Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1918-02-04
CLEAR DISPUTES
Continued from PAGE One)

certain adjustments required by the
law. II any change in the invested
capital has been made during the year
Tho monthly average is to ne taken.
IL the true surplus or undivided prof
ite are not shown by the books be-
cause of failure to provide for depie-
ton. depreciation, obsolescence. or 9TH
or losses the regulations make it man
datory 70 figure corrections and thus
reduce the capital figure. This would
prevent corporations from figuring
their tax exemptions at too high a fig
ure by over estimating their capital.
On the other hand, it IS permitted
90 add TO the surplus account expen-
ditures in the past for extension Of
the plant or equipment which still is
in active as" if the expenditures have
been charged as current expense.
ono Of the most disputed points has
related 80 the valuation Of trade marks,
good will patents or copyright. most
businesses arguing for inclusion of
these AT a high figure in their capital
where actual payment has been made
Ton these items. the expense to be add
,d To the invested capital total. No
adjustment is allowed either for ex-
penditures made to develop good will
- other tangible assets BY this rul-
ing the plea OF number of corpora =
tons which have spent thousands OF
even millions of dollars developing q
business is refused.
Determining Of Deductions
The excess profits law provides that IL
cases where IL seems impossible to de
trrmNe definitions In the ordinary way
because business did rot exist in pre-
% Years or because OF exceptional con-
dtions, such as extraordinarily low
Profits, then the business of representa- :
tive concerns is to he taken as basis
f'r Nsuuug deductions This provision,
A." regulations provide may apply to
businesses having defective accounting
~ stems. making IL impossible 70 compute
iuNestel capital Foreign taxpayers when
y IS deemed inpracticable to Investigate
! vested capital figures IN another coun-
1'Nt long established business concerns:
witch maintain conservative or lmusual
i',s1'ess organizations; GEd businesses on
N".h invested ca..ita. Is seriously dis
! ''p 'rt'p1dte to the taxable income An
'N' mpG M 'he LAST case would he a bus
in'ss which made large profits in 1917.
iHt which had had several previous I'M
productive years. The s per cent. tax on
l'""'s over 5000 for taxpayers having
'hN q nominal capital is held to apply
~ professional men. or TO trades or busi-
''sseS rendering professional services lf
corporation is engaged in two kinds o.
BUSINESS, on" being professional and re-
''NiS no capital. the regulations pro
vac that its entire income is to be con-
s"ertd as OF its pr1acipal business.
II an individual :. engaged in two or
more businesses. however, one taking no
'pital and one with capital Income tro,,
'''h = 20 bc taxed separately. For in
stance. physician owning a hospital
would be taxed at per cent on his pro-
i'~sioh"l income above sG.O in addition.
"a capital invested in the HOSPITAL a,
Their rates
Inc regulations require corporations in
i'''"lhE returns tn describe their relo
'pns with other affiliated COMBINATIONS
mis- y expected 10 disclose MANY fact,
concerning business combinations no.
TOW on record