the annual indicators; however, the amount of industry detail is somewhat less--about 65 industries. Except for the fourth quarter, preliminary quarterly estimates of PBT and profits tax liability are prepared approximately 45 days after the end of the quarter, and revised estimates are prepared approximately 75 days after the end of the quarter. For the fourth quarter, preliminary estimates and revised estimates are prepared approximately 75 days and 105 days after the end of the quarter. This delay occurs because most corporations have fiscal years that end in the fourth quarter and need additional time to complete their end-of-year reports. For dividends, preliminary and revised estimates are prepared 15 days and 45 days after the end of the quarter. In general, the preliminary quarterly estimates are based on less complete information than the revised estimates prepared a month later. For example, for industries extrapolated with information from the Quarterly Financial Report , the preliminary estimates are based on a subsample of the information that is available a month later. Annual Estimates Derived from Corporation Returns The third July estimates, to be described in this section, are essentially final estimates. Unlike some NIPA components, PBT, profits tax liability, and dividends are not subject to changes resulting from incorporation of major new information sources during the periodic comprehensive revisions of the NIPA's; statistical revisions in the profits components are limited to the introduction of corrections to the IRS tabulations and to the incorporation of a few types of information that are available only with a long lag. The estimates of PBT, profits tax liability, and dividends are prepared, by industry, by starting with an IRS item and then making a number of adjustments that conform the IRS information to the coverage and definition of the NIPA items. This section describes the adjustments, which are shown in table 3; that table reproduces the items and line numbers of NIPA table 8.12. Profits before tax The starting point for the derivation of PBT is IRS "total receipts less total deductions," which is shown as line 1 in table 3. For each industry, total receipts less total deductions is obtained from Corporation -9- Profits - May 1985 "O c C 4-J C L. OJ +-> x> 3 OJ L- OJ +J L. -i- u L. s. to >> u , i/i •r- OJ L. 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QJ C J o CL L- .V TO L C^ 3 TO l_J o CO in _^: a TO C£ ■a c TO _l , TO t_ 0J TD OJ Lu i I c — i o CO X> -t- <-* -t-J t TO t_ 4-> CD L L. n o C^ O [ 1 Cl a> GJ cn cc o t _ +J ra ra ~> 3 CJ c c CI : C a j < ^ cc •-• co 4-> s: JZ w— > -11 Profits - May 1985 Returns . (This item differs from income subject to tax, as defined on the corporate tax return, in that it includes tax-exempt interest and excludes the special statutory deductions available for corporations.) The major adjustments to IRS total receipts less total deductions required to arrive at PBT for domestic industries consist of the following: o An allowance for the underreporting of corporate income disci osable by IRS audit (part of line 2 in table 3); o IRS deductions that are not elements of costs of current production: Depletion on domestic minerals (line 3), expensing of expenditures for mining exploration, shafts, and wells (line 4), oil well bonus payments written off (line 5), State and local corporate profits tax accruals (line 6), and bad debt allowances in excess of actual losses (part of line 9); o Elements of costs of current production that are not IRS current deductions: Costs of trading or issuing corporate securities (line 13); o Elements of domestic income from current production that are not IRS income: Profits of certain types of financial institutions (lines 7 and 8), and defaulters' gain on bad debt (part of line 9); o Elements of IRS income that are not domestic income from current production: Gains, net of losses, from the sale of property (line 10), dividends received from domestic corporations (line 11), and income on equities in foreign corporations and branches (line 12). To arrive at PBT on a national basis, rest-of-the-world profits, derived from BEA's balance of payments accounts, are added (line 14). These adjustments are discussed in the order shown in table 3. Posttabulation amendments and revisions, including allowance for audit profits and gross renegotiation refunds (line 2). — The tabulations in Corporation Returns , which are compiled from samples of unaudited tax returns, do not include unreported income. The NIPA measure should include such income. The adjustment adds an estimate of the additional profits that would be revealed if all corporate returns were audited. It is calculated separately for corporations reporting a profit and for those reporting a loss. For corporations reporting a profit, the adjustment is calculated as follows: (1) To derive actual tax settlements by corporate asset size class, the value of the assessment per return, by size class, recommended by IRS auditors is reduced by the overall ratio of actual settlements to recommendations [49]. (2) The estimates of actual settlements are raised to universe totals by multiplying them by the number of corporate tax returns with income, by asset size class, as published in Corporation Returns . (3) The estimated universe totals of settlements are divided by the applicable corporate tax rate to obtain the estimate of additional -12- Profits - May 1985 profits. For corporations reporting a loss, the adjustment is calculated by multiplying total losses, as published in Corporation Returns , by an estimate, based on fragmentary information from IRS, of the percentage by which losses are reduced during audit. The industry distribution of audit profits is based on the judgment of IRS auditors that most audit recommendations have stemmed from overstating repairs, misstating compensation of officers, and expensing, rather than depreciating, plant and equipment expenditures. Accordingly, the audit profits total is divided into thirds, and these are distributed by industry on the basis of the distributions of the repairs item in Corporation Returns , the compensation of officers item in Corporation Returns , and plant and equipment expenditures from BEA's quarterly survey L43J. Posttabulation amendments also include a number of items, most of which are either small relative to PBT or affect only a few years. They are described briefly in table 4. The adjustment for interest payments of regulated investment companies has become large in recent years. It reflects the treatment of interest payments of money market mutual funds as an expense in calculating NIPA profits. Depletion on domestic minerals (line 3). — Natural resource discoveries are not considered to be capital formation in the NIPA's; consequently, depletion — the charge for the using up of these resources — is not a charge against current production. In contrast, IRS permits depletion to be charged as an expense. By the adjustment, the Corporation Returns expense "depletion" is reduced by the domestic depletion claimed on tax returns, thereby increasing profits. The adjustment is calculated as the difference between depletion from Corporation Returns and an estimate of foreign depletion based on special IRS studies. TThe effect of foreign depletion is removed when foreign income is removed in line 12.) Adjustment to depreciate expenditures for mining exploration, shafts , and wells (line 4). — Expenditures for mining exploration, shafts, and wells are treated as capital formation in the NIPA's. In contrast, IRS permits certain of these expenditures to be charged as current expense. Corporation Returns "other deductions" are adjusted to remove the expensed portion of the current year's investment and to add depreciation charges on investment made in the current and previous years. Estimates of oil and natural gas drilling expenses are obtained from data on drilling footage and on prices from the Joint Association Survey on Drilling Costs published by the American Petroleum Institute L2J, producer price indexes from the Bureau of Labor Statistics [47], and the Annual Survey of Oil and Gas from the Census Bureau [39]. Estimates of expensed expenditures for construction of mine shafts (to deposits of minerals other than petroleum and natural gas) are based on the quinquennial census of mineral industries [36] and plant and equipment expenditures from BEA's quarterly survey [43]. Depreciation charges for investment in mining exploration, shafts, and wells are estimated using a perpetual inventory calculation, in which the investment is depreciated over time. -13- Profits tO c o •r— +-> <_> 7B 03 +-> o to m ai to Q. aj o CD as 03 4-> O CO OS. to B to o +-> 03 jo fO ±> J-> to o a. 1 I cu -Q 03 - May 1985 s- >> to CU 1 c en +-> 03 , — O c s- N -•-> in s- • q; C_3 jc 4-> *p~ ns c ■a ** CU 03 »— 1 to -4-> S- O) 1— 3 s- c -O -<-> C ■r- o; 3 O 03 cu r- 03 1— to J= •r— 03 J2 ■3- ■!-> 03 V mm CU C u O C IB IB en ac «*- to ■•-> 03 3 cu a. in 03 -O CU +J +-> 1 — cj O cu cu J= +J in T3 jo CU BK s. • to in cu O M c c c CU c s_ c JC •» *r- in g Q. +J cu c -4-> to +-> 3 O CU • 1— 03 CD X o> E a> -a cu i. 3 ^S -O "8S 03 *** "S ■p E o3 s- c JD .0 •r— JO > OS +J JO 03 •r- CU r (U£ 4- ■s •l" JO 03 O s- 4_) CU +-> CU c cu CU +-> s- CU 10 03 CU 3 s- •^* s_ CU s- u cu s- 0) <4- 3 ■«pog CU cu CU 03 i. 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I ^1" JO 1 E s- or (u • 3 S- +-> -C M- CU 1 — 1 T) 1/1 CU r— CU C S_ CU +-> <4- 4-> -rj 03 .