Music Trade Review
Issue: 1946 Vol. 105 N. 1 - Page 5
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
The Jtusk
Established 1879
2792nd Issue
REVIEW
7
Vol. 105, No. 1
THE
P I O N E E R
P U B L I C A T I O N
January, 1946
O F T H E M U S I C
I N D U S T R Y
Are You Sure You Take All
Your Income Tax Deductions^
By HAROLD J. ASHE, Tax Counselor
*
Although Congressmen promise a substantial income tax reduction for
1946, dealers will still have to face their annual struggle with '45
returns. According to Harold Ashe, Tax Counselor, many dealers pay-
too much income tax, so in this article he shows numerous deductions
which are frequently overlooked.
ed you to pay more than your share
of income tax, and in this article I
have undertaken to outline the many
pitfalls of tax statements.
Acting on advice of the Treasury
Department many music merchants
have filed 1945 estimates based on
their 1944 earnings. Even if 1945 gross
income and operating expenses com-
pare favorably with 1944, if these
ii
yes!" exclaimed the mu- taxpayers erred in not taking all
sic merchant as a reluctant expense items into consideration in
afterthought, "I've got about 1944 it follows that they not only
$500.00 in the bank, so I suppose I'll will have paid too high a tax on 1944
income, but they will repeat the error
have to pay taxes on that too!"
Funny? Not so funny if you're pay- again in March, 1946, on 1945 in-
ing the taxes. And many a music come unless they correct such errors.
Ignoring wages, materials and
merchant today, even though he would-
other
orthodox expenses which it is
n't try to pay taxes on money in the
assumed
were deducted from gross
bank, makes mistakes that boost his
income
to
arrive at a net figure, what
income tax return needlessly. Such
are
the
items
of expense frequently
dealers, while shouting invective
overlooked
either
partly or entirely
against the government's devouring all
by
the
average
small
radio dealer?
their profits, unwittingly pour extra
Speaking from observation I ven-
money into the United States Treas-
ury by paying income taxes on the ture the belief that 50 per cent fail
physical assets of their business—not to take into account at least one of
to mention the earnings of those as- the following, and many ignore all.
sets. Such taxpayers fail to reckon 1. Depreciation of office, store and
with all of the costs of doing business shop fixtures; 2. depreciation on
in arriving at their net profit figure. trucks and service cars; 3. deprecia-
In filling out your 1944 tax returns, tion on private cars used partly or
you may have committed this or any entirely in business, and 4. deprecia-
number of similar errors which forc- tion on heavy tools, equipment and
O"
THE MUSIC TRADE REVIEW, JANUARY. 1946
machinery. I shall enumerate numer-
ous other deductable items, presently.
Items Usually Overlooked by Dealers
The items already referred to rep-
resent assets being liquidated through
usage in producing income without
which no income would be possible.
The cost of these items, through de-
preciation, is as much a cost of pro-
ducing income as are labor, mate-
rials and the thousand and one petty
items usually so carefully recorded.
Probably the simplest explanation
as to why the above items seldom
appear as business expenses is be-
cause they do not appear in the year's
books as expenditures, having been
acquired in previous years. Actual-
ly, if a service car was purchased,
say in 1941 for $800 and has a life
expectancy of five years, it then fol-
lows that this car (in initial outlay
(Turn to page 81
The Jtusk
Established 1879
2792nd Issue
REVIEW
7
Vol. 105, No. 1
THE
P I O N E E R
P U B L I C A T I O N
January, 1946
O F T H E M U S I C
I N D U S T R Y
Are You Sure You Take All
Your Income Tax Deductions^
By HAROLD J. ASHE, Tax Counselor
*
Although Congressmen promise a substantial income tax reduction for
1946, dealers will still have to face their annual struggle with '45
returns. According to Harold Ashe, Tax Counselor, many dealers pay-
too much income tax, so in this article he shows numerous deductions
which are frequently overlooked.
ed you to pay more than your share
of income tax, and in this article I
have undertaken to outline the many
pitfalls of tax statements.
Acting on advice of the Treasury
Department many music merchants
have filed 1945 estimates based on
their 1944 earnings. Even if 1945 gross
income and operating expenses com-
pare favorably with 1944, if these
ii
yes!" exclaimed the mu- taxpayers erred in not taking all
sic merchant as a reluctant expense items into consideration in
afterthought, "I've got about 1944 it follows that they not only
$500.00 in the bank, so I suppose I'll will have paid too high a tax on 1944
income, but they will repeat the error
have to pay taxes on that too!"
Funny? Not so funny if you're pay- again in March, 1946, on 1945 in-
ing the taxes. And many a music come unless they correct such errors.
Ignoring wages, materials and
merchant today, even though he would-
other
orthodox expenses which it is
n't try to pay taxes on money in the
assumed
were deducted from gross
bank, makes mistakes that boost his
income
to
arrive at a net figure, what
income tax return needlessly. Such
are
the
items
of expense frequently
dealers, while shouting invective
overlooked
either
partly or entirely
against the government's devouring all
by
the
average
small
radio dealer?
their profits, unwittingly pour extra
Speaking from observation I ven-
money into the United States Treas-
ury by paying income taxes on the ture the belief that 50 per cent fail
physical assets of their business—not to take into account at least one of
to mention the earnings of those as- the following, and many ignore all.
sets. Such taxpayers fail to reckon 1. Depreciation of office, store and
with all of the costs of doing business shop fixtures; 2. depreciation on
in arriving at their net profit figure. trucks and service cars; 3. deprecia-
In filling out your 1944 tax returns, tion on private cars used partly or
you may have committed this or any entirely in business, and 4. deprecia-
number of similar errors which forc- tion on heavy tools, equipment and
O"
THE MUSIC TRADE REVIEW, JANUARY. 1946
machinery. I shall enumerate numer-
ous other deductable items, presently.
Items Usually Overlooked by Dealers
The items already referred to rep-
resent assets being liquidated through
usage in producing income without
which no income would be possible.
The cost of these items, through de-
preciation, is as much a cost of pro-
ducing income as are labor, mate-
rials and the thousand and one petty
items usually so carefully recorded.
Probably the simplest explanation
as to why the above items seldom
appear as business expenses is be-
cause they do not appear in the year's
books as expenditures, having been
acquired in previous years. Actual-
ly, if a service car was purchased,
say in 1941 for $800 and has a life
expectancy of five years, it then fol-
lows that this car (in initial outlay
(Turn to page 81
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