The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1921-12-25
NO DIFFICULTY IN.
REPORTING INCOME
TAXES THIS YEAR
Collector of Internal Revenue
Tells How to Take
Inventories.

The following statement is issued by
collector of internal revenue, Acel {.
Alexander, district Of Oklahoma City,
Oklahoma;
Merchants, manufacturers and bus
iness men generally need experience
no difficulty in taking their inven
tories for the year 1921 to conform
with the new revenue act. The langu.
age of the revenue act of 1915. and
the revenue act of 1921, (Sec. 2O5),
relating to inventories, are identical:
THAT whenever in the opinion On
the commissioner the use Of inventor
les is necessary in order clearly to
determine the income of the taxpayer.
inventories shall be taken by such
taxpayers upon such basis as the com
missioner, with the approval of the
secretary, may prescribe as conform
! ing as nearly as may be TO the best
accounting practice in the trade OF
business, and as most clearly reflect
( ing the income.
| Present treasury regulations pro
| vide that inventories must be valued
| at either cost or market, whichever
/ is lower Taxpayers We're permitted
/ regardless of their past practice. TO
/ adopt the cost or market basis.
/ whichever is lower. in taking their
Inventories Tor 1920. Thereafter, the
regardless of their past practice TO
l4adc only after permission is Oh
famed from the commissioner Of in
tolnal revenue
Cost is Invoice Price
In the case Of merchant, cost
means the invoice price. less trade oi
other discounts, excepting strictly cash
discounts approyim0ling rain rate
ct interest wlch lnny D. d.ductoo
cr not at the Opt of the taxpayer
moyidng consistent course IS lo.-
lowed TO tha nct invoice pricn shou!o
be added the cost or transportation
~nd> ether necessary charg incMTcd
H. acquiring possession OF lie g od9.
"ln case of Manufacture. cost
moans the ost OF raw material ana
supplies, expenditures 10Y labor ana
indirect cost incident to production,
including reasonable proportion Il
management expenses. but not in
Guiding any cost of sciling c. ar
curing return of capital.
"NlariSet" 1, Defined
market means the current bic
price prevailing at the date OF the III
vcntory for the particular merchandis'
'rhc burden Of proof rs to the cor
rcctncss e the price rests upon the
taxpayer in each ease. Where no open
market quotations are available Tho
taxpayer must use such evidence ol
fail market price at the dates near
! st the inventory aa may bc Available
such as specific transactions or com
pensatiuns paid for cancellation o
contracts or purchase commitments
Where because of abnl rmal condition.
thc taxpayer mas regularly sold mer
chandisc at prices lower than III
market bid price. the inventory mn,
he valued ut such prices, The corroc'
ncss of such prices viii be determine
by reference TO the actual sales q
the taxpayer for reasonable pcrio
before and after the date OF inventory
Prices which vary materially fror
the actual prices 80 ascertained. wi
u no; be accepted as rejecting the mnI
: kct.
u Value Based ON Cost
"The value OF each item In th
:, inventory must be measured by COS
or market. whichever is lower. y
. entire stock may not BE- inventoricd q
: cost and also at market price. an
the lower of the two inventors
used. inventories on whatever bas
taken, will b. subject to investigate
~ the commissioner Of internal rev'
nuc. and the taxpayer must satisi
the commissioner OF the conectno'
y OF the prices adopted, He must be pr
: pared TO show both the cost and Il
- market price OF each article include
- In the inventory.
- In the conGuct II modern lyusines
- Il Is OF the utmost Importance tn
:. every business. large or small. whet
!, er corporation. parmcrship or irdiVi
ual. shall maintain an exact record
4, receipts and expenses. No special sy
:, ten OF accounts II prescribed by q
q bureau OF Internal revenue. but q
nj looks should show In detail inve
J.. tories. purch1Nes. sales, capital
vestments, depreciation, and simil
as items required In making up incor
q. tax returns"