CONTENTS

Page

Introduction 1

INDIVIDUAL INCOME TAX RETURNS

Major characteristics of 1952 5

Income tax provisions for 1952 individual income 6

Returns included 6

Composition of adjusted gross income 7

Marital status 7

Deduction for medical expense 8

Explanation of classifications and terms 8

Classification of individual returns 8

Sources comprising adjusted gross income 10

Itemized nonbusiness deductions 12

Measures of individual income 13

Exemptions 13

Tax items 13

Description of sample and limitations of data 15

Tabulated data 15

Basic tables, 1952:

1. Number of returns, adjusted gross income, and total tax — simple and cumu-

lated distributions 18

2. Sources ot income and loss, itemized deductions, and net income, by returns

with standard or itemized deductions 19

3. Sources of income and loss and itemized deductions, by adjusted gross income

classes 20

4. Sources ol income and loss, deductions, exemption, and tax items — fre-

quencies and amounts by adjusted gross income classes 21

5. Frequency distributions of returns by size of source 26

6. Frequency distribution of returns by size of net income 31

7. Adjusted gross income, tax liability, average tax, and effective tax rate, by

types of tax 33

8. Adjusted gross income, exemption, and total tax, by marital status of

taxpayer 34

9. Exemptions by marital status of taxpayer 36

10. Selected sources of income, adjusted gross income, exemptions, and tax

liability by detailed adjusted gross income classes for all returns and joint

returns, and in total for other marital statuses 40

11. Capital gains and losses, short- and long-term, by adjusted gross income

classes 43

12. Selected sources of income and tax liability by States and Territories 45

13. Adjusted grass income and income tax liability, by States and Territories

and by adjusted gross income classes 46

Historical tables," 1944-52:

14. Number of returns by major characteristics, adjusted gross income and

deficit, and tax 53

15. Number of returns with income tax liability, adjusted gross income, income

tax, average tax, and effective tax rate, by adjusted gross income classes. _ 54

16. Sources of income by type 55

17. Selected sources of income by adjusted gross income classes 56

18. Itemized deductions by type 58

19. Number of returns with adjusted gross income, adjusted gross income, and

income tax, by States and Territories 59

FIDUCIARY INCOME TAX RETURNS

Major characteristics of 1 952 63

Income tax provisions for fiduciary income 63

Returns included 64

Explanation of classifications and terms 64

Classification of fiduciary returns 64

Sources comprising total income 65

Deductions 66

Measures of fiduciary income 66

Amount distributable and exemptions _. 66

Tax liability 67

Description of sample and limitations of data 67

Tabulated data 68

VI CONTENTS

Basic tables, 1952: Paee

1. Number of returns, total income, and tax — simple and cumulated distribu-

tions 70

2. Sources ot income and loss, deductions, exemption, and tax — frequencies and

amounts, bv total income classes 71

3. Sources of income and loss, deductions, exemption, and tax, by net income

classes 74

4. Frequency distribution of returns by size of net income 76

5. Total income, net income, tax, average tax, and effective tax rate, by types

of tax 78

6. Capital gains and losses, short- and long-term, by total income classes 79

7. Returns for trusts and for estates by total income classes 81

8. Selected sources of income and tax by States and Territories 82

Historical tables, 1944-52:

9. Number of taxable returns, total income, tax, and effective tax rate, by total

income classes 84

10. Sources of income and deductions by type 85

SYNOPSIS OF FEDERAL TAX LAWS, 1944-52

Individual and fiduciary income tax:

A. Requirements for filing returns and exemptions 89

B. Normal tax and surtax rates 90

C. Provisions pertaining to capital gains and losses 91

Self-employment tax:

