Professional Documents
Culture Documents
Comprehensive
Volume 2022
General Editors
James C. Young David M. Maloney
Ph.D., CPA Ph.D., CPA
Contributing Authors
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Preface
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Learning Tools and Features to Help Students Make the Connection
FULL-COLOR DESIGN: We understand that students struggle with learning difficult tax law concepts and
applying them to real-world scenarios. The 2022 edition uses color to bring the text to life, capture student attention,
and present the tax law in an understandable and logical format.
Property Transactions:
13
C H A P T E R
to guide students in focusing on L E A R N I N G O B J E C T I V E S : After completing Chapter 13, you should be able to:
LO.1
Perform the computation of realized gain or loss on
LO.6
Apply the nonrecognition provisions and basis
property dispositions. determination rules for like-kind exchanges.
concepts for the CPA Exam while Sale or Gift of inherited houSe and other ProPerty tranSactionS
LO.3 LO.8
of asset acquisition. of gain on the sale of a personal residence.
Describe various loss disallowance provisions. Apply various tax planning opportunities related to
LO.4 LO.9
selected property transactions.
Alice owns a house that she inherited from her grandmother, Paula, seven months ago. Paula lived in the house
Carl sells Swan Corporation stock with an adjusted basis of $3,000 for $5,400. Carl’s realized gain
is $2,400 ($5,400 2 $3,000). If Carl had sold the stock for $1,750, he would have had a realized loss
EXAMPLE
T
his chapter and Chapter 14 explain the income tax consequences of property
of $1,250 ($1,750 2 $3,000). 2
transactions (the sale or other disposition of property).
Concept Summary 13.1 summarizes this calculation. The various terms used in Con-
• Is there a realized gain or loss? cept Summary 13.1 are discussed on the following pages.
• If so, is the gain or loss recognized?
• If the gain or loss is recognized, is it ordinary or capital? Concept Summary 13.1
• What is the basis of any replacement property that is acquired?
Realized Gain or Loss
This chapter discusses the determination of realized and recognized gain or loss and
the basis of property. Chapter 14 covers the classification of the recognized gain or loss Realized Gain
as ordinary or capital. +
is
nt
ou =
LO.1 13-1 DETERMINATION OF GAIN OR LOSS If a
m
In a property transaction, the fair market value of property received is the price determined
date acquired by the taxpayer. Capital additions increase and capital recoveries decrease
the original basis.10 As a result, adjusted basis is determined as follows:
Cost (or other adjusted basis) on date of acquisition
over 40 examples in each chapter by a willing seller and a willing buyer when neither is compelled to sell or buy and both
have reasonable knowledge of relevant facts.6 All of the relevant factors must be considered,7
and if the fair market value of the property received cannot be determined, the value of the
property given up by the taxpayer is assumed to be equivalent and may be used.8
1 Capital additions
2 Capital recoveries
5 Adjusted basis on date of disposition
Return to the facts of Example 3. There are several ways one can determine the fair market value
EXAMPLE Veronica purchased a residence for $250,000. Whether Veronica uses $250,000 from her personal
of the land Juan is receiving.
assets to pay for the residence or uses $50,000 from her personal assets and borrows the remaining
EXAMPLE
allow students to integrate chapter • If the exchange is between a willing buyer and seller, determining the fair market value of
Juan’s landscaping machine could answer the question (i.e., given the facts of the case, it
should be worth $56,000).
discuss how to determine basis for these assets later in the chapter.
Capital Additions
examples.
in the current taxable year if they are related to business or income-producing property.
else of value, from the disposition of the property. Any liability on property that is assumed by the buyer also is included in the buyer’s
The calculation of the amount realized may appear to be one of the least complex areas original basis of the property. The same rule applies if property is acquired subject to a
associated with property transactions. However, because numerous positive and negative liability. Amortization of the discount on bonds increases the adjusted basis of the bonds.11
adjustments may be required, this calculation can be complex and confusing. In addition,
determining the fair market value of the items received by the taxpayer can be difficult. The Capital Recoveries
following example provides insight into various items that can affect the amount realized. Capital recoveries decrease the adjusted basis of property.
4
§ 1001(b) and Reg. § 1.1001–1(b). The amount realized also includes any of property subject to a mortgage, the Federal income tax consequences in
Depreciation and Cost Recovery The original basis of depreciable property is
real property taxes treated as imposed on the seller that are actually paid calculating the amount realized are the same.
by the buyer. The reason for including these taxes in the amount realized 6
Comm. v. Marshman, 60–2 USTC ¶9484, 5 AFTR 2d 1528, 279 F.2d 27
reduced by any cost recovery or depreciation allowed while the property is held by the
is that by paying the taxes, the purchaser is, in effect, paying an additional (CA–6) and Reg. §§ 1.737–1(b), 20.2031–1(b), and 25.2512–3(a). taxpayer. The amount subtracted annually from the original basis is the greater of the
amount to the seller of the property. Refer to text Section 10-2b for a dis- 7
O’Malley v. Ames, 52–1 USTC ¶9361, 42 AFTR 19, 197 F.2d 256 (CA–8) allowed or allowable cost recovery or depreciation.12
cussion of this subject. and Alan Baer Revocable Trust v. U.S., 2010–1 USTC ¶60,590, 105 AFTR
5
Crane v. Comm., 47–1 USTC ¶9217, 35 AFTR 776, 67 S.Ct. 1047 and Comm. v. 2d 2010–1544. 9
§ 1011(a) and Reg. § 1.1011–1. 12
§ 1016(a)(2) and Reg. § 1.1016–3(a)(1)(i). In most cases, these amounts are
Tufts, 83–1 USTC ¶9328, 51 AFTR 2d 83–1132, 103 S.Ct. 1826. Although a legal 8
U.S. v. Davis, 62–2 USTC ¶9509, 9 AFTR 2d 1625, 82 S.Ct. 1190. 10 the same (refer to text Section 8-1c).
§ 1016(a) and Reg. § 1.1016–1.
distinction exists between the direct assumption of a mortgage and the taking 11
See text Section 14-3b for a discussion of bond discount and the related
amortization.
vi
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
COMPUTATIONAL EXERCISES: Students need to learn to apply the rules and concepts covered in
each chapter to truly understand them. These exercises, many of which mirror text examples, allow students to practice
and apply what they are learning.
26. LO.1 Melba purchases land from Adrian. Melba gives Adrian $225,000 in cash and
agrees to pay Adrian an additional $400,000 one year later plus interest at 5%.
a. What is Melba’s adjusted basis for the land at the acquisition date?
b. What is Melba’s adjusted basis for the land one year later?
