Selected Capital Gain and Loss Provisions of the Internal Revenue Code and Regulations
BY CARROLL L. WEBB, JR. Principal, Dallas Office
Presented before The Tax Institute of Ark-La-Tex, Shreveport, Louisiana — November 1959
THE quest for means whereby taxpayers may realize income that will be subjected to tax only at capital gain rates is a never ending one. To the taxpayer who already has large amounts of ordinary income, there is little incentive for realizing additional income
other than that which will be capital gains. But even to the lower income taxpayer capital gains are important because only half the gain will be subject to income tax until his income reaches an amount sufficient to make applicable the alternative tax computation
by which it will be taxed at the present maximum rate of twenty-five per cent.
Our tax law and regulations contain numerous provisions relating
to capital gains and losses. Obviously our time tonight will not permit a discussion of all of those provisions. For our discussion,
I have selected some of those pertaining to real estate, timber, and involuntary conversions.
Of course, each one of these subjects, in itself, provides enough material for much more time than we are going to devote to all three here tonight. However, this paper is confined to a discussion of these subjects only as they are affected by the gain and loss provisions
of the Code and Regulations; it does not include a discussion of the multitude of other tax problems connected therewith.
First let us take a look at some of the tax considerations involved in the disposition of real estate. To begin with we might say that, as to tax consequences upon disposition, real estate falls into four principal categories, held or used as follows:
• As a personal residence
• In a trade or business
• Primarily for sale to customers
• For investment