The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1926-03-09
SOME ITEMS0
AUT0EXPENSE
DEDUCTIBLE
Regulations Permit Motor Car
Owners to Deduct Fees
and Taxes

Washington, ID. c.. March 9.-After
cons ultation with officials Of the In
tcrnal Revenue Bureau, the American
Automobile Association issued bull.
letin today which contains timely
advice to motor vehicle owners as to
what items of car operation are de-
ductible from gross income in the
filing of Federal Income Tax returns
for the year.
First, the car owner may deduct
from his gross income all sums paid
during the calendar year in the form
of registration fees, drivers licenses,
state personal property taxes and
municipal taxes.
Second, the gasoline tax may be
deducted in all cases where it is a
consumers tax" under the state law
but not where it is specifically en-
acted as a distributors tax"
: Third, the interest on money Dor
. mobile is dcductiblc, irrespective of
whether the car is used for business
or pleasure purpose.
| Fourth, the amount paid as occupa-
tional taxes to the Federal Govern
mcnt by operators Of vehicles for
hire arc deductiblc.
! Fifth, if a passenger car is used
wholly for business purposes all cx-
penses incident to maintenance and
:, operation may be deducted. These
include repairs, gasoline, oil, replace
ments, garage rent, insurance, chat
feur's salary and depreciation. De-
probation should be figured on the
basis of the life Of the motor vehicle.
On passenger cars this would figure
around 20 per cent, per annum. and
on trucks about 25 per cent.
| How can q mOtOrist determine
whether or not he is entitled to the adj
vantages, set forth in the last clause
that is, the deduction Of maintenance
costs? On this point the Legal De-
partment Of the A. A. A. says:
when passenger automobile is
used primarily for professional OF
business purposes, and incidentally
for pleasure. ordinary expenditures
, for maintenance and repairs may be
prorated according to use, and deduct
ed, provided the car is used chiefly
| in the pursuit Of q business or pro.
fession. Chiefly is interpreted by
the Bureau to mean more than so per
cent. If business constitutes a minor
usage and pleasure the major part,
the expense can not be rorated nor
l ucuuCtcu. IL Tie cuteI use Is Tor DOSl-
ness, the items of depreciation. gaso-
line. oil, repairs, chauffeur's salary
garage rent and insurance, as well
as any other legitimate expenses, may
be prorated according to the usage
! and the portion applicable to bust
\ ness purposes deducted"
If a passenger automobile is dam
aged while used for pleasure, although
its chief use is for business purposes,
the cost of repair may not be prorated
and deducted. On the other hand, if
the damage was caused while the
automobile was being used in q bust
ness transaction, the entire cost OF
repairs is deductible as a. business
| expense.
The Bureau of Internal Revenue
has never been called upon to deter
mine whether or not fine paid by a
motorist might be deducted as q bust.
ness expense, where, at the time the
i expense was incurred, he was nsina
the car for business or professional
purposes. It has ruled. however, that
where a motorist paid damages fol
injury to a pedestrian. such amount
is deductible, provided at the time
the injury occurred the car was being
used for business.