The Alaska daily empire., 1918-03-14
INCOME TAX
 PRIMER FOR
 BUSY PEOPLE
Continued from Yesterday

| ff. II clilplUy all dTCHllcCt lO prepare plans for a building to be used for business purposes, may the | fee be paid out to the architect be claimed as a business expense? No. Amounts expended for an architects services are held to be a part of the cost of the building and not such items as may be claim ed as deductions.
 75. You have heretofore stated that only such items of income as have actually been paid to me dur ing the tax year are to be reported, and only such items of expense as I have actually paid during that year claimed as deductions. Can not a business or professional man who ] keeps set of books and enters thereon as income the cost of goods | sold on credit, or fees earned but not paid, and charges to expense ac- count items which have not been paid by him, report his net income 1 for the year as shown by his books when they are balanced at the end of the calendar year?
 Section (g) of the act of Sep tember s, 1916, states that:
 An individual keeping accounts up- on any basis other than that of ac- tual receipts and disbursements, un- less such other basis does not clear 1 ly reflect his income, may, subject ] to regulations made by the Commis- sioner of Internal revenue, with the | approval of the Secretary of the | Treasury make his return upon the basis upon which his accounts are | kept, in which case the tax shall be computed upon his income as so re- turned
 | 76 What is meant by the state l ment in the law that all interest paid within the year upon the indebted | ness of taxpayer, except on in debtedness incurred for the purchase of securities the interest upon which | is exempt from taxation as income under this title" may be claimed as a deduction?
 | If taxpayer, desiring to do his pa l triotic duty, borrowed money to in vest in Liberty Loan 31a per cent | Bonds, or if he borrowed money to invest in the bonds of a State, cOun | ty, or municipality, or any security issued under the provisions of the Federal farm-loan act of July F, | 1916, or any other securities the in terest from which is not subject to income tax as explained in the an swer to the eighteenth question, the interest paid by the taxpayer upon | the money so borrowed can not be claimed as a deduction. All other interest paid within the year may be SO claimed
 l 77. If I have a certain sum of l money invested in farm or business may I claim as deduction, under the head of interest, an estimated amount of interest which might have accrued to me had that money been I deposited in a bank or invested in interest-paying securities?
 | No.
 IS. What forms of taxes can not be claimed as deductions?
 l Taxes assessed against an individ- ual on property owned by him to i pay for the paving of street con tiguous to his property, the construc- | tion of sewer, sidewalk, etc, the | sprinkling or oiling of street in front of his home, the construction of levees to protect, or ditches to drin, property owned by him, can not be claimed as deductions. In short, such taxes as are not genearl in na- ture and are levied on account of some work or privilege the benefit of which accrues to limited num- Der of property owners, of which the taxpayer is one, are not allow able deductions.
 79. If I pay any amount of person al income tax for the year 1917, may claim that amount as a deduction for the year 1918?
 1 No. The income-tax law states that income taxes are now allowable as deductions. Under this provision income tax paid in 1917 on income received in 1916 or any previous year can not be deducted.
 80. In 1916 bought certain stocks and bonds for $5,000 and in 1917 the value of these securities dropped to $4,OO0. May I claim the differ ence of $1,000 as a loss in comput- ing my income tax liability?
 No. Under the provisions of the fourth and fifth paragraphs of sec tion of the act of September s. 1916, only such losses as have ac- tually been sustained during the year can be claimed; that is. the loss l must have resulted from complet- l ed and closed transaction. In your case you still own the securities. They may go up in value during 1918, and until they are sold or oth- erwise disposed of you are unable to determine whether you will sui