New-York tribune., 1919-03-15

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" equally difficult to sotvs problems
connected toitt ihe sncomo, tocr end
excess profits imposts.
me Tribune has therefore provided
thts Tag Seruice Department. Through
the courtesy Of tho Guaranty Trust
Company Of Ns,o York.
Morris i. Frey.
Tar Conaaitant Of that fnstitutton and
q leadin0 authority On Tho subject. wiH
answer .qnesttoms sabmitfsd TO him
Mron.gh this department ,'etatiny 10 IN
dsV'dnai, corporation or partnership In
come tdrca, or about war profits and
sseeees profts ta1es.
fom may therefore tell your fas
Io4btes to Th@ Tribune with tho assuy-
dnco that they piH rccefpo expert con-
alteration. Those ouestions aDhich arc
o. general infe, eat WiU be GnsweYed in
this column. flames wifl not be mssd.
AH 9ther questions aoiH be ans,oered BY
mail. All communications aDi. be re-
0drded as highly confidential.
You 70iH fauor ns and expedite the
reply ~ you wiH please Observe these
requests:
state your questions as concisely as
possible, but be sure that no essential
information is 'vithheId.
Write on one side of paper only.
inciose stamped addressed envelope
Tor reply iii case questions are not an
swered in the column.
address Gil correspondence to
Tax Service Department, Tribune
Business News Bureau, 154 Nassau
Street, New York City.
Questions-I understand that have
no right to deduct repairs of any kind
or depreciation on my residence which
own and occupy.
However, | own a house occupied by
tenant. In arriving at the net in
come may l deduct repairs made dur
ing the year and also depreciation If
so, how much? Or is it optional either
to deduct repairs and make no charge
for depreciation or ignore the repairs
. and make the charge for depreciation
only? Is the depreciation based OH a
percentage of the full markes value of
the property?
| bought house q few years since
and made extensive repairs for ten
ant that exhausted more than a wear
and halfs gross rental. | proposed
to amortize the sum by charging off
certain amount each year over a period
of several years. In making last years
income tax .return, being in doubt, I
made no deduction. In April, 1918, /
SOLD the property and am returning the
net income for three and half
months. May / also deduct any por-
ton of the sum actually spent several
years since? Ny books have been kept
with the bona fide intention to treat
the expense as outlined.
Answers-Repairs which are not in
the nature of improvements and bet
terments are allowable deductions
against income received from rented
property. A deduction for depreciation
may also be taken, but the law does not
provide for any fixed rate. 1t is gov
erned by the probable life of the build
ing and should be distributed ratably
over such period, based on the fair
market value of the building on March
/, 1913, if purchased prior to that date,
or the cost OF the property if pur-
chased subsequent to that date.
Only such repairs as have been made
during the taxable year may be de-
Quoted.
Repairs and depreciation on your
residence are not deductible.
Question: Under heading of Deduc-
tions Allowed in the Proposed Tax Bill,
Section PA (12) it states: CAT the time
of fling returns for the taxable year
1918 a taxpayer may file claim in
abatement, based on the fact that he
has sustained a substantial loss
(whetllcr or not actually realized by
sale or other disposition) resulting
from any material reduction (not due
To 4ol1o o,,D,. 4
such inventory for such taxable year"
etc.
Having taken an inventory on De-
cember 81, and my profits naturally
being based Oh the result of this in
ventory, and there having been CON
siderable decline since that time in the
value of the merchandise inventoried
on December 81, can | make deduc-
ton from my profits based on the fact
of the reduced value of the goods at
the time returns are made, and if so,
how do | proceed to get this rcduc-
tion?&
Also would this deduction be made
on such merchandise as was inven-
tored December 81 and is still on hand
when the return is filed; and does it
also cover such merchandise as was
sold al loss between the time of the
inventory and the time when return
Is filed.
Answer: Recent Treasury Regula-
tions in this connection read AS fol-
lows: Losses under paragraph 12-a
relate only to a redetermination of tho
value of inventories taken at the close
of the taxable year 1918. Such rede-
Termination of value may be made (a)
before the date of filing return for
that year, in which case the claim
should be filed with the return, or {b,
if no such claim is filed With the return,
claim may be filed subsequently,
thereto with the collector. Each claim
shoud state the name and address of
the taxpayer and should contain . con-
else statement of the amount of the
loss sustained and the basis upon which
II has been computed, together with all
pertinent facts necessary to enable the
commissioner to determine the allow
ability of the claim. Each claim should
be supported by an affidavit, and after
one claim has been allowed no further
claim can be considered. To be allowed
such inventory loss must be substan-
tial in amount and represent either (a)
realization by sale of goods taken
in the inventory or (b) shrinkage in
market price land such shrinkage must
show sound ppidepro of r,oVrnaunn~vl cF