The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1921-12-24
LAW UNCHANGED
Revenue Acts Of 1918 and 1899
IdentieaI-M0tter.
Revenue Collector Issues State
ment to Kansas Merchants.
ON cost OR MARKET" BASIS
Whichever Is Lower - Mer-
chants Get Benefit Of System.
All Inventories Subject TO In
"a vestigatiOn by OFfeerss
ON cost OR MARKET" BASIS

Vichita kan Dec 24-Tl1e fol
ing statement is issued by Collector
Internal Revenue H. H. MOtter.
hira. district OF Kansas:
Merchants. manufacturers and
mess men generally need expert
: no difficulty IN taking their in
tories for the year 1921 TO con
il with the new revenue act. The
.uage OF the revenue act Of 1918
the revenue act OF 1921. (Sec.
b. relating to Inventories Is lden-
That whenever in the opinion Of
commissioner the use OF inven-
IS is necessary in order clearly 20
'rmine the income OF any taxpayer,
.irtoriess shall be" taken by Euca
laver upon such basis as the com
ziouer. with the approval Of the
etarv. may prescribe as confirm
as nearly as may be 10 the best ac-
lring practice ia the trade or bust
and as most clearly rejecting
income
Present treasury regulations pro-
that Inventories must be valued
airher cost or cost or market.
enever is lower Taxpayers were
uitted. regardless OF their past
.tice. To adopt the cost or mar
basis whichever is lower in tax
tlefr Inventories for 1920 There
p the regulations provide, changes
be made only after permission is
ined from the commissioner Of in
I'll revenue.
inst Follow Consistent Course.
d the case OF a merchant cost
rs the invoice price less trade
ther discounts. excepting strictly
discounts appr0Eimatng a far
OF interest. which may be de-
ed or not at the option Of the
aver. providing a consistent course
Flowed. To the net invoice prize
ia be added the cost OF trans
alton and Other necessary charges
rred in acquiring possession OF
goods.
n the case OF a manufacturer
% means the cost Of raw materials
supplies. expenditures for labor
Indirect costs incident to produc-
including reasonable proper
Of management expenses, but not
ldinE any cost of selling or secur-
return on capital
Market means the current bid
prevailing at the date Of the III
DRY for the particular merchant
The burden OF proof as 10 the
ecruess Of the price rests upon
taxpayer in each case. Where
Jpen market quotations are avail
the taxpayer must use such evi-
- OF a fair market price at the
s nearest the inventory as may be
liable. such AZ specific transa ctios1s
compensation paid for cancellation
lntracts or purchase commitments
re. because Of abnormal COndi.
the taxpayer mas regularly sold
chandise at prices lower than the
ker bid price the inventory may
-alued at such prices. The cor
70 ess OF such prices will be deter
I'd by reference to the actual sales
le taxpayer for Il reasonable period
re and after the date Of inven-
Prices which vary materially
D the actual prices so ascertafned
not be accepted as rejecting the
Ilet
payer Must satisfy Commissioner.
The value Of each item in the in
ors- may be measured by cost or
ker. whichever is lower An en-
stock may not be inventoried It
and also at market price. and the
ar OF the two Inventories used. In
cries on whatever basis taken viii
ubiecr co invest cation by the com
ioner OF internal revenue. and the
aver must satisfy the commits
err Of the correctness of the prices
lted. He must be prepared %
both the cost and the market
OF each article included in thu
HtOry.
the conduct Of modern business.
Of the utmost Importance that
81 business. large Or small. whether
iuration. partnership or individual.
I maintain an exact record Of re-
Is and expenses. No special sys-
of accounts is prescribed by the
au Of internal revenue. but the
Ks should show in detail inven-
IS. purchases. sales capital invest
rs, depreciation, and similar items
ired III making 10 income tax re-