Milford chronicle., 1928-02-24
AUTO OWNERS MAY
SAVE ON INCOME TAX
[Csntiase4 from frst paael

LAoHttH1en JyOU JtySE p0gCl
new top or body, is not regarded a
repairs and is not deductible. !
. physician, lawyer or other profes
siOnal man is entitled to a simila
deduction if the car is used primar
lily for professional purposes.
eff the automobile is used partl,
for business or professional pur
| poses and partly for the pleas drt
or convenience of the taxpayer Oh
his family, such cost may be appur
1 toned according to the extent Of
the use for purposes of business anC
| pleasure or convenience, and only
the proportion of such cost justly
attributable to business or p .fes-
sional purposes is deductible.
Depreciation Provided For
"The owner of a car used wholly
for business purposes of the owner
is entitled to deduct a reasonable
amount for annual depreciation in
the value of the car. The owner of
a car which is used solely for
pleasure purposes is not entitled to
a deduction for depreciation. If the
car is used partly for business and
partly for pleasure purposes, the
depreciation is to be apportioned ac-
cOrdingly. Thus, if the annual de-
probation of a car is figured at
$500 and 40 per cent of the mileage
for the year was for business pur-
poses, the deduction would be SI20
I'm figuring the amount of depre-
citation for the taxable year it is
first to estimate the prob
able life of the car in terms of
years.
1.-THE life of a car is ordinarily
estimated as from five to seven
years, according to the usage. The
value of the car should then
be estimated as of the end of the |
active life of the car.
This amount should be deducted |
from the purchase price and the diff
terence should be divided by the |
number of years estimated for the
life of the car This gives the an
lual depreciation.
For example, a new car is pur-
chased for $4,000 on January 1,
1922, and you figure that the active
ife of the car will be five years and
hat its salvage value at the end of
hat time will be $500. You should
ubtract $500 from $4,000 and divide
he balance, $4,000, by five, which
will give you $40 as the annual
of the car. You are
Untitled to a deduction of that
mount TarnTyfdn6 -, ]
Exclusively for business or profess
iOnal purposes or the proper pro- :
ortion of it if the car is used
artly for business and partly for
ersonal purposes. :
Illustrations
"The life of a car used by a Y
MUSICIAN is seldom estimated at Y
Iore than five years. t
1.-THE premium paid for automobile
ability insurance is considered a
art of business or professional ex- =
ense, and is deductible as such in =
net income. When the :.
II is also used for pleasure pur- =
'ses such item is deductible, but N
e item must be apportioned. Thus, Z
a lawyer uses his car 80 per \
mt of the time for professional =,
Irposes, 80 per cent of this item, y
well as other costs of upkeep u
ID ordinary repair, may be deduct Il
Whether the car is used for bust
SIS or pleasure and is damaged in tt
accident, the entire cost of re-
IRIS and new parts may be de- be
cted. al
"A salesman who maintains his er
n car in order to perform his du-
to his employer and earn his
airy may deduct as a business
lense' the actual expenses sat-
actorily shown to have been in
red in the operation of the auto da
bile for business purposes, plus a Re
per allowance to cover deprecia-
4. Al,
II business or professional Al,
who uses his car for business or
tess1onal purposes also uses it to =
We from his home to his Office, -
is not considered a business
, but rather a matter of conven- -
&c, and in appOrtioning the use I Pe'.
he car as between business and noi
lsure uses, he should not make p!
deduction for operating costs M,
dent to such use. ELI
Fines Not DeductibIe eT1
Can taxpayer deduct as a nee ed
Try expense of the business fines If I
by him for operating his auto con
lie (either by himself or en- Mr..
ee) in violation of the traffic or bod
Dr. vehicle laws? nile,
he Internal Revenue DEPART r
t has answered that amounts Sa1t
for violation of laws are not M
nary or necessary expenses len,
FRED in the course of a business. and
therefore, do not constitute al M
BILE deductions for income tax mo-.
oses. Likewise, a fine paid for Of lrP'' /
ton while the car is being Tost
N for pleasure purposes is not M
ductible item H
use of brI,i,,o Anoney Ior the last
interest paid on such OBLIGATION NJ
deductible from gross A't NJ
ne in determining net income -, w
her the car is to be used for E E
,leasure," PU4 PoSe' Vi Web
MI
lTNE CVTrn nraRNv. BeeL