New-York tribune., 1922-02-19

For instance. If the taxpayer pur-'
chased one hundred shares Of X stock
in 1915, sold it at loss on December
shares Of the same stock on December
s. 1921, he would not be permitted TO
take loss, represented by the differ
once between the cost of his stock
nurchascd in 1918 and the amount rea,
zed from the sale Of the stock in 1921.
Likewise. If he purchased one hundred
shares Of X stock in 1918, then pur-
chssed al additional hundred shares Of
X stock on December |, 1921, and on
December 5, 1921. sold one hundred
shares of stock, he could not deduct
Tie loss, II any, represented By the di t.
tyence between the cost OF the stock
acquired in 1918 and the amount re-
ceived therefor or December 5 1921
This new provision will prevent q
number OF sales being made merely for
the purpose Of establishing losses for
income tax purposes.
The meaning of the clause in The law
ie not entirely clear, and to clear up
come questions departmental interprcta-
ton will be necessary. 1t would seem
that the provision was not intended to
prohibit the deduction of losses sus-
taineo in case where a person buvs
securities and later disposes Of the
Identical securities. notwithstanding
such disposition WAS made within thirty
days from the date OF acquisition
For instance, If the taxpayer pur-
chased 100 shares of x stock at 50 and
sold the same next week at 90 there is
10 reason why such taxpayer should
not be entitled TO take his loss. even
though the purchase. took place within
thirty days of the sale. Upon the same
reckoning 1t seems clear that q de-
ductlble loss is realized in the case Of
short sale" where person borrows
securities and subsequently,, within
thirty days, purchases identical securi-
ties and uses the same TO repay the
loan previously made
Another change with regard to the
deduction OF losses is that which pro
vides that allowable losses shall be de-
Quoted as OF the taxable year in which
sustained unless, in order to reflect
clearly the income, the loss should, in
the opinion of the Commissioner. be
accounted for as Of different period.
Under this provision. in exceptional
cases, In order to avoid injustice to
the taxpayer or to more clearly reflect
his income the Commissioned may per
NIT loss to be accounted for as Of :.
year other than the one in which sus-
tanned.
For example, an mbezzlement or
shipreck which occurred in 1921 may
not become known until 1922. and in
eaen case the income may be more
sIeasly reflected by accounting for the
!oss Is of 1922 than in 1921. The rul-
'ngs Of the Treasury Department pro-
Vide that II taxpayer desires to ac-
eonne TOR loss as of period other
than the one in which actually sus-
tanned. he shall attach to his return y
statement setting forth his REQUEST fo,
consideration of the case by the Com
missioner. together with complete
statement of the facts upon which h.
relies. In his income tax return the
taxpayer shall deduct a loss orlv fo,
the taxable year in which actually sus
tanned but. upon audit of the return
the Com missioner will decide whether
or not the case is within the execution
provided by the statute.
RepidCemcy1ts
The revenue~ct of 1921 Contains =
new provision o~'ling with cases where
property IS involuntarily converted
INTO cash as result of fire. shipwrecb
condemnation or related causes. Th;s
provislon permits the taxoaver to omit
@! oeduct gains involuntarily reaiized
"nen he invests the proceeds Of such
conversion in the acquisition of sin,ila =
fund. "a - : ~ : u
The act provides that where propertv
's compulsorily or involuntarily con
VeSeeo INTO cash or its equivalent as a
result OF a it's destruction in whole
e1 IN part, (b) theft or seizure. or Co
=" exercise of the power of ACQUISITION
eonoemnation, or the threat Of i'm
'a'hehce thereof, and the taxpayer pro
see9S IN good faith to exrend the pro
s.eos s.ss thereof IN the acquisition of
os"ef property of character similar
W IN the acquisition of 80 per cent or
"o9e OF the stock or shares of cor
pO'suon owning such other property
~ IN the establishment Of replace
meh' !und, a deduction shall be al
.ywen 1or such ssortion # the gain de-
s'sed which such portion of the pro
proceeds.
There are number OF Other chances
~ the 1921 law relating to deductions.
as under the former law, interest paid
;s,rued ~ accrued within the taxable year on
s"oeotedness is e proper deduction in
.vmputirg income tax. The former law
.Aeepsec interest incurred or con-
.;"ued 70 purchase or to carry obliga-
luis or securities, other than obliga-
S Sons OF the United States issued after
ssp'ember "a, 1917, the interest upon
.a'cn was wholly exempt from income
.ss sa. lae new law makes a change in
.a'o exception by providing that in
..e'ess or Indebtedness incurred or con-
.i.uec .s'uec 20 purchase or to carry obliga-
Ss Sons Of the United States issued after
september "a, 1917, which is wholly
ssAsmpt from income tax, shall rot be
asouctble unles such obligations were
sms.slNally subscribed for by the taX-
!he new act specifically provides that
oeouction shall be allowed for travel
ag expenses incurred while away from
.one In pursuit OF trade or business,
.Iciuding the entire amount expended
'0f meals and lodging
foreign Taxes
Under the 1921 act the income tax
y. s.e an individual and the income, war
SS.oAts and excess profits taxes Of a
tss.aestlc corporation, as computed for
~ taxable year, shall be credited with
IN the case of a citizen of the
.hted States, or domestic cor
po1atlon. any income, war profits
.s no excess profits taxes paid during
s'e taxable year to foreign country
"a possession of the United States;
~ IN the case Of a citizen of the
Sn'ted States, such taxes paid dur
IA In