Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-16
In the Motor World
BY q. ADAMS HOWARD.

7 NASMUCH as the automobile
may play a part in ones in
come tax figures for this year
a survey of what advantages
can be taken and what claims
cannot be made should prove OF
interest to the motoring popula-
ton of the National Capital
Through the aid of the legal de-
partment of the American Auto
mobile Association, the following
deductions from the gross income
allowed car owners under the reg
ulations of the Bureau of Internal
Revenue on account of automobile
ownership and operation are set
forth.
First. The car owner may de-
duct from his gross income all
sums paid during the calendar
year in the form of registration
fees, drivers license, State per-
sonal property taxes and munich
pal taxes.
May Deduct d. C. Gas Tax.
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 spe-
officially enacted as a "distribu-
tors tax" It is pointed out that
the gasoline tax has been ruled
y consumers tax, and therefore
deductible, in the District of Co
lumbia and the following States:
Maryland, Virginia, PENNSYLVANIA.
North Carolina, Delaware, Geor-
gla. Illinois, Kentucky, Michigan,
Massachusetts,, Missouri, New
Hampshire, Rhode Island, South
Dakota, Washington, Wisconsin,
Kansas and New Mexico.
Third. The interest on money
borrowed for the purchase of an
automobile is deductible, ire
Spective of whether the car is
used for business or pleasure. If
the taxpayer keeps his accounts
on a cash basis, such interest will
be deductible only for the year in
which paid. If accounts are kept
on accrued basis, interest may be
deducted as it accrues.
Other Deductions Allowed.
Fourth. If a passenger car is
used wholly for business, all ex-
penSeS incident to maintenance,
including depreciation at the rate
of 20 per cent per annum, may be
deducted. Where the car is used
chiefly" or more than so per
cent, for business and incidentally
for pleasure, the expense may be
deducted on a pro rata basis.
Fifth. Loss sustained by rea-
son Of damage to an automobile
while being used for either bust
ness or pleasure is deductible.
The loss, however, must be an ac-
tual loss to the person claiming
deduction. In other words, if it
is compensated for by insurance
or otherwise, it is not deductible.
Sixth. The bureau has ruled
that where a motoriSt paid dam
ages for injury to pedestrian,
such an amount is deductible pro-
vided at the time the injury oc-
CURED the car was being used for
business. There has never been
a decision, however, on whether
fine paid by motoriSt might be
deducted as a business expense
where, at the time the expense
occurred, the car was being used
for business or professional pur-
poses.
Seventh. Loss when sustained
where an automobile used wholly
or chiefly for business purposes is
traded in for new car may be
deducted.
Eighth. The amount paid for
insurance on automobiles used for
business purposes may be deduct
ed, and also the amount of
finance charges on a purchased
car which covers interest and risk
on the loan, but not the amount
covering the premium on insur-
ance to protect the finance COM
pany'S interest.
In no case is a loss deductible
where it is sustained when an au-
tomobile used for pleasure is
traded in for a new car. At the
same time, in no case is the
amount paid for an automobile
used for either business or pleas
ure allowed as a deduction. This