r958

FORSYTH HARDWOOD CO.

355 Bayshore Boulevard

San Francisco 24, California

GOR,RECT ANSWER,S

1. (b) On lcased propertn you normally spread the cost of improvements over the shorter period-the lifa of the improve- ment or the term of the lease. Since your lease expires in fou, y-ears and presrrmably the furnishings will have a longer life than that, you should be able to clairo, a $250 deductio" orr-yoo, federal tax return for this year and the next three years.

2. (9) The moncy you rcceived from the company must be reported as incgmc, but you may deduct the cost oi moving yow entire family. If the amount thc company gives you exceedi your expenscs, the excess is taxablc. Conversely, however, if your ex_ penses were rnore than thc amount received, the difierenie is not deductible.

^9, (f) -and (b) are both corect. All ta:rpaycrs are entitled to a S5O dividend exenrptiorl A husband ana witi can combine their exemptions and receive $100 in dividends tax free, providing the slock ! jointly owned. The filing of a joint return witl not grialify them for this double exemption if the stock is hcld in only one of their namcs.

4. (c) You cannot deduct contributions to an organziation which spends a substarrtial part of its time lobbying or-di.tribut_ ing political propaganda.

5. (a) You gained a son-in-law but lmt a $6fi! dependency exernption for 1957 when your daughter married in Nbvembei. All is not lost, howcver. If you provided more than one-half of your_ daughtcr's euppo,rt during the year, you may claim her medical cxpensea as a deduction on your return.

6.(c) Watching television can be most relaxing and it might wen hclp you to forgct you,r poker losses-which is the thinito do because net gambling losees are definitely not deductible.f{et Cq"bflrg gains are taxablc ae income; so if you won money in "''a football pool or other eources, you may use your poker l&es to offeet these gains.

7. (b) The IRS has ruled that ..if the repairs do nothing more fhan restorc the property to ite condition immediately bcfire the casualty and do not add to (ite) value, utility or useful life, such repair costs may be used as a measure of the value of the de_ stroycd portion." Where you were going at the time of the acci_ dent does not afect the deductibility of car damag.es. f3. (c) [n thc absence of fraud or substantial understatement of income, the Government has three years frorn the due datq of your 1957 return to chcck your return and bill you for additional tax. Since the due date of moet individual returng is April 15 and for investigajion purposcs all returns are treated as tliough filed on the due date, you etrould be sure to save all check stubs and receipted bills to prove your declared deductions urrtil April 15, 1961. f4. (c) The fee which a CPA charges you to prepare a tax return or defend thc accuracy of you,r return before thi Treasury Department is dcductible in full if you itemize deductions.

8, (b) Commutation fees are not a deductible business expegs.- The cost of going to and returning frorn work, whether it be by bus, cab, train or plane, is not deductible since it is a personal expense. On the other hand, (a) and (c) are deductible.

9. (-c) Damage to your shrubbery caused by children, dogs or errant lawrmowcrs is not deductible. If your hotrJe or lain is damaged by fire, storm or flood the loss not covered by insurance may be deducted. When large arnounts are involved ii is wise to have an expert appraisal made imrnediately after the casualty.

10. (b),Since your son works for yor.l, you are not supposed to pay social seerrity tar on his wages, nor is he reguired t6 inat<e contributions. If your.business is incorporated, horiever, the cor_ poration must pay social security tax on his salary.

11. (a) Your deduction for a charitablc contribution is the value of the gift at the time it is made. You are not considered to have realized a taxable gain or deductible loss when you give properry away. You may claim a deduction for the entire Sl"S00 so long as this amount does not exceed ZOo/o (3to/o in some cases) of your adjusted grocs income.

12. (b) The roof is considered an irnprovement, not an ordi_ nary repair. The cost of replacing the roof is deductible as de_ preciation sprcad over its estimatid useful life.