Evening star., 1933-02-12
In the Motor World
BY G. ADAMS HOWARD.

\ n UGH is being said these day
Nu about taxes. unfortunately
N 1t seems that each day bring.
4 4 higher and newer ones. Un'
questionably the motorist has
laig full share Of them. Now, the mag
~ out Of income taxes appear In the
Cfiing, and what Is harder for many
the payment Of them.
In this levy the notorist gets a
s'break," small as it may be. However,
q little legal "chiseling" Of the amount
due In the next few weeks will be
favortte indoor sport OF many.
Compiled by A. A. A.
Deductions allowed motorists on ac-
count Of car ownership and operation
have been compiled by the American
Automobile Association, following a
careful analysis of rulings made by the
United States Bureau of Internal Rev
enue. These rulings may be an old
story to many motorists, but to new
drivers they will be Of interest.
First, the car owner may deduct from
his gross income all sums paid during
the calendar year in the form OF regis
tration fees, dr'ver's license fees, state
personal property and municipal taxes
Second, the gasoline tax may be de-
Quoted in all cases where 1t Is con-
sumers' tax" under the State law, but
not where it is specifically enacted as
a "distributors' tax" If t,,e taxes are
added to or made a part If ttc busi-
ness expense of the consumer, they
cannot be deducted separately as tax.
The Internal Revenue Bureau has
ruled that the gas tax Is consumers
tax and deductible in the following
States: Delaware, District Of Columbia,
Idaho, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Maine, Maryland,
Massachusetts,, Michigan, New Hamp-
shire, New Jersey, New Mexico, New
York North Carolina North Dakota,
Oklahoma, Rhode Island, South Da-
kota, Virginia, West Virginia, We shing-
ton and Wisconsin. In Missouri, the
gas tax Is a consumers tax, with the
exception of the fuel tax imposed by
Kansas City. Recent changes in the
language Of some Of the State laws may
have added additional States to the
list where the gasoline tax may be de-
Quoted.
The distinction between the applica-
don Of State and Federal gasoline taxes
should be noted. The Federal gasoline
tax Is imposed on the manufacturer and
Is not deductible by the purchaser. The
taxes on new automobiles, trucks, parts
and accessories, tires and tubes and
Mbricating oil, imposed under the
revenue act of 1882. are likewise not
deductible by purchasers, even though
such taxes are passed to them as part
Of the purchase price.
Interest Deductible.
Third. the interest on money Dor
rowed for the purchase Of an automo-
bile is deductible, irrespective Of
whether the car is used for business
purposes or for pleasure. If the tax
payer keeps his accounts on cash
basis, such interest will be deductible
only for the year In which paid. II
accounts are kept on an accrual basis,
interest may be deducted as 1t accrues
Fourth, II q passenger car Is used
wholly for business purposes, all ex-
penses incident to maintenance, in
cluding depreciation, may be deducted.
The bureau fixes no definite rate OF
depreciation. Allowance Is made for
exhaustion, wear and tear, obSolescence
OF property and excludes any idea Of
mere reduction OF market value not
resulting from wear and tear. While
the burden of proof rests on the tax
payer to sustain the deduction for de-
probation, such deduction will not be
MSallowed unless shown to be reason
able. Where the car is used partly for
business and partly for pleasure, only
q proportionate part Of maintenance
and depreciation may be deducted,
based on the extent to which the car
IS used in the taxpayers pursuit OF
business.
Fifth, loss sustained by reason of
damage to a passenger automobile while
keing used for pleasure Is deductible.
The loss, however, must be an actual
loss to the person claiming the de-
dsfction. In other words, II 1t Is COM
pensated for by insurance or other
wise, 1t is not deductihle.
Sixth, the bureau has ruled that
where q motoriSt paid damages for in
Jury to pedestrian, such amount Is
deductible, provided at the time the
injury occurred the car was being used
for business. Since a fine paid by a
Inotorist using q car for business pur-
poses does not constitute an ordinary
and necessary business expense" as
that term Is used In the revenue act
Of 1882, no deduction may be taken
for the amount so expended. Fines
paid, or collateral forfeited In con-
nection. with charges Of traffic VIOLA
t3ons are not deductible for income
tax purposes regardless Of whether the
oer is used for business or pleasure
purposes.
Seventh, loss sustained from the out
right sale Of an automobile used
primarily for business purposes may be
deducted in computing net income.
Eighth, the amount paid for insurance
On automobiles used for business pur-
poses and also the amount of finance
charges on purchased car which covers
interest and risk on the loan, may be
deducted but not the amount covering