Music Trade Review

Issue: 1932 Vol. 91 N. 2

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
What You Should Know
About the
Federal Income Tax Law
By R. W. MacNAUGHTON, C.P.A.
of Hill, Bieth & Company
Accountants and Auditors, New York, N. Y.
The third of a series of pertinent discussions on the Federal Tax Law rulings writ-
ten exclusively for THE REVIEW
R. W. MacNAUGHTON, C.P.A.
A
S there seems to be but little doubt
that the present tax law will be
amended so as to produce larger
revenue through increased taxation,
I am submitting to the members of the music
trade an outline of the various changes pro-
posed, with some comments about several of
them.
Secretary of the Treasury Mellon, in his
report to Congress on December 9, 1931,
recommended that the following changes be
adopted to produce sufficient revenue to bal-
ance the budget:
1. Normal tax on individuals be increased
from V/ 2 per cent, 3 per cent and 5 per
cent to 2 per cent, 4 per cent and 6 per
cent.
2. Personal exemptions of individuals be de-
creased from $1,500 if single and $3,500
if married to $1,000 if single and $2,500,
respectively.
3. Surtax rates (which apply to incomes over
$10,000) be increased to a maximum of 40
per cent instead of 20 per cent.
4. Corporate tax rate be increased from 12
per cent to \2 l / 2 per cent.
5. No exemption be allowed a corporation
whose income is less than $25,000. The
Revenue Act in force allows $3,000.
6. The imposition of a Supertax on Estates
in addition to the present Estate Tax.
7. Various changes in excise tax rates includ-
ing such new taxes as a levy of 5 per cent
on the manufacture of radio and phono-
graph accessories and a 2-cent stamp on
each check or draft.
The Democratic Party immediately coun-
tered with its proposal, which in substance is
as follows:
1. Increase in surtax rates.
2. Repeal of Capital Gains and Losses pro-
vision of the present Revenue Act.
3. A gift and inheritance tax.
4. No additional sales or luxury taxes other
than those now in force.
5. No changes to apply to incomes of less
than $5,000.
6. All changes to be retroactive so as to
apply to 1931 incomes.
The retroactive measure proposed by the
Democratic Party is causing the most adverse
criticism, and not unjustly, for a retroactive
measure is, to say the least, vicious. The
American business man likes to know what
earnings he may expect from his investment
and labors after taking into consideration the
cost of doing business, including taxes, and
at the end of a fiscal period he wants to con-
sider the results closed. He can hardly be
expected to accept with a cheery smile a tax
that will upset all his calculations. Nine-
teen-thirty-one has of itself been a sufficiently
troublesome year. The proposed measure
would shatter his confidence, which is a vital
factor in the recovery of American business,
for he would always have before him the
possibility that Congress might pass another
retroactive measure affecting 1932.
The proposal to abolish the Capital Gains
and Losses provisions has caused no little con-
fusion in the minds of Congress and the gen-
eral public, as these provisions of the law and
those governing the right to take straight losses
are not differentiated. To make the proposal
somewhat clearer, I will endeavor to explain
the features of the Capital Gains and Losses
provisions as set forth in the Revenue Act.
The provision was created in the Revenue
Act of 1921 and under the terms thereof
could be applied to sales of capital assets
consummated after Pecember 31, 1921, only.
Except for a few nroor changes, the law in
force today is the same as it was in 1922.
It does not apply to corporations.
First, let us get clearly in our minds the
meaning of the various terms pertinent to this
section of the law. The Revenue Act of 1928
defines a "capital gain" as a "taxable gain
from the sale or exchange of capital assets"
and a "capital loss" as a ". . . . deductible
loss resulting from the sale or exchange of
capital assets."
"Capital assets" means property held by
the taxpayer for more than two years
(whether or not connected with his trade or
business). It does not include property held
primarily for sale in the course of the tax-
payer's trade or business, or property which
would properly be included in inventory at
the end of a fiscal period.
In calculating the two-year period, the law
permits the taxpayer to include the period
during which he held the property if no gain
or loss was recognized at the time of the
exchange of the other property for the prop-
erty sold. This has reference to a non-
taxable exchange (referred to in a previous
article) or an exchange in connection with a
corporate reorganization. There is also in-
cluded the period during which the donor, if
the property sold was a gift, held same. The
period during which stock rights and stock
dividends are considered held is based upon
the date on which the stock with respect to
which issued was acquired, and not the date
of the receipt of the rights, etc., by the tax-
payer.
If the taxpayer has a capital gain, as de-
fined above, the law offers the privilege of
election to taxation at 12^2 per cent on this
capital gain, in lieu of the rates on ordinary
income, and the total tax payable is the tax
computed on ordinary income exclusive of the
capital gain, plus the tax on the capital gain.
If a capital loss, the total tax is the amount
determined on ordinary income less \2 l /i per
cent of the capital loss.
There are certain limitations to computing
the tax under this method, however. For
instance, a taxpayer certainly would not elect
to pay 12^4 per cent on a gain where the
normal and surtax rates on all his income,
including the capital gain, did not amount
to that sum. On the other hand, the law
(Please turn to page 16)
Have your Federal Tax Problems answered by Mr. MacNaughton through THE REVIEW—con-
fidentially and without charge. With the many business readjustments, timely information in tax
matters is most important just now. Send us your questions.
THE
M U S I C
T R A D E
R E V I E W ,
February,
1932
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
10
THE
MUSIC
TRADE
MERCHANTS' ASSOCIATION PRESIDENT
MAKES TOUR OF NEW ENGLAND CITIES
C
ARRYING out the plan inaugurated
some time ago, President Weeks, of the
National Association of Music Mer-
chants, accompanied by Executive Secretary
