The Richmond Virginian. (Richmond, Va.) 1910-1920, 1920-03-02
INC0nt-IAx FACTS
YOU SHOULD KNOW

! In these days OF high rentals AMI
cAcessivs ecst of maintenance and up
keep beth landlords and tenants fie
inquiring as to their allowable dednc-
tons in the fling of ~ income tax re-
turn,
Whore property is held for renting
purposes the owner may deduct the
cost OF securing tenants, such as COM
IN issions To real estate agents. adver-
Using. etc. and the expenses of main
ltsnance. such as ordinary repairs.
lights, fuel, janitor service. and insur-
aEce. If the owner occupies part OF
the building as his dwelling. the ex-
penses must be apportioned. and only
those relating TO the part which is
rented may be deducted.
tenant may deduct the rent paid
for business premises but not t's
home. which it not perconzt of living
expense
Taxes paid by tenant to or for
landlord for business property are ad
ctftionai rent and are dednctiblc by
the tenant Such items represent IN
come to the landlord. H1A ~ >
must be included in his return of gross
income, but NAV be ciain,ru H. ..I
also az A deduction The cost of erect
iirg buildings or permanent improve
Toents on ground leased by taxpayer
Is additional rental and therefore de-
duetible from gross income, provided
such buildings and improvements re-
vert to the owner of the ground at the
expiration of the lease. In such cases
the cost of the Improvement may be
pro-rated over the term of the lease.
SO that a proportionate amount will
be deducted In each year Of the ten
ancy.
Having deducted the cost OF such
f-.4ldinrS as rental the lessee is No.
allowed a deduction fro depreciation,
but the cost of ordinary repairs rs cee-
ssry to their maintenance and upkeap
is an allowable item
when at the expiration OF the lease
such property reverts to the owner OF
tae land It's value is considered taxabtc
Income 10 the landlord for the year in
which received.
Under the heading OF depreciation.
owners are permitted the deduction OF
"a reasonable amount for the exhaus-
ton, wear and tear of property used in
trade or business. including a rc1-0n-
able allowance for obsolence" This
deduction must be made as a separate
item OF the return and must be ex-
rIained by showing separately each
class Of property, its cost or value at
the date of purchase ton or before
Asrch /, 1918, If acquired on or before
that date. estimated life, depreciation
chArgen TOT the taxable year. ana totai
depreciation charged for al taxable
years To be allowed the amount
claimed for depreciation must be charg
&C OFT the books of the taxpayer, either
BY deductiHs IL directly from the book
value of the assets or crediting it to
a depreciation reserve fund, SO that Il
will be reflected in the annual balance
ST Get
Depreciation may be claimed on all
TX birh ivrir,6ag NOT
only buildings, but machinery OF a
permanent character automobiles,
farm tractors, mine and mill equip
mont. office furniture and books, The
rates at which depreciation is allow ed
are not fixed by the law or regulations
and arc determined by the circum-
stances governing each particular case.
The ordinary method is by determining
the lifetime of the property and divd-
ing it's cost by the mum Der of years IL
will be disable in the business in which
employed.
Deductions for depreciation are Tim
tied strictly to property used in the
taxpayers trade or business No such
allowances are made for automobiles
or other vehicles used chiefly for pleas
ure. the taxpayers dwelling. nor the
furnishings therein personal effects or
clothing. Property or clothing used
exclusively in theatrical business,
however. may be the subject OF de-
probation allowance.
Intangible property, the use % which
in trade or business is definitely lin
, itee in duration. may be made the
claim for a depreciation allowance.
Examples are patents. copyrights, H.
censes and franchises. fntangibles. the
use OF which 10 NOT so limited. will not
usually be the proper subject Of such
an allowance.