March-Minded Investors

Stock traders divide their December attention between the year-end dividend crop and their March 15 income-tax returns. Last week sales for tax purposes weighed heavily on the New York Stock Exchange, helped depress it still further.

Despite the production boom, stock prices never have climbed back to the level from which the Lowlands Blitzkrieg toppled them last May. Thus many a shareholder had paper losses this month on stocks bought before the May collapse. To deduct them from his 1940 taxable income, he had to sell the shares, turn his paper losses into real ones. He then could deduct his short-term losses (on securities held less than 18 months) from short-term profits taken on other transactions this year, carry any net loss over to deduct from next year's short-term profits. On long-term transactions (securities held more than 18 months) he could claim only half to two-thirds of the loss, but could apply it against income of any kind.

No one ever knows how many December stock transactions represent tax selling, but it was clear that many of this month's deals were made with March in mind. One day a block of 30,000 shares of New York, New Haven & Hartford was sold for $1,875 (6 1/4-c- a share), or $675 less than the seller (possibly Pennroad Corp.) had to pay in commissions and transfer taxes. Corn Products Refining Corp., which pays a $3 dividend and sold as high as $65.12 this year, went at a bargain near its eight-year low of $40.25.

Added to tax-loss selling last week was a new December phenomenon: sales to take profits on stocks which had moved up. Since any change in income taxes would be upward (to pay for the defense program), investors with large paper profits hastened to cash them in at the 1940 rate.

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