D. Requirements for filing returns and tax rate 92

FACSIMILES OF TAX RETURNS, 1952

Form 1040, Individual Income Tax Return 95

Form 1040A, Employee's Optional Income Tax Return 117

Form 1041, Fiduciarv Income Tax Return 119

Index J 127

INTRODUCTION

Statistical data presented in this report cover the income year 1952. The source documents are individual income tax returns, Form 1040 and Form 1040A, and fiduciary income tax returns, Form 1041, both taxable and non- taxable. With the inclusion of the nontaxable fiduciary returns, the statistics for fiduciary returns embody comprehensive data for the income from estates and trusts. Income, deductions, exemptions, taxes, and other important in- formation reported on these returns are presented by various classifications of taxpayers, size of income, tax status, and other relevant groupings. Gift tax returns filed for gifts made in 1952 and estate tax returns filed during 1953 were not processed by the Statistics Division; therefore no data for these re- turns are included in this report. Under present plans, however, both gift tax returns and estate tax returns will be processed for next year's report.

The first part of this report pertains to the individual income tax returns and contains data from Form 1040, whether short-form or long-form, and from the employee's optional returns. Forms 1040A. Although Form 1040 A differs from Form 1040, it is possible to integrate the data reported on the vari- ous forms and no distinction is made in the tabulations. Current year data are presented in 13 basic tables; in addition, significant historical series for 1944 and subsequent years are given in 6 tables.

The second part of this report presents data reported on fiduciary income tax returns. Forms 1041. The current year statistics are tabulated in 8 basic tables and include data for both taxable and nontaxable fiduciary returns. This is the first year since 1939 that the nontaxable fiduciary returns have been processed by the Division. With the inclusion of the nontaxable returns, the data now show the entire income from estates and from property held in trust even though the trust income was distributable to beneficiaries to the extent that none was taxable to the fiduciary. Data characteristic of fiduciary re- turns differ somewhat from those for individual returns; however, statistics from fiduciary returns are presented, so far as possible, in tables similar to those for individual returns, so that these data may be associated. Two historical tables, showing data for taxable fiduciary returns only, follow the current year tabulations.

The third part of this report gives a brief synopsis of recent Federal tax laws relating to the income tax provisions that apply to individual income and fiduciary income, and to the tax on self-employment income derived by an individual from his solely owned business and his distributive share of partner- ship income.

At the close of the report are inserted facsimiles of the individual income tax returns, Forms 1040 and 1040A, and of the fiduciary income tax returns, Form 1041, for 1952.

Four tables from this report were published in a Preliminary Report, Statistics of Income jor 1952, Part 1, issued in AprU 1955. Three of these tables contain data for individual returns and are tables 1, 4, and 12 in this complete report ; the remaining table contains data for taxable and nontaxable fiduciary returns and is table 2 among the fiduciary tables of this report. Kevisions in the previously published data were found necessary in compiling tables for this report.

Individual

Income Tax

Returns

INDIVIDUAL INCOME TAX RETURNS FOR 1952

MAJOR CHARACTERISTICS OF 1952

Adjusted gross income and tax liability on individual returns for 1952 continue the upward trend, resulting in the largest amounts ever to be reported. This is the first year to reflect the entire annual increase in surtax rates that became effective on November 1, 1951, under provi- sions of the Revenue Act of 1951.

The total tax liabihty for 1952 is $28 billion of which $0.2 billion is self-employment tax. There is an increase of $3.6 billion, or 15 percent, in the total tax over that for 1951. A breakdown of the current year tax shows an increase in the combined normal tax and surtax as well as in self-employment tax; but there is a decrease in the alternative tax. Approximately one-third of the total tax is paid on returns with adjusted gross income under $5,000. Only 6 percent of the tax is reported on returns showing adjusted gross income of $100,000 or more.

Adjusted gross income reached an all-time high of $216.1 billion, which is nearly $13 billion, or 6 percent, more than that of the previous year. Somewhat over one-half of the adjusted gross income for 1952 is reported on returns with income under $5,000. Adjusted gross

deficit for the current year is about $0.8 billion; this is 5 percent larger than the 1951 deficit.