27. LO.1 On July 1, 2021, Katrina purchased tax-exempt bonds (face value of $75,000)
for $82,000. The bonds mature in five years, and the annual interest rate is 3%.
a. How much interest income and/or interest expense must Katrina report in 2021,
assuming that straight-line amortization is appropriate?
b. What is Katrina’s adjusted basis for the bonds on January 1, 2022?
28. LO.3 Luciana, a nonshareholder, purchases a condominium from her employer
for $85,000. The fair market value of the condominium is $120,000. What is
Luciana’s basis inCHAPTER
the condominium andDetermination
13 Property Transactions: the amountof Gain orof
Loss,any income as
Basis Considerations, and a resultExchanges
Nontaxable of 13-67
this purchase?Randall treats the transaction as a like-kind exchange. Even though the original office
THE BIG PICTURE Joseph Mucira/pixabay THE BIG PICTURE: Tax Solutions for the
EffEct of a for-Profit BusinEss on a tax-ExEmPt Entity
Real World. Taxation comes alive at the start of each
Hopeful, Inc., is a tax-exempt organization under § 501(c)(3) that provides temporary lodging and psycho-
logical services for abused women and children. Its annual operating budget is $12 million. More than two
chapter as The Big Picture examples provide a glimpse
decades ago, Jennifer Abbott was a recipient of the services provided by Hopeful. Now Hopeful’s adminis-
trator has been notified by the attorney for Jennifer’s estate that her will transfers to Hopeful her shares in
the outstanding stock of Taste Good Ice Cream, a chain of 40 gourmet ice cream shops located in Virginia,
into the lives, families, careers, and tax situations of
North Carolina, and South Carolina. The business has been in existence for eight years and has produced
substantially higher profits each year. typical filers. Students will follow a family, individual, or
Hopeful’s board is considering the following options regarding the bequest from Jennifer and has hired
you to provide an analysis of the tax consequences of each option.
• Sell the stock of Taste Good Ice Cream, and add the net proceeds to Hopeful’s endowment.
other taxpayer throughout the chapter, to discover how
• Continue to conduct the Taste Good Ice Cream business as a division of Hopeful.
• Continue to conduct the business as a wholly owned subsidiary of Hopeful.
the concepts they are learning apply in the real world.
With the second and the third options, the existing Taste Good management team will remain in place.
After-tax profits not needed to expand the ice cream shop chain will be transferred to Hopeful, to be used
Finally, to solidify student comprehension, each
chapter concludes with a Refocus on the Big
in carrying out its exempt mission.
FRAMEWORK 1040:
Fitting It All Together.
This chapter-opening feature 11-2 PART 3 Deductions and Credits
income tax topics fit together, This chapter covers Income (broadly defined)....................................................................................................... $ xx,xxx Use this chapter-opening
the boldfaced portions
using the Income Tax Formula of the Tax Formula
for Individuals that
Less: Exclusions ................................................................................................................... (x,xxx)
Gross income ...................................................................................................................... $ xx,xxx Framework 1040, which
shows the topics as they
for Individuals as the framework. was introduced in
Concept Summary 3.1
FORM 1040 (p. 1)
7 Capital gain or (loss). Attach Schedule D if required, If not required, check here
appear in the individual
on p. 3-3. Below those
The framework helps students portions are the
sections of Form 1040
FORM 1040 (Schedule 1)
tax formula and then identify 12 Standard deduction or itemized deductions (from Schedule A) . . . . . . . . .
where these items are reported Personal and dependency exemptions* ....................................................................... (x,xxx)
Deduction for qualified business income** .................................................................. (x,xxx)
Taxable income .................................................................................................................... $ xx,xxx
on Form 1040. Framework 1040 Tax on taxable income (see Tax Tables or Tax Rate Schedules) ............................................. $ x,xxx
Less: Tax credits (including income taxes withheld and prepaid) .......................................... (xxx)
helps students navigate topics by Tax due (or refund) ............................................................................................................... $ xxx
explaining how tax concepts are **Only applies from 2018 through 2025.
organized.
A
s discussed in Chapter 6, a tax deduction for an expense or a loss is not allowed
unless specifically permitted by Congress. For example, losses can be recog-
nized and deducted in the case of certain unprofitable investments only because
the Code allows them. These losses can arise from the operation of an activity or on its
sale. For most individual taxpayers, deductible investor losses come within the scope
of § 165(c)(2) relating to transactions entered into for profit.1 But what happens if the
investment is mostly motivated by the tax loss it generates? Or what if the investment
generates expenses that offset ordinary income and it later is expected to produce
appreciation taxed at capital gain rates? This chapter addresses these tax minimization
strategies and the rules put in place to restrict their use.
viii
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
FINANCIAL DISCLOSURE
8-6 PART 3 Deductions and Credits
INSIGHTS: Tax professionals need to FINANCIAL DISCLOSURE INSIGHTS Tax and Book Depreciation
A common book-tax difference relates to recovery deductions represent a means by which the taxing
understand how taxes affect the financial the depreciation amounts that are reported for GAAP and jurisdiction infuses the business with cash flow created by the
Federal income tax purposes. Typically, tax depreciation reduction in the year’s tax liabilities.
statements. Financial Disclosure Insights, deductions are accelerated; that is, they are claimed in earlier For instance, recently, about one-quarter of General Elec-
reporting periods than is the case for financial accounting tric’s deferred tax liabilities related to depreciation differences.
appearing throughout the text, use current purposes. Ford’s depreciation differences amounted to about one-third
Almost every tax law change since 1980 has included of its deferred tax liabilities. And for the trucking firm Ryder
information about existing taxpayers to depreciation provisions that accelerate the related deductions Systems, depreciation differences accounted for virtually all
of the deferred tax liabilities.
relative to the expenses allowed under GAAP. Accelerated cost
highlight book-tax reporting differences,
effective tax rates, and trends in reporting Taxpayers may elect the straight-line method to compute cost recovery allowances
conventions.
11-18 PART 3 Deductions and Credits for each of these classes of property. Certain property is not eligible for accelerated cost
recovery and must be depreciated under an alternative depreciation system (ADS). Both
participates or has worked for more than 750 hours in these real property trades or
businesses during the year.26 Services performed by an employee are not treated as the straight-line election and ADS are discussed later in the chapter.
being related to a real property trade or business unless the employee performing the Cost recovery for personalty generally incorporates the half-year convention ; that
services owns more than a 5 percent interest in the employer. In addition, a closely held is, cost recovery in the year the asset is placed in service, as well as the year it is
C corporation may also qualify for the passive activity loss relief if more than 50 percent removed from service, is based on the assumption that the asset was used for exactly
of its gross receipts for the year are derived from real property trades or businesses in one half of the year, allowing a half-year of cost recovery.CHAPTER
7
For example, 27theThe Federal Gift and Estate Taxes
regular
which it materially participates. MACRS recovery period for property with a life of three years begins in the middle of
50
Example 46 illustrates a an
the year lifetime
asset is version of theand
placed in service direct
ends skip event.
three years later, In thisfourth
in the situation,
taxable
the GSTT is imposedyear.
