Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1918-02-04
BOOKS MUST SHOW
INVESTED CAPITAL
Excess Profits Law Regulations
Leave Many Points Still
in Doubt
COPYRIGHTS HAVE NO VALUE
Proof of Good Will" Purchases
Necessary for Inclusion as
Capital in Business.
COPYRIGHTS HAVE NO VALUE
,By Associated Press.


WASHINGTON, February 3.-l:cSu-
ia,;ons under which the excess prolts
tax law IS 10 be administered. made
public tonight b. tho Bureau Of IN
ternal Revenue. clear up many long
disputed questions affecting the deter
mination oc the basis for GSurinr
Profits. but leave number ye, to bc
threshod out b. individual rulings, or
By amendment OF the law rcw
draft OF the war tax act is now Lcin.
prepared By tho bureau em6odyinE
proposed amendments on subjects
which officials think cannot properly bc
passed Oh by executive rulings.
EXccss profits return FORMS will be
available in a few days. and returns
must be made by March on 1917 bus,-
ress Some extension of this time has
been urged by business interests
Since deductions based on per
ccn;agc OF invested capital may DC
taken from aggregate profits before
determining the taxable amount, cor
porat:oas or partnerships are anx ious
to figure their invested capital as high
as possible. D. the regulations. IN
vested capital is defined as the total
o. the capital. surplus and undivided
profits as shown on the books, with
certain adjustments required hy the
law. Il: any change in the invested
apital has been made during tho year.
tho monthly average Is 20 be taken.
II the true surplus or undiv idcd
profits are not shown by the books
because OF failure TO provide for de-
pletion. depreciation, obsoiescence o.
other losses. the regulations make 1t
mandatory to figure corrections, and
thus reduce the capital figure. This
would prevent corporations from Hsur-
inG their taT exemptions al too high a
figure b. o"crcsiimatiag their capita,
on the other hand. 1t Is permitted
TO add 10 the surplus account cSpcadi
turcs In the past for extension OF the
plant or equipment which still is II
active use, If the expenditures have
Seen charged as current expense.
NO ADJUSTMENT ALLOWED FOR
"GOOD WILL" EXPENDITURES
One OF the most disputed points has
related TO the valuation Of trade-ma a rk 3.
good will. patents or copyrights. most
businesses arguing 70: inclusion OF
these a: a high figure in their capital
Investment. The regulations provide,
however, tina. OIL" in cases where
.c;ual payment haa been made for
these items can the expense be added
10 the in"cs;ed capital total. No ad-
sus.meEt IS allowed either for cxpcn-
ditures made 10 develop good will or
other intangible assets. Ey this ruling
the plea OF q number Of corporations
which have spent thousands or even
millions OF dollars developing a bust
ness IS refused.
Thc excess profits law provides that
, in cases where il seems impossible to
, determine deductions in tho ordinary
way, because business did not exist
II pre-war years. or because OF cXcep-
;ional conditions. such as cXtraorlin-
arily low. profits then, the business of
representative concerns is 10 be taken
as basis for figuring deductions.
The per cent tax on profits over
s6,ch0 70: taSpaycrs having only q
, nomira, capital Is held 20 apply to
professional men or to trades or busi-
uesses rendering professional services.
II a corporation is engaged in two kinds
os business, one being professional and
rcqu!rin. no capital, the regulations
provide that it's entire income is to be
considered IS of its principal business.
II an individual Is engaged in two
or more businesses. however one taking
no capital and one with capital. in
come from each is TO be taxed scpa-
ratc!v. For instance. physician
owning a hospital would he taxed at
s per cent on his professional income
above $4,000 and IN addition on capital
invested in the hospital ut other rates
The regulations require corporations
10 describe. in making returns their
relations with other affiliated corpora
t.ons. THIS is expected to disclose
many facts concerning business combi-
nations not now on record.