Classic Mode

Music Trade Review

Issue: 1918 Vol. 66 N. 5

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE MUSIC TRADE REVIEW
HOW WAR REVENUE TAX AFFECTS THE PIANO MERCHANT
(Continued from page 5)
that where the entire property is devoted to
business purposes the whole rental and all ex-
penses for electric current, etc., should come out
of gross income. However, in the not infrequent
instances where piano merchants are occupying
certain portions (say the rooms above the first
floor) of such buildings for residential purposes,
the expense account must be split and only that
portion of the rental, etc., ascribed to the main-
tenance of the part of the building devoted to
offices and salesrooms and storage uses may be
charged off as an outlay for purposes of trade.
Don't Forget Paying Yourself a Salary
In view of the practice so generally prevalent
in the business world, presumably every progres-
sive piano merchant follows the plan of paying
himself a salary, even though his is a one-man
business. If he does not thus provide remunera-
tion for his personal services when balancing
his own books he is entitled to make the sub-
traction when preparing a basis for "war taxa-
tion." However, there are two deterrents to
any temptation to be greedy in paying oneself
a salary in order to cut down tax liability. In
the first place, the Internal Revenue officials
have let it be known that they will regard with
suspicion any claim for personal remuneration
that is out of proportion to the salaries that
rule in the field where the taxpayer happens to
be in business. Secondly, there is the circum-
stance that a business man who voted himself a
fancy salary would, in effect, be going around
in a circle. If his salary allotment is sanctioned
it would, to be sure, cut down his business prof-
its and corporate income, if his business be in-
corporated; but on the other hand it would boost
his individual income, which would, presumably,
be liable to taxation.
The Importance of Inventory
Making inventory of the piano man's assets is
not the least of his responsibilities in connection
with making ready to tell Uncle Sam his busi-
ness secrets. The inventory of instruments and
merchandise on hand may be on the basis of
cost or present market price, whichever is lower
or whichever the merchant prefers. However,
it is not clear that there is much choice, because
the Treasury officials have given warning that a
business man is likely to be required, in years
to come, to stick to the same inventory basis
that he adopts for 1917, so that there may be
no advantage either way in the long run. In
the estimation of Uncle Sam's tax experts, the
ideal procedure for the piano man bent upon
making a "return" that will receive a prompt
" " " " " " " " " " "
inilllMIIMHnilllMIHMMIIINMIIIHiniU
O. K. at Washington is to make use of two in-
ventories as of date, respectively, December 31,
1916, and December 31, 1917. To the inventory
of stock on hand at the close of 1916 may be
added the cost of all goods purchased during
1917, and there is derived a total which, when
balanced against the inventory at the end of
1917, plus total receipts for that year, gives the
"gross income" to be entered on the tax return.
The Income Tax and Instalment Business
Piano men as a class will probably have to do
more figuring to ascertain the proper entries for
the tax "returns" than will merchants in almost
any other line, owing to the credit system under
which most piano merchandising is carried on.
As a veteran piano executive remarked to the
writer, "All the profit in the business is in the
contracts or leases" and consequently it becomes
of first importance what treatment is to be ac-
corded "piano paper" and payments on piano
contracts. It is this element in the situation
which prevents even the smallest merchant in
the trade from adopting the care-free plan of
the storekeeper who sells for cash, keeps no
books worthy of the name, and makes his return
on the basis of actual receipts for the year.
It makes all the difference in the world, from
the war-tax angle, whether or not title to a piano
has passed in a credit transaction. Of course,
the great majority of pianos are sold under con-
tract whereby title does not pass until the final
monthly payment has been made. Nevertheless,
in the case of a customer whose responsibility
is well known a piano dealer will sometimes ac-
cept promissory notes and close the transac-
tion. Such notes must, in making a war tax
return, be treated as the equivalent of cash re-
ceipts. Not so a contract where title to the
instrument remains with the dealer. Here the
only thing to be taken into account in report-
ing for 1917 is the aggregate amount of pay-
ments made on that contract during the year
past.
The Little "Joker" You Must Watch
A little '"joker" lies hidden just here, however.
