Evening star., 1921-03-14
TAX OPINION NOT
Of GREAT IMPORT
Would Apply if Upheld by
Court to Isolated Cases.
Local Stocks.
By 1. A. FLEMING.

The recent action of William L.
Frierson. solicitor. general. referring
to the matter involving the Validity
Of a ruling by the commissioner OF
internal revenue in the matter OF the
sale of $500 shares of b. +. Goodrich
stock. with tax assessment based on
value as OF March ]. 1913. had as it's
basis the following: The plaintiff in
error acquired this stock in 1912. with
a certain amount Of cash, in exchange
for other stocks. which he previously
received as gift and by bequest.
as .hus stock edn $3.50 sss or
s2s1.6oo. He sold the stock in 1916
for s2Ss,346.25. making net loss on
the entire transaction Of $22.263.15.
But it appears that after he had re-
very rapidly declined until. on March
1. 1918. it sold on tho New York Stock
Exchange at Sal a share. On this
basis the commissioner or internal
revenue determined the total value OF
the stock on March /. 1913, was $l4s.-
$3.50.
He therefore deducted this from the
proceeds OF the sale-$269. .346. 5o-and
collected taxes on the remainder-
$129,710.75.
At no time during the entire trans
action or transactions was there 4
profit in sight for the owner of these
shares.
The law itself specifically cites that
the date March !. 1913. was decided
upon for the specific purpose Of as
|certaining the gain from the sale or
other disposition of the property. real,
personal or mixed, acquired before
March l. 1913. and the fair market
price or value of such property as of
March !. 1913. shall be the basis for
determining the amount of gain de-
rived"
The solicitor general said:
ut is difficult to escape the con-
clusion that this provision can have
no application until it is first as
certained, by comparing purchase and
selling price, that there was an ac-
tual gain"
The plaintiff in error was the plain
tiff in two cases. In the first instance
he sought to recover on taxes paid on
account of a transaction in United
Verde Extension Mining Company
shares. He purchased the shares IN
for $13,931.22.
On this transaction he made a clear
gain of $13.431.2e. From the time he
purchased it the stock had increased
in value, by Nj. ch /. 1913. to $685..
The commission OF internal revenue
construed the y to allow him 10
withdraw as capital value from the
DIOCceUS Vi thC SaiS thc Ss&AoS
1, 1918, $685.. and collected on $l3,-
25622. Plaintiff in error was plainly
liable for this tax.
The opinion Of the solicitor general
in this case, should it be sustained
by the Supreme Court. would be ap.
plicable to isolated cases only. and
would not cause any great loss to the
government or any heavy refund OF
taxes collected, under similar cases.
The government has yet to make
refund on the Supreme Court decision
on stock diyidend according to gem
eral report, although the settlement
may have been made in some IN
stances.
Busy mt Banks.
This was a busy day at the banks
Of the city, most of the cashiers and
assistant cashiers being busy max
ing out income tax returns for Gus
toners. All returns must be In Bal
timore tomorrow, care collector,
Maryland district. the last day, and
belated taxpayers extended the SER
vice possibilities Of the tax experts
and other officials were called into
service.
Local Securities.
Capital Traction shares were ex-
dividend today at 85. The 5s OF the
same company were firm at 81.
Sales Of Washington Market stock
were reported at Is and II.
Washington Gas notes were steady
at 100k.