FRIDAY, FEBRUARY . 1959
HERALD AN'P NEWS. KLAMATH FALLS. OREGON
Your Annual Income Tax Primer
By RICHARD A. MULLENS
Written (or NEA Service
A somewhat complicated but
very useful provision in the tax
law permits a taxpayer, under
certain conditions, to postpone pay
ing tax on the gain from the sale
of his residence.
In this day and age of rising
prices, it is not unusual for a man
who bought a home for $7,500 in
1940 to find that it is worth $15,000
120.000 today.
That sounds sood fof the home
owner, but under the old law it
could result in a real hardship.
Suppose such person were sud
denly transferred to a job in an
other city. I'nder the old law, if
he sold his home for say $17,500,
he would be taxed on the cain.
The capital gains tax on a profit
ot sio.ooo could run as high as
$2,500.
This would mean that without
putting up additional cash or bor-
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u $r6Q.PM2 ,,,-57
New Capital Deficit Seen
At SI Billion By Expert
By ELMER C. WALZER
UPI Financial Editor
NEW YORK (UPI) Estimates
on 1959 financing show there will
be a deficit of $1 billion in new
capital, according to Girard L.
Spencer of the stock exchange
firm ot Salomon Bros & Hutzler.
As a result of this excess of
demand for long-term capital and
continuing restrictive monetary
policy, pressure is expected to
continue in the money market.
InteresJ rates are likely to con
tinue to rise, says Spencer, at
least during the first half of the
year. But the rise is expected to
-,. be less rapid than in the second
J rtull 0frl95B. --JT -
7 . Spencer anticipates a supply of
$23.7 Million in long-term tunas
. seeking investment. He places
demand for these funds at $24.7
billion.
Here are the sources of supply
Life insurance companies $4.7
billion, mutual savings banks $2.2
billion, savings and loan associa
tions $5.5 billion, corporate pen.
sion funds (not funded with insur
ance companies) $3.3 billion,
state and municipal retirement
and pension funds $1.6 billion.
fire and casualty insurance com-
I pames $1.3 billion, and other long
; term funds $5.1 billion.
Demand for long-term funds is
expected to come from mortgage
financing $13.3 billion; slate,
municipal and public revenue au-
thority financing $3.5 billion, and
i corporate financing $7.9 Diuion.
Spencer arrives at his mortgage
financing estimate on the basis
' of 1.150.000 private housing starts.
Corporate financing consists of
$8.6 billion bonds and notes. $10.5
billion preferred stocks, and $1.6
billion common stocks, less $2.8
billion maturities and sinking
fund retirements.
It is interesting to note that this
calculation includes more than $2
billion in stocks, including pre
ferreds. Wall Street has been looking for
rise in stock offerings for in
dustry financing in 1959. In the
first place, the stock market is
strong for making a climate to
absorb new oiferings, and the
bond market unpopular as well
as cluttered with municipal flota
tions. .
The Journal of Commerce notes
that public utility companies are
the first important group to take
advantage of the rise in the stock
market to step up equity financ
ing. Some pickup is noted in equity
financing by industrial compan
ies but thus far this has been
PAGE' NINE
relatively small, it is noted.
The stock exchange firm of
Shearson, Mill & Co. notes that
several companies have' called
their convertible issues, including
Continental Can, National Cash
Register, and American Machine
& Foundry, thus providing more
stocK lor tne market.
Barron's recently noted another
means of increasing the supply
ot stock tor the market. This is
through secondary offerings of
stocK.
Also, Barron notes, a growinc
number of companies, mindful of
tne tinancing opportunities of
lered by the current market, have
decided to raise money by float
ing convertible debentures.
"While perhaps not technically
equity financing. such flotations,
in fact, inevitably mean a greater
availability of common stock,"
says the publication.
In the first half of 1958. the
total of corporate securities of
fered for sale, totaled $6,222,000.
000 and of this only $816,000,000
was in equities.
For the full year of 1957, financ
ing totaled $12,884,000,000 with
common stocks making up
$2,927,000,000 of the total.
The lure . of floating common
stocks is the - big demand for
them. Corporations have had a
tendency to resort to bonds in
their financing. These have an
advantage in that the corporation
does not have to pay income
taxes on the interest it pays on
its bonds. It does have to pay
taxes on the dividends it pays to
stockholders. The disadvantage in
bonds is that in case of a bad
year, a company may be thrown
into bankruptcy if it cannot meet
Bond interest.
rowing money, he could not buy
as nice a new home as was his
old one.
The law was changed in 1954
Now. even though yon sell your
principal residence at a gain, the
gain is not taxed if you buy a new
residence within a period begin
ning one year before the date
of sale and ending one year there-
alter and if the adjusted sales
price" of the old residence is less
than the cost of the new one.
As usual, this general rule needs
some explanation. For example,
adjusted sales price' ot the old
residence means the selling price
less expenses of sale and also less
any "fixing-up expenses." The lat
ter means expenses for work per
formed wilhin 90 days before the
contract of sale on the old resi
dence in order to assist in its
sale. Such expenses must be paid
within 30 days after the date of the
contract of sale in order to qualify
as "fixing-up expenses."
The rule also applies if the cost
of constructing a principal resi
dence is as much or more than
the adjusted sales price of the
old residence.
In this case, if you begin con
struction of the new residence
yourself (that is, you do not take
over a construction . contract be
gun by another person before the
expiration of one year after the
sale of the old residence, you may
have an additional six months in
which to complete the new house
and move in.
The one-year or 18-monlh pe
riod referred to above is suspend
ed while taxpayer serves on ex
tended active duly with the Armed
Forces of the U.S., but not for
more than four years after the
date of sale of the old residence.
The term "residence" includes
a house, houseboat, or house trail
er. It you. live in more than one
place, it must be your principal
residence.
