The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-01-29
THAT AMAZING DECISION.
Another Modification Of the Trcasury's
Attitude Revealed.

To THE EpiToR or TIE sUN--S~: The
letter to n gentleman of this city from
l.. +. Speer Deputy Commissioner OF
Internal Revenue. under date Of August
"a, 1914, contains this declaration:
Upon a further consideration OF the ques-
tiSh OF Losses the clause In paragraph II
OF the Act Of October 3. 1918. reading
"l,sses actually sustained during tn. year,
incurred In trade IL Interpreted
to mean that losses actually sustained dur
ing the year as result of any lawful
transaction or investment made for the
purpose OF gain or proft. which gain or
proht would be income subject to the In
come tax, are held to be losses Incurred
In trade" and tho amount thereof may be
claimed as an allowable deduction, even
though the said losses arose from invest
ments or transactions not connected with
the regu ar trade, calling, profession or en-.
ployment OF the person rendering the re-
turn. To be an allowable deduction. how
ever. the loss must be actually sustained
and determined during the tax year for
which the deduction Is sought to he made
and must be tNe result Of an actual, a
completed. q cl, sed Transaction.
But r. u. 1850, Issued under date Of
December ~. 1914, entitled synopsis vt
rulings on question relating 10 income
tax imposed hv Section . OF the Act Of
October 3, 1919" signed by w H. o.
born, Commissio aer OF Internal Reeve
nue.. and approx cd by W. q. McAdoo,
Secretary Of tho Treasury. contains Thu,
passage:
The term in trade" as Wsd In the law
and In r. ID. zoos Is held TO mean the trade
or trades ~ which the person making the
return Is engaged. that l., In which he has
Invested money otherwise than for the pur-
pose OF being employed In Isolated transac-
lions and to which he deyotes al least a
part Of his time and attention.
person may engage In more than one
trade aud may deduct losses incurred In all
% them. provided that In each trade the
above requirements are met
As 60 losses on stocks, grain cotton. Sc,
II these are incurred by a person engaged
In trade to which the buying or selling of
stocks, &c. are incident as part Of the
business, as BY member OF n stock grain
or cotton exchange, such losses may be
deducted.
person can be engaged In more than
one business. but 1t must be clearly shown
In such cases that he Is actually dealer
or trader or manufacturer. or whatever
tho occupation may he. and Is actually en-
gagged In ono or more lines Of recognized
businesses. before losses can be claimed with
respect to either or more than on line Of
business, ana his status a. such dealer must
be clearly established IT. u 2oojr.
Deputy Commissioner Specr Informed
his correspondent that losses actually
sustained during the year as a result of
any lawful transaction or lnve'tmen,
made for the purpose OF gain or profit
are held TO be losses Incurred
in trade. hut his superiors rule that
only losses sustained by actual traders
not persons indulging Ia isolated trans
actions" may DE deducted.
Thus the ply stefan who on July | In
vests 81 900 In stocks. and on September
/ sells them for $500. is guilty OF ar
isolated transaction" and can claim no
deduction for his loss but his broker
under similar circumstances, may.
This Is the hates, Treasury ruling, and
its Incidence will be particularly felt this
year when the great losses suffered IN
1914 are taken into account.
AN INVESTOR.