property as is described in paragraph (1), (4), or (5), of subdivision (a), the basis as therein provided), or (B) the fair market value of such property as of March 1, 1913, whichever is greater. In determining the fair market value of stock in a corporation as of March 1, 1913, due regard shall be given to the fair market value of the assets of the corporation as of that date. Capital Gains and Losses. SEC. 208. (a) For the purposes of this title— (1) The term "capital gain" means taxable gain from the sale or exchange of capital assets consummated after December 31, 1921; (2) The term "capital loss" means deductible loss resulting from the sale or exchange of capital assets; (3) The term "capital deductions" means such deductions as are allowed by section 214 for the purpose of computing net income, and are properly allocable to or chargeable against capital assets sold or exchanged during the taxable year; (4) The term "ordinary deductions" means the deductions allowed by section 214 other than capital losses and capital deductions; (5) The term "capital net gain" means the excess of the total amount of capital gain over the sum of (A) the capital deductions and capital losses, plus (B) the amount, if any, by which the ordinary deductions exceed the gross income computed without including capital gain; (6) The term "capital net loss" means the excess of the sum of the capital losses plus the capital deductions over the total amount of capital gain; (7) The term "ordinary net income " means the net income, computed in accordance with the provisions of this title, after excluding all items of capital gain, capital loss, and capital deductions; and " (8) The term "capital assets means property held by the taxpayer for more than two years (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale in the course of his trade or business. In determining the period for which the taxpayer has held property received on an exchange there shall be included the period for which he held the property exchanged, if under the provisions of section 204 the property received has, for the purpose of determining gain or loss from a sale or exchange, the same basis in whole or in part in his hands as the property exchanged. In determining the period for which the taxpayer has held property however acquired there shall be included the period for which such property was held by any other person, if under the provisions of section 204 such property has, for the purpose of determining gain or loss from a sale or exchange, the same basis in whole or in part in his hands as it would have in the hands of such other person. In determining the period for which the taxpayer has held stock or securities received upon a distribution where no gain is recognized to the distributee under the provisions of subdivision (c) of section 203 of this Act or of the Revenue Act of 1924, there shall be included the period for which he held the stock or securities in the distributing corporation prior to the receipt of the stock or securities upon such distribution. (b) In the case of any taxpayer (other than a corporation) who for any taxable year derives a capital net gain, there shall (at the election of the taxpayer) be levied, collected and paid, in lieu of the taxes imposed by sections 210 and 211 of this title, a tax determined as follows: A partial tax shall first be computed upon the basis of the ordinary net income at the rates and in the manner provided in sections 210 and 211, and the total tax shall be this amount plus 12 per centum of the capital net gain. (c) In the case of any taxpayer (other than a corporation) who for any taxable year sustains a capital net loss, there shall be levied, collected, and paid, in lieu of the taxes imposed by sections 210 and 211 of this title, a tax determined as follows: A partial tax shall first be computed upon the basis of the ordinary net income at the rates and in the manner provided in sections 210 and 211, and the total tax shall be this amount minus 12 per centum of the capital net loss; but in no case shall the tax under this subdivision be less than the taxes imposed by sections 210 and 211 computed without regard to the provisions of this section. (d) The total tax determined under subdivision (b) or (c) shall be collected and paid in the same manner, at the same time, and subject to the same provisions of law, including penalties, as other taxes under this title. (e) In the case of the members of a partnership, of an estate or trust, or of the beneficiary of an estate or trust, the proper part of each share of the net income which consists, respectively, of ordinary net income, capital net gain, or capital net loss, shall be determined under rules and regulations to be prescribed by the Commissioner with the approval of the Secretary, and shall be separately shown in the return of the partnership or estate or trust, and shall be taxed to the member or beneficiary or to the estate or trust as provided in sections 218 and 219, but at the rates and in the manner provided in subdivision (b) or (c) of this section. INDEX A Additional Commissioners- duties of, 249. in Great Britain, 24. Administration- Additional Commissioners, 249. advantages of British system of, 295. appeals, in Great Britain, 271. in the United States, 272. assessment by various bodies of officials in Great Britain, 243. in the United States, 267. Board of Inland Revenue, 247. Bureau of Internal Revenue, 253. duties of assessors in Great Britain, 252. duties of collectors, in Great Britain, 252. in the United States, 253. duties of revenue agents in the United States, 254. General Commissioners, 248. general observations, 246. in Great Britain, 22, 247. Inspectors of Taxes, 250. of United States income tax, 32. payment of the British tax, 280. payment of the United States tax, 281. production of books and accounts, in Great Britain, 275. in the United States, 276. refunds of tax, in Great Britain, 285. in the United States, 286. returns of income, in Great Britain, 260. in the United States, 261. Special Commissioners, 249. the two systems compared, 255. United States Board of Tax Appeals, 254. Agricultural organizations- exempt in the United States, 171. Allowances- under the British law, 57. Annual value- conception of, more prevalent in Great Britain, 160. Assessment- arguments against average system, 222. arguments in favour of average system, 221. basis of, 209. by various bodies of officials in Great Britain, 243. exclusively on preceding year basis in the United States, 209. for opening years of business, 217. for super-tax in Great Britain, 212. in Great Britain, 211, 265. in the United States, 29. in Great Britain, in case of losses, 218. where business is discontinued, 219. in relation to deduction at source, 215. in case of losses, 224. modifications of average system in Great Britain, 216. results of, on basis of average of several years, 214. year of, in Great Britain, 20. Assessors- upon which income taxes of Great Britain and the United States British Income Tax (continued)— assessors, 23. collectors, 23. Commissioners of Inland Revenue, 23. compared with the United States law from point of view of tax theory, 77. conception of income, 118. corporations under, 51, 86. difficulty of changing, 294. effect of assessment on average of several years' income, 214. estates and trusts under, 113. exempt income, 162. exemptions from, 37. exemptions of charities, 173. foreign income, 46. history of, 16. imposed annually, 9. income must be annual, 120. individuals under, 48. information at source, 231. Inspectors of Taxes, duties of, 23. lack of logical arrangement, 12. municipalities subject to, 152. no deduction for charitable contributions, 165. partnerships under, 51, 110. payment of, 21, 280. persons subject to, 18. production of books and accounts, 275. contents of, in Great Britain, 9. Building and loan associations- exempt in the United States, 172. exemption of income from, in the United States, 164. Bureau of Internal Revenue- description of, 32. duties of, 253. Business Leagues- exemption of, in the United States, 172. |