Source: http://www.taxhistory.org/Civilization/Documents/Surveys/hst23731/23731-6.htm
Timestamp: 2017-12-12 12:06:44
Document Index: 644999978

Matched Legal Cases: ['art 1', 'art 2', 'art 2', 'art 2', 'art 1', 'art 2', 'art 1', 'art 2']

APPENDIX B -- PROPOSED SCHEDULES AND EXAMPLES
Statement of Gains, Where There Are No Losses, from Sale (or
Exchange) of Assets (In cases where there are losses and no gains
from sale (or Exchange) of assets, this form may be used by treating
losses as gains after inserting a minus sign before each loss)
1. DESCRIPTION OF        2. DATE ACQUIRED      3. DATE SOLD
PROPERTY AND                               OR EXCHANGED
4. GROSS SALES PRICE    5. COST OR MARCH 1,
(Contract price)        1913, VALUE IF
(Indicate basis) /**/
6. COST OF IMPROVEMENTS     7. DEPRECIATION
SUBSEQUENT TO             ALLOWED
ACQUISITION OR          (OR ALLOWABLE)
MARCH 1, 1913        SINCE ACQUISITION
OR MARCH 1, 1913
8. Gain   9. No. of years   10. Weighted gains
held /*/       (Col. 8 X Col. 9)
1. Total                                                  XXXXXX
2. Average investment period for gains /*/
(Line 1, Col. 10 divided by Col. 8)
3. Average annual gain
(Line 1, Col. 8 divided by line 2)
4. Surtax net income
(From item 24 page 1 of return; if none, enter a zero)
5. Surtax net income plus net average annual gain
(Line 3 plus line 4)
6. Tentative tax on line 5 (Use rate schedule below)
7. Tentative tax on line 4 (Use rate schedule below)
8. Tax on average annual gain (Line 6 minus line 7)
9. Total tax on capital gains (Line 8 multiplied by line 2)
/*/ Disregard fractional parts of a year unless they amount to
one-half or more, in which case, count them as a full year.
Schedule C - Part 1
Statement of Gains and Losses from Sale (or Exchange) of Assets
8. Gain      9. Loss      10. No. of years
held /*/
11. Weighted gains     12. Weighted losses
(Col. 8 X Col. 10)      (Col. 9 X Col. 10)
(Line 1, Col. 11 divided by Col. 8)
3. Average investment period for losses /*/
(Line 1, Col. 12 divided by Col. 9)
4. Average annual gain (Line 1, Col. 8 divided by line 2)
5. Average annual loss (Line 1, Col. 9 divided by line 3)
6. Net average annual gain or loss (Line 4 minus line 5;
if line 5 exceeds line 4, indicate net average annual
loss by using minus sign)
7. Average annual gain or loss for longer investment
period (Enter line 4 if line 2 is greater than line 3;
otherwise enter line 5, preceded by a minus sign)
one-half or more, in which case, count them as a full year
Schedule C -- Part 2 /*/
Computation of Tax or Tax Credit on Capital Gains and Losses
8. Surtax net income (From item 24 page 1 of return;
if none, enter a zero)
9. Surtax net income adjusted for net average annual
gain or loss (Line 6 plus line 8)
10. Tentative tax on line 9 (Use rate schedule below)
11. Surtax net income adjusted for average annual gain
or loss for longer average investment period
(Line 7 plus line 8)
12. Tentative tax on line 11 (Use rate schedule below)
13. Tentative tax on line 8 (Use rate schedule below)
14. Annual tax or tax credit with respect to shorter
average investment period (Line 10 minus line 12)
15. Total tax or tax credit with respect to shorter
average investment period (Line 14 multiplied by
line 2 or line 3, whichever is smaller)
16. Annual tax or tax credit with respect to longer
average investment period (Line 12 minus line 13)
17. Total tax or tax credit with respect to longer
average investment period (Line 16 multiplied by
line 2 or line 3, whichever is greater)
18. Aggregate tax or tax credit on capital gains and
losses (Line 15 plus line 17)
/*/ For a discussion of the tax computation procedure followed
in this schedule, see page 69.
