The New York herald., 1921-02-17
U. S. WOULD REMIT
BILLIONS TO BOOZE
INTERESTS, CHARGE,
Frelinghuysen Says Loss to
Government Will Reach
Four Billions.
RULING rs TENTATIVE
Allows Deduction, as Loss,
Of Good Will and Trade
Marks Hit by Dry Law.
PROTEST FROM SENATE
Smoot and His New Jersey CoEj
league Demand That Ex-
PLANTATION Be Made.
RULING is TENTATIVE
PROTEST FROM SENATE
Special Despatch to THE NEw YoeR HERALD.
New York Herald Byeau.
Washington, u. c., Feb. 10.


New York Herald BuJeau.
Washington, H. c., Feb. 10.
Tentative rulings of Internal Rev.
enus Bureau officials will deprive the
Government of liquor taxes estimated
by Senator Smoot (Utah) at s1000,-
OO0, 900 and by Senator F~relingllnysen
IN. ~ at nearly $4,000, 900 900. accord
Ing to statements made by them in the
Senate to-day.
1t is not yet a fixed ruling. Senator
Smoot said, but added that If it be-
comes so, which he wishes the prevent,
then all the liquor interests will have
the privilege of deslucting, as losses,
their good will-whatever amount
they may be able 10 establish under
such a claim--their trademarks, trade
brands and similar intangible values
involved in the enforcement of. ma
tional prohibition.
Senator Frelinghuysen explained that
the proposed ruling is for ''obsolescence
of property" and that under 1t the
revenue officials are proposing to re-
init or pay back to liquor interests
sums which in certain instances are
five times the amount allowed to other
taxpayers.
Senator Smoot brought up the matter
In the Senate in connection with
resolution adopted by the Senate about
e. month ago, which required the In
.ternal Revenue Bureau to inform the
Senate Of refunds. abatements aud
credits for taxes for a series of years
from 1917 to the present time, includ-
ing the following:
''The aggregate amount of such claims
and an estimated proportion OF the ag-
gregate attributable to. first. erroneous
assessment; second, stock dividends;
third. obsolescence of war property;
fourth, obsolescence OF property OF
those whose business was terminated
by prohibition legislation; the policy
and basis together with methods Of
computation for allowances as to good
VIII, and as to whether a proper al
iowancc for the claims SO filed was
made in the financial reports of the
Treasury Department
VIII Demand Report.
''If / am correctly informed said
Senator Smoot. there is on foot at
the present time a plan to return to
the liquor interests Of the United States
q .o00. 900. 900 from the Treasury depart
ment under certain rulings.
"If that Is so I think we dnght to
have a report on the matter a9 quickly
as possible. Therefore I wish to give
notice now that II there is not report
made upon my resolution within very
few days I shall ask the chairman OF
the Finance Committee to call meet
ing of that committee and slyall then
ask the committee to call before II the
officials who have the subject in hand.
According to Senator Frelinghuysen,
who took the floor after Senator Smoot
concluded, the estimate OF the Utah
senator Is moderate"
"I am informed Senator Freling-
huysen said. that the exemptions
which will be granted and Which the
Treasury eventually will be called on
20 pay amount to between T,0oO. .0ooc 600
and 1900, 10000. That is the informa-
sion which comes to me under a ruling
which has been made by the Internal
Revenue Bureau OF the Treasury De-
partrnent. As I understand. allowances
nre being granted by the internal Reve-
nue section to brewers, to dstiliers
ard 10 liquor dealers which in some
cases amount TO five times the sum
allowed TO individual corporations; in
other words. Congress will have to face
an appropriation for exemptions
amounting to 1900 900. 900 to be returned
20 distiIlers. liquor dealers and saloon
keepers of this country. I think it the
duty OF the Finance Committee to call
the chief of the Internal Revenue Bu-
reau before Il and to ascertain whether
under a ruling of the bureau the Trcas-
iry Department is going TO return,
these amounts to the liquor dealers and
xl.-.r nsx1 sl.-
sons they give for such action.
"In most instances the property
owner, the taxpayer, is compelled to
sue for a return, but in this case.
through a simple railing, the Treasury
ls going TO be looted TO the extent OF
AT least s., ,0O0. .0o0, 900. ! think Il is tt-e
Congress should ascertain what are he
facts"
Quotes Ruling ms Authority.
senator Frolinghuysen quoted the fol-
urv which he said substanuated 9is
assertion though he did not explain in
SIN this case reference is made to
the first paragraph Of r. NJ. 81. B,ille-
tin 1870, as follows:
1.-THE committee has considered the
question of providing some practical
tOTnOla LOT Nhibt 80 u
March I, 1913, or Of any date which
might be considered as applying TO
Intangible assets. but finds Itself unable,
10 lay down any specific rule OF guii'
ance for determining the value OF In
tanxfbfss which would be npplica Bile,
In all cases and under all circumstances.
Where there is no established mar.
ket to serve as a guide. the question
of value even OF tangible assets Is one
largely of judgment and opinion. and
the same thing II even more true or
Intangible assets such as good Will,
trademarks, trade brands, &C. How
ever there arc several methods of
reaching a conclusion as to the value
OF intangibles which the committee SUD
Rests may be utilised broadly IN pass-
ing on questions OF valuation not to be'
regarded as controlling. however. ~
better evidence Is presented IN anyI
specific case
vAssAR HAS ONLY ONE FUNK =.