The federal government wasted no time in levying income taxes after Secretary of State Philander C. Knox declared that the so-called 16th Amendment had been ratified. His fraudulent declaration was made on February 25, 1913. The first Form 1040 was printed to cover the period of March 1 to December 31, 1913. This form was entitled "Return of Annual Net Income of Individuals (As provided by Act of Congress, approved October 3, 1913.)"
A most revealing part of this Form 1040 is found in the "Instructions", which are reproduced verbatim on the following pages. In the first paragraph of these instructions, there is valuable evidence which substantiates the validity of The Matrix discussed throughout this book. This paragraph is repeated as follows, in order to highlight key phrases:
This return shall be made by every citizen of the United
States, whether residing at home or abroad, and by every
person residing in the United States, though not a citizen
thereof, having a net income of $3,000 or over for the
taxable year, and also by every nonresident alien deriving
income from property owned and business, trade, or
profession carried on in the United States by him.
[Form 1040 for the Year 1913]
[From March 1, to December 31]
[Instructions, Paragraph 1]
INSTRUCTIONS
1. This return shall be made by every citizen of the United
States, whether residing at home or abroad, and by every
person residing in the United States, though not a citizen
thereof, having a net income of $3,000 or over for the
taxable year, and also by every nonresident alien deriving
income from property owned and business, trade, or
profession carried on in the United States by him.
2. When an individual by reason of minority, sickness or other
disability, or absence from the United States, is unable to
make his own return, it may be made for him by his duly
authorized representative.
3. The normal tax of 1 per cent shall be assessed on the total
net income less the specific exemption of $3,000 or $4,000
as the case may be. (For the year 1913, the specific
exemption allowable is $2,500 or $3,333.33, as the case may
be.) If, however, the normal tax has been deducted and
withheld on any part of the income at the source, or if any
part of the income is received as dividends upon the stock
or from the net earnings of any corporation, etc., which is
taxable upon its net income, such income shall be deducted
from the individual's total net income for the purpose of
calculating the amount of income on which the individual is
liable for the normal tax of 1 per cent by virtue of this
return. (See page 1, line 7.)
4. The additional or super tax shall be calculated as stated on
page 1.
5. This return shall be filed with the Collector of Internal
Revenue for the district in which the individual resides if
he has no other place of business, otherwise in the district
in which he has his principal place of business; or in case
the person resides a foreign country, then with the
collector for the district in which his principal business
is carried on in the United States.
6. This return must be filed on or before the first day of
March succeeding the close of the calendar year for which
return is made.
7. The penalty for failure to file the return within the time
specified by law is $20 to $1,000. In case of refusal or
neglect to render the return within the required time
(except in cases of sickness or absence), 50 percent shall
be added to amount of tax assessed. In case of false or
fraudulent return, 100 percent shall be added to such tax,
and any person required by law to make, render, sign, or
verify any return who makes any false or fraudulent return
or statement with intent to defeat or evade the assessment
required by this section to be made shall be guilty of a
misdemeanor, and shall be fined not exceeding $2,000 or be
imprisoned not exceeding one year, or both, at the
discretion of the court, with the costs of prosecution.
8. When the return is not filed within the required time by
reason of sickness or absence of the individual, an
extension of time, not exceeding 30 days from March 1,
within which to file such return, may be granted by the
collector, provided an application therefor is made by the
individual within the period for which such extension is
required.
9. This return properly filled out must be made under oath or
affirmation. Affidavits may be made before any officer
authorized by law to administer oaths. If before a justice
of the peace or magistrate, not using a seal, a certificate
of the clerk of the court as to the authority of such
officer to administer oaths should be attached to the
return.
10. Expense for medical attendance, store accounts, family
supplies, wages of domestic servants, cost of board, room,
or house rent for family or personal use, are not expenses
that can be deducted from gross income. In case an
individual owns his own residence he can not deduct the
estimated value of his rent, neither shall he be required to
include such estimated rental of his home as income.
11. The farmer, in computing the net income from his farm for
his annual return, shall include all moneys received for
produce and animals sold, and for the wool and hides of
animals slaughtered, provided such wool and hides are sold,
and he shall deduct therefrom the sums actually paid as
purchase money for the animals sold or slaughtered during
the year.
When animals were raised by the owner and sold or
slaughtered he shall not deduct their value as expenses or
loss. He may deduct the amount of money actually paid as
expense for producing any farm products, live stock, etc.
In deducting expenses for repairs on farm property the
amount deducted must not exceed the amount actually expended
for such repairs during the year for which the return is
made. (See page 3, item 6.) The cost of replacing tools or
machinery is a deductible expense to the extent that the
cost of the new articles does not exceed the value of the
old.
12. In calculating losses, only such losses as shall have been
actually sustained and the amount of which has been
definitely ascertained during the year covered by the return
can be deducted.
13. Persons receiving fees or emoluments for professional or
other services, as in the case of physicians or lawyers,
should include all actual receipts for services rendered in
the year for which return is made, together with all unpaid
accounts, charges for services, or contingent income due for
that year, if good and collectible.
14. Debts which were contracted during the year for which return
is made, but found in said year to be worthless, may be
deducted from gross income for said year, but such debts can
not be regarded as worthless until after legal proceedings
to recover the same have proved fruitless, or it clearly
appears that the debtor is insolvent. If debts contracted
prior to the year for which return is made were included as
income in return for year in which said debts were
contracted, and such debts shall subsequently prove to be
worthless, they may be deducted under the head of losses in
the return for the year in which such debts were charged off
as worthless.
15. Amounts due or accrued to the individual members of a
partnership from the net earnings of the partnership,
whether apportioned and distributed or not, shall be
included in the annual return of the individual.
16. United States pensions shall be included as income.
17. Estimated advance in value of real estate is not required to
be reported as income, unless the increased value is taken
up on the books of the individual as an increase of assets.
18. Costs of suits and other legal proceedings arising from
ordinary business may be treated as an expense of such
business, and may be deducted from gross income for the year
in which such costs were paid.
19. An unmarried individual or a married individual not living
with wife or husband shall be allowed an exemption of
$3,000. When husband and wife live together they shall be
allowed jointly a total exemption of only $4,000 on their
aggregate income. They may make a joint return, both
subscribing thereto, or if they have separate incomes, they
may make separate returns; but in no case shall they
jointly claim more than $4,000 exemption on their aggregate
income.
20. In computing net income there shall be excluded the
compensation of all officers and employees of a State or any
political subdivision thereof, except when such compensation
is paid by the United States Government.
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