Evening star., 1939-02-18
Your Income Tax
No. 20.
DEDUCTION FOR TAXES.

taxes on real estate and personal
property paid during the year 1888
are deductible. So-called taxes
which are assessed against local
benefits, such as streets, sidewalks,
drainage and other like improve
ments, are not deductible but are to
be capitalized, as they tend to in
crease the value of the property
and thus constitute cost of a per-
manent Improvement The Federal
income tax may not be deducted
The tax on unjust enrichment-a
Federal tax on income-is not de-
ductible. Income tax, however, paid
to the State by an individual on his
income is an allowable deduction in
his Federal income-tax return.
Customs duties paid by a person
on articles imported for his own use
are deductible Import or tariff
duties paid to customs officers, and
business. license. privilege, excise
and stamp taxes paid to internal
revenue collectors are deductible as
taxes, provided they are not added
to and made part of the expenses
OF the business or the cost of the
articles of merchandise with respect
to which they are paid, in which
case they cannot be deducted sep
arately as a tax. A Federal tax is
imposed of cent for each 10 cents
or fraction thereof of an amount
paid for admission to any place
(where the amount paid is Al cents
or more) and is deductible, provided
an account has been kept by the
taxpayer of the amount paid. Taxes
on club dues are deductible by the
member paying them. An individual
may deduct the tax on his telephone
conversations, radio messages, tele-
grams and cables and on the rent
of his safe-deposit box.
Unemployment compensation con-
tributions, if officially classified as
taxes, are deductible as taxes and
not as business expenses.
The income tax imposed upon en-
ployes by section 801 of the Social
Security Act may not be deducted
by the employees. But the excise
taxes imposed upon employers by
sections 804 and 9O1 of the Social
Security Act may be deducted by
the employers. Also, if an employer
pays the income tax on employees
under section 801, the amount may
be deducted by the employer as an
ordinary and necessary business
expense, and the employees are re-
Quired to report as additional in
come in their Federal income-tax
returns the amounts of the tax so
paid for them.
License fees eXacted by a State or
city upon certain businesses are de-
ductible as taxes. Automobile license
fees are ordinarily taxes and deduc-
tible. Postage is not tax and is not
deductible. In general, taxes are de-
ductible only by the person upon
whom they are imposed.
Federal estate and gift taxes and
State inheritance, estate, legacy, or
succession taxes are not deductible
on Federal income tax returns. The
Federal taxes on automobiles, gaso-
line. cigarettes and liquor are i'm
posed upon the manufacturer, pro-
ducer or importer and are not de-
ductible by the purchaser or con-
sumer. Whether or not the gasoline
tax or the sales tax levied by
State may be deducted by the in
dividual purchaser depends upon
the terms of the State law imposing
the tax; consequently. the right to
the deduction, as between purchaser
and seller, varies in the different
States.
Under the Revenue Act of 1888 the
amount of excess-profits tax paid or
accrued under the Revenue Act of
1885 (as amended or that imposed
by section 602 of the Revenue Act of
1898 is deductible in computing net
income of corporation.