Arizona republican., 1917-12-05

At rate Ter share of. f......... Per pound of copper. ........
 From the above tax schedule you will see that according to the interpre- tation of the law by the Treasury De- partment as to the application of the deduction, Company A would pay a war tax of approximately 40 per cent more than what it would pay under the apparent intent Of the law. A very vigorous protest is being made against this interpretation of the law by the Treasury Department, and it is prob able that the session of congress which convenes today may straighten out this matter.
 Capital Returned.
 As it is expected that the War Tax Law will be interpreted that dividends paid out of capital returned will not be taxed tor even if it is not so inter preted), it will be necessary to deter mine what the Government will allow as capital returned, which will be the total amount set aside as Depletion and Depreciation of Equipment figured according to enacted laws as follows: Under the Corporation Excise Tax law, approved August ,, 1909. and the Income Tax law, approved October B. bs for the years 1909 to 1915 inclusive, from gross earnings for Depreciation is a reasonable amount for wear and tear of equipment and the amount that will be allowed for Depletion of Mine for the years 1913 to 1915 inclusive, is per cent of the value of the product at the mine: for the year 1916 and thereafter, the amount of depletion that will be allowed is> figured upon the net or estimated fair market value of the mineral in place as of March l. 1913 or the salable value en bloc or the entire mineral deposit on the lat ter date. for those companies who had acquired their mine property prio4 to the first of March. 1913, and upon the actual capital invested in the mine property for those companies who had acquired their mine property since the latter date.
 Therefore, when you have deter mined the amount or the depreciation sand depletion allowable according to the laws as stated, if you have not al ready set aside out of previous year s earnings such amount, you may charge surplus with the amounts so obtained and credit reserves for depreciation and depletion.
 In order to show what amount of dividends you have paid out of Cap ital Returned, you will cnarge Reserves for Depreciation and Depletion the amount of such dividends and credit Capital Returned Paid Out. Capital Returned Paid Out' will show as Q de- duction on both sides of the balance sheet.
 Minor Points of the Law Applicable to
 Domestic Corporations.
 Undar the War Tax Law, instead of deduction of tax at the source as here tofore, it will be necessary to give information at the source with respect to all income received by citizens and residents of the United States of earned salaries wages. premiums compensations. recommendations, or other fixed or determinable gains, profits and incomes of SS0o.00 or more in any taxable year. This will require the analysis of the payroll by all the large mining companies, as any work man under the present wage schedule who has worked for the company more than six months will have to be re. ported to the commissioner of the In ternal Revenue Department as havins received an income of sS00.00 CT more
 A tax of 10 per cent will be imposed on the net income of any incorpora | tion beginning with the year 1917. re ceived during each year and remaining undistributed six months after the ent tof each calendar or fiscal year, unles! actually invested or employed in tn, business, or is retained for employ ment in the reasonable requirement! of the business.
 Incomes invested in obligations O the United States issued after Septem Der 1, 1917, shall not be subject to tn, tax.
 The Depletion Mucdle of the Tax Law
 The depletion deduction from gros earnings is to be made according to al act of September 5, 1916, and the rul ings of the Treasury Department relat ing thereto. This act and the subse quent rulings provide that in the cas- of mining companies acquiring thei mine property subsequent to Marcl 1, 1913, the depletion deduction shal be based upon and limited to the cap ital originally invested, meaning sup posedly the capital originally investe, in the mine property, while those com panies who had purchased their min property prior to March l, 1913, shal base the depletion deduction and limi it to the amount of the fair marke value of the mineial in place on Marc l. 1913.
 Why it should have been considere necessary to make a difference in tn method of figuring depletion accordin to the date of organization of the min property is a mystery. If the deple ton deduction is based upon the fai market value of the mineral in plac as of March l, 1913, instead of the ac tual investment in the mine property then when the fair or estimated mar ket value of the mineral in place as c March 1, 1913, is in excess of the actua investment in mine property the com pany will have the benefit of depletin a yearly amount greater than the sac tual investment in ore mined an treated, and thereby reduce it's nc earnings and increase the amount ( capital returned, while the smaller an less successful company who has cap ital invested in mine property in ex cess of the estimated value of the min eral in place as of March l. 1913, woul be compelled to make a yearly deduc ton less than the actual investmer in it's ore mined and treated, and there by showing earnings of greate amount than the actual earnings an be allowed capital returned less tha the actual investment in the ore mine and treated.
 Also the law and the rulings of tn Treasury Department relating theret