The midland journal. (Rising Sun, Md.) 1885-1947, 1939-02-24
Federal Income Tax
Deductions

| Full information ON Federal In.
come Tax deductions which may be
claimed by motorists Is given In a
statement prepared by the Keystone
Automobile Club In response to
numerous requests for specific i'll
ustrations OF deductible items.
| Many deductions may be made by
motorists, including uncompensated
loss by fire or casualty, according to
Harrison G. Kildare, counsel for the
Club. Full deductions may be made
for:
(a) Registration Fees paid by the
taxpayer (under Taxes Paid,
which is Item 8, Schedule q, on
Form 1040A-1938).
OBJ Operators License Fees paid
by the taxpayer, both for him and
the members Of his family, II he
foots the bill. Qtem 81.
(c) Gasoline and Oil Taxes, paid
in States where local laws impose
the tax directly on the buyer and
not on the seller Pennsylvania, New
Jersey and Maryland motorists may
deduct the State tax. However, the
Federal Gasoline Tax Of lie per gal
Ion is not deductible. Utem 81.
Cd Loss by Accident Is deduct
ible, unless the owner has been COM
pensated for the loss. This includes
loss by fire. or casualty. Deduct un-
der Losses" (Item 10, Schedule FL .
(e) Interest Paid on Personal In
debtedness, including finance COM
pany loans. Consult your finance
company for the exact rate of in
terest because finance charges in
clude cost of insurance and other
items which are not exempt. When
the actual interest figure has been
determined, deduct under Inter
est" (Item 8, Schedule D..
The following items are not de-
ductible: Cost of new automobile
loss On trade-in, expense of travel
ing between home to place of bus
mess, accident and damages paid by
the taxpayers, expense of defending
a damage suit, or fines for violating
traffic laws.
If the vehicle is used in business.
certain additional credits are allow
ed. These deductions may be group
ed under one head as Expenses
Paid" Schedule B-3, A. and titled,
Automobiles Business use." If the
taxpayer has been reimbursed by his
employer for any expenses, this
part of the income should be in
Guided in total taxable income de-
clared under Item / Schedule B-1,
%. If the vehicle is used partly for
pleasure and partly for business
the taxpayer may deduct as bus
mess use" the proper proportion OF
his total operating expense. Thus, if
the car is used for business 500
of the time he may take credit for
500 of the total operating expense
for 1898.
Proper items for consideration
under this head include:
(D Operating cost, covering (al
full cost of fuel, (b) maintenance
and repair costs, (c) garage rent
(d) insurance premiums (net), and
(e) automobile club dues.
(2) Depreciation is allowed on
some reasonable basis. On the
theory that the average motor We
hicle has disable life of four years,
a deduction of 25% of the list price
is considered reasonable for pleasure
cars. Allowances of ten to thirty
percent may be accepted on trucks
and 16 $50 on house trailers used
in business.
CD Loss in Trade on a new car,
If any.
Acquiring title to motor vehicle
by purchase, gift or inheritance does
not constitute income. But If title
is received in consideration of SER
vices rendered or prize in a COM
petition or in a lottery, it must be
declared under Income"
Federal manufacturer taxes are
levied on the manufacturer and may
not be deducted by the purchaser Of
a new vehicle, even though he pays
for them in the price of his car.