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MARCH 2, 1918
THE MUSIC TRADE REVIEW
IMPORTANT INCOME TAX RULING FOR PIANO TRADE
CHARLES J. TONK DIES SUDDENLY
W. S. Weser Investigates and His Lawyer Gets Treasury Department Ruling That Tax Is Return-
able on That Part of Instalment Which Can Be Considered Profit and Not on Whole Amount
President of Tonk Bros. Co. and Vice-President
of Wm. Tonk & Bro. Succumbs at Daytona,
Fla., Whence He Had Gone to Rest
W. S. Weser, vice-president and general man-
ager of Weser Bros., Inc., has recently been in-
vestigating carefully the Federal income tax as
it applies to piano manufacturers and instalment
houses generally with the result that he has sent
out to the trade through The Review the fol-
lowing on income tax rulings, giving other piano
men the advantage of the experience of his
house with the Federal authorities.
The following decision, it will be noticed, is
radically different from the former on the same
subject, being more equitable and representing
a considerable saving to the trade in the income
tax payable. Mr. Weser's letter follows:
"This seems an opportune time when income
tax reports are about to be filed, to give the
trade advantage of our experience with the Fed-
eral authorities, and the ruling we were success-
ful in obtaining, as to the proper interpretation
of the Federal Income Tax Act for computing
the tax assessible upon income derived from the
instalment sales.
Under a decision of the Treasury Department
No. 2090 it was formerly held that:
" 'For income tax purposes where there is
an actual sale and transfer, profit will be
sidered as realized even though payment is
to be made in instalments.'
"Under the foregoing decision the Commis-
sioner of Internal Revenue through its agents
heretofore advised the trade in general that in-
come tax reports were to be based upon the
amount of sales made during a taxable year, ir-
respective of whether such sales represented in-
come or profit, or were to be payable in de-
ferred payments. Thus, if possession of a piano
were transferred under the usual instalment con-
tract of conditional sale, the revenue agents
advised that such sale be considered as imme-
diately consummated, and that the full price set
forth in the conditional sale contract be re-
turned as income. We, of course, took excep-
tion to the foregoing decision, knowing for a
fact that the contract price does not represent
income, and certainly not profit.
"In furtherance of our contention and in or-
der to more forcibly present same in its true sig-
nificance to the proper authorities, we decided to
have our attorney, Irving Levine, Esq., 299
Broadway, New York City, communicate with
the Commissioner of Internal Revenue at Wash-
ington, D. C , and later visit the Capital City for
a personal interview, with the result that he
succeeded in convincing the Commissioner of
the evident error in their former interpretation
of the law relating to the subject matter at is-
sue, and obtained a new ruling upholding our
contention, and in direct contradiction to the
Treasury Decision No. 2090. It will no doubt
be of interest to your readers to have before
them, when preparing their income tax report,
the ruling our attorney was instrumental in ob-
taining, which in part follows:
" 'For Federal income tax purposes it is
held that the contract is for the ultimate
purchase of a piano and that every dollar
received under the contract represents, in
part, the return of a portion of the cost of
the piano to your client and a portion of
the profit to be derived from the transac-
tion, and that the amount of profit repre-
sented by all payments received during a tax
year should be included in any personal re-
turn your client may be required to render
for that year.
" 'For example, in a case where the pos-
session of a piano which cost your client
$300 is transferred to another under a con-
tract calling for twenty monthly payments
of $20 each, a total of $400, each monthly
payment represents a return of capital in-
vested amounting to $15 and profit amount-
ing to $5, and the multiplication of this lat-
ter amount by the number of payments re-
ceived during the year yields the amount to
be returned as income for that year.
" 'When there is a lapse of default in pay-
ment and your client becomes possessed of
a piano, the entire amount theretofore paid
and credited to principal from date of con-
tract to date of default is income to be in-
cluded in a return of income, for the reason
that it is held that such an amount consti-
tutes rental for the use of the piano, and a
reasonable allowance may be claimed to
cover such depreciation as may have actual-
ly occurred in the value of the repossessed
piano by reason of its use.' "
Charles J. Tonk, president of the Tonk Bros.
