The Bridgeport times and evening farmer., 1919-02-28
NEW INCOME
 TAX RULES
Albert R. Williams Tells Senators of Deeds in
 Parts of Russia.

The subject of Liberty bonds is treated in this paragraph:
 Accordingly, there may be exclud- ed from gross income (A) the interest received on not exceeding $5,000 principal amount of Liberty bonds of any CT all issues after the first, up to and including the fourth, and until two years after the war, (B) the in terest received on not exceeding ESQ., 900 principal amount of Liberty bends of the fourth issue, plus co the interest received on an aggregate principal amount of Liberty bonds of the first loan converted, the Second Liberty loan, converted or uncon- verted, and the Third Liberty loan, not exceeding $45, GOO and not exceed ing 150 per cent. of the principal amount of the bonds of the Fourth Liberty loan, both originally subscrib- ed for by the taxpayer and still own ed by him at the date of his return. plus (A) the interest received on not exceeding $5O,O00 principal amount of Liberty bonds in which First Lib erty bonds may have been converted in the exercise of any privilege aris- ing as a C. lsequence of the issue of the Fourth Liberty bonds."
 Another ruling of public interest holds that in computing business ex- penses the deduction of an allow ance for depreciation Is limited to property used in the taxpayers trade or business. No such allowance may be made in respect of automobiles or other vehicles used chiefly for pleas ure a building used by the taxpayer solely as his residence nor in respect of furniture or furnishings therein
 
 properties and costu mes used exclu- siveIy in Q business such as a theat- rica1 business may be the subject cf a depreciation allowance"
 Still another important provision states that "a deduction on account of amortization will be allowed only in the case of an enterprise or project falling within the class of activities contributing in the prosecution of the war;
 In dealing with loss in value of in- ventory the Revenue Bureau rules that: ITO allow such inventory loss must be substantial in amount and represent either (a) a realization by sale of goods taken in the inventory or (b) a shrinllage in market price and such shrinkag ge must show sound evidence of permanency---of goods taken in the inventory and unsold al the date of the claim No claim will be allowed for any loss of anticipated profits.
 The regulations rader the heading: Items Not DeducJibIe" give these rulings which will bear a relation to the incomes paid by every Individual:
 Personal and family expenses insurance paid on a dwelling owned
  sonal expense. Premiums paid for life insurance by the insured are not deductive. In the case of a profes- sionaI man who rents a property for residential purposes but incidentally receives there clients patients or call CTS in connection with professional work (his place of business being elsewhere) so part of the rent is de- duCuble as a business expense The father Is legally entitled to the ser vices of his minor children and aI- lowances which he gives them, whether said to be in consideration of service or otherwise are not allow able deductions in his return of in come
 Amounts paid from a salary re- ceived for all service rendered and expenses incurred are deductible as business expenses when the expendi- lures are occasioned by the services in respect of which the salary is paid A salesman who has to pay for the use of a sample room at a hotel for the display of his goods Is entitled to deduct such payment as business ex- pense, and a traveller or actor to en- able him to move about in carrying out his occupation.
 
 Amounts expended for additions and betterments or for. furniture, which constitute an increase in capital in vestment and add to the value of the assets are not a proper deduction, but such expenditure when capitalized may be reduced through annual de- preciation dedu ctions"