The daily banner. (Cambridge, Md.) 1897-2008, 1921-01-26
Eighth Article
On The 1920 Income
1921 Incon,c Tax Facts You Should
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Millions Of dollars We're realized
III 1920 from the sale Of property
real and personal. Profits from
such transactions is income &nd
must be carefully accounted for IN
the recipients return. whether il be
$4,000 on the sale Of real estate or
SIv Oh the sale Of 4 secondhand au-
tomobile.
The return must show the kind OF
property on which the profit was
realized. tie name and address OF
the purchaser or broker; the sale
price, date acquired cost of sub5e-
QuenJ improvements. If any: dep;e-
citation subsequently sustained; anG
cost or market value as of March i.
1913, if acquired prior thereto.
Prlfits from the sale Of property
is taxable income for the year IL
which the sale occurs. This profit
is measured by the difference be
tween the cost, if acquired subse-
Quent TO March /, 1918 or the fair
market value as Of March l 1913. II
acquired prior thereto, and the cen
sideration received for the property.
/ ItN DiOuI, So uElGI ikllljCbt, 4S oupJISt
to a further adjustment on account
OF additions or beterments added to
the property and to depreciation s4s-
tanned
For example. real estate acquired
IN 1909 at q cost of $4,000 increased
in value and on March !, 1913,- is
worth $4,000. Real estate IS rot
subject to depreciation. and no IN
prOyements were made thereon: in
1920 the property was sold for 81 j.
600. The profit over the cost is So
000, but the taxable profit is only
$4,000.
The bureau has not formulated
any definite method for determining
the market value as Of March /,
1918. What that value was IS
question of fact 10 be established by
the taxpayer. Sales of other prop
erty in the neighbCr hood similarly
situated on or about March l, 1873.
is eyidential as to the March /
value The opinion of experts, bid
and asked prices for similar proper
ty and any other revelant evidence
or facts with respect TO value on
March 1913, may be placed in the
record.
Allowable Deductions
In the purchase and sale or real
estate brokers' fees, commissions,
lawyers fees. recording fees, and
like expenses connected with the
transaction are considered part or
The cost and may be deducted from
the selling price in determining pro-
lit. If. in order TO sell for high
cr price, property is improved, as
" hen a house is repainted or an al
,omobtle overhauled. the expense
may be added to the cost. Sucn
items, however, If deducted from
gross income when the expenditures
we're made, can not later be cOnsiti-
cred in arriving at the profit; or, in
other words. can not be Included as
a business expense and also as part
Of the cost Of the property.
The selling price of property IN
dudes notes, mortgages securities
or any thing accepted as cash, AID
The prof, rauz4 he included. =
come when received. Installment
sales, involving a small initial pay
rnent are governed by special Treas
pOrJiOued to each installment and is
reported for taxation as collected.
Except where these special regula-
lions apply, notes, mortgages. ana
other deferred payments must be
considered as If the entire amount
was paid in cash.
If, in the latter instance, a note
Is found worthless, or if a deferred
payment can not be collected. the
taxpayer. after. exhausting every
reasonable means Of collection, may
deduct the amount as q bad debt in
his income tax return for a subse-
Quent year. The sale OF the proper
ty is regarded as a close transaction
and the collection of the notes as
new item.
Depreciation
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