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1/ Donation Basis: 1. Estimated present market value of the: (a) Entire water system (b) Office, shop building, equipment #3,400,000 and automotive equipment 102.300 (c) Total #3,502,300 2. Tax saving as a donation (52% x 1(c)) #1, $ 21,196 1/ This is conditioned on a legal determination that the Las Vegas Water District has the right to exercise a part of the sovereign power of the | t State of Nevada and could qualify as a political I subdivision thereof within the meaning of Section I I v'V'X 29.22(b) (4)-1, pabge lSl^- of Regulation H I T lT~ ^ tahmeo uWngtr torefF "dTofnTsattriiocnt tcohaalt'd 'c”noouTl*ds ob"e' qtuaikreinf yaTs^ Thae tax deduction would be limited to the book value less n a v»n /n /4 v * o +? i a m o +? Q v e o*tr t m re r ta I « T n 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 covers 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. accrued depreciation, and the tax saving would in rjo wise be comparable with the advantage of the sale basis. Sale Basis 3. Estimated sale price at the average of #2,000,000 and #2,500,000 #2,250,000 4. Less estimated book value 5. Gain for tax purposes (3 minus 4) 6. Capital gains tax (26% x 5) 7. Net profit (3 minusR e6)sult B. Sale basis over donation basis (7 minus 2) # 207,B04 (sgd) R. M. Sutton