Evening star., 1922-03-07


disbursements and reporting on the
accrual basis.
The cash receipts and disbursements
method Is the reporting Of the income
when actually received and of ex-
penses when actually paid. Thus, for
example, II I reported on the cash
basis. should report a fee of $1,000
earned in 1921. but actually received
January I. 1922. as income of 1922.
Similarly, If paid my stenographer
on January 2. 1922. for services rem
dered the month Of December, 1921, I
should deduct in 1922 the salary paid
to her.
The regulations Of the commissioner
provide that taxpayer reporting on
cash basis shall assume the actual
receipt OF money, even though phys
ically not received by him, as soon as
Thus interest on bank balances is
deemed to be income as soon as cred
tied to the deposition, even though not
actually collected by such depositor.
So also salary credited to a taxpayer
on the books Of his employer, IL avail
able to him. but which for any reason
the employe does not actually take. Is
to be treated as part of the en-
ploye's income when reporting on a
cash basis.
The taxpayer is permitted to report
on an accrual basis only il he keeps
income and expenses consistently.
Thus, to employ the previous iilustra-
ton, fee earned in 1921, but not ac-
tually received until 1922, must be
regarded us 1921 income. A salary
paid in 1922 for services rendered in
ha
'pense.
. A fuller discussion of the subject
re the methods of keeping books on
the cash receipts and cash disburse-
ments basis and the accrual basis will
be found in any bookkeeping or ac-
sion is based upon Chapter x Of my
own Elements of Accounting"
+. QUESTIONS AND ANSWERS.
O.. u4D-I am In receipt of the fol-
lowing communication from the
Plat. chief Of section:
The deduction in your report OF
1919 in block Of $36Q has been dis
allowed. since the losA was sustained
on the sale Of your house. A loss sus-
tanned on the sale Of an individuals
private residence is considered a per-
sonal expense. since the purchase of
the building was not a transaction
entered into primarily for profit, but
the residence was purchased more
for personal convenience and use than
as a business investment. The loss
OF 1850 has. accordingly, been disal-
lowed"
This was a loss made on the sale OF
our house, the same year my wife re-
ported a gain of $4,000 in her return
on her house sold in Forest Hills.
ta) We are about to sell the house
we are now living in at a good profit;
from reporting the gain in our re-
turns for 1922. for the same reason
that the house was not a transaction
entered into for profit.
CD Can we ask for relief on the
tax paid on the $3.100 gain reported
by my wife the same year for the
same reason?
We purchased all three houses to
live in, and IL one was not purchased
to make profit. then all three were
not.
The writer does not agree with Mr..
Platt's contention; it is my belief that
one cannot purchase house without
the element of speculation or profit. ]
don't believe there is one man in a
hundred but. what when the time
comes to buy house asks himself.
Can get out at profit If want to
A. The law is inconsistent in that
1t aims to tax all income, but per-
mits the deduction of some losses
only. II yoV can prove that the pur-
chases of sour houses we're trans
actions entered into for profit" you
may deduct the loss suffered. Present
your evidence to Mr.. Platt.
9. u45)-(a) Will 1t be necessary
for ME to include in my income tax
return the income which my wife re-
ceived during the first four months of
1921 before we were married. This
amount was less than $500
(b) Will be allowed any exemption
for partial support of my mother, who
Is living with my brother? I send her
some money each month. which
amount is equivalent to about one
half her support.
arate return.
(b) Either you or your brother.
whoever is the chief support of your
mother, is entitled to the exemption.
Only one of you may take it: it can
not be divided between you.
Q. (146)-I note from the columns
Of your paper that you are giving ad-
am a regular reader 1 am writing you
for advice. My problem is as follows:
Until last year I owned a suburban
home in Maryland. but had not lived
there since 1915: meantime 1t was
rented. 1t cost me in 1908 about $4,000.
dar year 1913. under answer to Ques-
tion 13, subheading 4. "cost of prop
erty Cor market value. March 1,
1913)" gave the same figure, $4,000.
In each subsequent report I took ad-
vantage of the deduction of 2 per cent,
allowed for depreciation. I have re-
Gently disposed of this property at a
figure several thousand dollars in ex-
cess of the rated value as of March
1, 1918. Immediately upon selling this