TAXES: A Most Ingenious Paradox

One look at its own classified columns last week was enough to convince the Wall Street Journal that present tax laws are straight from Wonderland. "MILLION DOLLAR VALUE," cried one ad. Up for sale was 75% interest in a company with "$200,000.00 in losses sustained in past three years available for carryover . . ." i.e., for credit against future profits. Then the Journal noticed an ad for another company: "FEED MANUFACTURER . . . $3,000,000 yrly. gross. Excel. plant & buildings appraised at over $500,000. Long record of earnings . . . Full price less than $400,000."

The paradox of the profitable company being worth less than $400,000, and one with steady losses being touted as a "million dollar value," fascinated the Journal. "Almost any day now," it said editorially, "we expect to see an ad like this . . . EXPERIENCED EXECUTIVE. Over past five years has successfully lost $100,000 on labor and material costs and reduced sales by $200,000. Total 5-year loss personally achieved from all sources over $375,000. Available because I have done all I can with this company. Prefer company with conservative management needing shaking up. Substantial salary expected . . ."