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AUGUST 6, 1927
The Music Trade Review
Tax Appeals Board Upholds Regulations
of Commissioner on Instalment Sales
Taxpayer Who Changes From Accrual to Instalment Sales Method Must Return as
Income Proper Proportion of Payments in Each Year on Previous Sales
\I7ASH1NGTON, D. C, August 1.—Regula- this right in computing income under the rev-
** tions of the Commissioner of Internal enue act of 1916, and all subsequent revenue
Revenue relating to instalment sales are upheld acts, and acts amendatory thereof; and that
in a sweeping decision just rendered by the Congress, by implication, at least, has rejected
United States Board of Tax Appeals in the the rule prescribed by Article 42 of Regulations
case of Blum's, Inc., dealer in phonographs, 45 (1920 edition) for returning income on the
pianos and other merchandise on the instalment instalment method, and has manifested an in-
plan, of Baltimore. The regulations in ques- tent to sanction the rule laid down in Article
tion require that a taxpayer who changes from 42 of the second edition of Regulations 45,
the straight accrual method to the instalment promulgated December 29, 1919, as a proper
sales method of returning income must return interpretation of the statue and as correctly de-
as income of the year in which the change is fining the instalment sales method of returning
made, and of all subsequent years, a proper income.
proportion of all instalment payments, actually
"The rule laid down in Regulations 45,
received in those years, relating to sales promulgated December 29, 1919, is that a tax-
effected in years prior to the change in method, payer employing the instalment method of
notwithstanding that the entire profits from computing income must include a proper pro-
the sales to which such payments relate were, portion of the instalment payments received
under the method of returning income then during the taxable year on account of sales
employed, returned and taxed as income of the effected in earlier years. Note also that the
years in which such sales were effected.
statute does not provide for returning only a
The board, in this case, went exhaustively proportion of the instalment payments received
into questions relating to returns of income during the year relating to sales made after
from instalment sales. It was held that a tax- the change of method, but provides for return-
payer employing the accrual method of ac- ing a proportion of 'the instalment payments
counting, but returning income from instalment actually received in that year.' To the same
sales on the instalment sales method, is entitled effect are the provisions of Article 42 of Regu-
to deduct from the income of any taxable year lations 69, promulgated by the commissioner
all of the expenses, allowances and losses under the revenue act of 1926.
enumerated in sections 214 and 234 of the "Thus, at last we have a remedy for the
revenue act of 1918, which were paid or in- most glaring ills of the transition period in the
curred, or paid or accrued within the taxable requirement that a taxpayer employing the in-
year. Instalment payments received and re- stalment sales method of returning income
funded by a taxpayer in the same year, it was must include a proper proportion of the entire
ruled, should be excluded from the total in- instalment payments received during the year,
stalment payments received before computing though some of them may relate to sales the
the proportion thereof to be returned as in- entire profits from which were returned in
come.
years prior to the change of method."
Discussing the results of a change in method
of accounting, the board in its decision pointed
out that there ensues in such cases a "period
of transition," being the time before which
the taxpayer making a change of method would
begin to report his normal level of profits, Ginn & Co. Use Columbia New-Process Records
for Recording Singing Lessons In Connec-
which has given the board deep concern. Tes-
tion With "Music Education Series"
timony taken from two recognized authorities
on Federal taxation indicated that the distor-
tion of income of the transition period must
Ginn & Co., one of the largest publishers of
be corrected by requiring a taxpayer, returning text books in the country with headquarters in
income through the employment of the instal- Boston and branches in New York, Chicago,
ment sales method, to return as income, for San Francisco and a number of other large
any taxable year, all of the profits actually cities, after a careful examination of all- various
reduced to possession in that year, notwith- records on the market, have selected the Co-
standing there may be included profits from lumbia New-Process records upon which to
instalment sales of earlier years which had record selections which are issued in record,
been returned and taxed as income of those form as an integral part of the series of sing-
years, as required by the regulations.
ing books issued by the company and known
"It is manifestly clear that Congress has as the "Music Education Series."
conferred upon dealers in personal property
This b'egun in 1923, has just been completed.
on the instalment plan the privilege of return- It consists of sixty-three double-faced records,
ing income from instalment sales upon the of which forty-four are ten-inch and nineteen
method prescribed in section 212 (d) of the are twelve-inch. On these records 229 pieces of
revenue act of 1926," the decision continued; music are recorded, all by members of the Phil-
"that such dealers may avail themselves of
harmonic Orchestra of New York. The series
Prominent Publishers Adopt
Columbia Process Records
ESTABLISHED 1862
includes a five-book course for schools in
smaller towns, and an eight-book course for
large cities. The records are equally adapted to
either of these courses.
One of the deciding factors in the selection
of Columbia New-Process records by Ginn &
Co. is the "laminated" or "new process," the
patents of which are controlled by the Columbia
Phonograph Co. Records, such as Ginn's
"Music Education Series," made for study and
many replayings, every note of which must be
reproduced exactly as recorded, and with a
maximum of clarity, should have a playing sur-
face of the utmost smoothness and durability.
This the laminated process insures.
The usual phonograph record is made
throughout of what is known as "solid stock,"
which means that the interior is composed of
exactly the same material as the surface. The
expensive ingredients, of which shellac is the
most important, are mixed throughout the en-
tire record.
By the laminated process, the
shellac and other costly materials that are vital
to the playing qualities of the record, and of
value only in proportion to the amount con-
tained on the surface of the record, are con-
centrated on that playing surface. This is ac-
complished by pressing upon each side of the
solid stock of the record to be laminated a sheet
of especially prepared paper, which is coated
with gum. Before this gum is dry, a sprinkler
deposits the shellac and other ingredients upon
the surface of the paper.
From Los Angeles to
Chicago in 24 Hours
Cyril Farny Covers Distance in Twenty-four
Hours Flying Time and Qualifies as Piano
Record Holder
DKKALB, 111., August 3.—With twenty-four hour
flying time to his credit and making the jump
by airplane from Los Angeles to Maywood
Field, Chicago, with short business stops at
Salt Lake City and Denver, Cyril Farny, vice-
president and general manager of the Rudolph
Wurlitzer Grand Piano Co., qualifies as the
record holder for this trade. He likes air-
plane travel, and, aside from the time saved,
told The Review that it is more interesting
ihan train or automobile transportation.
Mr. Farny, several weeks ago, made an air-
plane trip from DeKalb to St. Louis as one
of a committee of DeKalb business men who
invited Colonel Charles Lindbergh to visit De-
Kalb. From St. Louis Mr. Farny went out to
the Pacific Coast for the Rudolph Wurlitzer Co.
and covered that area quite well.
He stopped at Butte and several other points
going West and visited all the important cities
from Seattle down to San Diego, California. He
also stopped in San Francisco for several days
and attended the convention of the Western
Music Trades Association.
Talking with The Review he said, "I found
business to be satisfactory and the prospects for
Fall and Winter excellent. Particularly popu-
lar with the public are the Wurlitzer Clavichord
and the Spinette and the Wurlitzer Treasure
Chest of Music."
L^UTER
ONE OF AMERICA'S FINE
NEWARK N J.
PIANOS
UPRIGHTS
GRANDS
THE LAUTER-HUMANA