The published decisions of the Treasury Department up to this date require that all profits shown on the books in any year must be treated as income during that year. On the other hand, such profits as are lost through cancellations are allowed to be charged off as losses in future years. This includes, of course, gains derived from real estate sold on time; and the fact that the books of land companies usually show such gains as profits has necessitated, in many cases, the payment of taxes on profits not received, not earned. This ruling adds to the importance of a proper treatment of such gains, and it is believed that the methods described in Chapters XX, XXII, and XXIII will avoid these unnecessary tax payments for book profits. "Gains" should never be treated as profits, nor even be called "profits," and therefore could not come under the existing decisions as to profits. The term "profits" as used in this work apply only to such profits as are fully earned.