Loomis, visited several cities in New Eng-
land during the month of January and, in
addition to the holding of exceedingly satis-
factory conference committee meetings, Presi-
dent Weeks had an exceptional opportunity to
spread the gospel of music when he spoke on
the subject of "The Mission of Music in the
Home" before several hundred members of
Rotary Clubs in the cities visited.
Being a past president of his local Bing-
hamton Rotary Club and past governor of
the Twenty-eighth District Rotary Interna-
tional, Mr. Weeks is widely know y n in Rotar-
ian circles, and when it was learned by secre-
taries of these New England Rotary Clubs
that he was to be in their cities there were
immediate invitations extended by the chair-
men of the program committees.
The meetings were held in New Havien,
January 12; Boston, January 13 and 14;
Springfield, January 15, and Hartford, Jan-
uary 18. Mr. Weeks' talk was originally
scheduled as "Rotary in the Home," but re-
ceiving a request from the secretaries of the
Rotary Clubs in New Haven, Boston and
Springfield to pay special attention to music,
he changed the title of his address to "The
Mission of Music in the Home."
In New Haven, Springfield and Hartford,
the conference committee meetings of the
members of the association were held imme-
diately following the Rotary Club luncheons,
and in Boston there was a luncheon meeting
of Boston members, together with several
from other nearby New England cities, held
on Thursday. William F. Merrill, secretary
of the New England Music Trade Associa-
tion, kindly rendered assistance in getting up
the Boston meeting.
At the Boston Rotary Club luncheon there
were in attendance almost the complete mem-
bership of 325. There were also twenty-five
visiting Rotarians who came from many
States. One of the members of the music
industry, W. Deane Preston, of the B. F.
Wood Music Co., a Rotarian, was given the
honor of presenting Mr. Weeks at the Bos-
ton meeting. There were a number of other
members of the music industry present at the
luncheon.
There were in attendance at the luncheon
meeting Thursday about twenty-five members
of the trade, including, in addition to the
retail piano men, a fine representation of
sheet music dealers and music publishers. In
introducing President Weeks, Secretary
Loomis presented for the entertainment of the
music men the electrical transcription made
recently by Mr. Weeks, consisting of a fif-
teen-minute program for broadcasting pur-
poses.
Declaring that the music industry of the
United States is standing at the threshold
EDWIN R. WEEKS
of what will be the greatest expansion which
has ever taken place in the history of the
trade, Mr. Weeks sounded a note of distinct
optimism. He cited the fact that the music
industry has fared fully as well as any indus-
try during the past two years.
Pointing out, specifically, his reasons for an
entirely optimistic view of the outlook, he
called attention to conversations he has had
with leading music merchants in cities he has
recently visited, emphasizing the tremendous
increase in interest in music as evidenced by
the fact that today more boys and girls in
the United States are studying music, either
in classes in the public and private schools,
or privately, than ever before in our history.
He pointed out that radio broadcasting of
the finest concert and operatic music has
broadened greatly the love and intelligent
appreciation of music and has stimulated a
desire for self-expression in music.
"We know of literally hundreds of per-
REVIEW,
February, 1932
sons," said Mr. Weeks, "who are now ready
to make purchases of musical instruments and
are biding the time when they have the
money with which to gratify this desire to
promote and carry on this greatest of all arts
—music. In my own business in December
we actually sold more pianos than in any one
month in the last five years.
"Realizing that we are a fickle people and
that we have passed through a period of
extreme fickleness as to entertainment, there
seems to be a growing trend toward the more
simple things, especially that of art in the
home. History reveals that after every war
has come a period of unrest, but followed
always by a return to—may I say—sanity."
Immediately following Mr. Weeks' opening
remarks, there was a round-table discussion
of merchandising plans and expressions of
confidence in the immediate future were
made by all of the members present.
In Springfield Alfred W. Prouty, manager
of the M. Steinert & Sons Co. branch, a
Rotarian, took the occasion to entertain, as
his guests, a number of Springfield and
Holyoke members of the trade.
At the Hartford Conference Committee
meeting, following Mr. Weeks' opening re-
marks, which were similar to those made at
the other meetings, the round-table discussion
brought out a very keen interest in the possi-
bility of holding a piano-playing contest early
next Fall in Hartford. The members present
made inquiry as to those contests which have
recently been held successfully in New
Orleans and Denver, Col., and which were
reported by Past President Werlein and Vice-
president Bradford at the last convention.
The executive secretary was requested to
communicate with Mr. Werlein and Mr.
Bradford to secure for the Hartford members
detailed information regarding those contests.
It was the sense of the meeting that in the
future there should be no daily paper adver-
tising of used pianos at any price under $100.
The Hartford meeting was one of the most
interesting and valuable of the series.
Mr. Weeks was distinctly optimistic and
was quoted verbatim along tJiese lines in
articles appearing in the daily papers of all
of the cities visited. In Springfield, the two
afternoon papers, the Springfield Union and
the Daily News, used stories on the Confer-
ence Committee meeting of nearly a column
in length with display headlines.
A. H. Kayton, formerly president of the
Milton Piano Co. before retiring from busi-
ness some years ago, has returned to New
York with his family after a long period of
traveling abroad and will make his home
here for the future.
STARR PIANOS
STARR ELECTRIC REFRIGERATORS
CHAMPION and GENNETT RECORDS
ELECTRICAL TRANSCRIPTIONS for RADIO BROADCASTING
THE STARR PIANO COMPANY
ESTABLISHED 1872
RICHMOND, INDIANA

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