The Seattle star. [volume] (Seattle, Wash.) 1899-1947, 1922-02-10

tssp~ysr. Watch TIE Star dAiy q
Section so2 Of the revenue act OF
1891 deals with the basis Of ascer-
tanning taxable loss or deduetibls
gain In the sale or other dlsposi'
ton of property. The art provides
that cost shall DO tho basis with
three exceptions.
The first Is that In the cnse OF
property which should DO included
In the taxpayers Inventory. the las,
inventory value shall be the basis
for example. n merchant bought
In 1890 . certain article. and u was
not sold by him prior 20 December
81. 1890. but was included In his
inventory as OF that date and sold
IN 1891. tho taxable gain or deduct
lille loss would be tho difference DO
tween the selling price and the
amount AZ which the article WIS
carried In his inventory.
Tho second exception 10 that In
the case Of property acquired by
gif, after December 81. i9ao. tho
bass shah be tho same as tina,
which IL would have been In the
hands Of the donor or last prceed'
Ing owner by whom u was acquired
BY gift-
For exampis. . man In 1918 40
aulrsd stock In q corporation for
500 a share. and kept u until 1880.
when Il was worth $40 a share.
and then gave Il TO his son, who In
January. 1881. gavs u 90 his wife.
the stock at that time being worth
$3.50 a share. II subsequently, tho
wife sold tina stock for tsao a share.
her taxable profit Is not 80, but
500. the gain over the cost 20 the
last preceding owner who did not
acquire the stock by gift
In tn. case Of property acquired
by gift on or before pecsmbcr ~.
1880. the hasls foe aseertaininE gain
or loss from a sale or other dispo.
sitlon thereof ahail be the fair mar
Net price or value Of such property
az the time OF acquisition. In tho
case Of property acquired BY 10
quest, devise or inherttanos. the
fair market price or value of the
proprrty at tho time Of It's acqulsi-
ton Is the basis for determining
gain or loss
Subdivision c Of section ~ Of
the new revenue act deals primarily
with the exchange Of property for
property. II 10 much more liberal
than the act Of 1919 In snumsratlug
the classes Of such exchanges
which do not result In gain or loas
to the taxpayer. In general. there
10 no gain OF loxs when property
tothsr than stsck In trade or prop
srty held primarily for saIei n en-
changed for property Of a Ike kind
Whsn an individual or . partner
ship transfers property 10 cor
porxtion and Immediately therc-
wftcr IL in control OF such corpora
tion--ownlng 81 least 80 per cen,
Of the voting stock and at least 80
per cent Of the total number Of
shares Of all other classes OF stock
Of the corporatien--no taxabls gain
or no detucsibls lors resuitA
In tho case OF the sale Of prop
srty acquired prior TO March l..
1919. the basis for Determining tar
able gain or deductibie Iers II cost
but tho fair market price or value
as Of that date IL important Gen
orally to determine taxable gain.
the March 1. 1919. value Ia used "
more than cost. and to Determine
x~x~sst.t. -. 49, Me- r~t 4 xnifa
IL used II less than cost TaSpay-
ers should read carefully section
eoz fb) OF tho act on this point
Following are concrete examples:
A bond bought In 1919 foe $500 had
on March I. 1919, value Of $3.50
and was ssld In 1891 for ti,eoo. The
taxable gain In sfse. the excess OF
the selling price over March L.
1914, value.
A bond bought In isf: for $1,000
had a market value on March i.
1913. OF $3.50 and In 1921 was sold
for $500. The dedunflbIs loss Is
s2ss. the excess Of the mayks,
value Of March !. 1912. over the
selling price.
A bond purchased IN fsf, for
$500 had a market value on March
I. 1914. OF $1,000 and was sold In
1921 for $3.50. In this case there
Is no taxable gain and no deductibie
loss
A bond purchased in 1913 for
81 900. on March 1. 1918. had a mar
ket value Of $500 and 10 1891 was
sold for $3.50. This transaction. on
basis Of cost would result In an
actual loss OF $3.50, but owing 10
the provisions OF section 200 n, t)
Of the act thu taxpayer cannot de-