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1950-51 Theatre Catalog, 9th Edition, Page 155 (135)

1950-51 Theatre Catalog, 9th Edition
1950-51 Theatre Catalog
1950-51 Theatre Catalog, 9th Edition, Page 155
Page 155

1950-51 Theatre Catalog, 9th Edition, Page 155

More About Drive-In Depreciation

Government Takes First Step in Drawing Up of Fair Schedules Anxiously Awaited by Drive-Iii Operators

Although drive-in theatres numbered less than 100 in 1942, they have mushroomed since the end of World War II to an amazing total of over 2,200 presently in operation. While they have required sizeable initial expenditures (as much as $500,000 for a large deluxe one to a minimum of $80,000), they have been, on the whole, sound investments and have returned the initial cash outlays to the owners in reasonably short order. There was, however, a slight slacking off in receipts during the 1949-50 season that promises to bring revenue down to normal entertainment business returns, as the novelty of the outdoor theatre continues to wear off and as competition from those new structures built before the recent government ban on amusement construction makes itself felt.

Drive-In Depreciation Unique

The nourishing drive-in industry must, of course, pay taxes, but, in view of the aforementioned decline in receipts and higher operating costs, outdoor theatre operators desperately need a definite schedule of some sort which they may use to calculate depreciation of their highly expensive equipment, such as sound systems and projection machines, seasonal plumbing, underground wiring, oil surfacing, sign work, etc., none of which are actually sheltered by any building that may strictly be considered as a permanent structure.

It must be remembered that equipment which has been constructed for the clean, dry conditions of the normal roofed theatre will naturally not stand up as well when subjected to the dust, cold, sun, and all other corrosive influences of the weather in an open-air theatre. Therefore, it is not logical to assume that yardsticks used to determine depreciation periods of equipment in roofed houses can, with justice, be siniilarly applied in determining use life of equipment in open-air theatres.

Lack of Definite Criteria

Unfortunately, while the drive-in theatre industry has evidenced an honest desire to pay its just taxes and to amortize its equipment in sensible percentages, there have not been, up to the present time, any depreciation rates published by the Treasury Department which specifically cover drive-in theatres and their equipment. Until a taxpayer appealed the rates suggested by a local revenue agent on up to a tax court, no precedent to stand on could be established. Since the industry is still too young to have. had any cases reach a tax court as yet, there has been no such precedent established in this manner. As a result, there have been no ofiicial rates which a drive-in operator could refer to in arguing his tax case, if he did not agree with those proposed by his local


. for calculating

BRIEF: W/hile hundreds of books have been published . . . and scores of experts have set themselves up in business . . . to aid the U. S. taxpaper in figuring out what he owes Uncle Sam . . . the drive-in theatre operator has had little sure advice in. filling out his return . . . particularly as far as the ticklish subject of depreciation is concerned . . . Due to the outdoor exposure of his equipment, this is an important item in any outdoor theatre.

Lacking opicial rulings from Washington . . . drive-in operators have been compelled to accepted depreciation rates decided by their local revenue agents

. . oftentimes inequitable . . . In. recognition of this sorry situation . . . and the need for correction . . . the Editors of THEATRE CATALOG have sought

. . and obtained . . . the first o}??ciol statement from the Bureau of Internal Revenue on the subject . . . Herewith are presented the initial figures suggested by the Government itself . . . depreciation rates for drive-in equipment.


revenue agent. Consequently, Bureau of Internal Revenue field offices, without help or directives from Washington, have been arriving at more or less urule of thumb" decisions that are often at great variance throughout the nation.

Two Temporary Expedieni's

In an effort to lend the drive-in operators among its readers as much of a. helping hand as was possible at the time in the solution of this important tax question, the Editors of THEATRE CATALOG published in the 1949-50 Edition (pp. 288-289) two tables for calculating depreciation rates, one of which was compiled with the advice of an experienced accounting firm, and the other with the aid of a major theatre circuit operating a number of drivedns. It was emphasized, however, that these figures were not oihcial, had not won any particular sanction by the Treasury Department, and were to be employed only as temporary measures until such time as the Government published definite rulings in the matter.

FlVE YEARS LIFE is suggested by Commissioner Schoeneman of Internal Revenue for (his exposed Sign at the Airline, Ielierson Parish. Louisiana where Adler 17" and 10" plastic letters are uSed.

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1950-51 Theatre Catalog, 9th Edition, Page 155