Profit must be extracted from each payment on
contract. Many piano merchants are in the habit
of looking to the final payments on a contract
for all the profit. Uncle Sam will not counte-
nance any such waiting game. He insists that
each payment embraces reimbursement for in-
vestment and also a margin of profit. The case
that is cited at the Treasury Department for the
benefit of perplexed piano men is that of a dealer
who buys a piano at wholesale for $300 and re-
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inn HI
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iiiiiMii|iiiiiiiiiii[iiiiiinmn
Its ready response to the touch and re-
quirements of the most critical forcibly
^ ^ ^ ^ ^ ^ ^ demonstrates the superiority of the Strauch
C j 3 ^ ^ T 9 Player Action.
. _
Manufacturers should know of its capacity
for greater repetition ; the increased strength and stur-
diness (with no addition to the size) which are so
essential to dependable player actions.
The placing of the action in the instrument is a matter
for considerable care and experience and here is where
Strauch skill insures the perfect performance that has
characterized Strauch manual actions, in quality pianos,
for nearly half a century.
I
PIANO
ACTIONS-HAMMERS
FEBRUARY 2, 1918
tails it at $400 under contract for twenty month-
ly payments of $20 each. The Federal tax ar-
biters construe each monthly payment to repre-
sent a return of capital amounting to $15 and a
profit amounting to $5. Hence, if twelve pay-
ments have been made during the year an in-
come entry of $60 must be made. In the event
that repossession, becomes necessary, the entire
amount paid is regarded as rental and must be
credited to income.
The Matter of Piano Depreciation
While the Internal Revenue officials admit
that piano merchants are, under certain circum-
stances, entitled to an allowance for deprecia-
tion on instruments—say the depreciation that
has actually occurred in the case of a repos-
sessed instrument—they have not attempted to
fix the "life" of a piano as a basis for figuring
annual depreciation as they have done in the case
of the various classes of buildings and of auto-
mobiles used for business purposes, which latter
are credited with a life of four or five years.
The nearest that the officials at Washington
have come to this question was when they ruled
that the estimated lifetime of "ordinary ma-
chinery" is ten years, a calculation that may con-
tain a hint for estimators of depreciation on
mechanical instruments. Any piano merchant
who charges off the full measure of depreciation
on old or used instruments in his hands must be
careful not to include as business expenses any
outlay for labor and material employed in re-
pairing or restoring such instruments. Uncle
Sam will reject such parallel charges as duplica-
tion. If repairs and replacements are to form
exemptions, the depreciation quota must be re-
duced by the amount of the outlay expended to
make the instruments "like new."
SUPPORTS CHAMBER OF COMMERCE
J. A. Coffin, as President of National Piano
Manufacturers' Association, Votes for Reso-
lution Adopted by Chamber of Commerce of
the United States Relative to German Embargo
J. A. Coffin, as president of the National Piano
Manufacturers' Association, voted in favor this
week of Referendum No. 23 of the Chamber of
Commerce of the United States of America on
a proposal to discriminate against Germany in
trade after the war if necessary for self-defense.
The resolution adopted is as follows:
"Whereas, The size of Germany's present
armament and her militaristic attitude have been
due to the fact that her government is a mili-
tary autocracy, not responsible to the German
people; and
"Whereas, The size of the German armament
after the war will be the measure of the great-
ness of the armament forced on all nations; and
"Whereas, Careful analysis of economic con-
ditions shows that the size of Germany's future
armament will fundamentally depend on her
after-war receipts of raw materials and profits
from her foreign tra-de; and
"Whereas, In our opinion the American peo-
ple, for the purpose of preventing an excessive
aimament, will assuredly enter an economic
combination against Germany if governmental
conditions in Germany make it necessary for
self-defense; and
"Whereas, We believe the American people
will not join in discrimination against German
goods after the war if the danger of excessive
armament has been removed by the fact that the
German Government has in reality become a re-
sponsible instrument controlled by the German
people; therefore, be it
"Resolved, That the Chamber of Commerce of
the United States of America earnestly calls the
attention of the business men of Germany to
tl.ese conditions and urges them also to study
this situation and to co-operate to the end that
a disastrous economic war may be averted and
that a last'ug peace may be made more certain."
An explosion of 400 quarts of nitro-glycerine
in an adjoining building caused heavy loss to
Ladd's music store, in Bowling Green, O.
