Abstract The article presents information on the fact that the Sixteenth Amendment 1913 was formulated to delegate power to the U.S. federal government to levy a tax on the income of natural persons. An income tax on corporations had been effective four years before the amendment. It was decided as early as 1904 that an excise tax could be measured by gross income and a corporate income tax was construed to be an excise tax for the privilege of doing business as a corporate entity. Whatever might have been the intent of the amendment or the popular belief, the income tax has not developed into a personal tax in a strict sense either in law or in other respects. The present Federal income tax is unique in the sense that it cannot be classed with any other known form. From a legal standpoint the tax does not follow the person. From an economic standpoint it does not fall on persons in proportion to their respective economic circumstances. It is neither legally nor otherwise a personal tax based on ability to pay.

Abstract The distinction between realized and unrealized income is a familiar one to accountants. The distinction in fact is such a vital one that income which is not realized is not generally considered to be income at all. At the present time the problem of income is more in the foreground of the accountant's horizon than ever before. In view of the immediate significance of income it seems strange that such a crucial question as the test of realization should so generally have escaped critical discussion. The test of realization most generally applied is that of sale. This is a convenient test which is readily understood in the great majority of cases by most people concerned. However in view of the great importance attached to the test and of the absurdities which it causes in a few cases, a study of the sale as the dominant criterion for income realization should prove fruitful. While the sale is a convenient rule-of-thumb test, in some ways it represents a rather low stage of development of a streamlined concept of income.