Combined normal tax and surtax rates /*/
Amount of                           Rate           Total normal
surtax net income                    (percent)       tax and surtax
0 -- 4,000                                4                  $160
14,000 -- 6,000                           8                   320
6,000 -- 8,000                            9                   500
8,000 -- 10,000                          10                   700
10,000 -- 12,000                         11                   920
12,000 -- 14,000                         12                 1,160
14,000 -- 16,000                         13                 1,420
16,000 -- 18,000                         15                 1,720
18,000 -- 20,000                         17                 2,060
20,000 -- 22,000                         19                 2,440
22,000 -- 26,000                         21                 3,280
26,000 -- 32,000                         23                 4,660
32,000 -- 38,000                         25                 6,160
38,000 -- 44,000                         28                 7,840
44,000 -- 50,000                         31                 9,700
50,000 -- 56,000                         35                11,800
56,000 -- 62,000                         39                14,140
62,000 -- 68,000                         43                16,720
68,000 -- 74,000                         47                19,540
74,000 -- 80,000                         51                22,600
80,000 -- 90,000                         55                28,100
90,000 -- 100,000                        59                34,000
100,000 -- 150,000                       62                65,000
150,000 -- 200,000                       64                97,000
200,000 -- 250,000                       66               130,000
250,000 -- 300,000                       68               164,000
300,000 -- 400,000                       70               234,000
400,000 -- 500,000                       72               306,000
500,000 -- 750,000                       74               491,000
750,000 -- 1,000,000                     76               681,000
1,000,000 -- 2,000,000                   77             1,451,000
2,000,000 -- 5,000,000                   78             3,791,000
5,000,000 and over                       79
Note: Where the amount to be subjected to tax is preceded by a
minus sign, compute the tax disregarding the minus sign, then insert
a minus sign before the resulting tax to indicate a tax credit.
/*/ In order to simplify as much as possible the actual tax
computation for the taxpayer, it is advisable to print in the
capital gains schedule a table showing the combined normal and
surtax rates. It is possible to combine the two rates because the
recommended treatment disallows, in computing the tax or tax credit
on capital gains and losses, any portions of the personal exemption
and credit for dependents, and the minimum earned income credit,
which are not utilized in computing the tax on ordinary income.
Note On Tax Computation Procedure Used In Part 2 Of Proposed Schedule
The tax computation procedure described in the recommended plan may be shown symbolically as follows:
Let T = total tax on capital gains.
Let S = number of years in shorter average investment period.
Let L = number of years in longer average investment period.
Let O = total tax on surtax net income.
Let A = total tax on sum of surtax net income, average annual
gain, and average annual loss.
Let B = total tax on sum of surtax net income and average
annual gain or average annual loss, whichever accrued
for the longer average investment period.
Then, T= S(A -- O) + (L -- S)(B -- O)
or, T = SA -- OS + LB -- SB + OS -- OL
from which, T = SA + LB -- SB -- OL
or, T = S(A -- B) + L(B -- O)
This latter tax procedure has been adopted in the proposed schedule (Schedule C, Part 2; see page 67) because it produces identical results with the tax procedure under the recommended plan while substituting simpler computations.
For purposes of illustrating the operation of the recommended plan for the tax treatment of the capital gains and losses of individuals, twelve cases, with varying assumptions respecting surtax net income and capital gains and losses, have been chosen. These cases, which follow immediately, are reported in the same form as the proposed schedules for capital gains. The assumptions for each case appear in the respective schedules.
It will be noted that Cases I and II have capital gains and no capital losses; Cases III and IV, capital losses and no capital gains; and Cases V through X both capital gains and capital losses. Cases I, III, V, and VIII have no surtax net income, while the remaining cases have surtax net incomes of varying amounts.
Cases I and II Schedule C
Statement of Gains, Where There Are No Losses, From Sale (or Exchange) of Assets
(In cases where there are losses and no gains from sale (or exchange) of assets, this form may be used by treating losses as gains after inserting a minus sign before each loss)
g. Gain       9.           10.
No. of       Weighted
years      gains (Col.
held /*/     8 x Col. 9)
- 2,000          1          - 2,000
- 3,000          2          - 6,000
- 4,000          3         - 12,000
- 5,000          4         - 20,000
- 1,000          5          - 5,000
- 5,000          6         - 30,000
- 70,000          7        - 490,000
- 10,000          8         - 80,000
- 5,000          9         - 45,000
- 5,000         10         - 50,000
1. Total                        110,000     XXXXXX          740,000
Case I          Case II
2. Average investment period for                 7                7
gains /*/ (Line 1, Col. 10
divided by Col. 8)
3. Average annual gain (Line 1,             15,714           15,714
Col. 8 divided byline 2)
4. Surtax net income (From item 24               0           10,000
page 1 of return; if none,
enter a zero)
5. Surtax net income plus net               15,714            5,714
average annual gain (Line 3
plus line 4)
6. Tentative tax on line 5                   1,383            3,220
(Use rate schedule below)
7. Tentative tax on line 4                       0              700
8. Tax on average annual gain                1,383            2,520
9. Total tax on capital gains                9,681           17,640
(Line 8 multiplied by line 2)
Cases III and IV Schedule C
(In cases where there are losses and no gains from sale (or exchange) of assets, this form may be used by treating losses as gains sifter inserting a minus sign before each loss)
- 7,000          7        - 490,000
1. Total                       -110,000     XXXXXX        - 740,000
Case III          Case IV
2. Average investment period                     7                7
for gains /*/ (Line 1, Col.