ETHICS & EQUITY:
In practical
upon Elenaterms,
when thisthe
means
giftthat
is an asset’sto
made cost is actuallybecause
Rodrigo, recovered the
over gift
4, 6,
ETHICS & EQUITY Punching the Time Clock at Year-End 8, 11, 16, or 21 years.
skips over the generation of Rodrigo’s parents. Many tax issues
As the end of the tax year approaches, Julie, a
The GSTT rate is the highest
• On weekends, she and Ralph will visit the same units to
do not
rate underhave just
the gift andoneestate tax correct
schedulesanswer.
(i.e., 40 percent).
The GSTT base is reduced by the same
MACRS Personalty; exemption
Half-Year equivalent amount that is available
Convention
successful full-time real estate developer and investor, recog-
nizes that her income tax situation for the year could be bleak.
further evaluate the operations.
• Also on the weekends, while they are doingagainst their rou- the Federal estate
Ethics & Equity features
51
and gift tax (see Exhibit 27.1). For a donor who is will spark
married, the
Kareem acquires a 5-year class asset on April 10, 2021, for $30,000. Kareem’s cost recovery deduction
Unless she and her spouse, Ralph, are able to generate more
hours of participation in one of her real estate rental activities,
election
tine household shopping, they will be on the lookout
other rental properties to buy. Julie plans to countThe
E X to
for A Msplit
P L Ethe gift
for(ascritical
2021under asthinking
§ 2513)
is computed can double and
follows: the amount invite
both tax base also is reduced by the annual gift tax exclusion and the charitable
GSTT exemption.52
of theclassroom
3 MACRS cost recovery [$30,000 3 0.20 (Exhibit 8.3)] $6,000
they will not reach the material participation threshold. Conse-
quently, the tax losses from the venture will not be deductible.
her and Ralph’s weekend hours toward the tally of total
participation. and marital deductions. The discussion,
GSTT does not enticing
apply to gifts students to evaluate
made for political, medical,
To ensure deductibility, Julie suggests the following plan: and educational purposes,
Julie contends that the law clearly allows the efforts theirif the owncorrespondingvalue system.
gift tax exemption Suggested
applies. A credit is
• She will document the time she spends “thinking” about of one’s spouse to count for purposes of theallowed material for certain state-level
Assume the sameGSTTfacts aspaid.
in Example 3. Kareem sells the asset on March 5, 2023. Kareem’s cost recov-
her rental activities. EXAMPLE
Generations
participation tests. Likewise, nothing in the tax law requires answers
are assigned
ery deduction by birth
for 2023 to
is $2,880 Ethics
or marriage.
[$30,000 &
3 0.192For Equity
other
(Exhibit scenarios
8.3) 3 parties,
]. 1
2 a generation is
• During the week, Ralph will visit the apartment building taxpayers to be efficient in their hours of participation. How 4
25 years long. The GSTT computation is made on a schedule that is part of Form 706 or
to oversee (in a management role) the operations of the
rentals.
do you react? appear in
709 (i.e., the estate or gift tax return to which it relates).
the Solutions Manual.
Mid-Quarter Convention
The half-year convention is based on the simplifying presumption that assets gener-
Real Estate Rental Activities with Active Participation Mother Anna (age 60) and sonacquired
ally are barry (age 40)even
at an are pace
in two successive
throughout theGSTT generations.
tax year. Father Carl
However, Congress was
The second exception to the passive activity loss limits is more significant(age 60)it and
in that is daughter Denny
concerned(age 15)taxpayers
that are in two successive
might defeat thatgenerations.
presumption by placing large amounts of
EXAMPLE
deduct E’Toin (ageproperty
not restricted to real estate professionals. This exception allows individuals toSpouses
up to $25,000 of losses from real estate rental activities against active and portfolio
60) andin Fantasia
service toward
(agethe
58)end
areofinthethe
taxable
same year (and by doing
generation.
year’s depreciation on those large end-of-year acquisitions).
so, receive
Spouses a half-
Gerardo 47
(age 60) and Hermosa (age 20) are in the same generation.
income each year.27 The potential annual $25,000 deduction is reduced by 50 percent
of the taxpayer’s AGI in excess of $100,000. As a result, the entire deduction isUnrelated
phased individuals Ishu (age 60) and Jiva (age 50) are in the same generation. Unrelated
individuals
out at $150,000 of AGI. If married individuals file separately, the $25,000 deduction is Kong (age 60) and Lian (age 12) are two generations apart.
reduced to zero unless they lived apart for the entire year. In this case, 7the loss amount
§ 168(d)(4)(A).
TAX PLANNING: Chapters include is $12,500 each and the phaseout begins at $50,000 of AGI.28
To qualify for the $25,000 exception, a taxpayer must meet both of the following
27
professional rule.
29
important, income from the property is generally shifted to the donee. If the donee is in a
loans, and net losses from passive activities. See § 469(i)(3)(F).
§ 469(i). § 469(i)(6).
lower bracket than the donor, the family unit will save on income taxes. Second, the proper
spacing of gifts can further cut down the Federal gift tax by maximizing the number of
annual exclusions available. Third, many states impose some type of tax at death, but only
a relatively few impose a gift tax. Thus, a gift may completely avoid a state transfer tax.
In minimizing gift tax liability in lifetime asset transfers, the optimum use of the annual
11015_ch11_hr_002-039.indd 18
CHAPTER 3 Computing exclusion the Taxcan have3-23 significant results. Because a new annual exclusion is available each year,
25-02-2021 7:05:13 PM
spacing gifts over multiple years increases the amount that can be transferred free of gift tax.
