Arizona republican., 1918-10-14
M 'ADOO ADDRESSED IN RESOLUTION BY
 ARIZONA MINE MEN

The Arizona Mining Mems associ- ation, which was organized at a meet ing at the Adams hotel Saturday after noon, adopted a resolution in the form of a suggestion addressed to Secretary McAdoo for the benefit of the mining industry. It follows:
 SUGGESTION FOR AN ADDITION TO THE TREASURY DEPART MENTS REGULATIONS GOVERN ING THE COLLECTION OF THE IN COME TAX IN ORDER TO PROTECT THE PROSPECT AND DEVELOP MENT MINES FROM PAYING AN INCOME TAX UPON A RETURN OF PRINCIPAL:
 Whereas, the present federal acts imposing an income tax upon mining companies, and the treasury depart ments ruling governing the collection of the income tax, do not make any distinction between income received by producing mines that have developed sufficient ore to guarantee the return, or to warrant belief in the return, of | the original capital invested in the bus mess, to the business, as Wefl as profit above the return of the original | investment, and the income received by | prospect and development mines that have not developed sufficient ore to guarantee the return, or the reasonable belief in the return, of the original cap ital invested in the business to the business; and Whereas, the said federal acts and | the treasury departments rulings do not protect the prospect and develop ment mines that have not sufficient ore to guarantee the return of tie orig inal investment to the business from paying an income tax upon the amount that receipts from shipments of ore en- | countered in course of development work exceed the operating expense; and
 1 Whereas, under the present federal acts and treasury departments rul- ings. investors will not be found to prospect and develop mineral ground, requiring a number of years invest ment without any interest return. that has not an assured tonnage of ore suf- ficient to guarantee a return of their investment, as they would not be able to make shipments of ores encountered in development work without paving an income tax upon the return of their principal under the proposed new rev enue bill at the rate of IS per cent if undisturbed. ard 12 per cent if distrib uted as dividends. etc
 NOW. THEREFORE, BE IT RE SOLVED THAT the treasury depart. ment, in revising Regulations No. 3; governing the collection of the income tax imposed by acts of September s H 1916, as amended by the act of October 3, 1917, and as will be amended by the present tax legislation now pending include under Article No. 172 of the present issue of the Regulations No. 3;
 (which article sets forth the method ot determining the depletion. deduction and the method of arriving at the mine valuation) a paragraph covering tho method of determining the depletion deduction against returns from pros. pect and development mines as follows, Prospect and Development Mines
 The net returns from prospect or de. velopment mines shall not be consid
 cred income subject to income tax un. til the total net earnings, plus the tota net value of the ore in sight shall bs equal to or greater than the investmen
 in mine property and mine equipment plus g. reasonable rate of interest or the actual investment, provided tha
 such net returns are set aside as de,
 pletion reserves for the return tt
 stockholders of the original investmen
 in the mine property and mine euuip
 ment, or for use in further develop
 ment of. or for reinvestment in tn,
 mine property.
 Any mine so setting aside its net re
 turns from prospect or developmen
 ores shall. at the end of any year whel