n-Reg.  33,  Art.  183.
F.  I.  Tax.— 14


210  FEDERAL   INCOME   TAX

kept  according  to  standard  accounting  systems.  This
basis  is  more  fully  discussed  in  the  latter  part  of  this
chapter.  -

Book  Value  of  Assets.  Neither  the  Government  nor
the  taxpayer  is  bound  by  valuations  entered  on  the
books  of  the  taxpayer.^''  Where  property  is  carried  at
nominal  value  on  the  books  of  the  taxpayer,  and  the
Government  seeks  to  assess  a  tax  on  the  basis  of  that
value,  the  taxpayer  may  prove,  by  otlier  evidence,  the
true  value  of  such  property.*^  A  book  value  increase
in  the  value  of  capital  assets  due  to  a  re-appraisal  of
property  is  not  income  within  the  meaning  of  the  law.^*
A  book  entry  reflecting  only  an  enhanced  value  of  assets
during  the  year  evidences  an  increase  in  the  net  worth
of  the  corporation  or  individual  for  that  year,  an  in-
crease which,  under  adverse  conditions,  may  disappear
the  next  year.  An  increase  in  value  thus  evidenced  is
intangible,  unstable  and  is  not  such  income  as  the  law
contemplates  shall  be  returned  for  the  purpose  of  the
tax.**  Returnable  and  taxable  income  is  that  actually
realized  during  the  year,  evidenced  by  the  receipt  of  cash

12  Doyle  v.  Mitchell,  235  Fed.  686.
13  U.  S.  V.  Guggenheim  Exploration  Company,  238  Fed,  231.
