, 1923-03-29
REVENUE COLLECTOR HI.
PLAINS CHANGE IN TAX Law

LL
The following statement In refer
ence TO nonresident aliens and the
federal income tax law has been is
sued By n. g. Reynolds, collector Of
internal revenue for the district Of
Wyoming:
Administrative measures have been
taken By the Bureau Of Internal
Revenue to carry into effect two
important amendments to the Rev
enue Act Of 1921. adopted during
the closing days Of the session, in
respect to exchanges Of property and
income tax Of nonresident aliens.
Section '202 Of the act is amended
by eliminating the provision allow
ing the exchange free from tax OF
stocks, bonds, notes, chooses In action.
certificates of trust. or beneficial in
terest, and limits the cases where
securities may be exchanges for
other securities without the realixa-
ton Of taxable income to those cases
where the exchange is in connection
with the reorganization Of one or
more corporations. AS q consequence
of this amendment, any exchange Of
securities effected subsequently to
January 1, 1928, may result in tax
sole income or deductible loss, the
amount of which should be computed
as II the securities had been sold
an amount of cash equivalent to the
fair market value of the property re-
ceived in exchange. Section ZOE,
prior to its amendment. provided for
the exchange OF property held for
Investment for other property Of q
like kind without the realization Of
tavNhlA nrnuno
Section 2O3 is amended also to
provide that in the case of tax free
exchanges; for example, exchanges
Of securities, in connection with the
reorganization of q corporation,
where money is received ito boot,
the amount of gain realized from the
exchange is the excess Of the sum
OF the money and the fair market
value Of the property received in ex-
change over the cost (where apple
able the fair market value as of
March 1. 1920 Of the property
exchanged. provided. however, that
the amount of taxable gain resulting
from the exchange shall not exceed
the amount of money received. For
example II. prior to the enactment
OF this amendment. a taxpayer ex-
changed, in connection with the re-
organization OF corporation. stock
which cost him $1,000 for other
stock of = fair market value of
$1.1O0. together with $500 in cash.
no taxable income resulted there
from. Under this amendment. the
amount Of gain resulting from this
exchange would DO $500. but the tax
able gain would be only. the amount
OF money received In exchange
Tho effect OF the amendment In re-
spoct TO income tar OF nonresident
aliens 10 to give nonresident aliens
who r residents Of . contiguous
country flor example. Canada) the
benefit Of the I per cent rate Of
normal tax on the first $4,000 Of
net income in excess OF Q personal
exemption of $1,000 received as COM
pensation for labor or services per-
formed In the United States. Prior to
the enactment Of this amendment the
eatire mel income Of every non-resi-
dent alien from sources received with
II the United States, in xcess of .
personal exemption Of $1,000. vas
subject 70 . normal tax rate OF eight
pr ceot. The amendment extends
siso to nonresident aliens. who are
f~Feaidents q . contiguous country.
the benefit Of the $500 credit for
each dependent. The amendment II
retroactive to take effect January l..
1857.