The Washington times., 1922-02-03
INCOME TAX
IN NUTSHELL
Furnished by U. S. Internal

uTntSHeQ Oy u. .. iHLef"o'
Revenue Bureau.
WHO? Single persons who had
net income Of 1000 or more,
or gross income Of $1,000 or
more. Married couples who
had net income OF 5000 or
more, or gross income OF S5,00o
or more.
WHEN? March Is. 1S22, Is iinai
date for filing returns and max
ing first payments.
WHERE? Collector Of Internal
revenue for the district IN
which the person lives. or has
his principal place OF business.
HOW? Four per cent norman
tax on taxable income Np 10
$4,000 In excess Of exemption.
Eight per cent normal tax on
balance of taxable income. Sur
tax from 1 per cent to IS per
cent on net incomes over
$1,000 for the year 1871.
Income.Tax Facts.
In computing net income the TAX
payer is permitted to deduct from
gross income certain deductions Tor
losses. bad debts, contributions. IN
terest. taxes, etc. Deductions for
losses include not only losses In
Cured in taxpayers trade or ousi-
ness. but losses connected with any
transaction entered into Tor
profit" or II arising nom fires'
storms, shipwreck, or other casu'
atty. Deductions for losses are
allowable only to the extent that
they are not compensated for by
insurance or otherwise.
Losses arising from the destruc:
ton or damage to property acquired
prior to March /, 1918, 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 which case the loss
Is computed OH the basis Of cost.
A new provision Of the revenue
act of 1921 Is that in exceptional
cases, and in order more clearly to
reflect income, the Commissioned
of. Internal Revenue may permit the
deduction Of a loss other than In
the year in which actually sustain
ed The taxpayer in his return, or
an amended return, may deduct a
loss only for the year In which
sustained. II he desires to account
for the loss as Of another period,
he must attach to his return for
that year a request for consider
alton Of the case by the commits
sioner, together with a complete
statement Of the facts. Upon audit
Of the return, the commissioner
will decide whether the case is
within the exception provided by
10 atn eat Of
.duction other than in the year in
which actually sustained is entirely
within the discretion Of the com.
missioner and will apply only in
exceptional cases.
Must Follow Statute.
Claims for losses must conform
closely to the wording of the statute.
The loss must have been actually
sustained during the year in which II
is claimed i'll the taxpayers return.
While a taxpayer may feel certain
that property owned by him is worth
less than the purchase price. he is
not allowed a deduction until the loss
isNmade absolute by the sale, or
other disposition of the property. A
loss sustained by a taxpayer in the
sale OF his residence, which at the
time Of purchase was bought with.
out intention of selling, is not a de.
ductible items, because 1t was not
a transaction entered into for
profit" For the same reason a lose
sustained in the sale Of an automobile
purchased for personal use may not
be deducted. A loss may be claimed
by the owner of a business truck
injured or demolished in a collision
but not by the owner of a pleasure
car.
wash Sales"
Claims for deductions for losses on
what Is known as wash sales" are
expressly disallowed by the revenue
act of 1921. In connection with the
sale or disposition of stocks or securi.
ties, no deduction will be allowed
where 1t appears that within thirty
days before or after such sale or
disposition the taxpayer has ac-
qIired (other than by bequest or in
heritance) substantially identical
property and the property so &C.
quired is held by the taxpayer for
any period after such sale or other
disposition"