Evening star., 1928-06-09
II S. REVENUE ACT OF 1928
81 COMMENDED BY REALTORS
Enactment Recently Signed by President
Held to Embody Many Provisions Long
s Urged by National Association.

The Federal revenue act of 1928. just
signed by President Coolidge, is a
notable advance over previous acts so
far as 1t applies to real estate sales, ac-
cording to the National Association of
Real Estate Boards. which for two years
has carried on an intensive campaign
for reorafting administrative require
ments of the act which have seriously
Handicapped real estate development
Revisions of great importance to
owners of real property, to prospective
buyers and to real estate dealers have
been written into the act of 1928 at
the direct request of the National As
ISOLATION of Real Estate Boards
Subdivision development in particu-
lar is affected profoundly by the changes
made. A more equitable provision in
regard TO installment sales of real es-
tate, written into the new law at the
request of the national association. Will
remove O situation which, by forcing
tax payments on paper profits, had cut
safe ground from under all long-term
payment arrangements In the sale OF
real estate and which threatened TO
criye many subdividers out of business
or force q radical change in business
methods.
The new provision Is of great impor-
.kalce to the prospective purchaser OF a
ihouSe or Of q lot for home building, IN
that il removes the heavy tax handicap
which has existed against the dealer
who extends to a buyer the privilege
OF long g-term payment plan.
Outlines Points Gained.
In its continuing campaign toward a
tax Law so written that it takes ac-
count of the way bushes Is actually
AcrnrfofinYl Rf
Real Estate Boards has secured from
Congress the following gains IN the 1928
law:
A more liberal treatment for INSTALL
ulent sales Of real estate.
Relief from double taxation for the
fAxpayer who elects to change from an
nccrual to an installment basis IN re-
eording incomes.
Establishment retroactiveiy OF more
equitable basis of taxation for real es-
tate syndicates and trusts.
Definite exemption Of real estate
boards from the making Of tax returns,
81 4 par with chambers OF commerce.
boards or trade and other business
leagues.
Retroactive relief for overpayment Of
taxes incurred in changing to an IN
stalhneTt basis.
n additton to the direct gain made
N The fige items above listed, the ma
tionsi association was successful IN hav-
me excluded from the act as It was
finally passed two provisions which
were inserted In the bill as 4 passen the
House and which would have been
serious hardship to companies whose
ordinary business requirements called
Tor the holding Of real estate over
considerable period of time.
The provisions stricken out OF the
House bill as 1t was finally passed were;
A provision which would have sub
sec.ed personal holding company 70
penalty tax Of 80 per centum II II oiu
not distribute more than 70 per centum
Of its profits each year.
A urOvssiOn which would nave
hr0ueisk back into taxation surplus ac-
rurnfslated By corporations prior u
March /. 1913, the date upon which the
firxt Federal income taxation went into
effect.
other Important Sections.
Detail Of the law Of great importance
10. reai estate Is as follows:
IrastzlIment sales classification.
m the case Of sale or other dispoEi-
ton Of real property, the initial pay
uaents do not exceed 40 per centum OF
the selling price the transaction may
fsnctfpn "A. subsection b.. The reve-
rl1,e art Of 1926 permits return on an
irstalament basis only IL the payments
received In the year Of sale did not ez-
ceed Is per eentum Of the sale.
The National Association Of Real ES-
tate Boards. in brssfg presented 10 the
w1-5 and means committee and TO the
T.gnce committee Of the Senate,
pointed cut that the hitherto existing
provision. which was requiring the pay~
Taent Of tax on the expected gain 10 DI
made upon sale when, as mat1er o.
fact. the payments would not be COM
p.esed for q number of years and nigh.
g.cgeY be completed. and when the taz-
fs4yer had realized no gain and might
meyer realize q gain. was tax on paper
Profits and was not in conformity with
the actual conditions under which blIsi-
ness ig real estate lis transacted.
Relief from double taxation where
basis is changed,
sales Of real property land casual
~ sales Of personality are relieved OF the
double taxation which has neen en-
tailed by provisions Of the existing act
Z. IN the case Of q taxpayer who elects Tor
ans taxable year TO change from All
ac@t71ai TO an inStAllment basis In re-
4 porting his income.
The bill as II was passed by thu
House definitely provided for double
taxation for ingtaiiments received dur
3rg the taxable year IN which the
!. change is made. A phrase, inserted NJ
Tie Eenate and included In the act. a:
finally enacted, makes this provision
apply only 10 dealers in personal prop
eYtg. The final report Of the commit
NJ on finance report 800 defnitei;
states.
Applies 10 Casual Sales.
This principle is specifically mGd
inapplseabie 70 casual sales Of per-
GOnalty and W sales Of real property,
Real estate syndicateE and trusts,
FoF the purpose Of the revenue aci
of 1915 and prior acts provision u
saa1e for the classification Of real es.
tate gyEdicates ard trusts as trusts ans
net ~ associations. The National AS
gociata0n Of EesI Estate Boards haG
asked that taz return be required onl,