The 56.5 million individual income tax returns filed for the income year 1952 are somewhat over one million returns more than were filed for 1951. Although more than three-fourths of the 1952 returns are filed by tax- payers whose income is less than $5,000, there are one million fewer returns in this category than last year. Taxpayers with income of $5,000 or more in 1952 filed 2 million returns more than were filed by the same income group in 1951.

Salaries and wages for 1952 are $174.3 billion, an in- crease of $13.9 billion, and account for the major portion of the increase in adjusted gross income. There are also increases in investment income from interest, annuities, and rents and royalties. Business profit is up slightly, but dividends, statutory capital gains, partnership profit, and fiduciary income declined in 1952. Among the losses in adjusted gross income, there are larger losses from rents and royalties and business activities and a larger deduc- tion for capital loss than were reported in the prior year.

Salaries and wages are found on 90 percent of the re- turns with adjusted gross income under $5,000 as well as

Percent of total 801

INDIVIDUAL INCOME TAX RETURNS. BY INCDME GRDUPS. 1952

Percent of total 7180

NUMBER OF RETURNS

ADJUSTED GROSS INCOME

TAX LIABILITY

— 30

— 20

UNDER tS.OOO

JS.OOO UNDER tlO.OOO ADJUSTED GROSS INCOME GROUPS

$10,000 OR MORE

INDIVIDUAL INCOME TAX RETURNS FOR 1952

on returns with $5,000 or more. Dividends are reported on one out of every five returns with income of $5,000 or more, whereas dividends are reported on about one out of 20 returns with income under $5,000.

Almost 7 million returns show business activity of sole proprietors and 1.8 million are filed by members of part- nerships; however, in some cases, business and partner- ship enterprises occur on the same return. Among these returns, there are four million taxpayers with self-em- ployment tax.

There are 43.9 million taxable returns for the current year. This is 1.2 million more taxable returns than were filed for the previous year, while the nontaxable returns decreased only 146 thousand.

The standard deduction was elected on 43.7 million returns, which is 77.3 percent of all returns. This is the lowest percentage of returns ever to show this election which has been gradually declining since 1948 when 83 percent of the returns showed use of the standard deduction.

The optional tax table was used to determine the in- come tax liability on 36.2 million returns, or 64 percent of the total. This is the smallest proportion of the re- turns to show use of the optional tax since its introduc- tion in 1944. The highest proportion was slightlv over 80 percent for 1945.

Of the 12.8 million returns which have itemized non- business deductions in 1952, almost all show contribu- tions and taxes paid. On one-half of these returns, the taxpayer's medical and dental expenses were such that he claimed a deduction. About 6 out of 10 returns have a deduction for interest paid.

The total number of exemptions claimed is 149.6 mil- lion of which 90 million are the per capita exemption for the taxpayer and on joint returns his spouse, 5.5 million are the additional exemptions for age and blindness, and

NUMBER OF RETDHNS. AND AMOUNTS OF INCOME. DEFICIT. AND TAX: INDIVIDUAL RETURNS 1952 AND 1951

1952

1951

Increase or de- crease (— )

Number or amount

Per- cent

.\I1 returns: Number of returns

56, 528, 817 216, 087, 449 797, 541 43, 876, 273 43, 866, 832 198, 531, 784 9,441

23,425

28. 02O, 288 27, 802, 831

217, 457

12,652,544

12. 240, 257

17,555,665

412, 287

774,116

55, 447, 009

203,097,033

760,548

42, 648, 610

42, 636, 797

185,171,964

11,813

23,912 24, 439, 073 24, 227, 780

211,293

12, 798, 399

12, 405, 800

17,925,069

392, ,599

736, 636

1,081,808

12, 990, 416

36,993 1,227,663 1,230,035

13, 359. 820

—2, 372

-487 3, .181,216 3, 575, 051

6, 164

—14,5,855

—165. 543

—369, 404

19,688

37,480

2,0 6.4 4.9 2 9 2.9 7.2 -20.1

—2.0

14.7 14.8

2.9

Adjusted gross income

thousand dollars. . Adjusted gross deficit

thousand dollars.. Taxable returns: Total number of returns

With adjusted grn.*^ income: .Vumber of returns

.Adjusted gross income

thousand dollars.. With no adjusted gross Income: Number of returns

Adjusted gro^s deficit

thousand dollars.. Total tax liability. ..thousand dollars.-

Income tax thousand dollars .

