The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-03-09
toners and to obtain an increase in

toners and to obtain an increase In
trade.
One taxpayer who in 1917 bought
certain stocks and bonds for $4,000
said that in 1918 the value OF these
securities dropped to $4,000. He wanted
to know II he could claim the $1,000 as
a loss In computing his income tax
liability. He cdald not. Under the
provisions OF section 214 OF the revenue
act Of 1918 only such losses as have
been sustained during the taxable year
can be claimed; that is, the loss must
have resulted from a completed and
closed transaction. In this case the man
still owned the securities. They may
go up in value in 1919. and until they
are sold or otherwise disposed of this
taxpayer would be unable to determine
whether he suffered loss or derived a
gain from the investment. In other
words. no account Ia taken for income
tax purposes of fluctuations in the mar
ket value or arbitrary changes In the
book value of securities or other prop
erty. This ruling has been modified In
the case of securities owned by dealers
In securities. See Treasury decision 2609
and Treasury decision 2649.
A man while driving an automobile
for pleasure ran down and injured an
other person. He either paid over a
certain sum or paid judgment rendered
against him in settlement of the injury
done. AS this was not loss incurred
In the conduct of his business or trade,
or which resulted from transaction
entered into for profit, he cannot claim
the amount as a loss.
A frequent question asked has to do
with alimony. Allmony is not held to be
Income to the recipient, nor is it held
H. III,
deduction to the person paying the same.
II physician or other professional or
business man rents a home and uses a
portion of 1t for professional or business
purposes the proportion of the rent paid
which is properly chargeable to the
number OF rooms used for professional
or business purposes may be claimed
as a deduction.
Liberty Bonds Exempt.
Ali interest received upon Liberty
bonds Is exempt from normal tax.
In any event, interest upon the 3La
per cent. Liberty bonds OF the first series
Is exempt from both normal tax and
surtax.
In addition, a person is entitled to eX-
emption from tax upon interest received
on $4,000 aggregate amount of bonds OF
later issues ana war savings certlncateS.
II one originally subscribed for Lib
erty bonds OF the fourth series he is also
entitled to an exemption from tax on In
terest received upon bonds of the prev-
Gus issues not to exceed one and one-half
times the amount of tho fourth Liberty
bonds originally subscribed for and still
owned. not TO exceed in the aggregate
S45. 900.
The interest received on not ex-
ceeding $4,000 principal amount of
Liberty bonds into which first Liberty
bonds may have been converted in the
exercise of any privilege arising as a
consequence OF the issue of the fourth
Liberty bonds is exempt.
The interest received on not exceeding
100000 principal amount OF Liberty
bonds OF the fourth issue is exempt
The interest upon Liberty bonds,
which is entirely exempt from income
tax as defined above. should not be in
cluded in the gross income of the re-
turn, but should be reported in the re-
turn.