Norwich bulletin., 1922-02-04
INCOME TAX FACTS
 YOU SHOULD KNOW
DEDUCTIONS

Tn computing net income the tax payer is permitted to deduct from gross income certain deductions for , losses, bad debts, contributions, inter | est. taxes. etc Deductions for losses | include not only losses incurred in the taxpayers trade or business but losses connected with any transaction enter 1 ed into for profit" or if arising from fires, storms, shipwreck or other cas- uaHy. Deductions for losses are allow able only to the extent that they are not compensated for by insurance CT otherwise.
 Losses arising from the destruction or damage to property acquired prior to March i, 1913. are to be computed on the basis of the fair market price or value as of that date. unless, the cost is less than such value. in whiHh case the loss is computed on the basis of cost. A new provision of the revenue act of 1921 is that in exceDtional cases, and in order more clearly to reflect income, the Commissioner of Internal Revenue may permit the deduction ot loss other than in the year Sn which is actually sustained. The taxpayer in his return, or an amended return, may deduct a loss only for the year in which it was sustained. If he wishes to account for the loss as of another period, he must attach to his return ] for that year a request for considera- l tion of the case by the commissioner | together with a complete statement Of l the facts Upon audit of the return 1 the commissioner will decide whether l the case is within the exception p-o- 1 vided by the statute. Allowance Of a ! deduction other than in the year in
 which actually sustained is entirely within the discretion of the commits
 sioner and will apply only in excep- | ttonal cases.
 1 MUST FOLLOW STATUTE | Claims for losses must conform closely to the wording of the statute. The loss must have been actually sus- tained during the year in which It Is claimed in the taxpayers return. While A. taxpayer may feel certain that pro- perty owned by him is worth less than the purchase price. he is not al- lowed a deduction until the loss. is
 made absolute by the sale, or other disposition of the property. 4 loss sus- taired by a taxpayer in the sale of his
 residence, which at the time of pur-
 chase was bought without intention oi
 selling. is not a deductible item, be-
 cause 1t was not transaction ''en- I tered into TOT pr0IlI- r or the same ISd-
 son a loss sustained in tte sale of ar
 automobile purchased for personel us' may not be deducted. A loss may b' claimed by the owner of a bushes:
 truck injured or demolished in col Hsion. but not by the owner of a plea
 sure car. -.
 WASH SALES"
 Claims for deductions for losses ol
 what isknown as wash sales ar expressly disallowed by the revenu act of 1921. In connection with tn sale or disposition of stocks or securi ties, no deduction will be allowe' where 1t appears that within thirt. days before or after such sale or dis } position the taxpayer has. acquire (other than by bequest or inheritance } substantially identical property and tn . property so acquired is held by tn taxpayer for any period after such sal
 or other disposition.
 Owners of stocks and bonds can no : deduct from gross income amount g claimed as losses on account of tn shrfnkage of value in such securitie l through fluctuation inthe market c otherwise. The foregoing applies onl ' to owners and investors, and not e dealers in securities. who, by mean of the inventory. are given the benef . of sfrinkage in the securities in whic they deal