Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-11-21
TAX LAW REVISION
WOULD ADD millions
TO INCOME OF i. s.
treasury Department Prob
ably viii Ask Congress to
Change LaW-CommerCiaI
Situation Unchanged
BY HARDEN COLFAX
(Leased Wire Service to The Journal.)
(CopyriCht 1927


Copyright, 1927
WASHINGTON, Nov. 20.-Con
gress probably will be asked by the
treasury department within the mex
four weeks to make a change in thG
tax law under which the govern
ment's income would be increased
by s100,000,000 or more annually.
The proposed change concerns sec
ton 202 of the law, portion OF
which would have to be repealed il
the change is made Under that sec
ton, as it stands at present, thou.
sands of sales of stocks, bonds, real
estate and other property are re
ported to have been made under the
guise of exchanges absolutely free
of tax on the profits involved. It is
difficult to measure the amount of
income thus lost to the government,
but unofficial observers place it at
from SIS, 900 600 to 1925, 100000 an.
nually.
| The section provides: On an ex-
change of property, real, personal or
mixed for any other such property,
no gain or loss shall be recognize
unless the property has properly
realized market value; but even #
the property has readily realizable
market value, no gain or loss shall
be recognized when any such prop
erty is exchanged for property OF
! link kind of use"
Other Sections
There are several other provisions
Of similar tenor. Under the protec.
ton OF this section of the law many
dealers of stocks are openly advertis-
ing, the treasury is informed, their
willingness to make Exchanges" Of
securities without the levy of taxes
on enhanced values of the securities
thus exchanged. Under previous
revenue laws, this practice was not
permitted.
Thousands of such sales, it is re-
ported, are made during the course
Of ordinary business every week in
the security markets Of New York
alone, possessors of high-price
stocks and bonds thus being enabled
to convert them, free of income tax,
into other forms of securities. 1t
would be possible, under this sec
ton, unofficial observers say. for an
individual or firm to conduct a
mammoth business in stocks and
bonds through a system of ex-
changes without placing clients to
the inconvenience OF paying the gov
ernment any income tax whatever
Some of the more reputable firms,
however, regard this kind Of trading
as an evasion of the law, and do not
participate IN it.
The subject has been discussed for
some time by officials of the internal
revenue bureau, who realize the
magnitude Of the fortune in taxes
slipping from the government ev-
cry year that the present provision
of the law remains in effect Mem
bers of the tax simplifcation board
also have looked into this potential.
source of revenue and may employ
in their Forthcoming report a recon-
mendation that the exchange pro-
visions be repealed. The report of
the board is being written now for
presentation : to congress on Deem
Der 4, but, it is understood, no def
mite decision has yet been reached
with respect to that section.
The board has under considera-
ton the recommendation of other
measures, as we'll, to simplify the
procedure of tax representing the
collection. So has Sec 4tary Mellon,
who will likely ernbody them in his
report.
Commercial Conditions
Industrial and commercial devel-
opments of the week showed no pro-
nounced changes from their previous
upward trend. Car lcadings dropped
slightly-from 1,014,000 to $4,000
carloads for the week-but, despite
the slight decrease hung up another
record, being the highest ever re-
corded for the first week in Novem-
her. Building activities continued to
fall off sharply, as anticipated with
the approach of winter, though even
at the slower pace skilled labor re-
manned scarce and at the highest
wages ever known in this country
Shipments of lumber showed a de-
cided gain, as did the volume of or
ders but production dropped about
l. per cent below the level of the
preceding week.
There is no longer any doubt as to
where the automobile manufacturers
are bound with their production fig
ures. On the first day of November
they stood within a few thousand
| cars of the total for the whole year
| Of 1920, the biggest year ever re-
| corded. 1t is estimated that by the
middle OF November they had passed
the 1920 mark easily and from now
on the returns will only indicate the
growing largness If the new record.
The year probably will close with a
total output of about 100000 cars,
or soc, 200 more than 1920.
| A sensational advance in the price
of corn within the past four week )
is spelling real prosperity for the
farmers Of the middle west. The adj
vance almost wholly unexpected,
found the farmers with most of the
crops en- their hands reversing the
usual procedure under which the
middleman has raped the profit.
Cotton also continued toward higher
levels.
AS an indication that business is
continuing to improve, one of the
largest of the and 1O-cent chain
stores in the country reported aggre-
gated October sales of $15,775, 900 as
| coqnpared with S144OS, 600 during