Norwich bulletin., 1920-01-13
INcoME-TAx FACTS
 YOU SHOULD KNOW
8.

Numerous inquiries are received by collectors of internal revenue con corning depreciation and the allow ances therefor in the filing of an in come tax return. As the rate at which depreciation may be claimed IS dependent upon local conditions, the use to which the property is put and its probable lifetime under normal business conditions, no specific rate is established by the law or regula- tions. The word depreciation" is not used in the law, which provides a reasonable allowance for exhaustion, wear and tear of property used in trade or business, including a reason able allowance for obsolescenee@
 To compute the amount of deprecia- tion which may he claimed. 8 taxpay- CT should determine the probable life time of the property, then divide the number of years it will be usable in the business in which employed. The result thus obtained will represent the amount which may be claimed as a deduction. For example, a frame building, the probable lifetime of which without repair or repla cement is 25 years, cost s5.000. Divide s5,000 by 25 and claim szuo each year as an exemption.
 Average Depreciation. While each taxpayer must deter mine the probable lifetime of his pro- perty without regard to the following | figures, it has been estimated that | the average usabie lifetime ofshis pro- perty without regard to the follow | ing figures, it has been estimated that the average usable lifetime of frame building is 25 years; a brick building | B years; a stone. steel, or concrete 1 4a mated life of ordinary machinery Is 1 10 years, that of automobiles used for 1 business or farm purposes and farm l tractors, 4 to years.
 | If a taxpayer claims the full amount of depreciation he can not claim as a 1 deduction the cost of repairs to the 1 property during the same year. If he i wishes to claim deduction on ac- count of repairs, their cost must be deducted from the full amount of de- preciation, and the balance may be claimed under the heading of -'Depre- i ciation." Repairs in this connection means repairs and replacements of 6 kind tending to make good the depre- citation, such as new flooring or new roof Small items such as replace ments ar broken windows. papering and minor repairs are allowable, ever l though the full amount of deprecia. tion is claimed.
 Principles to be Observed.
 In claiming depreciation the follow Ing fundamental principles must b, observed:
 Only such depreciation as result from exhaustion, wear, and tear O property arising out of its use in bus mess or trade Is allowed. Deprecia tion in the value of a home, or prop erty such as automobiles used fo pleasure or convenience cannot b lclaimed.
 Depreciation due to changes in tn
 social or business conditions of
 neighberhood, or changes of stree
 grade. or fluctuations in market val
 ues can not be claimed.
 Depreciation in the value of land
 whether improved or unimproved, du : to erosion, exhaustion or any othe
 cause can not be claimed.
 When, 1 nthe course of years, tn
 owner of property has claimed it's flu
 cost as depreciation, no further clair
 will be allowed.
 The value to be cared for by depre
 citation is the actual amount investe in the property.