New-York tribune., 1919-02-07

lOfelgn governments from American
sources, the amounts received through
teath accident insurance or workmen's
compensation act benefits
In the case of soldiers or sailors en-
gagged in the present war only that
part of their compensation in excess
of $500 shall be included in gross in
come. The Senate placed no limit, and
this is practically a return to the
House position, except that the House
gave this benefit only to those serving
abroad
Income from government bonds is
sued after September l, 1917 and from
|. War Finance Corporation bonds is not
to be included, except for figuring sur
taxes. BY special act of Congress
income from Liberty Loan bonds is ex-
cluded from surtaXes up to certain
amount and for a certain time.
Deductions Allowed In computing
net income from gross income there
essary business expenses; all interest
pald out, except that on obligations in
Cured in purchasing obligations or Sc
curities other than those of the United
States issued after September l, 1917,
the interest on which is wholly exempt
from Federal taxation; Federal taxes,
except income, war profits and excess
profits taxes, and all local taxes ex-
cept those assessed against local ben
etits; losses sustained during the table
year and not compensated for by in
surance or otherwise; charged off
debts, etc
An important deduction covering
amortization provides REASONABLE al
IoWance for exhaustion, wear and tear
OF property used in trade or business,
nsludlng reasonable allowance for OBJ
soiescence. special reasonable al
loWance for amortization is allowed in
the case of war plants and ships. and
thls subject may be determination.
The deduction provision for oil and
gas wells. other natural deposits and
timber is as follows:
In the case of mines. oil and gas
wells, other natural deposits and
timber, reasonable allowance for
depletion and for depreciation of i'm
pfoVements. according to the peculiar
condltlons in each case, based upon
cost, including cost of development
not otherwise deducted provided
that IN the case of such properties
acquired prior to March /, 1918, the
falr market value of the property
'or the taxpayers interest therein)
on that date shall be taken in lieu
of cost up to that date provided
further that in the case of mines.
OIL and gas wells discovered by the
taxpayer on or after March /, 1913,
and not acquired as the result of
purchase OF proven tract or lease.
Wherc the fair market value of the
property IS materially dispropor-
tlonate to the cost, the depletion
ai,owancc shall be based upon the
1alr market value of the property at
! lne date OF the discovery or within
| thirty days thereafter; such reason
IL
TO be made under rules and regula-
tons to be prescribed by the com
missioner with the approval of the
secretary. IN the case of leases the
dcductions allowed by this paragraph
shall be eQuitably apportioned be-
tween the lessor and lessee. Con-
trlbutlons Of gifts not in excess Of
III per cent of the taxpayers net in
come shall be deducted.
IN connection with deductions the
conferrces adopted in place of a Sen
ate amendment the following impor-
'aht relief provision in regard to losses
ascertaincd after the close of the tax
able wear:
(A) AT the time of filing return
Tor the taxable year 1918 a taxpayer
may HE claim in abatement based
ON the tact that he has sustained a
substantial loss (whcther or not
actually realized by sale or other
olsposltlon) resulting from any ma
teral reduction (not due to tenn
porary iluctuation) of the value of
the inventory from such taxable year
or from the actual payment after tho
close of such taxable wear Of rebates
IN pursuance of contracts entered
INTO during such year upon sales
made during such wear. In such casa
payment Of the amount of the tax
covered by such claim shall not be
required until the claim is decided.
nut the taxpayer shall accompany his
cla'm with bond in double the
amount of the tax covered by the
ciaIih. WIN sureties satisfactory to
the commlssioner conditioned for
the payment Of any part of such tax
found to be due, with interest IF
any part Of such claim is disallowed
then tho remainder of the tax due
snail on notice and demand bv the
collector be paid by the taxpayer
with interest at the rate of | Der
cent a month from the time the tax
would have been due had no such
clam been filed. If it is shown to
the satisfaction of the commissioner
that such substantial loss has been
soStalned, then in computing the tax
imposed by this title the amount Of
such loss shall be deducted from the
net income
B) If no such claim is filed. hut
1t IS shown to the satisfaction of
the commissioner that during the
taxable year 1919 the taxpayer has
sustained substantial loss of the
character above described, then the
amount ot such loss shall be de-
Quoted from the net income for the
taxable year 1918 and the tax i'm
posed by this title for such wear
snail be redetcrmined accordingly.
Any amount found to be due the
taxpayer upon the basis of such re-
determination shall be credited or
refunded to the taxpayer in accord
ancc with the provisions of Section
252. N'-o"
Items not deductible - These in
cluded personal. living or family ex-
penses. amounts paid out for new
buildings or improvements and pre-
mInms paid on life insurance of anv
officer or employe or any person inan-
clally. interested in the taxpayer when
the latter is directly or Indirectly
beneficiary.
Credits allowed These include for
purposes Of the normal tax onIy divi-
dcnds from taxable corporations
Under this title" are included the
amount received as interest upon
United States and War Finance Cor
poration bonds. which il included in
gross income and in the case of n