The Waterbury Democrat., 1944-02-07
Your Federal Income Tax
BUSINESS and PROFESSIONAL

Individuals engaged in a business
or profession report the net profit
Cor loss) in their individual income
tax return Form 1040. The net pro.
fit Cor loss) is entered in item s
of the return Form 1040 end the
entry must be supported by the in
formation called for in Schedule
90 or by another schedule particu.
larry adapted to the business o,
profession.
In reporting income from business
or profession, all income so de-
rived must be shown in the SEIZED.
ule. In arriving at net income OF
loss, the taxpayer may use the
method is reasonably consistent and
clearly reflects the income.
In the case of farming operations
If the taxpayer is using the cash
basis, Form 1040F, Schedule OF
Farm Income and Expenses" Is
required to be filed in and filed
along with Form 1910. Use of Form
1040F is optional in the case OF
farmers who use the accural
method.
It should be noted that incidental
transactions entered into for gain
such as the buying and selling OF
securities where one Is not in the
investment business, do not con-
stitute a trade or profession" Gain
or less from such operations are
reported in item and item 8 of
return Form 104O.
Expenses deductible in arriving
at net profit Cor loss) from business
or profession dtem 8 of return
Form 1040) are the normal current
costs of running a business or
producing income. Such expenses
must be distinguished from those
incurred for the convenience, COM
fort, or economy of the individual
pursuing the business, or in the
nature of loans, gifts, capital in
vestments, and the like. The dis
junction lies in the purpose and
nature Of the payment, rather than
IN any account in which it is
charged.
Business expenses may include
salaries and wages paid (if not in
controyention of the Wage and
Salary Sterilization Act TO october
2. 1912, interest on business in
debetedness, taxes on business and
business property, loss arising from
business operation, bad debts aris-
Ing from sales or services. depre-
citation, obsolescence or depletion,
ana rents, repairs, and other ex-
penses. Other items includible are
management expenses, commissions,
labor, supplies, advertising or other
selling expenses, and insurance
premiums.
In the case of professional man.
maintenance and repair expenses OF
an automobile used for professional
purposes Cor that portion of the
expenses applicable to professional
uSe) Is allowable, as well as men,
bership in technical societies, SUBJ
scriptionS to technical journals and
current magazines used in the re-
ception room, cost of supplies, and
fees paid to other professional men
Tor professional assistance.
If a professional man uses his
residence as office and home, he
may deduct the expense applicable
to that part used for professional
purposes. Expenses not deductible
include the cost Of books, and the
cost OF instruments and equipment
having useful life longer than a
year Gas these are regarded as
capital items on which depreciation
may be anowable), and membership
dues in a purely social club.
Cost Of incidental repairs Is de-
ductible provided the property
account is no increasing by such
expenditures. but repairs In the ma
tur0 0f requirements, betterments,
and improvements are regarded as
capital expenditures and are not
deductible.
Persons engaged in business o.