^ CU O JZ r-l +->1_1 ro > i— i o > 1 — i d)^ (1) S- P •■-•I- cv. s_ 4-> C E c CU o 3 o u J- O -r- -a CO CU CU CO C d) 4- 1 I •!- 05 2 Q. O s_ c S- JO ■!-> CU E <4- 03 E i- O CO cj co o i — i fa en +-> cu t- cu c JZ S_ CU r— 3 i_ CU CU E T3 c c cu U E S- 03 O o oi- c cu -— » u_ o CU +-> E cu JZ •1— cu ■»-> u_ a o c CO CO O <4_ CU P ■s * J at ot-r 1 CU 4-> 1_ -r- +-> e CO CO 4_ 03 o CO ex u_ o ro e O °3 B JO • JO _o cu x: co c EC c s- o cc -r- crP c • S- S- o S_ 1 O t- •>- 4-> CU CU -r- 3 CO CO +-> S- 03 > +J +J CO O cc cu "r~ 3 03 03 S_ E O 03 03 •!— E CD-r- = f3 s_ o CO CO o CO +J -o S_ 03 i. 4-> cu o u o 3 i_ P 4-> 4-> O i. c +-> ■»-> 3 CC 'I- c c c+> a ci_ i— Q. O C -rj 03 O t »- CU CD cu o i"8 cu cc (U O i- S. (!) C S- co E <« E O O 4- -r- o s- c E +•> +3 i. p o -P «au-r O Q.T- +J 03 X CO <_> CO t- CO CO CU i — -o r— Q. CO E 03 3 3 $- 3^ S. 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O cc 3 3 e o a; •r- -r- CJ S- i- r— CU ■<- C CU •r* r— 03 U •i- n cu S- <+_ qj cu cu Q.+-> cu o c: s- E 4- <_> r— M- Q. s- i~ O t_ S r e * u c m cu CU c CO 03 cu E CD «o s- t *- +J OP O -i- •r™ 'p - <* «d- o o co r» <4- 3 r- O LT) r-H un o r»« ■>!■ O r» LO CO,-!) »• i ,— 1 CO >0 m oo (DC> | +-> O CO •O -r- i- Er- 03 . . . . • • . . . . •i- r— r— r>- i—i O r-l CO <-* p T- r- r*- co 00 CO ^o co CO E O en en CT> Cn en en UJ >-- "O 1 ' 1 ■ r— r— "E CO -o CO 03 1 03 i- r>* 2 o 00 3 O CT> en o >- I— cj_ ■" r— <4_ cu P CJ +J c E Q. cu cr X to ■s^ E ■•-> cu co ■P P 4-> •r- 3 X cu cu co •r™ C)- CO cu i~ e 3 co -a JO cu •r- c: 1 cu o •o -O "r- X +* u "O o s- o o fO c c ' c eu ■a s. c cu r io *r— 4-> c >» i — 03 3 IS) 3 IT) S~ cu o c 03 a. CO cu > o o co -)-> e cu cr ■P 00 3 "S a> jc; +-> +-> cc cu CO a> s_ o. eu s_ "* „ &. cu cr +J o B X. 03 03 +-> « CU f — i_ 03 o c <4- O CU •r— n +-> •r— CO c +-> •r— •r— >+- ^~ CU o T) i_ Q. ~ _ "2 CU 03 CD (73 z i- CO eu C > o o •1 — (_> 4-> z C^ 3 CD-O <4_ p u •I— a. cu CO • r— 4- CO CU 4- OJ o 03 u cu oo i. 1) 1 — CU 03 %~ H3 c> CU 05 P >> o > JZ p s_ cu (J r 00 qj -CC •r— c co ■p JZ E l_ 2 cD 3 eu s- P P 3 o •i •r— CU C M- CO CC (1) +-> a:| > eu cc C3I c a< i_ CU o cc: 03 B cu •r— JZ p , — CO CO P 03 03 CU 3 s_ cc ■P •«""S c o c_ 03 • T) cu ex cu 1= CO 03 cu i_ p •r- S. s o cr P 03 CU p c_> i — i CO CU JZ cu UJ >, I— JO CO • • aL CC 1 — CVJ C_3 1 — t ■17- Profits - May 1985 The adjustment is prepared for all business and is allocated by legal form of organization and by industry on the basis of BEA's estimates of domestic depletion. Oil well bonus payments written off (line 5). — Bonus payments for drilling rights paid to lessors of land are treated as transactions in land in the NIPA's, and thus do not affect measures of current production. For tax purposes, a bonus payment is not recognized until either production begins or the leasehold is abandoned. If the latter, the bonus payment is written off by the firm as a current expense. By the adjustment, Corporation Returns "other deductions" is reduced by the amount of the bonus payments written off, thereby increasing profits. The adjustment is based on a special study of depletion included in the President's 1963 Tax Message [34] and on unpublished data from trade sources on canceled oil leases. (Should the leasehold prove productive, the bonus payment is capitalized and is charged as depletion on tax returns; in this case, the payment is removed by the adjustment for depletion on domestic minerals in line 3.) State and local corporate profits tax accruals (line 6). — PBT is measured before deduction of income taxes. Because State and local income taxes are an expense item on the Federal tax return, they must be added to Corporation Returns total receipts less total deductions. They are not shown separately, however, on the corporate Federal tax return; the estimate is based on State and local government receipts compiled by the Bureau of the Census in Quarterly Summary of Federal , State, and Local Tax Revenue [41]. The industry distribution of these taxes is based on that in Corporation Returns for Federal income tax liability. Income of Federal Reserve banks and other federally sponsored credit agencies (line 7). --Federal Reserve banks, Federal home loan banks, the Federal Home Loan Mortgage Corporation, and Federal land banks are included in the corporate sector of the NIPA's. Because these institutions do not file tax returns, their income and expenses are not included in Corporation Returns . By the adjustment, profits of the Federal Reserve System, measured by current net earnings from the annual report of the Board of Governors [6], are included in PBT of the banking industry, and net income of the other agencies is included in PBT of credit agencies other than banks. Information on net income of the other agencies is from the annual reports of the Federal Home Loan Bank Board [13], the Federal Home Loan Mortgage Corporation [15], and the Federal land banks, the last compiled by the Farm Credit Administration [11]. Adjustment for insurance carriers and mutual depository institutions ( 1 i n e 8). --Life insurance carriers' net income from underwriting is treated as PBT. Until 1961, Corporation Returns did not fully reflect this income because the carriers were not taxed on it. The adjustment for years before 1961 is the difference between the profits of life insurance carriers compiled by the American Council of Life Insurance [1] (which includes net income from underwriting) and total receipts less total deductions for life insurance carriers in Corporation Returns. -18- Profits - May 1985 Private noninsured pension plans—that is, pension plans managed through a trust arrangement instead of by an insurance company—are included in the NIPA corporate sector in the insurance carrier industry. Corporation Returns does not include the income of these plans because they are not taxed on it. By the adjustment, their PBT is included. PBT for these plans is defined as their net dividend payments, and it is negative because their dividend receipts exceed payments. Estimates of investment income — interest and rent as well as dividends— are benchmarked to intermittent Labor Department [46] and IRS [50] tabulations of pension plan reports. The estimates are interpolated between benchmarks and extrapolated beyond the last benchmark by an indicator based on the product of stock holdings and average yield. Data on the market value of common and preferred stocks held by private noninsured pension plans are from the Federal Reserve Board flow of funds accounts [8]; data on the average yields of common and preferred stocks are from the Federal Reserve Board [7]. (Until the Securities and Exchange Commission tabulation of the investment income of these plans was discontinued in 1975, the indicator was this annual tabulation [53].) Earnings of mutual depository institutions — mutual savings banks, savings and loan associations, and credit unions— are treated as PBT. For mutual savings banks, until 1953, Corporation Returns did not reflect this income because these institutions were not taxed on it. The adjustment for years before 1953 is derived by extrapolating Corporation Returns data for 1953, using information on earnings of insured mutual savings banks from the Federal Deposit Insurance Corporation [12]. For savings and loan associations, until 1953, Corporation Returns did not reflect their income because these institutions were not taxed on it. The adjustment for years before 1953 is derived by extrapolating Corporation Returns data for 1953, using information on earnings of savings and loan associations from the Federal Home Loan Bank Board [13]. From 1953 forward, the Corporation Returns measure of profits is not used because of discontinuities in the treatment of bad debt expense allowances arising from changes in the Internal Revenue Code. Profits estimates are based on income for insured savings and loan associations tabulated by the Federal Home Loan Bank Board [14] and adjusted by BEA to amortize the income earned on commissions, fees, and points over the life of mortgage loans. For credit unions, income is not reflected in Corporation Returns because these institutions are not taxed on it. The adjustment consists of net income less dividends to shareholders and interest refunds as tabulated by the National Credit Union Administration for State-chartered and federally chartered credit unions [30]. Bad debt adjustment (line 9).