Selt.cmployment tax

thousand dollars.. Nontaxable returns: Total number of returns

With adjusted gros.s income: Number of returns

—1.3

-2.1

5.0

5.1

Adjusted gross income ,„ ^ thousand dollars. . With no adjusted gross Income:

Number of returns

Adjusted gross deficit

thousand dollars. .

54.1 million are per capita exemption for dependents. The average number of exemptions on returns under $5,000 adjusted gross income is 2% exemptions per return, while on returns with $5,000 or more income the average number of exemptions is 3% for each return. The chief reason for this divergence is that joint returns, having at least 2 exemptions, compose 90 percent of the returns with income $5,000 or more, but in the lower income group only 50 percent of the returns are joint returns. The average number of exemptions for joint returns as a whole is 3)^ and for all other returns, as a group, the average is 1% exemptions each.

INCOME TAX PROVISIONS FOR 1952 INDIVIDUAL

INCOME

The Internal Revenue Code of 1939 as amended by the Revenue Act of 1951, dated October 20, 1951, and by the Social Security Amendments of 1950, dated August 28, 1950, is effective for the income year 1952. Some of the amendments were applicable throughout the year 1951, others were applicable as of November 1, 1951, so that the full effect of the increase in tax rates and of other changes is reflected, for the first time, in the income and tax data for 1952.

In addition, Public Law 465-82d Congress, 2d Session, approved July 8, 1952, amended the 1939 Code in several respects, one of which is an increase in the allowable deduction for charitable contributions made by individ- uals. The deduction is increased to an amount not in excess of 20 percent of the adjusted gross income for tax- able years beginning on or after January 1, 1952, whereas the deduction formerly was limited to 15 percent of ad- justed gross income.

RETURNS INCLUDED

Data in this report are compiled from the returns as filed by the taxpayers, prior to audit by the Internal Revenue Service, and do not reflect any changes in income, deductions, exemptions, cr taxes that may result from official audit.

Individual returns used are Forms 1040 and 1040A filed by citizens and resident aliens. Included are returns for tlie calendar year 1952, a fiscal year ending within the period July 1952 through June 1953, and a part year with the greater number of months falling in 1952. The majority of returns are for the calendar year. Tentative returns are not included and amended returns are used only if the original returns are excluded. Returns of nonresident aliens are not included.

A return is required of every individual, including minors, wlio had $600 or more of gross income for the taxable year, except that every self-employed person must file Form 1040 if he has at least $400 of net earnings from self-employment, regardless of allowable deductions and exemptions. Many returns, not otherwise required, are filed solely to claim refund of tax overpaid by cur- rent payments; also some returns are received without anv information on tliem.

INDIVIDUAL INCOME TAX RETUENS FOR 1952

Form 1040A is the employee's optional return which may be filed by persons whose gross income is less than $5,000 consisting of wages reported on Withholding Statements (Form W-2) and not more than a total of $100 from other wages, dividends, and interest. The income tax liability on this form is determined by the district director of iiaternal revenue on the basis of the income reported, in accordance with optional tax table II of the 1951 act, amending the 1939 Code. The tax in this table applying to 1952 income makes allowance for the standard deduction and for exemptions. Jouit returns of husband and wife may be filed on Form 1040A if their combined income meets the requirements for its use. Form 1040A cannot be used by husband and wife to report divided community income; neither can it be used by persons claiming status as head of household.

