New-York tribune., 1922-03-12
salesman Can
Deduct Cost
OfCar Upkeep
He Need Not Pay Tax or
Money Spent for Main
tenance of Auto Used
for Business Purposes
Gas Cost Also Exempt
Income Assessments Also
Allow for Garage Rent.
Repairs and Chauffeur

TIE question of income tax is al
r.vs somewhat OF a puzzle to the
..r.oe individual, and when it comes
:, knowing just what expenses con
-,.,ed with the operation of his au-
,ouobie can be deducted in figuring
.so amount ne $ indebted to the gov
.r,nent. he is fguratively "out of
rssr The following digest of the in
come law and the regulations under
that law applying to automobiles has
been prepared by Walter b. Guy.
Washington, D. c. taxation counsel
for the National Automobile Dealers
Association;
1all automobile owners may deduct
rrem their gross income the amount
they have paid fof license fees. such
fees being regarded as state tax and
being deductible as such The oues.
ton is frequently asked whether the
Federal tax on the sale of new cars.
which increases the selling price and
is therefore indirectly paid by the nur-
chaser, can he deducted by the buyer
I, can only be deducted by the manu-
facturer, who pays il direct. The same
is true as to all Federal taxes on tires.
parts, batteries and accessories.
Gas for Business Cars
"Thc cost Of gasoline. ordinary re-
pairs and upkeep Of an automobile. in
cludng garage. rent and chaufreur's
salary, II used wholly for business pur-
poses, Is deductible as an expense of
the business. A physician. lawyer. or
other professional man is entitled to q
similar deduction if the car is used
primarily Tor professional purposes.
"The owner of 4 car used wholly for
business purposes Of the owner is on.
titled to deduct a reasonable amount
for annual depreciation in the value
Of the car If the car is used partly
tor business and partly for pleasure
purposes the depreciation is apDor-
toned aceordingly y. Thus. if the annu-
al depreciatlon Of your car is figured at
$500 and 40 per cent OF the mileage
for the year was for business purposes,
your deduction for depreciation would
be sl2O- In figuring the amount of the
depreciation of the car for the tax
able year ! IS necessary first to esti-
mate the probable life of the car in
terms Of years. The salvage value Of
the car should be estimated as of the
end OF the active life CT the car.
When Car is Salvaged
"This amount should be deducted
from the purchase price and the DIFF
ference should be divided by the num-
Der OF years estimated for the life of
the ear. This gives the annual de-
probation.
You are entitled to deduction of
that amount. provided your car is used
exclusively for business or professional
purposes, or the proper proportion of
It if the car is used partly for business
and partly for personal purposes.
ihe premiums for all kinds of in
surance carried on an automobile used
for business or professional purposes
are considered as proper expenses OF
the business or profession and are de-
ductibe as such in computing net in
come. When the car is also used for
pleasure purposes such an item is de-
ductible, but the item must be appor-
toned.
mo matter what the use OF the car,
any use not covered by insurance and
sustained by fire, theft, storm, ship
wreck, or other casualty, as well as any
amount paid out in settlement of any
Judgment, or in compromise of any
claim for injuries to the person or
property of others and arising by rea-
son of the operation Of the car, is de-
ductible though for damage to ones
own car the cost of the repairs and new
parts may he deducted as business
expense or loss only when the car was
USED for business or professional pur
poses at the time of the accident.
Statesmen Who Use Cars
"a salesman who maintains his own
car in order to perform his duties to
ms employer and earn his salary may
deduct as business expense the
actual expenses satisfactorily shown
10 have been incurred in the operation
Of the automobile for business pur-
poses, plus proper allowance to cover
depreciation If business or profes
slonai man who uses his car for busi-
ness or professional purposes also uses
It TO drive from his home to his Office,
tins is not considered q business use,
but rather matter of convenience;
and in apportioning the use of the car
as between business and pleasure uses
ne should not make any deduction for
operating costs incident to such use.
The cost of new car is not a de-
ductible item.
The Internal Revenue Department
has answered that amounts paid for
violation of laws are not Ordinary or
necessary expenses incurred in the
course OF & business, and therefore do
not constitute allowable deduction for
income tax purposes. Likewise, a fine
paid for violation while the car is be
'ng driven for pleasure purposes is not
z Gcductlble item