The daily progressive-miner., 1918-03-07
THE INcoMET TAX
Depreciation-How to Figure 1t

Oeprectation-t7oW 10 fI9ure It
 As the rate at which depreciation may be claimed is dependent, in a greater or less extent, upon local con- ditions, the use to which the proper ty is put and it's probable lifetime un- der normal business conditions, no specific rates at which it may be claim ed have ever been established. The law states that a reasonable allow ance" may be claimed. and it is for the taxpayer to determine what con stitutes a reasonable allowance" To compute the amount which may be claimed, a taxpayer should determine tue probable lifetime of the property, then divide it's cost to him by the num- Der of years 1t will be usable in bus mess in which employed, and the re- suit thus obtained will represent the amount which may be claimed each year as a deduction, e. g. frame bull. ding, the probable lifetime of which, without repair or replacement, is 25 years. cost s5,000. Divide $5,O00 by 25 and claim $200 each year as de- preciation.
 While each taxpayer must determ- inc the probable lifetime of his prop erty without regard to the following figures, it has been estimated that the average usable lifetime of frame bull ding is 25 years, brick building 35 years, stone building or a steel and concrete building 50 to 100 years. The estimated lifetime of ordinary machin- cry is 10 years, that of automobiles used for business or farm purposes and farm tractors to years.
 If a taxpayer wishes to claim the full amount of depreciation estimated to have occurred in the value of a building or other property used for business or trade purposes he may do so, but this precludes his claiming a deduction to cover any amount ex- pended during the same year in mak- ing repairs. If he wishes to claim a deduction on account of repairs their cost must be deducted from the full amount of depreciation and the bal ance may then be claimed as deduct ion under the heading of "Deprecia- tion'-that is, if the taxpayer expends $100 in making repairs to building which will depreciate in value $200 during the calendar year, he may claim s100 as business expense and s100 as depreciation and nothing for repairs. In short, the aggregate deductions claimed on account of repairs and de- preciation must not exceed the full amount of depreciation estimated to have occurred.
 (NOTE-The repairs referred to in this paragraph are such as are gener- al in character, representing replace ments. etc. Small items. such as re- placement of broken window panes, papering, minor repairs, etc, are al- lowable. even though full amount of depreciation has been claimed.)
 In claiming depreciation the follow ing fundamental principles must be taken into considerations:
 (a) Only such depreciation as re- suits from exhaustion, wear and tear of property arising out of it's use or employment in business or trade can be claimed. Depreciation in the value of home or any article of property: such as automobiles used for person al pleasure or convenience, cannot be claimed; tho property must be used for the purpose of producing income.
 (b) Depreciation other than that arising from wear and tear, such as Q .essening of values due to changes in the social or business conditions in the neighborhood in which property is located, changes of street grade or fluctuations in market values, etc, can not be claimed.
 (c) Depreciation in the value of land. whether improved or unimprov- ed, due to ordinary erosion. exhaust ion. or any other cause cannot be claimed.
 (d) Where, in the course of years. he owner of property has claimed it's tu!l cost as depreciation in h.s Income Tax returns. no further claim will be allowed.
 (e) The value to be cared for by depreciation is the actual amount in- vested in the property and not the value which may be arbitrarily or otherwise fixed, j.