Form 1040, which may be either a long-form return or a short-form return, is used by persons who, by reason of the size or source of their income, are not permitted to use Form 1040A, and by persons who, although eligible to use Form 1040A, find it to their advantage to use Form 1040. Persons with adjusted gross income of less than $5,000, re- gardless of the source, may elect to file the short-form return on which nonbusiness deductions and tax credits are not reported, the income tax being determined on the basis of adjusted gross income, by the taxpayer, from the optional tax table. If the taxpayer whose adjusted gross income is less than $5,000 wishes to claim nonbusiness deductions in excess of the standard deduction, he must file the long-form return and compute the income tax lia- bility on the basis of net income less allowable exemptions. Persons with adjusted gross income of $5,000 or more are required to file the long-form return and compute the in- come tax liabOity. In computing the net income to be taxed, the taxpayer may use, in lieu of itemized nonbusiness deductions, the optional standard deduction which is the smaller of $1,000 or an amount equal to 10 percent of the adjusted gross income, except that in the case of a married person filing a separate return, the standard deduction is $500.

Facsimilies of the 1952 individual returns. Forms 1040 and 1040A, are presented on pages 95-126.

The table below sets forth the number of individual re- turns filed for 1952 on the various forms and shows whether they are taxable or nontaxable. It also indicates the re- turns on which tlie tax is determined from the optional tax table, as well as returns on which the taxpayer elected the standard deduction and returns on which the taxpayer found it to his advantage to itemize his nonbusiness deduc- tions. The income tax liability of 36.2 million taxpayers filing Form 1040A and short-form 1040 returns is deter- mined from the tax table. These 36.2 million returns also have the standard deduction. In addition, 7.5 million taxpayers using long-form 1040 returns elected to use the optional standard deduction, so that a total of 43.7 million returns show use of the standard deduction. On the re- maining 12.8 million returns, the taxpayer itemized his deductions.

NUMBER OF RETURNS BY FORM OF RETURN. 1952

Form of return	Total	Taxable	Nontaxable
Form ICHOA	11, 896, 547 24,276,697 7, 519, 797 7, 942, 164 4, 893, 612	8, 103, 863 16, 790, 004 7, 519, 797 6, 568, 997 4, 893, 612	3, 792, 684
Form 1040: Short -form.	7, 486, 693
Long-form: With standard deduction— adjusted gross
With itemized deductions:	1, 373, 167
Adjusted gross income $5,000 or more

Total returns	56,528,817	43, 876, 273	12, 652, 544

COMPOSITION OF ADJUSTED GROSS INCOME

In the following chart showing composition of adjusted gross income for 1952, the income base is adjusted gross income less adjusted gross deficit. Only the four major sources — salaries and wages, business, partnership, and dividends — are given a specific area, the remaining sources being grouped in the area for other income. In plotting the business area, the net profit and net loss from business are combined; similarly, the net profit and net loss from partnership are combined for the partnership area. Other income encompasses net profit and net loss from rents and royalties, net gain and net loss from sale of capital assets and other assets, net operating loss deduction, and income from interest, annuities and pensions, estates and trusts, and miscellaneous sources.

Salaries and wages, which predominate, make up 81 percent of the income and are four times greater than in- come from all other sources combined. Business and partnership together contribute 1 1 percent of the income Dividends form only 3 percent of the total.

COMPOSITION OF ADJUSTED GROSS INCOME, 1952

ADJUSTED GROSS INCOME (net) J2I5 BILLION

MARITAL STATUS

Among the returns for 1952, there are 33.4 million joint returns of husbands and wives; this group forms nearly 60 percent of all returns filed. The next largest group of returns is that filed by single persons not heads of house- hold ; this group of 20 million returns constitutes somewhat

INDIVIDUAL INCOME TAX EETURNS FOR 1952

over 35 percent of the total. Of the remaining returns, 2.3 million, or 4 percent, are separate returns of husbands and wives and 0.7 million, or 1 percent, are returns of heads of household, a status created under the 1951 act and classified for the first time on 1952 returns.