GLOBAL TAX ISSUES Tracking Down Tax Dollars
Global Tax Issues: The
Non-U.S. persons who earn income within the The position of the IRS is that theStarting in 2013,
current ITIN Cora makes gifts in the amount of the annual exclusion to each of her five grand-
procedure lobal Tax Issues feature gives
G
children. EXAMPLE
United States may need to file a Federal income tax return, brings in revenue that otherwise would not be Taking into account the changes in the amount of the annual exclusion allowed, Cora will
forthcoming.
but they may not have a Social Security number for filing pur- Some undocumented workers want have transferred
to comply with the $650,000
law insight into the ways in which
through 2021 with no Federal gift tax consequences. 48
poses. If not, they can use a nine-digit Individual Tax Identi- and pay the income taxes they owe. This practice should not
fication Number (ITIN) instead. The IRS issues ITINs upon the be discouraged, as the tax law applies with equal force to legal
Years taxation is affected by international
Amount of Exclusion
submission of an application and proof of identification (e.g., and illegal residents of the United States.
a driver’s license). As the IRS does not require an applicant to However, ITINs have been criticized 2018–2021 concerns and illustrates the effects
for their use by ille- $15,000 (annual exclusion) 3 5 (number of
show that he or she is in the United States legally, the ITINs are gal immigrants and undocumented workers. A recent report donees) 3 4 (number of years) $300,000
freely available to undocumented persons (i.e., illegal immi- 2013–2017
found that individuals who are not authorized of various events on tax liabilities
to work in the $14,000 (annual exclusion) 3 5 (number of
grants). The use of an ITIN also can enable the holder to carry
out other financial transactions (e.g., establish a bank account,
United States were paid $4.2 billion in refundable tax credits,
such as the child tax credit, because they were able to file tax
across the globe.
donees) 3 5 (number of years) 350,000
through tax professionals who have been accepted into the electronic filing program
by the IRS. Such parties often hold themselves out to the general public as “authorized
IRS e-file providers.”
For direct e-filing, a taxpayer uses a personal computer, laptop, phone, or tablet,
employing tax preparation software with the capability of conveying the information
11015_ch27_hr_002-041.indd 25
online to an electronic return transmitter. A taxpayer then can use the free smartphone
app “IRS2Go” to check the status of a refund.
Through an arrangement with the IRS, designated software providers offer free
e-filing services. These services are available only to lower-income taxpayers. A list
of these “Free-File” providers and their eligibility requirements can be obtained at
irs.gov/filing/e-file-options.
ix
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most taxpayers, this attesting can be done through an electronic return signature using
a personal identification number.
E-filing has two major advantages. First, compliance with the format required by the
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Take your students from Motivation to Mastery with CengageNOWv2
Motivation —
To help with student engagement and
preparedness, CengageNOWv2 for SWFT
offers:
❏❏ “Tax Drills” test students on key
concepts and applications. With
three to five questions per learning
objective, these “quick-hit” questions
help students prepare for class
lectures or review prior to an exam.
Application —
Students need to learn problem-solving
behavior and skills, to guide them to complete
taxation problems on their own. However,
as students try to work through homework
problems, sometimes they become stuck and
need extra help. To reinforce concepts and keep
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for SWFT offers the following.
❏❏ End-of-chapter homework from the
text is expanded and enhanced to follow
the workflow a professional would use
to solve various client scenarios. These
enhancements better engage students
and encourage them to think like a tax
professional.
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❏❏ “Check My Work” Feedback. Homework questions include immediate feedback so students can learn as they
go. Levels of feedback include an option for “check my work” prior to submission of an assignment.
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explaining why their answers were incorrect. Instructors can decide how much feedback their students receive
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Mastery —
❏❏ Tax Form Problems give students
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❏❏ An Adaptive Study Plan comes
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xii PREFACE
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PREFACE xiii
•• Added Ethics & Equity feature on the expansion •• Replaced summary of a Fortune article on execu-
of unemployment benefits during the COVID-19 tive compensation with summary of a Wall Street
pandemic. Journal article (text Section 6-4c).
•• Noted the 2020 unemployment compensation •• Revised and updated end-of-chapter materials
exclusion added by the American Rescue Plan Act as needed (including changes needed to reflect
of 2021. revised inflation-adjusted items).
• • Added two examples illustrating the •• Modified items in tax form and tax computation
relationship of the all-events test to problems to be more reflective of current income
financial reporting. levels.
• • Added example of potential income shifting
to a taxpayer not subject to the kiddie tax to
highlight the general benefits of income shift- Chapter 7
ing and the impact of the kiddie tax on this •• Cited a recent Tax Court decision that
benefit. provides a comprehensive overview
• • Deleted former homework Problem 55 that of the law related to worthless securities
required completion of Worksheet 1, Figur- [MCM Investment Management, LLC
ing Your Taxable Benefits, from IRS Publica- (T.C.Memo. 2019–158)].
tion 915. •• Updated text to include discussion of COVID-19
casualties (and the ability to deduct these in the
year prior to the loss).
Chapter 5
•• Added a new example (Example 27) demonstrat-
•• Modified Learning Objective 1 to address the
ing how to amortize research and experimentation
definition of exclusions and that they are
expenditures incurred in taxable years beginning
distinguishable from items that are
after December 31, 2021.
not income.
•• Noted (in footnote 37) the retroactive delay of the
•• Combined the learning objective on cancellation
excess business loss provision by the CARES Act
of debt with the learning objective related to other
(revised effective date is taxable years beginning
exclusions.
after December 31, 2020).
•• Renamed text Section 5-1 as “Income Exclusions.”
•• Modified the net operating loss materials to reflect
•• Moved material on corporate distributions from changes made by the CARES Act.
text Section 5-11 to new text Section 5-1b, to
•• Added new part to Problem 40 to allow students
illustrate an example of something received that
to compute the appropriate deduction for research
is not income.
and experimentation expenditures incurred in
•• Moved and renamed former text Section 5-16 taxable years beginning after December 31, 2021;
as text Section 5-14 to improve flow of chapter also added a related question to the text bank and
materials. modified an essay question.
•• The discussion of corporate payments called •• Updated remainder of chapter materials as
“dividends” (but not considered dividends for tax needed (including various inflation-adjusted
purposes) was moved to Chapter 4 (as part of amounts).
gross income discussion).
•• Updated text, examples, and end-of-chapter
materials as needed, including 2021 inflation Chapter 8
adjustments. •• Updated chapter materials to reflect inflation
adjustments to § 179 (including SUVs) and luxury
automobiles.
Chapter 6 •• Updated Form 4562 and Schedule C (Form 1040)
•• Revised and updated chapter materials as needed; to 2020 forms.
clarified chapter materials when necessary. •• Updated and revised remainder of text and end-
•• Updated text for inflation-adjusted items. of-chapter materials as needed.
