Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1923-03-27
Collector Ham
Notes Changes in
Revenue Act 1921

Hon. Frank J. Ham of this city, the
collector of internal revenue for the
District of Maine. said Monday that
administrative measures have been
taken by the Bureau of Internal Key
cnue to carry into effect two import
ant amendments to the Revenue ACT
of 1921. adopted during the closing
DAYS of the session Of Congress. III
respect TO exchanges OF property ana
income tax of non resident aliens.
section 202 of the act is amend
ed by eliminating the provision al
lowing the exchange free from tax OF
stocks. bonds. notes. chooses in action.
certificates Of trust or beneficial in
tercst. ana limits the cases where Sc
curities may he exchanged for other
securities without The realization OF
taxable income to those cases where
the exchange is in connection with
the re organization Of one or more
corporations. continued Mr.. Ham.
''As consequence of this amend
ment. any exchange of securities eff
fected subsequent to Jan. |, 1928, may
result in taxable income or deduct
ible loss. the amount of which should
be computed as if the securities had
been sold for an amount of cash
equivalent to the fair market value
of the property received exchange.
Section 2O2. prior to its amendment,
provided for the exchange of property
held for investment for other pro-
! perty of like kind without the reali-
, cation of taxable income.
Section 202 is also amended to
provide that in the case Of tax free
exchanges. for example, exchanges or
| securities. in connection with the re-
organization of corporation. where
money is received to boot, the
amount of gain realized from the ex-
! change is the excess Of the sum or
the money and the fair market value
! of the property received in exchange
| over the cost (where applicable the
| fair market value as OF March l..
1879 of the property exchanged. pro
vided. however. that the amount OF
taxable gain resulting from the ex-
Of money received.
f"For example. If prior to the enact
ment Of this amendment. taxpayer
exchanged. in connection with the re-
organization of q corporation, stock
which cost him 1000 for other stock
of fair market value Of $1,100. to-
gether with s4OO in cash. no taxable
income resulted therefrom under this
amendment, the amount OF gain re-
sulting from this exchange would be
$780, but the taxable gain would be
only $4,000 the amount OF money re-
ceived in exchange.
1.-THE effect Of the amendment IN
respect to income tax Of non resi-
dent aliens is to give non resident
aliens who are residents of a con-
tiguous country (for example. Cam
ada,) the benefit of the four per cent.
rate Of normal tax on the first $4,000
Of net income in excess Of a personal
exemption Of $1,000 received as COM
pensation for labor or services per-
formed in the United States.
prior to the enactment OF TINS
amendment the entire net income OF
every nonresident alien from sources
received within the United states, IN
excess of a personal exemption OF
81 900, was subject to a normal tax
Of rate of eight per cent. Tne
amendment extends also to non-resi-
dents Of contiguous country. the
benefit of the $500 credit for each de-
pendent. The amendment is retro
active to take effect Jan. j. 1877.