The Grangeville globe. [volume] (Grangeville, Idaho) 1907-1922, 1921-12-22
REVENUE ACT.

REVENUE ACT.
The following statement is issued by
Collector Of Internal Revenue, BOISE,
the District Of Idaho.
Merchants, manufacturers and bust
ness men generally need experience no
difficulty In taking their Inventories
for the year 1921, to conform with the
new Revenue Act. The language of the
Revenue Act Of 1918 and the Revenue
Act of 1921, (Sec. 2O3), relating to in
ventories are identical:
That whenever In the opinion
or the Commissioner the use of in
ventories is necessary In order
clearly to determine the income of
any taxpayer, inventories shall be
taken by such taxpayer upon such
basis as the Commissioner. with
the approval of the Secretary.
may prescribe as conforming as
nearly as may be to the best ac-
counting practice in the trade or
business and as most clearly re-
flecting the income
Present Treasury regulations pro.
vide that inventories must be valued
at either cost or cost or market
whichever is lower. Taxpayers were
permitted, regardless of their past
practice, to adopt the cost or market
basis, whichever is lower In taking
their inventories for 1920. Thereaf after
the regulations provide, changes can
be made only after permission is oh
tanned from the Commissioner of In.
ternal Revenue.
I'm the case of a merchant cost
means the invoice price less trade OF
other discounts, excepting strictly cash
discounts approximating a fair rate
OF interest, which may be deducted OF
not at the option Of the taxpayer, pro
viding a consistent course is followed
To the net invoice price should be add
ed the cost of transportation and other
necessary charges incurred I'm acauir
ing possession of the goods.
I'm the case of manufacture,
cost means the cost of raw material,
and supplies, expenditures for Labor
ana Indirect costs incident to produc
ton, including a reasonable proportion
OF management expenses, but not in
Guiding any cost of selling or securins
return on capital
Market means the current bie
price prevailing at the date of the in
ventory for the particular merchan
disc. The burden of proof as to tn,
correctness of the price rests upon th,
taxpayer in each case. Where no opel
market quotations are available. tn,
taxpayer must use such evidence o
fir market price at the dates near
est the inventory as may be available
such as specific transactions or com
pensation paid for cancellation Of con
tracts or purchase commitments
Where, because of abnormal condition
the taxpayer has regularly sold mer
chandise at prices lower than the mar
ket bid price, the inventory may b.
valued at such prices. The CORRECTNESS
of such prices will be determined b,
reference to the actual sales of the tax
payer for a reasonable period befor
and after the date of inventory Price
which vary materially from the actua
prices so ascertained will not be az
cepted as reflecting the market
THE value of each item in the in
ventory may he measured by cost o
market, whichever is lower. An entir
stock may not be inventoried at 0cs
and also at market price, and the low
er of the two inventories used. Inven
tories on whatever basis taken vii
be subject to investigation by the Con
missioner of Internal Revenue, an
the taxpayer must satisfy the cen
missioner of the correctness of til
prices adopted. He must be prepare
to show both the cost and the marke
price Of each article included in til
inventory.
I'm the conduct of modern bushes
it is of the utmost Importance tina
every business large or small, whetht
corporation, partnership or individual
shall maintain an exact record of RI
ceipts and expenses. No special systeI
of accounts is prescribed by the Bui
eau of Internal Revenue, but the book
should show in detail inventories. pu
chases, sales, capital investments. d
probation, and similar items require
in making up income tax returns"
-X
SUMMONS