The Daily Alaska empire., 1938-02-15
YOUR INCOME
 TAX
CAPITAL GAINS AND LOSSES

O6CUlOn III OI UIl6 neVetlue ACI LII 1886 deals with the manner or method of taking into account in computing net income gains and losses resulting from the sale or ex- change of capital assets as com puted and recognized under sections III, 112, and 113.
 Section IF (a) provlues tnat m the case of a taxpayer other than corporation only the following per centages of the gain or loss recog- nized upon the sale or exchange Of capital asset shall be taken into account, in computing net income: 100 percent if the capital asset has been held for not more than 1 year 30 percent if the capital asset has been held for more than l year but not for more than years; 60 per- cent if the capital asset has been held for more than 2 years but not for more than years; 40 percent if the capital asset has been held for more than 5 years but not for more than 10 years; 30 percent if the capital asset has been held for more than 10 years.
 Section IF (b) defines capital assets as property held by the tax payer (whether or not connected with his trade or business), express ly excluding therefrom stock in trade of the taxpayer or other prop erty of a kind which would proper ly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his 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 capital asset has been held. These provisions are in general to the ef- feet that, where property 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 acquired from an- other person and the property re- tains 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 ex- change or the period during which the property was held by such for mer owner is also to be included in determining the period for which the property is held for the purpose of section IF (a).
 Section IF (d) provides very important limitation affecting all taxpayers (including corporations, except with respect to banks and trust companies), that is, that losses from sales or exchanges of capital assets shall be allowed only to the extent of $2,00O plus the gains from such sales or exchanges.
 Section IF (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 losses from sales or exchanges of capital assets. In the former the percen- tage of the gain or loss to be taken into account shall be computed ac- cording to the period for which the property delivered was held. In the latter the gains or losses shall be considered as arising from sales or exchanges of capital assets held for year or less.
 Section IF 0D provides that amounts received upon the retire ment of corporate bonds and similar evidences of corporate indebtedness, with interest coupons or in regis tered form, shall be considered as amounts received in exchange there for, thus giving to any gain or loss thereby resulting to the holder the status of capital gain or loss, as the case may be.
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