— A bad debt adjustment is made so that only actual losses are treated as an expense in calculating NIPA profits and so that the gains from defaulting are treated as a receipt. On tax returns, companies may deduct either the actual amount of bad debt incurred during the year or a "reasonable addition" to a bad debt reserve. To the extent that the reasonable addition is larger than the actual bad debt, profits are understated. For all industries other than -19- Profits - May 1985 commercial banks, mutual savings banks, and savings and loan associations, the change in bad debt reserves — the excess of the addition to reserves over actual bad debt losses—is used as the part of the bad debt adjustment that restates expenses. For the financial institutions, because they are allowed to charge to their reserve account an estimate based on outstanding loans, the change in bad debt reserve may misstate actual bad debt losses. The latter are estimated from Federal Deposit Insurance Corporation data on loan losses and recoveries [12], extrapolated, when necessary, by Federal Reserve Board data on asset holdings [7]. A defaulters' gain is added to incomes in the NIPA's on the premise that the defaulters, by not paying off debts, gain the value of that debt. The total gain from defaulting on debts by persons and business is equal to the actual bad debt losses of corporate and noncorporate business. For industries in which sales are mainly to persons, the bad debt loss, representing the defaulters' gain, is allocated to persons; for other industries, the loss is allocated between persons and business, based on shares of loans outstanding [7]. Total business defaulters' gain is allocated by industry based on the industry distribution of liabilities in the Quarterly Failure Report of Dun and Bradstreet [10]; industry totals are then allocated by legal form of organization using relative shares of business receipts from Corporation Returns and corresponding IRS tabulations for noncorporate business. The corporate share is reduced by 40 percent because it is assumed that Corporation Returns other receipts reflects some of this gain. Gains, net of losses, from sale of property (line 10). — Gains (net of losses) on sales of fixed assets and securities are not considered to be income from current production. Corporation Returns total receipts less total deductions are adjusted to remove these gains and losses. The adjustment consists of Corporation Returns items for net gains with two modifications. The first modification relates to income from the sale of timber, coal, iron ore, livestock, and unharvested crops. This income is treated as gains or losses for tax purposes, but it is included in NIPA profits because it reflects current production. Therefore, an estimate of such gains or losses, which is derived from Corporation Returns and special BEA studies, is subtracted from the Corporation Returns net gains items. The second modification relates to accidental damage to fixed business capital. In Corporation Returns , the net gains items include the excess of insurance payments for accidental damage over the historical cost of the damaged property. In the NIPA's, this amount is not considered a capital gain: The insurance payment is an expense of current production for insurance carriers, and the historical cost of the damaged property is treated as depreciation. Thus, the Corporation Returns net gains items are modified to exclude the amount of the excess, which is estimated as the difference between the insurance payments, based on data on insurance losses from Best's Aggregates and Averages: Property-Casualty [5], and BEA estimates of accidental damage. This modification is included from 1968 forward. -20- Profits - May 1985 Dividends received from domestic corporations (line 11). — NIPA profits are the sum of each corporation's income from its current production; the dividends received by the corporation are not an element of such income. In contrast, receipts of dividends paid by other domestic corporations are included in total receipts less total deductions in Corporation Returns . This adjustment, which is from Corporation Returns , removes these dividends. Income on equities in foreign corporations and branches (to U.S. corporations ) (line 12). — This adjustment places total receipts less total deductions in Corporation Returns on a domestic basis by removing the income earned abroad by U.S. corporations that is included in total receipts less total deductions in Corporation Returns . The adjustment is estimated as the sum of (1) dividends received from abroad, from Corporation Returns ; (2) other foreign-source income reported in support of claims for foreign tax credits, from special IRS tabulations of schedule 1118; (3) since 1976, income earned by U.S. corporations from their operations in U.S. possessions, from special IRS tabulations; and (4) from 1959 to 1980, income earned by Western Hemisphere Trade Corporations, from Corporation Returns . Two modifications are made to the estimate of the adjustment as just described: Fees and royalties received from foreigners are subtracted and those paid to foreigners are added, based on information from BEA's balance of payments accounts (BPA's) [44] and special IRS tabulations. Fees and royalties are treated as receipts for services rendered in both the NIPA's and BPA's and are not part of rest-of-the-world profits. Fees and royalties received from foreigners, therefore, should be reflected in domestic PBT as receipts from current production; subtracting these fees and royalties from the Corporation Returns foreign income adjustment has the effect of adding them to domestic PBT. Fees and royalties paid to foreigners, as payments for services purchased, should be treated as an expense in calculating domestic PBT; adding fees and royalties paid to foreigners to the Corporation Returns foreign income adjustment has the effect of subtracting them from domestic PBT. Costs of trading or issuing corporate securities (line 13).— The costs of trading, which are brokers' commissions, and of issuing corporate securities are treated as expenses of the current period in calculating NIPA profits. In contrast, in tax accounting these costs are deferred. For the costs of trading, the adjustment is made to treat these costs as an expense in the current period rather than as a reduction in future capital gains income. The estimate of brokers' commissions is based on data on commissions paid from studies by the New York Stock Exchange [32]. The corporate share is derived as a residual, after deducting estimates of commissions paid by persons and noncorporate business, which are based on information from the Securities and Exchange Commission (SEC) [53] and stock exchanges [31]. The corporate share is allocated by industry by the Corporation Returns item "other investments." For the costs of issuing debt or equity securities, the adjustment is made to treat these costs as an expense in the current period rather than as amortized costs. The estimate is based on SEC data on new -21- Profits - May 1985 offerings of corporate securities and associated expenses [54]. The allocation by industry is based on the SEC tabulations and Corporation Returns data on holdings of long-term mortgages and capital stocks. Income received from equities in foreign corporations and branches by all U.S. residents, net of corresponding outflows (line 14). — As noted previously, the adjustments to total receipts less total deductions thus far provide PBT for domestic industries and exclude rest-of-the-world profits. To arrive at PBT on a national basis, rest-of-the-world profits, derived from BEA's balance of payments accounts (BPA's) [44], are added as an adjustment. The derivation of the adjustment, in terms of 3PA components used in its construction, is shown in table 5. The adjustment consists of receipts of all U.S. residents, including both corporations and persons, of earnings (both distributed and reinvested) of foreign affiliates of U.S. direct investors and of the dividends portion of other private receipts, less corresponding outflows; all items are recorded net of income taxes and of capital gains and losses. Profits tax liability The starting point for the derivation of profits tax liability is IRS "income tax, total," which is shown as "Federal income and excess profits taxes" on line 16 in table 3. For each industry, this item is obtained from Corporation Returns . It measures total income taxes before allowance for tax credits; it is the gross Federal income tax liability on income from all sources. The adjustments to IRS Federal income and excess profits taxes required to arrive at NIPA profits tax liability consist of the following: o Tax liability disclosed by IRS audit and renegotiation and carryback refunds (part of line 17); o Elements of NIPA tax liability that are not included in IRS Federal income and excess profits taxes: Payments to the Treasury by Federal Reserve banks (line 18) and State and local corporate profits tax accruals (line 19); o IRS tax credits, which are deducted in arriving at NIPA tax liability: Foreign tax credits (line 20), investment tax credit (line 21), and other tax credits (line 22). Posttabulation amendments and revisions including results of audit and renegotiation and carryback refunds (line 17). --An adjustment for the results of audit, renegotiation, and carryback refunds is necessary because Corporation Returns tabulations are compiled from samples of unaudited tax returns. The audit adjustment is the amount of additional tax liability owed by firms actually audited. It is actual tax settlements derived in the first step of the calculation of the audit adjustment for PBT (line 2). The adjustment is distributed by industry in the same way as the audit adjustment for PBT. -22- Profits - May 1985 — o in = a: cz V CM LO ^t m o X) ro r*. *3- U LO «* CO ro CM co ro ^r in co — . E CD 30 1 o to O CM x> — \ CD ^-« lO CM <* CM CM ro ro ^h in "O o CD I o a> vo .—i t£» CM (_ "* ro cm «=r cm "3- CD E zs m Lf> ^H -O ^ .n * cz 1— t— 1— r— r- i— in o at . t— *~> c * * o> L_ TJ cd cd m ^ cd CZ C 4-> C CD in • £ 13 CD 4J U ■•- CZ ^j CD I CD j_) CD *-J -i- c 4-> ~a r- u x: \ >> c u jz: *«*, • cd a» lo «— C U 4_) «^-| id ■r- CD 4J ^r| . o 0) t- E o C- L. Q. CZ t- O -M "O jz; 1— t- tj •- cz m t_ -i- cz in r— JZ) 4- ^ +J -p TO C 4-> fO fD L. CD 4-> 4-» CD 4-> 4-) CZ > -r- •.