Accurate Records, Expert Advice
Assure Correct Incolne Tax Return
April 15 is the deadline for filing in-
come tax estimates for the year 1946_ It
is at this time that many operators sud-
denly become aware of the necessity for
keeping accurate records and books so
that the tax forms can be prepared ac-
curately and intelligently_
At least one group of operators, those
in the vicinity of Los Angeles, has found
a cure for income tax headaches_ For the
income tax worries of this group have
been considerably lightened by the expert
advice and service rendered by the Asso-
ciated Operators of Los Angeles County,
Inc_ Almost ten years ago, the association
retained the services of Albert E. Sun-
shine & Coo, tax consultants and account-
ants, for advice on tax matters_ Two not-
able developments of this service have
been a series of letters to membcrs with
information 'a bout new income tax regula-
tions and clarification of various questions
regarding deductible expenses, and a sys-
tem of specially designed index cards and
files for record-keeping_
Available to members at all times for
expert advice on tax matters, the associa-
tion has been instrumental in obtaining
rulings from the Federal Bureau of In-
ternal Hevenue on misunderstood l'egula-
tions and has saved members thousands
of tax dollars that would have been paid
through erroneous interpretations of tax
provisions.
One of the major reasons for over-
payment of taxes is failure to make a
sufficient allowance for deductible expenses.
As a guide to the taxpayer, the AOLAC
lists the following expenses, all of which
are deductible in calculating the tax pay-
ment.
UST OF DEDUCTIBLE EXPENSES
Depreciation
a. Operating equipment-games, phonos,
etc_
b. Furniture and fixtures
c. Auto and delivery equipment
d. Tools
Repairs, Parts and Supplies
a. Outside labor and service charges
Records-phonograph
Association dues
Salaries
Supplies
Commissions
Auto Expense
Dues and Subscriptions
Donations
Insurance
a. Compensation Insurance
b. General Insurance
Rent
Small and perishable tools
Heat and light
Traveling expenses
Storage and hauling
Miscellaneous expenses
Interest cost
Cash shortage
Extraneous expenses and losses-such as
theft or vandalism of machine
With regard to the first item listed
above, equipment may be depreciated 100
per cent in one year. Some operators have
been known to take only a small percent-
age of depreciation over a period of as
much as ten years. In the case of machines
normally traded in within less time, the
extension of depreciation over such a
period results in excess payment of taxes.
One hundred per cent depreciation of
equipment in one year is advisable if
machines are frequently traded in and have
lost their playing appeal.
It should be noted that where there is
a recurring trade-in, or where the article
is traded in within the year of purchase,
the law permits a charge-off of equipment
at time of purchase-provided the equip-
ment traded in is similar to that obtained_
Entertainment, goodwill and promotion
are allowable expenses within reason. Many
operators underestimate these expenses. Op-
era tors servIcmg a machine at a location
have different goodwill expenses. This defi-
nitely comes under the heading of good-
will and promotion. Such expenses amount
to a considerable sum over the period of
a year, and should be included in the tax
return.
Some operators make a number of tele-
phone calls daily while traveling over their
routes. A systematic record of these calls
will show a surprising total, which should
be listed at income tax time as a deduct-
ible expense.
The Associated Operators of Los Angeles
County, Inc., in association with Albert E.
Sunshine & Co., has devised and also has
available for members a looseleaf, pocket-
size "Expense and Tax Record" booklet
(printed by Nascon Products, Inc., New
York 17, N.Y.) designed principally for
operators who travel out of town. This
lists such daily, often-overlooked expenses
as meals, rent, tips, laundry, fares, postage,
telegrams, telephone calls, entertainment,
and automobile. The booklet also may be
kept to advantage by operators of routes
in one town.
Expense accounts often are incorrectly
computed and deductions erroneously made.
A new regulation covering expense ac-
counts recently was issued by the Bureau
of Internal Revenue. The regulation pro-
vides that flat expense accounts-that is,
a definite sum of money advanced regu-
larly to employees from which expenses
are to be met-must be reported by the
COIN
employer on Internal Revenue Form 1099,
"Individual Income Tax Return," Where MACHINE
employees at irregular intervals submit
REVIEW
itemized expenses to employers for reim-
bursement, such expenses do not have to be
reported to the government_
Employers were required to file with the
TURN PAGE
FOR
lS
AL.BERT E. SUNSHINE
•
A~vertising
Entertainment; goodwill and promotion
Professional Services-legal and auditing
Stationery and supplies
Telephone
a. Exchange
b. Office
c. Telephones on locations
Federal Old Age Benefit
Unemployment Insurance
Taxes
a. Federal Excise Tax
b. Personal Property taxes
c. County licenses
d. Cities and towns licenses and permits
e. Miscellaneous taxes
•
Reproduced at the right are two special
file cards developed especially to facilitate
bookkeeping procedure for operators and to
make tax return computing easier.
ALBERT E
SUNSHINE
MARCH
7946