Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-01-20
No. 10.

To the salaried or professiona
man whose principal source of in
come is payment for professional
! services the problem of making GU
an income tax return is not a.
great as that presented to the own.
er of business. In the case of o
| merchant, manufacturer, or any
business in which production, pur-
chase, or sale of merchandise. is an
income-producing factor, inyen-
tories are necessary at the begin
ming OF each fiscal or calendar
year, according to the taxpayer
method of accounting. The fiscal
year is an accounting period OF
twelve months ending on the last
day of any month other than De-
cember. Taxpayers who keep their
books on a fiscal-year basis are re-
CURED to make their returns on
that basis.
The inventory should include
raw material and supplies on hand
that have ben acquired for sale or
use in production, together with
all finished or partly finished
goods. 1t should include merchan-
disc sold but not billed to the Gus
toner at the date of inventory and
any goods out upon consignment
unless such goods have been in
cluded in the sales for the taxable
year. 1t should also include mer-
chandise purchased though not ac-
tually received to which title has
passed to the purchaser.
Cost or Market.
Inventories may be taken either
on the basis Of cost or cost or mar
ket value, whichever is lower. In
the case of a merchant Cost
means the invoice price lesss trade
or other discounts approximating
fair rate of interest, which may
be deducted or not at the option of
the taxpayer providing a consistent
course is followed.
To the net invoice price should
be added the cost of transportation
and other necessary charges in
Cured in acquiring possession of
the goods.
In the case of a manufacturer
cost" means the cost of raw ma
terials and supplies, expenditures
for labor, and indirect costs Incl
dent to production, including al
reasonable proportion of manage
ment expenses, but not including
any cost of selling or securing re-
turn on capital.
Market" means the current bid
price pevailing at the date of the
inventory for the particular mer-
chandise. The burden of proof as
to the correctness Of the price
rests upon the taxpayer in each
case. If the cost or market" ba-
sis is used, each class of goods
must be itemized and the cost or
market price of each shown sep
arately The value of each item in
the inventory may be measured byI
cost or market, whichever is lower.
An entire stock may not be inven-
toried at cost and also at market
price. and the lower of the two in
ventories used.
No special system of accounts is |
prescribed by the bureau of inter
nal revenue, but the books must
show in detail inventories, pur-
sales, capital, investments, /
anu llNIil1 ltHuli GU Ill Ildh-
ing up an income tax return. The |
inventory. which cannot be taken |
without some form of accounts, is !
the compass of a business. without |
it the direction in which the bust
ness is heading, either for success
or failure, cannot be determined. |
Taxable Income.
In the making Of an income tax |
return for the year 1920, taxpay-
ers of every class, business and |
professional man, wage earners, |
and farmers should present to |
themselves the following questions: |
Did you receive any interest on
bank deposits?
Have you any property from |
which you receive rent?
Did you receive any income in
the form of dividend or interest |
from stocks or bonds?
Did you receive any bonuses
during the year?