- •r- m 13 C -P T) -f- (/l c O CZ CZ J Ql in > CD zn CZ +j > ro TD CD c +-> ccl in cd ■*- ID 13 O *r- tn 4-» •- CD tO -r- 3. Z3 CD E L. ^ CD •■— QJ CO U O E E l/l M- O <— L. 4-> +-> CD E C_> ^~ ^ a> a> 4-» at o — \ ac TO Q. V> L^j-O ^ 13 CZ O -C in in a) -t— O m CD in CD o in CD in CX "- cu .. c i_ e x in i- 0) >, c L. it- CD -*-> L. 4_> 4_) >i- HI C > (*- cu -*-»*• cz -=c Lf. C C "O in iO r U w c c c r oj ■^ cz c c m u ex U "O -i- - — p oj cr>*.j a •r- O -i- =) +J E CD O -r- ID CD CD 2D LU —1 O O O CU —1 OJ +-> 13 J*> n <<0 U3 o -O CTi U3 O io to ■=3- LO CM O ro CM O ro cm 00 f- CO co "3- ^T CM CO ** LO *T CD ■»-> .— ) l/> CM CM C7\ co ro ro "O 0) ro m ,— ' *"• ^ H ^ H O * CD L_ CM CM SZ i> <3- CO r-i -T) ^H to ro *-> J2 _j —i —1 _l _l _l —J 4_ 5 * m * • o c 1— h- i— 1> i—l r— r— U"> LO 1— 1— +J oj in c oj b. "" I *-s • • ""^l * OJ ■o m ro • ro| -CI c CD m • *-> u • 4_> in cz a* cz -o • ■r- «tJ • CD TJ • S • cd x CZ O • — .- O - o OJ W E VO ' t L_ p L. . ^j i3 un t- C 4_> (- £_ • -M O +j t_ o jO — M- -Q c=> m cd 4J (Up Q. C- l-> Q. CD L_ 4-> CD 1/1 +J cz > ai c -»- in u - — "O f- 4-> TJ ■ i— j_> -I— m i-> o cz cz •>- Q. in > CD "O CZ > •o tz> cz zx in CX ■r- ■ T) • E C_) .— cd a» CD 4_> "O O saa JD OO *-» ZL CX tn LO -+-> ^* u c a tj r in •«- •i— • in ■■— CD • m in CD ■r- 0) o x .. C L 0) c L. r> OJ t_ CD > CZ) CD •• C oc cz i~ i~ +j in i- cu o 4-» > CD U cz > m -i— ,.,_> -r- Z3 CX 13 m m o ■3- CD <4- i/i ■«- a OJ CO CD o «3 m ro T> CO l- CD O (D >, Z3 CD JD 4-* ■*-> TD -Q ro in %n m i — C t- 4-1 4-> -•— CD o •<- <- X3 "O m CXM- <+- X y_ ra (- o o 13 O r- > "O O L. L. 4-> !-. 1 cz u a. o_ a. 1 a ZD u ^3- E X T% i/i CD OJ r ft] Z3 jz: ^o Tl t/> =1 m I J CD CJ C L- 1/1 o -i c ID CT ■i~> > r CD L. 11 ^ rz t ) ■*-> CD O c > 0) CD > TD C_ c n ^o T3 in ra ■o 4-> CD TJ ID iD CD <- jz: c in a> 3 0) c jd JD l- c > CX-r- r ■T1 L. V c *-> "O CD 0) uo ' — tn D c- o V Z3 a O J= CD 4-> ■x? 5 4_> c~ jz: t- c X3 4J 13 EM CD 1 30 01 30 a I*- l/l on L. CD C3 O l- 1 CD c: U 4-> JD OJ i* 01 c in E ■23- Profits - May 1985 In the NIPA's, tax refunds resulting from net operating losses are viewed as reducing tax liability in the year of the loss. IRS permits corporations with such losses to carry the loss back to claim a refund for taxes paid in preceding years and to carry forward the amount of such loss in excess of profits in the years for which refunds are obtained. BEA obtains data on carryback refunds from monthly IRS tabulations of applications for carryback refunds; the adjustment is allocated by industry on the basis of deficits reported in Corporation Returns . No adjustment is required for carryforwards because the lower tax payments are reflected in Corporation Returns . Several of the posttabulation adjustments to profits have a tax impact as well; these are included in table 4. In addition, for 1938-40, an adjustment is made for excess profits taxes levied under the Vinson Act. Amounts paid to U.S. Treasury by Federal Reserve banks (line 18).-- Federal Reserve banks are included in the corporate sector of the NIPA's, but are not included in Corporation Returns . Consequently, payments to the U.S. Treasury by Federal Reserve banks, which are treated as taxes in the NIPA's, must be added to the IRS Federal income taxes. Data are from the Federal Reserve Board [6]. State and local corporate profits tax accruals (line 19). — In the NIPA's, profits tax liability includes Federal, State, and local taxes. Because State and local taxes are an expense item on the Federal tax return, they must be added to the Corporation Returns item, which includes only Federal taxes. The adjustment is the same as that for PBT (shown in line 6). Tax credits (lines 20-22). --The NIPA measure of profits tax liability reflects actual tax liability; consequently, tax credits must be subtracted from the Corporation Returns tax item, which is before allowance for tax credit. Currently, these credits are: (1) U.S. tax credits claimed for foreign taxes paid; (2) investment tax credit (1962 forward); (3) work incentive credit (1972 forward); (4) U.S. possessions tax credit (1976 forward); (5) employment tax credit (1977-79); (6) targeted jobs credit (1979 forward); (7) nonconventional source fuel credit (1980 forward); (8) alcohol fuel credit (1980 forward); (9) research activities credit (1981 forward); and (10) employee stock ownership credit (1982 forward). Data for the adjustment, by industry, are from Corporation Returns . Dividends The starting point for the derivation of dividends is IRS "distributions to stockholders, cash and property except in own stock," which is shown as "dividends paid in cash or assets" on line 25 in table 3. For each industry, this item is obtained from Corporation Returns . It consists of cash and noncash payments out of current or retained earnings; it does not include liquidating dividends or other distributions of paid-in capital . -24- Profits - May 1985 The adjustments to IRS dividends paid in cash or assets required to arrive at NIPA dividends consist of the following: o Posttabulation amendments and revisions (line 26); o Elements of NIPA dividends that are not included in IRS dividends paid in cash or assets: Dividends paid by Federal Reserve banks and other federally sponsored credit agencies (line 27) and measures of U.S. receipts of dividends from abroad net of payments to abroad, from BEA's balance of payments accounts (line 28); o Elements of IRS dividends paid in cash or assets that are not included in NIPA dividends: Dividends received by U.S. corporations (line 29) and capital gains distributions of investment companies (line 30). Posttabulation amendments and revisions (line 26). — Several of the posttabulation adjustments to profits — including the adjustment for interest payments of regulated investment companies (specifically, money market mutual funds) — have an impact on dividends as well; these and other posttabulation adjustments are described in table 6. Dividends paid by Federal Reserve banks and other federally sponsored credit agencies (line 27). — Federal Reserve banks, Federal home loan banks, and Federal land banks are included in the corporate sector of the NIPA's. Because these institutions do not file tax returns, their income and expenses are not in the Corporation Returns . The dividends paid by these institutions — from the annual reports of the Board of Governors of the Federal Reserve System [6], the Federal Home Loan Bank Board [13], and the Federal land banks, the last compiled by the Farm Credit Administration [11] — are included in dividends of banking and credit agencies other than banks. U.S. receipts of dividends from abroad, net of payments to abroad ( 1 i ne 28). — The Corporation Returns item dividends received from foreign sources includes only the dividends received by corporations. To arrive at dividends on a national basis, the Corporation Returns item is removed and the BEA balance of payments accounts [44J measure of dividends received by all U.S. residents is added. A corresponding adjustment is made to outflows. (The foreign dividend measure used for this adjustment does not include the earnings of unincorporated affiliates of U.S. and foreign direct investors.) Dividends received by U.S. corporations (line 29). — In deriving PBT, the items for dividends received by corporations in Corporation Returns were subtracted (see lines 11 and 12). This adjustment must also be made to one of the components of PBT. It is made to the dividends component in order to obtain the appropriate measure of undistributed corporate profits. The resulting measure of net dividends paid equals the dividend receipts of persons, government, and foreigners. The adjustment consists of domestic and foreign dividends received, from Corporation Returns, and -25- Profits - May 1985 CO m to s- o tO to a. to -o cz CO > •I — a oO a; o +-> to +-> cz a> B to cz o ■p 13 +-> +-> to o a. i i • n cz c c o o o CO £ > o3 (_) in © -c r_ +-> o o s_ CO o> Q. CO •■- to o E rO cz to J- CO CO 1_ E o i- > t0 -r- < to ■g o cz • o • -o LU • to •■- o to m i_ >* t/> co to <* fO ■!-> +J cz o CO C CM E CO to CO i— 3 OO 01 CO r— CO 1- o CO fmm a> 52 -Q —> E 4-> fO ■•-> s- 4- >> to o ^ 3 -t-> +-> g 3 -O CO 3 <4- f0 Q.i — I o 'O to o •r-» > CO •<-> 4-» * CO 00 •o a£ •r- i. 35 c: CO -oo; fO 1- <* CO < o -a i- °r- oo < o ■o o 1 oo -o •r™ to CO cl+j e cu to "g C X "3 ■+-> +-> (A (A i. -r- CO CO c "8 t— c: CO to "S • -o - > 4-> CO s- CO •r- s_ > • ^t CO 00 cz m fO "O 3 +J "8 • ■r- E CO CO •i- Q a> -P o to ca 3 <-> ■* o (_) CO r— > oo E s- to ex cn • 9\ 4- +-> a» s_ CO s- X) •i- >>£ w i— e 3 a to CO 4-> W s_ CO •1— 3 r— ■ ■l-> •>-j c >> O T3 •r- fO to o • J=3 o ^ CO o -CZ >>TZJ CO o CO c >> c +■> C <-) s_ fO to -§ CO CO o ■<-> .a <: to •^» r— •— at -Q CZ > o CO in +j co 3 +-> fO <•- -o CX CO •r— CO CO ■r- •*- _cz OO o CO -r^ to E <-> +-> -Q >> CO CO 4-> to ex E (-> s- to s- > +-> o 3 CO o o r— • • s_ fO > to CO o •r- •p— CO L> cy> J2 O X oo 1— CO -o fO , — 3 o •i- c J3 0.<4- O T3 to ■»-> +-> fO s_ 3 ra Q. 1— s_ co o i- r— to +-> •r— S- •p T -o • c o u t- >» o +J S. i_ o c O CO iZ m CU 4-> •r- • • .c S- fO en «/> s- to •»-> 5- o> o a. -o c o to fC CO CO i CO >r— c 1 to to •r— S- s--o JC TZ) CZ •f- o to ex CO co C0-r^ +J •(— "»- # r— E o s- o S- M- E to > -o fO E <0 > > > to <4- •i- cz -CZ o CO (T3 •^ •i- «J (O c o CO O i_ o O -r- M- >> OJ C0 (— •!- 4-> O c Q. -o r- .O V ,r " o >> o a. C_J -o O JD $- Q ^~ CM CM CO CM CM in oo o CM cz r— 1 i— M- CM ^H 1—1 ^o cr> CM ,_) CTi H «/»•>- O r-~ oo 00 ■& i-n tn oo CM CO uj E CM cm CM CM CM J^ CM CM CM * — " i— i .— « r-l r—t I— 1 t— 1 t— 1 ^H i—l (A -2 V. CM on ■g * J- CM S CM s co r^ $_ CO s- <* in i_ CM J- >- > M- -^ cz CO •o ■s to J2 CZ c rO o CZ > (O co CZ -i- m •t— C3> •r— CO O J i. +-> co en •1— •r" CO > i— a> c fO CO o s- to 4-> s- CZ -r- 5 s- CO CO CO 3 cz o •■- E »o o S- to £ '»-» l-l Q. zc M- CO o -o i_ ^^ tA Z£ ^z < o o =>o ya— -a •r- C_> +■> >, to c !