When part of the property is
used as your principal residence,
and part is used for business pur
poses or rented out, only the allo
cated gain on that part of the prop
erty used as the principal rest
dence is not taxed. The gain on
the business or rented part of the
properly must be reported.
For example, if a taxpayer rent
ing one-third of his residence sells
it for $6,000 profit, he must re
port one-third of the gain, or $2,000
but need not report $4,000 of the
profit if he otherwise complies
with the special rules on sale of a
residence.
Even though you did not pur
chase a new home by Dec. 31, 1958,
if you think you may either buy
or build within the required pe
nod, you need not report a tax
on the profit from the sale of your
old residence on your 1958 return
You must, however, show the sale
of the old residence on Schedule!
D, Form ' 1040, but should enter
"none" in column (h), headed
"gain or loss."
If it develops that you don't buy
or build and occupy a new resi
dence within the specified time.
then you must file an amended
1958 tax return and pay a tax on
the profit.
The Revenue Service has avail
able Form 2119 which can be used
to determine the tax consequences
of a sale of your personal resi
dence. It is not necessary to use
or file this form,, but it will be
helpful to use it. One of these
forms, properly filled out, is print
ed with this article.
&jf i It f M
fJfT TRADING POST ?
I
irs i
.CENTENNIAL THEME is exemplified at Rickys Town and
Country through centennial dinnerware and a trading
post for buy, sell and swap items. Bob Scholl, manager,
with a centennial beard, stands beside the china display.
Bavarian luncheon or salad plates, cups and saucers and
ash trays are imported through Tirschenreuter and im
printed in this country with a center picture on the
coupe shaped plates. The picture has four scenes Mount
Hood, Oregon Coast, covered wagons on the Oregon Trail
and a picture of Crater Lake.
Ranger Given
New Position
Promotion and transfer of Rex
ford A. Resler. district ranger.
I'nion Creek District, to the su
pervisor's office ot the Willamette
National Forest, Eugene, has just
been announced by Forest Super
visor C. E. Brown. Resler will
handle tne timber management
activities on the Willamette For
est. Resler served four and one half
years with the Air Force as in
structor in radio communication
and repair.
He was graduated from Oregon
Stale College in r.).')3 with a de
gree in forestry and received a
master's degree in 1954. while on
part time work with the Forest
Service.
He received his appointment in
1953 as a junior forester on the
Siuslaw National Forest where he
served as timber sale officer on
the Waldport District until July!
1955, when he was made district
ranger of the newly formed Mary's
Peak Ranger District. In May of
1957 he was moved to the Union
Creek District.
Home Extension
MIDLAND
The Midland Home Extension
Unit met at the county fairgrounds,
at which time new officers were
named.
Fanny Horsley was named chair
man succeeding Edythc Casehier.
resigned: Helen Warren was elect
ed vice chairman succeeding Pau
line Risley, resigned; and fhclina
Houck was named food chairman,
succeeding Sue Combes, resigned.
After a noon sack lunch, mem
bers enjoyed an open meeting of
visiting, knitting and discussing a
low calorie menu which will be
demonstrated at the next meet
ing. 1
MECHANIZE' FARM METHODS
TAIPEI. Formosa (UPIi-Agri-
culture officials have launched a
long-range program to mechanize
000-year-old farming methods on
this island stronghold of the Chi
nese Nationalists.
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r show me lins
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ft . ; a
Examine me for
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Now you can have the appearance of youth and free
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tale age line and unpleasant eye-jump caused by
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perfect lenses for our high-style imported PER
SONALITY GLASSES frames.
Open All Day Saturday
X?K Green Stamps
Courteous Credit Always
out S4& HMX
COLUMBIAN OPTICAL CO.
730 Main St. TU 4-7121
Dn. Omar J. Nolo and Don R. Haylor Sr.
SPEEDUP SOUGHT
OAKLAND, Calif. (UPD
George Matthews, 94, has asked
the court to speed up hisrequest
for a divorce that would 'end his
marriage of '5 years.
Matthews told Judge Chris B.
Fox, "I want to live my last few
years on earth in peace."
Gilchrist High
News
By RUTH' FORSTER
The Gilchrist High School win
ner of the Betty Crocker Home
maker of Tomorrow contest is
Sue Roland of Gilchrist. On a 50
minute examination on homemak
ing knowledge given to all grad
uating senior girls. Sue received
the highest score. Her paper has
been entered in competition with
those of other Oregon school win
ners for the state title Betty Crock
er Homemaker of Tomorrow..
Each state wmner will receive
a 11,500 scholarship from General
Mills, an educational trip April
4-10 with her school adviser to
Washington, D.C., colonial Wil
liamsburg, New York City and
Minneapolis. She will be a candi
date for the All-American Home
maker of Tomorrow. To the runner-up
in the state will be given
$500 scholarship.
Sue was presented with a pin
representing the slogan, "Home Is
Where The Heart Is." by Dorothy
Houston, homomaking instructor,
at a student body meeting last
eek.
mm
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featuring
Capitol Recording Star
GENE
BE-BOP-A-LULA
VINCENT
ma
PLUS
CLAYTON VATSON
and the SILHOUETTES
THIS IS A REAL ROCKIN' BAND AND HAS BEEN TOUR
ING WITH JIMMY RODGERS AND JERRY LEE LEWIS AND
WILL BACK GENE ON HIS RECORDS FROM NOW ON.
AUDITORIUM
SAT. NIGHT
DANCING 9-1 $2.00 PER PERSON
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BEEF "STEW
For reel horn style beef ttew In Min
utes serve Nolley's. Nal ley's exclusive
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delicious meat uicet 1 . . give Nalley'e
beef itew a flavor ell Its ewn.
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