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
FEBRUARY 2, 1918
THE REVIEW PROMINENT IN EXHIBIT
This Publication, Together With The Talking
Machine World, Featured as Representative
Organs of Two Leading Divisions of Music
Trade at Trade Journal Display in Newark
Two of the outstanding features at the Trade
Journals' Exhibit now being held in the Library
Art Gallery in Newark, N. J., under the auspices
of the Newark Free Public Library and the
Newark Museum Association are The Music
Trade Review and The Talking Machine World,
which have been given a prominent place as the
representative organs of the two divisions of
the industry which they cover.
The Review and The World are placed in
conspicuous positions on sloping screens near
the entrance of the exhibit, so that they may be
readily seen and examined by those who attend.
Altogether there are about one thousand trade
journals covering all branches of business in
the industry, many of them little known by the
laymen. The exhibit, however, serves to em-
phasize the importance of strictly business pub-
lications, for there is hardly a trade that has
not at least one representative publication in
the group.
The Newark Library has a business branch
which makes a specialty of "Print for Business
Men." Over 250 trade journals, 350 house or-
gans, and hundreds of publications along other
and similar lines are on file at all times and the
library subscribes for about $3,000 of such pub-
lications annually.
The library officials have long been urging
the use of trade publications in the schools, and
literature recently issued says:
"Why does the teacher teach children to read
and give them practice in reading fiction, poetry,
essay, drama, literary description, and give them
to read so little of directly informational mate-
rial? Children ask for facts, Heaven knows; and
we give them only fancies.
Why does the
teacher teach children to write friendly letters,
anecdotes, descriptions of natural scenery, bio-
graphic sketches, moral homilies, yea, even
poems, and fail to practice them on clear nar-
ratives of How the Clothes Wringer Works,
and What to do to a Squeaking Hinge, or de-
scriptions of the Purse I Lost, or Jack's Bob-
sled? Why do librarians act as though their
buildings were constructed and their salaries
paid for lending light literature to be lightly
read by light heads? And, for that matter, why
do business men fail to demand that the exist-
ence of things written for the business world
be recognized in libraries, and finally, why does
not the business man read what the libraries do
have of material that would be of value to his
life and his business?
"This exhibition stimulates one to the asking
of these questions. If they will come to see
it, it will doubtless stimulate some members of
the community to answer them."
DEATH OF B. M. HARGER
Harger & Blish, Inc., Des Moines, la., have
sent out memoriam cards announcing the death
of Benton Merritt Harger, president of that
corporation, who passed away recently at his
home in Hollywood, Cal., where he had resided
for some years past. Mr. Harger had not been
prominent in the trade of late years, merely
retaining a financial interest in the corporation
which bears his name. Following the death
of his wife two months ago, Mr. Harger suffered
an epileptic stroke from which he rallied, but
a second stroke, which occurred last week,
proved fatal. Mr. Harger was born in Syracuse,
N. Y., April 12, 1839, and during his lifetime
had been one of-Iowa's foremost citizens.
MUSIC
TRADE
REVIEW
M. V. DE FOREEST'S GOOD WORK
REDUCTION ON IMPORT DUTIES
State Commissioner for Pennsylvania for N. A. Brazilian Government Will Admit American-
Made Pianos at a Reduction of 20 Per Cent.
P. M. Carrying on Strong Personal Campaign
From Usual Import Taxes
to Enroll Piano Merchants in His Territory
in the National Association
According to reports recently received from
SHARON, PA., January 28.—Among the State the American Ambassador in Rio de Janeiro,
Commissioners of the National Association of Brazil, the Brazilian Government has decided to
Piano Merchants who arc taking their task se- admit American-made pianos to that country at
riously and endeavoring to increase the mem- a reduction of 20 per cent, from the usual duties.
bership of the association by their personal ef- This reduction in import taxes will apply only
forts is to be included M. V. DeForeest, of W. to pianos manufactured entirely in the United
C. DeForeest & Son, piano merchants of this States, and has been made in order to encourage
the exportation of American pianos to Brazil.
city.
Mr. DeForeest declares that he feels that Prior to the war Brazil was a large buyer of
every piano merchant in the State must appre- German pianos, but the anti-German feeling at
ciate by this time the splendid work being done present prevalent in that country, combined with
by the association, and believes that it will not the import concessions described above, indi-
be long before the majority of them are enrolled cates that the Brazilian market will be prac-
in that organization. In order to bring about tically closed to German musical instruments in
this end, Mr. DeForeest sent the following let- the future.
ter to the hundred or more dealers in Pennsyl-
vania whose names are not yet on the associa-
TO SELL PIANOS, NOT TERMS
tion roll:
"For the first time in its history the United Manager Ditzell, of Famous & Barr, St. Louis,
States Government is recognizing and calling on
Maps Out Program Whereby No Sale Will
the trade organizations representing the various
Extend Longer Than Twenty Months
industries of the country.
