The Daytona daily news. [volume] (Daytona, Fla.) 1903-1926, 1922-01-12


fonkey. tax consultant Of the
Central National Bank Savings
and Trust Company, Cleveland.
Are any OF these similar to .our
ease?
BY r. A. coNkEv.
Question CAN unmarried indiyid
uai receives during the year sal asy
amounting to $500. dividends $500 aud
Insurance from his fathers dean Of
s5.o"o. Should he file a return
Answer-The insurance is not tax
able and need not appear on the re
turn His net income. however. is
Sl,20O and he must fie a return As
the dividends are not subject To nor
nal tax this leaves only 5000 subject
u normal tax and his personal ex
eruption Is $1,000. therefore he has
DO tax to pay
q. 5o-What Is the basis of deter
mining gain or loss from the sale OF
purchased property?
A IL With respect to property
purellaseq since Feb. %. 1913. the
basis is its cost The difference be
/ ven the sale price and its cost is
citla gam 4or loss
9th respect to property pur-
chased Prior to March l. 1918. the
faif market value as of that date gov
erns. ythe basis The following eN-
a'nples Illustrate how this basis is APP
piled. IT,
Where March /. 1913. value is great
er tiisn .rost and less than sale price
/ fropslfy toA -----$t 900 90
March |. 1913. value - | 500 90
Sold subsequent to March /.
1913. Tor ------------ 10000
Actraf~ gain -------$ 700 90
Taxable gain texcess of sale price
over March !. 1913. value). $4,000
Where March l. 1913. value is less
IAN cost but greater than sale price:
property cost ------------$ 81 900 80
March ! 1913. value - 10000
Sold subsequent to March /,
1915. Tor ----------------- 6no0o
Actual loss -------$ ioo 90
Deduciible loss fexcess of March !.
1913, value over sale price,. 5000 90
Where March |. 1913. value is great
er than cost and greater than sale
price.
property cost --------S 81 100 90
March |. 1913. value 100 90
Scld SUBSEQUENT to March
1918, Tor ------ | .,Un. 90
Actual gain S POO 90
which gain is not returnabIe. as sale
price is less than March |. 1919. value
and therefore no taxable gain accrued
since that date
Where March |. 1913. value is less
than cost and less than sales price
Property cost 81 DDa 90
March / 1913. value coo 90
Sold subsequent to March
1913, for --l- 500 90
Actual loss A s 2on 90
which loss is not deductbIe. as such
less did not accrue since March
1913
q 3l-Why does the date March
J. 1913, govern the basis
As this was the effective date
Of the first income tax law. gains ac-
crnulated prior to that date are not
taxed AMI likewise losses aecumu
iatea prior to that date are not allow
able DEDUCTIONS This was The dat.
" tHN D1SodSf u TIE sixteenth amend
ment lie the United States constitution.
permitting Congress to pass income +
tax laws without apportionmeut
among the states. The law Of 1909
VAS an excise tax law but based upon
net income
Q - What is the basis for deter
INNING gain or loss from the sale OF
property acquired BY gift2
II acquired by gift after Decem-
Der ~. 1920. the basis shall be- the I
same as il would have been in fhe
aandss of the donor or last preceding
owner who did not acquire il bV CIR
- s'-f WAT Is the basis il property
= acquired by Request. devise or in
beritance?
a. II acquired 20 Feb y 1872. the
OASIS Is lis fair market value 1T t.ne
81 acquisition
q iii 4 taxable gain af los
FealAs,l upon exchange OF propefivg
\ Where properties oi like ma
tu'c ar's exchanged no gain or loss
recognized, but if the property -
eflVed has = ready realizable market
value u, excess Of that OF the property
excllanssed There may under certain
conditions be a taxable gam
9 p What is meant bY meg loss
FMS Is loss resulting from
tAr operation Of a trade or biAnless
regularity carried on bs ibe taNpatas
including loss IN disposine 81 t
eapHsl assets OF tho basIness Tb
mount II this net loss mss 81 e.
tlt iefi from the met Income vi tie
suceeeding year and Is the ~net las
A IL excess ot such not Income th