72d CONGRESS . SESS. I. CH. 209 . JUNE 6,1932 .
205 deductions properly allocable to or chargeable against amounts
INCOME TAX excluded from gross income under this subsection . As used in this "Earned income! subsection the term " earned income " means wages, salaries, profes- sional fees, and other amounts received as compensation for personal s ervic es ac tuall y rend ered, but does n ot in clude that part of th e Eaeeptions n compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings o r profit s rather than a reasonab le allow ance as c ompensat ion for the p erson al se rvice s actu ally rende red . In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income producing factors, a reasonable allow- ance as compensation for the personal services actually rendered by the taxpayer, not in excess of 20 per centum of his share of the net profits of such trade or business, shall be considered as earned income . (b) TEA Cnxes IN ALASKA AND HAWAII : -In the case of an indi- a aaches in Alaska vidual employed by Alaska or Hawaii or any political subdivision t hereof a s a teac her in a ny educa tional i nstitutio n, the c ompensat ion received as such. This subsection shall not exempt compensation paid tfoVia`axe ptea°~- directly or indirectly by the Government of the United States . Sub- Form erpr ovisi onsr e . section (b) of section 5 of the Act entitled "An Act to provide a pevol. 46, p . isi, re . government for the Territory of Hawaii ", approved April 30, 1900, pealed .. as amended by the Act entitled "An Act to amend section 5 of the Vol . i, p.141. Act entitled 'An Act to provide a government for the Territory of Hawaii ', approved April 30, 1900 ", approved April 12, 19 30 [U. S.
SC ., Supp. V, P. C ., Sup . V, title 48, sec . 495(b)], is repealed as of January 1, 1932 . (c) INCO ME OF FOREIGN GOVERNMENTS.-The income of foreign income of foreign governments from in . governments received from investments in the United States in vestments in uni ted stocks, bonds, or other domestic securities, owned by such foreign states, etc • governments, or from interest on deposits in banks in the United States of moneys belonging to such foreign governments, or from any other source within the United States . . (d) INCOME OF STATES, MUNICIPALITIES, ET c :Incom e derived etI Income public ates, from any public utility or the exercise of any essential governmental ties . funct ion a nd acc ruing to a ny St ate, T errit ory, or the Dist rict of Columbia, or any political subdivision of a State or Territory, or income accruing to the Government of any possession of the United States, or any political subdivision thereof . Whenever any State, Territory, or the District of Columbia, or It under prior con . any pol itical s ubdivisio n of a S tate or Territor y, prior to Sept ember thaecreo s for operation 8, 1916, entered in good faith into a contract with any person, the objec t and purpo se of whic h is to acq uire, cons truct, oper ate, or m ainta in a publi c util ity- (1) If by the terms of such contract the tax imposed by this Levy on proceeds title is to be paid out of the proceeds from the operation of such wile State etc thereof public utility, pribr to any division of such proceeds between the p erson and the St ate, Terri tory, polit ical subdi vision , or the District of Columbia, and if, but for the imposition of the tax i mposed b y this t itle, a part of such pro ceeds for the tax able yea r would accrue directly to or for the use of such State, Territory, political subdivision, or the District of Columbia, then a tax upon the net income from the operation of such public utility s hall be levied, assessed , collec ted, and paid in the mann er and a t the rates prescribed in this title, but there shall be refunded to Refundsu such State, Territory, political subdivision, or the District of Columbia (under rules and regulations to be prescribed by the C ommi ssi oner with the approval of the Secretary) an amou nt which bears the same relation to the amount of the tax as the
