Evening star., 1942-07-23
Bankers Of Nation
Keep Close Watch
On New Tax Bill
Special Treatment on Some
Losses May Help Offset
increased Levies
Ry EDWARD c. STONE.

now before the Senate FlnanC'
Committee. with exceptional inter
est, especially the parts of th'
measure which affects their own in
stitutions.
Although banks. like all taxpay.
ers. will have their taxes substan.
TALLY increased by the higher rate
provided In the bill as passed b,
the House. there are a number o
administrative changes which are
expected to lessen the tax burder
end remove certain hardships OF
the banks.
Banks are given special treat.
nent with respect to losses from
sales or exchanges of corporate
Government and municipal bond.
and similar securities by permitting
In effect. the deduction of the ex.
cess Of such losses over gains from
such sales or exchanges from ordi-
nary income instead of treating
such losses as capital losses, II
gains from such sales or exchanges
exceed losses from the same source
such excess of gains is taxed at q
rate of 25 per cent.
Recovery of a bad debt is ex-
cluded from taxable income to the
extent that the prior deduction OF
the debt did not result in a tax
benefit to the taxpayer. This
change is made retroactive to and
including 1898, which should take
care of all cases where tax was
sought to be collected on the entire
amount of the recovery under the
contrary rule of the bureau.
Amortization of Bond Premiums.
Banks and other corporations will
be required to amortize for tax pur-
poses the premiums on wholly and
partially tax-exempt bonds and may
at their election amortize premiums
on fully taxable bonds. In the case
of fully tax-exempt bonds the effect
would be to eliminate the amount
Of the premium as a capital loss
deduction upon the maturity or sale
of the bond, as 1t has heretofore
been treated.
In the case of such fully tax
exempt bonds now owned by banks,
however. the amount of the premium
unamortized prior to this year will
still be treated as capital loss on
the maturity or sale of the bond.
In the case of fully taxable bonds
the annual amortization is allowed
as a deduction.
Provision Is made to permit in
dividuals to take as a deduction all
of the ordinary and necessary ex-
penses paid or incurred for the pro-
lection or collection of income or
for the management. conservation
or maintenance of property held
for the production of income. The
effect of this is to permit, among
other things, the deduction OF trus-
tees fees. custodian fees and the
like by the individuals to whom
they are charged. This provision Is
made retroactive to and including
1898.
ABA Suggestions Adopted.
Changes in the bill which were
urged by the American Bankers
Association were adopted by the
House Ways and Means Committee.
Bankers are naturally pleased that
the bill as 1t now stands contains
no provision for a tax on checks,
this proposal having been discarded
several weeks ago.
D. j. Needham, general counsel
Of the American Bankers Associa-
ton. has just sent a bulletin to all
State association secretaries In
which he forecasts that the Senate
Finance Committee will make sub
stantial changes in the framework
Of the bill" He devotes his letter
TO facts about the measure which
are vital to banking.
Secretary Morgenthau is demand
ing changes in certain provisions OF
the bill as it now stands.
Hobbs Heads War Bond Group.
Robert B. Hobbs, partner in the
Arm of w. w. Lanham e. Co.. Balti-
more. has been appointed manager
Of the Baltimore area Office of the
Victory Fund Committee of the fifth
Federal Reserve district. and the
appointment has been approved by
the Secretary of the Treasury.
The announcement was made to-
day by Hugh Leach. president of the
Federal Reserve Bank of Richmond
and general chairman of the COM
n1ittee in this district.
Mr. Hobbs will devote his full time
10 the work Of the committee in the
Baltimore area. His Office is in the
Baltimore branch of the Federal Re.
serve Bank The area is comprised
Of the District of Columbia. Mary.
land and 80 counties in the northern
part of West Virginia.
Dyer on National Committee.
William H. Dyer. assistant secre
tary OF the Perpetual Building AS
sociatlon, has been appointed
member OF the United States Saw
ings & Loan Leagues 1912 Commit
tee on Investments and Investmen
policies.
Appointment was made bv F 6
Cannon, league president. Mr., Dye
will serve with % other building ant
loan offlcials. There has never beel
q time in the history of the buildin,
and loan business when the aSsocia
tions faced more difficult investmen
decisions than now" Mr.. Cannon
said in naming the committee. H
added.
Inevitably War Series G and fu
ture bond issues will have to b
considered as part of the invest
rlent business of these institution
along with home loans. The prob
ability that year from now les
sened demand for home mortgag
loans is bound to be felt. makes tn
progressive institution managers to
day turn realistically to the formu
iation OF a program to offset sue
q condition when it develops"