-■ (^ ■»-> i— «s Jit o -o S- s- •r" CO CO E .— o E CO o 33 Q OO QC O < a. a U. U- -26- Profits - May 1985 CD 3 4-> G o o I I 00 4-> a> oo < o 00 o a. co -o c CO -a > 5 vO O 4J CO +J C 2 c o •I - •4-> +■> CO O a. lo co to □£ -n .-h • , co oo CO 4-> i_ C_)| s_ o ■=* 00 4-> O •*->-« ■•-> cu •«- c: cu c 3-o 00 J3 ■P fO s_ CD +-> -Q 4-> LO OICQ c «o O 00 00 1 -r- CO +-> 00 +J CO J- 3 CD 3 0O CU E E ^ -a 3 •i-> s- 'n«fl s. o >> CO •n(/)i — O -O CU fltJl O < s <: -h m- s. to CO -o a: o OO M- Q.0O < H-. JC cr O E C •r- O CO 00 r?> oo s_ « J= -O CU T- 3 14-10 +J c w c p-ojc o . x o •<- (J .r- +J 14_ q; CO co c c: CO > o| |M~ s~ ,— •!- . .. C ^3 CO <4- CO <0 *• -o -o •■- «= 4-> »0 ^ To r NIPA s pa uded ved 65. CO oo -o 4-> -o -»-> CO CO O C <8 O E X <-> CO oo <4- -p- +-> Q. •• O <0 £Z O ^O • • CO > 00 CO S- i— S- 4-> -p- CO CT> r— ■ s- -i- a s- 3 fO M- S_ .-I o •i— O -r- cu -a ■!->•■- CU S C LO •^ Q. 3 4-> i—i x> +■» •r- 00 S_ CD ^> •^ •• Z -r- C C 3 O 00 -o | c S- i. CO •r- r— l*- CO •!- CT> •r™ co E +■* s- *♦-(_> X > C\J <4- x: o to i- CO X <4- tO -r- Cn co +J t. •«- 3 Q CO O +J -O "- 1 Q O <4- -o <-> ^^ - CM 00 O LO oj en LO r^ <-lj 00 CM C •— ^i 1 ia o o i E -r- X> •r— r— •••• •••• • • • • • • • • •P r— M- Cn LO 0O LO .TO <-t en r-, co •■- o CM >* -O LO •O CO LO CO LU E en en cn en en en en en "*■■' * f-H t— 1 r— 1 r— 1 ^H r-H .—i t— i 00 LO LO ■2 -2 i- 1 1 to to - en en en o en o H t— 1 «-H 14- i-i t|_ >> r«^ CO 00 4-> ? to CO »o -o M- +J C3L-— •1™ O C CO CO > CO 00 S_ +J •r— 00 E 3 c -o +J ■»-> e oo CD c oo X o B c CO CO O r- o E > -C U oo >»<= 00 00 3 X - •^ ■0 +J "S CO o < C T3 c 00 +J •!- — * *r- o> cu to C O 'I - i- r- <0 S- > CO CO 3 CX CO to s- ■Peng sz o C CO o 4-> O u_ i— i s~ o O 4-> ^5 H3 •r* 4-> 4-> •r™ c c: CO •i — 00 CO at s- £2 a. 4-> CO s- >> n— s i— • > •o = c: <+- « CO o •— T3 (O T- c c > to o •<- a. •i- -a to ■!-> «o c"B •i- (O i. <4- CO co = > "O 00 o = 4-> o CO = 00 to •> 00 +-> CD to S- I s- o CO oo > J= rs O 00 •>-) O X = oo -o A 00 c L. fO CO o -o CO 00 *4- to to g to i- CO Ctfl . CO •r— J= JZ > CO u +-> i. JZ •r- 00 0) +-> x: c c ^ 3 CU s_ s_ cu 3 CO o « 5 +-> 3 14- . 00 4-> CO c: 00 4-> CO cc a> a; J_ C n > %- (O CO c a> (O CO ^5 to o a£ >> CO *r— to to a +-> i — CO r— 3 c « •>-> CO S_ c to c -a s_ O s- E •r~ to CO a. CO •^ F 14- i_ +-> 4-> i- CO 4- o c to Jj co T3 o 1 — 1 OJ 1°° •27- Profits - May 1985 the dividend income of private noninsured pension plans, described in discussing line 8. Capital gains distributions of investment companies (line 30).-- Capital gains distributions of regulated investment companies are removed from IRS dividends paid in cash or assets in Corporation Returns because capital gains are not income from current production. The adjustment is made only for the distributions of regulated investment companies; data are not available for other companies. The adjustment is the sum of capital gains distributions by both closed-end and open-end investment companies. Since 1968, the estimates have been based on Corporation Returns data for these companies. Before 1968, the gains distributed by closed-end companies were estimated from a sample of shareholder reports [23]; the gains distributed by open-end companies were from the Investment Company Institute [20]. Extrapolated Annual Estimates and Quarterly Estimates: Profits Before Tax The second and first July annual estimates of profits are obtained by extrapolating from the third July estimates. Where source data permit, the extrapolation is done by industry. However, some of the items that reconcile total receipts less total deductions (in Corporation Returns ) and PBT are prepared at the all-industry level and then distributed by industry. These items are shown in table 7. For each of approximately 75 industries, specific indicators are used to extrapolate the appropriate base--that is, PBT less or plus any of the reconciliation items extrapolated at the all- industry level that are relevant to that industry. The quarterly estimates are obtained by interpolation between the annual estimates, and, for the current quarters, by extrapolation. The quarterly estimates are prepared in somewhat less industry detail than the annual estimates; for each industry, PBT is extrapolated even though, for some industries, the reconciliation items are not in the indicator. As indicated in table 2, most of the industry indicators are based on income — as tabulated either in the Quarterly Financial Report (QFR) [42], by regulatory agencies, or by BEA from samples of shareholder reports. Table 8 shows the several different kinds of income measures used as indicators. Wherever possible, these measures are modified to remove special adjustments and charges not recognized in PBT, such as the current expensing of future costs and capital gains and losses. These measures include net income before tax; net income, which is after tax; and gross income, which is the sum of net income before tax and depreciation. The procedure used when gross income is the indicator is as follows: (1) An augmented base is established that is the sum of the base and BEA estimates of tax-return-based depreciation; (2) the augmented base is extrapolated by an indicator, which is the sum of depreciation and net income before tax; (3) BEA estimates of tax-return-based depreciation are subtracted -28- Profits - May 1985 Table 7. --Framework for the Second and First July Estimates of Profits Before Tax 1981 estimate (millions of dollars) Profits before tax 221,152 Reconciliation items extrapolated at the all-industry level .. 40,862 Audit profits 29,993 Posttabulation adjustments -132 Nonprofit organizations 60 Special assessments -109 Construction interest and property taxes -83 Adjustment to depreciate expenditures for 13,111 mining exploration, shafts, and wells Oil well bonus payments written off 579 Costs of trading or issuing corporate securities -2,689 Base, extrapolated by industry 180,290 -29- Profits - May 1985 a = E *> <— ill CO co r-* ud ^h <3- OO OJ ro cm t— < O^ r^ r^ ^H -H O ^r> oo ao LO 00 cu in OJ F H E yi o> TD di T3 0J TJ CU to -*-> jD *-> a -Q 4-> -O ' r ~ CL "". a. "" CL • Q. r T3 c o U 4_> CO 0) CO 0) X CO CU X CO cu x Q_ Ofi UJ Q_ en LU CL. C£ LU CL CU UJ c <- ■- o at tj CU IO CO i — E *-> E 4-> 1- 4-> o O CU u a ai u oj *j ai c t- C U (. L. — o <- O rv -w- %- =3 -o 4_> CU 4-> CU CT C CU -O CU jO •- i VI >» CU CU L_ u *-> 3 1/1 OJ U > cu c l_ in Cu o C7> i/i '4- *+- -30- Profits - May 1985 . 1- vo • — ■ a; c\j . "O i — I o — E o — - l. o to a. F o LA P"> CD t *— " ' — l/l rt3 ? t" 1 > >, t. QJ ' CO «*■ **- in -y\ *3- C\J r-4 CO I** ^ <3" CO "— i ■^ CO CO r^ ^o cm ^ n tr> O oaio no CO ID CON .-h CO ro QJ ftS T3 i — O ■-< — • CO O CO ro ^ *d- in a> E i/> QJ fO CO QJ X q. ccuj x m i/> 0) iO c^> — en T3 rn (b-*j ■r- C O 4-> ceo > O i/) 'D . — i^ ■31- Profits - May 1985 un a; 4_ (]> O 3 c in CD u c 1 — qj la 'O 3 13 >> c E XJ r— C - '1- 3 C CD C\J • QJ =-> l- >1 -1 3 ro u 1/1 O f%t c .— < i= — i ■ — 1/1 lO r— X) co lo r- a^ .-h r-^ tO «d- CO ao cr» 0"» CO ^ u-> ur> o cr> => o cm a> ^ o .n jd uo ro en ororo * tf t— O +J h— u +j ca cd x cci aj x Q. C£ UJ o . ce i_u CD CD X q_ a: uj o_ ac uj o- a: uj * in <\> (/) OJ *-> JD **■ , C a. o i- h- KJ *-> m OJ X a. CCL UJ x a> i/i > i/l "O i- .x — u O -r- u 4-> >* <- <_> * *-» l- (U L. (D >*— i/» O -M i- u -*- ♦j -a t- rn ■.- U o c -a c u c o cu ai ;U 0) 3 E O a_ i- en -C C7> u o u 0) *- ft3 £= > <-> 1/1 c >>4-" <= l_ "O ♦— O «oO O) ai a> CD Q. C Irt U i~ aifl w L. > t/1 O 3 flj L '— O ai cu cu 1 (V *-> trt c a> 3. aO C o C31 u C t- -.- CD *-> "o jt C ^-« a> ^r o o E — -32- Profits - May 1985 C -i- 3 <: +j -o -d l/l 4-* 3 W> "O UJ c •— >> JD c t- -r- O CT •— i > T> I — 1 c OJ rtj «d- i ii ii/> *-\ u_ 4-> U1 cu >q; -^ , >! o m >- ■*-> i L_ ■M * TJ C CU c x: I ) r TO o C 1 L. O CU +-> h TO o o ■o T7 c r TO o cn E c — i o «3- C > -H O ra oo LU o <— « t/1 a: K < co O QJ QJ cz c c X3 c C u > O E l- a> 3 L_ 4_» X> a> l_ 4-> +J N 4-> -p ■O E u OJ QJ c u 3 c £= c C c O O c i/i t- (0 TO U 3 3 3 C 3 3 i- t_ in TO o cn O O cn O O X3 CL«*- *-*. 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X o C QJ 4— QJ it) T o TO -53- Appendix B Corporate Tax Return, Industry Classification, and List of Tabulated Items This appendix reproduces parts of the 1981 corporate tax return and Corporation Returns : (1) The major schedules of form 1120, the form used by most corporations; (2) the list of industries in which corporations identify the industry from which they derive the largest percentage of their total receipts, thus providing the basis for the industry detail available in the Corporation Returns tabulations; and (3) a page from Corporation Returns that shows the items that are tabulated from the tax returns. -54- 1120 Department of the Treasury Internal Revenue Service Profits U.S. Corporation Income Tax Return For calendar year 1981 or other tax year beginning 1981. ending ► For Paperwork Reduction Act Notice, see page 1 of the instructions Check if a — A. Consolidated return I I B. Personal Holding Co. I ! C. Business Code No. {See page 9 of Instructions) C O ■■c 3 TD V Q Use IRS label. Other- wise please print or type. Name Number and street City or town. State, and ZIP code 1 (a) Gross receipts or sales $ _. (b) Less returns and allowances $ Balance ► 2 Cost of goods sold (Schedule A) and/or operations (attach schedule) 3 Gross profit (subtract line 2 from line 1(c)) 4 Dividends (Schedule C) 5 Interest on obligations of the United States and U.S. instrumentalities 6 Other interest 7 Gross rents 8 Gross royalties 9 (a) Capital gain net income (attach separate Schedule D) (b) Net gain or (loss) from Form 4797, line 11(a), Part II (attach Form 4797) 10 Other income (see instructions — attach schedule) ' . . . 