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xiv PREFACE
Chapter 9 Chapter 13
•• Updated text and end-of-chapter materials for •• Revised introductory discussion of realized gains
revised standard mileage amounts; updated and losses (text Section 13-1a).
materials on retirement plans. •• Expanded the discussion of basis when a liability
•• Deleted coverage of § 222 (repealed as part of is involved, adding Example 7.
Consolidated Appropriations Act of 2021). •• Reduced the discussion of basis computations,
•• Revised and clarified materials based on feedback deleting former Example 11.
from adopters.
Chapter 14
Chapter 10
•• Updated Exhibit 14.1 summarizing 2021 and 2020
•• Revised and clarified text as needed, including break points for the 0%/15%/20% alternative tax
2021 change to medical expense AGI floor (now rates on net capital gains and qualified dividend
permanently set at 7.5% of AGI). income.
•• Added brief comment on CARES Act cash chari- •• Updated text and end-of-chapter materials for
table contribution for non-itemizers (a for AGI 2021 inflation adjustments to Tax Rate Schedules
deduction). and alternative tax rate brackets (for net capital
•• Updated text for annual inflation adjustments. gains).
•• Updated end-of-chapter materials as needed. • • Enhanced text materials, Concept Summary
14.6, and Concept Summary 14.8 to show
integration with the capital gain materials
Chapter 11 more clearly.
•• Made minor changes to Learning Objectives 2
and 4.
•• Updated chapter materials to reflect inflation Chapter 15
adjustments. •• Updated chapter materials to reflect 2021 infla-
•• Added new research problem on virtual currency tion adjustments to QBI deduction threshold
investing and software tools to help track the nec- limits.
essary information for tax reporting. • • Updated example illustrating the completion
•• Updated end-of-chapter materials as needed. of 2020 Form 8995-A and Schedule A (Form
8995-A).
•• Revised and clarified materials based on feedback
from adopters.
Chapter 12
•• Updated end-of-chapter materials as needed
•• Updated for changes to various individual credits
(including revisions for inflation adjustments to
by the American Rescue Plan Act of 2021.
QBI deduction threshold limits and completion of
•• Reorganized presentation of credits to show those 2020 Form 8995).
available to businesses, to individuals, and to both
types of taxpayers.
•• Updated Ethics & Equity scenarios to reflect cur-
rent tax law considerations.
Chapter 16
•• Removed discussion of conditions for granting
•• Added a problem on the AMT.
approval to change an accounting period.
•• Updated problems, improved readability.
• • Replaced a research problem with one involv-
•• Added an exhibit summarizing various energy ing a sole proprietor and the constructive
credits (Exhibit 12.4). receipt doctrine (and added a communications
•• Updated Affordable Care Act materials. requirement).
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PREFACE xv
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xvi PREFACE
Chapter 25 Chapter 27
•• Revised Learning Objectives 3 and 5. •• Revised Learning Objectives 1, 2, 5, 8, and 9.
•• Replaced a Global Tax Issues feature •• Updated statistics about estate and gift tax returns
(“COVID-19 and Permanent Residency”). filed.
•• Rearranged and revised material in text
•• Revised the discussion of tax treaties
Section 27-2a.
(text Section 25-2).
•• Revised material in Concept Summary 27-3.
•• Updated and added statistics about the global
economy, worldwide tax rates, treaty withholding •• Revised introductory material in text Section 27-3.
rates, advance pricing agreements, FTC deferrals, •• Revised and rearranged material concerning life
and CFCs. insurance in the gross estate.
• • Revised Concept Summary 25.4 (which now •• Updated information about estate and gift tax
illustrates the components of Subpart F treaties with other countries.
income). •• Replaced a research problem with a new data
•• Deleted text Section 25-5b (“Creating a analytics problem.
Cross-Border Entity”). •• Revised titles for text Section 27-1b.
•• Revised and expanded the discussion of Global •• Updated statistics about the net worth of U.S.
Intangible Low-Taxed Income (GILTI). households.
•• Added a number of new examples to illustrate •• Expanded the list of requirements for using a buy-
text materials. sell agreement.
•• Revised the discussion of the § 1014(e) rule.
•• Revised Research Problem 6, which asks
students to explore and report on OECD •• Expanded material in text Section 27-3b.
base erosion and profit shifting (BEPS) •• Added material on charitable gifts using donor-
developments. advised funds.
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PREFACE xvii
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likely to come into his everyday talk, and no explanations will make
“Thy” have the same force for him as “your.” To make a child utter his
prayers in a strange speech is to put up a barrier between him and
his “Almighty Lover.” Again, might we not venture to teach our
children to say “dear God”? A parent, surely, can believe that no
austerely reverential style can be so sweet in the Divine Father’s
ears as the appeal to “dear God” for sympathy in joy and help in
trouble, which flows naturally from the little child who is “used to
God.” Let children grow up aware of the constant, immediate, joy-
giving, joy-taking Presence in the midst of them, and you may laugh
at all assaults of “infidelity,” which is foolishness to him who knows
his God as—only far better than—he knows father or mother, wife or
child.
Let them grow up, too, with the shout of a King in their midst.
There are, in this poor stuff we call human nature, founts of loyalty,
worship, passionate devotion, glad service, which have, alas! to be
unsealed in the earth-laden older heart, but only ask place to flow
from the child’s. There is no safeguard and no joy like that of being
under orders, being possessed, controlled, continually in the service
of One whom it is gladness to obey.
We lose sight of the fact in our modern civilisation, but a king, a
leader, implies warfare, a foe, victory—possible defeat and disgrace.
And this is the conception of life which cannot too soon be brought
before children.
“After thinking the matter over with some care, I resolved that I
cannot do better than give you my view of what it was that the
average boy carried away from our Rugby of half-a-century ago
which stood him in the best stead—was of the highest value to him—
in after life.... I have been in some doubt as to what to put first, and
am by no means sure that the few who are left of my old
schoolfellows would agree with me; but, speaking for myself, I think
this was our most marked characteristic, the feeling that in school
and close we were in training for a big fight—were, in fact, already
engaged in it—a fight which would last all our lives, and try all our
powers, physical, intellectual, and moral, to the utmost. I need not
say that this fight was the world-old one of good with evil, of light and
truth against darkness and sin, of Christ against the devil.”
