Evening star., 1922-01-14
ARTICLE VII.

Let US at once proceed to a discus
sion of the first topic referred to in
yesterdays outline.
A. Gross income. (see section 2ls-a
Of the law)
Gross income includes: -
Item 1. Gains and Profits-If A is
a dealer in hardware and purchases
merchandise for $50. before he can
determine the profit resulting from a
sale Of the merchandise for $50 he
must add to the purchase price the
expenses incurred in making the sale.
The calculation is as follows:
Realized from sales Observation-Disclosures. 500 90
Less-Cost Of merchandise. 5000
business expenses 400
Total cost and expenses "a. 90
Profit. MISREPRESENTATION. $500
For this transaction the dealer re-
ports as his gross income the total
his merchandise and the expenses in
CURED by him are taken as deduc-
tions. Space is provided on the re-
turn for gross income and for deduc-
tions.
Item 2. Wages and salaries-Ar
wages and salaries received consti-
tute part of gross income.
Item 3. Other Compensation and
Personal Service-This includes fees
received by professional men, commits
sions earned by statesmen or by
brokers. special earnings for deliver
ing lectures, writing articles, etc.
Item 4. Salaries and wages received
by officers and employees Of the fed
eral government are subject to tax
Thus the wages of post office employees,
salaries of officers of the United States
Army ands Navy and Of judges of the
federal courts are subject to tax.
Item S. Wages, salary or other
to the amount of the fair market
value of what is received must be
reported as gross income. Thus, if
a janitor receives $40 per month and
in addition an apartment. fuel and
light, he must report, besides his cash
salary. the market value of the apart
ment. light and heat furnished him.
However, If an employe purchases
luncheons from his Arm at reduced
rates, he need not report as additional
income the difference between the orr
binary value of the luncheon and the
price paid therefor.
Item S. Rents received by the
owner of building constitute a part
Of his gross income. If the property
is sold at profit. the profit is also a
part of his gross income.
The concluding four items OF this
dlFlSlon Will be discussed tomorrow.
Questions and Answers.
Q. G)-I sold in the latter part of
December a hundred shares of stock
with the intention Of replacing 1t
when the market sold off. The mar
ket had not sold off enough by the
end of 1921. Now, il I repurchase the
stock within the arbitrary th:lty-day
limit, but in 1922. is it a new trans
action or should it be treated as COW
ering my sale of late December
A. I am inclined to believe that the
regulations, when issued. will be
found to interpret section 214 (a) 60
and section 234 (a) 90, regardless of
the taxable year in which the buying
and selling transactions occurred.
Accordingly, I should strongly advise
against the repurchase within the
thirty day period. 1t may interest you
to know that certain attorneys are
of the opinion that the sections in
question may prove to be. unconsti-
tutional.
Q. .(s)-Will you kindly advise. in
following case:
City employe receives salary of $500
per month: is listed in budget at
S2,400 per annum. But, due to the
attitude Of the board of estimate and
apportionment toward the particular
department in which said employe
works. his check for the last half of
the month of December, 1921. is held
up. The probability is that l will