Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-01-17
No. s..

Millions of dollars were realized
In 1870 from the sale of property
real and personal. Profits from
such transactions is income, anC
must be carefully accounted for ir
the recipients return, whether it be
$4,000 on the sale of real estate OIL
VIZ on the sale of a secondhand
automobile.
The return must show the kind
or property on which the profit
was realized; the name and ad.
dress of the purchaser or broker;
the sale price; the date acquired
cost of subsequent improvements
II any, depreciation subsequently
sustained; and cost of market val.
ue as of March /, 1913, If acquired
prior thereto.
Profit from the sale of property
is taxable income for the year in
which the sale occurs. This profit
Is measured by the difference be.
tween the cost, If acquired subse-
quent to March /, 1913, or the fair
market value as Of March l, 1918
If acquired prior thereto, and the
consideration received for the prop.
erty. The profit, so determined, is
subject to further adjustment or
account of additions or betterments
added to the property and to de.
probation sustained.
For example, real estate acquires
In 1909 at cost Of $4,000 in.
creased in value and on March /
1913. is. worth $4,000. Real estate
is not subject to depreciation, ant
no improvements were made there
on. In 1920 the property was solo
for $4,000. The profit over the
cost is $1,000. but the taxable profit
is only $4,000.
The bureau has not formulated
any definite method for determin
ing the market value as of Marcel
!, 1918. What that value was is 6
question to be established by the
taxpayer. Sales of other property
in the neighborhood similarly sit
uated on or about March l, 1918
Is evidential as to the March / val.
ue. The opinion of experts, bid anC
asked prices for similar property
and any other relative evidence OF
facts with respect to value or
March /, 1913. may be placed II
the record.
Allowable Deductions.
In the purchase and sale of rea
estate brokers' fees, commissions
lawyers fees, recording fees, ant
like expenses connected with tn,
transaction are considered part o.
the cost and may be deducted
from the selling price in determin
ing profit. If. in order to sell for {
higher price, property is improved
as when a house is reprinted or al
automobile overhauled, the expens,
may be added to the cost. Sucl
items, however. IL deducted from
gross income when the expendi
lures were made, can not later b,
considered in arriving at the profit
or, in other words, cannot be in
cluded as q business expense ant
also as a part of the cost of tn,
property.
The selling price of property in
cludes, notes, mortgages. securities
or anything accepted as cash, an,
| tAlC pt DIS In
come when received. Installmen
| sales, involving a small initial pay
ment, are governed by special treas
ury regulations. The profit Is ap
! portioned to each installment an,
| Is reported for taxation as collect
ed. Except where these specia
regulations apply, notes, mortgages
and other deferred payments mus
be considered as If the entir
amount was paid in cash.
If. in the latter instance, a not
Is found worthless, or If deferred
payment cannot be collected, tn
taxpayer, after exhausting ever,
reasonable means of collection
may deduct the amount as ba,
debt in his income tax return for
subsequent year. The sale of tn
property is regarded as a close,