New Ulm review. (New Ulm, Brown County, Minn.) 1892-1961, 1918-02-27

tions, and the principles underlying these
allowances are equally applicable in the
case of anyone engaged in business,
trade, or profession. In short, all ex-
penses connected directly and solely
with the conduct of an income-pr ducing
business, trade, profession, or vocation
are allowable.
Items of personal expense or items
connected in any way with the support,
maintenance, and well-being of family
are not allowed; neither are the amounts
paid for tools, implements, vehicles, ma
chinery, or surgical instruments which are
more or less permanent in character,
nor the cost of medical, law, or other
professional books, nor amounts expended
in making permanent improvements or
betterments of any kind whatsoever,
allowable as deductions. These latter
items are held to be investments of
capital upon which depreciation may
be claimed.
If employ a minor son or daugh-
ter to assist me in my business or
trade and l pay a salary or wage for
such assistance, may | claim the
amount as deduction?
No. If, however, the son or daughter
has attained his or her majority, the
amount of compensation paid for his or
her Sc! vices may be so claimed.
Can a taxpayer claim deduction
for his own remuneration?
Wages or salary drawn by taxpayer
from his own business are more in the
nature OF a charge out of profits than
charge against. profits. If such could
be deducted they would merely be added
to his income, the effect of which would
be to take money out of one pocket
and put it in another. Therefore no de-,
duction can be claimed for income-tax
purposes.
Can the amounts expended by a
business man in entertaining out
of-town customers, or prospective
customers, be claimed as deductions?
+ Yes. 1t the sole purpose of the bust
mess man in making such expenditures
IS to cultivate the good will of his Gus
toners and secure an increase in trade
they may be so claimed.
( Are the items of expense incurred
and paid by me during the calendar
year in connection with a farm which
l, lease to another on cash or crop-
share rental basis, such as repairs
to fences, farm buildings, etc, allow
able as deductions? {.
Yes. ,,;.-.> ,-...s :.
Can the amount of life insurance
premiums and premiums paid for
insurance on my residence be claim
ed as deductions?
No, as these are held to be items of
personal expense. If, however, you
pay premiums on insurance policies cover
Ing farm buildings, other than your
dwelling house, or on any property used
TOR business purposes, these premiums
are allowable as deductions. e:' =. !
If employ an architect to prepare
plans for building to be used for
business purposes, may the fee paid
to the architect be claimed as a
business expense? ~ss9-.'2 q
NO. Amounts expended for an ar
chltect's services are held to be part
OF the cost Of the building and not such
items as may be claimed as deductions.
What is meant by the st atement III
the law that all interest paid within
the, year upon the indebtedness of
a taxpayer, except on indebtedness
incurred for the purchase of obliga-
tons or securities the interest upon
which is exempt from taxation as
income under this title may be
claimed as deduction?
II taxpayer, desiring to do h $
patriotic duty, borrowed money to invest
In Liberty Loan IL per cent bonds,
or II he borrowed money to invest in the
bonds OF State, county, or municipality,
or any security issued under the pro-
visions, of the Federal farm-loan act of.
July II, 1916, or any other securities the
interest from which is not subject to in
come tax as explained in the. answer to
another 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. II
A professional man or merchant
owns and operates a '"fancy stock
farm" The expenses of operation
exceed the gross receipts. Can the
difference be claimed as deduction
under the head of ''losses?"
No. It is held that where farm is
operated for purposes of recreation or
pleasure, and not primarily for profit,
but as hobby, that farm is not to be
classed as commercial enterprise, that
it does not form part Of its owners
business or trade and until it is placed
upon a participating basis the gross re-
ceipts are not to be reported under
"Gross income" and the expenses. are
not to be claimed as deduction. This
ruling, Of course, precludes the claiming
Of the difference between the two amounts
as loss.
Ifcattle or other live stock are pros
duced on farm which own or
operate, and are then lost thru
disease, may I claim their value at
the time of death as an allowable
deduction?
I No. If the stock which died was.
purchased and the cost has not been
claimed in previous return as a de-
duction, that cost may be claimed as a
deduction in your return rendered for:
the year during which the loss occurred.
At what rates may depreciation
be claimed and under what condi-5
tons?
AS the rate at which depreciation may
be claimed is dependent, in a greater
o, less extent, pon local conditions, the
u-e to witch the property is put, and it's
10 1;fnt iy,oo ,,ndor normal h11cin oce