So said the author of “Tom Brown” in an address to Rugby School
delivered on a recent Quinquagesima Sunday. This is plain
speaking; education is only worthy of the name as it teaches this
lesson; and it is a lesson which should be learnt in the home or ever
the child sets foot in any other school of life. It is an insult to children
to say they are too young to understand this for which we are sent
into the world. A boy of five, a great-grandson of Dr. Arnold, was
sitting at the piano with his mother, choosing his Sunday hymn; he
chose “Thy will be done,” and, as his special favourite, the verse
beginning, “Renew my will from day to day.” The choice of hymn and
verse rather puzzled his mother, who had a further glimpse into the
world of child-thought when the little fellow said wistfully, “Oh, dear,
it’s very hard to do God’s work!” The difference between doing and
bearing was not plain to him, but the battle and struggle and strain of
life already pressed on the spirit of the “careless, happy child.” That
an evil spiritual personality can get at their thoughts, and incite them
to “be naughty,” children learn all too soon, and understand,
perhaps, better than we do. Then, they are cross, “naughty,”
separate, sinful, needing to be healed as truly as the hoary sinner,
and much more aware of their need, because the tender soul of the
child, like an infant’s skin, is fretted by spiritual soreness. “It’s very
kind of God to forgive me so often; I’ve been naughty so many times
to-day,” said a sad little sinner of six, not at all because any one else
had been at the pains to convince her of naughtiness. Even “Pet
Marjorie’s” buoyancy is not proof against this sad sense of
shortcoming:—
“Yesterday I behaved extremely ill in God’s most holy church, for I
would never attend myself nor let Isabella attend, ... and it was the
very same Devil that tempted Job that tempted me, I am sure; but he
resisted Satan, though he had boils and many other misfortunes
which I have escaped.”—(At six!)
We must needs smile at the little “crimes,” but we must not smile
too much, and let children be depressed with much “naughtiness”
when they should live in the instant healing, in the dear Name, of the
Saviour of the world.
FOOTNOTES:
[4] “Memoirs of Arthur Hamilton.” Messrs. Kegan Paul & Co.
[5] Catholics say “who art.”
CHAPTER VII
Part I
says Goethe; for poets, like the rest of us, are born, not made, and
get the most of what they are from their parents. But it did not take
poet or modern scientist to discover this; people have known it time
out of mind. Like father, like child, they said, and were satisfied; for it
was not the way in earlier days to thresh out the great facts of life.
Not so now; we talk about it and about it; call it heredity, and take it
into count in our notions, at any rate, if not in our practice. Nobody
writes a biography now without attempting to produce progenitors
and early surroundings that shall account for his man or his woman.
This fact of heredity is very much before the public, and by-and-by
will have its bearing on the loose notions people hold about
education. In this sort of way—“Harold is a bright little boy, but he
hasn’t the least power of attention.”
“Oh, I know he hasn’t; but then, poor child, he can’t help it!
‘What’s bred in the bone,’ you know; and we are feather-brained on
both sides of the house.”
Now the practical educational question of our day is just this, Can
he help it? or, Can his parents help it? or, Must the child sit down for
life with whatever twist he has inherited? The fact is, many of us,
professional teachers, have been taking aim rather beside the mark;
we talk as if the development of certain faculties were the chief
object of education; and we point to our results, intellectual, moral,
æsthetic, physical, with a—“See there, what culture can effect!” But
we forget that the child has inborn cravings after all we have given
him. Just as the healthy child must have his dinner and his bed, so
too does he crave for knowledge, perfection, beauty, power, society;
and all he wants is opportunity. Give him opportunities of loving and
learning, and he will love and learn, for “’tis his nature to.” Whoever
has taken note of the sweet reasonableness, the quick intelligence,
the bright imaginings of a child, will think the fuss we make about the
right studies for developing these is like asking, How shall we get a
hungry man to eat his dinner?
Many a man got his turn for natural science because, as a boy, he
lived in the country, and had a chance to observe living things and
their ways. Nobody took pains to develop his faculty; all he had was
opportunity. If the boy’s mind is crammed with other matters, he has
no opportunity, and you may meet men of culture who have lived
most of their lives in the country, and don’t know a thrush from a
blackbird. I know of a woman who has developed both a
metaphysical and a literary turn, because, as a girl of ten, she was
allowed to browse on old volumes of the Spectator, the most telling
part of her education, she thinks. Again, I watched quite lately an
extraordinary educational result of opportunity. A friend, interested in
a Working Boys’ Club, undertook to teach a class to model in clay.
There was no selection made; the boys were mill-boys, taken as
they came in, with no qualifications, except that, as their teacher
said, they had not been spoilt—that is, they had not been taught to
draw in the ordinary way. She gave them clay, a model, one or two
modelling tools, and also, being an artist, the feeling of the object to
be copied. After half-a-dozen lessons, the things they produced
cannot be called less than works of art; and delightful it was to see
the vigour and spirit they worked with, the artistic instinct which
caught the sentiment of the object, as the creases made by a little
foot which make a child’s shoe a thing to kiss. This lady maintains
that she only let out what was in the boys; but she did more, her own
art enthusiasm forced out artistic effort. Even taking into account the
enthusiasm of the teacher—I wish we might always count on that
factor—this remains a fair case to prove our point, which is, give
them opportunity and direction, and children will do the greater part
of their own education, intellectual, æsthetic, even moral, by reason
of the wonderfully balanced desires, powers, and affections which go
to make up human nature.
A cheerful doctrine this, which should help to swell the ranks of
the unemployed. Outlets for their energies, a little direction, a little
control, and then we may sit by with folded hands and see them do
it. But, in fact, there are two things to be done: “powers to be
developed—where a little of our help goes a long way; and character
to be formed”—and here children are as clay in the hands of the
potter, absolutely dependent on their parents. Disposition, intellect,
genius, come pretty much by nature; but character is an
achievement, the one practical achievement possible to us for
ourselves and for our children; and all real advance in family or
individual is along the lines of character. Our great people are great
simply by reason of their force of character. For this, more than for
their literary successes, Carlyle and Johnson are great. Boswell’s
“Life” is, and perhaps deserves to be, more of a literary success than
anything of his master’s; but what figure does he make after all?
Greatness and littleness belong to character, and life would be
dull were we all cast in one mould; but how come we to differ?
Surely by reason of our inherited qualities. It is hereditary tendencies
which result in character. The man who is generous, obstinate, hot-
tempered, devout, is so, on the whole, because that strain of
character runs in his family. Some progenitor got a bent from his
circumstances towards fault or virtue, and that bent will go on
repeating itself to the end of the chapter. To save that single quality
from the exaggeration which would destroy the balance of qualities
we call sanity, two counter-forces are provided: marriage into alien
families, and education.
We come round now to the point we started from. If the
development of character rather than of faculty is the main work of
education, and if people are born, so to speak, ready-made, with all
the elements of their after-character in them, certain to be developed
by time and circumstances, what is left for education to do?
Very commonly, the vote is, do nothing; though there are three or
four ways of arriving at that conclusion.
