The Birmingham age-herald., 1920-11-03
LETTERS TO THE EDITOR

taxable year. A taxpayer whose accounts are kept on the basis of cash receipts and disbursements is entitled to deduct taxes actually paid within the taxable period for which return Is made, whereas d taxpayer whose accounts are kept on the accrual basis is required to deduct taxes accrued, whether or not actually paid, within such period. A tax is de ducted when it is subtracted from the gross income of the individual in com putting his net income subject to tax, thus serving to reduce the net income, whereas a tax is credited when it is ap- piled against the total tax due on hls return, thus serving to reduce the total tax payable on the return by the amount so credited.
 A taxpayer may claim as a deduction the amount of war tax paid on facili- ties furnished by public utilities, which includes tax on railroad and steamship fares, and the war tax paid on admis- sions and dues A taxpayer claiming this deduction must keep some record of such taxes paid; a mere estimate will not be sufficient.
 The war excise taxes imposed by sec ton 90l and paid by the purchaser are deductible, but the war excise taxes imposed by Section 900, which are levied against and paid by the manufacturer, producer or importer are not deductloie by the individual purchaser.
 On certain classes of merchandise the excise tax is levied against the rlanu- facturer, producer, and importer; on other classes of merchandise it is levied against the vendor who sells for con- sumption or use; and on still others 1t is levied against the purchaser. In de- termining who is entitled to the deduc- tion for taxes so levied and which have been paid on the purchase or sale Of mer- chandise; one must be guided in all cases by the general rule that the per son against whom the tax is levied IS entitled to the benefit of the deduction therefor.
 The sales tax on jewelry is levied against the dealer who sells for consump- ton or use and he alone is entitled to the benefit of the deduction. The tax
 is measured by the price for which the article is sold. If the price of tax able article is increased to cover the tax, the tax is on such increased price. The profit to be returned from the sale in such case is determined by a comparison of the cost to the dealer and the actual sales price, including the amount added to the list price to offset the tax which he is required to pay. Where, however. the tax is billed to the consumer as a separate item such amount need not be included Ill the price TOT WHlcn the dT ticle is sold in determining the profit de- rived from the sale therof, but the dealer may not take a deduction in re- spect of such taxes unless he includes the amount of them in his gross income.
 Further information concerning the different taxes imposed by the revenue act of 1918 may be obtained from the schedule on pages 30 to 39 of this bulle- tin.
 Additional income tax assessed against a taxpayer upon the basis of his reutrns filed under the acts of October 3, 1913, and September 8, 1916, due to the correction of errors made in preparing such returns, are deductible only if paid prior to January l, 1917 since the acts in effect for 1917 and subsequent years prohibit the deduc- ton of federal income taxes in comput- ing taxable net income.
 An individual who leases a house and in addition to paying rent therefor agrees to pay taxes imposed on the premises, is not permitted to deduct such taxes in his personal return unless the property is used by him for busi- ness expense. An amount so paid by the lessee on account of taxes would constitute income to the lessor, and would also be an allowable deduction in the lessor's return unless it rep-
 resented an assessment for a local benefit, in which event the amount should be reported as income by the lessor, but would not be an allowable deduction.
 Taxes paid on bank stock by the is-