The Barre daily times. (Barre, Vt.) 1897-1959, 1920-02-26
INCOME TAX
LESSON NO. 8
Deductions Which An Owner
May Make for Certain
Expenses.

In these days OF high rentals and ex-
cessive cost of maintenance and up
keep, both landlords and tenants are
as TO their allowable deduc-
tions in the filling of an income tax re-
turn.
Where property is held for renting
purposes the owner may deduct the
cost of securing tenants, such as com
missions to real estate agents, adYer-
Using etc, and the expenses OF main
tenance. such az ordinary repairs. lights
fuel, janitor service, and insurance. II
the owner occupies part Of the building
as his dwelling the expenses must be
and only those relating to
the part which is rented may be de
Quoted.
Additional Rental.
Taxes paid by a tenant to or for
landlord for business property are ad'
dtional rent and are deductible by the
tenant. Such items represent income
to the landlord. and therefore must be
included in his return of gross income,
but NAV be claimed by him, also, as a
deduction. The cost of erecting build
ings or permanent improvements on
ground leased by taxpayer ls add
tiona rental and therefore deductlble
from gross income, provided such build
ings and improvements revert to the
owner of the ground at the expiration
of the lease In such cases the cost OF
may be prorated over the
term of the lease so that proportion
ate amount will be deducted in each
year of the tenancy.
Having deducted the cost OF such
as rental, the lessee Is not
allowed deduction for depreciation,
but the cost of ordinary repairs ne
cessary to their maintenance and up
keep is an allowable item.
When at the expiration of the lease
such property reverts to the owner OF
the land its value is considered tax
able income to the landlord for the
year in which received.
Depreciation Allowance.
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 rca
sonable allowance for obsolescence.
This deduction must be made as a sep
aratc item of the return and must be
explained by showing separately each
class of property. its cost or value at
the date of purchase ton or before
March |. 1918. if acquired on or he
fore that datel, estimated life. depre
citation charged for the taxable year
and total depreciation charged for all
taxable wears. To be allowed the
amount claimed for depreciation must
be charged off the books Of the tax
payer. either by deducting il directly
from the book value Of the assets or
crediting it to a depreciation reserve
fund so that it will be reflected in the
annual balance sheet.
Depreciation may be claimed on all
business property, which includes not
only buildings but machinery OF q per
manent character. automobiles farm
tractors, mine and mill equipment, Of
flee furniture and books. The rates at
which depreciation is allowed are not
fixed by the law or regulations and are
by the circumstances gov
erning each particular ease. The ordi
nary method is by determining the life
time Of the property and dividing its
cost by the number OF years it will be
disable in the business in which en-
ployed
Deductions for depreciation are lin
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 Of which
in trade or business IS definitely limit
ed in duration. may be made the claim
for depreciation allowance Examples
are patents, copyrights, licenses and
franchises. Intangibles. the use Of
which i not SO limited. viii not usual
Is be the proper subject Of such an
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