The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1920-01-14
No. 5.

Income Tax Facts You Should Know.
Deductions from gross income in de-
termining net income include all bust
ness expenses, which are the amounts
actually incurred during the tax year
in the conduct of a business, trade, or
profession.
4 merchant may claim as deductions
the amount paid for advertising, hire
of clerks, and other employees. the
cost of light, fuel, heat. water and
telephone used in his place of bust
ness. the cost of operating delivery
wagons motor trucks and incidental
repairs to such vehicles.
a physician may claim as deduc
tions the cost of medicines and medi
cinaI supplies used by him in his prac-
tice. a reasonable proportion of The
expenses paid in the maintenance and
repair of an automobile used in max
ing professional calls, the expenses of
attending medical conventions. due to
medical societies and subscriptions TO
medical journals, the rent paid for
office rooms and the cost of heat.
water. light, telephone, etc. used in
such office rooms. and salaries paid
to office assistants. The same deduc
tions are allowed a dentist.
Farmers Also Considered.
The farmer may deduct all amounfs
paid in preparing his land for crop.
and the cultivation, harvesting, and
marketing of the crop. The cost Of
seed and fertilizer used and amounts
spent in caring for live stock are de-
ductible items. The cost of minor re-
pairs to farm buildings. other than the
dwelling. and of fences. farm machin-
cry. and wagons may be claimed, also
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up in the course of a year or two. The
cost of machinery of a permanent
character, such as thrashins machine
or tractor. is held to be a capital in
vestment. and is not an allowable de-
duction. Rent paid for a farm is de-
ductible.
The principles underlying these al
lowances are equally applicable to the
conduct of any trade, business or pro-
fession In short. all expenses con-
nected solely and directly with the con-
duct of an income producing business,
trade. profession. or vocation are al
lowable.
Deductions for Losses.
Losses incurred by a taxpayer in
any transaction entered into for profit
outside of his regular business are al
lowed. Under the 1917 act deductions
for such losses were allowed only to
the extent of gains. i'm similar trans
actions. IF, for example, person
made 81 900 in one stock market trans
action and in another lost $4,000 he
was required to include the $1,000 IN
his return of gross income, and could
deduct only that amount as loss.
Under the current act he is allowed
deduction of $4,000.
4 asonable allowance is made for
depreciation of business property and
obsolescence, and for the depletion OF
oil and gas wells and other natural de-
posits.
Contributions or gifts made during
the year 1919 TO corporations organ
lied for charitable. scientific, reliS-
ious or educational purposes. or for
the prevention of cruelty to animals or
TO the special fund for vocational re-
habilitation may he deducted TO an
amount not exceeding Is per cent OF
the taxpayers income.
Other DeductibIe Items.
Other items which may be deducted
are as follows:
Taxes paid or accrued during the
year 1919, except income, war profits,
or excess profit taxes, and those as
sessed against local benefits of a kind
tending to improve the value OF the
property.
Loss of property not connected with
trade or business rising from fires,
storms. shipwreck, or other casualty,
or from theft, if not compensated for
by insurance or otherwise.