Evening journal., 1922-01-13
RAISE QUESTION
ABOUT.NEW TAX
Co-Partnerships Not Re
CURED TO Pay on Capital,
Accountants Claim
PREVIOUSLY PAID
TAXES DEDUCTIBLE

connection with the enforcement OF
the new state school tax law and
applicable to the 1921 income OF in
dividuals and invested capital Of cor
porations doing business on invest
ments within the state as at Deem
ber 81. 1921. Charles n. Ryan. a
member OF the firm OF Harrington
and Ryan. Delaware Trust Building
to-day issued the following state
ment:
"As a result OF a careful study OF
th, tax law 1t was discovered that
the iext OF the law contained GER
tain complexities which required in
depreciation by the Commissioner
Two OF the chief points needing
eiucidation were those covering the
returns demahded from partnerships
and the deduction by corporations Of
franchise and merchantiie taxes paid
in the taxable year 10 the state from
taxes imposed under the provisions
OF the new act.
Question About Co-Partnerships.
LAS the text OF the law contains
no reference to the taxability OF
partnerships on the basis Of invested
capital this question was taken up
with the commissioner in a letter
dated December 21. 1921. which,
among other questions, asked the
following:
rs a partnership required TO
make a return or pay a filing fee,
and IL so. is 1t taxable and on what
basis7'
Under date OF December %. 1921.
the commissioner answered this
question as follows;
Make a return. Pay filing fee.
Rate. two and one-hah (2ls) mills
on every dollar
Further careful analysis OF the
law on the question failed to change
my opinion. As the ruling OF the
commissioners did not appear to be
In conformity with the act the mat
ter was again referred to him on De
cember 81. 1921. with the question
as to whether shis Interpretation
represented the official ruling OF the
tax department and on December 80,
his reply stated that II did.
Being still firmly convinced that
the ruling OF the tax commissioner
was not in accordance with the law
the matter wa presented to Ward
Gray and Neary, attorneys. for their
opinion and they concurred with me
that the state schcol tax law i'm
posed no tax or co-partnerships AS
the co-partnerships form Of business
organization represents a large fac
tor in the business OF the state, the
imposition OF a tax on such organi-
zations by the tax department. II
not In accordance with law. is a mat
ter OF Importance. not only 10 mem
bers Of co-partnerships. but TO all
tax payers who are vitality interested
in the manner in which the tax Law
Is enforced.
Previously Paid Taxes DeducubIe
Article III Section 2t. 3, reads
as follows:
~'s In the payment Of taxes,
credit shall be allowed the follow
Ing corporations for taxes actually
paid to the State Of Delaware other
than for a certificate OF incorpora-
hon or for a certificate OF increase
OF capital stock, during the same
year canal telegraph. telephone.
electric light. heat and power COM
nanies. water and gas companies.
cable companies, oil or pipe line
corporations. parlor. palace or sleep
ing car corporations. and other for
eign or domestic corporations
which. under existing laws. are sub
ject 10 taxation by this State for
State purposes.
on December p. 1921. the tax
nissioner was requested for rui-
ings. including the following:
Section 21-In paymnt OF taxes,
may taxable deduct amount paid
to State as mercantile tax during the
taxable year.
ITO which the commissioner.
under date OF December %. replied.
All taxes except income tax, are
exempt
This reply. not bringing the in
formation desired. the commissioner
was again written 10 on December
27. as follows;
in our opinion. one Of the most
important questions In the entire
tax situation is the deducubility Of
taxas paid from taxes 20 be paid by
r-sorporatons. as set forth in Sectior
II paragraph 3. OF the Act, which
reads as follows:
Does not this mean that II the
corporation known as the John Dot
Company. which. on the basis O
its capital investment Of $4,000
fcapital stock outstanding 500, 0Oi
and surplus $4,000 at two and one
half mills) is assessable s275 CA
II not deduct from that amountin
the total OF its franchise tax an
mercantile tax amounting TO $40.
leaving a balance Of S173 due an
payable as tax on its capital in
vested?'
Under date OF January II, 1872.
the commissioner replied;
Ny understanding Of this mat
ter Is that on the two and one-hal
miles (.0o2iz) basis. a 0orporatio
was charged S275, and they had dl
rectiy paid 10 the state any kind q
tax. other than for certificate 4
Incorporation, or for certificate {
Increase Of capital stock, during tn
same year. the amount or amoun
should be deducted from n
amount to be paid this office"
The Importance Of Section 21-
ae stated above. has probably n,
b4en realized by corporations sui
ject to mercantile tax inasmuch
In many cases after deducting n
amount paid as mercantile tax vei
little. II any, additional tax viii I
payable"
TO REDUCE FORD CARS.
a-LLLA-l--I-CA