10 dividend by Col. 8)
3. Average annual gain (Line 1,           - 15,714         - 15,714
Col. 8 divided by line 2)
4. Surtax net income (From                       0           10,000
item 24 page 1 of return;
5. Surtax net income plus                 - 15,714          - 5,714
net average annual gain
6. Tentative tax on line 5                 - 1,383            - 297
8. Tax on average annual gain              - 1,383            - 997
9. Total tax on capital gains              - 9,681          - 6,979
Cases V, VI and VII Schedule C -- Part 1
g Gain      9.       10.            11.           12.
Loss      No. of       Weighted      Weighted
years         gains         losses
held /*/     (Col. 8g X    (Col. 9 x
Col. 10)      Col. 10)
2,000                   1          2,000
3,000                   2          6,000
4,000                   3         12,000
5,000                   4         20,000
1,000                   5          5,000
5,000                   6         30,000
70,000         7                      490,000
10,000                   8         80,000
5,000         9                       45,000
5,000        10                       50,000
1. Total    30,000    80,000    XXXXXX        155,000       585,000
2. Average investment period for gains /*/                        5
3. Average investment period for losses /*/                       7
4. Average annual gain (Line 1, Col. 8                        6,000
divided by line 2)
5. Average annual loss (Line 1, Col. 9                       11,429
divided by line 3)
6. Net average annual gain or loss                          - 5,429
(Line 4 minus line 5; if line 5 exceeds
line 4, indicate net average annual loss
by using minus sign)
7. Average annual gain or loss for longer                  - 11,429
investment period (Enter line 4 if line 2
is greater than line 3; otherwise enter
line 5, preceded by a minus sign)
Cases V, VI, and VII Schedule C -- Part 2
Case V      Case VI      Case VII
8. Surtax net income (From            0       10,000        100,000
item 24, page 1 of
return; if none, enter
9. Surtax net income            - 5,429        4,571         94,571
adjusted for net
or loss (Line 6 plus
10. Tentative tax on              - 274          206         30,797
line 9 (Use rate
11. Surtax net income          - 11,429      - 1,429         88,571
annual gain or loss for
longer average
investment period (Line
7 plus line 8)
12. Tentative tax on line         - 857         - 57         27,314
11 (Use rate schedule
13. Tentative tax on line             0          700         34,000
8 (Use rate schedule
14. Annual tax or tax               583          263          3,483
credit with respect to
(Line 10 minus line 12)
15. Total tax or tax credit       2,915        1,315         17,415
with respect to shorter
period (Line 14
multiplied by line 2 or
line 3, whichever is
16. Annual tax or tax             - 857        - 757        - 6,686
(Line 12 minus line 13)
17. Total tax or tax credit     - 5,999      - 5,299       - 46,802
with respect to longer
period (Line 16
line 3, whichever
18. Aggregate tax or tax        - 3,084     - 3,984        - 29,387
credit on capital gains
and losses (Line 15
plus line 17)
Cases VII, IX and X Schedule C - Part 1
g. Gain      9.      10.            11.           12.
Loss     No. of       Weighted      Weighted
held /*/     (Col. 8 X     (Col. 9 X
70,000                   7        490,000
1. Total   100,000    10,000    XXXXXX        645,000        95,000
2. Average investment period for gains /*/                        6
3. Average investment period for losses /*/                      10
4. Average annual gain (Line 1, Col. 8 divided               16,667
by line 2)
5. Average annual loss (Line 1, Col. 9 divided                1,000
by line 3)
6. Net average annual gain or loss (Line 4                   15,667
minus line 5; if line 5 exceeds line 4,
indicate net average annual loss by using
7. Average annual gain or loss for longer                   - 1,000
Cases VIII, IX and X
Schedule C -- Part 2
Case VIII     Case IX     Case  X
8. Surtax net income                    0        10,000     100,000
(From item 24, page 1
of return; if none,
9. Surtax net income               15,667        25,667     115,667
10. Tentative tax on                1,377         3,210      43,714
11. Surtax net income              -1,000         9,000      99,000
annual gain or loss
for longer average
12. Tentative tax on line             -40           600      33,410
13. Tentative tax on line               0           700      34,000
14. Annual tax or tax               1,417         2,610      10,304
credit with respect
to shorter average
15. Total tax or tax credit         8,502        15,660      61,824
(Line 14 multiplied by
line 2 or line 3,
16. Annual tax or tax credit          -40          -100        -590
17. Total tax or tax credit          -400        -1,000      -5,900
(Line 16 multiplied by
18. Aggregate tax or tax            8,102        14,660      55,924