Weekly journal-miner., 1918-03-13
THE INCOME TAX: HOW ID FIGURE
 DEPRECIATION
SOME GOOD POINTER TO PEOPLE WHO ARE WORRYING OVER HOW MUCH THEY OWE TO THE GOVERNMENT.
(From Fridays Daily.)

L'ahJ.( As the rate at which depreciation may be claimed is dependent, in greater or less extent, upon local con- ditions, the Gse 10 which the prop erty is put and its probable lifetime under normal business conditions, no specific rates at which 1t may be claimed having ever been established. The law states that reasonable allowance" may be claimed, and it is for the taxpayer to determine what constitutes reasonable allowance" To compute the amount which may be claimed, a taxpayer should deter mine the probable lifetime of the property, then divide its cost to him by the number of years 1t will be usable in business in which em- ployed, and the result thus obtained will represent the amount which may be claimed each year as a deduction, c. g. frame building, the probable replacement, is 25 years, cost S5,OOO. Divide S5,000 by 25 and claim S200 each year as depreciation.
 While each taxpayer must deter mine the probable lifetime of his property without regard to the fol- lowing figures, 1t has been estimated that the average usable lifetime of . frame building is 25 years, brick building 5 years, a stone building or steel and concrete building 50 to 100 years. The estimated lifetime of ordinary machinery is 10 years, that of automobiles used for business or farm purposes and farm tractors 4 to years.
 If a taxpayer wishes to claim the full amount of depreciation esti- mated 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 expended during the same year in making repairs. If he wishes to claim a deduction on account of repairs their cost must be deducted from the full amount of deprecia- ton and the balance may then be claimed as a deduction under the heading of "Depreciation"- that IS, if the taxpayer expends Sl00 in mak- ing repairs to a building which will depreciatc in value S200 during the calendar year, he may claim Sl00 as a business expense and SlOO as de- preciation, or he may claim S1OO as depreciation and nothing for repairs. In short, the aggregate deductions claimed on account of repairs and depreciation must not exceed the full amount of depreciation estimated to have occurred.
 (Note-The repairs referred to in this paragraph are such as are gem eral in character, representing re- placements, etc. Small items, such as replacement of broken window panes, papering, minor repairs, etc, are allowable, even though full amount of depreciation has been claimed.)
 Tn claiming depreciation the fol- lowing fundamental principles must be taken into consideration:
 (a) Only such depreciation as re- suits from exhaustion, wear and tear of property arising out of its 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 per scnal pleasure or convenience, can not be claimed; the property must be used for the purpose of producing income.
 (b) Depreciation other than that arising from wear and tear, such as I lessening of values due to changes in the social or business conditions in the reighborhood in which a prop erty is located, changes of street grade or fluctuations in market val ues, etc, cannot be claimed.
 (c( Depreciation in the value of land, whether improved or unim- proved, due to ordinary erosion, ex- hausuon or any other cause, can not be claimed.
 (d) Where, in the course of years, the owner of property has claimed its full cost as depreciation in his income tax returns, no fur ther claim will be allowed.
 (e) The value to be cared for by is the actual amount in- vested in the property and not the value which may be arbitrarily or otherwise fixed.