Evening star., 1928-06-09

upon profit actually realized by the tax
payer and not upon profits which mighu
never be realized.
The act provides in section 706 (b)
that for the purpose of the revenue act
of 1926 and prior acts trust, at the
option of the trustee, exercised within
one year, shall be considered as trust
the income of which is taxable whether
distributed or not) to the beneficiaries
and not as IN association, If the trust
had a single trustee, was created and
operated for the sole purpose of liqui-
dating real property as single VEN
ture and If it has not made a return
for the taxable year as an association.
Real estate boards included as exempt
from returns-Real estate boards by
section I03 Cd of the act as passed are
specifically included with business
leagues, chambers of commerce and
boards of trade as exempted from in
come taxation when no. organized for
profit and when no part of the net
earnings inures TO the benefit of any
private shareholder or individual
Installment sales overpaymentS.-
Retroactive relief is provided (section
705) where overpayment of tax Is made
in the case of a taxpayer who by an
original return, made prior to February
26, 1896 changed to the installment
basis In reporting his net income for
the year 1924. or any prior year. If for
any such year the taxpayer claims to
have overpaid his tax, the tax shall be
computed by including amounts re-
ceived during such year on account of
sales made in any prior year, and any
refund will be on that basis. However,
If it is claimed that there is any de-
ficiency due from the taxpayer it shall
be computed by excluding amounts re-
ceived during the year on account of
sales made In any prior year In other
words, In deciding whether or not the
taxpayer has paid too much tax, the in
come viii be computed by including the
inStailment payments received during
the year: but in determining whether
or not he has paid too little tax his
income win be computed by excluding
the instailment payments received dur
ing the year.
Earnings and Profits.
Distribution of dividends-In the tax
alton of distributions made by a cor
poration to its shareholders out of earn
ings or profits accumulated section lis
OF the new act defines the term 'divi-
dend" to mean any such distribution
made out of earnings or profits accumu-
lated after February 13, 1913.
The House bill had included proyi-
sion to tax the distribution of surplus
accumulated prior to March /. 1913, the
date upon which the first Federal In
come taxation went into effect
The National Association of Real Es-
tate Boards has protested that such a
sudden revision of income tax policy
was unwarranted. and would work q
hardship, particularly on corporations
whose holdings consisted in large part
Of real estate which must necessarily
be held over a considerable period.
Compulsory distribution for personal
holding companies-The provision of the
House bill which would have subjected a
personal holding company to a penalty
tax OF 80 per centum II it did not dis
tribute more than 10 per centum Of its
profits each year was stricken out by
the Senate and left out Of the bin as
finally enacted.
The provision for compulsory dis
trihution by personal holding companies
was protested by the National Associa-
/, ton Of Real Estate Boards. which
points out that corporations whose as
sets consist largely Of real estate may
find II :. necessary business policy 70
hold those assets over long period.