Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1920-02-17
'ACkARD GIVES
OPINION ON TAX
construction is Placed on,
Income Tax Provi-
sions.

CONSTITUTION OF certain provisions
the income tax law, under which
as been made by Assistant Attorney
enernll F. r. Packard in an opinion
.ceived here today from Gordon v.
Ok. income deputy, tax commission
{ Bismarck, %8s
$. j.; Elliott, deputy revenue collec-'
#, will be located in, his office on
ilird floor of the federal building
3i the date limit set, fot-.the mak-
NJ income tax returns.
>,t.8's Packard's opinion deals with
Alne5 received as interest upon land.
aatiaEts; income received upon notes
nd income received for negotiating
pans upon North Dakota real proper
v In the nature of commission mort
ages. 4
Packard's Opinion.
laste opinion issued by Atty. Pack
I'd follows:
Il. I'm my Judgment, income re-
Eetved as interest upon land contracts,
hat IL. contracts for deeds wherein
ne title remains in the vendor, Is ex-
kmpt from taxation under the provis
ions Of the income tax law. While
he matter is not without difficulty, l
I'VE no doubt that 1t was the intent
the legislature. to exempt income
rom farm loans from the operation
the income tax act, to secure as
Nv a rate Of interest as possible for
no borrower. No One questions where
he incident of the tax on farm mort
ages falls-the borrower Invariably
Eays ,the tax. The same is true Of a
AK upon land oontracts-the buyer
Fho is usually struggling to- possess
imself of a home must pay the tax.
"2. AS to the income received up
n notes, the security for which con
lists of both real and personal prop
rty, I am Of the opinion that the
rincipal security should govern. its
allure, II the principal security Is the
cal property. then I am of the opin-
eingf added thereto does not destroy
he exemption. On the other hand II
he principal security is chattels, then
he incidental inclusion Of q third or
kourth mortgage could not be said to
ring the loan within the exemption
revision: The predominant use gov
rms as to the exemption of property
Nd for religious, charitable or edu-
.,Eonal purposes. When part of the
noperty Is used for purposes within
ile exemption statute and, the re.
taainder used for other purposes.
ZEE no way out Of the dilemma indi-
Ated by your second question, except
) fall back upon this rule of pre-
ominAte use and stretch it to fit the
%ccasion.
-. income received for negotiat.
og loans Upon North Dakota .real
property in the nature Of commission
Mortgages is brokerage, and not in.
Sofhe from real property within. the
Eneaning of the statute and is not ex'
mpt from the operation OF the in
kome tax law. If the brokerage II
aid in cash and the transaction
yosed, then I am of the opinion tina,
me income tax rate should be applied
. the entire amount, but II it is il
he nature of an installment mort.
cage, then the income should be APP
lied when the installments are paid
am aware that the federal incom,
az administration applies the ia,
ate to the entire amount Of thu
brokerage at the time. Of the transac
len, regardless OF whether it IL in thu
satura Of an installment mortgage Q
rot This appears to<m me to be bat
pom principle since, az installt1een
mortgage Represents little value oh
il paid and 1t doubtless f%rsquentl!
happens that some~of the installment
.re lever paid. This would necessi
ate some sort Of deduction at q late
'ate and would cucumber admins
no tim - s,..=.r.E ~ .