The sun., 1918-12-07
Helps Mine ana OIL Prospectors.

The Senate committee in this part
Of the bill added this provision:
"In the case Of a bona d sale OF
mines. oil or gas wells. or any. interest
therein where the principal value Of
the property has been demonstrated
by prospecting or exploration and dis
covery work lone by the taxpayer, the
portion Of the tax Imposed by this
section attributable to such sale shall
not exceed 20 per cent. Of the selling
price of such property or interest"
This provision whs inserted to pre-
vent making the burden so heavy on
fortunate ~prospectors that the dis
covery OF new wells would be cut of.
The definition of gross income
adopted by the House. in which was
specially included the compensation
received by the President and the Fed
eral judiciary, was amended by strik-
ing out this specific inclusion OF such
salaries and by several other changes.
Deductions to BE Allowed.
As the Senate committee framed
the bill these deductions from gross
income are allowed in computing net
income:
1. First ordinary expenses paid or
incurred. In carrying on business, in
GLIDING salaries for services actually
rendered and rentals.
2. Interest on Indebtedness except
on Indebtedness incurred or continued
to purchase securities Of which the
interest Is exempt except securities
Of the United States issued after Sep
TENDER "a, 1917.
3. Taxes paid or accrued imposed
by the Federal Government except
income. war profits and Sexcess profits
taxes or taxes imposed by any State
or possession or subdivision thereof
except the income. war profits and
Excess profits taxes or taxes imposed
by any foreign country excepting the
amount Of income. war profits and ex-
cess profits taxes allowed as a credit.
4. Losses incurred in trade OF busi-
ness not compensated for by insurance.
3. Losses incurred in any TRANSACT
ton entered int for profit not COM
pensated for by insurance. but In the
case of a nonresident alien only such
Transactions entered into in the United
States.
26. Losses sustained from fires. ship
wreck, storm or other casualty II not
compensated for by insurance.
Z. Worthless debts charged of.
8. A reasonable allowance for depre-
citation Of property used in trade or
business.
D. In the case of buildings. ma
chinery, equipment and the like built
or acquired since the United States
went to war for the production OF
articles contributing to waging the
war n In the case OF ships built or
acquired since that date contributing
to the prosecution Of the war, a
reasonable deduction for amortization
10. In the case of oil and gas wells,
other natural deposits and timber a
reasonable allowance for depletion and
for depreciation OF improvements &C
cording to the conditions in each case.
Provided. however. that in the cas- OF
properties acquired prior to March /,
1918, the fair market value on that
date shall be taken in lieu Of cost up
to that date.
IL. Gifts made to corporations or
ganized and operated exclusively for
religious, charitable, scientific or edu-
cational purposes or for the preven-
ton Of cruelty to children or animals
or to the special fund authorized by
sthe vocational rehabilitation act to al
amount not in excess of is per cent
of the taxpayers net income.
~. II it is shown hat during the
taxable year 1919 or 1920 the taxpayer
has for the first time ascertained q
loss sustained during the preceding
kn@nhI. rAnr - ~1 not IAItNAta1 rAo
gross income for that year, or has sus-
tanned a substantial loss resulting from
any material reduction Of the value OF
the inventory for the preceding taxable
year, then the amount of such loss
shall be deducted from the net income
for such preceding taxable year, this
taxes for that ear predetermined and
the amount found due the taxpayer
shall be refunded or credited.
For nonresident aliens the deduc'
tons allowed in paragraphs /, 4, 7, 8
Q, 10 and ~ shall be allowed only L
the extent that they are connected
with income arising from n source
within tho United States.
No Personal Expense Deduction.
No deductions are permitted for per
sonal, living or family expenses
amounts paid for new buildings or per
manent improvements made to in,
crease the value of any property o.
estate, any amount expended in re
storing property for which an allow
ance is made or premiums paid on in
Burance covering the life of any OF
ficer, employee or person financial!
interested in the business carried OIL
by the taxpayer.
The credits allowed for the norma
income tax for individuals are practi
cally the same as those allowed by tn
House. This amount includes divi
dends form corporations taxable as cor
poration income. the interest on obliga
tons of the United States and Of tn
War Finance Corporation, a persona
exemption Of $1,000 for single person
and s 2 1000 for heads OF families, wit
an additional 5000 for each minor de
pendent child. The personal exemptio
is allowed non-residet aliens only I
the extent that their own countrie
ALLOW similar credits TO citizens OF tn
United States not living in those cour
tries but having incomes wholly G
partly derived from those nations.
Partnerships and personal servic