The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-01-26
BY ROBERT TALLEY
NEA Service Writer

lost money in the depression year
1882 as the result OF the stock mar
ket decline, bad debts. depreciation,
fire, flood or even burglaryS, you
can get some deduction for these in
your income tax report March Is.
But the law has not been liber-
allied in this reSpect-in the case
Of stock market losses it even has
been frightened.
An important 1888 change is the
new limitation placed on deductions
for losses incurred in sale or ex-
change Of stocks and bonds that
the taxpayer had held for less than
two years, and which. therefore, are
not classified as capital assets"
Some Deduction Allowed
Briefly, this meaSn:
If, by the sale or exchange of
such securities in 1882. you incurred
losses. you can deduct such losses
from your taxable income only to
the extent that you made taxable
gains from similar sources in the
same year.
If the 1882 losses exceed the
gains, the excess, in an amount
not greater than the 1882 net in
come, may be carried forward and
taken as a deduction against SINH
lar gains next year.
To claim any loss at all, though,
you actually must have taken a loss
in sale or exchange of such Secur-
tiles Mere depreciation or shrink
age in value of securities that re-
main in the taxpayers hands
doesn't count.
Doesn't Apply to Brokers
The new limitation does not APP
ply to brokers who deal in securities
for resale to customers. Govern
ment, state, municipal and foreign
bonds are specifically excluded from
its terms.
Here are other deductions that
both individuals and corporations
may claim to reduce taxable in
come:
Bad Debts - Debts that can
definitely be shown as worthless in
the year for which the return is
made can be deducted from gross
income. Court action as proof that
the debt is worthless is not essential.
DEPRECIATION-This deduction
must be confined to property actual
ly used in trade, business or profess
sion plus machinery, etc-and does
not apply to homes. In general, II
applies to capital assets the cost OF
which can not be deducted as
business expense.
Taxes Are Deductible
FIRE, STORM, THEFT, ETC
Such losses are deductible only to
the extent that they are not COW
cred by insurance.
TAXES-TaXes paid on real estate
and personal property in 1882 are
deductible, except special taxes (for
street paving, etc. that enhance the
value of the taxpayers property.
The federal income tax can not be
deducted, but deduction may be
made for income taxes paid to states.
INTEREST-As interest received
is taxable, interest paid is deducti-
BILE, This applies generally to inter-
est paid on debts, real estate mort
cages, and the like.
Interest paid on behalf Of friend
or relative where there is no legal
obligation on the palt of the payor
is not deductible, the law regarding
this as a gift.
Contribution-If made to an
established charity organization,
they are deductible, but contribu-
tons made directly to financially
disinterested relatives or friends are
not deductible.
Contributions to churches, scien-
tif1c, religious and educational or
CARNATIONS are deductible in an
amount equal to IS per cent of the
taxpayers net income.
AS for the new taxes enacted by
congress last summer in its sweep
ing effort to balance the federal
budget the law varies.
Those that are levied on the man.
ufacturer are not deductible; those
levied on the public directly are de-
ductible.
But an individual can deduct the
tax he paid in 1892 on bank checks,
on the rent Of a safety deposit vault,
on his electric light bill, club dues,
kilograms, telephone conversations,
ETC., since the law levies these on
him directly.
Admission taxes to theaters. mo-
vies, ball games, etc, are deductible,
but the taxpayer must be able to
show that he has kept an account
Of the amount paid.
State automobile licenses are
taxes and therefore deductible, as
are license fees exacted by q state