The daily banner. (Cambridge, Md.) 1897-2008, 1921-02-01
Ninth ArIic e
On The 1920 Income
1921 Income Tax Facts You Should
Know

Increased rentals added largely 10
the profits of the landlords last year,
every dollar of which must be in
cluded in the taxpayers return of IN
come. Gross income includes all
amounts received as rents. Both
landlord and tenant are allowed GER
tain deductions.
Where property is held for rent
ing purposes, the owner may deduct
the cost of securing tenants, such as
advertising. and the maintenance eX-
penses, such as light, fuel, janitor
service, insurance and ordinary re-
pairs. 4 tenant may deduct the
rent paid for business premises. but
not for his home, which is person
al or living expense. Interest and
taxes paid by the tenant on behalf Of
the landlord are deductible by the
tenant as additional rental, provided
the property is business property.
Such items represent income to the
landlord and must be included in his
return of gross income. but are de-
ductible by him also.
Frequently a tenant agrees TO erect
4 building or make other permanent
improvements for the benefit of the
landlord. The cost of such improve
ment is a capital expenditure. and
in order 10 return to the tenant his
investment of capital, an annual de-
ductiou may be made from gross in
come of an amount equal to the total
cost of such Improvements divided
by the number of years of the term
of the lease, and such deduction
shall be in lieu of a deduction for de-
probation.
Under the head of depreciation
owners are allowed a reasonable
amount for exhaustion. wear and
tear of property used in trade or
business, including a reasonable al
lOwance for obsolescence." This de-
duction must be made as a separate
item on the return, and must be eX-
planned by showing separately each
class Of property, its cost or fair
market value on March l, 1913, if
acquired prior thereto, value at the
date of acquisition, if acquired by
gift. devise, or descent, estimated
life depreciation charged for the
year 1920, and total depreciation
charged for all taxable years.
No Specific Rate
AS the rate at which depreciation
may be claimed is depende| upon
local conditions the use ySYhich
the property is put. and it's prAble
lifetime under normal CORY 30 n
specific rate is established % me
law and regulations. While each
taxpayer must compute the probable
lifetime of his property without re-
gard to the following figures, it has
been estimated that the probable life
time of frame building is % years,
a brick building 35 years, stone,
steel or concrete building SO to 100
years
To compute the proper amount of
depreciation the taxpayer should de-
termine the probable lifetime of the
property, then divide the fair market
value as of March l, 1913, or the
cost if acquired subsequent thereto,
by the number of years so determine
ed. This will give the amount de-
preciated ALLOWABLE. For example, a
frame building, the probable life
time OF which is 25 years, cost $4,000
Divide 1000 by rs and claim $12O
each year as depreciation.
Deductions for depreciation are
limited strictly TO business property
which include not only buildings
but machinery, automobiles, farm
tractors. mine and mill equipment
office furniture, instruments used by
professional men and books.