11 TOTAL income — Add lines 3 through 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Compensation of officers (Schedule E) (a) Salaries and wages 13(b) Less WIN and jobs credit(s) _ __ Balance ► Repairs (see instructions) Bad debts (Schedule F if reserve method is used) Rents Taxes Interest Contributions (not over 5% of line 30 adjusted per instructions) Amortization (attach schedule) Depreciation from Form 4562 (attach Form 4562) , less depreciation claimed in Schedule A and elsewhere on return , Balance ► Depletion Advertising Pension, profit-sharing, etc. plans (see instructions) Employee benefit programs (see instructions) Other deductions (attach schedule) TOTAL deductions — Add lines 12 through 26 Taxable income before net operating loss deduction and special deductions (subtract line 27 from line 11) . Less: (a) Net operating loss deduction (see instructions — attach schedule) . (b) Special deductions (Schedule C) Taxable income (subtract line 29 from line 28) 29(a) 29(b) 31 TOTAL TAX (Schedule J) 32 Credits: (a) Overpayment from 1980 allowed as a credit . (b) 1981 estimated tax payments (c) Less refund of 1981 estimated tax applied for on Form 4466 . (d) Tax deposited: Form 7004 Form 7005 (attach) Total >> (e) Credit from regulated investment companies (attach Form 2439) (f) Federal tax on special fuels and oils (attach Form 4136 or 4136-T) 33 TAX DUE (subtract line 32 from line 31). See instruction C3 for depositary method of payment . (Check ► Q if Form 2220 is attached. See instruction D.) f> $ 34 OVERPAYMENT (subtract line 31 from line 32) 35 Enter amount of line 34 you want: Credited to 1982 estimated tax ► Refunded ► May 1985 0MB No. 1545-0123 19 81 O. Employer identification number E. Date incorporated Total assets (see Specific Instructions) 1(c) 9(a) 9(b) 10 11 12 13(c) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 ■//////Ss 34 35 ■MM^^MM^. Please Sign Here Paid Preparer's Use Only Under penalties of periury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Signature of officer Title Preparer's signature Date Check if self-em- ployed ^ lj Preparer's social security no. Firm's name (or yours, if self-employed) and address E.I. No. > ZIP code O -55- Profits - May 1985 Form 1120 (1981) Cost of Goods Sold (See Instructions for Schedule A) Page 2 1 Inventory at beginning of year 2 Merchandise bought for manufacture or sale 3 Salaries and wages 4 Other costs (attach schedule) 5 Total — Add lines 1 through 4 6 Inventory at end of year 7 Cost of goods sold — Subtract line 6 from line 5. Enter here and on line 2, page 1 8 (a) Check all methods used for valuing closing inventory: (i) [j Cost (ii) fj Lower of cost or market as described in Regulations section 1471-4 (see instructions) (Hi) fj Writedown ot "subnormal" goods as described in Regulations section 1471-2(c) (see instructions) (b) Did you use any other method of inventory valuation not described above? I | Yes "1 No If "Yes," specify method used and attach explanation ► (c) Check if the L1FO inventory method was adopted this tax year for any goods (If checked, attach Form 970.) FJ (d) If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing in- ventory computed under LIFO (e) If you are engaged in manufacturing, did you value your inventory usingthe full absorption method (Regu- lations section 1.471-11)? PJ Yes FJ No (f) Was there any substantial change in determining quantities, cost, or valuations between opening and closing inventory? ... I I Yes 1 No If "Yes." attach explanation. Dividends and Special Deductions (See instructions for Schedule C) (C) Special deduc- tions: multiply (A) X (B) 1 Domestic corporations subject to 85% deduction 2 Certain preferred stock of public utilities 3 Foreign corporations subject to 85% deduction 4 Wholly-owned foreign subsidiaries subject to 100% deduction (section 245(b)) . 5 Total — Add lines 1 through 4. See instructions for limitation 6 Affiliated groups subject to the 100% deduction (section 243(a)(3)) .... 7 Other dividends from foreign corporations not included in lines 3 and 4 . . . . 8 Income from controlled foreign corporations under subpart F (attach Forms 3646) . 9 Foreign dividend gross-up (section 78) 10 DISC or former DISC not included in line 1 (section 246(d)) 11 Other dividends 12 Deduction for dividends paid on certain preferred stock of public utilities (see instructions) 13 Total dividends — Add lines 1 through 11. Enter here and on line 4, page 1 ^ 14 Total deductions — Add lines 5 through 12. Enter here and on line 29(b), page 1 Schedule B Compensation of Officers (See instruction for line 12) 1. Name of officer 2. Social security number 3. Time devoted to business Percent of corporation stock owned 6. Amount of compensation 7. Expense account 4. Common 1 5. Preferred <%^MM^W^/ WMMMMfflt. WMMMMM> mmmmm wmmmm. Total compensation of officers- — Enter here and on line I'. I, page 1 . ■ ■■'//'//// Wfo \ ,,//////Z'////////' yrnrgiM Bad Debts — Reserve Method (See instruction for line 15) 2. Trade notes and accounts re- ceivable outstanding at end of year 3. Sales on account Amount added to reserve 1. Year 4. Current years provision 5. Recoveries 6. Amount charged 7. Reserve for bad against reserve debts at end ot year 1976 1977 1978 1979 1980 1981 -56- Profits - May 1985 Form 1120 (1981) Page 3 ESB353BI Tax Computation (See instructions for Schedule J on pages 7 and 8) Note: Fiscal year corporations, see instructions on pages 10 and 11. Omit line 1, complete line 2(a) and, if applicable, line 2(b), and enter on line 3, the amount from line 44, Part III, of the fiscal year worksheet provided on page 11 of the instructions. 1 Taxable income (line 30, page 1) 2 (a) Are you a member of a controlled group? Q Yes [H No (b) If "Yes," see instructions and enter your portion of the $25,000 amount in each taxable income bracket: (i) $ (n) $ (in) $ (iv) $ 3 Income tax (see instructions to figure the tax; enter this tax or alternative tax from Schedule D, whichever is less). Check if from Schedule D ► ["] 4 (a) Foreign tax credit (attach Form 1118) (b) Investment credit (attach Form 3468) (c) Work incentive (WIN) credit (attach Form 4874) (d) Jobs credit (attach Form 5884) (e) Other credits (see instructions — attach forms and schedule) 5 Total — Add lines 4(a) through 4(e) 6 Subtract line 5 from line 3 . . 7 Personal holding company tax (attach Schedule PH (Form 1120)) . . . 8 Tax from recomputing prior-year investment credit (attach Form 4255) . 9 Minimum tax on tax preference items (see instructions — attach Form 4626) 10 Total tax — Add lines 6 through 9. Enter here and on line 31, page 1 Additional Information (See page 8 of instructions) G Did you claim a deduction for expenses connected with: (1) Entertainment facility (boat, resort, ranch, etc.)? .... (2) Living accommodations (except employees on business)? . (3) Employees attending conventions or meetings outside the North American area? (See section 274(h)) (4) Employees' families at conventions or meetings? .... If "Yes," were any of these conventions or meetings outside the North American area? (See section 274(h)) (5) Employee or family vacations not reported on Form W-2? . H (1) Did you at the end of the tax year own, directly or indirectly, 50% or more of the voting stock of a domestic corporation? (For rules of attribution, see section 267(c).) If "Yes," attach a schedule showing: (a) name, address, and identifying number; (b) percentage owned; (c) taxable income or (loss) (e.g., if a Form 1120: from Form 1120, line 28, page 1) of such corporation for the tax year ending with or within your tax year; (d) highest amount owed by you to such corpo- ration during the year; and (e) highest amount owed to you by such corporation during the year. (2) Did any individual, partnership, corporation, estate or trust at the end of the tax year own, directly or indirectly, 50% or more of your voting stock? (For rules of attribution, see section 267(c).) If "Yes," complete (a) through (e) (a) Attach a schedule showing name, address, and identifying number. (b) Enter percentage owned ► (c) Was the owner of such voting stock a person other than a U.S. person? (See instructions) If "Yes," enter owner's country ► (d) Enter highest amount owed by you to such owner during the year ► Yes I No (e) Enter highest amount owed to you by such owner during the year ► (Note: For purposes of H(l) and H(2), "highest amount owed" in- cludes loans and accounts receivable/payable.) I If you were a member of a controlled group subject to the provi- sions of section 1561, check the type of relationship: (1) rj parent-subsidiary (2) f"l brother-sister (3) Q combination of (1) and (2) (See section 1563.) J Refer to page 9 of instructions and state the principal: Business activity.. __ Product or service _ K Were you a U.S. shareholder of any controlled foreign corpora- tion? (See sections 951 and 957.) If "Yes," attach Form 3646 for each such corporation L At any time during the tax year, did you have an interest in or a signature or other authority over a bank account, securities ac- count, or other financial account in a foreign country (see in- structions)? M Were you the grantor of, or transferor to, a foreign trust which existed during the current tax year, whether or not you have any beneficial interest in it? If "Yes," you may have to file Forms 3520, 3520-A or 926. N During this tax year, did you pay dividends (other than stock dividends and distributions in exchange for stock) in excess of your current and accumulated earnings and profits? (See sec- tions 301 and 316) If "Yes," file Form 5452. If this is a consolidated return, answer here for parent corporation and on Form 851, Affiliations Sched- ule, for each subsidiary. O During this tax year was any part of your tax accounting records maintained on a computerized system? -57- Profits - May 1985 Form 1120 (1981) Page 4 EfkTS,T?flirat»g Balance Sheets ASSETS 1 Cash 2 Trade notes and accounts receivable . (a) Less allowance for bad debts . 