New-York tribune., 1919-12-22
Travis Explains
State lncOm
TaxRegulations
New Law Goes Into Effect
on January 10, and Is
Similar in Most Respects
to the Federal Levy
Return Limit March Is
More Exemptions Granted
and Rate Is Lower Than
the National Assessment

State Comptroller Travis discusses
the new state income tax law in an
article in the current Issue Of the
Merchants Association publication.
"Greater New York" The article Is
intended mainly for business men, but
calls attention to the fact that the
state law calls for reports from all
men or women whose earnings exceed
$1,000 if single and $4,000 year if
married
The state law. was enacted during
the legislative aesson of 1919. and
becomes effective January 10, so that
returns required under it's provisions
must be made at the same time re-
p8rts on income are submitted to the
Federal authorities. The state law
closely parallels the Federal statute,
with this difference: The states
rates are lower and no surtaxes are
imposed. They are / per cent on the
first $4,000 of taxable income, 2 per
cent on the next $4,000, up to and
including $4,000, and per cent on
all sums exceeding $4,000. Returns
must be submitted between January /
and March Is to one of the following
district offices of the Income Tax Bu
reau:
Albany, Manhattan, Brooklyn, Bronx.
White Plains, Buffalo, Elmra, Erie.
Syracuse, Utica, Binghamton, Roches-
ter and Kingston.
"One feature of all income tax laws
which has been troublesome to mer-
chants and business men," Mr.. Travis
says, "1s the method and manner of
taking Inventories. In brief, the in
ventory of a merchant should include
all merchandise on hand, together with
that which has been puchased, although
not actually received, and to which the
tltle has passed; also goods which have
been sold and to which title has not
passed to the vendee.
"Following the Federal practice. the
state law and regulations require that
| inventories be valued at (a) cost, or
1n) cost or market, whichever is lower.
Whlchever basis is adopted it must be
appiled to each item and not merely to
the total of the inventory. That is. if
the method Of valuing is cost or mar
ket, whichever is lower, the value of
each ltme of the inventory will be meas
ured by the market if that is lower
tnan cost, or by cost if that is lower
than market.
The term cost means, in the case
or merchandise, the invoice price less
trade or other discounts, except strictly
cash discounts approxlmating fair
interest rate. TO this net invoice price
should be added transportation and
other necessary charges incurred in
acquiring possession of the goods.
The term market value means the
current bid price prevailing at the
gate OF the inventory for the particu-
lar article of merchandise.
"The items which enter into the
computation Of gross income as we'll
rs deductions in computing net in
come and the exemptions allowed are
practically the same as under the Fed
era! statute,' Mr.. Travis continues.
However, the state law specifically
exempts from taxation interest upon
all Federal bonds, bonds of the State
OF New York and its municipal sub
division, as we'll as salaries received
from the Federal government It has
also been ruled that the salaries. wages
or other compensations received bv
employees of railroads, the Pullman
Company, telephone or telegraph lines
as we'll as those of employees of the
american Railway Express, are exempt
from taxation for the period during
which these corporations are under
Federal control
"Io reach the amount of tax to be
paid, the taxpayer first determines his
gross income. He is permitted bv law
to make certain deductions. which rives
the amount of his net income. resi-
dent taxpayer may then deduct per.
sonal exemption of 81 900 if single or
$1,000 if married. An additional ex-
emption of 5000 is granted for each de-
pendent under the age of eighteen
years, or other person who because of
physical or mental condition is depend
ent upon the taxpayer for support,
"A taxpayer is entitled to deduct
from gross income in computing net
income all ordinary and necessary busl-
ness expenses, including salaries, rents.
taxes (other than income and Local i'm
proy.ement taxes), losses not covered
by insurance, worthless debts actually
charged off, and a reasonable allow
ance for the exhaustion, wear and tear
CT property used in the trade or bust
ness.
Like the Federal law, a deduction
OF not exceeding Is per cent of the net
income of taxpayer is allowable for
contributions to New York charitable.
religious and educational associations.
Partnerships are not taxpayers, but
the income Of the individual partners
is taxed"