The Waterbury Democrat., 1936-02-19
YOUR INCOME TAX
CArNs AND LOSSES

section 111 or the NeVeuue ACv VI 1884 deals with the manner or meth- cd of taking into account In cotn- putting net income gains and losses from the sale or exchange of capital assets as computed and recognized under sections ili,ii2, and 1lS.
 Section ll7 Co provides that m the case of Q taxpayer other than Q corporation only the following percentages of the gain or loss rec ognized upon the sale or exchange of Q capital asset shall be taken into account In computing net income: 100 percent if the capital asset has been held for not more than l year; 80 per cent if the capital asset has been held for more than 1 year but not for more than 2 years; 60 per cent If the capital asset has been held for more than 3 years but not for more than years; 70 per cent if the capital asset has been held for more than 5 years but not TOT more than 10 years; 30 per cent 1T the capital asset has been held TOT more than 10 years.
 Section 1l7 (b) defines capital as- sets as property held by the taxpay- CT (whether or not connected with his trade or business), but does not include stock in trade of the tax payer or other property of Q Kind which would properly be included in the inventory of the taxpayer If on hand at the close of the taxable year, or property held by the tax payer primarily for sale to custom CTS in the ordinary course Of ms trade or business. In this definition the length of time the asset was held by the taxpayer is disregarded. . Section IF Co provides the rules for determining the period for which a capital asset has been held and IS similar to the provisions of section IOl Co (8) of the Revenue Act or 1882. These provisions are in gen. eral to the effect that, where pro- perty is acquired in an exchange and the property so acquired retains the old basis on which to compute gain or loss or where property is ace ouired from another person and the property retains the same basis on which to compute gain or loss as it had in the hands of the person from whom 1t was so acquired, the period for which the property disposed of in the exchange or the period dur ing which the property was held Dy such former owner is also to be in- cluded in determining the period for which the property is held TOT the purpose of section 117 (a).
 Section IF (d) provides 8 very important Limitation affecting all taxpayers (including corporations. except with respect to. banks ana trust companies), that is, that loss- es from sales or exchanges of capi- tai assets shall be allowed only to the extent of $2,O00 plus the gains from such sales or exchanges.
 Section TIT (e) provides that gains or losses from ''short sales" of prop erty, and gains or losses attributable | to the failure to exercise privileges or options to buy or sell property. shall be considered as gains or loss l es from sales or exchanges of capi- | tai assets. Tn the former the per- centage of the gain or loss to be tax. en into account shall be computed according to the period for which the property delivered was held: m the latter the gains or losses snaii be consideerd as arising from sales or exchanges of capital assets held | for 1 wear or less.
 Section l17 CD provides that amounts received upon the retire. ment of corporate bonds and similar
 evidences of corporate indebtedness, with interest coupons or in tegist- cred from, shall be considered as
 amounts received in exchange there- fof, thus giving to any gain or loss thereby resulting to the holder the
 status of capital gain or loss, as the ! case may he.