3 Inventories 4 Gov't obligations: (a) U.S. and instrumentalitie (b) State, subdivisions thereof, etc. 5 Other current assets (attach schedule) . . 6 Loans to stockholders 7 Mortgage and real estate loans 8 Other investments (attach schedule) . . 9 Buildings and other depreciable assets . (a) Less accumulated depreciation . 10 Depletable assets (a) Less accumulated depletion .... 11 Land (net of any amortization) .... 12 Intangible assets (amortizable only) . . . (a) Less accumulated amortization . 13 Other assets (attach schedule) .... 14 Total assets LIABILITIES AND STOCKHOLDERS' EQUITY 15 Accounts payable 16 Mtges, notes, bonds payable in less than 1 year 17 Other current liabilities (attach schedule) . 18 Loans from stockholders 19 Mtges, notes, bonds payable in 1 year or more 20 Other liabilities (attach schedule) . . . 21 Captial stock: (a) Preferred stock . . . (b) Common stock . 22 Paid-in or capital surplus 23 Retained earnings — Appropriated (attach sch.) 24 Retained earnings — Unappropriated . 25 Less cost of treasury stock 26 Total liabilities and stockholders' equity . Kiqrrrmrfli'iBll Reconciliation of Income Per Books With Income Per Return Beginning of tax year (A) End of tax year (C) (D) 1 Net income per books 2 Federal income tax 3 Excess of capital losses over capital gains . 4 Income subject to tax not recorded on books this year (itemize). 5 Expenses recorded on books this year not deducted in this return (itemize) (a) Depreciation $ (b) Contributions carryover . . $ Total of lines 1 through 5 7 Income recorded on books this year not in- cluded in this return (itemize) (a) Tax-exempt interest $ 8 Deductions in this tax return not charged against book income this year (itemize) (a) Depreciation . . . $ (b) Contributions carryover . $ 9 Total of lines 7 and 8 . . 10 Income (line 28. page 1) — line 6 less 9 l^nrnnfl'©'-! Analysis of Unappropriated Retained Earnings Per Books (line 24 above) 1 Balance at beginning of year 2 Net income per books 3 Other increases (itemize) — 5 Distributions: (a) Cash (b) Stock (c) Property 6 Other decreases (itemize) 7 Total of lines 5 and 6 . . . . 8 Balance at end of year (line 4 less 7) . 4 Total of lines 1. 2, and 3 U S GOVERNMENT PRINTING OFFICE -58- SCHEDULE D (Form 1120) Department of the Treasury Internal Revenue Service Profits - May 1985 0MB No. 1545-0123 Vsd|JII.dl Vadium dim LUbbCb To be filed with Forms 1120. 1120-DISC. 1120F, 1120-H, 1120L, 1120M, 1120-POL, 990-C. and certain Forms 990-T HD81 [Name Employer identification number HSUJHi Short-term Capital Gains and Losses — Assets Held One Year or Less I. Kind of property and description (Example. 100 shares of "Z" Co.) b. Date acquired (mo., day, yr.) c. Date sold (mo., day, yr.) d. Gross sales price less e«pense of salt t. Cost or other basis (. Gain or (loss) (d less e) 1 2 3 3 Unused capital loss carryover (attach corrmutatior ) 4 Net short-term ca pital gain or (l( 4 Long-term Capital Gains and Losses — Assets Held More Than One Year 5 Enter section 1231 gain from Fo -m 4797. linp BfaWll 5 6 7 8 Net long-term capital gain or (los S) 8 Summary of Schedule D Gains and Losses (Form 1 120L filers omit line 1 1) 9 Enter excess of net short-term capital gain (line 4) over net long-term capital loss (line 8) . . . . 10 Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss (line 4) 11 Total of lines 9 and 10. Enter here and on Form 1120, line 9(a), page 1; Form 1120-H, line 6(a), page 1; Form 1120-POL, line 6(a), page 1; or the proper line on other returns 10 11 Note: If there is no entry on line 11, see instructions on capital losses for explanation of capital loss carrybacks. Alternative Tax Computation (Forms 1120-H and 1120-DISC filers omit Part IV) (Fiscal year filers, do not complete Part IV, but instead see the instructions for the applicable return to figure the tax for fiscal year 1981-82) 12 Taxable income. Enter the amount from (a) Form 1120, line 30, page 1 (b) Form 1120-POL, line 19, page 1 (c) Others — Enter amount from the proper line of other returns 13 Net capital gain from line 10 14 Subtract line 13 from line 12 (a) Form 1120 — In accordance with the instructions for Form 1120, Schedule J (b) Form 1120-POL — 46% of line 14 (c) Others — In accordance with the tax computation instructions for applicable return 16 28% of line 13 17 Alternative tax — total of lines 15 and 16. If less than amount of tax figured by regular method, enter here and on Form 1120, Schedule J, line 3; Form 1120-POL, page 1, line 21; or the proper line on other returns. Also check box for Schedule D . . . 15 Partial tax. Compute the tax on line 14 as follows 12 13 14 15 16 17 For Paperwork Reduction Act Notice, see page 1 of Form 1120 instructions. -59- Profits - May 1985 Codes for Principal Business Activity These industry titles and definitions are based, in general, on the Statistical Policy Division, Office of Information and Regulatory Affairs, in the Office of Management and Budget, to classify enterprises by type of activity in which they are engaged. The system follows closely the Standard Industrial Classifica- tion used to classify establishments. Using the list below, enter on page 1, under C, the code number for the specific industry group from which the largest percentage of "total receipts" is derived. "Total receipts" means gross receipts (line 1, page 1) plus all other income (lines 4 through 10, page 1). On page 3, under J, state the principal business activity and principal product or service that account for the largest percentage of total receipts. For example, if the principal business activity is "Grain mill products," the principal product or service may be "Cereal preparations." Agriculture, Forestry, and Fishing Code 0400 Agricultural production. 0600 Agricultural services (except veterinarians), forestry, fish- ing, hunting, and trapping. Mining Metal mining: 1010 Iron ores. 1070 Copper, lead and zinc, gold and silver ores. 1098 Other metal mining. 1150 Coal mining. OH and gas extraction: 1330 Crude petroleum, natural gas, and natural gas liquids. 1380 Oil and gas field services. Nonmetallic minerals, except fuels: 1430 Dimension, crushed and bro- ken stone; sand and gravel. 1498 Other nonmetallic minerals, except fuels. Construction General building contractors and operative builders: 1510 General building contractors. 1531 Operative builders. 1600 Heavy construction contractors. Special trade contractors: 1711 Plumbing, heating, and air conditioning. 1731 Electrical work. 1798 Other special trade contractors. Manufacturing Food and kindred products: 2010 Meat products. 2020 Dairy products. 2030 Preserved fruits and vegetables. 2040 Grain mill products. 2050 Bakery products. 2060 Sugar and confectionery products. 2081 Malt liquors and malt. 2088 Alcoholic beverages, except malt liquors and malt. 2089 Bottled soft drinks, and flavorings. 2096 Other food and kindred products. 2100 Tobacco manufacturers. Textile mill products: 2228 Weaving mills and textile finishing. 2250 Knitting mills. 2298 Other textile mill products. Apparel and other textile products: 2315 Men's and boys' clothing. 2345 Women's and children's clothing. 2388 Other apparel and acces- sories. 2390 Miscellaneous fabricated textile products. Lumber and wood products: 2415 Logging, sawmills, and planing mills. 2430 Millwork, plywood, and related products. 2498 Other wood products, includ- ing wood buildings and mobile homes. 2500 Furniture and fixtures. Paper and allied products: 2625 Pulp, paper, and board mills. 2699 Other paper products. Printing and publishing: 2710 Newspapers. 2720 Periodicals. » 2735 Books, greeting cards, and miscellaneous publishing. 343-118-2 Code 2799 Commercial and other printing, and printing trade services. Chemicals and allied products: 2815 Industrial chemicals, plastics materials and synthetics. 2830 Drugs. 2840 Soap, cleaners, and toilet goods. 2850 Paints and allied products. 2898 Agricultural and other chemical products. Petroleum refining and related industries (Including those integrated with extraction): 2910 Petroleum refining (includ- ing integrated). 2998 Other petroleum and coal products. Rubber and misc. plastics products: 3050 Rubber products; plastics footwear, hose and belting. 3070 Misc. plastics products. Leather and leather products: 3140 Footwear, except rubber. 3198 Other leather and leather products. Stone, clay, and glass products: 3225 Glass products. 3240 Cement, hydraulic. 3270 Concrete, gypsum, and Blaster products, ther nonmetallic mineral products. Primary metal Industries: 3370 Ferrous metal industries; misc. primary metal products. 3380 Nonferrous metal industries. Fabricated metal products: 3410 Metal cans and shipping containers. 3428 Cutlery, fiand tools, and hardware; screw machine products, bolts, and similar products. 3430 Plumbing and heating, except electric and warm air. 3440 Fabricated structural metal products. 