New Provisions in the Revenue Act of 1921;

              106 HASKINS & SELLS December
SOME of the principal differences which
have been noted between the Revenue
Act of 1921 and that of 1918, are sum­marized
briefly in the following memo­randa.
Copies of the new act are now on
file in all the practice offices and the men
of the staff should familiarize themselves
immediately with the details of these
provisions which are given here only in
memorandum form.
In the case of property acquired by
gift after December 31, 1920, the basis
for determining gain or loss on subsequent
sale is the same as it would have been in
the hands of the donor or the last pre­ceding
owner by whom it was not acquired
by gift.
In case of exchange of property for other
property, no gain or loss shall be recog­nized
unless the property received in
exchange has a readily realizable market
value.
Even if property so received has a
readily realizable market value no gain or
loss shall be recognized in the following
cases:
1. When property held for investment
or for productive use in trade or business
(except inventories) is exchanged for like
property;
2. When in a reorganization a person
receives in place of securities held, securi­ties
in a corporation which is a party to or
the result of such reorganization;
3. Where one or more persons transfer
property to a corporation and are im­mediately
after in control of the cor­poration.
Control means ownership of
80% of voting stock and 80% of all other
stock.
Net losses in any year beginning after
December 31, 1920, are deductible from
succeeding year and if still remaining,
then in next succeeding year.
The tax on capital net gains (after
December 31, 1921) is limited to 1 2 ½%
of such gain, except that total tax cannot
be less than 12½% of total net income.
Capital net gain—taxable gain on capital
assets—(losses on capital assets are de­ductions
allocable to capital gains).
Capital assets mean property acquired
and held for profit or investment for more
than two years (other than for personal
use).
Does not apply to corporations.
Surtax rates for 1922 and thereafter:
1%, $6,000 to $10,000
2%, $10,000 to $12,000
and 1% additional on each additional
$2,000 up to $100,000 (except $20,000 and
$32,000), at which point the tax is 48%
to $150,000, 49% to $200,000, and 50%
above $200,000.
Traveling expenses (including the entire
amount expended for meals and lodging)
while away from home in pursuit of a
trade or business, allowed as a deduction.
No losses allowed on sale of securities
after November 23, 1921, if identical
securities are purchased within thirty
days and such securities are held for any
period.
Reserve for bad debts allowed, in dis­cretion
of Commissioner.
Where debts are recoverable only in
part, they may be charged off in part.
In case of depletion based on discovery
values, such depletion may not exceed
income derived from property on which
discovery is made.
Contribution provision has been broad­ened
to include gifts to United States, any
New Provisions in the Revenue Act of 1921