Free trader-journal and Ottawa fair dealer. (Ottawa, Ill.) 1920-1927, 1921-12-20
GOVERNMENT GIVES.
MERCHANTS TIP ON.
FILING INVENTORY.
COLLECTOR OF INTERNAL REEVE
NUE. TELLS HOW TO PREPARE
SCHEDULES ON WHICH TAXES
WILL BE LEVIED FOR 1922.

Notwithstanding the revenue tink.
ering' t'l2c congress has been indulg-
ing IN down mt the national capital.
there still remains bunch of trouble
Tor Ottawa merchants who are re.
9Gired to file Inventories during the
next few months These will be the
basis upon which many Ottawa per.
sons VIII he taxed for government
hurposes, The country has resumed
tts peaceful relations with all ita late
snemios, but the costs Of that will be
"A heritage to be handed down for gen
eratlons yet to come There is no use
IN attempting to dodge the Issue
schedules and inventories will be call.
ed Tor and the amounts assessed by
the Tvenue department exacted
IN an effort 10 spread Information
concerning the taking or inventories
for the year 1921 John c. Cannon, in
terna' revenue collector for this dis
tHcl has issued statement declar-
ing that merchants, manufacturer
AID business men generally need ex.
perience no difficulty in taking their
inventories for the year 1921 to coz.
sorm with tho new revenue act"
After quoting the section OF the law
as amended which provides for the
ming Of an inventory whenever In the
opinion OF the internal revenue com.
missioner an inventory shall be noe.
essary to clearly detremine the In
come OF the taxpayer, Mr. Cannon
continues
Present treasury regulations pro
vide that Inventories must be valued
AT either cost or market which
ever 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. There
after, the regulations provide. changes
can be made only after permission is
obtained from the commissioner of in
ternal revenue.
In the case of a merchant cost
means the invoice price less trade or
other discounts, excepting strictly
cash discounts approximating fair
rate of interest, which may be deduct |
ed or not. at the option of the tax
payer, providing a consistent course |
Is followed. To the net invoice price |
should be added the cost of transpor-
tation and other necessary charges |
incurred in acquiring possession of
the goods.
In the case of a manufacturer
cost means the cost of raw materials |
and supplies, expenditures for labor
and indirect costs incident to produc |
ton, including a reasonable proper
ton of management expenses, but not |
including any cost of selling or secur. !
ing return on capital.
" Market means the current bid
price prevailing at the date of the in
ventory for the particular merchan.
disc. The burden of proof as to the /
correctness OF the price rests upon
The taxpayer in each case. Where no
open market quotations are available
the taxpayer much use such evidence
OF a fair market price at the dates
nearest the inventory as may be await
able such as specific transactions or 4
compensation paid for cancellation of Il
contracts or purchase commitments L
Where, because of abnormal condi- Il
tons, the taxpayer has regularly sold Il
merchandise at prices lower than the Il
market bid price, the inventory may Il
be valued at such prices The cor
rectnesa of such prices will be deter
mined by reference to the actual sales
of the taxpayer for reasonable pc
riod before and after the date of in
yentory. Price, which vary materially L
from the actual prices SO ascertained Il
will not be accepted as rejecting the
market.
THE yalne of each item in the in Il
Sentory may be measured by cost OF
market, whichever is lower An en-
tire stock may not he inventoried at
cost and also at market price. and
the lower of the two inventories used
Inventories on whatever basis taken
VIII be subject to investigation by the
commissioner of internal revenue. ami
the taxpayer must satisfy the com