3460 Metal forgingsand stampings. 3470 Coating, engraving, and allied services. 3480 Ordnance and accessories, except vehicles and guided missiles. 3490 Misc. fabricated metal products. Machinery, except electrical: 3520 Farm machinery. 3530 Construction and related machinery. 3540 Metalworking machinery. 3550 Special industry machinery. 3560 General industrial machinery. 3570 Office, computing, and accounting machines. 3598 Other machinery except electrical. Electrical and electronic equipment: 3630 Household appliances. 3665 Radio, television, and communication equipment. 3670 Electronic components and accessories. 3698 Other electrical equipment. 3710 Motor vehicles and equipment Transportation equipment, except motor vehicles: 3725 Aircraft, guided miss ires and parts. 3730 Ship and boat building and repairing 3798 Other transportation equipment, except motor vehicles. Instruments and related products:. 3815 Scientific instruments and measuring devices; watches and clocks. -60- Code 3845 Optical, medical, and ophthalmic goods 3860 Photographic equipment and supplies. 3998 Other manufacturing products. Transportation and public utilities Transportation: 400O Railroad transportation. 4100 Local and interurban passenger transit. 4200 Trucking and warehousing. 4400 Water transportation. 4500 Transportation by air. 4600 Pipe lines, except natural gas. 4700 Miscellaneous transportation services. Communication: 4825 Telephone, telegraph,, and other communication services. 4830 Radio and television broadcasting. Electric, gas, and sanitary services: 4910 Electric services. 4920 Gas production and distribution. 4930 Combination utility services. 4990 Water supply and other sanitary services. Wholesale Trade Durable: 5008 Machinery, equipment, and supplies. 5010 Motor vehicles and automotive equipment. 5020 Furniture and home furnishings. 5030 Lumber and construction materials. 5040 Sporting, recreational photographic, and hobby goods, toys and supplies. 5050 Metals and minerals, except petroleum and scrap. 5060 Electrical goods. 5098 Other durable goods. Nondurable: 5110 Paper and paper products. 5129 Drugs, drug proprietaries, and druggists' sundries. 5130 Apparel, piece goods, and notions. 5140 Groceries and related products. 5150 Farm-product raw materials. 5160 Chemicals and allied products. 5170 Petroleum and petroleum products. 5180 Alcoholic beverages. 5190 Misc. nondurable goods. Retail Trade 5220 Building materials dealers. 5251 Hardware stores. 5265 Garden supplies and mobile home dealers. Food stores 5300 General merchandise stores. 5410 Grocery stores. 5490 Other food stores. Automotive dealers and service stations: 5515 Motor vehicle dealers. 5541 Gasoline service stations. 5598 Other automotive dealers. 5600 Apparel and accessory stores. 5700 Furniture and home furnishings stores. 5800 Eating and drinking places. Misc. retail stores: 5912 Drug stores and proprietary stores. 5921 Liquor stores. 5995 Other retail stores. Finance, Insurance, and Real Estate Cod* Banking: 6030 Mutual savings banks. 6060 Bank holding companies. 6090 Banks, except mutual savings banks and bank holding companies. Credit agencies other than banks: 6120 Savings and loan associations. 6140 Personal credit institutions. 6150 Business credit institutions. 6199 Other credit agencies. Security, commodity brokers, and services: 6210 Security brokers, dealers, and flotation companies. 6299 Commodity contracts brokers and dealers; security and commodity exchanges; and allied services. Insurance: 6355 Life insurance. 6356 Mutual insurance, except life or marine and certain fire or flood insurance companies. 6359 Other Insurance companies. 6411 Insurance agents, brokers, and service Real estate: 651 1 Real estate operators and lessors of buildings. 6516 Lessors of mining, oil, and similar property. 6518 Lessors of railroad property and other real property. 6530 Condominium management and cooperative housing associations. 6550 Subdividers and developers. 6599 Other real estate. Holding and other investment companies, except bank holding companies: 6742 Regulated investment companies. 6743 Real estate investment trusts. 6744 Small business investment companies. 6749 Other holding and investment companies except bank holding companies: Services 7000 Hotels and other lodging places. 7200 Personal services. Business services: 7310 Advertising 7389 Business services, except advertising. Auto repair; miscellaneous repair services: 7500 Auto repair and services. 7600 Misc. repair services. Amusement and recreation services: 7812 Motion picture production, distribution, and services. 7830 Motion picture theaters. 7900 Amusement and recreation services, except motion pictures. Other services: 8015 Offices of physicians, including osteopathic Bhysicians. ffices of dentists. 8040 Offices of other health practitioners. 8050 Nursing and personal care facilities. 8060 Hospitals. 8071 Medical laboratories. 8099 Other medical services. 8111 Legal services. 8200 Educational services. 8300 Social services. 8600 Membership organizations. 8911 Architectural and engineering services. 8930 Accounting, auditing, and bookkeeping. 8980 Miscellaneous services (including veterinarians). Page 9 Corporation Returns/ 1981 24 RETURNS OF ACTIVE CORPORATIONS Table 2 — Balance Sheets and Income Statements, by Major Industry [All figure* are e*limate» Based on simple*— noney amotion are in thousands of dollars! Profits - May 1985 NumOK ol returns, total Total asaeta - Ca»n Notes ar*i accounts receivable lest: Allowance lor oad debts Inventories Investments m Government obligations: UniiM Stale* ; Slaie ano local Otner current assets Loans to siocunoider* Monoage ana real estate Wan* Otner fivesiments Oeoreoaoie mmh Less: AccumtKaiea depreciation OeoMLaote assets Lass; Accumulated depletion Land Intangote assets (amorozaolel Less; Accumutaled amortization Otner assets ToUl liabilities - Accounts payable Mortgages, notes, and bonds payable m less than one year Otner current liabilities Loans Irom stockholder* Mortgages, notes, and Bonos payaWe it one year or more Otner natalities Caortal stock Paid-in or capital surplus Retained earnings, appropriated Retained earnings, unappropriated Less; Cost ol treasury stock Total receipt* - — 6usme*s receipts Intersil on Government obligations- United Stales State- ano local Otner merest Rents Royalties Net short-term capital gam reduced by net long-term capital loss.. Net long-term capital gain reduced by net snort-term capital loss. Net gain, noncapital assets Dividends received from domestic corporations Dividends received from foreign corporations Otner receipts Total deduction! _ ... Cost ot sales and operations Compensation ot officers Repair* Bad debts Rent paid on business property Taxes paid Interest paid Contnouuons or gifts Amomzaoon Depreciation Depletion Advertising Pension, profit-sharing, stock bonus, and annuity plans Employee benefit programs Net loss, noncapital assets Other deductions Total recects less total deductions Constructive taxable income from related forex^i corporation* Net income Hess deficit) Income suoreci to lax Income tax. total Regular ano alternative tax ■ Tax trom recomputing pnor-vear investment credrt Additional tax lor tax preferences Foreign lax credit U.S. possessions tax aeon Investment creail Work incentive IWINI creait Jobs creait Nonconveniionai source fuel credit Alcoryy tuei creait Research activities credit Distnbuiions to stocxnoioer* Casn ano property e*ceot in own stock Corporation s own stocx 2312.4201 •.S47.1S1.S72l 533.4 72.1681 2.239.832.9601 44 8407941 588.2 ..219.956) ,161.7141 304 .1 210675.9831 320.511 852! 32.042.3661 933.6732941 1.388244 1421 2.352.655.343 857 772.979) 84.098.89li 21.816569! 101.946 0161 55.131.1521 20.451 9691 347.378.3521 •.S47.t61.872J 619969.292J 585.947.6781 2.859 839 2151 107.229.41 7| 1.058.070.877J 1.072.164.6341 532.560.826J 670.619.2231 45.939.7341 1.124.012.345J 129.191 347^ 7,026.351.8391 6J44.678.064J 36.638.092l 13881 4601 442.918.1941 53.805.764i 13.716.8721 2.178.573 29.064 6301 16.639.271 17.442.1 12J 13.790.320! 141.598.4931 I S,S 13,84 1,3 561 4.509.1 98. 199J 120.324 7841 70.289.4241 22.286.815! 82.4I2J276! 170.470.9261 476.964 6841 2.5144251 4712.8641 186.195.0481 7.929.3961 60 094 6011 52.952.5831 45.795.893 7.943 6071 993.755.841 212.510.484l 15.019.9381 213.648 963 241.496.3681 102.257 ,85li 100.644 417) 1.083547! 524851) 21.828 686! 1.945.6371 18.887 2861 38223! 472.895! •622J •4801 639 302] 120.295338! 3.634 323I 64.73S.599l 195.021. 5761 4S.552.234l 1S0.193.3941 1.422.8281 1.636 9241 1.108.216) 74.144) 1.066.5001 2968151 1.345.4S2( 1.000.952 4.525.187) 1.248.4381 2.738.463) 6.051 4611 15.1441 52672! 18.448) 80 9571 2.532.363 6.078,518 1.961 534; 29.571| 1938251 174 467 182.7291 849,197 168.501| 668 161 47 3041 193.710 8.057 940) 20.191 127 3263601 5.173.1 75! •6.1831 328 3081 1.728 769) 557.8921 543 280! 12.3481 2.261) 3.2061 6.4781 128 7991 1841 3.6591 512.0271 44 9121 460 0S41 5.620.7461 4.119.613 31.1861 94 3081 1.958 9941 6661 582.5641 3851 5.75 3 278 771| 217523 Footnote at end ol laoie See ten tor Eipianmon ot Terms ' »no Oescnotion ot ine Samoie ano LimnaKms ot tne Data Note. --This table reflects revisions made after the data were made available to BEA. Thus, "total receipts less total deductions" shown in this table differs by a small amount from what is shown in line 1 of table 3 and "income tax, total" differs by a small amount from what is shown in line 16 of table 3. ■61- PEr J. N .pTATE UNIVERSITY LIBRARIES IIHIlllllllll