NUMBER OF RETURNS, ADJUSTED GROSS INCOME AND DEFICIT, BY MARITAL STATUS OP TAXPAYER. 1952

	Returns	Adjusted gross in- come	Adjusted gross deficit
Marital status	Number	Percent of total
Joint returns of husbands and wives. . . Separate returns of liusbands and wives:	33, 440, 334 1, 085, 336 1, 226, 430 342,440 347,025 10, 970, 540 9,116,712	59.2 1.9 2 2 .6 .6 19.4 16.1	Thousand dollars 163,708,804 3, 619, 690 2. 816, 016 1, 762, 473 1,461,215 23, 477, 822 19, 252, 629	Thomand dollars 623, 144 18, 524 7 943
Women
Returns of tieads of household:	(') (') 87, 179 65,464
Women
Returns of single persons: Men Women
Total	56, 528, 817	100.0	216,087,449	797, 541

1 Number of returns is subject to sampling variation of more than 100 percent; there- fore, data are not shown separately. However they are included in totals.

DEDUCTION FOR MEDICAL EXPENSE

Among the taxpayers who itemized nonbusiness deduc- tions for 1952 there are 6.4 million who claimed deductions amounting to $2.1 billion for medical costs paid during their taxable year. This is the largest amount ever claimed on account of medical expenses and represents nearly 7 percent of the $31.5 billion of adjusted gross income reported on returns having a medical deduction. For 1950, the last year for which the medical deduction was tabulated, the deduction is $1.6 billion. The 1951 act liberalized the deduction for taxpayers who have at- tained the age of 65 before the close of their taxable year, by removing the limitation pertaining to the amount of medical deduction equal to 5 percent of the adjusted gross income; so that such taxpayers may deduct their entire medical costs, if within the maximum allowable deduction.

Medical costs to be considered for this deduction include those actually paid during the year, even though the ill- ness occurred in a prior year, for the care of the taxpayer, his spouse, and any dependent who received over one- half of his support from the taxpayer regardless of the dependent's gross income. Medical costs include pay- ments to physicians, dentists, nurses, hospitals, oculists, chiropractors, osteopaths, as well as cost of X-rays, medi- cal supplies, drugs, dentures, crutches, hearing aids, and the like. Any sick, health, or hospital insurance received must be applied against the total medical expenses, after which a deduction is allowed subject to limitations. Under the 1951 act, if neither the taxpayer nor his spouse has attained the age of 65, the deduction for medical expenses is that portion of such expenses which exceed an amount equal to 5 percent of adjusted gross income; if either the taxpayer or his spouse is 65 years or over before the close of the year, the deduction is the entire amount of medical expenses for both plus the amount by wliich medical expenses for their dependents exceed 5 percent of adjusted gross income. However, the maxi-

mum deduction allowed in any case is limited to $1,250 multipled by the number of exemptions allowed for nor- mal tax and surtax other than those for age and blind- ness, but not in excess of $2,500 in the case of a single person, a head of household, or a married person filing a separate return, nor in excess of $5,000 in the case of a joint return of husband and wife.

In the following table, the deduction for medical, dental, etc., expenses is tabulated together with the adjusted gross income reported on these returns. The medical deduction is the amount claimed by the taxpayer whether or not the deduction complies with the above provisions.

MEDICAL DEDUCTION AND ADJUSTED GROSS INCOME BY ADJUSTED GROSS INCOME CLASSES. 1952

Adjusted gross income classes

Taxable returns: No adjusted gross income..

Under $600

.$600 under $1,000

$1,000 under $1.,500...

$1,500 under $2,000

$2,000 under $2,500

$2,,'i00 under $3,000

$3,000 under $3.500..

$3,500 under $4,000

$4,000 under $4,.=i00

$4,500 under $5,000..

