Every evening, Wilmington daily commercial., 1921-12-09
INCOME PROVISIONS
N NEN REVENUE LAW
EXPLANATION OF Puzzling Fsa-
tuvss OF Enactment That VIII
bs Found Helpful.

,t,, anon ,hn passage cf the net, but In
"a. majority uf eases II docs not UP
tiA untn irss.
rcrsuuai Exemptions.
pn. at IN. a,nrlio,ating PROVISIONS
.f IN. now revenue law. effective for
,h. yea, 1881, ia the increase of the
p.,-onai exemption of married per-
sons f,nm $4,000 20 $4,000. In cascs
vh,,e ,b, combined income of both |
i..a not exceed $4,000. This Increase /
Applies also to the head OF family.
IA order that combined Income |
sllnhtiy IA excess Of $4,000 shall not
b. subjected 10 an ordinateiy d'spro-
tu,tiunate tax on account OF the re-
aueiion cf tho exemption 20 $1,000
thereon, the law tS.ction ai6c) pro-
,ldus that such reduction shan not
spoNto 90 increase the tax by more
than the amount uf the net income In
rNres. ui $4,000,
rur example, the tax on an income
ul ta.ONn having an exemption of So
800, would ho 4 per cent Of $4,000,
amounting O. sipo. The tax ON an In
como oi 5000, permitting an cSomp-
tiun uf only $4,000, would he per
cent uf sa,uio. or ,i20.io. except for
the saving clause which reduces the
tax a. sioo un s. 600 computed on an
exemption ~ sg,boo) plus $40 (the ex-
,uss % incomo over $4,000, making
tho total tnN un s5.oio the sum OF $40.
Aa thia provision works out IN prac-
ilce. on any Income i'm excess Of $1,000
and lees than sa,oso. IN the language
ul Raymond Hitchcock, "thc Govern
mvnt lnkce ~ ALL"
Allowance for Dependents.
Tho allowance Tor dependents has
been increased from $500 90 sioo for
ohoh OF such persons,
Normal and SurtaNcs.
rho old rates ~ normal tax, ~ per
cent ON incomes of $4,000 In excess ~
thu exemption ana credits. and ~ )
rpr cent on the balance. remain un-
changed undcr the new law. Tho sur
taxes nXvd by the act OF 1918 continue
tor tho year 1891, but arc reduced Tor
ip1H aud thereafter, Tho amount OF
income which la not affected by the
hurtaX IL Increased from $1,000 under
she old law a. $4,000 under tho new.
Tho 1 per cent rate of surtaS under
she new act has been extended TO an
incomc n $4,000 80 that tho sur,ax
un an Income 1T that amount a. re-
ducod from $40 a. sac. effective 1922.
rho graduated FurtaNos continue on
Incomes of over $4,000 being increas-
ed per cent on every 1900 Of income
ur to 100000 Tho surtaxes on in
vOmcs uf over 100000 are reduced
from Ua per ccut under the old law 10
90 pee cent undcr tho new one.
Returns.
heretofore any person with \ net in
vnine not in excess ~ his exemption
has not boon required 20 nlc return.
Hereafter any person who has received
q net income " the amount OF. or IN
ekccts o. his exemption. or who has
hAh gross income of 5000 or over
trvKarll,ss of whether tho net amount
he Income or lOsal, II required TO file
q rrtufu, n the combined net in
COME ~ husband and wife amounts
tu y GOO or " their combined gross In
vnne h $1,000 or over they are ro-
uulftd 90 make either separate or Joint
returns
determining Gain or Loss.
The Limitation ~ tax on profits FROM
ihu ealo % capital assets 10 igis per
cent, effective Dec. 81, 1891. explained
ln mi Interview published In las, Mon
DAYS Times, will undoubtedly induce
iuhny investors 20 sell securities held
lN them since the Incidence OF income
tANps,
nains er iosscs on ~n,.s.
Tho method prescribed for the COM
ruiailon uf rain or loss on the sale OF
property acquired prior TO March ]
iria, now effective, appears 90 bo
slmllsf 10 that previously adopted by
the Treasury Department AZ the re-
rult ~ litigation, holding that there a.
nu taxable Income whcr. tho proceeds
~ sale wYr. ioss than IA. cost bn,
si.eiof than the market value on
March 4, iHia.
The tests provided nc Section 20'
isubilvl-lens tsi tbl tl) co (s)1 60 y,
applied in determining whether q
flansactlon results in a tagable profit
dsduc,lhls iusa, or n-dcductibl.
wont uf loss. VIII probably prove .,
w. hirlruN ~ Interpretation by th.
htsrhRo taxpayer.
~, hrsl subdivision ~ this section
w ihr less applies 90 case where ths
iuHttuH ni sale exceed both IN,
market tHlup un March ], 1913. an,
ths uflFIuHl cost. ln which case the .x.
cess 90 tht proceeds n sale over IN,
market value un March 4. 1919, ~ tax.
nhls Income. For example a bond nur
chased ~ 1910 for sboo. having =
market value on March 4, 1919 Of 1850
ana which II nov sold for 81 900 woui,
result ~ taxable Income O, the ox.
cess Of The proceeds ~ saio (,l .0oO
over thc markr, yniu. t76ol, amount
iur a. t4to,
The second Hnhdivlslon of the section
deals With a cRsc where the proceed,
~ ssla are less than either the cost %
requirement. ur "a. market value o,
Mm'h 4. iRla, nylns tho doductibl,
h'-s "a, the excess ~ the markc, valu,
ga March ., ieia. over ,ro procecd
~ the sai.. ior example, n bon,
purchased In 1919 for 81 600. havin,
msih't value on March /. 1919. o
tiep nnd nov Sold for $500. would re
Nuii in duductihe lusa ~ the cxcos
VI o., market value on March !, 1871
,oibpl, uN.r The sale price ,s50o)
amounting 40 s2a0.
\oU.tsNAbie Profits.
The thlii rubd.vlsion OF this sectio,
~ the law ha, g. DO with cases whor
ftnnts are not made taIphl. and wher
iusses are not dcductiblc. These case
may ~ Illustrated as follows.
a bond purchased IN 1910 for $500
hn,lns a market value on March