''The piano industry, through its various as-
ST. LOUIS, MO., January 28.—Manager Ditzell, of
sociations, and the Music Industries Chamber Famous & Barr, says that it will be his policy
of Commerce, through George W. Pound, its in the piano department, which was recently
manager, and Charles W. Parsons, are in con- annexed by his Victrola department, to sell
stant touch with the Government in the inter- pianos, not terms. He is mapping out a pro-
pretation of tax laws, matters of transportation gram that will mean that no sale will be ex-
and other facts of vital importance to our in- tended longer than twenty months. The terms
dustry.
will be those made by the purchaser within this
"A notable victory for our organizations was limit of time. He will not exact a definite
the interpretation of the tax on players, which amount of cash nor so much a month as an ar-
was most just and favorable to us, through bitrary rule, but will hear the statement of the
proper representation. It is equally true that customer as to his -ability to pay within the
it will be impossible to maintain this intelligent twenty months. Mr. Ditzell says that he be-
contact with the Government unless every indi- lieves that this will create a dignity about the
vidual piano merchant assumes his .share of the department that will be in keeping with the
burden of maintaining our national associations. store from which the sales are made.
"This, then, is an appeal to you to enlist as
a member of the National Association of Piano
Merchants. The benefits are so obvious, and
the expense is so small, only $10 per year.
S. George Graves Re-Elected President of Local
"I enclose application blank, and if you will
Music Dealers' Association
fill same out and return to me it will be a pleas-
ure to present it at the very important mid-
GRAND RAPIDS, MICH., January 28.—The Grand
winter meeting of the association in New York Rapids Music Dealers' Association held its an-
the latter part of this month."
nual meeting and banquet last week, twenty-
It might be said that Mr. DeForeest is al- eight members being present.
New officers
ready able to report gratifying results from his were elected as follows: S. George Graves, of
campaign.
the Young & Chaffee Co., president; Glenn Mills,
of the Wurzburg Co., vice-president; George M.
Koch, of the Cable Company, secretary; and
RETURNS FROM HONEYMOON
H. G. Hefferan, of the Heyman Co., treasurer.
ALLEN TOWN, PA., January 28.—Harry I. Albright The association adopted a rule which provides
and his bride, who was Miss Edna M. Wurley, that customers must keep at least one-third of
have returned from their brief honeymoon trip all talking machine records sent to them on ap-
spent in Philadelphia and other cities, and will proval, and that not more than twenty-four
start housekeeping in this city. Mr. Albright is hours will be allowed in which to return rec-
associated with his father, 1. E. Albright, in the ords. The association enjoyed a very success-
music business. The Albright store is located ful year, and anticipates an equally good one to
at 129 North Eleventh street, this city, and fea- come.
tures the McPhail piano as its leader.
This
old-time Boston piano has won a large and dis-
STEINERT & 0 0 . TO ENLARGE
criminating army of admirers in this city.
PROVIDENCE, R. I., January 28.—The M. Steinert
& Sons Co. is preparing to move into new quar-
ters on Westminster street, where they already
ST. LOUIS, MO., January 28.—C. S. Hammond, of are occupying a small store. Three floors will
the Vandervoort Music Salon, has returned be occupied by the concern, the main floor to
from an Eastern trip in which he made pur- be devoted to a Victrola department, and the
chases for 1918, hoping that he will be able to other two floors utilized for piano warerooms.
get the instruments when the shipping relief
conies. He has arranged for a big line of Kurtz-
The Montana Piano Co., Butte, Mont., has
mann instruments. He already has some here, been incorporated, with capital stock of $25,000,
but is expecting considerable shipments at once. by George H. Barry, M. J. Barry and Joseph
This is a new line for this department.
Barry.
GRAND RAPIDS DEALERS MEET
PLACE BIG ORDERS FOR KURTZMANNS
WINTER & CO.
PIANOS AND PLAYER-PIANOS
RUDOLF
PIANOS AND PLAYER-PIANOS
22O SOUTHERN BOULEVARD, NEW YORK

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