Pueblo chieftain., 1922-03-12

ST. LOUIS. Mo-. March 1.-THE
question Of income tax Is always
somewhat Of a puzzle to the average
individual, ard when it comes to know
Ing just what expenses connected with
the operation of his automobile can be
deducted in figuring the amount he is
indebted to the government, he Is fig
uratively out Of gas
The following digest OF the income
law and the regulations under tho law
pared by Walter b. Guy. Washington,
d. C. taxation counsel OF the National
Automobile Dealers association.
MAY DEDUCT FOR LICENSE
All automobile owners may deduct
from their gross income the amount
they have paid for license fees. such
fees being regarded as a state tax and
being deductible as such.
The question is frequently asked
whether tho federal tax on tho sale of
new cars. which increases tho selling
price and is therefore indirectly paid
by the purchaser, can be deducted by
tho buyer. 1t can only be deducted by
the manufacturer who pays it direct.
The same Is true as to all federal taxes
on tires, parts, batteries and acces-
sories.
GAS FOR BUSINESS CARS
Tho cost OF gasoline. ordinary repairs
and upkeep OF an automobile. includ-
ing garage. rent and chauffeur's sal.
ary. II used wholly for business pur-
poses. is deductible as an expense OF
the business. Tho cost OF substantial or
permanent improvements to the car.
such as a new top or body. is not re-
gardcd as repairs and is not deducti-
BILE. A physician. lawyer or other pro-
fcssional man is entitled to similar
deduction II the car Is used primarily
for professional purposes.
II the automobile Is used partly for
business or professional purposes and
partly for tho pleasure or convenience
OF the taxpayer or his family. such
costs may be apportioned according to
the extent of tho use for purposes Of
business and pleasure or convenience.
and only the proportion OF such cost
Justly attributed to business or pro-
fcssional purposes IS dcductibic.
DEPRECIATION IN VALUE
The owner OF a car used wholly for
business purposes of tho owner 10
entitled TO deduct n reasonable amount
for annual depreciation In tho value Of
tho car. the owner OF n car which IL
used solely for pleasure purposes 10
not entitled TO n deduction for dcprc-
citation.
II the car I. used partly for business
and partly for pleasure purposes. tho
depreciation is to be apportioned ac-
cordingly. Thus II tho annual depre-
clrtion OF your car Is figured at $500
and 10 per cont of tho mileage for the
year was for business purposes, your
deduction for depreciation would be
$50. In figuring tho amount OF tho
depreciation OF the car for the taxable
year 1t is necessary first to estimate
tho probable life OF the car In terms
o. years. Tho life OF n car Is ordinar-
lily estimated as from four to seven
years. according TO the usage. The
salvage value of tho car should then
b. estimated as OF tho end of the ac-
tive life of the car
WHEN CAR Is sALvAGED
This amount should be deducted
from the purchase price and the dif-
ference should be divided by the NUM-
her OF years estimated for the life OF
the car. This gives tho annual dcpre-
citation.
For example. new car Is purcha sed
for $1,000 on January !, 1921. and you
figure that the active life OF tho car
viii be five years and that its ealvaRc
value at the end OF that time will be
$500. You should subtract $500 from
5000 and divide the balance. S2.7oo by
five, which would give $40 as the
annual depreciation OF the car.
You are entitled to n deduction OF
that amount, provided your car Is used
exclusively for business or professional