Co., Chicago, and vice-president of Wm. Tonk
& Bro., New York, died on February 21, at
Daytona, Fla., whence he had gone in company
with his wife in search of rest and recupera-
tion from nervousness, from which he had been
suffering more or less for some time. Although
in this state he was not considered dangerously
ill and the end came suddenly. The immediate
cause could not be learned, but it is presumed
that it was apoplexy or heart failure.
Mr. Tonk was highly respected by his friends
and members of the trade.
He was always
TO AMEND PERSONAL PROPERTY LAW
Bill Now Before State Legislature Provides
That Where Goods Are Sold on Contract,
Cash and Instalment Prices Must Be Shown
A bill has been introduced in the New York
State Legislature by Assemblyman H. W. Smith
to amend the Personal Property Law in rela-
tion to displaying the selling price on goods
sold under contract or conditional sale. The
bill (Assem. Int. No. 537, Pr. 580) adds new
Section 68 to the Personal Property Law pro-
viding that a conditional vendor who displays
or exhibits goods or chattels or a sample or
samples thereof, to be sold under conditional
sale, shall attach to such goods or chattels, sam-
ple or samples, in a conspicuous place, a state-
ment of the selling price for cash and the sell-
ing price under conditional sale.
Violation is made a misdemeanor.
DEATH OF INDIANA DEALER
William H. Rinker, of Lafayette, Passes Away
After Long Illness—Claypool-Miller Music
Co. Succeed to the Business
LAFAYETTE, IND., February 25.—William H.
Rinker, one of Indiana's most successful music
dealers, and who conducted a store here for a
number of years since 1894, died at his home in
this city last week after a long illness.
Mr. Rinker was compelled to retire from ac-
tive business last September and his interests
were purchased by the Claypool-Miller Music
Co., prominent piano merchants of Logansport,
who are continuing the local store as a branch.
R. W. LAWRENCEGETS NEW OFFICE
Is Elected Vice President of the Bronx Board
of Trade at Meeting Last Week
Richard W. Lawrence, president of Kohler &
Campbell, Inc., was elected vice-president of the
Bronx Board of Trade at the annual meeting of
that organization held last week. Mr. Lawrence
has always taken an active interest in that body,
and has served previously on the directorate.
Charles W. Bogart and Charles E. Reid, both
well known in the piano trade, will serve as
treasurer and secretary respectively.
The Hamburg Music House will open a new
store on State street, Hamburg, Pa.
Charles J. Tonk
genial and affable and was quite ready to tell
or be told a story or joke. Aside from being
a good-fellow, he was known for his square
dealing, his word being as good as his bond.
He was a man of most exemplary habits and
attentive to his business, to which he was much
devoted.
Mr. Tonk was born in Newark, N. J., May 12,
1856.
In 1857 the family moved to Chicago,
where he was brought up, and resided ever since,
except five or six years' residence in New York
some years ago.
He received a private college education, was
well read on the topics of the day and was well
known as a historian—in this special field of re-
search he was in many ways considered an au-
thority.
He was associated with his brother William
from the time the firm of William Tonk & Bro.
was established. When, in 1903, the business
was incorporated, he became the vice-president,
which position he held ever since. For a num-
ber of years and up to his death he was the
president of the Tonk Bros. Co., with headquar-
ters in Chicago.
Comforts of home were his greatest attrac-
tion, and he seldom went out except to visit in-
timate friends or, occasionally, places of amuse-
ment. He was, therefore, not associated to any
extent with clubs or societies, the only exception
being that he was a member for a number of
years of the Chicago Athletic Club.
Mr. Tonk leaves a widow, formerly Miss
Hecker, of Cleveland, and two brothers—Will-
iam and Albert K. Tonk.
WINTER & CO.
RUDOLF
PIANOS AND PLAYER-PIANOS
PIANOS AND PLAYER-PIANOS
22O SOUTHERN BOULEVARD, NEW YORK