PREFACE

The present Congress has achieved the seemingly impossible task of passing an income-tax law even more complicated than its already far too complicated predecessor. And so the taxpayer finds himself confronted with the task of meeting the requirements of a statute that even the expert will have difficulty in unravelling.

Whether or not he is interested in the law and all its ramifications, the taxpayer must of necessity obtain a very thorough knowledge of those parts that apply to his own case. But the average taxpayer has no time to pore over the act in its entirety, to decipher each section, and then to be left wondering whether any particular section applies to his own tax return. He has several very definite questions to ask and he wants very definite answers-authoritative answers on which he can rely. It was with a view to the meeting of this situation that the present work was undertaken.

After careful consideration the author has departed from the more familiar method of presentation by means of general statements, and has instead analyzed the subject into a series of concrete and representative problems. Because he has adhered so closely to the problem method the writer feels that it would not be amiss to point out and emphasize what he considers to be its advantages over the other, more usual method.

There is an inherent difficulty in treating a complex subject by means of general statements, for the reason that a statement which is at once general and accurate tends to become so cluttered up with reservations as to make it unintelligible to any but the expert. And if the reservations are omitted in order to make the essential idea easier to grasp, the resultant loss of accuracy renders the statement unreliable. A general statement can be at best only a paraphrase of the law itself and, like the law, must be interpreted. If the paraphrase is short

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it loses in accuracy and clearness; if it is expanded, the reader requires even more time to go through it than through the original law. Even if these obstacles are surmounted, the reader is still confronted with the necessity of applying the general knowledge gained to the specific problem at hand.

The problem method, it seems to the writer, avoids these disadvantages and lends itself more readily to the simple exposition of a complex subject. Many of the various questions that arise in practice are here tabulated, the circumstances under which they arise are concisely stated, and a specific answer to each question is given so that the reader who is not himself a legal expert can obtain authoritative directions as to the proper method of procedure. The problems are arranged and indexed so that the reader can turn at once to the group in which he is interested. If the first problem is the same as his, he recognizes it immediately; if it is not, it is hoped that he will need to run through only a small group to find what he wishes. The answers do not conclude the problems, but in each case there is in addition a statement of the authority upon which the answer is based. Moreover, in certain instances where there is a reasonable doubt as to the meaning of the statute, a discussion of the author's interpretation has been added. The reader who is not satisfied with a categorical reply but who desires to go further into the subject will find in these references and discussions material for further inquiry and research.

In advocating the problem method the author feels that he has the support of modern educational experts in other fields. In fact this method is a characteristic mark of present-day pedagogy. In our law schools the lecture method of presentation has given way largely to presentation by cases; in schools of medicine and engineering the modern student is taught not so much by means of lectures as by the far more practical and efficient means of actual work in the laboratory. Even in theoretical science and in pure mathematics, teaching is carried on very largely by means of problems. In all these cases the question is put first and it is not until the student

has mastered the solution that he is given a general summing up, with the result that the general statements become full of meaning instead of hollow generalities waiting to be filled in with concrete data.

This mode of exposition is all the more effective in the presentation of the income-tax law because a strictly logical arrangement is in the nature of the case impossible, since the law itself is not a structure of logical sequence. It was, as is well known, hastily put together; its different parts were suggested by various persons each with his own theory of taxation; and the result represents a compromise on the basis of expediency rather than of logic. So faulty is the law that even its sponsors admit its shortcomings. The late Senator Penrose, who introduced the bill into the Upper House of Congress, characterized it as "a temporary makeshift" which "does not place the tax system on a stable and scientific basis." The author believes it best, therefore, to consider each important point of the act as a specific problem in itself.

A feature of the book to which the author wishes to call special attention is the double system of indexing. In addition to the general index a special index has been compiled for those more particularly interested in the legal aspects of the revenue act.

It is hoped that if the method and the arrangement of the book succeed in simplifying for the business man a complicated subject, the same qualities may render the work useful to the student and teacher. It is believed that a class that has acquainted itself with the problems and mastered their solutions will have a knowledge analogous to that gained in actual business experience.

The book was begun when the revenue bill was first introduced into Congress and the author has attempted to keep pace with the development of the law. He has tried to keep in touch with the progress of the bill throughout all the hearings, committee sittings and debates until its adoption in its present form. He has gone through the completed act with the utmost care, comparing it with the act of 1918, and working out its

applications to actual problems that will arise in the various types of business. In his research on the subject he has had the assistance of a corps of experts whose investigations have supplemented his own. With the aid of these experts all the problems in the book have been carefully worked out so that their formulation is as precise as possible; and the solutions and references have been thoroughly checked.

The author wishes to express his appreciation of the assistance rendered by the members of his staff. In particular does he wish to acknowledge his thanks to Mr. H. D. Heiby and Mr. H. O. Walker without whose co-operation this work could not have been completed.

17 EAST 42ND STREET, NEW YORK, N. Y.

MARCH 15, 1922.

E. E. ROSSMOORE.