Exhibitor's Trade Review (Nov 1925 - Feb 1926)

Exhibitors Trade Review Page 20 SEIDMAN'S TAX ADVICE By M. L. SEIDMAN This is the third of a series of articles by Mr. Seidman of Seidman & Seidman, certified Public Accountants, on how to prepare income tax returns, that will appear regularly in these columns. Mr. Seidman is a well known tax expert and has written numerous articles on taxation. He will answer all income tax questions that might be directed to him by our readers. Questions should be addressed to him, c/o Seidman & Seidman, 41 Park Row, New York City. All communications must be signed by the inquirer, but no names will be disclosed m the answers. * * * In the last article, we learned that, generally speaking, all single individuals had to file an income tax return if their net incomes were $1,000 or more, and that all married individuals had to file a return if their net incomes were $2,500 or over. The reason for these requirements becomes more readily apparent in considering the question of exemptions allowed individuals. That question will therefore be discussed in the present article. Single Persons Under the law as it now stands, a single person is entitled to an exemption of $1,000. By that is meant that of his income is less than $1,000 he will have no tax to pay. If his income is over $1,000, on the other hand, he will ordinarily have a tax to pay. That is why all single persons having net incomes in excess of $1,000 must file a return. Head of Family There is one exception to the $1,000 exemption provision for single persons, and that is in the case of an individual who is the head of the family. Such a person is entitled to an exemption of $2,500. The question naturally arises as to what is meant by the term "head of the family." The head of the family might be defined as a person who supports and maintains in his household one or more other individuals. Note that two factors must exist : a head of the family must support some other individual and the dependent must live in the same household with the person claiming the status of head of the family. An unmarried son who lives with his parents and supports them would be classed as the head of the family, and would be allowed the $2,500 exemption. If, however, he did not live with his parents, even though he supported them, he would not be the head of the family, and his personal exemption, aside from the question of dependents, would be $1,000. Another point is noteworthy. We saw that a single person had to file a return if his net income was over $1,000 because his exemption was $1,000. It does not follow, however, that a head of a family need not file a return if his net income is less than $2,500, just because he is entitled to an exemption of $2,500. On the other hand, a single person who is the head of a family must file a return if his net income is over $1,000, even though his exemption is $2,500. It is true that if his net income were less than $2,500, he would have no tax to pay. A return is required of him, nevertheless. Married Persons Now let us consider married persons. A married person under the present law, is entitled to an exemption of $2,500. That accountsfor the requirements that married persons having net incomes of $2,500 or over must file a return. There are several things to be noted in connection with the exemptions allowed mar ried persons. In the first place, the husband and wife must be living together, in order to become entitled to the exemption. If they are separated, they are regarded as single persons for this purpose and their exemptions are computed accordingly. Furthermore, the $2,500 is allowed the husband and wife as a marital unit, and not to each of them. However, the exemption may be divided between them in whatever manner they see fit. The husband on his return might take the entire exemption and the wife take nothing on her return, or vice versa. Or the husband might take one half, or one quarter, or one eighth of the $2,500, and the wife, the remainder. That is entirely up to them. Of course, if they file a joint return, the one exemption of $2,500 would be shown. Suppose a person were married during the year. What then? Would he be permitted to take the full married man's exemption? The rule in this connection is very interesting, if not strictly logical. It is provided that if the status of an individual changes during the year, his exemption is to be computed on an apportionment basis. For instance, if a person were married on June 30, 1925, his personal exemption would be arrived at as follows : having been single for one-half the year, he would get half the single man's exemption, or $500, and being married for the other half of the year, he would be entitled to half the married man's exemption, or $1,250, making a total exemption of $1,750. If he were married on November 1, his exemption would be $1,250, computed as follows : having been single ten months of the year, his exemption for that period would be 10/12 of $1,000, or $833.33. Being married two months of the year, his exemption would be 2/12 of $2,500, or $416.67, making a total of $1,250.00. The exemptions that we have thus far discussed are known as the personal exemptions. Every individual is entitled to them, and their amounts depend solely upon whether the individuals are single, married, or the head of a family. There is in addition what is known as a credit for dependents. That will be explained later. To round out the present discussion, let us consider taxpayers other than individuals. Corporations and Estates A corporation is entitled to a credit of $2,00, provided, however, that its income is $25,000 or less. If its income is more than $25,000, it is not entitled to any credit whatsoever. An estate or trust is regarded as a single person, and is allowed a flat credit of $1,000. New Law Possibilities One thing should be mentioned in passing. What has been here outlined is based on the law as it now stands. There is some talk about Congress changing the amounts of the exemptions. It is known that the House Ways and Means Committee in its report is going to recommend a $3,500 exemption for married persons. Whether this recommendation will ultimately be adopted, and in any event, whether any new law that might be passed would be made applicable to 1925 returns, cannot be said at this time. Matters must therefore be taken under the law as it exists at present. Should there be any changes, they will be called to the readers' attention through this column. Note : Several of the readers' questions have accumulated, and beginning with the next article, both questions and answers will be published. SPECIALS WORTH FIVE MILLION First National Markets Group of Eight on New Plan Under a selling plan just announced by First National Pictures, five million dollars worth of special productions become available to every theatre in the United States and Canada that has not yet played them. The five million dollars represents the actual cost of production, prints and advertising of the eight First National specials which may be sold under one contract. They are pictures which have proved big moneymakers wherever shown, including three Norma Talmadge pictures, the tremendously popular "The Sea Hawk" and "Abraham Lincoln," just awarded the Photoplay Magazine medal as the best picture of the year. The eight pictures on the list are, Frank Lloyd's "The Sea Hawk," starring Milton Sills and conceded to be one of the finest productions ever made ; Al and Ray Rockett's portrayal of "Abraham Lincoln" ; "Secrets," "The Lady" and "The Only Woman," three of the most popular pictures in which Norma Talmadge has been starred; "Quo Vadis," the great Italian spectacle presenting Emil Jannings in the role of Nero ; "The Scarlet West," an epic of the West filled with the most thrilling sort of dramatic action, and "Sundown," another western story of epic proportions dealing with the passing of the cattle barons. Every picture on this list has profited by nation-wide advertising in magazines and newspapers. The box-office value of all of the productions has been proven at the leading theatres of the country. * * # Kleblatt Press Installs Exploitation Department It is announced by Erwin S. Kleeblatt, president of the Erwin S. Kleeblatt Press, 351-355 West 52nd Street, that a new department had been created to handle the complete advertising, publicity and exploitation of motion picture producers and distributors. Charles Reed Jones, formerly director of advertising and publicity for Chadwick Pictures Corporation, is in charge. Jones and his staff have already taken over the publicity and advertising of Chadwick Pictures Corporation. The Chadwick company intends to broaden the scope of its exploitation. The Kleeblatt advertising and publicity' service will include trade journal, fan magazine and nation-wide newspaper campaigns. It was pointed out by Mr. Kleeblatt, while explaining his venture, that he believes his plan will effect a considerable saving in time and expense because of the fact that all publicity materials will be printed at the same place where they are prepared. Film Fans Magazine, a Kleeblatt publication, edited by Jones, is said to have met with an enthusiastic reception throughout the country and is enjoying a rapid increase in circulation. * # * Maude Miller Advanced Jesse L. Lasky announced yesterday that Maude Kirk Miller, who for several years has served in the editorial department of Paramount, has been appointed manager of the story department. $ ' $ if: Sheehan Stays Over Los Angeles. — Winifred Sheehan will not return to New York until the middle of December.