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April 29, 1950

INCOME TAX DISCRIMINATION AGAINST THE PROFESSIONS

JAMA. 1950;142(17):1357-1360. doi:10.1001/jama.1950.72910350001009
Abstract

Under Section 165(a) and related sections of the 1942 Federal Internal Revenue Code, funds used by companies for the purpose of providing employees with pensions or shares in profit-sharing trusts are deductible from gross receipts as business expenses and thus are not a taxable part of the employer's or company's income, if the particular plan is approved by the Bureau. These funds do not become a taxable part of the recipient's income until they are actually received, either when the recipient retires or when he cashes in on his profit-sharing account—at which time he will presumably be in a lower income bracket. Since the provisions of Section 165(a) and related sections are restricted to employees, professional men who can qualify as employees—for example, company lawyers and company physicians—can receive the benefits of these pensions and profit-sharing trusts, while those who conduct their professions as single proprietorships or partnerships may not

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