Broadcasting (Oct - Dec 1945)

8ROA D jSa STING BROADCAST ADVERTISING VOL. 29, NO. 21 WASHINGTON, D. C, NOVEMBER 19, 1945 $5.00 A YEAR— 15c A COPY Tax Cuts Will Help FM-TV Development May Savings for Radio Aggregate 20 Million By BILL BAILEY DEVELOPMENT of FM and television and expansion of standard broadcasting will be given financial aid in 1946 when the corporation excess profits taxes are eliminated. Radio next year should have 20 million dollars in tax money to help make much-needed improvements, expand staffs and pioneer in TV, FM and facsimile. That estimate was based on broadcasting's taxable income for 1944. It will be but a drop in the bucket of radio's contemplated expansion in the next year, however. Estimates based on a survey by Broadcasting indicated that radio plans to spend $110,000,000 for improvements to AM and development of FM and television [Broadcasting, Oct. 8]. Of that amount 38 million alone is for AM construction and expansion. For FM the estimate is 42 million and for TV 30 million. The networks alone will spend well over 20 million for new studios and equipment in key-station cities [Broadcasting, Aug. 20]. It is not possible to compute the exact savings to radio from repeal of the excess profits tax and the capital stock tax and elimination of the declared value excess profits tax. Each corporate owner presents a separate picture, according to Alvord & Alvord, Washington tax attorneys retained by the NAB. Many stations are owned individually or by partnerships. They require different returns from corporations. Conservative estimates are that at least 65% of radio income is subject to excess profits tax under the present law. It was pointed out that a 250-w local might be subject to a greater excess profits tax in proportion than a 50-kw clear channel outlet. Invested capital plays an important part in tax returns. According to FCC figures, released in September, radio's overall taxable income for 1944 was $90,272,851. Total revenue was listed as $275,298,611 [Broadcasting, Sept. 24]. It is estimated that this year's gross will exceed $300,000,000. The taxable income was broken down by the FCC as follows: Net works, including 10 key stations of major networks, $20,842,506; 22 other managed and operated network stations, $5,358,966; 843 independent stations $64,071,379. Other than the 10 key network stations, which were figured in the overall network incomes, the FCC disclosed that clear channel stations had a total taxable income of $25, RADIO's 110-million-dolIar expansion program in 1946 will be given some help in repeal of the corporation excess profits tax, effective Jan. 1. Estimates place amount of potential savings at 20 million dollars, although actually it's anybody's guess, inasmuch as each corporate taxpayer presents a different problem. Estimates were based on radio's taxable income for 1944 and the assumption that 65% was subject to excess profits taxes. 145,431. Of that figure 41 50-kw unlimited network affiliates paid taxes on $20,346,138. Three parttime 50-kw network affiliates were taxed on $916,655. ■ • : . Clear channel stations of 5-20 kw were broken down as follows: 22 network affiliates, unlimited, $2,968,006; 6 unaffiliated unlimited, $658,941; 2 unaffiliated parttime, $255,691. Regional stations paid taxes on a total of $34,924,631 as follows: 250 unlimited affiliates, $30,709,795; 28 unaffiliated unlimited, $1,087,738; 22 affiliated parttime, $882,383; 37 unaffiliated parttime, $1,244,715. In the local category 346 fulltime network affiliates were taxed on $8,931,795; 87 unaffiliated unlimited outlets, $1,209,281; 4 parttime network affiliates, $14,423; 16 parttime unaffiliated outlets, $204,784. For Public Benefit Of 865 commercial stations reporting taxable income of $69,430,345, only 58 had time sales of less than $25,000, the Commission data showed. A total of 807 commercial outlets reported gross revenue of $193,182,726 and taxable income of $69,356,960. Applications on file at the Commission give indication that the estimated 20-million savings in Federal taxes next year will be used to benefit the public and not sta tion owners. New transmitters, new studios, other equipment, additional talent all will be possible. During the war the only improvements possible were those of emergency nature, because of construction freezes. Under the new tax law, which President Truman has signed, scores of personnel in radio will effect savings in individual taxes as well as their respective employers. Executives, too, will have a few more dollars. For returning war veterans all income taxes on service pay of enlisted men from 1941 on is entirely exempt. Officers are given an exemption of $1,500 on their service pay, in addition to regular exemptions allowed civilians. Officers also are given a three-year extension for payment of tax on service pay while both enlisted men and officers are granted a three-year extension on pre-service income earned in 1940 or 1941 if the tax fell due after induction. Social Security tax on employes (Continued on page 95) Radio Tax Refunds Near $200,000 Two Regional Networks, Eight Stations Get Relief EIGHT STATIONS and two regional networks have been granted tax relief aggregating nearly $200,000 for taxable years from 1940-43, according to the Federal Register. In each instance the refunds were brought about through readjusted excess profits taxes. For the fiscal year ending June 30, 1945, the Bureau of Internal Revenue granted relief totaling $124,370.21 to six stations and two regional networks whose claims were based on the taxable years 1940-43, it was announced last week. Relief to Two in 1944 In the fiscal year ending June 30, 1944, the Federal Tax Commissioner granted relief of $47,412.51 to two stations and in the fiscal year ending June 30, 1942, the rebate amounted to $18,713.34 for one station, operated by a newspaper. For the taxable year ending Dec. 31, 1942, Arizona Broadcasting Co., licensee of KVOA Tucson, was allowed relief totaling $3,070.30. WJJD Inc, Chicago, was allowed total refunds of $4,223.32 on income taxes for years ending Dec. 31, 1941, 1942, 1943. Maryland Broadcasting Co., licensee of WITH Baltimore, for TAX RELIEF totaling more than $190,000 was granted eight stations and two regional nets through readjustment of excess profits taxes, Internal Revenue Bureau disclosed. Refunds covered taxable years 1940-43 and ranged from $1,123 for small station to $92,249 for Yankee Network. fiscal years ending Sept. 30, 1941, 1942, 1943, received relief totaling $4,711.18. Plains Broadcasting Co. licensee of KGNC Amarillo, was given relief amounting to $10,486.12 for the years ending Dec. 31, 1940, 1941, 1942. BROADCASTING • Broadcast Advertising Fayette Broadcasting Corp. and Fayette Title & Trust Co., licensee of WMBS Uniontown, Pa., for the year ending Dec. 31, 1942, was refunded $1,355.95. South Bend Tribune Co., licensee of WSBT, was granted relief twice totaling $24,542.63 for the taxable year ending Dec. 31, 1940. Taxes covered both newspaper and broadcasting business of the Tribune Co. Iowa Broadcasting Co. (now Cowles Broadcasting Co.), licensee of KSO-KRNT Des Moines, before selling KSO, was given relief of $46,288.90 for the taxable years ending Dec. 31, 1940, 1941, 1942. Radio Service Corp., licensee of KSEI Pocatello, Ida., benefited by $1,123.61 through readjusted excess profits taxes for the taxable year ending Dec. 31, 1942. Yankee Network Inc., Boston, received relief amounting to $92,249.98 for the years ending Dec. 31, 1940, 1941, 1942. Pacific Broadcasting Co., Tacoma, also a regional, for the year ending Sept. 30, 1941, was refunded $2,444.07. November 19, 1945 • Page 15