The Omaha guide., 1945-03-31

ecklng diets with a civilian hospital
photos from BPR)
able as a dividend, i. e.. $4,000, is
a recovery of capital. applied to re-
duce the bases of the stockholders
shares and nontaxable until 1t ex-
ceeds the basis. Any excess is tax
able as a capital gain ORC, (115 I'd
BASIS-EFFECT OF COURT DE-
CISION: Not infrequently, a third
party (for instance, a customer or
supplier) makes a contribution to-
ward the cost of taxpayers plant
or other facilities. Such contribu-
ton is not i%ncludible in the cost
basis upon which to compute de-
probation (Detroit-E Edison 319 US
9S).
Prior to the Detroit Edison dec
ision, in the case Of another taxpay-
er, the Fourt Circuit held Q29 F..
(2d) 1922 hat the basis for deprec-
iation did include such a contribu-
ton. The decision became final.
Even though such decision is OBJ
viously erroneous, it is binding on
the Commissioner, the Tax Court
holds. Hence, such taxpayer may
continue to compute it's depreciation
deduction by including the contri-
button as part of it's cost (Arundel-
Brooks, 4 TIC No. 113, PHI Fed.
Tax q 74,3O2). Presumably, the.
basis to compute gain or loss on
sale would also include the contri-
button.
. If the unadjusted basis has
been established by a final court
decision, it continues to be the un-
adjusted absis in the absence of
new legislation or facts affecting
the situation.
DEATH OF SERVICEMAN-TAK
RELIEF; Where a serviceman or
woman dies while in active service:
l. His or her Federal income
tax for the year in which death oc-
ours is cancelled, and
2. Any unpaid Federal income
taxes for prior years. whether on
military or civilian income. are for
given ORC, 421, PHI Fed. Tax, q
20,102).
A person is i'm active service if
actually serving in the military or
naval forces. This relief is given
~ hafhnr IanfI -o-x. -.
service or from natural causes.
. If the ~serviceman paid any es-
timated "a or had any tax with
hello from him Tor the year IN
which death occurs, his estate is
entitled to a refund. Refund can
be obtained by filing a return with
proof Of death during the taxable
year.
PAYMENTS TO A THIRD PARTY
WHEN INCOME: Taxpayer (cash
basis) sold property in considerat-
ion of the purchaser paying taxpay
er's debt to another. The purchas-
er gave notes to the creditor which
h accepted only as further collat-
eral for taxpayers debt. The not
es were not paid until a later tax
year. Tax Court held that taxpay-
er constructively received the am
cunt of the notes in the year they
were given. Circuit Court. howev-
er, reverses and holds thai taxpay-
er's gain on the transaction should
not be taken into ccoun until the
were paid. Cd. p Oil Co, CCA- 60, /
PHI Fed. Tax. q 72.391).
WASH .SALES-"FUTURESv:The
loss on a wash sale is not deduct
ible Except by a "dealer"); a
lays before or after a sale axpay
wash sale" occurs when within 20
er purchases substantially identic-
al stock or securities as those
sold ORC, 11S).
Taxpayer purchased commodity
futures. Held: Such contracts
are securities" and taxpayers loss
on a sale must be disallowed if he
purchases a substantially identic-
al contract within the specified
time (Trenton Cotton Oil Co, Goa
90, PHI Fed. Tax, @ 72,371).
---------
LABOR LAWS AND PAYROLL TAX
ES-Wage-Hour Division EnvaGcs
I~ntrastate Commerce.: Production
of goods for use within the same
state may be covered by the Wage
Law. At least, a new inter-
probation of the Wage-Hour Div.s-
so states (Rel. ALA. 2-13-45. P
II, Labor. q 12,3S1).
1t is the Divisions view that pro
of goods used intrastate IS
nevertheless covered by the Act
if the goods are produced to sup
ply, aid. facilitate or to serve as an
integral part of interstate com
-.z~za = nsrs~ 49,