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1953-54 Theatre Catalog, 11th Edition, Page 355 (317)

1953-54 Theatre Catalog, 11th Edition
1953-54 Theatre Catalog
1953-54 Theatre Catalog, 11th Edition, Page 355
Page 355


1953-54 Theatre Catalog, 11th Edition, Page 355

immediately by deducting the loss. If you trade in, you benefit in later years by deducting more depreciation.

Entertainment expenses may be increased at the year-end in order to reduce your tax provided: (1) that they are reasonable in amount and (2) that they are actually made in order to increase business. The government has approved the deduction of Christmas parties and gifts for employees, club dues, in whole or in part (where the club was used to entertain customers), theatre tickets for customers, etc.

Year-end advertising can be increased to reduce your taxes, provided the total expense is held within reasonable limits. You may also advertise for iipublic serviceii purposes, such as urging the purchase of defense bonds, or the conservation of natural resources.

A further increase in expense can be obtained with resulting good will on the part of your employees by means of a Christmas bonus. Care must taken not to violate Wage Stabilization Board regulations, but if you have given bonuses in the past, you may legally continue to do so.

Controlling Your Income

One of the most important matters for you to consider before the year-end is the advisability of taking capital losses to reduce capital gains. This refers especially to transactions in stocks and bonds. By this means, taxable income can be reduced by deferring until next year a profitable sale or including in this year a sale at a loss.

If the security sold was owned by you for six months or less, the gain or loss on the sale is known as a ushort-term" capital gain or loss. If held for longer than six months, it is known as a "longtermil capital gain or loss. Short-term gains and losses are recorded for tax computations at one hundred per cent. Net long-term gains and losses are recorded at 50%, but the effect on your tax cannot exceed 26%. A few examples will illustrate the working of this section of the tax low.

a) Short-term gain and short-term

loss: Assume that stock A cost $800 and was sold for $1,300, a gain of $500, and that stock B cost $1,700 and was sold for $1,500, a loss of $200. Both securities were owned for less than six months. Short-term gain . . . . .. $500.00 Short-term loss . . . . .. 200.00

Net short-term capital gain, taxed 100% $300.00

1'!) Long-term gain and long-term loss: Assume that stock C cost $1,600 and was sold for $2,500, a gain of $900, and that stock D cost $2,700 and was sold for $2,400, a loss of $300. Both securities were OWnod for more than six months:

Long-term gain . . . . .. $900.00 Long-term loss . . . . . . .. 300.00

Net long-term capital gain . . . . . . . . .. $600.00

1953-54 THEATRE CATALOG



Taxable as income (50%) . . . . .. $300.00

c) Long-term gain and short-term loss: Assume that stock E cost $2,000 and was sold for $2,900, a gain of $900, and that stock F cost $2,600 and was sold for $2,100, a loss of $500. Stock E was owned for more than six months. Stock F was owned for less than six

months. Long-term gain . . . . . . .. $900.00 Short-term loss . . . . . . . . 500.00 Excess of long-term gain over short-term loss . . . . 400.00 Taxable as

income (50%) . . . . .. $200.00

In each of the above examples, the net

result was a capital gain, taxed 100% if short-term and 50% if long-term. If the net result is a capital loss, you may only deduct $1,000 from your other income, or up to the amount of your other income if it is less than $1,000. Any excess of the net capital loss may be carried forward and used during the following five years. Examples of a unet loss carry over" are given:

Other income . . . . . . . . . . . . .. $6,300.00

Net capital loss ..$4,000.00 Capital lossallowed 1,000.00 1,000.00

Net income . . . . . . . . . . . . .. $5,300.00 195:

Other income . . . . . . . . . . . . .. $7,400.00

Net gain . . . . . . . . . . . . . . .. 1,700.00

$9,100.00

Capital loss allowed



($1700 plus $1000) $2700 .. 2,700.00

Net Income . . . . . . . . . . . . .. $6,400.00

Other income . . . . . . . . . . . . .. $8,100.00

Net gain . . . . . . . . . . . . . . .. 3,000.00

11,100.00

Capital loss allowed (balance of $4,000 loss

MAIOR IMPROVEMENTS such as new seating might pay for themselves out of the tax savings.

less $3,700 deducted in 1952 and 1953) . . . . . . .. 300.00

Net Income . . . . . . . . . . . . . . $10,800.00

The above comments on capital gains and losses apply to individuals. Other rules apply to corporations. For partnerships, each partner shows on his personal tax return his proportionate share of the partnership's capital gain or loss.

If you are a landlord and receive from a tenant a $300 deposit which is intended to cover the rent for the last four months of the lease, the entire deposit (plus rents received for the current year ) is taxable in the year of receipt. (This is not true of the tenant, who can deduct the deposit only for the year to which it applies). To avoid this, the $300 deposit should be deposited and maintained in a separate bank account and should be recorded in the lease as a deposit to be returned upon completion of the contract. The deposit should not be recorded as rent paid in advance.

If you have a child who works after school, be sure he does not earn over $599 during the year. If he earns $600, or more, he must pay a tax on his earnings and you cannot deduct $600 for him: as a dependent. If his earnings are less than $600, he will get a refund of the tax withheld from his pay and you can also deduct $600 for him as a dependant. If one manis son earns $595 and another manls son earns $605, the latterls tax plus his fathers tax will exceed the other couple's tax by at least $200.

Do you own any E bonds They were sold during the war for multiples of $18.75. Ten years after sale, an $18.75 bond matures for $25.00. The interest may be taxed each year the value of the bond increases or may be taxed all at once when the bond matures. Tax-wise, with today's high rates, it is better to pay your tax on each yearis appreciation of the bond value.

Taxable income can also be reduced by investing in bonds of a state, county, or local municipality. Such bonds are known as municipal bonds, and the interest received on them is completely exempt from tax.
1953-54 Theatre Catalog, 11th Edition, Page 355