Evening star., 1926-11-27


tailed in the present tax regulations
IN regard to reporting income from
real estate sales were forcibly pointed
out in a conference of real estate
boards over the country called by the
National Association Of Real Estate
Boards in Chicago. November IL
and l..
The conference was called through
ne Association's committee on Fed
eral legislation and taxation. 1t is
The first meeting ever convened by
real estate men of the country to
bring together their points Of view as
20 the Legislation hampering real
estate, and to make possible q unified
program Of action on the need for
revision of such legislation.
The conference emphasized nine
points in the wording of the present
Revenue Act and of its accompanying
Treasury regulations making require
ments which are unfair or burden
some. These points, the conference
brought ont. are not only of inn
pOrtance to men engaged in the buy
ing and selling of real estate, but also
seriously affect real property owners,
and in some cases are having re
tarding effect on the free transfer 81
property and the development Of the
business sections Of communities.
Following the expression of the
confereeS representing real estate
boards in centeis where the wording
OF the Revenue Act is handicapping
real estate operations, the National
Association, through its committee on
Federal legislation and taxation and
It's general counsel, was authorized
% draw up a definite program OF
changes to be asked for in the act
or in treasury income regulations. and
all member boards OF the association
we're called on by the conference to
stand squarely and solidlN behind
his program.
Ii Boards Represented.
The real estate boards of New York.
Brooklyn, Westchester County and
Long Island. the Chicago Real Estate
Board, the Los Angeles Realty Board,
the real estate boards of Pittsburgh,
Buffalo. Detroit, Kansas City, Mo-;
Kansas City. Kans.; Knoxville, Tenn;
MINNEAPOLIS, and the Florida Asso-
citation of Real Estate Boards, repre-
senting all member real estate boards
of Florida, sent representatives to the
conference The conference also had
before it expressions of the individual
attitudes of others of the 607 member
boards Of the association as given In
response to a preceding request OF the
committee for guidance in formulating
a unified program.
The taxpayer whose income comes
from the sale of real estate finds nm
self in n very serious situation, par
ticularlv if his business is the develop
ment of residential subdivisions or the
sale of large business properties.
Wording of the present Revenue Act
and the administrative regulations
and rulings which have interpreted 1t
are such that in many instances 1t is
necessary fof' him to pay tax on
theoretical gains before any part OF
such gains have actually been
received.
A number OF specific instances
were cited showing that the present
reouirements, in taxing paper
profits. are forcing the taxpayer to
finance his tax payment from sources
outside the operation which IS as
Sumed 70 have rendered the pront.
SO serious is the injustice that II con
tinued it will make impossible the
use of present ordinary and estao-
lished business methods in the SAFE
OF homes and home sites III many
communities. the conference brought
a out.
Provisions of the present law which
are forcing the making of income tax
returns from real estate sales in Such
a way as TO upset or greatly penallze
we'll established business practices, or
which are so badly correlated with &C
tual conditions under which business
"a transacted as to involve enormous
= heavy bookkeeping difficulties,
we're pointed out by the member
boards of the association at the con-
ference.
Needed Changes Suggested.
Suggestions for needed changes
were as follows:
/, Capital Gains on the sdio
OF real estate should be considered as
capital gain whether the sale Is
made by an ordinary investor.
broker. or an operator, and regaroiess
of the length of time the property mas
heen held, thus making all prohts Oh
real estate sales subject TO the - 2
nor cent capital gains tax only. Ine
Conference urged this because OF the
,,ni,,st burden of State and local taxa
ton which real estate is already com
pelIed to pay.
Installment Sales.-The remoFai
~ tb. Of per cent initial payment I'M
t+ation as a basis of determination as
+o x.hether or not real estate sales are
tnstallment sales, was urged IL was
noJnted out that dealers In persondi
nroperty on the installment OASIS plall
are allowed to report their safes Oh
IN installmeut basis, no matter what
,a,,,t &c received as an initial pay
,,ant and no matter what amount Is
oIIac.ed during the first year after
yhe making of the sale. The presen'
low conoDels the vendor OF real estate
10 report Il sale as closed trdhsaC
tion If % per cent or more OF tne puI
base price has been paid IN an!
year. :. Was
Z. Deferred Payments.-t was
,,rped that the statute or reSulatlo'Mi7 Us
should contain an express ueiiIll.Aoll
~ the term fair market value, 50 is
" cIartfv the obligation OF the vendor
,,;+f resoect to evidence of indebted
ness which he takes from the pur.
nhaSar The conference stated tha'
20 Suc, evidence OF Indebtedness
necnot he disposed of through ordl
Vary commercial channels al us,
ro,,n+ which does not exceed Az pei
.ort the vendor should not be com,
nelled 10 pay taxes on h!potnet1Cd ~'
nrof,ts. but should be allowed 10 re
hort such transactions on the deIefIeu
payment plan ,.ors,na
4. Depreclation.-lhe ne 1a5 %
urged that the law be anenaea 50
that at the time of sale OF properly
the cost thereof should oe reuuGeu e,,
~, IN the extent that depreciation,
,Ias heen allowed to the taxpayer anu
raLen by the taxpayer, insteau ot pe
ing produced by the amount OF De
ee,;s,ion which is allowable as al
present provided. Under the preseh;
presu.' pp,,5;nc profit upon the sale Of real
as.ate is considered to be. the diner,
sSna $50 between the selling price and the
n,. enU rednced by whatever depreciation
;. sound 70 have been allowed by the