As, What’s the good? The fathers have eaten sour grapes; the
children’s teeth must be set on edge. Tommy is obstinate as a little
mule—but what would you have? So is his father. So have been all
the Joneses, time out of mind; and Tommy’s obstinacy is taken as a
fact, not to be helped nor hindered.
Or, Mary is a butterfly of a child, never constant for five minutes to
anything she has in hand. “That child is just like me!” says her
mother; “but time will steady her.” Fanny, again, sings herself to
sleep with the Sicilian Vesper Hymn (her nurse’s lullaby) before she
is able to speak. “It’s strange how an ear for music runs in our
family!” is the comment, but no particular pains are taken to develop
the talent.
Another child asks odd questions, is inclined to make little jokes
about sacred things, to call his father “Tom,” and, generally, to show
a want of reverence. His parents are earnest-minded people—think
with pain of the loose opinions of Uncle Harry, and decide on a policy
of repression. “Do as you’re bid, and make no remarks,” becomes
the child’s rule of life, until he finds outlets little suspected at home.
In another case, common thought is much more on a level with
the science of the day; there is a tendency to lung-trouble: the
doctors undertake to deal with the tendency so long as the habit of
delicacy is not set up. The necessary precautions are taken, and
there is no reason why the child should not die at a good old age.
Once more;—there are parents who are aware of the advance
science has made in education, but doubt the lawfulness of looking
to science for aid in the making of character. They see hereditary
defects in their children, but set them down as of “the natural fault
and corruption of the nature of every man which naturally is
engendered of the offspring of Adam.” This, they believe, it is not
their part to remedy; that is, unless the boy’s fault be of a disturbing
kind—a violent temper, for example—when the mother thinks no
harm to whip the offending Adam out of him. But so surely as we
believe the laws of the spiritual life to have been revealed to us, so,
not less, surely, though without the same sanctity, have been
revealed the laws by which body, mind, and moral nature flourish or
decay. These it behoves us to make ourselves acquainted with; and
the Christian parent who is shy of science, and prefers to bring up
his children by the light of Nature when that of authoritative
revelation fails, does so to his children’s irreparable loss.
If the race is advancing, it is along the lines of character, for each
new generation inherits and adds to the best that has gone before it.
We should have to-day the very flower and fruit that has been a-
preparing through long lines of progenitors. Children have always
been lovely, so far back as that day when a little child in the streets
of Jerusalem was picked up and set in the midst to show of what sort
are the princes in the Kingdom to come:—
“In the Kingdom are the children—
You may read it in their eyes;
All the freedom of the Kingdom
In their careless humour lies.”
And what mother has not bowed before the princely heart of
innocence in her own little child? But apart from this, of their glad
living in the sunshine of the Divine Countenance, surely our children
are “more so” than those of earlier days. Never before was a
“Jackanapes” written, or the “Story of a Short Life.” Shakespeare
never made a child, nor Scott, hardly Dickens, often as he tried;
either we are waking up to what is in them, or the children are indeed
advancing in the van of the times, holding in light grasp the gains of
the past, the possibilities of the future. It is the age of child-worship;
and very lovely are the well-brought-up children of Christian and
cultured parents. But, alas! how many of us degrade the thing we
love! Think of the multitude of the innocents to be launched on the
world, already mutilated, spiritually and morally, at the hands of
doting parents.
The duteous father and mother, on the contrary, who discern any
lovely family trait in one of their children, set themselves to nourish
and cherish it as a gardener the peaches he means to show. We
know how “that kiss made me a painter,” that is, warmed into life
whatever art faculty the child had. The choicer the plant, the
gardener tells us, the greater the pains must he take with the rearing
of it: and here is the secret of the loss and waste of some of the most
beauteous and lovable natures the world has seen; they have not
had the pains taken with their rearing that their delicate, sensitive
organisations demanded. Think how Shelley was left to himself! We
live in embarrassing days. It is well to cry, “Give us light—more light
and fuller;” but what if the new light discover to us a maze of
obligations, intricate and tedious?
It is, at first sight, bewildering to perceive that for whatever
distinctive quality, moral or intellectual, we discern in the children,
special culture is demanded; but, after all, our obligation towards
each such quality resolves itself into providing for it these four things:
nourishment, exercise, change, and rest.
A child has a great turn for languages (his grandfather was the
master of nine); the little fellow “lisps in Latin,” learns his “mensa”
from his nurse, knows his declensions before he is five. What line is
open to the mother who sees such an endowment in her child? First,
let him use it; let him learn his declensions, and whatever else he
takes to without the least sign of effort. Probably the Latin case-
endings come as easily and pleasantly to his ear as does “See-saw,
Margery Daw,” to the ordinary child, though no doubt “Margery Daw”
is the wholesomer kind of thing. Let him do just so much as he takes
to of his own accord; but never urge, never applaud, never show him
off. Next, let words convey ideas as he is able to bear them.
Buttercup, primrose, dandelion, magpie, each tells its own tale; daisy
is day’s-eye, opening with the sun, and closing when he sets—
“That well by reason it men callen may
The daïsie, or else the eye of day.”
Let him feel that the common words we use without a thought are
beautiful, full of story and interest. It is a great thing that the child
should get the ideas proper to the qualities inherent in him. An idea
fitly put is taken in without effort, and, once in, ideas behave like
living creatures—they feed, grow, and multiply. Next, provide him
with some one delightful change of thought, that is, with work and
ideas altogether apart from his bent for languages. Let him know,
with friendly intimacy, every out-of-door object that comes in his way
—the red-start, the rose-chaffer, the ways of the caddis-worm, forest
trees, field flowers—all natural objects, common and curious, near
his home. No other knowledge is so delightful; not natural science,
but common acquaintance with natural objects.
Or, again, some one remarks that all our great inventors have in
their youth handled material—clay, wood, iron, brass, pigments. Let
him work in material. To provide a child with delightful resources on
lines opposed to his natural bent is the one way of keeping a quite
sane mind in the presence of an absorbing pursuit.
At the same time, change of occupation is not rest: if a man ply a
machine, now with his foot, and now with his hand, the foot or the
hand rests, but the man does not. A game of romps (better, so far as
mere rest goes, than games with laws and competitions), nonsense
talk, a fairy tale, or to lie on his back in the sunshine, should rest the
child, and of such as these he should have his fill.
