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**2 *> 1/ Donatioa Baals: 1* Estimated present market value of the: (a) Entire water system (b) Office, ®hop) building, equipment | 3, 400,000 and automotive equipment (c) Total 2, Tax saving as a donation {52$ x 1(c)) $1,321,196 1/ This is conditioned on a legal determination that the Las Yegas Water District has the right to exercise a part of the sovereign power of the State of Nevada and could qualify as a political subdivision thereof within the meaning of Section 29.22(b)(43-1* page 121, of Regulation 111. If the Water District could not so qualify, the amount of donation that could be taken as a tax deduction would be limited to the book value less accrued depreciation, and the tax saving would in no wise be comparable with the advantage of the sal® basis. The foregoing tabulation indicates that even if the Water District is a legal political subdivision, the donation basis is not as favorable financially as the sale basis* The foregoing, which cover© the latest suggestions at hand, will probably suffice for the present} if there are any further developments involving federal income taxes or accounting features, we will be glad to comment further. gale Basis 3. Estimated sale price at the average of $2,000,000 and $2,500,000 4. Lass estimated book value 5* Gain for tax purposes (3 minus 4) 0. Capital gains tax (26% x 5) 7. Nat profit (3 minus 6) fis « i nnn $ 221,000 $2 ,029,000 Result 6. Sale basis over donation basis (7 minus 2) | 207,304 (sgd) ft. M. Sutton