Show II YOUR INGO INCOME 1 TAX TAX II 1 More specimen income ta tax cases i are cited and solved today in the S fourth article by R R. A. A Conkey I t tax x of ot the Central Na- Na a- a Bank Savings and Trust company Cleveland Are any of ot these similar to your 11 0 case By R. R A. A CONKEY Qu Question 29 an 29 an unmarried individual Individual ual receives during the year ear salary amounting to dividends SOO and insurance from hi his fathers father's death of Should he file a return A. A The Insurance Is It not taxable and need not appear on the return His net income however ever Is 1200 and he must file le a return As Its the dividends are not subject to normal tax this leaves only subject to normal tax and his personal property exemption is 1000 therefore he has no ta tax to pay Q 30 What 30 What is the basis of or determining determining deter deter- determining mining gain gaiR or loss from the sale of or purchased property A A. A With 3 j With respect to property purchased since Ince February 28 28 1913 the basis I is Its cost The difference between between be between be- be tween the sale price and its cost is either gain or loss 2 2 With With respect to property purchased purchased purchased pur pur- chased priOr to March 1 I 1913 the fair tail market value as of or that date governs governs gov gov- erns ems the basis basi The toll following owing examples Illustrate how this basis is applied Where March 1 I 1913 value alue Is greater great great- er than cost ost and less than price Property cost March 1 l 1 1913 1913 13 value Sold subsequent to March 1 1 1013 1213 for for Actual gain k S Taxable gain excess of sale price over March 1 1 1913 value Where March 1 1913 value is less than cost but greater than sale pi price ice Property cost March 1 I 1913 1913 value Sold subsequent to March 1 I 1913 for GOO 00 Actual loss los r t 1 Deductible loss excess s of March 1 1 1913 1912 value over sale price Where March I 1 1 1913 value Is greater great great- er than cost and greater than sale price ProP Property r y cost March 1 1913 value 1500 00 Sold subsequent t to March 1 I 1913 for tor 1200 00 Actual gain 00 which gain is not returnable as as s sale le price Is less than March 1 1913 value and therefore no taxable gain accrued since that date Where here March 1 I 1913 value is less than cost and less les than sales price Property cost A March 1 1913 value Sold subsequent to March 1 I I 1913 for tor V OOOO Actual loss los which loss is not deductible as such loss did not accrue since March 1 1913 S Q Q 31 Why 31 Why does the date March 1 I 1913 govern the basis A A. As this wa was the effective date of or the first Income tax law Jaw gains accumulated accumulated accumulated prior to that date are not taxed and likewise ise losses accumulated prior to that date are not ot allowable de de- de- de This was the date of ot the passa passage e of the sixteenth amendment to the United States State's constitution permitting permitting permitting per per- congress to pass income tax laws without apportionment among the states The law of or 1909 was an excise excise ex ex- ex- ex cise else law but based u upon uon on net Income Q 32 32 What What is the basis tot for determining determining determining deter deter- mining gain or less from the sale of ot property acquired by b- gift A A. If It acquired by gift after December December Decem Decem- ber 31 1920 the basis shall be the same as It would have been In the hands of ot the donor or last preceding owner Who did not acquire it by gift Q 33 What 33 What is the basis of or prop- prop ert eity elty is acquired b by bequest devise or inheritance A A. If It acquired to February 28 28 1913 the basis is its fair tall market value at time of acquisition Q 34 Is 34 Is a a. taxable gain or loss Joss realIzed realized real real- upon exchange of ot property A A. Where here properties of ot a like nature are exchanged no gain or loss Is rec rec- but if it the property received has a ready realizable market marlet excess of or that of ot the property ex ox- Ct- Ct changed there may moy be under tinder certain conditions be a a. Q 35 35 What What Is meant by net loss loss' A. A This is a loss resulting from the operation of a trade or business bustnes regularly regu- regu regu 1 larJ carried on b by y the taxpayer in- in in 1 in-I in eluding loss in disposing of ar any capital assets of the HIe business The he amount of this net ma may mav be deducted from the n net t income of 01 the succeeding year and If It the net loss is in ex excess ess of deducted such net income that excess ma may be from the net income of of ot the second succeeding year I In tomorrows tomorrow's Telegram Conkey shows you how to fill out your income tax return V |