This, speaking broadly, is the rationale of the matter:—just as
actually as we sew or write through the instrumentality of the hand,
so the child learns, thinks, feels, by means of a material organ—the
very delicate nervous tissue of the cerebrum. Now this tissue is
constantly and rapidly wearing away. The more it is used, whether in
the way of mental effort or emotional excitement, the more it wears
away. Happily, rapid new growth replaces the waste, wherefore, work
and consequent waste of tissue are necessary. But let the waste get
ahead of the gain, and lasting mischief happens. Therefore never let
the child’s brain-work exceed his chances of reparation, whether
such work come in the way of too hard lessons, or of the excitement
attending childish dissipations. Another plea for abundant rest:—one
thing at a time, and that done well, appears to be Nature’s rule; and
his hours of rest and play are the hours of the child’s physical growth
—witness the stunted appearance of children who are allowed to live
in a whirl of small excitements.
A word more as to the necessity of change of thought for the child
who has a distinct bent. The brain tissue not only wastes with work,
but, so to speak, wastes locally. We all know how done up we are
after giving our minds for a few hours or days to any one subject,
whether anxious or joyous: we are glad at last to escape from the
engrossing thought, and find it a weariness when it returns upon us.
It would appear that, set up the continuous working of certain ideas,
and a certain tract of the brain substance is, as it were, worn out and
weakened with the constant traffic in these ideas. And this is of more
consequence when the ideas are moral than when they are merely
intellectual. Hamlet’s thoughts play continuously round a few
distressing facts; he becomes morbid, not entirely sane; in a word,
he is eccentric. Now, possibly, eccentricity is a danger against which
the parents of well-descended children must be on the watch. These
are born with strong tendencies to certain qualities and ways of
thinking. Their bringing up tends to accentuate their qualities; the
balance between these and other qualities is lost, and they become
eccentric persons. Mr. Matthew Arnold writes down the life and the
work of a great poet as ineffectual; and this is, often enough, the
verdict passed upon the eccentric. Whatever force of genius and of
character, whatever lovely moral traits they may have, the world will
not take them as guides for good, unless they do as others do in
things lawful and expedient; and truly there is a broad margin for
originality in declining to hunt with the hounds in things neither lawful
nor expedient.
Now, practically, what is the mother’s course who notices in her
most promising child little traits of oddity? He does not care much for
games, does not get on well with the rest, has some little den of his
own where he ruminates. Poor little fellow! he wants a confidante
badly; most likely he has tried nurse and brothers and sisters, to no
purpose. If this go on, he will grow up with the idea that nobody
wants him, nobody understands him, will take his slice of life and eat
it (with a snarl) all by himself. But if his mother have tact enough to
get at him, she will preserve for the world one of its saving
characters. Depend upon it there is something at work in the child—
genius, humanity, poetry, ambition, pride of family. It is that he wants
outlet and exercise for an inherited trait almost too big for his childish
soul. Rosa Bonheur was observed to be a restless child whose little
shoes of life were a misfit: lessons did not please her, and play did
not please her; and her artist father hit on the notion of soothing the
child’s divine discontent by—apprenticing her to a needlewoman!
Happily she broke her bonds, and we have her pictures. In the case
of pride of birth, it is well that the child should be brought face to face
and heart to heart with the “great humility” of our Pattern. But that
being done, this sense of family distinction is a wonderful lever to
raise the little world of the child’s nature. Noblesse oblige. He must
needs add honour and not dishonour to a distinguished family. I
know of a little boy who bears two distinguished family names—
Browning-Newton, let us say. He goes to a preparatory school,
where it is the custom to put the names of defaulters on the
blackboard. By-and-by, his little brother went to school too, and the
bigger boy’s exordium was:—“We’ll never let two such names as
ours be stuck up on the blackboard!”
Amongst the immediate causes of eccentricity is the dreariness of
daily living, the sense of which falls upon us all at times, and often
with deadly weight upon the more finely strung and highly gifted.
“Oh, dear! I wish I was in Jupiter!” sighed a small urchin who had
already used up this planet. It rests with the parents to see that the
dreariness of a motiveless life does not settle, sooner or later, on any
one of their children. We are made with a yearning for the “fearful
joy” of passion; and if this do not come to us in lawful ways, we look
for it in eccentric, or worse, in illegitimate courses. The mother, to
whom her child is as an open book, must find a vent for the restless
working of his nature—the more apt to be troubled by—
“The burden of the mystery,
The heavy and the weary weight
Of all this unintelligible world”—
the more finely he is himself organised. Fill him with the enthusiasm
of humanity. Whatever gifts he has, let them be cultivated as “gifts
for men.” “The thing best worth living for is to be of use,” was well
said lately by a thinker who has left us. The child into whose notion
of life that idea is fitted will not grow up to find time heavy on his
hands. The life blessed with an enthusiasm will not be dull; but a
weight must go into the opposite scale to balance even the noblest
enthusiasm. As we have said, open for him some door of natural
science, some way of mechanical skill; in a word, give the child an
absorbing pursuit and a fascinating hobby, and you need not fear
eccentric or unworthy developments. It seems well to dwell at length
on this subject of eccentricity, because the world loses a great deal
by its splendid failures, the beautiful human beings who through one
sort of eccentricity or another become ineffectual for the raising of
the rest of us.
FOOTNOTES:
[6]
“Vom Vater hab’ ich die Statur,
Des Lebens ernstes Führen;
Vom Mütterchen die Frohnatur,
Und Lust zu fabuliren.”
CHAPTER IX
Part II
Suppose the parent see that the formation of character is the
ultimate object of education; see, too, that character is, in the rough,
the inherited tendencies of the child, modified by his surroundings,
but that character may be debased or ennobled by education; that it
is the parents’ part to distinguish the first faint budding of family traits
—to greet every fine trait as the highest sort of family possession to
be nourished and tended with care; to keep up at the same time the
balance of qualities by bringing forward that which is of little account
—the more so when they must deliver their child from eccentricity,
pitfall to the original and forceful nature;—suppose they have taken
all this into the rôle of their duties, there yet remains much for
parents to do.
We are open to what the French call the defects of our qualities;
and as ill weeds grow apace, the defects of a fine character may well
choke out the graces. A little maiden loves with the passion and
devotion of a woman, but she is exacting of return, and jealous of
intrusion, even with her mother. A boy is ambitious; he will be leader
in the nursery, and his lead is wholesome for the rest; but there is the
pugnacious little brother who will not “follow my leader,” and the two
can hardly live in the same rooms. The able boy is a tyrant when his
will is crossed. There is the timid, affectionate little maid who will
even tell a fib to shield her sister; and there is the high-spirited girl
who never lies, but who does, now and then, bully; and so on,
without end. What is the parents’ part here? To magnify the quality;
make the child feel that he or she has a virtue to guard—a family