$5,000 under $6.000

$6,000 under $7,000

$7,000 under $8,000..

$8,000 under $9,000

$9,000 under $10,000

$10,000 under $15,000

$16,000 under $20,000

.$20,000 under $30,000

$30,000 under $60,000

$50,000 under $100,000

$100,000 under $200,000

$200,000 under $500,000

$500,000 under $1,000,000... $1,000,000 or more

Number of returns

Total ta.xable returns..

Nontaxable returns: No adjusted gross income..

Under $600

$600 under $1,000...

$1,000 under $1,500

$1 .500 under $2,000

$2,000 under $2,600..

$2,500 under $3,000

$3,000 under $3.600

$3,500 under $4,000..

$4,000 under $4,600

$4,500 or more

Total nontaxable returns.

Grand total

Taxable returns under $5,000 returns

Taxable returns $5,000 or more..

and nontaxable

(')

2,743

48,961

138, 192

288,302

388,465

468. 128

572, 315

672,538

656, 086

593, 878

848, 405

454,609

215, 166

118, 214

65,865

141,528

50, 871

41,258

25,959

13, 548

3,707

1.071

153

5, 800, 951

8,892 11,912 59, 479 93,785 92, 873 95, 637 99,712 69, 072 46,221 26.093 34,809

638,485 6, 439, 436

4, 459, 032 1,980,404

Deduction for medi- cal, dental, etc.. expenses

Thousand dollars

(')

317

7,286

26, 421

61,411

88,956

119,947

158, 375

196, 154

194, 527

171.930

273, 597

161,944

85,204

62, 536

35,894

99,266

43,494

40,464

28,556

16, 171

4,676

1,444

214

1, 868, 137

4,825 4,445 18, 169 32, 871 38,563 37, 366 46,299 31,407 20,192 14, 356 21, 606

270, 097 2, 138. 234

1, 294, 700 843,634

Adjusted

gross

income

Thousand dollars (') 1,478 42, 910 176,884 507, 477 878, 731

1, 267, 608 1, 859, 881

2, 523, 107 2, 788, .■fflO 2,818,296 4, 628, 382 2, 934, 287 1, 603, 647

996, 379 623, 278

1, 686, 318 871.610

997, 375 984, 961 911,200 4%, 430 297,258 103, 969

66,389

30, 065, 047

2 56,493 6,050 49,284 121, 140 161,316 213, 349 276,368 223,675 171,664 110.447 193, 319

' 1,469,018 '31,534,065

' 14, 332, 682 17, 201, 483

1 Number of returns is subject to sampling variation of more than 100 percent; there- fore, data are not shown separately. However, they are included in totals.

2 Adjusted gross deficit.

5 Adjusted gross Income less adjusted gross deficit.

EXPLANATION OF CLASSIFICATIONS AND TERMS Classification of Individual Returns

Individual returns for 1952 are classified by adjusted gross income classes, by taxable and nontaxable returns, by standard and itemized deductions, by marital status of taxpayer, by number of exemptions other than age or blindness, and by States and Territories. Also returns are classified by the size of each specific source of income and loss comprising adjusted gross income; taxable returns are classified by types of tax liability. Returns

INDIVIDUAL INCOME TAX RETURNS FOR 1952

with itemized deductions are classified by net income classes for a frequency of returns only. Data presented under the various classifications differ, some items not being available for all classifications.

Adjusted gross income classes.^ — The amount of ad- justed gross income reported on each return supplies the basis for this classification. The class intervals for 1952 are broader, in most instances, than those used in former years. Returns showing an adjusted gross deficit regard- less of amount, returns that break even in adjusted gross, and returns with no information on them are designated "No adjusted gross income" and appear in aggregate as a separate class.

Returns in the two classes, no adjusted gross income and adjusted gross income under $600, occur among the tax- able returns because the self-employment ta.x is payable on self-employment income irrespective of the income tax. Nontaxable returns in the adjusted gross income class $4,500 or more are considered a class unit and, in tables where the taxable and nontaxable returns are combined, the nontaxable returns in this class remain in this unit, even though they exceed the designated class limit.

