The Alaska daily empire., 1918-03-18
INCOME TAX PRIMER FOR
 BUSY PEOPLE
(Continued from Yesterday

99 At what rates may deprecia- tion be claimed and under what con- ditions?
 AS the rate at which depreciation greater or less extent, upon local conditions, the use to which the property is put and it's probable life time under normal business condi- tions, no specific rates at which it may be claimed have ever been es- tablished. The law states that reasonable allowance" may be claim ed and it is for the taxpayer to de- termne what constitutes a reason able allowance" To compute the amount which may be claimed, a taxpayer should determine the prob able lifetime of the property, then divide it's cost to him by the num- Der of years it will be usable in a business in which employed, and the result thus obtained will represent the amount which may be claimed each year as a deduction, e. g., a frame building, the probable life time of which, without repair or re- placement, is 9 years, cost $5,000.
 Divide 5000 by % and claim $20o each year as depreciation.
 While each taxpayer must deter mine the probable lifetime of his property without regard to the fol- lowing figures, it has been estimated that the average usable lifetime of a frame building is % years; brick building 35 years; stone building or a 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, to 5 years.
 If 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 !
 es to claim deduction on account
 of repairs, their est must be deduct
 ed from the full amount of deprec-
 iation, and the balance then may be
 claimed as deduction under the
 heading of Depreciation" that is, if the taxpayer expends $100 in making II repairs to a building which will de- preciate in value $200 year he may claim s100 as business expense
 and $100 as depreciation, or he may
 claim $200 as depreciation and noth-
 ing for repairs. In short, the aggre-
 of repairs and depreciation must not exceed the full amount of deprecia- ton estimated to have occurred. . (Note-The repairs referred to nj
 this paragraph are such as are gen. eral in character, represent replace , ments. etc Small items, such as re- , placement of broken window panes, papering, minor repairs, etc, are al
 Iowable, even though full amount of
 depreciation has been claimed.)
 In claiming depreciation the fol
 lowing 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 3 for personal pleasure of convenience, :. can not be claimed; the property must be used for the purpose of pro. ducing income.
 (b) Depreciation other than that arising from wear and tear, such as lessening of values due to changes in the social or business conditions in the neighborhood in which prop erty is located, changes of street
 grade, or fluctuations in market val ] ues, etc, can not be claimed. (c) Depreciation in the value of : land whether improved or unimproy. , ed, due to ordinary erosion, exhaus- ton. or any other cause can not be ? claimed.
 . td) Where the value of piece of : machinery or any other asset is les sened by reason of the production of
 an improved machine or article, that depreciation can not be claimed, as it does not result from exhaustion, wear and tear.
 (e) Where. in the course of years. the owner of property has claimed It's full cost as depreciation in his
 income-tax returns. no further claim will be allowed
 uD The value to be cared for by depreciation is the actual amount fn- vested in the property and not the
 value which may be arbitrarily or otherwise fixed.
 100. A store or other building has outliyed it's usefulness; the owner
 tears it down to make room for a
 building of an improved type Can
 the value of the old building st the