Returns with standard deduction or with itemized deductions. — Retui-ns with standard deduction are op- tional returns. Form 1040A, and short-form returns. Form 1040, on both of which the adjusted gross income is less than $5,000 and deductions are allowed automatically through use of the tax table, and long-form returns, Form 1040, with adjusted gross income of $5,000 or more on which the optional standard deduction is used. The standard deduction in the latter case is the smaller of $1,000 or 10 percent of the adjusted gross income, except that on the return of a married person filing a separate return, the standard deduction is $500.

Returns with itemized deductions are long-form re- turns. Form 1040, on which nonbusiness deductions allowed against adjusted gross income are reported in detail by the taxpayer or on which no deductions (stand- ard or itemized) are reported; all returns with adjusted gross deficit whether short-form or long-form returns (with or without deductions) ; returns that break even in adjusted gross; and returns with no information on them.

Taxable and nontaxable returns. — This classification is based on the existence or nonexistence of a tax liability after tax credits. The tax liability includes the self- employment tax. Tax credits are allowed for tax paid at source on interest from tax-free covenant bonds and for income tax paid to a foreign country or a possession of the United States. However, these tax credits are allowed only to taxpayers who itemized deductions and only against the income tax. No tax credit is allowed against the self-employment tax.

Taxable returns are those showing a tax liability re- maining after the allowable tax credits stated above. Returns with self-employment tax are classified as tax- able even though there is no income tax.

Nontaxable returns are those without taxable self- employment income that have an adjusted gross deficit, or a breakeven in adjusted gross, or no amounts of income, or that have an adjusted gross income which when re- duced by deductions (standard or itemized) and exemp- tions leaves no income to be taxed, or in case of remaining income, the income tax thereon is eliminated by the tax credits.

Size of specific source. — For the purpose of frequency distributions only, returns are classified by size of each specific source of income and loss comprising the adjusted gross income. The class intervals are sufficiently narrow to provide adequate classification of small income items. Net income classes. — Returns with itemized deductions are classified on the basis of the amount of net income for a frequency distribution of these returns. Returns with net deficit, regardless of amount, are designated "No net income" and appear as the first class.

Types of tax. — Taxable returns are classified on the basis of three types of tax: combined normal tax and surtax, alternative tax on income containing capital gain taxed at the special rate, and self-employment tax only. The first two types of tax may be in conjunction with the self-employment tax. By so classifying the tax, the two categories — returns with normal tax and surtax, and returns with alternative tax — are maintained on the same basis as was used before the advent of self-employment tax.

Returns with normal tax and surtax include the optional returns. Form 1040A, and the short-form returns. Form 1040, on both of which the optional tax is paid in lieu of the regular normal tax and surtax. Short- and long-form returns. Form 1040, with normal tax and surtax may also have self-employment tax. Returns with normal tax and surtax include all returns with net loss from. sales of capital assets and returns with net gain from such sales unless the alternative tax is imposed.

Returns with alternative tax are long-form returns. Form 1040, wherein the income includes a net long-term capital gain or an excess of net long-term capital gain over net short-term capital loss and the alternative tax is less than the regular normal tax and surtax on income which includes all net gain from sales of capital assets. Returns with alternative tax may also have self-employ- ment tax.

Returns with only self-employment tax are returns, Form 1040, with self-employment income subject to self-employment tax but with no income tax liability.

Marital status. — Classification of returns for marital status of ta.xpayer is based on the marital status of the taxpayer at the close of the income year or on the date of the death of a spouse. The four classifications are: joint returns of husbands and wives, separate returns of hus- bands and wives, returns of heads of household, and re- turns of single persons. The last three groups are also classified as returns of men and returns of women.

Joint returns of husbands and wives are those on which a married couple report their combined income or returns